We examine whether the heterogeneity of expectations is associated with idiosyncratic variations in experience. Combining household survey data and administrative data from the Netherlands, we find that given market development, households’ expectations about house price changes vary with their individual experience. This association is related to the use of information conveyed by experience, which varies in terms of informativeness, recency, and household sophistication. Finally, we find that individual experience also explains how far house price expectations deviate from realized house prices and that it may affect household behavior. Our findings elucidate the role that individual experience plays in expectation formation.

Extant theory proposes that stakeholders reward organizations that behave ethically and punish those that don’t. Taken at face value, this dynamic implies that organizations prioritizing ethical concerns should have competitive advantages augmenting performance. Unfortunately, hoped-for advantages often fail to materialize. Examining this difficult reality, we explore how pluralistic ethical standards manifest in ways that are not obvious because they are often locally and temporally attached to stakeholder groups. Further, we adopt a resource-based view of organizations and draw on literature related to dynamic capabilities and stakeholder theories to argue that ethics-related organization-level behavior can only lead to sustainable competitive advantages when there is continued competence across present and future-oriented systems. As a whole, our work provides a useful theoretical framework for addressing the pragmatic difficulties associated with enacting universal ethical principles in unique situations.

We examine how lenders design contracts to account for transitory and permanent cash flow shocks facing borrowers. We find that volatile transitory cash flow shocks are associated with fewer liquidity covenants, indicating financial flexibility that enables firms to survive liquidity crunches. The opposite is true for volatile permanent cash flow, suggesting that borrowers’ economic fundamentals are important credit risk factors. Subsequent analyses show that borrowers exposed to transitory (permanent) shocks face less (more) severe credit consequences following poor performance. Overall, we show that transitory and permanent cash flow shocks have significant and opposite effects on debt contract covenant design.

How does a role—whether in business, law, government, or some other institution—change what is morally permissible or obligatory? Here I present three options and argue for the third. On the balancing model, a role simply gives its occupant additional normative reasons, to be weighed against all other normative reasons. On the shielding model, a role comes with its own moral code, blocking the force of all role-external reasons. On the filtering model, a role selectively filters its occupant’s reasons for action, creating obligations or permissions to act on a narrowed range of considerations. I argue that the filtering model offers a superior analysis of the ethics of roles, including the concepts of professional integrity and discretion. I focus on three difficult cases: a nuclear safety regulator, a criminal defense lawyer, and a corporate lobbyist. I conclude by discussing the implications of the filtering model for business ethics.

The trade war with China has cost US producers and consumers hundreds of billions of dollars since 2018. Yet relatively few US businesses took action to oppose it. This study reports the results of an elite survey experiment on business political activity toward trade policy. Researchers presented business managers with information about the input costs of the new tariffs to their bottom line—information that most subjects acknowledged that they lacked—and invited them to take political action to express support or opposition to these tariffs. The results suggest that the novel information on economic costs did not significantly increase managers’ propensity to contact members of Congress, donate to political campaigns, sign petitions, or join social media groups. We also found that the firm’s political culture (liberal or conservative) did not significantly influence the effectiveness of the treatment. However, descriptive analysis showed that firm political culture was strongly related to the company’s support for the trade war, suggesting that these preexisting political beliefs were resistant to new information provided in our experiment even if that information could affect the company’s bottom line.

To protect inframarginal rents, rivals react to competition shocks by increasing product differentiation or lowering costs by standardizing products and production processes. We test these two mutually exclusive reactions by exploiting changes in rivals’ idiosyncratic stock return comovement following significant tariff cuts. While increased product differentiation implies a reduction in return comovement, greater standardization implies the opposite (a comovement increase). Difference-in-differences (DID) tests indicate that tariff cuts cause a significant increase in return comovement—in particular among within-industry “followers.” Treatment effects on cash flows, product counts, similarity scores, and business segment counts further support cost-cutting strategies.

Our field has reached a critical juncture. Authentic leadership, which once promised to illuminate how leaders inspire and influence through genuine actions, has become mired in conceptual ambiguity and ideological bias. Much of the research is based on evaluations of behaviour conflated with antecedents and outcomes, presuming an oversimplified, positive view of authenticity. To advance, we must refocus on what authentic leaders actually do – their discrete behaviours – as signals of leadership. In this editorial, we redefine authentic leadership through signalling theory to address unresolved critiques and provide a platform for meaningful progress. We then summarise and synthesise the articles in this special issue, which systematically review the literature, present dynamic models of authenticity, introduce ‘bounded authenticity’ in leadership roles, advocate for rigorous experimental methods, and offer empirical support. Collectively, these papers advance authentic leadership theory with greater theoretical precision and a conceptual nuance that reflects the modern organisational leadership landscape.

