The Effect of Managerial Share Pledges on the Cost of Debt

We examines whether share pledges by controlling shareholders influence a firm’s cost of debt. We also investigate whether the relationship between share pledges and the cost of debt stems from the managerial risk-taking incentives or pursuing the private benefits of controlling shareholders. We make three major findings. First, we find the cost of debt is higher in firms with share pledges than in firms without share pledges. Furthermore, we identify a positive relationship between the cost of debt and the level of share pledges. Second, we find that there is no increased corporate financial leverage or investment activities in firms with share pledges. Finally, our empirical evidence demonstrates that the positive relationship between share pledges and cost of debt is more pronounced for lower foreign institutional investor stakes or higher controlling shareholders ownership. Overall, the results indicate that share pledges by controlling shareholders negatively affect the cost of debt. However, the effect of share pledges on the cost of debt is differently influenced by a firm’s ownership structure. Our findings suggest that share pledges induce stockholder-bondholder conflict, and the bondholder requires more risk premium due to the decrease of firm value.

Foreign Experience of CEOs and Managerial Risk Taking

Our paper uses a multidimensional analysis to provide a better insight on the relationship between CEO foreign experience and corporate risk-taking. By decomposing the foreign experience of CEOs from developing economies such as Malaysia, we find that CEOs who have studied in OECD countries undertake higher levels of risk-taking and CEOs’ foreign working experience may have an adverse effect on risk-taking behaviour especially if the working experience is obtained from non-OECD countries. Additional analysis reveals that younger CEOs and family CEOs with foreign working experience matter in reinforcing the firms’ risk-taking activities. Overall, our findings provide implication for researchers and policymakers seeking to nurture risk-taking behaviours and innovativeness in emerging countries.

Does board gender diversity weaken or strengthen executive risk-taking incentives?

We investigate the effect of board gender diversity on managerial risk-taking incentives. Our results demonstrate that companies with stronger board gender diversity provide more powerful executive risk-taking incentives. It appears that female directors’ risk aversion exacerbates managers’ risk aversion, resulting in a sub-optimal level of risk-taking. To offset this tendency for too little risk, companies are induced to provide stronger risk-taking incentives. Specifically, an increase in board gender diversity by one standard deviation raises vega by 10.3%. Further analysis corroborates the results, including propensity score matching, entropy balancing, and an instrumental-variable analysis. Endogeneity appears to be unlikely, suggesting that female directors are not merely associated with, but probably bring about stronger risk-taking incentives.

Canary Science in the Mineshaft of the Anthropocene

Alongside the melting of glaciers, human bodies warn of another petrochemically driven planetary crisis. Much as climate science ignored the early warning observations of Indigenous peoples, the medical establishment has oft en dismissed the canaries struggling to survive in the mineshaft of modernity. In an aleatory Anthropocene, we know not for whom the toxicity will toll. While case studies of environmental justice remain essential, the privileged must also be jolted into understanding their own ontological precariousness (i.e., vulnerability) from toxicants pervasive in everyday life. Moving beyond “citizen science” with inspiration from feminist ethics of care and relational Indigenous epistemologies, I make a case for the extrasensory value of “canary science.” If managerial “risk” was the keyword of the profiteering twentieth century, a sense of shared vulnerability in the coronavirus era could help usher in the transitions needed for survival in this polluted world.

The Effect of Tax Risk on Tax Avoidance

This research intends to investigate whether tax risk is associated with tax avoidance, which is proxied by Cash Effective Tax Rate (CETR). Tax risk is measured by six tax risk components: transactional risk, compliance risk, operational risk, financial accounting risk, managerial risk, and reputational risk. The samples in this research are manufacturing companies listed on the Indonesian Stock Exchange (IDX). With a purposive sampling method, there are 168 firm years which we analyzed with OLS regression. The result in this study showed that tax risk is positively associated with CETR. It implied that choices of tax strategies and activities are involved in high tax risk, but firms still choose to comply with tax regulations, which can be seen in high CETR values. This research found that firms need tax risk management to ensure that tax strategies do not impact the firms’ future losses from additional tax payments and fines. Other than that, this research gives a new option for future researchers to measure tax risk using scoring methods and indicators that are engaged in each of the tax risk components.DOI: 10.26905/jkdp.v25i3.5629

Managerial Risk Perceptions of Corporate Social Responsibility Disclosure: Evidence from the Forestry Sector in China

Understanding how managers perceive risks in the decision-making process of corporate social responsibility (CSR) disclosure is vital, especially in sectors with high social and environmental demands on sustainability. The main aim of this study was to explore the impact of managerial risk perceptions and influencing factors on CSR disclosure in the forestry sector of China and to improve the sustainable development of forestry. Utilizing survey data of 214 managers from Chinese forestry enterprises, we analyzed how manager backgrounds, including six variables (gender, age, education level, degree major, number of years working as a manager, and work experience) related to the managers’ risk perceptions of CSR disclosure via a two-stage model. The analyses of the two-stage model revealed that the influence factors differ in the two stages of risk perception. According to our results, influencing factors were not the same at various stages of the CSR reporting process. This requires decision makers to take practical driving factors into account and select managers with different characteristics to carry out the CSR disclosure of forestry enterprises.