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Article

Cong Feng, Jiong Sun, Yiwei Fang and Iftekhar Hasan

This paper aims to examine the presence of an executive with customer experience (ECE) in a supplier firm’s top management team (TMT). The role of ECE presence remains…

Abstract

Purpose

This paper aims to examine the presence of an executive with customer experience (ECE) in a supplier firm’s top management team (TMT). The role of ECE presence remains understudied in the marketing literature. This study attempts to examine the relationship between ECE presence and firm performance.

Design/methodology/approach

This paper draws on the resource-based view of the firm and adopts a panel firm fixed effects estimator to test the proposed hypotheses. The empirical analysis uses a sample of 1,974 firm-year observations with 489 unique supplier firms. Selection-induced endogeneity is mitigated through the Heckman procedure.

Findings

ECE presence improves firm performance. Additionally, firms benefit less from ECE presence if a board member with customer experience (BCE) is also present, if a chief executive officer commands a higher pay slice (compared to other executives), and if a TMT is more functionally diversified. However, ECE presence is particularly beneficial if the overall economy is in contraction. Comparing the functional positions held by ECEs reveals that ECE in the marketing function (as a chief marketing officer) offers the largest benefit to an average supplier firm. ECE presence is also associated with other firm outcomes (e.g. bankruptcy odds, innovation and customer orientation).

Research limitations/implications

This study makes four contributions to the literature. First, this research contributes to existing studies that investigate marketing expertise in the upper corporate pyramid. Second, the study contributes to the burgeoning body of work across business disciplines that attempt to understand the impact of CxOs on firm performance. Third, the study contributes to the vast literature on customer orientation indirectly. Finally, this paper contributes to the broader literature studying the influence of board and TMT characteristics.

Practical implications

The findings are of particular importance to business-to-business firms. This paper shows that suppliers can benefit significantly from managers with customer experience. Four contingency factors moderate the relationship between ECE presence and firm performance. Among the various functional positions held by an ECE, the findings suggest that hiring an ECE for the marketing functional area is the most beneficial. ECE stands out as a better option for a company than BCE to improve firm performance. ECE presence is also associated with bankruptcy odds, innovation and customer orientation.

Originality/value

This paper provides the first empirical evidence regarding how ECE affects firm performance and also extends prior research on the value of human capital in TMT.

Details

European Journal of Marketing, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0309-0566

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Article

Bill Francis, Iftekhar Hasan and Yun Zhu

The purpose of this paper is to examine whether or not the chief executive officers’ (CEO) compensation is affected by the compensation of the outside directors sitting on…

Abstract

Purpose

The purpose of this paper is to examine whether or not the chief executive officers’ (CEO) compensation is affected by the compensation of the outside directors sitting on their board, who are also CEOs of other firms.

Design/methodology/approach

The authors collect CEOs’ and CEO-directors’ compensation data from Execucomp. The authors then match the CEO-directors’ compensation with appointing firms’ CEO compensation and financial statements, from Execucomp and Compustat, respectively. The sample contains 7,561 firm-year observations from 1996 to 2010, with 1,213 distinct S&P 1500 firms and 1,563 distinct CEO-directors. The authors use ordinary least squared method with firm and year fixed effect in most of the analysis.

Findings

With both annual and excess compensation, the authors find strong evidence that CEO-directors’ compensation is related to the compensation of the CEO. Causally, when CEO-director overturns his/her excess compensation from negative to positive, the CEO is more likely to have similar upward change in the following year, while more interestingly, the opposite does not hold. These findings are persistent over time and remain robust to various additional tests.

Research limitations/implications

Due to the data availability, this paper investigates the S&P 1500 public firms.

Originality/value

It is the first work that investigates the link between board members’ external compensation and the CEO’s compensation. This sheds new light on the process of the CEO’s compensation design, in regard to both the information being utilized in the design procedure and the CEO’s influence on his/her own compensation. Second, this paper adds additional evidence to the choice of peer groups in compensation construction. Third, the authors enhance the understanding of the role of CEO-directors. The authors show that CEO-directors may be the ally of CEO, and help in justifying CEO’s compensation, especially when underpaid.

