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We examine the effect of institutional blockholders on the variability of firm performance.

We use OLS regression models to estimate the effect of institutional blockholders on within-firm, over-time variability of firm performance.

We find that firms with more institutional blockholders experience less variable firm performance. In particular, more institutional blockholders are associated with less variability of annual stock returns, ROA and the market-to-book ratio. We further explore several underlying mechanisms through with institutional blockholders reduce firm performance variability. We find that more institutional blockholders are associated with less variable capital expenditures and R&D investments, and less frequent acquisition activities.

A limitation of this paper is that our sample period only covers 1996–2006. Future studies can extend our research to a more recent period (e.g. 2009–2019) to test whether our findings remain valid in other periods.

We document a significant relation between institutional blockholders and firm performance variability in this paper. However, we do not make any judgment as to whether firms should increase their institutional blockholders as it is unclear whether the caused reduction in risk-taking is socially efficient. We argue that the value implication of institutional blockholders depends on the existing blockholder structure and the different levels of risk appetite between the CEO and shareholders. Thus, the decision on the increase or decrease of institutional blockholders should be carefully made based on a firm’s specific characteristics.

This paper is a first study which examines the impact of the presence of institutional blockholders on the variability of firm performance, while most prior studies focus on the stock ownership of institutional blockholders and examine its impact on the level of firm performance.

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.

Sees the objective of teaching financial management to be to help managers and potential managers to make sensible investment and financing decisions. Acknowledges that financial theory teaches that investment and financing decisions should be based on cash flow and risk. Provides information on payback period; return on capital employed, earnings per share effect, working capital, profit planning, standard costing, financial statement planning and ratio analysis. Seeks to combine the practical rules of thumb of the traditionalists with the ideas of the financial theorists to form a balanced approach to practical financial management for MBA students, financial managers and undergraduates.

The Nature of Business Policy Business policy — or general management — is concerned with the following six major functions:

The world in which companies operate today is volatile, uncertain, complex, and ambiguous, thus subjecting contemporary forms to an array of risks that challenge their viability in an increasingly competitive landscape. Organizations that cling to their traditional ways of operating impede their ability to survive while those able to embrace evolving changes and lever their strategic response capabilities (SRCs) will thrive against the odds. The possession of such capabilities has become a prominent explanation for effective adaptation to the impending changes but is rarely analyzed and tested empirically. Strategic adaptation typically assumes innovation as an important component, but we know little about how the innovative processes interact with the firm’s SRCs. Hence, this study investigates these implied relationships to discern their effects on organizational performance and risk outcomes. It explores the effects of SRCs and the role of innovation as intertwined adaptive mechanisms supporting strategic renewal that can attain superior performance and risk effects. The relationships are analyzed based on a large sample of US manufacturing firms over the decade 2010–2019. The study reveals that firms possessing effective SRCs have the ability to exploit opportunities and deflect risky situations to gain favorable performance and risk outcomes. While innovation indeed plays a role, the precise nature and dynamic effect thereof remain inconclusive.

Mergers and acquisitions (M&A) are common strategies of firms to increase its performance. Although the motives of M&A are different, the determinants are discreet. The purpose of this paper is to determine the factors affecting M&A activities in the Indian pharmaceutical sector.

Using a balanced panel data of the pharmaceuticals sector in India, this study arrives at the determinants of M&A. The authors use regression techniques such as panel probit models, ordered probit models and matching techniques for a comparable and robust estimates for the factors related to M&A activities at firm level.

The empirical findings suggest that export intensity, import intensity, firm size and R&D intensity as the major determinants of M&A in the Indian pharmaceutical sector. In the context of acquisition, there is a riskiness associated with the any business strategy, for to which a firm may choose to finance the deal either via cash, stock or assets. This study further looks at the firm’s decision on the types of acquisitions and arrives at the determinants of such decisions. The factors such as capital intensity were found more important when acquisition by share was undertaken compared to others. The success of the M&A is observed by considering the financial performance of the firm measured in terms of the profit margin at firm level. Using the propensity score matching technique, this study concludes that M&A have a positive effect on the profit margin in the post-M&A scenario.

The study seeks to add to the existing literature and empirical work done in the field of M&A, by not only looking at determinants that motivate a firm to merge and/or acquire but also if the decision of the firm is reflected positively in the firm’s performance. The study concludes that export intensity is an important factor for the pharmaceutical firms in India since exports are a major proportion of firm’s total sales. Technology transfers as technology imports and R&D conducted by the firm are both very important for the drug manufacturers. Any gap in the flow of drugs to the market would hamper the growth of the firm. The growth of the pharmaceutical industry depends on the close collaboration between small R&D units that lack resources to sell their work and large business houses, both domestic and foreign affiliated that will provide them the required market. However, all comprehensive work has been done in this study to cover all aspects of M&A including the financial pathway taken by the firm yet, the study has certain limitations as it does not take into account the entry and exit of firms from the industry.

