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Academics within CAIR undertake an extensive range of research projects which encompass all aspects of investment decision making.

Current Project

Sung Hwan Chai and Brian Nicholson, Alliance MBS; Dr George Salijeni, University of Aston

This project explores auditors' changing role in the context of data-driven technologies such as machine learning, data visualisation tools, and Artificial Intelligence, exploring how financial auditors are deploying these technologies and being influenced by them. In particular it is conducting a case study of UK audit firms by interviewing audit partners, directors, and managers in order to gather primary data on changes in their organisations, newly required skills, and training in the context of data-driven technologies.

In May 2023, researchers began a management Knowledge Transfer Partnership (mKTP) with nationwide accountants and business advisors Beever and Struthers to help drive the firm’s digital transformation.

The 30-month programme will specifically aim to develop, embed and exploit smart data driven technologies within the audit function. This will enable the business to increase the quality, productivity and capacity to deliver additional insight and value to clients.

Learn more about the mKTP's aims >>

Viet Dang, Ning Gao, Jonatan Pinkse, and Tung Nguyen, Alliance MBS

While the scientific evidence of climate change is overwhelming, much less is known about the link between climate risk and corporate finance. This project proposes an ambitious, interdisciplinary research programme in order to fill this void and tackles important questions around whether and how firms strategically respond to climate change. Through a series of studies the authors will examine the corporate sector’s behaviour around the world, with a focus on firms in the US, the UK, and the EU.

This project is funded by the Lord Alliance Strategic Investment Fund.

Eghbal Rahimikia, Ser-Huang Poon, Philip Jobi Vallavanthra Aliiance MBS; Quintin Lake, FiftyEight & Just Good Work, Long Tran; Jill Banga,The Re-Assurance Network (TRN).

ESG (Environment, Social, and governance) and sustainable finance have increasingly become the central focus of the investment community, and modern slavery is an important social aspect in ESG and has become the key compliance concern of many regulators and supply chains specialists. In particular, the 2015 UK Modern Slavery Act (MSA) makes it mandatory for all UK businesses which have global revenues exceeding £36m to produce an annual Modern Slavery Report.

This project co-headed by Professor Ser-Huang Poon examines the disclosure quality of UK Modern Slavery reports, expanding her previous pilot study to cover more than 13,000 reports by 8,500 businesses. This study uses an automated process which will manually score the reports by FTSE100 companies against benchmarks provided by the Business & Human Rights Resource Centre. The ultimate goal is to fully automate the entire MSA reports scoring process in real time, thereby making it a dynamic process.

Vlad-Andrei Porumb, Alliance MBS; Joel Bothello, Concordia University; Ioannis Ioannou, London Business School and Yasemin Zengin-Karaibrahimoglu, University of Groningen

Given the growing legitimacy of corporate social responsibility (CSR), many firms engage in symbolic communication to showcase CSR without undertaking commensurate substantive actions. This “CSR decoupling” can create a risk of perceived greenwashing, which, in turn, may negatively affect a firm’s performance. 

In this study, we explore an unexamined antecedent of decoupling: interfirm affiliation. Specifically, we use the structure of Business Groups (BGs) to investigate CSR decoupling across rather than within firms. We find that apex firms within a group are more likely to engage in CSR decoupling compared with non-apex firms and, importantly, are partially shielded from greenwashing perceptions by the market. 

This research is significant as it sheds light on how corporate structures within BGs influence CSR practices and perceptions, contributing to the broader understanding of CSR decoupling, greenwashing, and the role of BGs.

Our research contributes to the literatures on decoupling, perceived greenwashing, and the role of BGs and their CSR practices.

In 2023 this paper was published by SSRN (Social Science Research Network). View the paper >>

Paolo Quattrone and  Vlad Porumb, Alliance MBS; Yasemin Zengin-Karaibrahimoglu, University of Groningen 

This project will explore the evolving role of auditors in the context of ESG risk integration into audits and its impact on audit quality. With the support of the Foundation for Auditing Research and joining audit firms, this research examines in depth the implications of recent regulatory changes that have extended the auditor's purview to include ESG-related matters, a move that is set to redefine the auditing landscape.
This project not only aims to contribute valuable insights to the business risk audit literature but also aspires to foster a dialogue among auditors, regulators, and the broader business community on enhancing audit quality in both standalone and multinational group audits.

This project has been funded by Foundation for Auditing Research.

Past Project

Paolo Quattrone, Jonathan O’Rourke, Kefei Wu, Martin Walker Alliance MBS; Robert Charnock, Metis Institute for Climate Strategy; Yasmine Chahed, FRC

According to recent research conducted by Alliance Manchester Business School, climate change profoundly impacts all aspects of society and the economy. These impacts are driven by a complex interplay of physical changes to the climate system, shifting policy landscapes, geopolitical issues, technological developments, and growing public demand for action. As a result, companies face a significant challenge in remaining resilient as a climate-changed future unfolds. However, scenario analysis has been promoted as a tool to help companies prepare for complex and uncertain futures. It provides hypothetical constructs of possible future states that are used to challenge prevailing assumptions and analyse business model resilience. Recently, it has become a focal point for corporate responses to climate change and associated disclosures, featuring as a core recommendation in the 2017 Recommendations from the Taskforce on Climate-related Financial Disclosures (TCFD).

