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Open Access
Article
Publication date: 3 August 2021

Rexford Abaidoo and Elvis Kwame Agyapong

This study examines how specific micro-level macroeconomic indicators influence corporate performance volatility among US corporate bodies in the short run.

Abstract

Purpose

This study examines how specific micro-level macroeconomic indicators influence corporate performance volatility among US corporate bodies in the short run.

Design/methodology/approach

The study employs error correction autoregressive distributed lagged (ARDL) model (ECM) to examine how micro-level variables influence volatility associated with corporate performance in the short run.

Findings

This paper finds that disaggregated or micro-level variables examined, tend to exhibit features that are not readily apparent from the aggregate variable from which such variables are derived. For instance, reported empirical estimate suggests that, growth in expenditures on services and nondurable goods tend to lower volatility associated with corporate performance, whereas government expenditures and expenditures on durable goods rather worsens volatility associated with corporate performance, all things being equal. Additionally, presented empirical estimates further provide evidence suggesting that macroeconomic uncertainty and inflation uncertainty significantly moderate or influence the extent to which disaggregated variables impact corporate performance volatility.

Originality/value

Compared to related studies in the reviewed literature, this study rather examines volatility associated with corporate performance instead of the corporate performance indicator itself. Additionally, this paper also examines how disaggregated variable instead of aggregate variables impact such volatility. Finally, the moderating role of key macroeconomic conditions in such a relationship is also examined.

Open Access
Article
Publication date: 29 September 2022

Kumiko Nemoto

Building on the institutional theory perspective on corporate governance change and based on interviews with investor relations (IR) managers in large Japanese companies, this…

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Abstract

Purpose

Building on the institutional theory perspective on corporate governance change and based on interviews with investor relations (IR) managers in large Japanese companies, this study aims to examine Japanese IR managers’ perceptions of the influence of foreign shareholders on Japan’s corporate governance reform and stakeholder-based system. The paper examines tensions, conflicts and collaborations among different stakeholders involved in corporate governance changes in Japan, especially in the areas of firm ownership, employment relations and boards of directors. The paper explains why convergence does not happen in some large Japanese companies by investigating Japanese managers’ responses to and perceptions of foreign shareholders in multiple corporate contexts.

Design/methodology/approach

The author conducted in-depth interviews with ten IR managers at large, listed Japanese companies in Kyoto and Tokyo and two managers at foreign investment banks in Tokyo, between 2018 and 2021.

Findings

This paper explores five themes that emerged from my interviews: Chief executive officers’ (CEOs’) mixed perceptions of foreign investors, the effectiveness of CEO compensation and outside directors, managers’ reluctance to accept stock price-driven business strategies, foreign investors’ engagement vs investments in index funds and gender patterns, including the effectiveness of token female outside directors. The Japanese companies the author looked at incorporated foreign shareholders as consultants and adopted a few major shareholder-based customs, such as CEOs communicating with investors, having outside directors, increasing CEO compensation and slimming down unprofitable parts of the business via restructuring and downsizing. Simultaneously, they resisted a few major shareholder-based practices. Foreign shareholders’ pressure revealed tensions and contradictions between the Japanese stakeholder system and shareholder primacy-based customs.

Originality/value

This paper is one of the few qualitative studies that explores Japanese IR managers’ responses to and perceptions of foreign shareholders in corporate governance reform, with a particular focus on ownership, employment relations and board members. This paper provides examples of tension, conflict and cooperation between Japanese managers and foreign investors, as seen through the eyes of Japanese IR managers. Examining changes in Japan’s stakeholder-based system of corporate governance reform enables us to better understand the processes by which, with vigorous pressure from government and foreign shareholders, a non-western country like Japan may adopt shareholder-based customs and how such a change may also lead to institutional changes.

