In this paper, I draw parallels between the literatures on the effects of law on the financial development of countries and on the effects of accounting standards on financial reporting outcomes. My central thesis is that these literatures are complementary in terms of what they have to say about understanding the effects of law, regulations and accounting standards on economic and financial reporting outcomes. Moreover, both literatures suggest that U.S. securities laws and financial reporting standards have taken a more regulatory direction over time. I then take these themes and draw implications for the effects of the adoption of International Financial Reporting Standards (IFRS) around the world at the time of adoption and over time.

The dynamic relationship between hypernorms and microsocial contracts can explain novel,evolutionary changes in economic life. The conceptual machinery of Integrative Social Contracts Theory (ISCT) can be expanded in order to understand dynamic moments in the evolution in economic life such as the economic crisis of 2008–2009. When a transition in the ethical interpretation of economic events occurs over time, it can be understood as a transition from the opaqueness of hypernorms to the relative clarity of microsocial contracts. This phenomenon deserves more study than it has received, and entails, at a minimum, the application of an enhanced, more dynamic interpretation of ISCT.

In a series of articles, Thomas Dunfee defended the view that managers are permitted and at times, required, to utilize corporate resources to alleviate human misery even if this is at the expense of shareholder interests. In this article, I summarize Dunfee’s defense of this view, raise some questions about his account and propose ways in which to answer these questions. The aim of this article is to highlight one of Dunfee’s contributions to the debate about corporate governance and corporate responsibility

Social status concerns influence investors' decisions by driving a wedge in attitudes toward aggregate and idiosyncratic risks. I model such concerns by emphasizing the desire to "get ahead of the Joneses," which implies that aversion to idiosyncratic risk is lower than aversion to aggregate risk. The model predicts that investors hold concentrated portfolios in equilibrium, which helps rationalize the small premium for undiversified entrepreneurial risk. In the model, status concerns are more important for wealthier households. Consequently, these households own a disproportionate share of risky assets, particularly private equity, and experience greater volatility of consumption, consistent with empirical evidence.

At the UN, important projects laying down transnational corporations’ (TNCs) human rights responsibilities have been launched without ever clarifying the relevant theoretical foundations. One of the consequences is that the human rights principles in projects like the 2000 UN Global Compact and the 2003 Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights can be understood in different ways, which should not cause surprise given that their authors come from diverse backgrounds, including economics and public policy. An examination of these projects and the views of their authors reveals that, although they are superficially linked to international human rights law, they go well beyond it and attempt to deal with corporate social responsibility issues in ways that elude neat classification as fitting neatly in either legal or non-legal categories. Too little attention has been paid to how in the course of developing these projects the legal and ethical dimensions have become entwined and how lines have gotten blurred. Meanwhile, there has been recognition that these UN projects have emerged simply as ad hoc responses to practical concerns about the sustainability of globalization. The lack of any foundational theory or normative framework should be addressed; it is time to bring together specialists from different fields concerned with the human rights responsibilities of corporations to see if it is possible to define a coherent overarching theory for these UN projects.

The authors propose that in mission-driven organizations, prosocially motivated employees are more likely to perform effectively when trust cues enhance their perceptions of task significance. The authors develop and test a model linking prosocial motivation, trust cues, task significance, and performance across 3 studies of fundraisers using 3 different objective performance measures. In Study 1, perceiving managers as trustworthy strengthened the relationship between employees’ prosocial motivation and performance, measured in terms of calls made. This moderated relationship was mediated by employees’ perceptions of task significance. Study 2 replicated the interaction of manager trustworthiness and prosocial motivation in predicting a new measure of performance: dollars raised. It also revealed 3-way interactions between prosocial motivation, manager trustworthiness, and dispositional trust propensity,such that high trust propensity compensated for low manager trustworthiness to strengthen the association between employees’ prosocial motivation and performance. Study 3 replicated all of the previous mediation and moderation findings in predicting initiative taken by professional fundraisers. Implications for work motivation, work design, and trust in organizations are discussed.

The NBA provides an intriguing place to assess discrimination: referees and players are involved in repeated interactions in a high-pressure setting, with referees making split-second decisions that might allow implicit racial biases to become evident. We find that more personal fouls are awarded against players when they are officiated by an opposite-race officiating crew than when they are officiated by an own-race refereeing

Research linking marketing to financial performance has predominantly focused on how marketing assets and actions add value. We argue that it is equally important to understand how marketing decisions can destroy firm value. Prior research has indicated that negative events vary greatly in their indirect costs to the firm. Based on established theory and in-depth interviews with practitioners, we identify a set of factors that can explain the heterogeneity in the magnitude of indirect costs associated with negative marketing-related events. Specifically, we address how shareholder value is impacted by the regulatory exposure of deceptive marketing, which carries no direct cost to the firm. Using an event study, our analysis shows that incidents of exposed deceptive marketing are associated with significant negative abnormal returns amounting to a drop of 1%, which translates into an $86M wealth loss for the median-sized firm in our sample. In explaining the variation in magnitude of the impact between events, we find that event characteristics are generally more significant than firm and brand characteristics. When deception is highly egregious or directed at vulnerable populations, firm value is more negatively impacted than when the potential to mislead and harm is not readily verifiable. Furthermore, when the cited product has substantial brand market share, the levels of egregiousness and target audience explain substantially more of the variation in event impact than when brand market share is low. The results are robust to alternative stock portfolio-based measures of abnormal returns, model specification, heteroskedasticity, and examination of risk. Our framework and analysis have implications for Wall Street executives, Main Street managers, academic researchers, and public policy.

Advertisements for charities often display photographs of the people they help to evoke the kind of sympathy that engenders giving. This article examines how the expression of emotion on a victim’s face affects both sympathy and giving. Building on theories of emotional contagion and sympathy, the authors propose that (1) people “catch” the emotions displayed on a victim’s face and (2) they are particularly sympathetic and likely to donate when they see sad expressions versus happy or neutral expressions. Consistent with emotional contagion, participants felt sadder when viewing a sad-faced victim, and their own sadness mediated the effect of emotion expression on sympathy. Contagion effects are automatic and noninferential, but they are diminished by deliberative thought. The authors discuss the implications of using subtle emotional expressions on charitable and other marketing appeals.