HOW IS THE CRISIS AFFECTING THE SOCIALLY

37h
HOW IS THE CRISIS AFFECTING THE SOCIALLY RESPONSIBLE BEHAVIOR OF
SPANISH FIRMS?
María del Mar Miras-Rodríguez
Bernabé Escobar-Pérez
Amalia Carrasco-Gallego
Universidad de Sevilla
Departamento de Contabilidad y Economía Financiera
Av. Ramón y Cajal, 1
41018 Sevilla (España)
Area tematica: H) RESPONSABILIDAD SOCIAL CORPORATIVA
Palabras Clave: Corporate Social Responsibility, Crisis, Financial Performance
HOW IS THE CRISIS AFFECTING THE SOCIALLY RESPONSIBLE
BEHAVIOR OF SPANISH FIRMS?
ABSTRACT
Taking into account the uncertain environment in which companies have to continue with their
business, academicians and managers are worried about what is going to happen with CSR
because of the decrease in the performance of the companies. The aim of this paper is to study
the effect of the crisis on the social behaviour of the Spanish companies through a descriptive
and explicative study, deepening in the comparison between the years 2006 and 2010. As a
result, Spanish companies continue carrying out CSR actions because their Social Scores are
growing. Moreover, it is identified a change in the factors that affect to social behaviour of the
companies.
1. INTRODUCTION
If organizations had been taken into account the CSR approach seriously, nowadays
we would not be likely involved in the current economic crisis (Fernandez, 2009) or at
least not in such magnitudes. On the contrary, the crisis is a reality as well as the great
consequences suffered by lots of companies which mean from the closing down of
several firms, getting losses, until at the best, a large reduction of the profits. So many
companies have been forced to redefine their business and implement austerity plans
as the unique alternative in order to be able to survive in this uncertain environment. In
this context, both academicians and practitioners are asking about how Corporate
Social Responsibility (hereinafter CSR) is going to be influenced by these extraordinary
circumstances.
So now, when the social needs are greater than ever (Karaibrahimoglu, 2010), it is
more necessary to emphasise the relevance of CSR actions carried out by the
organizations for the societal well-being. Hence, society asks companies being more
involve in supporting social and environmental causes (Grigore, 2011).
These circumstances may be well allowed to understand better and more clearly what
are the real motivations or interests of conducting CSR policies for firms. If companies
only implement CSR actions looking for legitimacy or direct benefits (short-term vision),
the CSR should be drastically affected by the crisis. However, if organizations are
really engaged with these issues and they have really integrated CSR in their business
strategy, they could take advantage of the crisis as an opportunity instead of
considering it such as a threat. Therefore, the present crisis may not mean directly the
disappearance of CSR actions, although the amount could be reduced due to main
causes.
The CSR purpose has been questioned by some researchers among which stands
Friedman (1970) who argued that the main objective of each firm should be to satisfy
the shareholders expectations. Nevertheless, Freeman (1984) along with a large
number of authors maintained that the organizations should not only be focused on the
shareholders expectations but they have to take into consideration all the stakeholders.
Despite the fact that the concept of CSR has been undergoing of much debates since it
was defined by Carroll (1979), it is undoubted the essential importance that CSR has in
business nowadays. In addition, the relationship between CSR and Financial
Performance has received substantial attention in the literature (Margolis & Walsh,
2003; Orliztky et al., 2003, Allouche & Laroche, 2005; Wu, 2006) even though there is
a lack of agreement about this causality. Likewise, we could identify lots of different
theoretical approaches that try to explain it. Thereby, taking into account that we are
concentrated in the potential influence of the Financial Performance on the CSR
actions carried out, we set out the three hypotheses which state about our concern.
On the one hand, the Slack Resources Hypothesis proposed that the degree in which
organizations will be socially responsible is on the basis of the available financial
resources. According to Orlitzky et al (2003), it should be also taken into account the
time lags because the changes in the financial returns may not immediately affect to
the CSR actions. In addition, the Managerial Opportunism Hypothesis set out that the
objectives pursued by the managers may well be different from those of the owners
and other stakeholders. This fact is related to the term orientation. The managers'
objectives usually are oriented towards the short-term and immediate profitability, while
the owners' objectives are more linked to the long term. Nevertheless, some arguments
that support the idea that companies continue doing CSR actions are given by the
Agency theory.
