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1 – 10 of 654Masoud Amirdadi and Farzad Dehghanian
In this paper, the authors aim to investigate the relationship between buyback policy and the potential number of used products that could be collected by developing a robust…
Abstract
Purpose
In this paper, the authors aim to investigate the relationship between buyback policy and the potential number of used products that could be collected by developing a robust fuzzy reverse logistics network.
Design/methodology/approach
In this approach, the authors seek to determine the amount of buyback based on the condition of used products at the time of return. In this process, the authors also take into account that apart from the condition of used products, other factors exist that the actual return rate could be dependent on them. This matter propelled us to make a novel distinction between the probability of return estimated from appropriate buybacks offered to consumers, and the actual return rate of used products using fuzzy mathematical methods. Besides that, a compatible robust fuzzy optimization method has been implemented on the model to deal with uncertain properties of it and simultaneously fortifying its responses against any possible effect of return rate fluctuation.
Findings
To analyze and evaluate the model performance, the authors decided to apply a series of exhaustive randomly generated experiments onto it. Also, the authors introduced a Lagrangian relaxation solution methodology to facilitate and improve the solving process of the model. Then, the evaluation of the results enabled us to demonstrate the model validity, and underscore its utility to deal with problems with more sophisticated used product collection process that practitioners tend to encounter in the real-world circumstances.
Originality/value
This study suggests a novel way to design the return rate of used products in a reverse logistics network with buyback offers through a complete set of factors affecting it. Furthermore, the procedure of developing the model encompasses several important aspects that significantly decrease its complexity and improve its applicability.
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On completion of analysis of this case, students would be able to: appreciate the context of a typical delisting decision of a public company that is part of a large business…
Abstract
Learning outcomes
On completion of analysis of this case, students would be able to: appreciate the context of a typical delisting decision of a public company that is part of a large business group; analyze the complex nature of the relationships among the promoter shareholders, minority shareholders, government-controlled financial institutions, independent directors and executive directors in such a situation of transfer of value; and develop the best possible course of action for the promoters, independent directors and public shareholders, keeping into consideration the principles of corporate governance and the objective of shareholders’ wealth maximization.
Case overview/synopsis
The case presents an opportunity to examine the corporate restructuring and governance issues associated with the delisting attempt of India-based mining company Vedanta Ltd., by its London-based parent company, Vedanta Resources. The case focuses on the conflict of interests between the promoters of a business group and the public shareholders of a subsidiary, and the pivotal roles independent directors and proxy advisory firms play in supporting the public shareholders.
Complexity academic level
The case can be discussed in a graduate-level corporate strategy course that deals with restructuring and governance issues in companies, especially large group companies. It can also be discussed in a course of corporate governance where students have the opportunity to understand the potential conflict between promoters and other shareholders, and the moderating roles the independent directors and institutions may play in resolving such conflicts.
Supplementary materials
Teaching notes are available for educators only.
Subject code
CSS 11: Strategy.
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The purpose of this study is to examine factors influencing decisions to repurchase shares on-market in Australia. The present study also examines the role of board size, board…
Abstract
Purpose
The purpose of this study is to examine factors influencing decisions to repurchase shares on-market in Australia. The present study also examines the role of board size, board independence and chief executive officer duality on the decision to repurchase shares on-market by Australian firms.
Design/methodology/approach
This study blends the traditional motivations of share repurchases with the influences of governance. The sample consists of all non-financial firms included in the Australian All Ordinaries Index (AOI) for the period 2004-2010. The repurchase sample consists of 104 repurchases undertaken by 62 firms. A probit panel model is used to analyse the decision to repurchase shares on the market. To account for unobserved heterogeneity, random effects panel models are also used.
Findings
Analyses of a sample of non-financial firms included in the AOI for the period 2004-2010 show that size is significantly positively correlated with the decision to repurchase shares, thus supporting the agency cost. Findings also support the undervaluation and signalling hypotheses. Similarly, there is evidence in support of the view that firms repurchase shares to reach their target optimal capital structure. The present study also finds a significant positive association between board independence and the decision to repurchase shares in Australia.
Research limitations/implications
On-market share repurchases help firms to signal their future growth opportunities and resolve agency conflicts. Signals from repurchases also help markets discover the true fundamental values of firms. Governance plays an important role in improving the effectiveness of on-market share repurchases, as independent directors provide both monitoring and discipline which helps to ensure that firms have valid motivations in undertaking share repurchases.
Practical implications
These findings have implications for capital restructuring and governance policies. Principle-based governance frameworks that prevail in countries like Australia work as well as rule-based governance.
