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Article
Publication date: 21 August 2017

Fabrizio Rossi, Chengru Hu and Maggie Foley

The purpose of this paper is to investigate the relationship between women in the board of directors, firm performance and corporate decisions as well as the risk of the…

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Abstract

Purpose

The purpose of this paper is to investigate the relationship between women in the board of directors, firm performance and corporate decisions as well as the risk of the firm, debt level, and research and development (R&D).

Design/methodology/approach

This study investigates a sample of 41 Italian listed companies. In particular, using a panel data of 369 firm-year observations, during the period 2005-2013, through a generalized method of moment, the relationship between women in the board of directors and corporate decisions has been investigated.

Findings

The results suggest that female representation in the board of directors affects corporate decisions. Women in the boardroom affect both financing and investment decisions. In particular, the presence of women seems to take on a complementary role to debt; it has a negative effect on risk and appears to have a positive impact on investment in R&D The results also suggest a strong relationship between female directors and firm value, especially when certain multicultural factors are considered. Finally, considering the concept of “critical mass,” in line with the arguments of Kanter (1977), the results seem to emphasize a greater influence of women with respect to corporate decisions, moving from “tokenism” to a “critical mass” scenario.

Practical implications

The outcomes of the application, besides improving the current knowledge on the relationship between female representation in the board of directors, innovation, financial, and accounting decisions, intend to reveal if the governance of Italian listed companies is efficient in determining company results and in pursuing optimal decisions. Moreover, the results could be useful for both policy makers for the regulation of corporate governance and the board of directors and as a suggestion to companies that regularly appoint the members of the board of directors.

Originality/value

The work is not limited to examining the relationship between female representation and the performance of firms but instead uses a series of indicators of corporate decisions and multicultural, such as, the nationality of women in board of directors, the educational level, the past experience, and their interaction with the variables concerning the decision-making process. To the best knowledge of authors, this is the first study that investigates the relationship between women and corporate decisions in a single civil law country.

Details

Management Decision, vol. 55 no. 7
Type: Research Article
ISSN: 0025-1747

Keywords

Article
Publication date: 23 September 2019

Juan Francisco Martín-Ugedo, Antonio Mínguez-Vera and Fabrizio Rossi

The purpose of this paper is to examine the relationship between women on the board of directors and firm performance in a comparative analysis between Italy and Spain.

Abstract

Purpose

The purpose of this paper is to examine the relationship between women on the board of directors and firm performance in a comparative analysis between Italy and Spain.

Design/methodology/approach

The generalized method of moment is employed to examine this relationship in a sample of 1,393 firm-year observations.

Findings

The results show that the presence of women on the board has a positive impact on the performance of Italian and Spanish firms. However, when the whole sample is divided into Italy and Spain, some results are remarkable. For Spain, the presence of women on the board has a positive influence on firm performance, whereas for Italy the authors find a negative and significant effect on firm performance. This study also finds that the “masculinity” dimension has a negative impact on firm performance.

Practical implications

The results of this study have several practical implications. First, masculinity differences within the countries can have a large impact on firm performance and can explain some differences between similar countries. Second, the legal system of countries might not explain adequately some differences in the decision-making process. Third, cultural values and thinking styles, in terms of masculinity, might better explain why the results on the relationship between female directors and firm performance are mixed. Fourth, the findings suggest that it is very important to promote gender equality, not only by passing laws but also taking action about the educational system.

Originality/value

To the best of the authors’ knowledge, this is the first study that investigates the relationship between female directors and firm performance between Italy and Spain considering the cultural differences in term of “masculinity.”

Objetivo

el objetivo de este trabajo es examinar la relación entre la presencia de mujeres en el Consejo de Administración y el rendimiento de la empresa, realizando un análisis comparativo entre Italia y España.

Diseño/metodología/Enfoque

Se emplea el método generalizado de los Momentos (GMM), utilizando una muestra de 1.393 observaciones.