Despite of the relevance of the issue, few researchers have addressed the problem
worldwide (Charitoudi et al., 2011; Giannarakis & Theotokos, 2011), and others have
analysed the situation in determinate countries (Njoroge, 2009; Schiopoiu Burlea et al,
2010; Arevalo & Aravind 2010; Ducassy, 2012).
In addition, taking into account that Spain is one of the most affected countries by the
economic downturn - economic intervention by the EU is being discussed – there is an
urgent need to have a better understanding of the question, trying to extend the results
obtained by Escobar & Miras (2013) in the Spanish Savings Banks.
With the aim of studying what has happened in Spain, we make an exhaustive study of
the evolution in the Social Scores and the financial ratios of the companies included in
the IBEX-35 before and during the crisis (2006 – 2010) as well as analyses through
several linear regressions in order to analyse empirically the effect of the crisis on the
Social responsibilities of the listed firms in Spain.
To achieve the objective proposed, the layout of this article is as follows. Firstly, we
argue about the economic crisis all over the world and particularly in Spain, and the
effect of it on the CSR actions. Next, there is a description of the CSR concept,
focusing on the key debates about CSR and the hypotheses development. Then, we
look more closely at the method and the sample formation. This, we report and discuss
the results. Finally, we present the conclusions as well as the limitations of the
research.
2. ECONOMIC CRISIS AND CORPORATE SOCIAL RESPONSIBILITY
The financial and economic crisis affecting the industrialised countries in recent years
has been singular given its intensity, complexity and the difficulties in overcoming it, so
the importance of CSR has been called into question. However, the present financial
situation provides a perfect opportunity to test the real commitment of the companies
with the CSR approach (Escobar & Miras, 2013).
According to Fernandez (2009), the crisis could be perceived as a threat or an
opportunity. On the one hand, she argued that CSR approach could be a threat for
firms´ survival due mainly to the high cost of implementation. So it is entirely
understandable that carrying out a CSR strategy in periods of uncertainty is not
expected. On the contrary, she asserted that CSR is one of the ways to manage the
situation and help companies overcome the consequences of the crisis due to the longterm benefits are widely recognised.
There are some arguments that support that CSR could be a threat in times of crisis.
Therefore, with the crisis in its height, companies behave in a more conservative and
defensive way (Cheney, 1990), so that it is usual that companies have been prompted
to get away from a socially responsible behaviour in order to be able to satisfy the
shareholders´ expectations (Giannarakis & Theotokos, 2011).
Since the current economic crisis rose, the priorities of the business have changed
becoming the liquidity management in one of the most important aspects. Moreover, all
the actions are being carried out in accordance with the financial difficulties (Yelkikalan
& Köse, 2012). Taking into account the uncertain business environment, companies
are encouraged to reduce the expenses (Karaibrahimoglu, 2010) which imply revoking
to their social responsibilities because them generates costs (Orlitzky et al., 2003).
According to Njoroge (2009) the inmediate consequences are the delay or cancellation
of many CSR initiatives. However, Wilson (2008) took an opposite stance to reduce the
expenses through the decline in the CSR commitment.
However, it´s no less true that the number of social needs has been increased during
these rough times, so the CSR actions are more necessary than ever
(Karaibrahimoglu, 2010). In this way, companies should change or redefine their
business objectives in relation to social expectations (Porter & Kramer, 2002), being a
perfect chance for differentiating them from the others (Giannarakis & Theotokos,
2011). In accordance with Arevalo & Aravind´s (2010) results, the level of impact of the
financial crisis in a company depends mainly on both: the degree of CSR integration in
the company - being the organizations with a high integration stage, those what suffer
more the crisis - and the kind of CSR strategy proactive or reactive that it carries out
because companies who have a proactive approach are more used to coping with new
circumstances.
Despite the importance of this issue and the large number of explications found in the
literature, there is little empirical evidence about what is happening in fact.
