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Article
Publication date: 31 May 2006

Frias Aceituno, José Valeriano, Rodriguez Bolivar and Manuel Pedro

The majority stockholders are not the same as parent company stockholders in a consolidated entity when one or more subsidiaries own parent company’s shares. In this…

Abstract

The majority stockholders are not the same as parent company stockholders in a consolidated entity when one or more subsidiaries own parent company’s shares. In this milieu, the allocation of income could be performed: a) among majority and minority stockholders; b) among parent company stockholders and minority stockholders. Considering minority interest as a component of the consolidated equity, this paper demonstrates how the criterion used to allocate income can influence on the consolidated financial statements and, thereby, analysis based these financial statements.

Details

International Journal of Commerce and Management, vol. 16 no. 2
Type: Research Article
ISSN: 1056-9219

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Article
Publication date: 4 May 2012

Padmini Srinivasan and M.S. Narasimhan

India is one of the few countries where companies are required to give both consolidated financial statements (CFS) as well as parent‐only financial statements. While…

Abstract

Purpose

India is one of the few countries where companies are required to give both consolidated financial statements (CFS) as well as parent‐only financial statements. While parent‐only statements have been in existence for a long time, CFS was introduced recently. The purpose of this paper is to examine the value relevance of CFS in India.

Design/methodology/approach

The value relevance of CFS is examined through an empirical study. The study examines the relationship between market values and consolidated earnings and parent‐only earnings is analysed. The study uses four years data of 59 companies whose subsidiary earnings are more than 20 per cent of consolidated revenue.

Findings

Initial results show that annual CFS are not value relevant, whereas annual parent‐only financial statements are value relevant. However, wherever quarterly financial statements are available, CFC are found to be value relevant and parent‐only financial statements are not value relevant.

Practical implications

While CFS and parent‐only financial statement on an annual basis are mandatory, companies have the option to publish parent‐only financial statement on a quarterly basis while not reporting quarterly consolidated financial statements. This inconsistency in the regulation causes confusion to investors who receive parent‐only quarterly financial statements for three quarters and suddenly consolidated financial statements at the end of the year. The paper shows how market reacts to such reporting practices.

Originality/value

In addition to examining the value relevance of CFS, the paper also examines the impact of incomplete regulations of financial reporting on asset pricing.

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Article
Publication date: 18 May 2010

Anders Haug, Anne Pedersen and Jan Stentoft Arlbjørn

Many companies are part of parent‐subsidiary supply chains, i.e. organisations where a parent company receives products from its subsidiary or the other way around. Having…

Abstract

Purpose

Many companies are part of parent‐subsidiary supply chains, i.e. organisations where a parent company receives products from its subsidiary or the other way around. Having this close relationship in a supply chain network opens the possibilities for different setups of enterprise resource planning (ERP) systems across such companies. This paper clarifies the different ERP system strategies for companies in parent‐subsidiary supply chains and the consequences of choosing the different strategies.

Design/methodology/approach

In order to position the contributions of the paper, literature on the use of ERP systems in supply chain management (SCM) is investigated. Next, four archetypical ERP system setups across parent‐subsidiary supply chains are defined. The consequences of the four defined setups are deduced. Three case studies are presented to justify the relevance of the defined four ERP system strategies and to further investigate the consequences of choosing these (one case study represents two strategies).

Findings

The paper shows that there are significant impacts of choosing one of the four ERP system setups across parent‐subsidiary supply chains, e.g. quality of communication, degree of local management, synergy effects, etc. Furthermore, the paper shows that extant literature dealing with ERP systems and SCM fails to consider this aspect, which may at worst lead to incorrect generalisations.

Research limitations/implications

The paper clarifies the importance of considering different ERP system setups in parent‐subsidiary relationships. Future research in ERP systems and SCM needs to focus more on this aspect.

Practical implications

The paper provides an improved basis for companies in parent‐subsidiary supply chains that are to implement ERP systems or are to rethink their current ERP strategy.

Originality/value

The definition of ERP system setups across parent‐subsidiary supply chains and the clarification of the consequences of these strategies represent new and useful contributions to the SCM and the ERP literature.

