University of California, Berkeley
All Answers (2)
Hi, Hope:
Some researchers argue that Equity offerings are due to earnings management, whereas other researchers attribute them to the timing of share placement by issuing firms. A recent research study (Shu, & Chiang, 2014) proposed that large and small firms treat their seasoned equity differently: small firms time the market, whereas large firms use discretionary accruals to increase their proceeds. Perhaps this is the appropriate point in firms journey to measure the impact of CSR on equity if executed earlier!
The authors verified this hypothesis using a sample of 463 firms listed on the Taiwan stock exchange. Specifically, for small firms, the timing effect is positively correlated with the firm's short-term wealth and negatively correlated with its long-term wealth.
For large firms, earnings management (proxied as discretionary accruals gauged by the modified Jone's model) is positively correlated with short-term wealth and negatively correlated with long-term wealth. The separating equilibrium is unlikely to be conditioned by the issuing firm's flotation methods.
A strong argument could be made that the modified Jones model will play a vital role in measuring the impact of csr on equity!
- Shu, P., & Chiang, S. (2014). Firm size, timing, and earnings management of seasoned equity offerings. International Review Of Economics & Finance, 29177-194.
Kind Regards, Nadeem
Similar questions and discussions
Is there such a thing as a business case for corporate social responsibility?
It’s not just about getting better at what we do – addressing impacts throughout our supply chain – it’s about striving for the best, creating value for the business and innovating for a better world (A Definition of CSR by Nike in Andrew Crane, Dirk Matten and Laura J. Spence, 2014 - CSR Readings & Cases)
#SharedValue
Conference Paper The Business Case for Corporate Social Responsibility
