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The purpose of this paper is to test the effect of informal finance and trade credit on the performance of private firms.

Based on a survey to private firms in 19 cities, the paper empirically tests the promoting effects of informal finance and trade credit on the performance of private firms in China.

It was found that informal finance and trade credit have positive effects on private firms' performance measured by ROA. The net income reinvestment rate of private firms is positively related to whether or not the firm adopts informal financing or trade credit financing. A private firm having limited access to formal finance is more inclined to rely on self‐funds and is more limited by financing choices. Informal financing and trade credit can relieve the tension of cash flow chain but cannot solve the financing constraints. The empirical results also show that bank credit is still not the main financing choice for private firms and has not yet played a promoting role in private firms' performance and growth. Informal finance is more important to promote performance in manufacturing industry, while trade credit is more effective in wholesale and trading industry. The results show the coexistence viability of informal financing channels and formal financial institutions in China.

The policy implication is the Chinese Government should take careful steps to regulate informal financing sources.

After some theoretical literature, such as Lin and Sun, this paper explores for the first time the effect of informal financing channels on the performance of private firms.

This paper aims to study how state ownership influences the innovation process in terms of allocating resources toward searching for new solutions and converting these efforts into economic value. On one hand, deep pockets of the state provide slack resources that may facilitate risk taking and innovation. On the other hand, soft budgets can create incentive problems and dampen the efficient use of resources. The authors suggest how accounting for competitive context can disentangle these countervailing forces.

The authors use a panel of over 240,000 Chinese firms over the years 2004–2008. The broad sample and period afforded substantial variability in terms of state ownership within and across firms. The authors use a two-stage model and a within-firm (i.e. fixed-effects) design, controlling for all time-invariant firm characteristics and the problematic unobserved heterogeneity that can often lead to erroneous inferences. Furthermore, the relatively short window limits the likelihood of time-varying unobserved firm characteristics biasing the empirical results.

The authors found that private-sector competition has the opposite effect on the relationship between state ownership and the second step of the innovation process. In industries where there is robust private-sector competition, state ownership diminishes the firm’s ability to convert R&D efforts into economic value. Private-sector competition competes away any advantages state-owned firms may have in terms of developing or accessing the complementary resources needed for commercialization. Ultimately, the inefficiencies of state ownership in terms of relatively undisciplined selection and monitoring of R&D activities outweigh any potential resource advantages derived from state ownership.

The state remains a prominent player in many economies throughout the world. The authors explored how state ownership of firms influences the resources they expend in searching out new solutions, and their success in converting such resources into economically valuable new products and services. State ownership has potentially countervailing effects on innovation. The authors disentangle these countervailing effects through consideration of how accounting for competitive context could determine whether the beneficial effects of state ownership dominate its detrimental effects for both searching for new solutions and converting these efforts into economically valuable new products. With a focus of market competition as an external force that drives the difference in innovation between SOEs and the private-sector, this study serves as a parallel effort to Jia et al. (2019) who investigate the joint effect of public and corporate governance on SOEs’ innovation performance, and Zhou et al. (2017) who concern the balance of the institution and efficiency logics on the comparative advantage of SOEs over privately owned enterprises in innovation performance.

This policy paper compares the performance of state-owned enterprise (SOEs) versus private firms in selected emerging economies in Asia, focusing on a number of performance indicators. The indicators are internationally recognized quality innovation, product and/or service innovation, financing of operations, dealing with government regulations and labor performance. To the best of the authors’ knowledge, there has been no such comparative study for these indicators between SOEs and private firms and across countries. Most studies of SOEs have been national case studies. As such, they give us little knowledge of how a country compares with other countries at similar stages of economic development. A cross-country comparative analysis can help us identify broader trends and patterns.

The authors compare and discuss the performance of SOEs versus private firms in a number of emerging Asian countries, namely China, India, Indonesia, Malaysia and Vietnam. To do so, the authors use data from the 2018 World Bank Enterprise Survey (which is the latest available) for the period 2012–2015. The authors focus on a number of key performance indicators, namely internationally recognized quality innovation, product and/or service innovation, financing of operations, dealing with government regulations and labor performance.

The comparative analysis uncovers some interesting differences between the two types of firms. For example, somewhat surprisingly, SOEs tend to innovate more than private firms. However, the single most significant pattern the authors find is that in middle-income Asia both types of firms face formidable challenges with respect to doing business – e.g. scarcity of relevant training programs for employees. Therefore, the priority of policymakers must be to improve the overall business environment for all firms, regardless of their ownership structure.