Details

International Journal of Physical Distribution & Logistics Management, vol. 40 no. 4
Type: Research Article
ISSN: 0960-0035

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Article
Publication date: 25 November 2019

Fang-Yi Lo and Ricky Tan

One important strategy Multinational Enterprises (MNEs) employ to compete in the global market is to engage in foreign investment, but firms must know how they can perform…

Abstract

Purpose

One important strategy Multinational Enterprises (MNEs) employ to compete in the global market is to engage in foreign investment, but firms must know how they can perform better in the host country market. International subsidiaries’ performances play a chief role for MNEs’ globalization strategy. The purpose of this paper is to construct multi-level research with parent-level data at the higher level and subsidiary-level data at the lower level.

Design/methodology/approach

This study helps capture the rapid growing trend in emerging markets and uses a sample of Taiwanese enterprises and their subsidiaries in China. The data come from the Taiwan Economic Journal database. Precisely, the authors obtain 711 Taiwanese MNEs and 4,458 of their subsidiaries in China.

Findings

This study finds among the parent company’s attributes that firm size, firm total performance, depth of internationalization and foreign shareholding have significant impacts on subsidiary performance, while within the subsidiary’s attributes, subsidiary size, subsidiary-owned capital and total investment fund significantly affect subsidiary performance.

Originality/value

In order to capture subsidiary performance, this study uses a multi-level analysis approach with the Hierarchical Linear Model statistic method to separate parent company attributes and subsidiary-owned attributes as two distinct levels. This method fills the gap in the literature by analyzing subsidiary performance and clarifying that foreign direct investment is a multi-level phenomenon that cannot be analyzed using a one-level analysis method.

Details

International Journal of Emerging Markets, vol. 15 no. 4
Type: Research Article
ISSN: 1746-8809

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Article
Publication date: 3 July 2017

James G.S. Yang and Frank J. Aquilino

The accounting standards for consolidated financial statements have been updated recently. The change involves the measurement of goodwill and noncontrolling interest…

Abstract

Purpose

The accounting standards for consolidated financial statements have been updated recently. The change involves the measurement of goodwill and noncontrolling interest. Under the new accounting standards, goodwill consists of not only the parent company’s portion but also the noncontrolling interest’s share. The noncontrolling interest comprises both the subsidiary’s identifiable net assets and goodwill. In addition, it further changes the treatment of noncontrolling interest from liability to equity. The change indeed has far-reaching consequences on financial statements. This paper formulates an equation to measure goodwill and noncontrolling interest. It also provides some examples for illustrative purposes. The purpose of this paper is to update the financial reporting to the current standards.

Design/methodology/approach

New accounting standards under FASB #141R and 160.

Findings

New accounting standards in measuring goodwill and noncontrolling interest in financial reporting.

Research limitations/implications

The knowledge is useful for accountants and financial analysts.

Practical implications

Improve the quality of financial statements.

Social implications

Investors will be better informed.

Originality/value

This new accounting standard was not explored before.

Details

Journal of Financial Reporting and Accounting, vol. 15 no. 2
Type: Research Article
ISSN: 1985-2517

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Book part
Publication date: 13 August 2018

Lorenzo Patelli

Purpose – To show the properties of performance measurement and management systems (PMMS) used dialogically and the association between the dialogic use of PMMS and the

Abstract

Purpose – To show the properties of performance measurement and management systems (PMMS) used dialogically and the association between the dialogic use of PMMS and the characteristics of the organizational relationships between parent companies and foreign subsidiaries.

Design/Methodology/Approach – Data were collected through a questionnaire e-mailed to large foreign subsidiaries of multinational firms operating in various industries. Hypotheses regarding factors associated with the extent to which PMMS are used dialogically between parent companies and foreign subsidiaries were tested based on responses to 136 usable questionnaires (45% response rate).

Findings – PMMS are used more dialogically within relationships between parent companies and subsidiaries characterized by subsidiary strategic role and organizational interdependence. Measurement diversity and perceived comprehensiveness of PMMS are higher if PMMS are used more dialogically. Finally, the dialogic use of PMMS is positively associated with subsidiary size and the emphasis on collaboration in the parent company’s national culture.

Originality/Value – In contrast to prior management accounting research that is focused on the outcomes of different styles of use of PMMS, this study shows organizational characteristics and PMMS properties associated with the dialogic use of PMMS. Moreover, this study advances the traditional view of the international business literature that conceives PMMS as bureaucratic systems employed by parent companies to coercively control foreign subsidiaries.