Details

Corporate Governance: The International Journal of Business in Society, vol. 23 no. 3
Type: Research Article
ISSN: 1472-0701

Keywords

Open Access
Article
Publication date: 24 May 2022

Renyu Li and Yi Feng

The real estate industry has experienced frequent changes in corporate executives in recent years. A total of 147 A-share listed firms witnessed a total of 191 corporate

Abstract

Purpose

The real estate industry has experienced frequent changes in corporate executives in recent years. A total of 147 A-share listed firms witnessed a total of 191 corporate executives' departure. This wave of corporate executive departures is significantly different from previous waves. This study aims to examine whether industry evolution influence the characteristics of corporate executives? If so, then how?

Design/methodology/approach

Drawing on upper echelons theory, this study analyzed the effects of industry life cycle on the characteristics of corporate executives. The data of A-share listed companies in the textile, real estate and computer industries in China from 1992 to 2014 were collected.

Findings

There are significant differences in the characteristics of corporate executives that match the life cycles of different industries. Companies at the growth stage in the life cycle of an industry were more likely to select and appoint younger corporate executives with political capital, peripheral functions and output functions, whereas companies at the maturity stage were more likely to select and appoint older corporate executives with throughput functions.

Originality/value

By using the upper echelons theory as a starting point, this study analyzed the effects of industry life cycle on corporate executive's characteristics. The research findings offer theoretical implications for the upper echelons theory and provide managerial implications.

Details

Journal of Organizational Change Management, vol. 35 no. 7
Type: Research Article
ISSN: 0953-4814

Keywords

Open Access
Article
Publication date: 8 February 2023

Bridget McNally and Thomas O’Connor

This paper aims to examine the impact of the corporate lifecycle on the corporate governance practices of firms in the Republic of Korea.

Abstract

Purpose

This paper aims to examine the impact of the corporate lifecycle on the corporate governance practices of firms in the Republic of Korea.

Design/methodology/approach

The authors use five corporate lifecycle measures and corporate governance scores from Black et al. (2012) to estimate governance-prediction models inclusive of corporate lifecycles measures for a sample of 497 Republic of Korea firms over the 1998–2004 period.

Findings

The authors find little evidence which points to a corporate governance lifecycle for firms in the Republic of Korea. The findings suggest that factors other than firm lifecycle best explain the corporate governance practices of firms in Korea.

Originality/value

Using a battery of lifecycle measures and corporate governance indexes and subindexes, the authors believe this paper represents the most rigorous study yet to study the corporate governance lifecycle in an emerging market economy, namely, the Republic of Korea.

Details

Corporate Governance: The International Journal of Business in Society, vol. 23 no. 5
Type: Research Article
ISSN: 1472-0701

Keywords

Open Access
Article
Publication date: 4 May 2020

Rahmat Heru Setianto

This paper examines empirically how growth opportunities determine the relationship between corporate diversification and firm's value in an emerging economy.

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Abstract

Purpose

This paper examines empirically how growth opportunities determine the relationship between corporate diversification and firm's value in an emerging economy.

Design/methodology/approach

This study employs annual data of Indonesian manufacturing firm's spanning five years. To test the potential nonlinear relationship between diversification and value, nonlinear regression model is employed. Baron and Kenny’s (1986) procedure is also employed to test the mediation role of the growth opportunities in the relation between diversification strategy and firm's value. This study also performs further robustness analysis on mediating role of growth opportunities on the relationship between diversification strategy and corporate value using path analysis approach.

Findings

The analyses reveal the U-shaped diversification and value relationship; this result suggests that the effect of diversification on value will vary across firms, the negative effect of diversification strategy on firm's value may reverse at higher levels of diversification. Further analysis indicates that such relationship is fully mediated by firm's growth opportunities.

Practical implications

Given the results, firms that are considering implementing diversification strategy should seek the optimal level of diversification to gain diversification premium. Furthermore, the manager should observe the best opportunities available for the firm before undertaking the diversification strategies.