Resultados

los resultados muestran que la presencia de mujeres en el consejo tiene un impacto positivo en el rendimiento de las empresas italianas y españolas. Sin embargo, cuando se analizan por separado ambas submuestras se obtienen algunos resultados destacables. Para España, la presencia de mujeres en el consejo tiene un efecto positivo, mientras que para Italia la influencia resulta negativa. Este estudio también muestra que la dimensión “masculinidad” tiene un efecto negativo en la rentabilidad de la empresa.

Implicaciones prácticas

Los resultados de este estudio tienen varias implicaciones prácticas. En primer lugar, la diferencia en la masculinidad entre países puede tener un gran impacto en el rendimiento de las empresas y explicar algunas diferencias entre países de características similares. En segundo lugar, el sistema legal de los países podría no explicar adecuadamente algunas diferencias en el proceso de toma de decisiones. En tercer lugar, los valores culturales y el modo de pensar, en términos de “masculinidad” podría explicar mejor el hecho de que los resultados de la relación entre consejeras y rendimiento de la empresa no sea concluyente. En cuarto lugar, nuestros hallazgos sugieren que es muy importante promover la igualdad de género no sólo a través de la aprobación de leyes, sino también actuando sobre el sistema educativo.

Originalidad/Valor

Que tengamos conocimiento, este es el primer estudio que investiga la relación entre la presencia de consejeras y rendimiento de la empresa para Italia y España considerando las diferencias culturales en términos de “masculinidad.”

Details

Academia Revista Latinoamericana de Administración, vol. 32 no. 3
Type: Research Article
ISSN: 1012-8255

Keywords

Content available
Article
Publication date: 12 April 2021

Maretno Agus Harjoto and Fabrizio Rossi

This study examines the market reaction to the World Health Organization (WHO) announcement of the novel coronavirus disease 2019 (COVID-19) as a global pandemic on the…

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Abstract

Purpose

This study examines the market reaction to the World Health Organization (WHO) announcement of the novel coronavirus disease 2019 (COVID-19) as a global pandemic on the emerging equity markets and compares the reaction with developed markets. This study also compares the market reactions to the COVID-19 pandemic with the market reactions to the 2008 global financial crisis.

Design/methodology/approach

Using the Morgan Stanley Capital International daily stock indices data and the Carhart and the GARCH(1,1) models for an event study, the authors examine the cumulative abnormal returns during 30 and 10 trading days and the extended 60 days before and after the WHO pandemic announcement. It also compares the market reactions during the COVID-19 pandemic with the reactions to the Lehman Brothers' bankruptcy announcement during the 2008 global financial crisis.

Findings

This study finds that the COVID-19 pandemic had a significantly greater negative impact to the stock markets in emerging countries than in the developed countries. The negative impact on the emerging markets is more pronounced for firms with small market capitalizations and for growth stocks. The negative impact of the COVID-19 pandemic is stronger in the energy and financial sectors in both emerging and developed markets. The positive impact of the COVID-19 pandemic occurred in healthcare and telecommunications for the emerging markets and information technology for the developed markets. This study also finds that the equity markets in both emerging and developed countries recovered faster from the COVID-19 pandemic relative to the 2008 global financial crisis.

Social implications

Investors' desire to diversify their risks across different countries and sectors in the emerging markets could bring superior returns. The diversification strategies bring critical financial supports to forestall the contagion of COVID-19, to protect lives, and to save the emerging economies, especially for those financially constrained countries that are facing twin health and economic shocks by channeling their investments to countries with weak healthcare systems.

Originality/value

This study extends the literature that examines market reactions to stock market shocks by examining the market reactions to the COVID-19 outbreak on the emerging and developed equity markets across different market capitalizations, valuation and sectors. This study also finds that the markets recovered quicker from the COVID-19 pandemic announcement than during the 2008 global financial crisis.

Details

International Journal of Emerging Markets, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1746-8809

Keywords

Article
Publication date: 13 February 2018

Fabrizio Rossi, Robert Boylan and Richard J. Cebula

The purpose of this study is to investigate the relationship between financial decisions and ownership structure by using the control contests on a sample of Italian…

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Abstract

Purpose

The purpose of this study is to investigate the relationship between financial decisions and ownership structure by using the control contests on a sample of Italian listed companies.

