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ECGI RESEARCH
24 April 2014  

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See the latest research from the ECGI published in the ECGI Finance Working Paper series
Thu, 13 Mar 2014 16:54 GMT  
ECGI Finance Working Paper 412/2014

by
Hao Liang, Tilburg University Christopher Marquis, Harvard University Luc Renneboog, Tilburg University and ECGI Sunny Li Sun, University of Missouri at Kansas City

Submitted by
Luc Renneboog
Keywords:
Language, Future-Time-Reference, Categories, Culture, Corporate Social Responsibility, Sustainability

We argue that the language spoken by corporate decision makers influences their firms’ social responsibility and sustainability practices. Linguists suggest that obligatory future-time-reference (FTR) in a language reduces the psychological importance of the future. Prior research has shown that speakers of strong FTR languages (such as English, French, and Spanish) exhibit less future-oriented behavior (Chen, 2013). Yet, research has not established how this mechanism may affect the future-oriented activities of corporations. We theorize that companies with strong-FTR languages as their official/working language would have less of a future orientation and so perform worse in future-oriented activities such as corporate social responsibility (CSR) compared to those in weak-FTR language environments. Examining thousands of global companies across 59 countries from 1999-2011, we find support for our theory, and further that the negative association between FTR and CSR performance is weaker for firms that have greater exposure to diverse global languages as a result of (a) being headquartered in countries with higher degree of globalization, (b) having a higher degree of internationalization, and (c) having a CEO with more international experience. Our results suggest that language use by corporations is a key cultural variable that is a strong predictor of CSR and sustainability.


to view details and download this Working Paper from the SSRN website

All ECGI Working Papers in the Law and Finance series are available on the ECGI website at www.ecgi.org/wp
See the latest research from the ECGI published in the ECGI Law Working Paper series
Wed, 19 Mar 2014 15:25 GMT  
ECGI Law Working Paper 248/2014

by
Joseph McCahery, Tilburg University and ECGI Erik Vermeulen, Tilburg University

Submitted by
Joseph McCahery
Keywords:
board of directors, CEO, conglomerate, controlling ownership, corporate culture, corporate governance, corporate group, innovation, investor conference, investor relations, one-size-fits-all, shareholder engagement, widely dispersed ownership

Recent regulatory initiatives that attempt to encourage shareholder engagement, ensure board independence and improve the operation and transparency of corporate groups are of great interest to both academics and practitioners. These initiatives reflect a ‘one-size-fits-all’ approach that may lead to disappointing and counterproductive results and could destabilize and disrupt workable arrangements between management, the board of directors and investors. In this paper, we take a different perspective by showing how there is more to corporate governance than just providing protection to investors and other stakeholders. An important reason for corporate governance is that it also facilitates companies to be innovative, create value and maintain a competitive advantage. To show this, this paper focuses on six components that successful and innovative companies have in common. We support our argument with case studies to show how these companies have found different ways to give substance to the six components.


to view details and download this Working Paper from the SSRN website

All ECGI Working Papers in the Law and Finance series are available on the ECGI website at www.ecgi.org/wp