How does access to public equity markets affect the human capital of IPO filing firms? While IPO filing firms have high average wages and limited industrial diversification, a successful IPO increases departures of high-wage employees to startups and triggers industrial diversification through employment growth in non-core industries. Surprisingly, IPOs do not significantly affect the earnings growth of pre-IPO workers. Instead, post-IPO hires receive larger earnings increases upon joining. Overall, going public has a significant effect on a firm’s workforce and labor reallocation across firms.

The sources formally documenting how tax policy evolves fail to capture many of the complexities inherent in such processes. Insights into such approaches would guide other tax administrations in navigating tax policy change in an international domain. This paper examines the historical background to the introduction of the Irish 12.5 percent corporate tax rate in 2003 in the face of the European Union’s (EU) dissatisfaction with the existing regime. A low corporate tax rate has long been seen as a critical element of the country’s industrial development strategy. Employing an oral history method to identify the perspectives and objectives of those involved in the policymaking process, we provide a case study of how one tax administration resolved what was seen as a particularly significant public policy dilemma.

We briefly describe the structure of a regulatory system that alleviates many of the problems that arise when elected officials delegate rulemaking authority to government agencies. These problems include principal-agent issues, monopoly provision, information asymmetry, and tragedy of the commons. This structure better aligns the incentives of regulators with those of legislators and with the well-being of the public. We intend the solutions and process structure presented here not to serve as a collection of proposed changes but as guideposts for those hoping to make any part of the regulatory system better attuned to the needs of the populace.

Department stores have served as significant commercial and cultural institutions, transforming retail systems, consumption patterns, and people’s tastes in many countries since the late 1840s, when the first department store emerged in Paris. However, the adaptation of their business models and influence varied depending on social contexts. This article examines Japanese department stores from the 1900s to the 1930s, focusing on the role of restaurants within these establishments. Department store restaurants not only redefined the customer experience through innovative food services but also played a crucial role in reshaping the business itself. Central to this transformation were the waitresses, often referred to as “restaurant girls,” whose emotional labor became integral to the department store’s operations. Their work introduced the incorporation of personality into business management, highlighting how the performance of personality—both gendered and productive—was leveraged in the modern commercial world.

The defence industry plays a critical role in maintaining international peace and security, yet its activities inherently have human rights implications. This article examines the industry’s responsibility to respect human rights in conformity with the United Nations Guiding Principles on Business and Human Rights. It explores challenges, practices, and opportunities of human rights due diligence within the arms sector—including the end-use monitoring component. It seeks to inform policymakers, industry, scholars and activists working towards a rights-respecting arms trade regime. The article will explore human rights due diligence’s foundations in international human rights law and corporate social responsibility frameworks, as well as emerging shifts and standards in the legal landscape at the national, regional, and international levels. Drawing on the American Bar Association Center for Human Rights evidence-based research, this piece will also explore the industry’s response to its due diligence obligations and how these narratives cannot shield the industry from legal, financial and reputational risks.

Large European arms companies increasingly own and control subsidiaries in other parts of the world. These subsidiaries operate hundreds of production sites used to manufacture and export weapons for the benefit of the parent company. Yet, they are bound by the legal framework in host countries. An important case study of this phenomenon is South Africa, which is now the site for numerous subsidiaries of large European arms manufacturers, including Rheinmetall and Hensoldt. Between 2018 and 2021, a Rheinmetall subsidiary in South Africa continued to export weapons to Saudi Arabia despite a German prohibition. This article uses South Africa as a case study to examine the potential consequences of the practice of offshoring in the context of weaknesses in South Africa’s arms export control framework and provides recommendations on how to improve scrutiny and reporting in South Africa’s system to better guard against this type of conduct.

Interregional and global economic connections continued to grow in the eighteenth century, but we know less about consuls’ impact on commodity chains that were stretched thin across large distances. Using a microhistorical approach, we look at the activities of a Swedish consul in Cadiz, Hans Jacob Gahn, who supplied large amounts of copper sheets to the Spanish navy. It was Gahn’s position as an official representative, not merely his networks in Spain and Sweden, that was crucial for winning and executing the contract: his consular post enabled him to leverage his social, political, and financial capital to drastically alter trade flows for the years he held the contract. As contractors, consuls had a significant economic function for both their sending and receiving states.