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Research based on the behavioral theory of the firm (BTOF) argues that firms will actively adopt strategic actions to respond to performance that falls below aspirations, that is performance shortfalls. However, most previous studies have focused on market-related strategic actions, paying less attention to the impact of performance shortfalls on non-market-related strategic actions, especially corporate social responsibility (CSR) and corporate social irresponsibility (CSI). In this study, we propose that firms facing performance shortfalls are likely to reduce CSR levels and increase (...) CSI levels. In addition, we also propose that board characteristics (board size, board age and board tenure) have a significant moderating effect on the above relationship. Empirical analyses based on an unbalanced panel data of China's listed firms from 2010 to 2018 show that our arguments are largely supported. (shrink)

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The relationship between analysts' forecasts and corporate fraud is a vital theoretical and practical question that needs to be clarified. Based on a strict distinction between negative performance gaps relative to analyst forecasts (negative forecast gaps hereinafter) and analyst coverage, this study investigates the influence of analyst forecasts on corporate fraud from a panoramic perspective. Using panel data on listed companies in China from 2008 to 2019, we find that short-term performance pressure caused by negative forecast gaps is significantly positively (...) correlated with firms’ possibility for fraudulent behavior. However, this positive correlation is weaker in state-owned enterprises than in their non-state-owned counterparts. Further, as a key external governance mechanism, analyst coverage enhances the negative moderator effect of state ownership on the positive relationship between negative forecast gaps and the likelihood of corporate fraud. (shrink)

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Business Ethics, the Environment & Responsibility, EarlyView.

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Our study explores how climate risk affects the tax behavior of governments and local firms, subsequently affecting corporate pollution emissions. Using data on Chinese non-state-owned industrial enterprises from 1998 to 2014, we empirically investigate the impact of natural disasters on corporate tax avoidance. The results indicate that companies in earthquake-damaged areas are less likely to avoid taxes than those in unaffected areas. Furthermore, companies that pay more taxes after a disaster can secure favorable government environmental policies, as indicated by a (...) rise in pollution emissions. Moreover, this effect is more pronounced for less polluting firms and firms with higher financial constraints. Our study contributes to the literature on taxation and ESG from the perspective of favor-exchange in government–firm relationships. (shrink)

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Integrating the behavioral theory of the firm and agency theory, this study is the first to examine the antecedents of firms' choice to disclose low-quality accounting information from the perspective of performance persistence below aspirations. Based on empirical data of 31,326 firm-annual observations involving 3584 listed companies for the 2007–2021 period, we find that firms actively reduce accounting information reliability and comparability in the presence of performance persistence below aspirations. Furthermore, we find that CEO-CFO surname ties enhance the negative effect (...) of performance persistence below aspirations on accounting information comparability. Finally, we find that agency costs play a mediating role in the relationship that performance persistence below aspirations has with accounting information reliability and comparability. This study is the first to examine performance persistence below aspirations and accounting information reliability and comparability. Meanwhile, this study provides important insights for policymakers to improve the quality of capital market information and for shareholders to improve the quality of corporate governance. (shrink)

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Academic experience has been found to significantly impact on the attitudes and behaviors of managerial decision-makers, which in turn influences corporate strategic decisions. However, the impact of academic decision-makers on corporate ethical decisions, particularly corporate social irresponsibility (CSIR), has yet to receive due attention to date. In this study, we integrate the upper echelons theory and managerial discretion literature to examine whether and when academic CEOs (CEOs with academic experience) influence corporate social irresponsibility (CSIR). First, we suggest that academic CEOs (...) discourage CSIR because they have higher moral standards; thus, their companies are less likely to engage in CSIR activities. In addition, we propose that negative attainment discrepancy (slack resources) reduces (enhances) academic CEOs' managerial discretion to incorporate their ethical preferences into their decisions, thereby weakening (enhancing) the above relationship. This study is the first to examine the relationship between academic CEOs and CSIR. Additionally, the empirical findings of this study offer crucial insights for shareholders and policymakers to prevent or mitigate CSIR effectively. (shrink)

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