Details

Managerial Finance, vol. 45 no. 7
Type: Research Article
ISSN: 0307-4358

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Book part

Iftekhar Hasan, Jarl G. Kallberg, Crocker H. Liu and Xian Sun

We empirically investigate the hypothesis that the less transparent (more difficult to value) the target’s assets are the more likely it is that the acquiring firm can…

Abstract

We empirically investigate the hypothesis that the less transparent (more difficult to value) the target’s assets are the more likely it is that the acquiring firm can obtain higher short- and long-term returns. We analyze a sample of 1,538 friendly acquisitions partitioned in two separate dimensions: acquisitions of public versus private firms, and acquisitions of a firm’s assets versus acquisitions of a firm’s assets and its management. Using a sample of (nondiversifying) real estate transactions with a public REIT as the acquirer, we find that acquisitions of public firms have insignificant short-term abnormal returns. Acquisitions of private targets have positive and significant short-term abnormal returns. The acquirer’s abnormal returns are higher in both cases when the transactions involve acquisition of the target firm’s management. We find parallel results when analyzing the acquirer’s Q over the merger year and the three following years. Our conclusions are robust to the type of financing (cash, stock, or a combination) used in the acquisition.

Details

Corporate Governance in the US and Global Settings
Type: Book
ISBN: 978-1-78441-292-0

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Book part

Sungho Choi, Iftekhar Hasan and Maya Waisman

The 1997 financial crisis in Asia has entailed significant changes and governance reforms in the Korean banking industry. This study investigates the impact of corporate…

Abstract

The 1997 financial crisis in Asia has entailed significant changes and governance reforms in the Korean banking industry. This study investigates the impact of corporate governance on the risk and return of Korean banks during the 10 years that followed the financial crisis era. In particular, we investigate the ownership structure of banks, the extent of involvement of foreign institutions and investors in ownership and board membership of Korean banks, and the heterogeneity of board structure on bank performance. Our findings indicate that foreign ownership, the extent of external board involvement, and the presence of foreign directors on the board are associated with significantly higher bank returns. Although foreign ownership and the number of outside board directors are associated with lower risk, the involvement of foreign board members is positively associated with risk. The results are fairly robust to a battery of tests and control variables, and offer the first detailed empirical documentation of the Korean banking governance reform and its achievements since 1997.

Details

Corporate Governance and Firm Performance
Type: Book
ISBN: 978-1-84855-536-5

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Book part

Bill B. Francis, Iftekhar Hasan and Eric Ofori

This paper investigates the impact of the development of capital markets on economic growth in Africa and reports a significant increase in real GDP per capita after stock…

Abstract

This paper investigates the impact of the development of capital markets on economic growth in Africa and reports a significant increase in real GDP per capita after stock exchanges are established. This paper also reveals that there are significant improvements in the level of private investments in the post stock market launch era. The results also indicate that stock markets play a complementary role to the banking sector by contributing to the availability of private credit. Although African capital markets are relatively less advanced when compared to capital markets on other continents (particularly in terms of technology, structure, and liquidity), we find that their establishment has been crucial in helping African countries catch up with the rest of the world.

Details

International Corporate Governance
Type: Book
ISBN: 978-1-78560-355-6

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Article

Lawrence Peter Shao, Alan T. Shao and Iftekhar Hasan

One important issue international firms must face involves the evaluation and control of credit risk. Many studies dealing with international credit management have…

Abstract

One important issue international firms must face involves the evaluation and control of credit risk. Many studies dealing with international credit management have focused on the practices used by multinational enterprises. In this study we take a different approach to this topic by analyzing the credit management decisions made by 188 U.S. foreign subsidiaries. We examine many aspects of the foreign subsidiary manager's credit policies including credit standards, credit terms, collection efforts and customer creditworthiness. The results of this study indicate that credit management practices of foreign subsidiaries are similar to those used by parent companies. In addition, the findings show that foreign managers generally use theoretically‐preferred methods when making credit decisions.

Details

Managerial Finance, vol. 23 no. 4
Type: Research Article
ISSN: 0307-4358

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Article

Iftekhar Hasan, Haizhi Wang and Mingming Zhou

The purpose of this paper is to investigate the role of institutional developments – market economy, financial deepening, private sector, property rights and rule of law …

Abstract

Purpose

The purpose of this paper is to investigate the role of institutional developments – market economy, financial deepening, private sector, property rights and rule of law – affecting the bank efficiency in China.

Design/methodology/approach

First, profit efficiency and cost efficiency scores of banks at the firm‐year level were estimated using a stochastic efficiency frontier approach. Then the results were aggregated at the regional level. Regional differences in the timing and extent of the institutional developments impacting bank efficiency were exploited.