Policies related to small and large firms should aim at making them export oriented and multinational affiliated to compete at the international market with corporate restructuring through M&A. This will help in firm’s growth and sharing of knowledge capital.

No such study is conducted that differentiate type of M&A and their determinants for the Indian pharma sector.

Research finds that investors initially under-react to increases in R&D intensity. The phenomenon is commonly viewed as mispricing. We draw on behavioral theory of the firm (BTF) to propose an alternative explanation that increased R&D intensity is often indicative of problemistic search in firms. We empirically explore three contextual factors that may help discriminate between mispricing and problemistic search effects when capital markets frown on increased R&D intensity.

We use econometric methods to analyze longitudinal data on 4,561 US manufacturing firms.

We find that market reactions to R&D investments are consistent with the view that managers often engage in R&D-based search to correct anticipated problems. We show that increased R&D intensity is a stronger indicator of diminished expected future performance for firms with greater inertia, including larger firms and high-performing firms. However, greater R&D intensity is less indicative of problemistic search in slack-rich firms.

Whilst the BTF has been used extensively in management research, ours is one of the few studies which link the BTF to stock market phenomena.

This chapter investigates whether core competence of managers and their expansive (vs. specialized) managerial style affects firms' innovative ability, capacity, and efficiency. Using exogenous CEO departures as a natural experiment, it establishes a causal link between managerial capability and innovation. Importantly, it reveals that firms with talented managers receive significantly more nonself citations; make significantly lower self-citations and lesser citations to the others, indicating novel and explorative innovation achievements. Also, managers with higher general (specialized) ability are cited more (less) by patents from a wider range of fields. Lastly, career concern is identified as a mechanism linking higher ability and innovation.

The main purpose of the study is to analyze the impact of research and development (R&D) expenditure on firm performance and firm value in an emerging economy.

In this study, firm performance is examined by firm financial performance (return on asset (ROA) and return on equity (ROE)) and market performance (Tobin's Q (TBQ)). This study conducted a multivariate analysis on the sampled data using pooled ordinary least square (OLS) regression method. In addition, both the level and lagged models have been used to test hypothesis in order to get the results.

All the empirical results from different models found significant and positive association of R&D expenditure with firm performance and firm value. The study also validates that all results are robust and free from outliers and multicollinearity issues.

Most of the studies regarding the R&D expenditure and its impact were conducted on developed countries addressing only firm performance. Whereby, this study examined the impact of R&D expenditure on both firm's financial performance and market performance as well as firm value in the context of an emerging economy.

The outcomes of the study will enable the entrepreneurs, managers, investors and policymakers with more confidence to invest in R&D expenditure that will also ensure the organizational sustainability in the long run.

Most of the prior studies regarding the R&D expenditure and its impact were conducted on developed countries addressing only firm performance. Herein, both firm's financial performance and market performance along with firm value have been analyzed in the context of an emerging economy. This paper is unique empirical research study due to different institutional and regulatory setting as well as corporate characteristics. This study strongly advocates the organizational learning theory, agency theory and resource-based view theory of firms' allocation of funds for future growth and innovation.

The purpose of this study is to review the capital budgeting literature over the past decade.

Specifically, over the years 2004–2013, we review works appearing in the major academic journals in accounting, finance, and management. Further, we review the specialized academic journals in management accounting. We examine the frequency of articles by journal and year published, the type of research method applied, and the topic area studied. We then review the research findings by topic area.

We find 110 articles appearing in the selected journals. While the articles increase in frequency, the research methods applied are predominantly analytical and archival in nature with relatively few experiments, case studies, or surveys. Some progress is observed for capital budgeting techniques and new methods for structuring uncertainty. The studies find that the size of capital budgets is about right for companies with high financial reporting quality, for liquid companies, during periods of normal cash flow, when the budget is financed by equity, for companies when they first go public or first go private. Tax rates and financial reporting methods for depreciation and tax expenses distort capital budgets. Organization structure and performance measurement can distort capital budgeting. Individual differences, especially optimism and honesty, can influence capital budgeting decisions.

This review is limited to the major journals in accounting, finance, and management; and the specialized journals in management accounting. There is much research to be done on capital budgeting, especially case studies of actual practice and experiments related to individual and group decision processes.