Session 189

Risk Management in Uncertain Environments

Track A

Date: Monday, October 12, 2009

 

Time: 17:15 – 18:30

Paper

Room: Meeting Room 13


Session Chair:
Lorraine Eden, Texas A&M University

Title: Trust Production in an Emerging Economy: Credit Rating and Non-Participation in China

Authors

  • Jiatao Li, Hong Kong University of Science and Technology
  • Weiping Liu, Shanghai University of Finance & Economics

Abstract: Although participation in credit rating has been widely recognized as a means for firms to establish credibility and has been widely adopted, some firms choose not to participate. This paper investigates firms’ nonconformity behavior in an emerging economy context. We argue that, notwithstanding most of the other firms’ participation, some firms choose to not to participate either because they have strong institutional endowments (e.g., state-owned firms and those with politically assigned CEOs in an emerging economy), or because they have strong resource endowments (e.g., human capital and slack resources). These endowments, as well as third-party certifications such as credit rating, provide complementary approaches for trust production in an emerging economy. The hypotheses are largely supported with survey data on 2,744 companies in China.

Title: Doing Harm by Doing Good: The Community Reinvestment Act and the U.S. Banking Crisis

Authors

  • Lorraine Eden, Texas A&M University
  • Stewart Miller, University of Texas-San Antonio
  • Joanna Tochman Campbell, University of Cincinnati

Abstract: The Community Reinvestment Act (CRA) encourages banks to make loans and investments, and provide services, to low and middle income households. Did this government regulation encourage excessively risky behavior by US banks that may have contributed to the current US banking crisis? When government regulations encourage firms to engage in activities that are socially desirable but are costly to the firms, can “doing good” end up “doing harm”?

Title: The Effect of Oil Price Volatility on Strategic Investment

Authors

  • Irene Henriques, York University
  • Perry Sadorsky, York University

Abstract: Energy security issues and global warming are two of the most pressing problems facing society and both of these issues are likely to increase oil prices and oil price volatility in the coming years. This paper explores the relationship between oil price volatility and strategic investment at the company level. This paper develops and estimates a model of a company’s strategic investment and shows how changes in oil price volatility can impact strategic investments decisions. The results should be useful to decision makers, investors, managers, policy makers and others who need to make strategic investment decisions in an uncertain world.

Title: The Evaluation of Competitive Strategy by Long-buyers and Short-sellers

Authors

  • Margaret Hughes-Morgan, Marquette University
  • Walter Ferrier, University of Kentucky

Abstract: This study examines how key characteristics of a firm's competitive strategy -- strategic volume, complexity, and heterogeneity -- are differentially perceived by two classes of stock market investors, long-buyers and short-sellers. Owing to their use of different decision making processes, these investors react to competitive strategy in different ways, as evidenced by higher or lower stock prices, and the degree of "short interest" in a firms stock -- a new performance variable in strategy research. We tested our hypotheses on a sample of pharmaceutical firms. Our findings suggest that stock price and short interest vary in response to the characteristics of competitive strategy.

All Sessions in Track A...

Mon: 12:45 – 14:00
Session 188: Market Pressure, Social Responsibility and Firm Performance
Mon: 15:45 – 17:00
Session 187: Market Conditions and Firm Internationalization
Mon: 17:15 – 18:30
Session 189: Risk Management in Uncertain Environments
Tue: 10:00 – 11:15
Session 190: Building up Firm Capabilities for Unstable Environments
Tue: 11:30 – 12:45
Session 191: The Role of Managers in Adapting to Uncertain Conditions
Wed: 10:00 – 11:15
Session 247: Managing Innovation in Uncertain Environments
Wed: 11:30 – 12:45
Session 246: Strategic Responses to Turbulent Environmental Conditions


Strategic Management Society

Washington DC