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1 – 8 of 8Bill Francis, Iftekhar Hasan and Christos Pantzalis
This study provides evidence on the importance of operational hedges in foreign-exchange risk management, an issue that has been largely ignored in the literature. One possible…
Abstract
This study provides evidence on the importance of operational hedges in foreign-exchange risk management, an issue that has been largely ignored in the literature. One possible reason for the absence of empirical evidence in the literature may be related to the difficulty in devising the appropriate measures of a firm's ability to construct operating hedges. We utilize measures of the structure of an MNC's foreign subsidiary network as proxies of the firm's ability to devise operational hedges and examine their relationship to exposure coefficients computed prior to and during the 1997–1998 Asian currency crisis. Our results show that the mean exposure during the Asian crisis period was significantly higher than the pre-crisis period. In addition, the mean of the absolute change in the exposure of MNCs that only operate in the Asian crisis region was significantly higher than that of MNCs without operations in the crisis region. We find a strong relationship between our proxies for ability to construct operating hedges and exchange-rate exposure measures both prior to the crisis and during the crisis. An even stronger association between exposure and measures of the MNC network structure is found for the sub-sample of MNCs that have some operations in the Asian crisis region. Similar results are obtained when the relationship is examined separately for “net importers” (MNCs with positive exposures) and “net exporters” (MNCs with negative exposures). Overall, our results are consistent with the notion that operational hedges significantly reduce a firm's exposure to foreign-exchange risk.
Scott Besley, Steve P. Fraser and Christos Pantzalis
We examine the relationship between how mutual fund sponsors configure their board(s) of directors and the performance of the funds under a particular board's purview. Fund…
Abstract
We examine the relationship between how mutual fund sponsors configure their board(s) of directors and the performance of the funds under a particular board's purview. Fund sponsors utilize either one board to oversee all the funds within a fund family or multiple boards that oversee one fund or a subset of the family's funds. Our results suggest that fund families – that is, sponsors – that use multiple boards have significantly higher objective-adjusted board-level weighted excess returns. But, there are no significant differences in the objective-adjusted board-level weighted excess expenses. These results are consistent with the argument that multiple boards provide superior monitoring.
Tom Aabo, Marianna Andryeyeva Hansen and Christos Pantzalis
The purpose of this paper is to investigate how non‐finance departmental involvement in the management of exchange rate risks impacts the extent of foreign exchange speculation in…
Abstract
Purpose
The purpose of this paper is to investigate how non‐finance departmental involvement in the management of exchange rate risks impacts the extent of foreign exchange speculation in non‐financial firms.
Design/methodology/approach
Non‐financial firms in a small open economy (Denmark) are surveyed to investigate the extent of foreign exchange speculation and how it is related to the degree of nonfinance departmental involvement in the management of exchange rate risks. The authors employ binary and ordered probit regression analysis.
Findings
A positive link is found between the extent to which departments other than the finance department are involved in the management of exchange rate risks; and second, the extent to which the firm is likely to speculate – whether in the form of selective hedging or active speculation – on the foreign exchange market.
Practical implications
The findings indicate that the trend towards a more integrated risk management approach in which the finance department is not the only department responsible for risk management may have the (unforeseen) consequence that foreign exchange speculation increases.
Originality/value
The paper's findings are important because the link between the extent of foreign exchange speculation and a more integrated risk management approach has not been addressed previously.
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Aim of the present monograph is the economic analysis of the role of MNEs regarding globalisation and digital economy and in parallel there is a reference and examination of some…
Abstract
Aim of the present monograph is the economic analysis of the role of MNEs regarding globalisation and digital economy and in parallel there is a reference and examination of some legal aspects concerning MNEs, cyberspace and e‐commerce as the means of expression of the digital economy. The whole effort of the author is focused on the examination of various aspects of MNEs and their impact upon globalisation and vice versa and how and if we are moving towards a global digital economy.
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Tom Aabo, Frederik Hoejland and Jesper Pedersen
The purpose of this paper is to investigate the role of narcissistic supply for the association between CEO narcissism and corporate risk taking.
Abstract
Purpose
The purpose of this paper is to investigate the role of narcissistic supply for the association between CEO narcissism and corporate risk taking.
Design/methodology/approach
The authors investigate a sample of 281 non-financial S&P 1500 firms and a corresponding 457 CEOs in the 10-yr period 2006–2015.
