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The objective of this study is to investigate how country risk, different political actions from the government and bureaucratic behavior influence the activities in industry supply chains (SCs) in emerging markets. The main objective of this study is to investigate the influence of these external stakeholders’ elements to the demand-side and supply-side drivers and barriers for improving competitiveness of Ready-Made Garment (RMG) industry in the way of analyzing supply chain. Considering the phenomenon of recent change in the RMG business environment and the competitiveness issues this study uses the principles of stakeholder and resource dependence theory and aims to find out some factors which influence to make an efficient supply chain for improving competitiveness. The RMG industry of Bangladesh is the case application of this study. Following a positivist paradigm, this study adopts a two phase sequential mixed-method research design consisting of qualitative and quantitative approaches. A tentative research model is developed first based on extensive literature review. Qualitative field study is then carried out to fine tune the initial research model. Findings from the qualitative method are also used to develop measures and instruments for the next phase of quantitative method. A survey is carried out with sample of top and middle level executives of different garment companies of Dhaka city in Bangladesh and the collected quantitative data are analyzed by partial least square-based structural equation modeling. The findings support eight hypotheses. From the analysis the external stakeholders’ elements like bureaucratic behavior and country risk have significant influence to the barriers. From the internal stakeholders’ point of view the manufacturers’ and buyers’ drivers have significant influence on the competitiveness. Therefore, stakeholders need to take proper action to reduce the barriers and increase the drivers, as the drivers have positive influence to improve competitiveness.

This study has both theoretical and practical contributions. This study represents an important contribution to the theory by integrating two theoretical perceptions to identify factors of the RMG industry’s SC that affect the competitiveness of the RMG industry. This research study contributes to the understanding of both external and internal stakeholders of national and international perspectives in the RMG (textile and clothing) business. It combines the insights of stakeholder and resource dependence theories along with the concept of the SC in improving effectiveness. In a practical sense, this study certainly contributes to the Bangladeshi RMG industry. In accordance with the desire of the RMG manufacturers, the research has shown that some influential constructs of the RMG industry’s SC affect the competitiveness of the RMG industry. The outcome of the study is useful for various stakeholders of the Bangladeshi RMG industry sector ranging from the government to various private organizations. The applications of this study are extendable through further adaptation in other industries and various geographic contexts.

The purpose of this paper is to clarify the influence of country risk (CR) and cultural distance (CD) on transnational equity investments. It also tries to find out the international equity investment patterns of enterprises from developing countries like China.

From the perspectives of internalization theory, transaction cost theory, etc. this paper tries to explain the relationships between country‐level factors and transnational investment. Based on the data collected from overseas listed companies, it also empirically analyses the impacts of CR and CD on Chinese enterprises' ownership pattern in transnational equity investment.

The empirical results of this paper indicate that both the risk of host country and CD between host country and home country have significant and negative impacts on the level of ownership equity, but insignificant impacts on ownership status.

As there are still some doubts about the existence of country culture, especially when dealing with a huge country like China, the use of Hofstede's instrument may be one of the limitations of this paper. Also, by focusing on Chinese enterprises, the research results may lack generalisability. Therefore, researchers are encouraged to test the proposed propositions when they study enterprises from other developing countries.

The paper sheds light on international investment activities of Chinese enterprises, and also provides insights for the decision making on equity arrangement in transnational investment.

This paper is one of the first to analyse the international equity investment activities of Chinese enterprises and it provides new evidence on how the country‐level factors influence transnational equity investment decisions.

The paper seeks to address four key Top Management Team (TMT) demographic characteristics in their relationship with firm performance: age, functional background, educational field, and team tenure. The study extends research on the TMT by explicitly introducing team performance as a new context measured in the form of International Risk Management Factor, in addition to demographic characteristic effects. International Risk Management Factor is developed based on multiple international risks trading off theory. In order to calculate that factor International Risk Management Index is introduced.

In the paper a sample of 212 firms was used, including 4,009 executives; also four hypotheses were tested. The hypotheses were tested using multiple regression analysis.

The findings in this paper support the proposition that top management team is an appropriate unit of study, due to its impact on firm performance. The results indicate that there is a significant correlation between TMT demographic characteristics and firm performance. This study concluded that three of the proposed four TMT demographic characteristics, including age, functional background, and team tenure influence firm performance. Results validate the proposition that TMT demographic characteristics show a significant positive correlation with firm performance, particularly when the accounting measure is applied. In addition, Top Management Team performance was positively correlated to team tenure, suggesting that as team tenure progresses team performance improves.

The paper differs in many features from previous research. Some of the most important aspects include scope of the study, scale of the sample, complexity of the moderated variable, uniqueness of moderated variable operationalization, and innovation in calculating International Risk Management Factor. For the first time, the study focuses exclusively on Top Management Team performance. The concept, which captures complexity of all TMT characteristics, is not included in demographic characteristics of TMT.