Originality/value

This paper contributes to the existing literature on diversification strategy by extending the insight of this research area of a large emerging economy, on which prior studies have not reached conclusive results.

Details

Journal of Asian Business and Economic Studies, vol. 27 no. 2
Type: Research Article
ISSN: 2515-964X

Keywords

Open Access
Article
Publication date: 15 June 2023

John Henry Hall

The purpose of this paper is to determine if there is a link between corporate shareholder value creation and economic growth. The first objective of this paper is to determine…

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Abstract

Purpose

The purpose of this paper is to determine if there is a link between corporate shareholder value creation and economic growth. The first objective of this paper is to determine which specific shareholder value measurement best explains shareholder value creation for a particular industry. The next objective of the study is to establish, for each of nine different categories of firms examined, a set of value drivers that are unique and significant in expressing shareholder value for that particular category of firms. Lastly, the relationship between shareholder value creation and economic growth is tested.

Design/methodology/approach

To quantify and measure value creation, the paper investigates the various value creation measurements that are being applied. The next step is to ascertain whether various industries have different value creation measures that best explain value creation for the respective industries. Then, the value drivers of these specific value creation measures can be determined and their relationship with economic growth tested.

Findings

The results of this study indicate that each industry does have a specific shareholder value creation measurement that best explains shareholder value creation for that industry; for example, for five of the nine categories (industries) that were analyzed, market value added was found to be the best shareholder value creation measurement, but for capital-intensive firms and manufacturing firms, the Qratio is the best measure, while for the food and beverage industry, the market to book ratio was found to be a better measure of shareholder value creation than other measures tested. It was further found that an increase in corporate shareholder value creation is to the detriment of economic growth.

Originality/value

The contribution of the present study is its determination of a unique shareholder value creation measurement for particular industries. In addition, a specific set of variables per industry that create shareholder value is identified. Lastly, the important link between shareholder value creation and economic growth is exposed.

Details

Studies in Economics and Finance, vol. 41 no. 1
Type: Research Article
ISSN: 1086-7376

Keywords

Open Access
Article
Publication date: 6 April 2021

Veronika Vinogradova

The paper investigates the market performance of strategic acquisitions for growth in the fifth and sixth merger waves and outlines the major determinants that affect the…

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Abstract

Purpose

The paper investigates the market performance of strategic acquisitions for growth in the fifth and sixth merger waves and outlines the major determinants that affect the performance of acquiring companies in these most complex and most challenging corporate transactions.

Design/methodology/approach

To perform the quantitative analysis a unique data sample was built out of acquisitions performed in the 5th and 6th merger waves with an only single purpose – strategic growth. Their performance was first analyzed using the method of market-based event study. In addition, the impact of several non-accounting determinants identified through a thorough literature review was tested using univariate/multivariate regression analysis.

Findings

The new findings of the study state that strategic acquisitions for growth created more value for acquiring companies if they were completed internationally and involved an acquisition of a middle-sized company. Moreover, the acquisition of targets in the less related industries (2-SIC) led to stronger performance of acquirers, especially in the international settings.

Research limitations/implications

The study suggests additional directions for future research. The future analysis can investigate the post-merger acquisition performance of strategic acquirers and can focus on additional financial (accounting) determinants in the evaluation of performance. This perspective can not only address the limitations imposed by the assumption of efficient capital markets but also provide additional insights.

Practical implications

The results of current study have important implications for executives performing M&A for growth. They show that the market reaction to M&A announcement can be at least partially anticipated and help managers to plan their strategic moves based on a defined set of variables.

Social implications

The study contributes to the sustainable, value-creating growth dynamics and encourages Executives to “lead for value.”

Originality/value

(1) In contrast to the existing studies that do not differentiate between the transaction rationale in their analysis, this paper focuses explicitly only on those acquisitions that have strategic growth as their primary objective and responses therefore, to the problem stated by Halpern (1983). This approach helps to mitigate the distortion of results and make a reliable assessment of the strategic move. (2) The results of quantitative analysis also outline that acquisition of mid-sized targets and larger degree of diversification (2-SIC, international focus) code were associated with higher value creation.

