Search results
1 – 10 of 15Haoyu Gao, Ruixiang Jiang, Junbo Wang and Xiaoguang Yang
This chapter investigates the cost of public debt for firms using a comprehensive sample consisting of 17,368 industrial bond issues from 1970 to 2011. The empirical evidence…
Abstract
This chapter investigates the cost of public debt for firms using a comprehensive sample consisting of 17,368 industrial bond issues from 1970 to 2011. The empirical evidence shows that yield spreads for seasoned bond issues are significantly lower than those for initial bond issues. This seasoning effect is robust across different sample periods, subsamples, and model specifications. On average, the yield spreads for seasoned bond issues are around 50 bps lower than those for initial bond issues. This difference cannot be explained by other bond and firm characteristics. The seasoning effect is more pronounced for firms with higher levels of uncertainty, lower information disclosure quality, and longer time intervals between the first and subsequent issues. Our empirical findings provide supportive evidence for the extant theories that aim to rationalize the information role in determining the cost of capital.
Details
Keywords
Himanshu Chauhan, Priyanka Panday, Raghav Upadhyai and Gargi Pant Shukla
This study enables one to critique the importance of adapting and innovating during challenging times to sustain and grow a business and also emphasizes the need for businesses to…
Abstract
Learning outcomes
This study enables one to critique the importance of adapting and innovating during challenging times to sustain and grow a business and also emphasizes the need for businesses to be flexible, resilient and willing to make necessary changes to stay relevant and thrive in dynamic and unpredictable environments.
Case overview/synopsis
In the competitive world of India’s quick-service restaurants industry, Shilpa Bhatt Bahuguna, the young entrepreneur behind “Pizza Italia,” aimed to secure the top spot in Uttarakhand. Despite facing setbacks by closing six out of the eight outlets during the COVID-19 pandemic, Bahuguna’s focus on product quality and localization had garnered word-of-mouth publicity for her brand. Now, with a limited budget for promotions, Bahuguna sought below-the-line strategies to ensure profitability and success for new outlets. Her determination to establish Pizza Italia as an indigenous brand and her plans for global expansion through franchising reflected her vision for growth and impact in the market. With her entrepreneurial spirit, Bahuguna remained poised to achieve even greater success in the future. Bahuguna aimed to leverage her product quality and word-of-mouth promotion to capture the market. She planned to expand her brand globally and open new outlets in Uttarakhand and London. However, Bahuguna was challenged to promote her brand on a limited budget, favoring “below-the-line” strategies.
Complexity academic level
This case study is appropriate for an undergraduate- or graduate-level program in marketing management.
Supplementary materials
Teaching notes are available for educators only.
Subject code
CSS 11: Strategy
Details
Keywords
Ly Thi Hai Tran, Thoa Thi Kim Tu and Bao Cong Nguyen To
This paper aims to investigate the relationship between uncertainty and corporate cash holdings with the moderating role of political connections.
Abstract
Purpose
This paper aims to investigate the relationship between uncertainty and corporate cash holdings with the moderating role of political connections.
Design/methodology/approach
We employ fixed effects estimation on a panel dataset of 669 Vietnamese listed firms over the 2010–2020 period, with one- and two-way standard error clustering. We conduct various robustness tests, including two-stage least squares/instrumental variable and generalized method of moments regressions, alternative cash holding measure, and additional controls for macroeconomic conditions and ownership types.
Findings
The effect of uncertainty on cash holdings is weakened for firms with political connections relative to those without the connections. Although general firms depend on cash flows to adjust their cash holding behavior when uncertainty increases, our findings suggest that politically connected firms do not rely on internal cash flows to accumulate cash when confronted high uncertainty.
Practical implications
Our findings on the role of political connections in moderating the relationship between cash holding and economic policy uncertainty have practical implications for policymaking. Since political connections serve as a buffer for a firm’s liquidity, firms may want to seek those connections, which can, in turn, lead to increasing informal costs and unfair business environment.
