We use a random forest model to classify firms’ financial constraints using only financial variables. Our methodology expands the range of classified firms compared to text-based measures while maintaining similar levels of informativeness. We construct two versions of our constraint measures, one using many firm characteristics and the other using a small set of more primitive characteristics. Using our measures, we find that institutional investors hold a lower percentage of shares in equity-focused constrained firms, while retail investors show a preference for them. Equity issuance and investment of constrained firms also increases during periods of high investor sentiment.

What determines the bargaining power of states in international trade negotiations? The literature focuses predominantly on economic strength as the determinant of bargaining power. However, this explanation neglects the reality of modern trade, which is characterized by the globalization of production and high levels of economic interdependence. I argue that this interdependence undermines the effect of economic strength on the bargaining power of states. Specifically, I hypothesize that the effect of economic strength declines when a country's companies rely on inputs for their production from a negotiation partner because they are integrated into global value chains. The more a country's firms are dependent on a partner country, the less that country is able to coerce concessions from the partner country by bringing to bear its economic strength. To test this hypothesis, I use a dataset covering concessions on liberalization of the services sector made by 54 countries in 61 preferential trade agreements. By calculating the relative concessions of each partner, I construct a quantitative indicator of the outcome of trade negotiations. This indicator should reflect the underlying bargaining power of each negotiating party. The results of a regression analysis of these negotiation outcomes mostly support my hypotheses.

The U.S. Consumer Financial Protection Bureau has released a database of consumer complaints about banks’ financial products to the public since 2013. We find a greater reduction in mortgage applications to banks that receive more mortgage complaints in local markets after the disclosures. The effect is stronger in areas with more sophisticated consumers and higher credit competition, and for banks receiving more severe complaints. The number of monthly mortgage complaints per bank exhibits faster mean reversion after the publication of the database. These findings suggest that the public disclosure of mortgage complaints enhances product market discipline and consumer financial protection.

In a general equilibrium framework, we show that banks may “buy” political influence at a discount: They offer disproportionately small campaign contributions compared to the influence they exert, thus generating abnormal returns. We distinguish between the direct effect of contributions which, as a cost, reduce bank returns, and the indirect effect of contributions which boost returns via inducing bank-favoring policies. Therefore, abnormal returns may or may not increase with the amount of contributions, depending on which effect dominates: Stricter capital requirements decrease contributions and abnormal returns. When politicians attach more weight to households’ welfare, contributions increase and abnormal returns decrease.

This article argues that corporate financial frictions can have an adverse effect on employee mental health, an important determinant of employee productivity. To identify the causal effects of financial frictions, we exploit variation in firms’ need to refinance their long-term debt in 2008, a period when refinancing became more difficult due to the credit crunch. Using administrative microdata, we find that antidepressant use grows significantly more among employees of firms in higher need of debt refinancing. Much of this effect occurs at employees keeping their jobs, pointing to decreased perceptions of job security as a transmission channel.

Reconnecting Fligstein’s and Chandler’s models of long-term organizational change, this article challenges the idea that corporate financialization is alien to the Chandlerian enterprise. Based on the case of the French automotive firm Peugeot Société Anonyme (PSA), it shows that this historical transformation has been intrinsically linked to Chandlerian dynamics. The article first highlights the crucial role played by the French government and financial institutions in the establishment of large multidivisional companies in France. It then draws on PSA, public, and private archives, and an interview with a former financial executive to examine a decisive financial restructuring of the family business in 1965. In describing the challenges faced by the business in the 1960s, the article analyzes how the creation of a multilevel structure of holding companies was meant to deal with Chandlerian challenges while paving the way for the further financialization of the business.

This article examines the role of business interests in shaping the structures of global environmental governance between the United Nations (UN) Conference on the Human Environment in Stockholm in 1972 and the UN Conference on Environment and Development in Rio in 1992. It demonstrates how the International Chamber of Commerce (ICC) managed to establish itself as a key partner for the UN while articulating a neoliberal vision that emphasized the market mechanism and business self-regulation as sources of environmental governance. The article provides empirical evidence that the ICC institutionalized business self-regulation in environmental governance and contributed to the very definition of the concept of sustainable development as we know it today.

This article examines the severity of the 2008 arbitrage crash in the convertible bond market by estimating how expensive it would have been to liquidate portfolio securities immediately. We consider whether funds actually demanded immediate liquidity or were able to delay trades. Our results indicate that the cost of immediacy was high, but that convertible bond sellers could largely avoid selling at fire sale prices. These results can be explained by dealers recognizing when trades are liquidity-motivated rather than information-based and by a shift to riskless principal trading, allowing dealers to avoid taking bonds into inventory.