研究目的

本文旨在研究於第五和第六波的併購浪潮中為增長而作出的策略性收購的市場表現;本文亦概述在這些極其複雜的和極具挑戰性的公司交易中影響作收購公司的表現的主要因素.

研究設計/方法/理念

為了能進行定量分析,研究人員收集在第五及第六波的併購浪潮中以策略性增長為唯一目的的收購個案、建立一個獨特的數據樣本。研究人員首先以基於市場的事件研究法分析那些進行了收購的公司的表現,並以單變量/多變項迴歸分析法去試驗那幾個透過深入的文獻研究而找到的非會計的決定因素的影響.

研究結果

研究得出的新發現是、如果以增長為目的的策略性收購是於國際間完成及涉及收購中型公司的話,則這收購行動會給進行收購的公司帶來更多價值。而且、如果收購目標的產業與作收購公司的不太相關的話 (2-標準產業分類),收購行動會為進行收購的公司帶來更強的表現、特別是在國際環境下進行這收購行動.

研究的原創性/價值

(1) 有別於現時其它於其分析中不區分交易理由的研究,本文明確地表示只集中探討那些以帶來策略性增長為主要目標的收購;因此、本研究對 (哈爾彭,1983年)(Halpern, 1983) 陳述的問題作出了回應。本研究的理念有助於減輕我們對收購結果的曲解,從而讓我們對策略性行動能作出可靠的評估. (2) 定量分析的結果、亦概述了以中型公司為目標的收購及更大程度的多樣化 (2-標準產業分類、以國際為焦點) 代碼與創造更大價值是有關聯的。

對日後研究的作用/實際影響

本研究的結果對學術界及管理人員均具吸引力,亦為策略規劃提供一個額外的工具.

對社會的影響

本研究可帶來可持續的及可創造價值的增長動力,又可鼓勵行政主管採用以價值為本的領導方針.

Details

European Journal of Management and Business Economics, vol. 30 no. 3
Type: Research Article
ISSN: 2444-8451

Keywords

Open Access
Article
Publication date: 24 February 2021

Vicente Salas-Fumás

This paper aims to assess the vulnerability and resilience of the Spanish non-financial corporations (NFC) to the shock from the COVID pandemic with consolidated income accounts…

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Abstract

Purpose

This paper aims to assess the vulnerability and resilience of the Spanish non-financial corporations (NFC) to the shock from the COVID pandemic with consolidated income accounts data, and shows comparative labor productivity and endowment of organizational capital of Spanish firms, as indicators of their capabilities at the outset of the new digital transformation wave proposed by the next generation EU program.

Design/methodology/approach

The paper first describes the recent evolution (quarterly 2020 data) of the Spanish non-financial corporate sector (gross value added, labor cost, capital formation, profits) in the assessment of the vulnerability and resilience of the sector to the shock of the COVID pandemic. Then second, it estimates a probit model to evaluate the EU country effects in the explanation of the different propensity firms in the European Company Survey database to adopt innovative management and organization practices.

Findings

In the Spring of 2020, the Spanish NFC were still recovering from the great recession (low resilience), and the severe contraction in value-added and profits of the corporate sector in the first three quarters of the year evidences its high vulnerability. The proved complementarity between organizational and information related assets implies that the low endowment of organizational capital of Spanish firms, could be a severe limitation for the advancement toward digitalization.

Research limitations/implications

The aggregate corporate sector data used in the analysis of vulnerability and resilience of Spanish firms does not account for the heterogeneous effects of the pandemic across economic sectors (manufacturing and services, for example) and across firms (large versus small ones).