Design/methodology/approach

The analysis adopts a balanced panel data set of 984 firm-year observations for the period of 2002-2013, with estimation using a generalized method of moments.

Findings

The results appear to confirm both the hypotheses of the alignment of interests and the entrenchment effect. The entrenchment and alignment effects are not found to be alternatives but rather are found to co-exist. The presence of a coalition of minority shareholders acts as a tool to control agency costs, particularly when the coalition is instrumental in the contestability of corporate control.

Practical implications

These findings suggest that minority shareholders may have a larger impact than previously identified by strategically aligning with other shareholders to form coalitions. This study provides several practical implications. First, dividend payout is not necessarily a good instrument to control and monitor agency costs. This is because the payout can be used to expropriate benefits from the minority shareholders. Second, high ownership concentration does not always reduce agency costs. Third, a non-collusive coalition can be more useful in the monitoring of agency costs than other tools, such as the debt level.

Originality/value

This study shows that there is considerable value to the firm when individual blockholders come together in a contestable environment and become instrumental in making business decisions. The results support the contention that contestability is an excellent deterrent to dampen the expropriation of benefits to minority shareholders. This study also provides evidence that cash holding can be a good substitute for dividends and debt in the effort to limit agency costs.

Details

Corporate Governance: The International Journal of Business in Society, vol. 18 no. 3
Type: Research Article
ISSN: 1472-0701

Keywords

Article
Publication date: 3 October 2016

Fabrizio Rossi and Richard J. Cebula

The purpose of this study is to investigate the relationship between the debt and ownership structure of a sample of Italian-listed companies to measure the role assumed…

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Abstract

Purpose

The purpose of this study is to investigate the relationship between the debt and ownership structure of a sample of Italian-listed companies to measure the role assumed in the control and monitoring of agency costs.

Design/methodology/approach

This study examines a balanced panel data, using both a random effects model and a generalized method of moments model to better capture any problems related to the endogeneity of the variables in the model.

Findings

The results provide evidence of a positive relationship between debt and ownership concentration on the one hand and a negative relationship between debt and institutional investors on the other hand. The debt seems to assume both functions, i.e. the disciplinary role of substitute at low levels of ownership concentration and a complementary role at high levels of ownership concentration.

Practical implications

This study provides three practical implications. The first is that the complementarity between debt and ownership concentration provides evidence of the entrenchment effect and tends to weaken the company financially. Second, the results also provide useful prompts to policy-makers who should encourage the presence of institutional investors. Third, the policy-makers should also encourage the expansion of the stock market to enhance the protection of shareholders, reduce private control benefits and provide Italy the same opportunities as other common and civil law countries to collect risk capital, avoiding the abuse of debt.

Originality/value

The empirical results suggest that ownership concentration increases the degree of corporate debt, whereas institutional investors assume the disciplinary role of monitoring and controlling agency costs. The results provide evidence of both the entrenchment effect and the alignment-of-interests hypothesis and that the expropriation theory seems to prevail over the control and monitoring role.

Details

Corporate Governance: The International Journal of Business in Society, vol. 16 no. 5
Type: Research Article
ISSN: 1472-0701

Keywords

Article
Publication date: 29 July 2021

Richard Cebula and Fabrizio Rossi

This study mathematically aims to evaluate the implications of a central bank’s adoption of a policy of quantitative easing (QE)/relative QE.

Abstract

Purpose

This study mathematically aims to evaluate the implications of a central bank’s adoption of a policy of quantitative easing (QE)/relative QE.

Design/methodology/approach

It is shown, within an investment-savings (IS)-liquidity preference-money supply (LM) framework, that this policy prerogative has, depending upon the aggressiveness which QE is undertaken, demonstrable implications for the conditions under which macroeconomic stability exists.

Findings

Furthermore, it is shown here that the presence of QE increases the effectiveness of traditional discretionary monetary and fiscal policies.

Originality/value

The study shows, within an IS-LM framework, that this policy prerogative has, depending upon the aggressiveness which QE is undertaken, demonstrable implications for the conditions under which macroeconomic stability exists.