The research by Alliance Manchester Business School highlights the practical steps companies take to get started with climate scenario analysis, as well as the observed challenges and best practices. It examines the processes through which companies produce their scenario analyses and how these shape their outcomes. The report focuses on the common steps taken in climate scenario analyses across the FTSE 350, with four areas of enquiry. By identifying the most relevant risks and opportunities, climate scenario analysis is expected to help companies enhance their business resilience in a climate-changed future. The report's findings provide scaffolding to help companies tailor their process and approach to climate scenario analysis and may be useful from a regulatory perspective beyond the Financial Reporting Council (FRC). Overall, this research highlights scenario analysis's critical role in helping companies navigate climate change's uncertain and complex landscape.

The report's findings provide scaffolding to help companies tailor their process and approach to climate scenario analysis and may be useful from a regulatory perspective beyond the Financial Reporting Council.

Konstantinos Stathopoulos, Alexandros Kostakis, Alliance MBS; Konstantinos Gkionis, UBS

This study examined the effects of political uncertainty around US presidential elections on firm risk, expected return and trading activity. Using information embedded in short-term options it looked at firms’ political features such as their sensitivity to economic policy uncertainty, their stock returns' exposure to the presidential party, their geographical political alignment with the presidential party, and their political connectedness through campaign contributions. The study found that sensitive, exposed, and aligned firms exhibit a substantially higher degree of option-implied price and tail risk, command a higher premium, and feature an increased dispersion of investor beliefs around presidential election day.

This project is funded by the Lord Alliance Strategic Investment Fund.

Edward Lee, Konstantinos Stathopoulos, Alliance MBS; Steven Xianglong Chen, University of Liverpool Management School

This paper investigates the effect of corporate social responsibility (CSR) spending on labour unions’ propensity to initiate strikes. It found that firms with high levels of (non-employee) CSR spending are exposed to a significantly higher risk of union strikes, while firms strategically curtail CSR expenditure in response to unionisation in order to mitigate the increased strike risk. Such downward adjustment in CSR spending is however less pronounced in financially constrained firms and in firms facing high levels of product market competition, due to their strong incentives to signal quality through CSR spending.

Edward Lee, Konstantinos Stathopoulos, Alliance MBS; Steven Xianglong Chen, University of Liverpool Management School

This paper investigates the impact of employee stock options (ESO) on labour unions' likelihood to initiate strikes. Using the unique setting of union elections in US firms, it found that firms offering higher levels of equity incentives to their employees are exposed to significantly lower post-unionisation strike risk. Furthermore, firms strategically grant more stock option incentives to employees in response to the unionisation of the labour force. The increase in option incentives is more pronounced among firms holding union elections in states with stronger union bargaining power and when the strike risk is perceived to be higher.

Professor Paolo Quattrone, Alliance MBS; Professor Ariela Caglio Bocconi University

This CIMA (Chartered Institute of Management Accountants) project investigated how organisations can embed SDG considerations into their strategic business decisions. Entitled: Calculating sustainability: on making accounting numbers central again, this study has provided a practical management and reporting framework to align SDGs to accounting measures. Producing an analysis of three in-depth case studies with three different companies, it illustrates how SDGs are being integrated through corporate governance, strategy and innovation. These examples can be practically applied by other companies to aid financial managers in playing a leading role in the understanding, communication and management of their companies’ contributions to SDGs.

The full report is available here:

Under the threat of climate change, companies have become increasingly reliant on stakeholders and other parties to hedge risks and increase values. This project studies various company decisions in the face of climate uncertainties which involve both transition risks and physical risks. The investigation will specifically shed light on the impact of climate risks on corporate decisions and outcomes, and will help inform institutional investors, company stakeholders and managers, and policymakers on the impact of climate risks on the corporate sector and suggest appropriate responses. It will also be a valuable input to the increasingly heated debate regarding the best way forward amongst the uncertainties imposed on economy and society by climate change.

This project explores important issues about dual-class firms such as disclosure, CSR, risk management and regulations.

The dual-class share structure has become more prevalent on U.S. stock markets over the past decades with, for instance, more than 20 per cent of companies listing shares on US exchanges between 2017 and 2019 having a dual-class structure. In recent years several prominent companies such as Google, Facebook and Alibaba have gone public with dual-class share structures which deviate from the one-share one-vote principle and allows company founders and executives who hold a minority of the company shares to have special voting rights.

This provides them with effective control, while outside investors who hold a majority of the company’s stock have regular voting rights. As such the rise of dual-class shares and the corresponding desire by stock exchanges to attract public offerings in more recent years, have drawn renewed attention to these structures.

This project investigates shelf-registered corporate security offerings. Shelf registrations allow eligible firms to offer and sell securities with a delay or continuously within a specified period. Once registered, an issuer can sell all or parts of the registered security anytime, without further red tape, within the shelf coverage period. Only a fraction of shelf registrations leads to actual takedowns. For instance, just under half of universal shelf filings between 2000 and 2020 did not result in an actual security offering, with the firm leaving all funding "on the shelf".

The project will focus on three key research questions. Firstly, what are the determinants of universal shelf takedowns? Secondly, given that universal shelf filings allow firms to choose between various security types, what are the determinants of different takedown types? And thirdly, does the market incorporate the predicted takedown probability into its stock price reactions at the shelf filing and takedown dates?