The purpose of this paper is to examine the market timing behavior of listed Brazilian companies to verify the effects of the cost of capital on their financing decisions, and hence on their capital structure.

The relation between the cost of capital (debt and equity capital) and the leverage of firms in the period from 2000 to 2011 is analyzed by means of regression models with panel data. For this purpose, different proxies are used for the cost of equity and debt capital.

The results provide strong evidence that Brazilian firms take advantage of windows of opportunity to obtain financing, and that when the cost of equity capital is high, firms appear to follow a pecking order, giving preference to debt financing. However, the decision is based on the cost of alternative sources of funding rather than just on the hierarchy established by the pecking order theory, due to the information asymmetry between market agents.

Few studies of the Brazilian capital market have analyzed firms’ capital structure under the market timing approach, and none have addressed the same aspects analyzed here. Therefore, this paper will be useful to different users of accounting information by indicating the factors that influence the capital structure of Brazilian firms, allowing a better analysis of whether these firms act to maximize the generation of shareholder wealth.

This paper introduces a conceptual framework to assess the foreign market entry behavior of emerging market multinationals (EMMs). By introducing strategic cognition as the underlying theoretical perspective, this paper postulates that different levels of institutional voids in home markets shape the strategic cognition of EMMs, influencing their market entry behavior due to the prevalence of organizational imprinting in the early stages of internationalization. The paper aims to contribute to the strategic cognition literature by introducing emerging markets as a relevant context in which to apply and extend current thinking. Additionally, it aims to contribute to the institutional voids literature by providing a cognitive framework of behavioral patterns that is rationalized by institutional voids. Finally, the paper contributes to the entry mode literature by proposing strategic cognition as a relevant moderator for foreign entry mode choices, particularly those of EMMs.

This case can be used to help students achieve the following objectives: To project financial statements and assemble different pieces of financial information to create a valuation model (objective #1, create), To calculate a value for Arcor shares, supporting the estimated value with the chosen assumptions and methodologies (objective #2, evaluate), To draw connections between four different approaches to valuation (DCF, EVA, RV and VI), contrasting them and weighting their advantages and limitations (objective #3, analyze), To examine the relationship between forecasted financial statements and valuation (objective #3, analyze), To discuss the calculation of the Weighted Average Cost of Capital in a new situation as is an emerging economy, with the corresponding country-risk adjustment (objective #4, apply), To discuss the sources of value creation in a family-owned private company in a developing economy (objective #4, apply), To understand the dilemma that the head of a company was facing, identifying the three possible financing alternatives discussed in the text as follows: corporate bonds, earnings reinvestment and an IPO (objective #5, understand). To recall basic facts, as the main character’s opinion on the direction of the local economy or the fact that Arcor already complies with the information requirements of a public company (objective #7, remember).

This case is based on the valuation of the world’s largest candy maker, Arcor S.A.I.C., originally a Latin American company, which remains a private family business. The key problem presented by the case is the use of different valuation approaches to price Arcor shares, in view of a possible Initial Public Offer. The case illustrates the application of four main valuation approaches as follows: Discounted Cash Flow (DCF), Economic Value Added (EVA), Relative Valuation (RV) and Value Investing (VI). Additionally, it includes a fundamental analysis of eight years of historical financial information and the preparation of forecasted financial statements. Set in a developing economy, the Arcor case introduces the complexities of calculating the cost of capital with the inclusion of country risk, as well as the financial analysis distortions caused by an environment of high inflation.

The Arcor case is appropriate to be used in graduate courses of Corporate Finance, Valuation or Private Equity.

Teaching notes are available for educators only.

CSS 1: Accounting and Finance.

The purpose of this article is to identify and apply an appropriate methodology for evaluating and ranking potential suppliers.

Essential characteristics of suppliers that must be considered in the supplier selection process are identified. Risk to the disruption of company operations as it relates to the reliability of suppliers is described as a reliability chain.

The analytic hierarchy process (AHP) is shown to be the appropriate methodology for evaluating and ranking potential suppliers.

The case study demonstrates how the AHP can serve as a valuable methodology for ranking and selecting suppliers.

The case study shows that the AHP can be used to evaluate and rank current and potential suppliers based on multiple criteria of supply reliability.

Climate risk greatly increases the risk exposure of global investments. Both the climate risks of home countries and host countries may affect international investment behaviors. The purpose of this paper is to explore the impact of climate risk and climate risk distance on foreign direct investment (FDI) inflows and outflows. Targeted proposals are provided to promote international economic and trade cooperation and the authors provide suggestions for the FDI strategies of multinational enterprises.