Findings

It was observed that most institutional variables play an important role in affecting bank efficiency and additionally banks tend to operate more efficiently in those regions with greater presence of private sector and more property rights awareness.

Research limitations/implications

The data on a number of important institutional variables such as property rights and rule of law are not easily available or importantly do not vary that much across years. However, based on whatever information available, it is apparent that institutional development is crucial to bank performance and also eventual economic growth.

Originality/value

This paper is believed to be the first attempt to empirically examine the role of institutional factor affecting bank efficiency especially in a transition country.

Details

Managerial Finance, vol. 35 no. 2
Type: Research Article
ISSN: 0307-4358

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Article

Glen D. Moyes and Iftekhar Hasan

Investigates the relative importance of potential factors associated with the likelihood of detecting fraud during the audit of financial statements. Based on a survey of…

Abstract

Investigates the relative importance of potential factors associated with the likelihood of detecting fraud during the audit of financial statements. Based on a survey of 357 auditors, reveals auditing experience of the auditor and prior success of auditing organization in detecting fraud are constantly significant variables in detecting fraud for each audit cycle and combined cycle estimates. Certified public accountant certification, peer review, and organizational size have impact only on certain specific audit cycles. This study surveyed two types of auditor: first, certified public accountants specialized in auditing publicly held corporations (external); and second, government entities, and internal auditors specialized in auditing publicly held corporations (internal). The respondent auditors evaluated the degree of effectiveness of 218 auditing techniques in detecting fraud. These techniques were associated with four different audit cycles: acquisition and payment, inventory and warehousing, payroll and personnel and sales and collection.

Details

Managerial Auditing Journal, vol. 11 no. 3
Type: Research Article
ISSN: 0268-6902

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Book part

Asokan Anandarajan, Iftekhar Hasan, Glen Moyes and Fred Wulsin

The purpose of this paper is to examine factors associated with promotions to manager of certified public accountants in auditing with special emphasis on ethnicity and…

Abstract

The purpose of this paper is to examine factors associated with promotions to manager of certified public accountants in auditing with special emphasis on ethnicity and gender. A survey was sent to 2,427 Certified Public Accountants (CPAs) in Santa Clara County, California. We conducted a logistic regression using the survey responses and found that CPAs who were managers had more years of experience and exhibited greater job proficiency in terms of discovering material irregularities and financial statement fraud. They also tended to be predominantly male. Conversely, CPAs who have not succeeded to the position of audit manager tended to have lesser years of experience than those who had, and lower frequencies of detecting material irregularities. They also tended to be predominantly female. While gender appeared to be a significant variable that correlated negatively with promotions, there did not appear to be a significant negative correlation with ethnicity. While there appeared to be a weak association between ethnicity and managerial promotions, this association was not statistically significant. Other factors such as level of college education including holding Master's degrees and possession of additional accounting certifications did not appear to influence the likelihood of becoming an audit manager.

Details

Mirrors and Prisms Interrogating Accounting
Type: Book
ISBN: 978-1-84950-173-6

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Book part

Ari Ginsberg, Iftekhar Hasan and Christopher L. Tucci

Prior research underscores the critical role of prestigious underwriters in shaping the success of the initial public offering (IPO) process, particularly for young firms…

Abstract

Prior research underscores the critical role of prestigious underwriters in shaping the success of the initial public offering (IPO) process, particularly for young firms that do not have much of a track record. Recent scholarly work has shown that the likelihood of a start-up securing a lead prestigious underwriter is influenced by its ability to provide important signals of organizational legitimacy, as conveyed in the employment experiences of the firm's top management team. Building further on theories of organizational attention and decision making, this chapter seeks to examine whether lead prestigious underwriters also consider different types of signals of organizational legitimacy that might be suggested by the existence of ties between young firms and corporate venture capital (CVC) investors.Analysis of 1830 IPOs during 1990–1999 indicates that having a tie to CVC investor provides added legitimacy value over that provided by independent venture capital investors alone. Further analysis of 315 IPOs affiliated with CVC investors suggests that prestigious underwriters pay attention primarily to endorsement-rather than resource-related signals of legitimacy when it comes to CVC ties, and that they pay more attention to investment screening prominence than to business management prominence when it comes to endorsement legitimacy. We also found that prestigious underwriters pay more attention to signals of IPO legitimacy provided by CVC investment in IPO markets that are hot than those that are cold. Our findings provide important theoretical extensions to the study of the certification value of interorganizational affiliations and its impact on IPO success.

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