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This paper aims to identify the problem situations leading financial firms to kick off the elimination decision‐making process for financial products in their line, measure the importance of problem situations, and assess the effects of a set of contextual variables on the above importance.

The study took place in the UK; data were collected through 20 in‐depth interviews with managers of financial firms and a mail survey to a stratified random sample of financial firms, which yielded 112 returns.

Eight problem situations are identified and their importance is measured. The results indicate that the importance of problem situations is highly situation‐specific: it varies in relation to the degree of a financial firm's market orientation, the intensity of competition, the austerity of the regulatory environment, and the rhythm of technological change.

From a theoretical standpoint, future research on the investigation of the importance of decision variables pertaining to line pruning must always take into consideration the internal and the external context of the firm. From a practical standpoint, this study has important policy implications, since it provides managers with a first picture of the effects of selected contextual forces on the importance of the problem situations triggering line pruning in services settings. The limitations of the study provide useful avenues for future investigation.

This study represents the first attempt to measure the importance of different problem situations triggering line pruning in financial services and relate that importance to a set of contextual variables. As such, it makes a clear theoretical contribution.

The purpose of this study is to examine the effect of corporate social responsibility assurance practice (CSRAP) on the financial distress likelihood of listed firms in India. It uses the signalling theory to interpret the relationship among the variables of the study.

The study used the Indian stock market as the testing grounds and applied probit and panel probit regression to examine the data set with 800 firm-year observations from 2010 to 2019.

The study’s first findings show that firms with an assurance service have a negative correlation and are less likely to stay in financial distress situations for an extended period. However, corporate social responsibility (CSR) assurance has a positive but weak correlation with insignificance with financial distress likelihood of firms in India. The authors also find that the engagement of CSR assurance and level of assurance (limited assurance) does not cause a change in a firm financially distress likelihood of firms in India. However, as assurance service providers, auditing firms are more likely to reduce a firm’s likelihood of financial distress. Finally, the study shows that CSRAP (CSR assurance, assurance service providers and level of assurance) does not moderate the association between CSR expenditure and financial distress likelihood of listed firms in India.

The study findings are the first to examine the level of assurance and financial distress of firms according to the authors’ knowledge. This study also adds new knowledge to the factors that cause or reduces the financial distress of listed firms, including CSRAPs.

The purpose of this paper is to explore the relationship between demographic diversity on boards and employer/employee relationship (EER) and to test the moderating effect of contextual factors such as a firm’s financial situation.

This paper analyzes data from over 1,000 publicly listed US firms and uses hierarchical regression.

Demographic diversity on boards of a given firm, such as ethnic diversity and gender diversity, should have positive effects on EER, which can be considered as an important dimension of overall human resource management performance in a given firm. Contextual factors such as a firm’s financial situation should moderate the relationship between demographic diversity on boards and the EER.

First, this research contributes to the current literature by showing that EER can be influenced by demographic diversity on boards, which further helps to highlight the beneficial effect of demographic diversity in top management team. Second, this study uncovers the moderating role of some contextual factors such as a firm’ financial situation. Third, this study also contributes to the corporate governance literature by studying the link between demographic diversity on boards and EER.

The purpose of this paper is to identify the interplay between a firm’s financial situation and its inventory ownership in a single-firm and a two-firm perspective.

The analysis uses different secondary data sources to quantify the effect of both financial constraints and cost of capital on inventory holdings of public US firms. The authors first adopt a single-firm perspective and analyze whether financial constraints and cost of capital do generally affect the amount of inventory held. Next, the authors adopt a two-firm perspective and analyze the inventory ownership in customer-supplier relationships.

Inventory levels are affected by financial constraints and cost of capital. Results indicate that higher costs of capital are weakly associated with lower inventories. However, contrary to the authors’ expectations, firms that are less financially constrained hold less inventories than firms that are more financially constrained. Finally, the authors find that customers hold the larger fraction of supply chain inventory in supplier-customer dyads.

The authors’ results indicate that financial considerations generally play a role in inventory management. However, inventory holdings seem to be influenced only slightly by financing costs and inventory holdings between supplier and customer seem to be less than optimal from a financial perspective. Considering those financial aspects can lead to relevant financial advantages.

In contrast to other recent research, the authors study how the financial situation of a firm affects its inventory levels (not vice versa) and also consider inventories from a two-firm perspective.

Firms are increasingly required to make ethical choices when selecting suppliers for their supply chains, and the decisions often rest on individual purchasing managers within the firm. This study builds on the literature on ethical decision-making and the concept of decision frames to investigate the decision-making process of purchasing managers in financially distressed firms. Codes of Conduct (CoC) and how they are enforced (financial rewards and codified procedures for oversight) are studied in terms of their effectiveness in informing and guiding purchasing managers in their supplier selection decisions.

Four sequential experiments were conducted with a total of 648 purchasing managers from manufacturing firms.

The results indicate that purchasing managers in firms facing financial distress are more than four times more likely than purchasing managers in the control groups to select the less ethical supplier in favor of better operational performance. As a potential remedy, it is found that enforcing the firm's CoC help to counteract this tendency and increase ethical supplier selection decisions by 2.1- to 2.6-fold. However, CoC enforcement that invokes multiple conflicting decision frames simultaneously is more likely to impair than promote ethical supplier selection decisions, compared to situations where only one enforcement method is present.