Originality/value
This study highlights the complementary roles that financial policies and corporate boards play in corporate governance. Independent boards ensure that firms pursue appropriate financial policies that help resolve agency conflicts and information asymmetry problems.
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Mayank Joshipura and Vasant Sivaraman
The learning outcomes of this study are as follows:1. Learn to analyze a hostile takeover bid from the perspectives of the acquirer, target firm’s management and a large…
Abstract
Learning outcomes
The learning outcomes of this study are as follows:1. Learn to analyze a hostile takeover bid from the perspectives of the acquirer, target firm’s management and a large institutional investor in the target firm.2. Review the structuring, financing, valuation, mode of consideration, legal and regulatory aspects of a hostile takeover.3. Understand the role of the target firm’s board in a hostile takeover transaction.4. Address “to sell or not to sell” dilemma of a large institutional investor in the target firm in the event of a tender offer given financial and non-financial considerations.
Case overview/synopsis
On June 14, 2019, Pulak Prasad, Founder and Chief Executive Officer (CEO) at Nalanda Capital, in consultation with other managing partners at Nalanda Capital, had to decide whether to tender a 10.6% equity holding in Mindtree Ltd. in an unsolicited open offer made by Larsen and Toubro (L&T) Ltd. Until then, Nalanda Capital, led by Prasad, had aligned with the Mindtree founders and had led a campaign to thwart L&T’s bid to acquire Mindtree; L&T’s offer to acquire 31% of Mindtree shares was because of open on June 17, 2019 and it is time for Prasad and the management team to take a reasoned call – whether to stay in Mindtree or to exit? Associated aspects included – What could be the consequences of not selling the stake? What could be L&T’s game plan? Could Mindtree continue to create wealth for its shareholders under L&T?
Complexity academic level
This case is appropriate for Mergers & Acquisitions and Strategic Financial Management courses in modules focused on structuring, financing and takeover defence techniques in a hostile takeover transaction. The case is appropriate for graduate MBA and EMBA programmes.
Supplementary materials
Teaching notes are available for educators only.
Subject code
CSS 1: Accounting and Finance.
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Arvind Mills incurred a loss of Rs.316 crores in the year 1999-2000 after a period of declining profits in spite of increasing sales. In January 2001 lenders to Arvind Mills…
Abstract
Arvind Mills incurred a loss of Rs.316 crores in the year 1999-2000 after a period of declining profits in spite of increasing sales. In January 2001 lenders to Arvind Mills received the Information Memorandum on Debt Restructuring which offered several alternative schemes. They had to decide whether they should accept the proposal and if they accept which specific scheme they should choose.
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Saurabh Agrawal, Dharmendra Kumar, Rajesh Kumar Singh and Raj Kumar Singh
Reverse supply chain (RSC) is one of the ways to handle product returns efficiently. Recovery of residual value from product returns also helps in achieving sustainability. Its…
Abstract
Purpose
Reverse supply chain (RSC) is one of the ways to handle product returns efficiently. Recovery of residual value from product returns also helps in achieving sustainability. Its successful implementation requires coordination among all the channel members involved in the activities, from the acquisition to collection to the disposition of returned products. This article aims to review the literature about coordination issues in the RSC.
Design/methodology/approach
A systematic literature review of 151 articles published during 2004–2021 is carried out. Theory, context and methodology (TCM) framework of the literature review is used to identify the research gaps for future research directions.
Findings
This study identifies the characteristics of RSC coordination. It includes channel structures; coordination mechanisms; performance measuring parameters; the methodology applied and explored industries. The review shows that game-theoretical modeling in RSC coordination is the most commonly used method to coordinate the channels. It was found that issues like disruption, fairness and corporate social responsibility are not explored in-depth and offer much potential for future research.
Originality/value
There are very limited studies on coordination issues in the RSC. The proposed articles add value by considering RSC issues from different strategic, government, consumers' behavior and functionality decision-making point of view.
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Yuqian Zhou, Gongbing Bi, Jiancheng Lv and Hongping Li
This paper aims to develop an optimal buyback promotion strategy for enterprises, including multibuyback strategy and self-buyback strategy, taking both the consumer's…
Abstract
Purpose
This paper aims to develop an optimal buyback promotion strategy for enterprises, including multibuyback strategy and self-buyback strategy, taking both the consumer's multichannel psychological acquisition attributes and remaining market into account.
Design/methodology/approach
Based on the game theory and Hotelling model, the authors formulate a new model to study the equilibrium of different buyback models, given the utility maximization of the consumers, the profit maximization and the constraint on nondecreasing market share of the enterprises, and the authors conduct comparative analysis.
