The impact of corporate social performance on financial risk and utility: a longitudinal analysis

This study focuses on the wealth-protective effects of socially responsible firm behavior by examining the association between corporate social performance (CSP) and financial risk for an extensive panel data sample of S&P 500 companies between the years 1992 and 2009. In addition, the link between CSP and investor utility is investigated. The main findings are that corporate social responsibility is negatively but weakly related to systematic firm risk and that corporate social irresponsibility is positively and strongly related to financial risk. The fact that both conventional and downside risk measures lead to the same conclusions adds convergent validity to the analysis. However, the risk-return trade-off appears to be such that no clear utility gain or loss can be realized by investing in firms characterized by different levels of social and environmental performance. Overall volatility conditions of the financial markets are shown to play a moderating role in the nature and strength of the CSP-risk relationship.

Risk under performance-based contracting in the UK construction sector

As a method of procuring the services of the built environment, performance-based contracting (PBC) seeks to link the building supplier to longer term commitments than has traditionally been the case in the construction sector. By rewarding the building producer according to the way that building or structure delivers the users' requirements, rather than according to a list of assembled parts, a number of additional risks are taken by contractors, including fitness for purpose, costs and briefing. The extent to which contractors recognize these risks and their methods of dealing with them vary considerably and are influenced by their attitudes towards risk. As the risks associated with PBC are seen as large, uninsurable, and vulnerable to changing client requirements, the majority of respondents would reject the use of PBC as a method of contracting. Nevertheless, PBC may be used under particular conditions, where rewards are deemed sufficient to compensate for the additional risk to the contractor of undertaking work on the basis of a stream of payments paid over the life of a structure depending on the satisfactory performance of the building or as part of a private finance initiative.

Expressing medicine side effects: assessing the effectiveness of absolute risk, relative risk, and number needed to harm, and the provision of baseline risk information

Objective: To assess the effectiveness of absolute risk, relative risk, and number needed to harm formats for medicine side effects, with and without the provision of baseline risk information. Methods: A two factor, risk increase format (relative, absolute and NNH) x baseline (present/absent) between participants design was used. A sample of 268 women was given a scenario about increase in side effect risk with third generation oral contraceptives, and were required to answer written questions to assess their understanding, satisfaction, and likelihood of continuing to take the drug. Results: Provision of baseline information significantly improved risk estimates and increased satisfaction, although the estimates were still considerably higher than the actual risk. No differences between presentation formats were observed when baseline information was presented. Without baseline information, absolute risk led to the most accurate performance. Conclusion: The findings support the importance of informing people about baseline level of risk when describing risk increases. In contrast, they offer no support for using number needed to harm. Practice implications: Health professionals should provide baseline risk information when presenting information about risk increases or decreases. More research is needed before numbers needed to harm (or treat) should be given to members of the general populations. (c) 2005 Elsevier Ireland Ltd. All rights reserved.

The tendering process and performance analysis of a public building project in Ghana

A case study on the tendering process and cost/time performance of a public building project in Ghana is conducted. Competitive bids submitted by five contractors for the project, in which contractors were required to prepare their own quantities, were analyzed to compare differences in their pricing levels and risk/requirement perceptions. Queries sent to the consultants at the tender stage were also analyzed to identify the significant areas of concern to contractors in relation to the tender documentation. The five bidding prices were significantly different. The queries submitted for clarifications were significantly different, although a few were similar. Using a before-and-after experiment, the expected cost/time estimate at the start of the project was compared to the actual cost/time values, i.e. what happened in the actual construction phase. The analysis showed that the project exceeded its expected cost by 18% and its planned time by 210%. Variations and inadequate design were the major reasons. Following an exploration of these issues, an alternative tendering mechanism is recommended to clients. A shift away from the conventional approach of awarding work based on price, and serious consideration of alternative procurement routes can help clients in Ghana obtain better value for money on their projects.

How often does direct real estate increase the risk-adjusted performance of the US mixed-asset portfolio?