The nature of this paper is a policy paper. This is because the data used in this study is survey data, conducted every four–five years (or more) for each country in the study and available for very few countries. As the data are not available for a continuous period of time, The authors could not conduct empirical research for this topic and thus made it a policy paper that presents a comparison across Asian countries as case studies.

The five selected Asian countries are interesting case studies for a comparative analysis since they are middle-income countries where SOEs play a significant role in the economy. Furthermore, state ownership is an important institutional dimension in emerging markets, and strong ties with the government can influence the performance of SOEs through various market and non-market channels. Despite the potential importance of the research theme, there is very little existing research on cross-country comparisons of the performance of SOEs vis-à-vis private firms. This could be explained by scarce data availability. With this in mind, the study attempts to shed some light on SOEs' performance and add to the rather limited literature.

The purpose of this paper is to empirically examine the extent at which idiosyncratic and financial market uncertainty affect the UK private manufacturing firms' investment decisions.

A firm‐level panel data covering the period from 1999 to 2008 drawn from the Financial Analysis Made Easy database was analyzed using the system‐generalized method of moments (GMM) technique to purge time‐invariant unobserved firm‐specific effects and to mitigate the potential endogeneity issues.

The results from the two‐step robust system‐GMM estimation indicate that firms significantly reduce their capital investment expenditures when uncertainty (measured by either form) increases. The findings also reveal that private firms' investment is more sensitive to idiosyncratic uncertainty than to financial market uncertainty. The results related to firm characteristics suggest that the firm‐specific variables such as debt‐to‐assets ratio, growth of sales and cash flow‐to‐assets ratio are also important in the determination of private firms' investment. The sensitivity analysis confirms that the findings are robust to an alternative method of estimation as well as to an alternative measure of idiosyncratic uncertainty.

The findings of the paper are useful for firms' investment decisions and authorities in designing effective fiscal and monetary policies.

The main value of this study is to investigate the effects of both idiosyncratic and financial market uncertainty on the investment decisions of private limited manufacturing firms.

This study aims to investigate the role of network in affecting private firms’ internationalization decision. Specifically, it investigates the way that business ties, political ties and status influence an internationalization decision.

On the basis of the survey data collected from Chinese private firms, this study distinguishes business ties from political ties and introduces network status. Binary logistic regression is used to test the hypotheses.

Results show that private firms that have business ties are more likely to internationalize, whereas private firms that have political ties are less likely to internationalize. High-status private firms are more likely to internationalize. Political ties negatively moderate the relationship between business ties and internationalization. High-status firms with political ties are more likely to internationalize.

This study provides theoretical and practical contributions. Results complement previous research on social networks in the context of Chinese private firms and have implications for managers who exert effort to internationalize their firms.

This study provides a large sample comparison of research and development (R&D) spending intensity in private and public firms and the extent to which these firms' unique characteristics affect their R&D spending rate.

The study compares both private and public data from UK firms for the period 2006–2016, generating a total matched 232,029 firm-year observations, and applies a probability model technique to our large panel datasets.

The authors uncover that private firms show lower R&D spending intensity compared to their public counterparts. The authors evidence also shows that privately owned firms in the technological (non-technological) sector display higher (lower) probability of R&D spending intensity. Compared with public firms, the authors further observe that the intensity of private firms' R&D spending increases with higher internal cash flow, leverage and industry information quality. The authors results remain robust to alternative econometric models.

Despite the findings of this study, the authors would like to point out that the use of a single country's data limits the generalisability of our findings. Thus, future studies may also consider extending this study across multiple countries.

A key implication of our study is that private firms are more likely to finance R&D intensity from the internally generated cash flow compared to the public ones. This stems from the fact that private firms are more likely to experience higher costs in raising external finance for innovative activities than public firms. Thus, easy access to funding for private firms is vital for enhancing R&D activities of the private firms.

By combining both private and public firms' datasets, the authors are able to provide new evidence to suggest that the intensity of private firms' R&D spending is dependent on internal cash flow, leverage and the industry information level. In fact, to the best of the authors’ knowledge, this is the first study that explores these relationships.

The purpose of this paper is to examine the role family identity and reputational concerns plays when private family firms engage in earnings management.