Details

Advances in Management Accounting
Type: Book
ISBN: 978-1-78756-440-4

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Article
Publication date: 1 June 1989

Mark L. Robinson

Business searchers of all types are asked at times to identify a company's corporate family structure. Searches of this type involve identifying the parent company and any…

Abstract

Business searchers of all types are asked at times to identify a company's corporate family structure. Searches of this type involve identifying the parent company and any other subordinate firms. Knowing which databases to search on Dialog and how to search them effectively is the focus of this paper.

Details

Online Review, vol. 13 no. 6
Type: Research Article
ISSN: 0309-314X

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Article
Publication date: 1 May 1997

May M.L. Wong

Examines the human resource (HR) policies adopted by two Japanese retail stores in Hong Kong. Finds that the two Japanese retail stores employ different HR policies in…

Abstract

Examines the human resource (HR) policies adopted by two Japanese retail stores in Hong Kong. Finds that the two Japanese retail stores employ different HR policies in terms of recruitment and selection, remuneration and welfare, and training and development for different groups of employees within the same Hong Kong operation. The implementation of the different HR policies for different groups of employees is attributable, first, to the influence of the parent company’s environment ‐ socio‐economic conditions, characteristics of the top management, corporate strategy and use of technology in the parent company; and, second, to the different types of employee in the two stores in Hong Kong ‐ the male and female expatriates among the parent‐country nationals (PCNs), and the professionals with high levels of skill, full‐time managers and employees with lower level skills, and part‐time employees among the home‐country nationals (HCNs).

Details

International Journal of Manpower, vol. 18 no. 3
Type: Research Article
ISSN: 0143-7720

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Article
Publication date: 1 March 1992

I.S. Demirag

The rapid development of multinational companies (MNCs) has resulted in the need for accounting systems which function to report, evaluate and control international…

Abstract

The rapid development of multinational companies (MNCs) has resulted in the need for accounting systems which function to report, evaluate and control international operations and their managers' effectiveness. While the problems surrounding the evaluation and control of domestic firms remain the same for MNCs' parent company managers, the question of which country's currency should be used in the evaluation process represents additional complexities for them. The choice is essentially either that of the parent company currency or the currency of the foreign subsidiary. Parent company managers may also use both of these currencies, but it is likely that this choice will result in different decisions regarding the performance of foreign operations (see Demirag, 1987,1987a, 1987b). The aim of this paper is to critically review the theoretical and empirical literature on the use of parent and/or foreign subsidiary accounting information used by multinational companies in the evaluation of their foreign subsidiary operations and managers. In doing so, the paper addresses the following two questions. First, to what extent is translated information, untranslated information or both types of information significant in the evaluation of foreign subsidiary operations and their managers' performance in MNCs? Second, what are the major contextual variables which influence MNC foreign currency accounting practices in performance evaluations?

Details

Managerial Finance, vol. 18 no. 3
Type: Research Article
ISSN: 0307-4358

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Article
Publication date: 10 April 2009

Yuwen Liu

The purpose of this article is to empirically examine the relationships between organizational support, affective commitment, and organizational citizenship behavior (OCB…

Abstract

Purpose

The purpose of this article is to empirically examine the relationships between organizational support, affective commitment, and organizational citizenship behavior (OCB) for expatriates.

Design/methodology/approach

Data from 162 expatriates, working in 37 subsidiaries of multinational corporations located in Mainland China, are used to examine the proposed hypotheses. The surveys are administrated in Chinese. Survey items are first translated into Chinese and then back translated to English to reduce the risk of losing meaning. Hierarchical regressions are used in the statistical analyses.

Findings

Results indicate that perceived organizational support (POS) from both the parent company and the subsidiary significantly related to affective commitment and organizational‐directed OCB. The results also show that the affective commitment acted as a partial mediator of the relationship between parent company POS and organizational‐directed OCB, and a full mediator of the relationship between subsidiary POS and organizational‐directed OCB.

Research limitations/implications

The sampling strategy employed possibly could weaken the generalization of the research findings.

Practical implications

The empirical results would encourage practitioners to enhance their services for expatriates. Management efforts devoted to enhancing the perception and reality of organizational support to expatriates may offer positive outcomes in terms of higher expatriate affective commitment towards the parent company, which significantly mediates the impact of POS on expatriate's ultimate attitudes and behaviors toward the company.

Originality/value

This study using POS as a lens to study expatriates' organizational commitment and organizational‐directed OCB provides a base for additional research to further develop the fields of POS and organizational‐directed OCB as they apply to expatriates.

Details

Personnel Review, vol. 38 no. 3
Type: Research Article
ISSN: 0048-3486

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