William P. Wan

Home Country Environments, Corporate Diversification Strategies, and Firm Performance

This study reexamines the relationships between corporate diversification strategies and firm performance and suggests that these relationships are related to home country environments. We examined...

Sentimental Drivers of Social Entrepreneurship: A Study of China's Guangcai (Glorious) Program

Social entrepreneurship plays an important role in local development in emerging economies, but scholars have paid little attention to this emerging phenomenon. Under the theory of moral sentiments, we posit that some entrepreneurs are altruistically motivated to promote a morally effective economic system by engaging in social entrepreneurial activities. Focusing on Chinas Guangcai (Glorious) Program, a social entrepreneurship program initiated by Chinas private entrepreneurs to combat poverty and contribute to regional development, we find that private entrepreneurs are motivated to participate in such programs if they have more past distressing experiences, including limited educational opportunities, unemployment experience, rural poverty experience, and startup location hardship. Their perceived social status further strengthens these relationships. Our study contributes to the social entrepreneurship literature by offering a moral sentiment perspective that explains why some entrepreneurs voluntarily join a social entrepreneurship program to mitigate poverty in society.

The Deterrence Effects of Vicarious Punishments on Corporate Financial Fraud

This study extends the research on corporate financial fraud by developing a new perspective on the deterrence effects of vicarious punishments premised on social learning theory. We posit that firms vicariously learn about punishments from their peers by picking up modeling cues, environmental cues, and social cues in the inhibitive learning process, thus being deterred from committing future fraudulence. Using a matched sample of 604 observations of Chinese listed firms between 2002 and 2008, our findings show that an observing firm is deterred from committing fraud if the peers in its industry are caught and punished. We further find that such deterrence effects are subject to how the observing firm evaluates the possibility of being caught and the likelihood it will be punished the same way if it violates similar prohibitions. In particular, inhibitive learning effects are positively moderated by punishments of prominent firms and model-observer similarity but negatively attenuated by the development of the legal system. Our study sheds light on the corporate fraud literature by illuminating the indirect, inhibitive learning process from vicarious punishments and identifying the conditions for differential learning/deterrence outcomes of the observing firms.

Alternative Governance and Corporate Financial Fraud in Transition Economies: Evidence From China:

How corporate governance mechanisms function in transition economies is a key topic for corporate governance researchers and policy makers. We propose that alternative governance mechanisms are in place to mitigate corporate fraudulent behaviors in the fluid state of transition economies where the establishment and enforcement of corporate governance legislation are presently insufficient. Drawing on the twin set of institutional logics—the institutional embeddedness logic and the institutional substitution logic—we posit that three salient types of prevailing alternative governance mechanisms (relational, administrative, and foreign governance) play important roles in transition economies because they are complementary to the institutional conditions at the time of the transition process. Conducting a bivariate probit analysis of a matched sample of corporate financial fraud cases in China, we find that strategic alliances, business group affiliation, nontradable state shares, local government ownership, use of foreign auditors, and foreign listing can deter corporate financial fraud, while foreign listing is also effective in detecting fraud. We also find that the deterrence effects of strategic alliances and business group affiliation become weaker as law development improves, while foreign listing and legal governance are completely substitutive. Our study provides a contextualized view of corporate governance that connects its effectiveness with institutionalization and the institutional state of a country. Our study also enriches our understanding of some unfamiliar forms of governance mechanisms that are in place and complementary to a country’s institutional conditions.

A Process Model of Shaming Sanctions on Corporate Fraudulence in Transition Economies

We examine how shaming sanctions mitigate corporate fraudulence by publicly listed firms in transition economies. We develop a process model exploring the interplay among institutions in transition economies, corporate fraud, and public shaming by focusing on the arbiter (stock exchange), the transmitters (media), the offender (fraud firm), and its social peers (business partners and other listed firms in the stock exchange). By outlining the shaming processes and outcomes, this paper sheds light on shaming sanctions in transition economies.