Michael Mcdonald

University of Tennessee | UTK · Department of Finance

We examine the valuation impact of an employee-friendly (EF) culture. Using a sample of 3446 firms from 43 countries for the period 2003 to 2014, we show that firms with a more EF culture are valued higher and perform better (ROA, ROE). Consistent with the good governance view, the impact is stronger for firms in countries with better investor prot...

We examine social characteristics (individualism and risk aversion) and their interaction with firm governance and capital structure across the G20 countries from 1995 to 2009 using roughly 13,000 firms. We show that higher levels of individualism are associated with increased firm use of debt and lower cost of capital, whereas higher risk aversion...

We examine the impact of differences in time varying social views towards sin stocks across G20 nations on firm valuation and excess returns. Sin stocks have an 8% lower equity valuation in countries where society is strongly against such industries. After controlling for other factors, sin stocks have excess returns of about 1-2% annually. However...

We examine the impact of social norms (individualism, risk aversion, and authoritarian control index) on firm capital structure in the G20 countries from 1995 through 2009. Our results show that increases in individualism increase firm willingness to use debt and decrease the average cost of capital (a move from below median to above median individ...

This paper examines the impact of social norms on firm value and the capital structure of firms engaged in the production of tobacco, alcohol, and gambling services ('sin stocks') in the G20 nations. We first demonstrate that sin stocks are undervalued in countries where social norms are strongly against such firms. The negative impact on these fir...