While Karaibrahimoglu (2010) analysed if in the context of the companies listed in
Fortune 500 there was a change in the number and extend of CSR projects in 2008 being in the deep of the crisis-, Giannarakis & Theotokas (2011) investigated the
influence on the CSR performance in some companies included in the GRI report list
since 2007 until 2010. On the other hand, Cheritoudi et al. (2011) evaluated the CSR
behaviour of the companies during 2007 until 2009. Likewise, Njorage (2009)
examined how the multinational firms in Kenya were being affected by the economic
downturn whereas Arevalo & Aravind (2010) studied the impact on the USA
companies. Indeed, the general conclusion we can report from the articles analysed is
that the firms had improved their CSR scores in spite of the consequences of the
economic downturn. Nevertheless, it seems to be a significant drop in the level of CSR
during the last period studied (2009-2010).
Nevertheless, Ducassy (2012) found that the relationship between CSR and FP in
France had changed due to the uncertain environment of the crisis going from a strong
relationship between the variables to an insignificant connection, being the second
semester of 2007 the break-point.
The present economic crisis has been made deeper and longer in Spain than other
countries and than previous instances, so the results and the evidence from the articles
discussed previously can not be extrapolated. There are several reasons why we are
so interested in studying the consequences on the CSR of the financial crisis in Spain,
and why it could be different from other countries, taking the Foretica report (2011) into
account.
One of the reasons why the Spanish economy has been severely affected by the
present situation is due to the lack of balance that had been generated during the
boom phase. These imbalances have made to Spanish economy particularly
vulnerable to changes in the macroeconomic and financial conditions, so the
consequences of the global international crisis are being worse than others European
countries.
Due to the pronounced expansion experienced by the Spanish economy in the
previous period -with annual GDP growth above 4%- , it is more highlighted the sharp
decline that is experiencing the employment (with an unemployment rate of around
25%), the difficulties facing the recovery as well as the higher risks from the possible
fall. In this sense, the adjustment phase is being conditioned by certain idiosyncratic
features of the Spanish economy -the shocks have affected Spain more than
neighbouring countries- and by certain institutional characteristics that affect the
adjustment mechanisms.
Moreover, according to the report of Foretica (2011), the crisis has had a direct impact
on the business activity in Spain. Such report reveals that at least 65% of Spanish
firms maintained or increased their investment in CSR in 2010, although it is also
shown that one in three companies stopped performing CSR as a direct consequence
of the crisis. It is also noted in the report that the behaviour of big companies and the
small ones differs considerably, the latter being those that have absorbed most of the
reductions in CSR.
In accordance with the authors, these results are quite good to the CSR in Spain
because in spite of the fact that 2.3 million jobs were destroyed and 130,000
businesses closed down in Spain between 2008 and 2010, most of the organisations
continue carrying out CSR policies. Despite the difficult situation that is happening in
the Spanish economy, CSR has not lost its strength. So consecuently, this report
makes us to consider that the behaviour of the CSR policies in Spain is being affected
by the crisis in a different way from other countries.
Although there is a lack of empirical evidence in Spain, Escobar & Miras (2013) tried to
determine the impact of the economic crisis on the level of social commitment of the
Spanish Savings Banks. It was focus on one specific industry in Spain, and they found
a significant decline in absolute numbers -as a logical consequence of an important
decrease in the financial results- although they identified a substantial growth in the
percentage that this kind of organizations spent on CSR issues. Notwithstanding, these
results are not necessarily extensive to all the Spanish companies because it was
focused on a specific industry and the particular characteristics of the Savings Banks.
So taking into consideration that Spain is one of the countries that is been more
affected by the current financial situation, the effect of the crisis on CSR in Spain could
be different from other countries, and the impossibility of extending the results of the
Escobar and Miras´ (2013) article to the whole population of Spanish companies, we
are going to test what is happening with the CSR in Spain during 2006-2010 period.
3. CORPORATE SOCIAL RESPONSIBILITY AND FINANCIAL PERFORMANCE
It is undeniable the evolution that Corporate Social Responsibility has suffered in
importance and significance over the last decades (Carroll & Shabana, 2010; Schultz &
Wehmeier, 2010). It has changed from an irrelevant or fashionable idea to one of the
most widely accepted concepts in the business world (Argandoña, 2007; Lee, 2008).
Although the idea that firms had some responsibilities to society beyond that making
profits has been around for centuries (Carroll & Shabana, 2010), it has not been until
the end of the last century when CSR was become in a reality in business and one of
the determinants factor that has been taking into account in the decision-making (Nieto
& Fernandez, 2004; Garriga & Melé, 2004). It is why most of the international
organizations have established guidelines (i.e. Global Reporting Initiative - GRI) and
recommendations about how to be a socially and environmentally responsible
company, the reason of a high increment in the number of voluntary social disclosure
memories of the companies as well as the creation of Sustainability Stock Indexes Dow Jones Sustainability Index, KLD Domini, FTSE4Good, between others- (Miras et
al., 2011).
