Wei Shi

Research SummaryThis study examines the impact of foreign takeover protection on firms' corporate social responsibility (CSR) following the enactment of investment screening laws worldwide. Drawing on research on intertemporal trade-offs in managerial investment decisions, we argue that foreign takeover protection encourages protected firms to improve CSR by expanding managerial investment horizons and increasing the motivation for long-term investments. This effect is stronger in countries with long-term-oriented national cultures and among firms with higher levels of long-term institutional ownership. Using a sample of 5353 firms across 72 countries from 2001 to 2018, we find support for our arguments. Our study provides a behavioral account of foreign takeover protection's impact and highlights its positive implications for firm CSR.Managerial SummaryManagers are often under pressure to boost their firm's share price or run the risk of a foreign takeover. In this study, we argue that when countries enact foreign takeover protection through investment screening laws, this short-term performance pressure on domestic managers can be alleviated, enabling them to adopt a longer investment horizon. As a result, managers may become more motivated to invest in corporate social responsibility (CSR). We find empirical support for this argument. Furthermore, we show that a country's temporal cultural orientation and the investment horizons of a firm's owners further shape managers' motivation to engage in CSR.

Neo-institutional theory predicts that when adaptations to institutional pressures contradict a firm's efficiency needs, decoupling may arise. This study systematically investigates the drivers of heterogeneous decoupling in the context of international expansion. We propose that specific configurations - awareness of peers' decoupling, a strong motivation to obtain legitimacy through ceremonial conformity, and a weak capability to couple stated policies with practices - will lead to a high occurrence of decoupling. An empirical analysis of 8918 annual reports of 1974 Chinese-listed companies from the period 2013-17 suggests that the 'Go Global' initiative undertaken by the Chinese government has created high institutional pressure for all Chinese firms to expand globally. However, when the implementation of that move is perceived as too costly or risky for a firm, the firm is likely to choose to decouple its international expansion from its stated commitment to expand under certain configurations of awareness, motivation, and capability conditions. Our theory and empirical findings extend decoupling research and international business research by providing a holistic configurational analysis of firms' decoupling in an international expansion context.

Firms are increasingly interested in investing in artificial intelligence (AI), but what drives this trend? Our research reveals that media coverage of labor issues plays a significant role. When firms face public scrutiny through media exposure of labor issues, the reputational pressure pushes them to act. AI emerges as a strategic response, offering powerful capabilities to automate and augment human tasks. Analyzing data from U.S. public firms, we found that labor issue-related media coverage significantly increases AI investments, particularly among firms with the motivation and resources to invest in AI, whereas other IT or general investments are not similarly influenced, suggesting that firms view AI as uniquely suitable to address labor challenges. Interestingly, firms appear to prioritize AI for its automation capabilities, particularly targeting high-skilled labor, contrasting with traditional automation investments focused on lower-skilled tasks. This shift signals a transformation in how companies are reimaging the future of work. For business leaders, our findings also reveal that AI investment not only reduces future media scrutiny but also decreases labor reliance. Policymakers, however, must consider the broader implications, particularly the impact of AI investment on labor markets and the need for proactive workforce planning. Despite growing interest in how artificial intelligence (AI) affects the labor market, there is limited understanding of the labor-related factors driving firms to invest in AI. Drawing on the institutional perspective of media coverage, we propose that media exposure of labor issues exerts reputational pressure on firms, heightening their awareness of the necessity and urgency to address these problems. Consequently, firms are driven to invest in AI as a potential solution, given its capabilities in both augmenting and automating human tasks. Analyzing a unique data set that combines various archival data sources from U.S. public firms, we find support for this argument. Our analyses reveal that when firms have stronger motivation and capability to invest in AI, this effect becomes more pronounced. In contrast, firms are not inclined to engage in non-AI information technology (IT) or general non-AI investments in response to media exposure of labor issues, indicating their preference for AI investment to address labor challenges. Our exploration of plausible mechanisms suggests a distinct automation motive underlying firms’ AI investment, particularly geared toward high-skilled labor, in contrast to traditional automation investment, which primarily targets non-high-skilled labor. Further, our findings suggest that AI investment reduces future media exposure of labor issues and leads to less labor use, indicating that firms likely engage in AI investment for automation rather than augmentation purposes. This study contributes to AI research in management information systems by identifying AI investment as a strategic response to media exposure of labor issues. Our findings also have meaningful implications for managers and policymakers regarding firm AI investment. History: Sam Ransbotham, Senior Editor; Chad Ho, Associate Editor. Supplemental Material: The online appendix is available at https://doi.org/10.1287/isre.2022.0402 .