Existing research examining the curvilinear relationship between network centrality and performance tends to focus on the information recipients’ perspective. Focusing on the information providers’ perspective, our study draws upon social exchange theory to demonstrate that the advice-giving centrality-performance relationship for information providers has an inverse U-shape due to decreasing benefits and increasing costs of maintaining more advice-giving ties. We further show that increasing advice-giving centrality increases the likelihood that individuals would become a hindrance to coworkers, as they become bottlenecks impeding efficient workflow. However, our study demonstrates that political skill enables them to overcome the interpersonal challenges associated with high advice-giving centrality. Specifically, individuals with high political skills can better convert advice-giving ties to resources that could assist their cooperation with coworkers, reducing the hindrance they impose. Overall, we provide insights into the trade-off between the benefits and costs of advice-giving ties from a social exchange perspective and examine political skill as an important mitigator of the downsides of large advice-giving networks – a key area that has been hitherto largely unexplored.

In this research, we explore how supply networks and board interlocks – as distinct, yet parallel interorganizational networks – jointly influence firms’ entry into new technology domains and exit from old technology domains. Drawing from the perspectives of social networks and organizational learning we highlight the relevance of the interdependency between these networks for a firm's technological entry and exit decisions. We argue that a firm that maintains a large number of supplier ties is more likely to enter new technology domains and exit from old technology domains instead. We further find empirical evidence that the degree centrality of a firm in its board interlock network strengthens these effects. Our theoretical arguments are supported through stochastic actor-based modeling analysis for the longitudinal and multilevel networks of 86 firms active in the Chinese automotive during 2011–2015. These findings inform the literature on interorganizational network dynamics as we insert relational pluralism to examine the complexities of organizational relationships as antecedents to a firms’ technological entry and exit. Finally, we imagine the implications of our analysis for management as they shed light on how multiple interorganizational relationships affect firms’ decisions on new technology entry and old technology exit.

Using three exogenous shocks to ex ante litigation risk, including federal judge ideology and two influential judicial precedents, we find that lower shareholder litigation risk reduces a firm’s propensity to delist from the U.S. stock markets. The effect is at least partially driven by indirect costs of litigation and that being a private firm can significantly reduce the threat of litigation. Overall, the results suggest that mitigating excessive litigation costs for public firms is crucial to ensure the continued vibrancy of the U.S. stock market.

How do corporate political ties impact firm performance in a transition economy? This topic has attracted wide attention in the strategy field. Accordingly, our study replicates a highly influential study, ‘Managerial ties and firm performance in a transition economy: The nature of a micro-macro link’ (Peng & Luo, 2000). The original study found that managerial political ties greatly improve organizational performance, and that this ‘micro-macro’ link varies across ownership types, business sectors, firm sizes, and industry growth rates. This replication study offers a hierarchical view of political ties by extending it from the individual to the organizational level and explores the complex link between the two levels of corporate political ties and firm performance. The results of a staged quasi-replication exercise show some similarities with the original study in the mechanism of corporate political ties on firm performance but, more importantly, reveal some key differences in the effect size and contingent effects. Furthermore, an extended test shows that corporate political ties are multilevel, and different levels of political ties vary in their mechanisms and effects on firm performance. The findings reveal temporal and contextual sensitivities of political ties studies in transition economies.

In this article, we take a global perspective to assess the impact of the exogenous COVID pandemic shock on business confidence. Through a quantitative analysis of 31 advanced and 12 emerging economies over the period from January 2018 to December 2020, we provide a novel investigation of a unique worldwide event, in contrast to the most frequent exogenous shocks, which typically have a more limited local or regional scope. We proxy business expectations with the business confidence indicator or BCI. First, we find that the containment measures for the COVID pandemic have negatively affected business confidence, with the compulsory policies having a greater negative effect on BCI than the voluntary ones. Second, we find positive spillover effects on the local BCIs from the containment measures implemented in neighboring countries. This suggests that business people are not against compulsory measures per se, but rather that they are less inclined to assume the costs of these. Third, we find that while the severity of containment measures has been greater in emerging countries, the negative impact on BCI of these containment measures has been larger in advanced economies.

Private equity funds implement various management and governance practices in firms they endorse, signaling higher quality of sponsored IPOs (Initial Public Offer). However, the participation of such PE funds comes at a cost for newcomer firms, as they may lose both autonomy and future post-IPO earnings. If they do not choose to signal quality through PE funds, the IPO literature points to the validity of other mechanisms, such as the experience and centrality of the board of directors. We theorize and test the effect of the tradeoff between private equity sponsorship and board centrality and experience on IPO performance. We analyzed the effects of signaling on long-term performance through the one-year cumulative abnormal return in Brazilian IPOs issued between 2004 and 2013. Our results indicate that private equity sponsorship is the most effective signal, completely overtaking the relevance of board centrality and experience to explain IPO performance. However, these latter board characteristics significantly affected the performance of non-private equity-backed IPOs. Between PE-backed companies, there is a reverse effect of the board centrality on the IPO's performance and a substitution effect of the board's previous experience with IPO processes.