Nevertheless, there still have been numerous debates around CSR. One of the most
relevant is due to the lack of consensus about the concept (Carroll, 1979; McWilliam et
al., 2006; Dahlsrud, 2008; Aras & Crowther, 2009). Likewise, a varying terminology has
been developed such as Corporate Citizenship, Business Ethics, Corporate
Accountability, Corporate Philantropy, Corporate Responsibility, Corporate Social
Performance, Corporate Sustainability, Philantropy, Stakeholder management,
Sustainability and Triple Bottom Line, even though they are competing, complementary
and overlapping concept (Barlett & Devin, 2011). In addition, other discussions about
the altruism (Margolis & Walsh, 2003; Maignan & Ferrell, 2004; Husted & De Jesus,
2006) and the voluntariness (Carroll, 1991; Williamson et al., 2006) of the CSR
practices could be found in the literature.
Within these debates, it is also important to emphasize the controversy about the
relationship between Financial Performance and CSR because despite being a
recurrent topic in the literature, the results are certainly not conclusive (Orlitzky et al.,
2003; Allouche & Laroche, 2005; Wu, 2006).
In addition, there have still not been resolved the mathematical sign for the causal
relationship (Preston & O´Bannon, 1997) and the issue about the direction of that
causality (Salzmann et al., 2005). In this regard, this paper is focused in the effect of
the Financial Performance on the CSR due to the current economic crisis is affecting
seriously to the financial outcomes of the companies. Hence, it is necessary to
describe the different approaches that try to explain this relation.
On the one hand, Waddock & Graves (1997) proposed in the Slack Resources
Hypothesis that companies will be more or less socially responsible depending on their
availability of financial resources. Achieving a better performance will allow making
great investments in social projects. Consequently CSR will only be viable in
companies with solid and sustainable financial results, i.e., some authors, such as
Izquierdo (2004) emphasizes that CSR is a luxury that can only be borne by buoyant
companies.
Moreover, the Managerial Opportunism Hypothesis reported by Williamson (1967,
1985) discussed that the purposes of the managers may be different from those of the
shareholders and other stakeholders. This is due to the managers' objectives being
oriented towards the short-term and immediate profitability, while the owners'
objectives are more linked to the long term.
In accordance with these hypotheses, the high cost of the CSR initiatives would be the
responsible of a drastic reduction of this kind of actions being it even higher if we based
on the second theoretical approach. It is because managers worried by the financial
situation prefer to decrease all the cost that they are not sure about their short-term
benefits because their main concern is their survival at the company. So the present
financial situation would be triggered a large diminution of the CSR activities or
policies, so our first Hypothesis would be:
H1: The companies are less socially responsible due to the economic crisis.
This conflict of interest between managers (agents) and owners (principals) has also
been developed by the Agency Theory (Ross, 1973). Notwithstanding, in order to avoid
the managerial opportunism (Miller, 2002), some mechanisms (financial rewards,
shares) were specified so that the interest of the shareholders has to be taken into
account (Jensen & Meckling, 1976; Eisenhardt, 1989). In addition, during a crisis
period, directors and shareholders should come to an agreement about the strategic
decisions of the companies, so managers pressured by shareholders could choose
continuing with CSR policies because they understand that it could be a good way to
manage the economic crisis and they could be more concerned about long-term
repercussions, so our second hypothesis would be:
H2: Despite of the crisis, companies continue to behave in a socially responsible way.
In addition, it must be kept in mind that the impact of the crisis on the CSR actions can
have time lags (Orlitzky et al., 2003), so it is important to analyse the influence in the
current year and the next.
H3: The Social Responsible behaviours of the companies are affected by the
performance obtained the previous year.
