Group Affiliation

The primary objective of this study is to investigate whether stock price reactions in response to investment announcements made by firms listed on the Indonesian Stock Exchange (JSX) depend on 1) the nature of relation between transacting parties (Related Party Transaction (RPT) or Non-Related Party Transaction (Non-RPT)); and 2) the type of firms (part of group affiliation or not). This study constitutes an event study, i.e., to examine cumulative abnormal returns (CAR) surrounding the date of investment announcements. The study finds that the stock price reaction (as measured by CAR) for RPT is lower than that for Non-RPT. Therefore, the market perceives that RPT is subject to wealth expropriation by controlling shareholders to minority shareholders, and that this perception is eventually reflected in the relatively lower market reaction. Further, the study finds (albeit weak) that the stock market reaction for firms in group affiliations is lower than for those in non-group affiliations. Under the condition of inadequate supervision and ineffective law enforcement, firms in group affiliations can easily conduct expropriation without being concerned about being detected by the regulator.

Capability approach brings about a fundamental shift in thinking about development by powerfully arguing development as ‘freedom’ – freedom to choose valuable ‘functionings’ – rather than the functionings themselves. According to the capability approach development entails
expansion of the ‘capability space’. The paper argues that elementary aspect of the capability space is its “connectedness” both extensive and intensive. However, the capability approach is typically characterised by various notions which tend to sever the elementary connectedness of the capability space. The paper, therefore, attempts at highlighting the interactions and
interconnections among these notions and intends to demonstrate that these interactions and intersections, in fact, may become extremely vital in understanding ‘limits’ to capability.

enhancement.

Few studies examine how firms make strategic decisions over time. In this study, we test whether a firm undertakes corporate social responsibility (CSR) activities as a function of its life-cycle stage. Drawing on prior CSR research that finds ethical concerns and opportunistic behavior to be two key motivations that underpin CSR activities, we hypothesize that firms in their growth stage are positively associated with CSR, while firms in stage of decline are less likely to invest in CSR. The empirical findings of our study-derived by leveraging a sample of South Korean listed firms-are consistent with these predictions. We further find that in the growth stage, group-affiliated firms are more engaged in CSR than are unaffiliated firms. Given that affiliated firms can share the resources of other group-member firms, this evidence supports the slack resource hypothesis. Overall, our results indicate that firms have different CSR strategies, depending on their life-cycle stage.

reactions in response to investment announcements made by firms listedon the Indonesian Stock Exchange (JSX) depend on 1) the nature of relationbetween transacting parties (Related Party Transaction (RPT) or Non-Related Party Transaction (Non-RPT)); and 2) the type of firms (part ofgroup affiliation or not). This study constitutes an event study, i.e., toexamine cumulative abnormal returns (CAR) surrounding the date ofinvestment announcements. The study finds that the stock price reaction(as measured by CAR) for RPT is lower than that for Non-RPT. Therefore,the market perceives that RPT is subject to wealth expropriation bycontrolling shareholders to minority shareholders, and that this perceptionis eventually reflected in the relatively lower market reaction. Further, thestudy finds (albeit weak) that the stock market reaction for firms in groupaffiliations is lower than for those in non-group affiliations. Under thecondition of inadequate supervision and ineffective law enforcemen...

Capability approach brings about a fundamental shift in thinking about development by powerfully arguing development as ‘freedom’– freedom to choose valuable ‘functionings’– rather than the functionings themselves. According to the capability approach development entails expansion of the ‘capability space’. The paper argues that elementary aspect of the capability space is its “connectedness” both extensive and intensive. However, the capability approach is typically characterised by various notions which tend to sever the elementary connectedness of the capability space. The paper, therefore, attempts at highlighting the interactions and interconnections among these notions and intends to demonstrate that these interactions and intersections, in fact, may become extremely vital in understanding ‘limits’ to capability enhancement.