The “case for real estate” in the mixed-asset portfolio is a topic of continuing interest to practitioners and academics. The argument is typically made by comparing efficient frontiers of portfolio with real estate to those that exclude real estate. However, most investors will have held inefficient portfolios. Thus, when analysing the real estate’s place in the mixed-asset portfolio it seems illogical to do so by comparing the difference in risk-adjusted performance between efficient portfolios, which few if any investor would have held. The approach adopted here, therefore, is to compare the risk-adjusted performance of a number of mixed-asset portfolios without real estate (which may or not be efficient) with a very large number of mixed-asset portfolios that include real estate (which again may or may not be efficient), to see the proportion of the time when there is an increase in risk-adjusted performance, significant or otherwise using appraisal-based and de-smoothed annual data from 1952-2003. So to the question how often does the addition of private real estate lead to increases the risk-adjusted performance compared with mixed-asset portfolios without real estate the answer is almost all the time. However, significant increases are harder to find. Additionally, a significant increase in risk-adjusted performance can come from either reductions in portfolio risk or increases in return depending on the investors’ initial portfolio structure. In other words, simply adding real estate to a mixed-asset portfolio is not enough to ensure significant increases in performance as the results are dependent on the percentage added and the proper reallocation of the initial portfolio mix in the expanded portfolio.

Towards an integrated script for risk and value management: insights from the dramaturgical metaphor

It is contended that the current conceptual distinction between risk management and value management is unsustainable. The origins of the two traditions are reviewed and critiqued from a postmodernist perspective. It is concluded that they differ primarily in terms of their rhetoric, rather than their substantive content. Insights into the current practice of risk and value management are provided by considering their enactment in terms of ‘performance’. The scripts for such performances are seen to be provided by the accepted methodologies which determine the language to be used and the roles to be acted out. A coherent integrated script for risk and value management can be provided by the methodology known as strategic choice, which replaces the language of ‘risk’ and ‘value’ with that of ‘uncertainty’. The benefits of adopting this alternative script are illustrated through six case studies.

Does the regional nature of multinationals affect the multinationality and performance relationship?

The traditional independent variable in the multinationality and performance literature is the ratio of foreign (F) to total (T) sales, (F/T). This can now be supplemented by a new regional variable, the ratio of regional (R) to total (T) sales, i.e. (R/T). Data are presented on both (F/T) and (R/T) for both sales and assets for a 5-year period, 2001–2005. New tests are reported on (R/T) as it affects a financial measure of performance, the Tobin's Q. Implications are drawn for future research on the S-curve relationship between multinationality and performance in the light of this regional phenomenon.

Risk and price in the bidding process of contractors

Formal and analytical risk models prescribe how risk should be incorporated in construction bids. However, the actual process of how contractors and their clients negotiate and agree on price is complex, and not clearly articulated in the literature. Using participant observation, the entire tender process was shadowed in two leading UK construction firms. This was compared to propositions in analytical models and significant differences were found. 670 hours of work observed in both firms revealed three stages of the bidding process. Bidding activities were categorized and their extent estimated as deskwork (32%), calculations (19%), meetings (14%), documents (13%), off-days (11%), conversations (7%), correspondence (3%) and travel (1%). Risk allowances of 1-2% were priced in some bids and three tiers of risk apportionment in bids were identified. However, priced risks may sometimes be excluded from the final bidding price to enhance competitiveness. Thus, although risk apportionment affects a contractor’s pricing strategy, other complex, microeconomic factors also affect price. Instead of pricing in contingencies, risk was priced mostly through contractual rather than price mechanisms, to reflect commercial imperatives. The findings explain why some assumptions underpinning analytical models may not be sustainable in practice and why what actually happens in practice is important for those who seek to model the pricing of construction bids.