4. METHOD AND SAMPLE
The current investigation involved analyzing whether the Social behaviour of the
Spanish companies are been influenced by the present financial crisis. In order to
achieve our aim, firstly, we made a descriptive analysis that helps us to understand the
evolution and what is happening with the Social Scores and the financial measures
from 2006 to 2010. After that, to test the first and the second hypotheses proposed, we
have carried out two linear regressions to evaluate if the CSR behaviours have been
affected by the financial performance obtained, in 2006 (before the crisis started) and
in 2010 (when the crisis was wreaking havoc), to compare if the influence of the
performance on the behaviour has changed due to the crisis. Moreover, to test the third
hypothesis, we made two extra regressions to see if the financial performance of the
previous year has influenced on the CSR behaviour of the firms in 2006 and 2010.
The population under study are all the companies listed in the IBEX-35 Spanish Stock
Index. It is due to most of the industries are represented in this sample.
So, the sample was initially composed by all the Spanish firms included in the IBEX-35,
although seven of them had to be excluded due to the lack of data availability, so the
final sample was compounded of 28 companies whose data were provided by the
DataStream Professional database.
The variables used in the study are mainly the Social Score and Economic Scores as
well as other financial performance measures (ROA and ROE) due to their use in the
literature. The Social and Economic Score have received a value between 0 and 100,
provided by DataStream, while the ROA and ROE are measured in percentage.
Based on the description given, the Social Score measures a company's capacity to
generate trust and loyalty with its workforce, customers and society, through its use of
best management practices, while the Economic Score measures a company's
capacity to generate sustainable growth and a high return on investment through the
efficient use of all its resources. This Economic Score is different to the others financial
measures because it includes some intangibles measures of the client loyalty,
performance and shareholder loyalty apart from taking into account the traditional
financial measures. It is reflection of a company's overall financial health and its ability
to generate long term shareholder value through its use of best management practices.
5. RESULTS AND DISCUSSION
As mentioned previously, the aim of the paper is to analyse empirically the influence of
the crisis on the Social responsibilities of the most representative firms in Spain. The
results are divided into two parts as follows: firstly, it has been examined the evolution
of the four variables studied -using the mean values- in order to be able to get a
general idea of the increase or decrease of the scores when the crisis began and
secondly, we are going to carry out linear regressions to test the influence of the
Financial Performance on the CSR, comparing the situation in 2006 to 2010 and taking
into account the time lags.
In general, we could report that the Social Scores is growing year by year in spite of the
economic downturn, that we could easily identify by the Economic Score´s behaviour.
The evolution of all the variables considered from 2006 to 2010 is shown in Figures 1
and 2. In them, it could be easily identify a positive tendency of the CSR Scores while
the financial ratios show a negative evolution.
Figure 1: Evolution of the Social and Economic Scores
From these figures, we could get some ideas. Firstly, there is a continuous growing in
Social Score, although this it is smaller since 2009. It is also evident from Figure 1 that
the behaviour of the Economic Score is completely different, because the Score
increase until 2008 and then decline. However, the ROA and ROE ratios have suffered
a big drop, although it is softer in the last two periods studied. This decline seems to
have affected more to the ROE ratio than the ROA.
Figure 2: Evolution of the ROA and ROE indicators.
In table 1, we are able to draw more precise conclusions due to the presentation of the
mean values and the percentage changes for every year and variable considered. In
this regard, it is especially remarkable the behaviour of the Social Score in 2008 and
2009 due to its increases even though the largest decreases of the financial measures
are produced in these years. It´s so relevant because the CSR behaviours of the
companies have not being interrupted or delayed by the financial crisis as in other
countries in which significant reductions were identified in the last two studied periods
(Karaibrahimoglu, 2010; Giannarakis & Theotokos, 2011; Charitoudi et al., 2011).
Table 1: Mean values of each variable
2006
2007
2008
2009
2010
Social Score
79.16
88.01
91.11
92.00
92.29
Economic Score
ROA
63.76
7.56
71.99
7.60
82.25
6.68
79.92
4.67
75.08
4.93
ROE
26.56
25.36
19.59
17.32
17.21
It also disagrees with the evidence found on the Spanish Savings Banks (Escobar &
Miras, 2013), so this fact shows that the conclusions of a particular industry could not
be generalized. Notwithstanding, this evidence agrees with the Foretica report (2011),
because this report argues that large companies in Spain continue to have a
commitment with the social responsibility, although the situation of small firms is not the
same.