Originality/value
This is the first study investigating the role of political connections to the nexus of cash, cash flow and uncertainty, providing novel evidence regarding the less dependence on internal cash flows to save cash by politically connected firms. Second, the paper enriches the literature on the motives of cash holdings by proposing a modified agency view in the context of weak investor protection. Therefore, our findings strengthen the explanation for the positive effect of uncertainty on firms’ cash holdings in emerging markets.
Details
Keywords
Mohsin Shabir, Jiang Ping, Özcan Işik and Kamran Razzaq
This study investigates the relationship between corporate social responsibility (CSR) and financial performance of the banking sector from the prospective of emerging countries.
Abstract
Purpose
This study investigates the relationship between corporate social responsibility (CSR) and financial performance of the banking sector from the prospective of emerging countries.
Design/methodology/approach
This study obtained balance sheet and income statement data for 173 banks in 20 emerging countries from the Bankscope database from 2005–2018. The CSR-related data were taken from the Thomson Reuters ASSET4 database. Moreover, macroeconomic controls such as GDP per capita, inflation, and financial development are attained from the GFDD. The series of institutional quality indices (Political Stability, Rule of Law, Control of Corruption, Government Effectiveness, and Regulatory Quality) is obtained from the WGI. At the same time, national culture and bank regulation are attained from Hofstede Insights and Barth et al. (2013). We used the panel fixed-effects model in our baseline estimations, while 2SLS and GMM were applied to control for endogeneity.
Findings
The finding shows that CSR activities significantly improve bank performance, but the effect varies across the bank. Only environmentally friendly activities have shown a significant positive relationship with banking performance for CSR dimensions. However, the social and government dimensions did not significantly affect bank performance. Moreover, a sound institutional and regulatory environment and national norms play an important role in the nexus of CSR activities and bank performance.
Originality/value
This study provides empirical evidence that sheds light on CSR and bank performance in an emerging market context.
Details
Keywords
Mehtap Aldogan Eklund and Pedro Pinheiro
This paper aims to investigate whether executive compensation, corporate social responsibility (CSR)-based incentives, environmental social and governance (ESG) performance and…
Abstract
Purpose
This paper aims to investigate whether executive compensation, corporate social responsibility (CSR)-based incentives, environmental social and governance (ESG) performance and firm performance are the significant predictors of CSR committees, in addition to CEO, firm and corporate governance characteristics, from the tenet of stakeholder and managerial power theories.
Design/methodology/approach
Switzerland is an exemplary country from the perspective of corporate governance and executive compensation. This empirical study includes a panel data set of listed Swiss companies, so fixed-effect logistic regression has been used.
Findings
It has been found that the companies that offer CSR-based incentives and higher compensation to their CEOs and have better ESG performance are more likely to have CSR committees.
Practical implications
This empirical paper fills the gap in the literature, guides practitioners about the factors that influence the creation and efficiency of CSR committees, and inspires regulatory bodies to ponder on a mandatory CSR committee to form resilient and sustainable organizations worldwide.
Social implications
COVID-19 has re-emphasized the prominence of sustainability and the stakeholder approach. Thus, this paper indicates that CSR committees require the adaption and implementation of a holistic sustainability policy that integrates both external and internal factors and thereby provides a whole process for sustainability issues.
Originality/value
The impact of CSR committees on corporate social performance (CSP) has already been investigated. However, the predictors of CSR committees have been less scrutinized in the literature.
Details
Keywords
Wei Wu, Chau Le, Yulu Shi and Fadi Alkaraan
Financial flexibility and investment efficiency are of vital importance in strategic choices at boardrooms, particularly in post-crisis recovery strategies. This study examines…
Abstract
Purpose
Financial flexibility and investment efficiency are of vital importance in strategic choices at boardrooms, particularly in post-crisis recovery strategies. This study examines the moderating effects of investment efficiency and investment scale on the relationship between financial flexibility and firm performance.