Consumer trust, risk and food safety: a review

Consumers' attitudes to trust and risk are key issues in food safety research and attention needs to be focused on clearly defining a framework for analysing consumer behaviour in these terms. In order to achieve this, a detailed review of the recent literature surrounding risk, trust and the relationship between the two must be conducted. This paper aims to collate the current social sciences literature in the fields of food safety, trust and risk. It provides an insight into the economic and other modelling procedures available to measure consumers' attitudes to risk and trust in food safety and specifically notes the need for future research to concentrate on examining risk and trust as inter-related variables rather than two distinct, mutually exclusive concepts. A framework is proposed which it is hoped will assist in devising more effective research to support risk communication to consumers.

The air distribution index as an indicator for energy consumption and performance of ventilation systems

This paper deals with the energy consumption and the evaluation of the performance of air supply systems for a ventilated room involving high- and low-level supplies. The energy performance assessment is based on the airflow rate, which is related to the fan power consumption by achieving the same environmental quality performance for each case. Four different ventilation systems are considered: wall displacement ventilation, confluent jets ventilation, impinging jet ventilation and a high level mixing ventilation system. The ventilation performance of these systems will be examined by means of achieving the same Air Distribution Index (ADI) for different cases. The widely used high-level supplies require much more fan power than those for low-level supplies for achieving the same value of ADI. In addition, the supply velocity, hence the supply dynamic pressure, for a high-level supply is much larger than for low-level supplies. This further increases the power consumption for high-level supply systems. The paper considers these factors and attempts to provide some guidelines on the difference in the energy consumption associated with high and low level air supply systems. This will be useful information for designers and to the authors' knowledge there is a lack of information available in the literature on this area of room air distribution. The energy performance of the above-mentioned ventilation systems has been evaluated on the basis of the fan power consumed which is related to the airflow rate required to provide equivalent indoor environment. The Air Distribution Index (ADI) is used to evaluate the indoor environment produced in the room by the ventilation strategy being used. The results reveal that mixing ventilation requires the highest fan power and the confluent jets ventilation needs the lowest fan power in order to achieve nearly the same value of ADI.

ApoE genotype, cardiovascular risk and responsiveness to dietary fat manipulation

Cardiovascular risk is determined by the complex interactions between genetic and environmental factors. The apoE genotype represents the most-widely-studied single nucleotide polymorphism in relation to CVD risk, with >3600 publications cited in PubMed. Although originally described as a mediator of lipoprotein metabolism, the lipoprotein-independent functions of apoE are being increasingly recognised, with limited data available on the potential impact of genotype on these metabolic processes. Furthermore, although meta-analyses suggest that apoE4 carriers may have a 40-50% increased CVD risk, the associations reported in individual studies are highly heterogeneous and it is recognised that environmental factors such as smoking status and dietary fat composition influence genotype-phenotype associations. However, information is often derived from observational studies or small intervention trials in which retrospective genotyping of the cohort results in small group sizes in the rarer E2 and E4 subgroups. Either larger well-standardised intervention trials or smaller trials with prospective recruitment according to apoE genotype are needed to fully establish the impact of diet on genotype-CVD associations and to establish the potential of dietary strategies such as reduced total fat, saturated fat, or increased antioxidant intakes to counteract the increased CVD burden in apoE4 carriers.

The effect of postnatal depression on mother-infant interaction, infant response to the still-face perturbation, and performance on an instrumental learning task

A representative community sample of primiparous depressed women and a nondepressed control group were assessed while in interaction with their infants at 2 months postpartum. At 3 months, infants were assessed on the Still-face perturbation of face to face interaction, and a subsample completed an Instrumental Learning paradigm. Compared to nondepressed women, depressed mothers' interactions were both less contingent and less affectively attuned to infant behavior. Postnatal depression did not adversely affect the infant's performance in either the Still-face perturbation or the Instrumental Learning assessment. Maternal responsiveness in interactions at 2 months predicted the infant's performance in the Instrumental Learning assessment but not in the Still-face perturbation. The implications of these findings for theories of infant cognitive and emotional development are discussed.