Institutional investors of different types have been shown to exert differential influences on firm strategic decisions individually. Yet, research has largely overlooked how institutional investors of different types can collectively affect firm decision-making. This study investigates the legal type diversity of institutional ownership (hereafter "investor type diversity") and its influence on corporate acquisitions. Because institutional investors with different legal types have distinct interests and objectives, investor type diversity can create principal-principal conflicts and prevent institutional investors from undertaking coordinated actions, weakening their collective power and ability to play a governance role. We posit that investor type diversity will be positively associated with CEOs' opportunistic acquisitions because the dilution of shareholder governance, resulting from investor type diversity, grants CEOs the leeway to champion acquisitions aligned more with their personal gains. We also argue that the positive influence of investor type diversity on opportunistic acquisitions will be stronger when CEOs possess a higher level of general managerial ability. However, acquisitions pursued in the presence of higher investor type diversity will be associated with poorer performance. Findings from a sample of 2,106 U.S. firms lend support to our arguments. This study advances strategy research by highlighting the importance of investor type diversity in shaping shareholder governance effectiveness.

Firms strategically establish political connections in the hopes of obtaining access to resources and opportunities controlled by the state. However, little is known about benefits that may accrue to firms from ties with politician shareholders. We explore potential spillover benefits of such ties in the context of financially motivated shareholder activism ("financial activism"). Specifically, we examine whether financial activists are deterred from targeting firms owned by Democratic politicians, who tend to adopt a more interventionist and stakeholder-oriented stance toward economic regulation than Republi-cans. Based upon an analysis of S&P 1500 firms over a 15-year period, we find that the number of Democratic politician shareholders is negatively associated with a firm's likeli-hood of being targeted by a financial activist. This relationship is stronger when Demo-cratic politician shareholders are more publicly prominent and when firms have more Democratic-leaning boards. Our study shows that the benefits firms derive from politician shareholders spill over beyond the business-government interface into the domain of cor-porate governance.

Existing research has suggested seemingly contradictory conclusions about the efficacy of impression management (IM) tactics. While a growing body of research highlights the potential benefits of IM, other studies imply that the effectiveness of these tactics in shaping stakeholder perceptions may be limited. Our study advances theory on IM by drawing upon expectancy violations theory to develop a contingency theory of IM efficacy. Concentrating on CEOs' positive portrayal of merger and acquisition (M&A) activity, we hypothesize that the effectiveness of this IM tactic hinges on factors related to the communicator (CEO duality), context (acquisition foreshadowing), and audience (investor type). Our results indicate that investor reactions to CEOs' positive portrayal are more favourable when M&A activity has been foreshadowed or when the institutional investor is transient. Conversely, reactions are less favourable for CEOs also serving as board chair. Our findings provide novel insights into IM theory, suggesting that potential expectancy violations associated with IM tactics could be shaped by the attributes of communicator, context, and audience.

Research SummaryWe draw attention to a rapidly emerging phenomenon-the appointment of activist-nominated directors to boards-that could have consequences for stakeholders. Although appointing an activist director tends to improve firm value for shareholders, we uncover a hidden externality wherein it also yields increased reports of stakeholder harm. We introduce activist directors to the management literature and examine an array of considerations with a view toward launching a stream of literature that explores nuanced forms of activist directorships, intemporal trade-offs in their influence, and the breadth and depth of their behavioral consequences for firms.Managerial SummaryHistorically, activist shareholders have primarily tried to affect managerial decision-making from their vantage point as outsiders. Today, activist investors are going further by demanding their own seats at the boardroom table. We examine the consequences of these activist directorships, finding that they are associated with increased reports of stakeholder harm. Supplemental analyses show that, while activist directors bring immediate benefits to shareholders, they appear to impose a managerial myopia wherein executives become less inclined to make long-term investments. Moreover, the adverse effects on stakeholder harm are most profound when a director is a delegate, meaning they work directly for an activist investor, as opposed to a trustee, who is appointed by, but does not work for, an activist investor.

This study extends competitive dynamics research by theorizing how and when information about a firm may be shaped by competitive forces operating through information intermediaries. Arguing that ownership bestows investors with influence over information intermediaries from which investors can profit, we suggest that firms receive less favorable ratings from rating agencies in which their rivals' investors have greater ownership. Building on research in this vein, we develop a dynamic theory of informationbased competition that suggests the rating discounts a firm receives from rating agencies owned by its rivals' investors are shaped by the reputational threats and opportunities faced by the firm and its rivals, which motivate and enable investors to use information intermediaries to intervene in competitive dynamics. Analyses of environmental, social, and governance (ESG) ratings of 2,787 firms by a leading ESG rating agency support these ideas. Our study introduces the concept of information-based competition and illuminates the conditions under which investors engage in information-based competitive attacks.