The authors define “climate risk distance” as the difference in climate risks between two countries. This paper uses both a theoretical model and a generalized least squares test to investigate the impact of climate risk distance on FDI from the perspectives of FDI inflows and outflows. In addition, the authors subdivide the samples according to the sign of climate risk distance and rank the FDI share from home country to host country into four groups according to the host country’s climate risk index. Finally, the authors undertake empirical tests with outward foreign direct investment (OFDI) data to support the empirical results.

Investors from countries with low climate risks have the upper hand due to their competitive advantages, like their skills, trademarks and patent rights, which they can transfer abroad to offset the disadvantage of being non-native. This is generally defined as ownership advantage. The impact of climate risk distance on FDI depends on the sign of climate risk distance. Specifically, host countries with higher climate risks compared with the climate risk levels of home countries may experience insignificant reductions in FDI inflows. For investors from home countries with higher climate risks, they are less likely to invest in host countries with lower climate risks. The results for samples from emerging market economies are shown to be more significant.

This study advances the O (ownership advantage) part of the ownership, location and internationalization (OLI) paradigm by incorporating the climate risk distance between the home country and the host country into the influencing factors of FDI. Both the O part and the L (location advantage, the advantage that host countries offers to make internationalization worthwhile to undertake FDI) part of the OLI paradigm concerning climate risks are validated with FDI and OFDI data.

The purpose of this paper is to examine the effect of bank consolidation and foreign ownership on bank risk taking in the Egyptian banking sector.

Following prior studies (e.g. Yeyati and Micco, 2007; Barry et al., 2011), this study uses pooled Ordinary Least Squares regression models under two main analyses to test the relation between concentration and foreign ownership on one hand and bank risk-taking behavior on the other hand, where observations are pooled across banks and years for the 2000-2011 period. The reform plan was launched in 2004 and resulted in various restructuring activities in the banking system. Thus, to control for the effect of implementing the financial sector reform plan on bank insolvency and credit risk, this study includes a reform dummy variable (RFM) for the post-reform period in models testing the association between consolidation, foreign ownership and bank risk. Therefore, this categorical variable identifies whether bank risk is related to the reform activities that have been observed during the post-restructuring period, 2005-2011. Moreover, to accommodate the possibility that effects of bank concentration and foreign ownership on bank risk differ due to the implementation of the reform plan, the author create two interaction terms: one uses the product of the reform dummy variable and concentration measures, while the other uses the product of the reform dummy and foreign ownership variables to capture interactions. These interaction terms and the dummy variable provide ample room to capture the effect of bank concentration and foreign ownership on bank risks during the post-reform period.

This study provides empirical evidence that bank concentration is associated with low insolvency risk and credit risk as measured by loan loss provisions (LLP) in the post-reform period. These results are consistent with the “concentration-stability” view, suggesting that concentration of the banking sector will enhance stability. Moreover, evidence shows that while a higher presence of foreign banks reduces bank credit risk in the post-reform period, it appears to increase insolvency risk. These results are robust to using alternative measures. These findings imply that regulators in emerging countries should support foreign investments in banks to transfer better managerial skills and systems. However, government-owned banks are found to be more prone to insolvency and credit risks; thus, their ownership should not be encouraged. Finally, policy makers should reinforce bank consolidation, be prudent in determining the capital adequacy ratio (CAR) and monitor intensively less profitable, well-capitalized and small-sized banks.

Consolidation of the banking sector decreases insolvency risk and credit risk, as measured by LLP in the post-reform period. This study proposes that bank supervisors implement prudent polices in determining the bank CAR, and monitor intensively less profitable, well-capitalized and smaller banks, as they have incentives to increase risk. In addition, regulators should encourage foreign investment in the banking sector and facilitate their operations in Egypt.

Bank supervisors should intensely monitor banks with high-CARs that exceed mandatory requirements because they may be more likely to engage in more risk-taking activities.

It provides empirical evidence from a country-specific, emerging market perspective, in which restructuring events affect the national economy. Egypt, similar to other emerging countries in Africa, pursues an institutionally based (bank-based) system of corporate governance, where banks are the primary sources of finance for firms. Therefore, restructuring banks and other financial institutions and supervising their operations ensure the soundness and stability of these institutions, which represent the nerve of emerging economies. Because emerging countries tend to share common characteristics and economic conditions, and the reform of their financial systems is significant for economic development, the Egyptian banking reform and restructuring program should be of interest to other emerging countries to capitalize on this experiment. While international studies on these relationships are mostly cross-country or focus on US banks, firm-specific studies are scant. Furthermore, the findings of this study should be of interest to Egyptian regulators, bank supervisors and policy makers studying the implications of bank reforms.