Findings
Intuitively, enterprises buying back products of other brands would appeal to some consumers. However, the authors find that after implementing the multibuyback scheme, enterprises may not be able to seize competitors' markets or even lose their original customer base in the context considered in this article counterintuitive. In addition, the size of remaining market share and the consumer's multichannel psychological acquisition affect the choice of buyback promotion strategies. Moreover, after implementing multibuyback scheme, customers with old products subsidize those who receive additional discounts. Finally, the authors point out that the buyback strategy choices of companies with different goal-oriented are diverse.
Practical implications
This study has a very solid realistic background and provides guidance for enterprises to implement buyback promotion strategies. In addition, the authors unearth new influencing factors to provide a reasonable explanation for different buyback strategies in reality.
Originality/value
To the best of the authors’ knowledge, this study is one of the first to explore the multibuyback promotion strategy as a new buyback method, where the two influencing factors the authors have not been proposed so far.
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Due to insufficient disclosure on open market share repurchases in the USA, at any given point in time, outside shareholders have no knowledge of whether their firm is executing…
Abstract
Purpose
Due to insufficient disclosure on open market share repurchases in the USA, at any given point in time, outside shareholders have no knowledge of whether their firm is executing open market share repurchase trades. It is hypothesized that such information disparity between outside shareholders and insiders of a repurchasing firm creates asymmetric opportunities for insiders to time their sell trades in a period when the firm is engaged in buyback trading of its own shares. Insiders have an incentive to sell when the firm is in the market supporting the price by repurchasing its shares. The purpose of this study is to examine this hypothesis (insider timing hypothesis) by investigating insiders' trading activities during the periods of corporate share buyback trading.
Design/methodology/approach
Multiple regression analyses are used to explore relations among trades by insiders, corporate share buyback trades, and a number of other control variables.
Findings
This study finds evidence that insiders do increase the net number of shares sold in a fiscal quarter when the firm is in the market engaged in share buyback trading.
Originality/value
This study suggests the possibility of insiders' opportunistic trading behavior during the periods of corporate open market share buyback trading.
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Katherine Campbell, Dee Ann Ellingson and Jane M. Weiss
The theoretical basis for the case is information asymmetry and signaling theory, with buybacks providing a mechanism for reducing information asymmetry between management and…
Abstract
Theoretical Basis
The theoretical basis for the case is information asymmetry and signaling theory, with buybacks providing a mechanism for reducing information asymmetry between management and investors. The controversy surrounding buybacks has led to political and regulatory scrutiny, which, consistent with evidence from academic research, may affect corporate behavior.
Research methodology
The compact case is based on secondary, public information about stock buybacks. All sources used are cited in-text, with full citations included in the references section at the end of the teaching note.
Case Overview/Synopsis
Stock buybacks, a means of providing returns to shareholders, have recently received increased scrutiny by politicians, media and shareholder activists. Proponents have argued that buybacks result in efficient allocation of capital by returning funds to shareholders, whereas opponents have criticized buybacks for enriching executives, providing tax advantages to shareholders and contributing to income inequality. Corporations did not curtail their use of buybacks after the Inflation Reduction Act of 2022 imposed an excise tax. The case frames the buyback debate in current events and focuses on the buyback activity of Apple. The case provides students the opportunity to analyze alternative ways that companies can provide returns to shareholders, evaluate impacts of buybacks on corporate stakeholders and appraise the reasons for, and implications of, current controversy regarding buybacks.
Complexity/Academic Level
This compact case is appropriate for upper-level undergraduate or graduate courses in financial accounting, tax and finance. This case provides an opportunity to analyze and evaluate stock buyback decisions in the context of the current controversy related to buybacks.
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Istemi Demirag, Thanamas Kungwal and Yassine Bakkar
This paper investigates stakeholders' perspectives of share buybacks in the context of time-horizons of investment decisions and strategy.
Abstract
Purpose
This paper investigates stakeholders' perspectives of share buybacks in the context of time-horizons of investment decisions and strategy.
Design/methodology/approach
We use in-depth interviews with stakeholders from eight listed UK firms as well as examine their publicly available data.
Findings
Findings suggest that share buybacks involve a wide range of stakeholders' rational interests and long-term management perspectives as they enable firms to strategise operational plans towards their long-term corporate goals.
Research limitations/implications
The findings are based on interviews with a small number of share buyback firms and the findings, therefore, may not be generalised to all firms.
Practical implications
The results show that share buybacks may be part of the long-term interests of firms and not necessarily used as part of short-term EPS increases as suggested in the extant literature.
Originality/value
The findings contribute to the literature on corporate pay-out policies in the context of short-term financial objectives vs long-term strategic objectives of stakeholders. They show that share buybacks can be an important part of firms' long-term strategic considerations.
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