Design/methodology/approach
The authors use sample of 10,755 US-listed firms over the period 2010–2021 to examine the relationships between investment scale, investment efficiency, financial flexibility and firm performance. Particular attention is paid to overinvestment and underinvestment.
Findings
Findings of this study reveal that financial flexibility mitigates investment inefficiency through reducing overinvestment. Financial flexibility contributes to boost a firm’s accounting and market performance. Additionally, investment efficiency and investment scale have moderating effects on the relationship between financial flexibility and firm performance. However, the influence of investment efficiency is greater than the influence of investment scale. Finally, the authors find that the direct and indirect effects of financial flexibility are stronger on market performance than accounting performance, implying that market is more sensitive to corporate financial policies.
Research limitations/implications
Findings of this study have implications for scholars, decision-makers policymakers, investors and other stakeholders.
Practical implications
This study has its own limitations due to the sample selection issues, country context and the research model adopted by this study.
Originality/value
The novel contribution to the extant literature is incorporating the influence of investment scale and investment efficiency into the relationship between financial flexibility and firm performance.
Details
Keywords
Saleh F.A. Khatib, Dewi Fariha Abdullah and Hamzeh Al Amosh
The literature has dealt with the relationship between board characteristics (BC) and firm performance (FP) on a large scale. However, it yielded inconsistent results. Thus, this…
Abstract
Purpose
The literature has dealt with the relationship between board characteristics (BC) and firm performance (FP) on a large scale. However, it yielded inconsistent results. Thus, this paper aims to examine the indirect relationship between BC and FP through the mediating role of the capital structure (CS).
Design/methodology/approach
This study used a sample of 528 non-financial companies listed on Bursa Malaysia from 2015 to 2019. Also, a two-step system generalised method of moments estimation technique was applied.
Findings
The results show that board diversity and the frequency of board meetings positively affect financial performance, and it is negatively influenced by board turnover, size and independence. Also, the results indicate a positive relationship between the independence of the board and all CS variables. Importantly, the findings support the policy-setting role of the board of directors where CS (measured by total debt and short-term debt) suppresses some governance mechanisms’ detrimental effect on FP. Hence, the board of directors, apart from the monitoring function, introduce various policies (financial and non-financial) that enhance the overall performance of companies.
Originality/value
These results are consistent with the agency’s perspective that management practices in selecting the optimal capital reduce agency costs and improve performance. The findings contribute to developing a broader theoretical framework that accounts for the policy-setting role of the board of directors. The current study model of corporate governance offers insight for policymakers into the role of corporate governance other than monitoring functions in organisations and how CS should be taken into consideration with corporate governance and FP association.
Details
Keywords
Rabiu Saminu Jibril, Muhammad Aminu Isa, Zaharaddeen Salisu Maigoshi and Kabir Tahir Hamid
This study aims to examine how audit committee (AC) attributes influence quality and quantity disclosure of energy consumed by the listed nonfinancial firms for the period of…
Abstract
Purpose
This study aims to examine how audit committee (AC) attributes influence quality and quantity disclosure of energy consumed by the listed nonfinancial firms for the period of five years (2016–2020). The study aims at providing empirical evidence on how board of director’s independence influences the relationship between AC attributes and firms’ energy in achieving sustainable development goals (SDGs) on world climate policy.
Design/methodology/approach
The study obtained data from a sample of 83 listed nonfinancial firms, content analysis technique was used to compute energy disclosure indexes using global reporting initiative standards, while regression analysis was conducted to test the relationship among research variables.
Findings
The study revealed that AC independence, diversity and meetings were significantly related with energy disclosure. Also, the study found that other variables were insignificantly related with energy disclosure.
Research limitations/implications
The study is constrained for not considering all listed firms in the country. Furthermore, the study considered selected attributes, other important audit-committee size attributes such as audit-committee size, audit-committee size tenure could be study in by the future study.
