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1 – 10 of 30Hsihui Chang and Helen HL Choy
This paper aims to examine the effect of the Sarbanes–Oxley Act (SOX), which was signed by President George W. Bush and came into effect on July 30, 2002, on firm productivity.
Abstract
Purpose
This paper aims to examine the effect of the Sarbanes–Oxley Act (SOX), which was signed by President George W. Bush and came into effect on July 30, 2002, on firm productivity.
Design/methodology/approach
The authors use the total factor productivity (TFP) as our measure of firm productivity.
Findings
Analyzing annual firm-level data from the Compustat database for the period of 1991-2006, the authors find that firm productivity increases at a higher rate in the post-SOX period. The results indicate that, although firms incur significant costs in complying with the requirements of the SOX, they also benefit from these requirements as evidenced by the improved productivity over time post-SOX. There is also a shift in the output elasticities from capital toward labor. The SOX has a positive effect on the output elasticity of labor but a negative impact on that of capital.
Research limitations/implications
The results have the following important implications. The SOX is a value-enhancing regulation in that it not only strengthens a firm’s corporate governance but also improves its productivity. However, compliance with the SOX can impose a long-term cost on firms: the decrease in the capital investment, leading to a decline in the output elasticity of capital. If this decline in the capital investment continues, it can have an adverse effect on firm productivity in the long term.
Originality/value
This paper extends the literature along the line of the actual operational effects of the SOX regulation by examining its effect on the productivity of firms.
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Olav Torp, Ingemund Jordanger, Ole Jonny Klakegg and Yvonne C.B. Bjerke
The purpose of the paper is 1) to address the importance of contingency at the right level when defining project control baseline, including cost reserves / “room to manoeuvre”…
Abstract
Purpose
The purpose of the paper is 1) to address the importance of contingency at the right level when defining project control baseline, including cost reserves / “room to manoeuvre” and 2) present proactive uncertainty management as a regime to ensure cost effective management of project reserves and contribute to project success.
Design/Methodology/Approach
The paper is a combination of literature study and quantitative research on how contingency develops during the lifetime of a case project. The investigation into the case project includes document study into quantitative material from the case project. The combination of empirical material and theory makes the discussion robust.
Findings
Unrealistic low cost uncertainty will lead to unrealistic low contingency. The case study from a Norwegian mega project shows a contingency of 15 per cent in addition to expected costs. The case study shows that by continuous opportunity management and risk reduction, the needs for management reserves are systematically reduced and the contingency is controlled.
Research Limitations/Implications
This research is limited to one case study. A higher number of cases are necessary to generalise the findings. However, the authors would claim that the systematic mapping of need for management reserve towards the project contingency, and a continuous uncertainty management system will help to obtain cost effective management. The findings from the case study could be applied on similar cases.
Practical Implications
The case study shows a way of setting contingencies and managing contingencies through systematic uncertainty management.
Originality/Value
Improved management of project provisions will increase the value of future projects.
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Paz Rico and Bernardí Cabrer-Borrás
The purpose of this paper is to analyse if the divergences in the economic growth of the Spanish regions are a result of sectoral differences, company size or technological level…
Abstract
Purpose
The purpose of this paper is to analyse if the divergences in the economic growth of the Spanish regions are a result of sectoral differences, company size or technological level of the new firms that emerge in the market.
Design/methodology/approach
For this purpose, a model is specified and estimated in which the total factor productivity of Spanish regions is explained by business dynamics, innovation, human capital and the level of entrepreneurship in each region.
Findings
The results obtained lead the authors to conclude that entrepreneurship understood as both the creation of new firms and entrepreneurial activity, have a positive effect on productive efficiency and can explain the differences in the economic growth of the regions. In addition, the stock of human capital and the promotion of innovation act as catalysts for the productive efficiency of the regions. However, the results show that it is not enough to generate new firms to boost economic growth; these businesses must also be oriented towards sectors that promote technological innovation and with the objective to reach an adequate size.
Originality/value
Empirical studies use either the creation of new firms or the index of entrepreneurial activity as alternative measures of entrepreneurship. In this research, however, both variables are considered together. Specifically, the creation of new companies is used as a measure of regional business dynamics, and the entrepreneurial activity index, provided by the Global Entrepreneurship Monitor, as a measure of regional entrepreneurship. The main novelty of this paper’s approach is that it considers different types of entrepreneurial capital in considering productive sector, size and technological level of the new companies.
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Francesco Aiello, Paola Cardamone, Lidia Mannarino and Valeria Pupo
The purpose of this study is to investigate whether and how inter-firm cooperation and firm age moderate the relationship between family ownership and productivity.
Abstract
Purpose
The purpose of this study is to investigate whether and how inter-firm cooperation and firm age moderate the relationship between family ownership and productivity.
Design/methodology/approach
We first estimate the total factor productivity (TFP) of a large sample of Italian firms observed over the period 2010–2018 and then apply a Poisson random effects model.
Findings
TFP is, on average, higher for non-family firms (non-FFs) than for FF. Furthermore, inter-organizational cooperation and firm age mitigate the negative effect of family ownership. In detail, it is found that belonging to a network acts as a moderator in different ways according to firm age. Indeed, young FFs underperform non-FF peers, although the TFP gap decreases with age. In contrast, the benefits of a formal network are high for older FFs, suggesting that an age-related learning process is at work.
Practical implications
The study provides evidence that FFs can outperform non-FFs when they move away from Socio-Emotional Wealth-centered reference points and exploit knowledge flows arising from high levels of social capital. In the case of mature FFs, networking is a driver of TFP, allowing them to acquire external resources. Since FFs often do not have sufficient in-house knowledge and resources, they must be aware of the value of business cooperation. While preserving the familiar identity of small companies, networks grant FFs the competitive and scale advantages of being large.
Originality/value
Despite the wide but ambiguous body of research on the performance gap between FFs and non-FFs, little is known about the role of FFs’ heterogeneity. This study has proven successful in detecting age as a factor in heterogeneity, specifically to explain the network effect on the link between ownership and TFP. Based on a representative sample, the study provides a solid framework for FFs, policymakers and academic research on family-owned companies.
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