Diversification Strategy and Good Governance: Does It Affect Firm’s Leverage?

This paper aims to analyze whether firm diversification affects firm leverage in developing countries. This research model is based on the agency theory view that focuses on diversification in leverage through good governance mechanisms. The data comes from 43 companies from 215 observation companies listed on the Indonesia Stock Exchange in the 2014–2018 period, supporting the co-insurance hypothesis; our findings suggest a positive effect of diversification on debt levels. Our findings show that cost advantages occur in diversified firms, including higher debt ratios in the firm’s capital structure. These effects are more substantial when firms have better corporate governance. These findings add value to the existing literature on the relationship between firm diversification, corporate management, and leverage and can be helpful for managers and policy-makers regarding the evaluation of diversification strategy and corporate governance implementations in Indonesia that has been widely studied.DOI: 10.26905/jkdp.v25i3.5758

Crisis Communication, Anticipated Food Insecurity, and Food Preferences: Preregistered Evidence of the Insurance Hypothesis

While overconsumption of energy-dense foods contributes to climate change, we investigated whether exposure to climate change-induced food insecurity affects preferences toward such products. Humans’ current psychological mechanisms have developed in their ancestral evolutionary past to respond to immediate threats and opportunities. Consequently, these mechanisms may not distinguish between cues to actual food scarcity and cues to food scarcity distant in time and space. Drawing on the insurance hypothesis, which postulates that humans respond to environmental cues to food scarcity through increased energy consumption, we predicted that exposing participants to climate change-induced food scarcity content increases their preferences toward energy-dense foods, with this effect being particularly pronounced in women. Three experiments—including one preregistered laboratory study—confirm this prediction. Our findings jointly demonstrate that receiving information about food shortages distant in time and space can influence current food preferences in a potentially maladaptive way, with important implications for public health.

Identifying drivers of forest resilience in long-term records from the Neotropics

Here, we use 30 long-term, high-resolution palaeoecological records from Mexico, Central and South America to address two hypotheses regarding possible drivers of resilience in tropical forests as measured in terms of recovery rates from previous disturbances. First, we hypothesize that faster recovery rates are associated with regions of higher biodiversity, as suggested by the insurance hypothesis. And second, that resilience is due to intrinsic abiotic factors that are location specific, thus regions presently displaying resilience in terms of persistence to current climatic disturbances should also show higher recovery rates in the past. To test these hypotheses, we applied a threshold approach to identify past disturbances to forests within each sequence. We then compared the recovery rates to these events with pollen richness before the event. We also compared recovery rates of each site with a measure of present resilience in the region as demonstrated by measuring global vegetation persistence to climatic perturbations using satellite imagery. Preliminary results indeed show a positive relationship between pre-disturbance taxonomic richness and faster recovery rates. However, there is less evidence to support the concept that resilience is intrinsic to a region; patterns of resilience apparent in ecosystems presently are not necessarily conservative through time.

Hungry People Prefer Larger Bodies and Objects: The Importance of Testing Boundary Effects

Several lab-based studies have indicated that when people are hungry, they judge larger women’s bodies as more attractive, compared to when they are satiated. Thesesatiety-dependent judgements are assumed to provide explanatory power when it comes to the noted cross-cultural differences in attitudes towards women’s adiposity, whereby people who live in regions that are under greater nutritional stress tend to have more favourable attitudes towards bigger bodies. However, it is premature to assume that women’s bodies are the proper or actual domain of the satiety-dependent judgement shifts found within research study testing contexts until stimuli other than female bodies have also been tested: the research programme falls into the trap of confirmation bias unless we also seek out disconfirmatory evidence, and test the boundaries of the effects of hunger. Accordingly, we collected attractiveness judgements of female and male bodies manipulated to vary in size by varying level of adiposity, and objects manipulated to vary in size, from 186 participants who also reported their current hunger level. We found that larger sizes of stimuli in general, and women’s bodies in particular, especially when judged by women, were judged as more attractive by the hungrier participants. We discuss these patterns in the context of the Insurance Hypothesis, the Environmental Security Hypothesis, and the impact of hunger on acquisition.

Auditor Selection and IPO Underpricing

This chapter focuses on the selection of an audit firm by UK initial public offering (IPO) firms. It documents that many IPO firms switch to an audit firm in a different segment (big, midsize, or small), which suggests that IPO firms carefully select an audit firm of a particular quality level before they go public. It examines whether the selection of an auditor by IPO firms is driven by the demand for certification or insurance. The authors find that IPO firms are more likely to choose a high-quality auditor when the uncertainty of the firm’s future prospects is higher and they want to signal quality (certification driven by signaling). In addition, they find that firms with riskier IPO offerings select higher-quality auditors, in line with the insurance hypothesis. They find mixed results for the certification hypotheses when testing for the effect of auditor reputation on initial returns.

Social Status and Adolescent Physical Activity: Expanding the Insurance Hypothesis to Incorporate Energy Expenditure

Low social status (SS) is a determinant of poor health status and is associated with increased disease burden. Obesity affects 20.6% of American adolescents, most of whom are from low-SS families. Contributors to the development of obesity among adolescents include sedentary behavior and low levels of physical activity. Environmental determinants—infrastructure, policy, and social relationships—influence engagement in physical activity and are affected by SS. Significant declines in physical activity have been documented during adolescence, and adolescents of low SS engage in significantly less physical activity per week than those with high SS. This article briefly reviews the literature on the relationship between SS and physical activity in adolescents and introduces a proposed biological mechanism that may explain that relationship. Characterizing the effects that SS can have on physical activity may help tailor clinical interventions and public health campaigns seeking to improve adolescent physical activity and weight management, thus increasing their effectiveness. This may be particularly beneficial for underserved populations.

Climate mediates the biodiversity–ecosystem stability relationship globally

The insurance hypothesis, stating that biodiversity can increase ecosystem stability, has received wide research and political attention. Recent experiments suggest that climate change can impact how plant diversity influences ecosystem stability, but most evidence of the biodiversity–stability relationship obtained to date comes from local studies performed under a limited set of climatic conditions. Here, we investigate how climate mediates the relationships between plant (taxonomical and functional) diversity and ecosystem stability across the globe. To do so, we coupled 14 years of temporal remote sensing measurements of plant biomass with field surveys of diversity in 123 dryland ecosystems from all continents except Antarctica. Across a wide range of climatic and soil conditions, plant species pools, and locations, we were able to explain 73% of variation in ecosystem stability, measured as the ratio of the temporal mean biomass to the SD. The positive role of plant diversity on ecosystem stability was as important as that of climatic and soil factors. However, we also found a strong climate dependency of the biodiversity–ecosystem stability relationship across our global aridity gradient. Our findings suggest that the diversity of leaf traits may drive ecosystem stability at low aridity levels, whereas species richness may have a greater stabilizing role under the most arid conditions evaluated. Our study highlights that to minimize variations in the temporal delivery of ecosystem services related to plant biomass, functional and taxonomic plant diversity should be particularly promoted under low and high aridity conditions, respectively.

Eating and body image: Does food insecurity make us feel thinner?

Body image distortions are common in healthy individuals and a central aspect of serious clinical conditions, such as eating disorders. This commentary explores the potential implications of body image and its distortions for the insurance hypothesis. In particular, we speculate that body image may be an intervening variable mediating the relationship between perceived food scarcity and eating behavior.