The paper is conducted as an archival study using data from private limited liability firms in Norway over the period from 2002 to 2015. The dataset includes financial accounting data and data on family relationships between shareholders, board members and CEOs, where family relationships are determined through bloodlines, adoption and marriage, tracing back four generations and extending out to third cousins. To investigate the incidence of earnings management, the authors employ a measure of accrual-based earnings management (AEM) (Dechow and Dichev, 2002; McNichols, 2002) and a measure of real earnings management (REM) (Roychowdhury, 2006). They use whether or not the family name is included in the firm name (i.e. family name congruence) as a proxy for family members' identification with the family firm and their sensitivity to reputational concerns.

The authors’ results show that AEM is lower for family-named family firms. Moreover, their findings also indicate that family-named family firms are more likely to select REM over AEM, compared to nonfamily named family firms. This is even more pronounced when detection risk is high (high quality audit proxied by Big 4).

The quality of the authors’ findings is limited to the validity of their proxy for family firm identification and reputational concerns (the family name included in the firm name). Even though findings from prior research suggest that family name congruence is a valid proxy for identity and reputational concerns (e.g. Kashmiri and Mahajan, 2010, 2014; Rousseau et al., 2018; Zellweger et al., 2013), future research should investigate the validity of these results using alternative proxies for family firm identification. Future research should also investigate whether the authors’ findings are generalizable to public family firms.

The authors’ results suggest that the risk of AEM is lower for family-named family firms, whereas the risk of REM is somewhat higher, compared to nonfamily named family firms. These results might be relevant for financial accounting users, auditors and supervisory and monitoring bodies when assessing the risk of earnings management.

The paper is, as far as the authors are aware of, the first to investigate the role of family name congruence and detection risk when private family firms select between AEM and REM.

The purpose of this study is to examine the relationship between auditing/non-auditing and accounting timeliness among Swedish private firms.

This paper uses regression analysis to test the relationship between auditing and two measurements of timeliness; lead time and late filing. The sample consists of Swedish private firms.

This paper finds that audited firms, when compared with unaudited firms, are significantly less timely. Moreover, greater profitability was associated with more timeliness but only for audited firms. The results of this paper also show that firms being audited by a big 4 auditor are significantly timelier than firms being audited by a non-big 4 auditor.

The findings in this paper suggests that one aspect of accounting quality, timeliness, does not seem to benefit from auditing in a Swedish context. There is a debate about whether the threshold levels in Sweden should be raised so that more firms voluntarily can opt out of audit. Those opposing a raised threshold level claim that auditing has positive effects on accounting quality and consequently that a raised level would have adverse effects. The findings in this paper do not support such a claim.

Little is known about timeliness in private firms compared to public firms and this paper fills that void. Contrary to prior research, findings show that unaudited firms in a Swedish regulatory setting actually are timelier than their audited counterparts. This questions one of the (presumed) benefits of auditing and should stimulate more research on this issue.

This paper investigates how past performance changes, prior CEO replacements and changes in the chairperson impact CEO turnover in public and large private businesses.

We analyze 1,679 CEO replacements documented in a sample of 1,493 Spanish public and private firms during 1998–2004 by computing dynamic binary choice models that control for endogeneity in CEO turnovers.

The results reveal that different performance horizons (short- and long-term) explain the dissimilar rate of CEO turnover between public and private firms. Private firms exercise monitoring patience and path dependency characterizes the evaluation of CEOs, while public companies' short-termism leads to higher CEO turnover rates as a reaction to poor short-term economic results, and alternative controls—ownership and changes in the chairperson—improve the monitoring of management.

Our results show the importance of controlling for path dependency to examine more accurately top executives' performance. The findings confirm that exposure to market controls affects the functioning of internal controls in evaluating CEOs and shows a short-term performance horizon that could be behind the recent moves of public firms going private or restraining shareholders' power.

The purpose of this paper is to examine the various factors that influence a small and medium enterprise’s (SME) decision to apply for bank loans.

Data from survey responses of 145 SMEs from Selangor and the Federal Territory of Kuala Lumpur are used for this purpose. Exploratory factor analysis, logistic regression and SEM-PLS are used to analyze the data.

The findings from the survey show that an SME’s financial performance, its access to finance and its legal form play a significant positive role in its decision to apply for debt financing. Private limited SMEs that perform well and are able to access to various financing options are more likely to apply for financing. However, there is also evidence of a significant negative influence of credit history on the decision to apply for financing, as SMEs with a poor credit history are more likely to apply for financing. The age of an SME has weak influence while its size is found to be insignificant in influencing its decision to apply for financing.

The results imply the role of financial market imperfections such as adverse selection and information asymmetry in defining the SME’s demand for debt financing. The study contributes to a deeper understanding of the debt financing decisions of SMEs.