Search results

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.

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.

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.

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.

This study aims to examine the influence of ownership structure and board composition on the probability and intensity of stock repurchases. The study’s sample comprises 3,744 firm-year observations, consisting of 53 repurchasing firms with 96 firm-year observations from 2008 to 2019.

Probit and fixed-effects regression models are used to obtain empirical results. Moreover, a probit model with a continuous endogenous regressor (IV-probit) and an instrumental variable method with two-stage least squares (IV-2SLS) estimation are used to address endogeneity.

Corporations with high family or state ownership tend to inhibit stock repurchases to hoard excess free cash flow, supporting agency theory. Conversely, firms with high board independence tend to repurchase their stocks at least once to distribute free cash flows to shareholders, confirming agency theory. Nonetheless, corporations with more female directors on the board or CEO duality tend to conduct stock repurchases at least once but do not repurchase stocks with high values. Interestingly, more female directors on the board may send false signals about undervalued stocks.

This is the first study to reveal that firms with CEO duality repurchase their stocks at least once but avoid repurchasing shares with high values. It is also the first study to explore whether women on a board may cause false signaling about undervalued stocks. Furthermore, this study reveals that family and state ownership are potential determinants of stock repurchases in countries with high ownership concentration. This is the first study to address this issue in Thailand.

The study aims to examine the dividend omissions and dividend cuts behaviour of manufacturing and non-financial services firms to identify the determinants of dividend omissions and dividend cuts.

The study analyses the financial data of 3,546 firms from 2011 to 2020 (35,460 firm-year observations) using a dynamic random-effect probit panel regression model.

The results suggest that profitability, growth opportunity, leverage, liquidity, risk, extraordinary income, shareholding pattern and buyback are major determinants of dividend omissions. Similarly, dividend cut in the previous year, profitability, operating cash flow, risk and extraordinary income are major factors leading to dividend cuts.

Firms which omit the dividend are less likely to start paying dividend in subsequent years, whereas firms which cut the dividend may increase dividend in later years. Also, profitability decreases for a significant number of firms post dividend omission and cut. This indicates that dividend omission is a more prominent signal than a dividend cut for the financial health of a firm.

The determinants identified in the study enable analysts and portfolio managers to decide the propensity of dividend omission and cut even before actual announcements and can alleviate the significant loss in the portfolio. Also, managers and the board of directors would be able to monitor the firm’s financial performance to avoid the situation leading to dividend omissions and cuts.

The study strongly recommends that firms should voluntarily pay dividends to shareholders to encourage the healthy participation of retail shareholders in the equity market and create a long-term win–win situation for all stakeholders in society. If a large number of firms continue not to pay the dividend, the study appeals to the regulators to intervene to protect shareholders' interests for the greater good of society.

To the best of author’s knowledge, this is the first study to empirically identify the determinants of dividend omission and cut in the unique setting like India where dividend taxation had undergone a significant change.

This research assesses the present condition of Circular Economy (CE) practices in green hotels situated in two leading Middle Eastern nations, Saudi Arabia and Egypt. Furthermore, it investigates the crucial impact of Industry 4.0 innovations in facilitating the relationship between the adoption of CE initiatives and hotel performance (HP).

Data from 59 green hotels in Saudi Arabia and 76 in Egypt were collected online, resulting in 400 complete forms, providing a diverse sample size suitable for PLS-SEM analysis using JASP software as a leading machine learning application.

The results demonstrate a notable correlation between CE strategies, including redesign, production, reuse and recovery in hotels and HP. Additionally, the impact of Industry 4.0 performance on the relationship between CE and HP is facilitated by four distinct CE loops.

This study offers practical insights into implementing CE practices in the hotel industry, aiding policymakers and establishments in enhancing sustainability and performance. Key stakeholders can use these findings to develop strategies that integrate CE initiatives, improve operational outcomes and align marketing efforts with sustainable practices.

This study is groundbreaking in its exploration of the relationship between CE and the transition to Industry 4.0 in the MENA region, analyzing the specific CE practices that contribute to high HP. The tested model expands on the Natural Resource-Based View and stakeholder theory by incorporating the critical role of Industry 4.0 innovations in the CE–HP nexus.

