• · Banerjee Shantanu, Swarnodeep Homroy and Aurelie Slechten: “CSR as investment or agency-cost? Evidence from Anti-Dumping penalties”
    • This paper investigates the role of stakeholder preference on corporate social responsibility. We find that Indian firms increase CSR expenses when the trade restrictions are initiated against competing Chinese exports from countries with high stakeholder preference for corporate philanthropy but not when these shocks open up other export markets. Capital investments and R&D of Indian. Firms increase due to the same shocks, irrespective of their country of origin. Finally, CSR has a bigger impact on . Firm value during new opportunities in the more charitable export markets. These results hold for . Firms with different ownership structures, and for firms producing intermediate and final goods. Collectively, our results provide empirical evidence of investment motives for CSR, transmitted via international trade.
  • Banerjee, Shantanu, Xin Chang, Kang Kang Fu, Li Tao and George Wong: “Environmental risk and buyer-supplier relationships”
    • We provide empirical evidence on the adverse effects of supplier firms’ environmental risk exposures on their relationships with principal customers. We document that supplier firms with high environmental risk are less likely to have principal customers. Moreover, from the principal customers’ perspective, a higher level of environmental risk lowers a supplier firm’s probability of being selected relative to its industry peers by its potential customer. Conditional on an ongoing relationship with principal customers, supplier firms with high environmental risk have lower sales to principal customers and shorter relationship durations. These results are more pronounced when customers’ environmental risk is lower. Collectively, our findings suggest that improving the trading relationship with principal customers is an important channel through which firms can benefit economically from being environmentally responsible.
  • Banerjee, Shantanu, Sudipto Dasgupta and Rui Shi: “Ripple effects of Corporate Fraud: Evidence from Innovation in the Supply Chain”
    • We investigate how suppliers adjust their innovation activities when their customers are revealed to be involved in corporate fraud. We identify customer-supplier relationship between US firms using the FactSet Revere relationship database and the Compustat Customer Segment file. We find that suppliers reduce R&D expenses after financial misconduct of their customers become known. This is reflected in the difference in the number of patents issued by the suppliers of fraudulent firms in comparison to peer firms that are not affected in a similar manner. Interestingly, we also find that affected suppliers increase the proportion of exploratory patents significantly more than their peers, indicating an effort to diversify their innovation activity. When suppliers have more than one customer, they increase their technological proximity to the unaffected customers while reducing that to the fraudulent ones. Collectively, our results highlight the importance of trust in stakeholder relationships.
  • Banerjee, Shantanu and Arijit Mukherjee: “Protecting Consumers through Patent Protection: The Implications of Merger”
    • We challenge the common wisdom that patent protection in the South always makes Southern consumers worse off by reducing product market competition unless it increases innovation significantly. We show that the absence of patent protection may affect the consumers in the South adversely by encouraging cross-border horizontal merger, thus increasing product market concentration compared to the situation with patent protection. Hence, we provide a new rationale for patent protection, which has been overlooked in the literature, by showing that, even if we ignore the innovation inducing effect of patent protection, patent protection may have a positive impact on the consumers by creating higher product market competition.
  • Banerjee, Shantanu, Sudipto Dasgupta, Rui Shi and Jiali Yan:“Predatory Advertising, Financial Fraud, and Leverage”
    • We examine how an industry leader’s competitors respond when financial fraud by the leader is publicly revealed. We document evidence of predatory advertising – close competitors of the leader step up advertisement spending relative to control firms. Although we do not directly observe product prices, we find that profit margins drop, consistent with predatory pricing. These effects are stronger when the fraud firm has higher leverage, and when the average leverage of rival firms is lower. The effects appear mainly in industries that produce customized products and consumer switching costs are high. Increasing advertising expenditure appears to be a more potent predatory strategy in industries that experience new customer growth, whereas cutting prices appears more potent in industries with stagnant customer base.

Work in progress:

  • “Do board members influence Financing decisions of firms?” (with Sudipto Dasgupta and Oksana Pryshchepa.)
  • “External monitoring, managerial entrenchment and corporate cash holdings” (with Panagiotis Couzoff and Grzegorz Pawlina).