These findings develop an improved understanding of purchasers' decision-making processes and shed light on how to effectively use CoCs to guide these decisions.

The purpose of this paper is to analyze the effect of different reorganization actions on long‐term financial performance of reorganizing small entrepreneurial firms in Finland.

An structural equation model estimated by partial least squares is applied to survey data from 98 reorganizing very small firms to analyze the effect of organizational change (OC), financial reorganization, management control system change (MCSC), and management accounting change (MAC) on performance.

Evidence supports three of the seven research hypotheses. Debt restructuring has a positive effect on performance. Liquidation of assets and OC do not show a significant direct effect but OC has a positive total effect. MCSC has a positive effect whereas the effect of MAC is negative. Compatibility of reorganization actions with the confirmed reorganization plan affects positively performance.

The sample is small. In further studies, larger samples should be used. Effect of reorganization on performance is self‐assessed by the firms. Further studies should apply more objective measures. The constructs of variables are intended for larger firms. New constructs should be developed for very small firms.

It is important that reorganization administrators and consultants prepare a careful reorganization plan to be followed during the program. In small reorganizing firms, it is beneficial to develop management control systems. However, one should be cautious when developing formal management accounting systems for very small firms.

This paper is the first one developing a structural model of the effects of reorganization actions on performance of small firms. It brings new evidence on the effects of organizational and control system change.

The purpose of this paper is to analyse whether the effect of innovation subsidies on firms' R&D investment varies depending on whether the firm is suffering from financial constraints.

To address this analysis, the authors provide a theoretical model and test their hypothesis using an econometric analysis of an unbalanced panel of 3,865 innovative Spanish firms during 2010–2017. They employ the SABI database to obtain firms' financial and economic data and incorporate firms' MORE financial rating. Specifically, the authors use the GMM-SYS technique to regress and measure the marginal effects of innovation subsidies size on firms' R&D investment and the influence of firms' financial constraints.

The results of this work indicate that financial constraints negatively moderate the effect of subsidies on R&D investment; that is, those firms that receive a subsidy and suffer financial constraints invest less in R&D projects than those which also receive the subsidy and do not suffer financial constraints. Besides, this work found that innovation subsidies alone do not significantly increase firms' R&D investment.

From a neoclassical point of view, the existence of financial constraints is the justification of public innovation policies. However, due to the difficulty of measuring financial constraints, innovation literature has abandoned the analysis of this crucial variable. This work reintroduces this vital variable and analyses how it interacts with innovation subsidies on firms' R&D investment.

The purpose of this study is to empirically investigate determinants of financial distress among small and medium-sized enterprises (SMEs) during the global financial crisis and post-crisis periods.

Several statistical methods, including multiple binary logistic regression, were used to analyse a longitudinal cross-sectional panel data set of 3,865 Swedish SMEs operating in five industries over the 2008–2015 period.

The results suggest that financial distress is influenced by macroeconomic conditions (i.e. the global financial crisis) and, in particular, by various firm-specific characteristics (i.e. performance, financial leverage and financial distress in previous year). However, firm size and industry affiliation have no significant relationship with financial distress.

Due to data availability, this study is limited to a sample of Swedish SMEs in five industries covering eight years. Further research could examine the generalizability of these findings by investigating other firms operating in other industries and other countries.

This study is the first to examine determinants of financial distress among SMEs operating in Sweden using data from a large-scale longitudinal cross-sectional database.

The authors investigate whether firms can ensure their financial stability during the coronavirus disease 2019 (COVID-19) pandemic by having ex-ante risk management.

The authors study 279 Vietnamese listed firms by investigating their disclosure of risk awareness and risk management tool(s) in the 2019 annual reports. The authors then examine whether prior risk awareness and adoption of risk management tool(s) can enhance the firms' financial ratios during the COVID-19 pandemic.

The authors find that firms that disclose their risk management tool(s) in the 2019 annual reports have better asset utilization and higher liquidity during the COVID-19 pandemic than the others. However, firms that simply express their risk awareness exert no stronger financial stability. In addition, the authors document that debt management is the most popular and most effective tool to ensure firms' financial stability during the crisis.

The study highlights the need for ex-ante risk management for future pandemics. The authors also suggest that stakeholders can rely on the degree of risk management tool utilization to evaluate the financial stability of firms.

Norway is a small nation state on the northernmost coastline of Western Europe, integrated in the Western world economy. For centuries Norway's integration in the world economy had been based on exports of raw materials such as fish and timber, as well as shipping services. In the early 20th century, furnace-based metals (made possible by cheap hydropower) were added to this export basket. Just as the world economy entered an increasingly unstable phase in 1970s, another natural resource was discovered in Norway: petroleum – that is, oil and natural gas from the North Sea. This chapter analyses the challenges and possibilities inherent in the Norwegian strategy of developing an oil economy in a world economic situation influenced by new and stronger forms of international integration through the four decades between 1970 and 2010.