To motivate the supplier to exert more corporate social responsibility (CSR) effort, the manufacturer offers it either a revenue sharing contract or a cost sharing contract. We study the contract choice of the manufacturer.

We develop game theoretic models to investigate the manufacturer’s optimal contract choice and examine whether there is a conflict of contract preference between the manufacturer and the supplier.

First, the revenue sharing contract has more strict conditions regarding the unit cost of the supplier’s CSR effort and the manufacturer’s retail price. Second, the cost sharing contract enables the manufacturer to achieve a “win-win” performance in terms of both profitability and CSR effort. Finally, the supplier prefers the cost sharing contract when the manufacturer’s price is low, otherwise, it prefers the revenue sharing contract.

Differing from the papers on CSR, our paper focuses on the supplier CSR management problem, and analyzes the optimal contract to motivate the supplier to exert more CSR effort.

The management issues of this article, and the author is attempting to address these issues, are as follows: What is the optimal decision of each entity in the closed-loop supply chain for the cascading utilization of power batteries under three government measures: no subsidies, subsidies and rewards and punishments? How do different measures affect the process of cascading the utilization of power batteries? Which measures will help incentivize cascading utilization and battery recycling efforts?

The paper uses game analysis methods to study the optimal decisions of various stakeholders in the supply chain under the conditions of subsidies, non-subsidies and reward and punishment policies. The impact of various parameters on the returns of game entities is tested through Matlab numerical simulation.

The analysis discovered that each party in the supply chain will see an increase in earnings if the government boosts trade-in subsidies, which means that the degree of recycling efforts of each entity will also increase; under the condition with subsidies, the recycling efforts and echelon utilization rates of each stakeholder are higher than those under the incentive and punishment measure. In terms of the power battery echelon’s closed-loop supply chain incentive, the subsidy policy exceeds the reward and punishment policy.

The article takes the perspective of differential games and considers the dynamic process of exchanging old for new, providing important value for the practice of using old for new behavior in the closed-loop supply chain of power battery cascading utilization.

The purpose of this paper is to examine the relationship between accounting conservatism and pledging of shares by controlling shareholders of a firm to obtain a loan. The pledging of shares by the controlling shareholders of a firm results in alterations to the payoff and risk structure for these shareholders. Since accounting numbers have valuation implications, pledging of shares by a controlling shareholder has an impact on accounting policy choices made by the firm. The purpose of this paper is to examine the impact of controlling shareholder share pledging to obtain a loan on a specific accounting policy choice, namely, conservatism.

The paper uses a large data set from India comprising 14,786 firm years consisting of 1,570 firms belonging to 58 industries for a period of 11 years (2009–2019). The authors use ordinary least square regression with robust standard errors. The authors conduct robustness checks and the results are consistent across alternative statistical methodologies and alternative measures of the primary dependent and independent variables.

The primary results show that pledging of shares by the controlling shareholders results in higher conditional conservatism and lower unconditional conservatism. Further analysis reveals that the relationship is stronger when the controlling shareholder holds a majority ownership in the firm. Additionally, the results show that for business group affiliated firms, which are unique to developing countries, both the conditional and the unconditional conservatism are incrementally lower when the controlling shareholder pledges the shares. For family firms with a family member as CEO, the conditional conservatism is incrementally higher and the unconditional conservatism is incrementally lower. Finally, the authors show that the results hold when the pledge intensity variable is measured with a one-year lag and finally, the authors show that conditional conservatism is incrementally higher in the year of the increase in the pledge and the year after, but there is no such incremental impact on unconditional conservatism.

The research is limited to the listed firms in India. Since majority of the listed firms are controlled by families and the family firms around the world are heterogeneous the findings of the research may not be applicable to other countries.

The study has implications for policy-making and monitoring of the pledging by the controlling shareholders. It also helps the investors in making investment decisions with respect to family firms in India.

The study is unique as it focuses on the relationship between pledging of shares by the controlling shareholders and its impact on accounting conservatism. To the best of the authors’ knowledge, this is the first research integrating these two aspects.