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Exploring the dark side of third-party certification effect in B2B relationships: A professional financial services perspective

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  • Cheng, Louis T.W.
  • Sharma, Piyush
  • Shen, Jianfu
  • Ng, Allen C.C.

Abstract

This paper extends the growing research on the dark side of B2B relationships by exploring the differences in third-party certification effects based on social capital with professional financial services firms, using a proprietary dataset with confidential voting records of the nominations for Investor Relation Awards in Hong Kong. Results confirm the dark side of these relationships by showing that the nominated firms with more favorable voting from international (vs. local) analysts experience stronger certification effect with higher valuations upon announcement. Moreover, nominated (but not awarded) firms with lower levels of information transparency demonstrate a larger certification effect but they also show significant improvement in their information transparency after the event, which represents an unexpected bright outcome from this dark side of B2B relationships. Overall, these findings extend the social capital argument that international financial services firms bring higher positive return through the support of their own professional and social network.

Suggested Citation

  • Cheng, Louis T.W. & Sharma, Piyush & Shen, Jianfu & Ng, Allen C.C., 2021. "Exploring the dark side of third-party certification effect in B2B relationships: A professional financial services perspective," Journal of Business Research, Elsevier, vol. 127(C), pages 123-136.
    • Handle: RePEc:eee:jbrese:v:127:y:2021:i:c:p:123-136
    DOI: 10.1016/j.jbusres.2021.01.031
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    1. Gligor, David M. & Pillai, Kishore Gopalakrishna & Golgeci, Ismail, 2021. "Theorizing the dark side of business-to-business relationships in the era of AI, big data, and blockchain," Journal of Business Research, Elsevier, vol. 133(C), pages 79-88.
    2. Fung, Michael K. & Cheng, Louis T.W. & Shen, Jianfu, 2024. "Do media message receivers asymmetrically react to non-strategic and strategic media coverage? Evidence from Hong Kong," Research in International Business and Finance, Elsevier, vol. 70(PA).
    3. Jill Atkins & Federica Doni & Andrea Gasperini & Sonia Artuso & Ilaria Torre & Lorena Sorrentino, 2023. "Exploring the Effectiveness of Sustainability Measurement: Which ESG Metrics Will Survive COVID-19?," Journal of Business Ethics, Springer, vol. 185(3), pages 629-646, July.
    4. Gillani, Alvina & Kutaula, Smirti & Budhwar, Pawan S., 2021. "Psychological contract breach: Unraveling the dark side of business-to-business relationships," Journal of Business Research, Elsevier, vol. 134(C), pages 631-641.

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