Originality/value

The paper complements the country-level analysis of the impact of the COVID pandemic in the Spanish economy with the analysis of the impact of the pandemic in the performance of the corporate sector. It provides one of the first analysis of the current endowment of organization capital of Spanish firms and highlights its relevance for productivity growth.

Details

Applied Economic Analysis, vol. 29 no. 85
Type: Research Article
ISSN: 2632-7627

Keywords

Open Access
Article
Publication date: 19 June 2020

Jeffrey D. Kushkowski, Charles B. Shrader, Marc H. Anderson and Robert E. White

Multiple disciplines such as finance, management and economics have contributed to governance research over time. However, the full intellectual structure of the governance…

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Abstract

Purpose

Multiple disciplines such as finance, management and economics have contributed to governance research over time. However, the full intellectual structure of the governance “field” including the exchange of knowledge across disciplines and the large variety of governance topics remains to be uncovered. To appreciate the breadth of corporate governance research, it is necessary to understand the disciplinary sources from which the research stems. This manuscript focuses on the interdisciplinary underpinnings of corporate governance research.

Design/methodology/approach

This paper employs bibliometric analysis to trace the evolution of corporate governance using articles included in the ISI Web of Science database between 1990 and 2015. Journals included in these categories encompass a full range of business disciplines and provide evidence of the multi-disciplinary nature of corporate governance. It also uncovers the topics treated by disciplines under the governance umbrella using a machine learning method called latent Dirichtlet allocation (LDA).

Findings

Corporate governance research deals with a number of strategy-related topics. Unlike strategy topics that reside in a single discipline, corporate governance crosses disciplinary boundaries and includes contributions from accounting, finance, economics, law and management. Our analysis shows that over 80% of corporate governance articles come from outside the field of management. Our LDA solution indicates that the major topics in governance research include corporate governance theory, control of family firms, executive compensation and audit committees.

Originality/value

The results illustrate that corporate governance is far more interdisciplinary than previously thought. This is an important insight for corporate governance academics and may lead to collaborative research. More importantly, this research illustrates the usefulness of LDA for investigating interdisciplinary fields. This method is easily transferable to other interdisciplinary fields and it provides a powerful alternative to existing bibliometric methods. We suggest a number of topic areas within library and information science where this method may be applied, including collection development, support for interdisciplinary faculty and basic research into emerging interdisciplinary areas.

Details

Journal of Documentation, vol. 76 no. 6
Type: Research Article
ISSN: 0022-0418

Keywords

Open Access
Article
Publication date: 10 November 2023

Alessandro Gabrielli and Giulio Greco

Drawing on the resource-based view (RBV), this study investigates how tax planning affects the likelihood of financial default in different stages of the corporate life cycle.

Abstract

Purpose

Drawing on the resource-based view (RBV), this study investigates how tax planning affects the likelihood of financial default in different stages of the corporate life cycle.

Design/methodology/approach

Collecting a large sample of US firms between 1989 and 2016, hypotheses are tested using a hazard model. Several robustness and endogeneity checks corroborate the main findings.

Findings

The results show that tax-planning firms are less likely to default in the introduction and decline stages, while they are more likely to default in the growth and maturity stages. The findings suggest that introductory and declining firms use cash resources obtained from tax planning efficiently to meet their needs and acquire other useful resources. In growing and mature firms, tax aggressiveness generates unnecessary slack resources, weakens managerial discipline and increases reputational risks.

Practical implications

The results shed light on the benefits and costs associated with tax planning throughout firms' life cycle, holding great significance for managers, investors, lenders and other stakeholders.

Originality/value

This study contributes to the literature that examines resource management at different life cycle stages by showing that cash resources from tax planning are managed in distinctive ways in each life cycle stage, having a varied impact on the likelihood of default. The authors shed light on underexplored cash resources. Furthermore, this study shows the potential linkages between the agency theory and RBV.

Details

Management Decision, vol. 61 no. 13
Type: Research Article
ISSN: 0025-1747

Keywords

1 – 10 of over 3000