Findings
The association between CEO narcissism and corporate risk taking depends on the admiration, attention, and affirmation of own superiority (“narcissistic supply”) that the CEO receives given her/his current position. Thus, a narcissistic CEO with an insufficient narcissistic supply (small firm/small compensation) will crave for more and take more risks (“rock the boat”) while a narcissistic CEO with a sufficient narcissistic supply (large firm/large compensation) will protect the status quo and be reluctant to take new risks. Specifically, the authors find that a change from a slightly narcissistic CEO to a strongly narcissistic CEO, for positions entailing limited (abundant) narcissistic supply, is associated with an increase (a decrease) in corporate risk of 6%–8% (11%–27%).
Originality/value
Previous research indicates a positive association between CEO narcissism and corporate risk taking in specific domains such as M&A and R&D activities. This paper provides a novel contribution to the existing literature by identifying and assessing the important role of narcissistic supply for the association between CEO narcissism and corporate risk taking in general.
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The paper's aim is to examine the influence of the Greek political elections on the course of the Athens Stock Exchange (ASE). Using daily data from the ASE General Price Index…
Abstract
Purpose
The paper's aim is to examine the influence of the Greek political elections on the course of the Athens Stock Exchange (ASE). Using daily data from the ASE General Price Index, it seeks to empirically examine the effect of political elections (Parliamentary and European elections) on the course of the ASE over the period 1996‐2002.
Design/methodology/approach
This paper examines the relationship between Greek political elections and ASE using ordinary least squares (OLS) models. It concentrates on the pre‐election and the post‐election periods of the last decade. Daily closing prices of the General ASE index are used for the period 1996‐2002.
Findings
The results show that two months prior to the elections index performance increases on average and the mean daily fluctuation decreases. One month before the elections, index performance decreases, the mean daily fluctuation increases and the change of daily exchange value increases on average. During the three‐month post‐election period, there is a considerable increase of index progress. Furthermore, between three and six months after the elections, a decrease in performance is found, while for a collective six months after the elections, there is remarkably positive course. Using a simple OLS model with a dummy variable, it is found that there is a negative effect of the political elections on the course of the ASE. However, this effect is always insignificant.
Practical implications
The results have important implications for traders, investors and political analysts. The findings are strongly recommended to financial managers dealing with Greek stock indices.
Originality/value
The main contribution of this paper is to provide evidence using data before and after the financial crisis of 1999‐2001 in Greece.
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Sandra Cohen, Vassilios-Christos Naoum and Orestes Vlismas
The purpose of this paper is to investigate the relationship of intellectual capital (IC) with the strategy of small-medium enterprises (SMEs) and their executive decisions…
Abstract
Purpose
The purpose of this paper is to investigate the relationship of intellectual capital (IC) with the strategy of small-medium enterprises (SMEs) and their executive decisions regarding the strategy of their IC portfolio during a financial crisis.
Design/methodology/approach
The analysis is informed by the responses of 162 Greek SMEs on a structured questionnaire. Greek SMEs constitute an appropriate research setting since they operate within an environment of economic recession, financial turbulence and operational uncertainty.
Findings
Initial analysis indicates that SMEs’ strategic position seems to affect the composition of their IC portfolio, especially when a SME is strategically classified as Analytic according to Miles and Snow's (1978) typology. Moreover, Greek SMEs do not seem to follow the suggested by literature executive decisions for the strategic management of their IC portfolio. They apply on their IC components strategies that could be classified as “Act” or “Analyse” under Wissenzbilanz's typology (Bornemann and Alwert, 2007) regardless of the prospects for improvement expected for these IC components. Therefore, while SMEs seem to care about their IC, they do not manage it in a coherent and strategically beneficial way.
Research limitations/implications
The study applies a novel methodology. By properly adapting the Wissenzbilanz's typology for IC executive decisions, it provides a research approach for collecting cross sectional firm data for IC executive decisions. A possible limitation but also an area for future research is to examine the implications of the relations between SMEs’ strategy and IC portfolio on SMEs’ financial performance.
Practical implications
The practical implications of this study are twofold. First, managers should take into consideration that IC seems to be a strategic enabler even in periods of financial crisis and, thus, decisions regarding IC investments should not be abandoned. Second, SMEs tend to follow different than the recommended by literature executive decisions for the components of their IC portfolio. This might reduce the potential returns on IC investment. Therefore randomly investing in IC will not result in the expected benefits.
Originality/value
The contribution of this study is that explores the relations of SMEs’ executive decisions in relation to the strategic management of their IC components as well as the influence that the strategic position of SMEs exerts on the composition of their IC portfolio during a financial crisis.
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