Details

Journal of Financial Economic Policy, vol. 14 no. 4
Type: Research Article
ISSN: 1757-6385

Keywords

Article
Publication date: 2 May 2017

Don Capener, Richard Cebula and Fabrizio Rossi

To investigate the impact of the federal budget deficit (expressed as a per cent of the Gross Domestic Product, GDP) in the US on the ex ante real interest rate yield on…

Abstract

Purpose

To investigate the impact of the federal budget deficit (expressed as a per cent of the Gross Domestic Product, GDP) in the US on the ex ante real interest rate yield on Moody’s Baa-rated corporate bonds and to provide evidence that is both contemporary and covers an extended time period, namely, 1960 through 2015.

Design/methodology/approach

The analysis constructs a loanable funds model that involves a variety of financial and economic variables, with the ex ante real interest rate yield on Moody’s Baa-rated long-term corporate bonds as the dependent variable. The dependent variable is contemporaneous with the federal budget deficit and two other interest rate measures. Accordingly, instrumental variables are identified for each of these contemporaneous explanatory variables. The model also consists of four additional (lagged) explanatory variables. The model is then estimated using auto-regressive, i.e., AR(1), two-stage least squares.

Findings

The principal finding is that the ex ante real interest rate yield on Moody’s Baa rated corporate bonds is an increasing function of the federal budget deficit, expressed as a per cent of GDP. In particular, if the federal budget deficit were to rise by one per centage point, say from 3 to 4 per cent of GDP, the ex ante real interest rate would rise by 58 basis points.

Research limitations/implications

There are other time-series techniques that could be applied to the topic, such as co-integration, although the AR(1) process is tailored for studying volatile series such as interest rates and stock prices.

Practical/implications

The greater the US federal budget deficit, the greater the real cost of funds to firms. Hence, the high budget deficits of recent years have led to the crowding out of investment in new plant, new equipment, and new technology. These impacts lower economic growth and restrict prosperity in the US over time. Federal budget deficits must be substantially reduced so as to protect the US economy.

Social/implications

Higher budget deficits act to reduce investment in ew plant, new equipment and new technology. This in turn reduces job growth and real GDP growth and compromises the health of the economy.

Originality/value

This is the first study to focus on the impact of the federal budget deficit on the ex ante real long term cost of funds to firms in decades. Nearly all related studies fail to focus on this variable. Since, in theory, this variable (represented by the ex ante real yield on Moody’s Baa rated long term corporate bonds) is a key factor in corporate investment decisions, the empirical findings have potentially very significant implications for US firms and for the economy as a whole in view of the extraordinarily high budget deficits of recent years.

Details

Journal of Financial Economic Policy, vol. 9 no. 02
Type: Research Article
ISSN: 1757-6385

Keywords

Article
Publication date: 4 April 2016

Richard J. Cebula, Fabrizio Rossi, Fiorentina Dajci and Maggie Foley

The purpose of this study is to provide new empirical evidence on the impact of a variety of financial market forces on the ex post real cost of funds to corporations…

Abstract

Purpose

The purpose of this study is to provide new empirical evidence on the impact of a variety of financial market forces on the ex post real cost of funds to corporations, namely, the ex post real interest rate yield on AAA-rated long-term corporate bonds in the USA. The study is couched within an open-economy loanable funds model, and it adopts annual data for the period 1973-2013, so that the results are current while being applicable only for the post-Bretton Woods era. The auto-regressive two-stage least squares (2SLS) and generalized method of moments (GMM) estimations reveal that the ex post real interest rate yield on AAA-rated long-term corporate bonds in the USA was an increasing function of the ex post real interest rate yields on six-month Treasury bills, seven-year Treasury notes, high-grade municipal bonds and the Moody’s BAA-rated corporate bonds, while being a decreasing function of the monetary base as a per cent of gross domestic product (GDP) and net financial capital inflows as a per cent of GDP. Finally, additional estimates reveal that the higher the budget deficit as a per cent of GDP, the higher the ex post real interest rate on AAA-rated long-term corporate bonds.