Table 2 reports the results of the linear regressions made in order to see what the
influence of the Financial Performance on CSR is (Model 1) as well as to compare the
scenario after and during the crisis. Firstly, it is relevant to mention the differences
between the analyses in both years. While the influence of the Financial Performance
on the CSR is important and it explains a 53% of the Social Score, the results in 2010
are completely insignificant so the financial performance only explain a 12%. It could
be explained by a change in the CSR behaviour of the Spanish companies, being now
more committed with the real extend than with the potential financial rewards of them.
These results are consistent with the evidence found by Ducassy (2012) in France,
who reported that since 2007 there has been a change in the behaviour of this
relationship.
In model 2, we choose to test the time lag only the Economic Score due to being the
most correlated measure of the financial performance. It is highlighted that the financial
performance of the previous year has a bigger and more significant effect on the Social
Score than the performance of the year, regardless the year we are testing. Moreover,
the percentage of the Social Score explained by them is higher than in Model 1. Then,
the social behaviour of the companies is more influenced by the financial performance
of the previous year.
Economic Score t
Economic Score t-
Model 1
Social
Scores 2006
0.595***
Model 1
Social Score
2010
0.070
Model 2
Social
Scores 06
0.304†
Model 2
Social Score
10
-0.123
0.389*
0.282*
20.96***
4.44*
1
ROA t
ROE t
F
-0.118
0.026
6.57***
-0.724
-0.208
0.3374
2
R
0.533
*** < 0.005, **<0.01,*<0.05, †<0.1
0.1287
0.626
0.2623
In spite of the influence of the previous performance on the CSR, the difference in the
percentages in which CSR is explained by the financial performance between the two
years considered remains. This fact allows us to further support the results shown by
Model 1, confirming that there is a change in the factors that determine the social
responsible behaviour of the companies.
6. CONCLUSIONS
The results are surprising one hand-because in no other empirical work had been
obtained CSR increases during 2010 - but otherwise they confirm the evidence shown
by the report of Foretica (2011). Therefore, it is reinforced the idea that Spanish big
companies during the crisis continue taking into consideration the CSR approach,
trying to behave in a socially responsible way.
The social score does not decrease but rather increased slightly, although the growth
rate is quite irrelevant compared to previous years. It is also important to see that it is
close to the maximum level, so it is true that the scope for improvement of firms each
year is more reduced and therefore each year is more complicated to get significant
improvements in the Score. Then, the results confirm that the commitment of the
Spanish companies with CSR is increasing year by year.
After the descriptive analysis of the findings and trying to connect them with the
theoretical framework, we could say that the results show that shareholders are
influencing in strategic decisions of the companies as the commitment to CSR. It
supposes to accept the Hypothesis 2 and reject Hypothesis 1. Thus, in the light of the
results, we can conclude that listed Spanish firms have adopted a long-term approach
to manage the CSR. So they are trying to continue doing CSR policies, although in
most of the cases it involves making significant changes in their CSR strategy to adapt
it at the new financial circumstances.
Although we have rejected the Hypothesis 1 because the Spanish companies continue
to behave in a socially responsible way, our results doesn´t mean that the amount
spent in CSR is increasing. In this regard, it should be noted that the increase in Social
Score does not necessarily mean that the costs of CSR in companies have enhanced,
because it is not consistent with the economic situation of the country and the
businesses.
The conclusions drown allow us to rethink the real reason for the CSR, which has long
been linked to fashion and the financial returns in times of economic boom. These
strategies has to change trying to spend less amount of money and take advantages of
the others alternatives that CSR approaches proposed to be responsible. Companies
and researchers have mistaken the concept of CSR with philanthropy, which is not
always true, because philanthropy is one of the ways in which CSR can be articulated,
but not the only one. Indeed, the cost of the philanthropy is often much higher than in
other CSR activities, being usually difficult for companies evaluate the potential
financial benefit of them.
It also relevant the change identified in the factors that affect to the CSR. While in
2006, the financial performance (from the previous and same year) explained at least a
62% of the Social Scores obtained, it was only a 26% of the Scores in 2010. Hence, we
could clearly conclude that the Financial Performance has left to be the most
influenced factor on CSR. The direct implication is that we have to search which factors
explains nowadays the Social Behaviour of the companies.
Regarding the paper's limitations, it only has been analysed the companies listed in the
IBEX-35 Index, so the conclusions couldn´t be extrapolated to all the Spanish
companies and particularly to the Small and Medium companies because they are
completely different from the studied firms.
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