Practical implications
The study’s findings would have practical implications for corporations and other business organizations seeking to actively involve the energy-related SDGs 7 and 13 in their business models and successfully communicate these efforts to stakeholders.
Originality/value
To the best of author’s knowledge, this is the first study that provides empirical evidence on the effect of AC attributes on the energy disclosure using effect of board independence as moderator in Nigeria.
Details
Keywords
Zhihao Qin, Menglin Cui, Jiaqi Yan and Jie Niu
This paper aims to examine whether managerial sentiment, extracted from annual reports, is associated with corporate risk-taking in the context of Chinese companies. This study…
Abstract
Purpose
This paper aims to examine whether managerial sentiment, extracted from annual reports, is associated with corporate risk-taking in the context of Chinese companies. This study expands the vein of literature on overconfidence theory.
Design/methodology/approach
By leveraging textual analysis on Chinese listed companies’ annual reports, the authors construct firm-level managerial sentiment during 2007 and 2021 to examine how managerial sentiment influences corporate risk-taking after control for firm characteristics. Corporate risk-taking is denoted by corporate investment engagements: capital expenditures and net fixed asset investment.
Findings
Results show that incentives for corporate risk-taking are likely to increase with the positive managerial sentiment and decrease with the negative sentiment in companies’ annual reports. Positive managerial sentiment is associated with over-/under-investment and low/high investment efficiency. Further additional tests show that the managerial sentiment effect only holds during low economic uncertain years and samples of private-owned firms. Furthermore, the robust tests indicate that there is no endogenous issue between managerial sentiment and corporate risk-taking.
Research limitations/implications
Annual report textual-based managerial sentiment may not perfectly reflect managers’ lower frequency sentiment (e.g. weekly, monthly and quarterly sentiment). Future studies could attempt to capture managers’ on-time sentiment by using media sources and corporate disclosures.
Practical implications
To the best of the authors’ knowledge, this paper is the first research to provide insights into supervising managers’ corporate decisions by observing their textual information usage in corporate disclosure. Moreover, the approach of measuring managerial sentiment might be a solution to monitoring managerial class.
Originality/value
This paper contributes to the literature on accounting and finance studies, adding another piece of empirical evidence on content analysis by examining a unique language and institutional context (i.e. China). Besides, the paper notes that in line with the English version disclosure, based on Chinese semantic words, managerial sentiment in the Chinese-speaking world has magnitude on corporate decisions. The research provides insights into supervising managers’ corporate decisions by observing their textual information usage in corporate disclosure. Moreover, the approach to measuring managerial sentiment may be a practical solution to monitoring managerial class.
Details
Keywords
Valeria Stefanelli, Francesco Manta and Antonio D'Amato
This paper aims to investigate the relationship between gender diversity in CEO positions and FinTech profitability by exploring the moderating role of the average board age on…
Abstract
Purpose
This paper aims to investigate the relationship between gender diversity in CEO positions and FinTech profitability by exploring the moderating role of the average board age on such a relationship.
Design/methodology/approach
A unique data set of Italian FinTech companies during the 2017–2019 period was used in an ordinary least square model specification. The model is designed to assess the relationship between the presence of a female CEO and FinTech profitability and the moderating role of the average age of governing board members.
Findings
The results of this study indicate that when the average age of the FinTech firm’s board members is relatively low, the profitability of those firms with female CEOs was not significantly different from the profitability of firms with male CEOs. However, among FinTech firms with relatively older board members, the profitability of those firms with a female CEO was lower. This empirical result seems to suggest that older board directors are less prone to recognize female CEO leadership qualities. This supports the need for FinTech firms to adopt good practices in board composition that favor gender inclusion and diversity on board.
Originality/value
The novelty of this study within the literature is that the empirical analysis added new evidence on the relationship between Female CEO and performance by exploring the moderating role of the average age of board members. Moreover, the empirical results of this study suggest specific conditions that could improve the profitability of female-led firms by removing the apparent biased perceptions about the quality of women in leadership among older board members.
Details