Design/methodology/approach

After developing an initial open-economy loanable funds model, the empirical dimension of the study involves auto-regressive, two-stage least squares and GMM estimates. The model is then expanded to include the federal budget deficit, and new AR/2SLS and GMM estimates are provided.

Findings

The AR/2SLS and GMM (generalized method of moments) estimations reveal that the ex post real interest rate yield on AAA-rated long-term corporate bonds in the USA was an increasing function of the ex post real interest rate yields on six-month Treasury bills, seven-year Treasury notes, high-grade municipal bonds and the Moody’s BAA-rated corporate bonds, while being a decreasing function of the monetary base as a per cent of GDP and net financial capital inflows as a per cent of GDP. Finally, additional estimates reveal that the higher the budget deficit as a per cent of GDP, the higher the ex post real interest rate on AAA-rated long -term corporate bonds.

Originality/value

The author is unaware of a study that adopts this particular set of real interest rates along with net capital inflows and the monetary base as a per cent of GDP and net capital inflows. Also, the data run through 2013. There have been only studies of deficits and real interest rates in the past few years.

Details

Journal of Financial Economic Policy, vol. 8 no. 1
Type: Research Article
ISSN: 1757-6385

Keywords

Article
Publication date: 11 March 2014

Domenico Celenza and Fabrizio Rossi

The aim of this paper is to investigate the relationship between corporate performance and Value Added Intellectual Coefficient (VAICTM) on the one hand, and the

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Abstract

Purpose

The aim of this paper is to investigate the relationship between corporate performance and Value Added Intellectual Coefficient (VAICTM) on the one hand, and the relationship between the variations in market value and the variations in VAIC on the other hand.

Design/methodology/approach

Starting from the VAIC model, 23 Italian listed companies were examined with the aim of investigating the relationship between VAIC and the performance of the firms in the sample. The analysis was divided into two stages. In the first stage, eight models of linear regression were estimated to verify the presence of a positive and statistically significant relationship between M/BV and VAIC and between accounting performance indicators (ROE, ROI, ROS) and the VAIC. In the second stage, six other models were tested, considering as an independent variable the variations in VAIC and the variations in profitability indicators.

Findings

The outcomes of the application stress the importance of VAIC in the explanation of the variations in MV and its role as “additional coefficient” in the analysis of equity performance.

Originality/value

This methodology highlights some very interesting aspects. In particular, whereas the relationship between M/BV and VAIC and between profitability indicators (ROI, ROE, ROS) and VAIC is statistically insignificant, the subsequent analysis highlights the importance of VAIC as a variable capable of increasing the explanatory power of the regression in a cross-sectional perspective.

Details

Measuring Business Excellence, vol. 18 no. 1
Type: Research Article
ISSN: 1368-3047

Keywords

Article
Publication date: 11 April 2016

Richard Cebula, Fabrizio Rossi and Jeff Clark

The purpose of this paper is to evaluate whether two specific forms of government policy influence entrepreneurship and hence the performance economy as a whole…

Abstract

Purpose

The purpose of this paper is to evaluate whether two specific forms of government policy influence entrepreneurship and hence the performance economy as a whole. Performance is measured in terms of living standards and growth therein. The policies are, as follows: higher quality government regulation of businesses and higher levels of economic freedom.

Design/methodology/approach

The paper first provides a basic model focussing upon the regulation and economic freedom variables. The study then adds a dummy variable for G8 nations, a tax burden variable, and the long-term interest rate and provides six estimates. The empirical analysis involves pooled time-series/cross-section data for the OECD over the period 2003-2007.

Findings

The findings indicate that for OECD nations, higher quality public regulation promotes entrepreneurial spirit and performance. Higher economic freedom does the same. The findings are that higher quality government regulation of business and higher levels of economic freedom lead to higher growth rates in the standard of living.

Originality/value

The time period studied, i.e., just prior to the Great Recession, the context of the OECD, the adoption of pooled time-series/cross-section data, and the specific choice of variables in the analysis, along with the estimation of possibly unique or close to unique specifications involving the growth rate of living standards per se make this study different.

Details

Journal of Entrepreneurship and Public Policy, vol. 5 no. 1
Type: Research Article
ISSN: 2045-2101

Keywords

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