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Article
Publication date: 1 January 1990

Robert L. Kieschnick

The purpose of this paper is to present a review of selected applications of contingent claims analysis in corporate finance. Contingent claims analysis is an approach to…

Abstract

The purpose of this paper is to present a review of selected applications of contingent claims analysis in corporate finance. Contingent claims analysis is an approach to valuing payoffs which are contingent on other uncertain payoffs. The essential logic of the different applications reviewed is that we can value these derivative payoffs by replicating them with assets, whose prices are known. This simple logic is capable of providing one with insights into the pricing of new types of financial assets (e.g. optional bonds) as well as providing new insights into the valuation of strategic corporate investments.

Details

Managerial Finance, vol. 16 no. 1
Type: Research Article
ISSN: 0307-4358

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Article
Publication date: 11 May 2012

Hernan E. Riquelme, Eman Mahdi Sayed Abbas and Rosa E. Rios

The purpose of this paper is to understand the factors that influence attitudes toward counterfeits, and the intention to purchase these illegal products in a Muslim country.

Abstract

Purpose

The purpose of this paper is to understand the factors that influence attitudes toward counterfeits, and the intention to purchase these illegal products in a Muslim country.

Design/methodology/approach

In total, 401 participants completed a questionnaire that contained 41 statements related to beliefs about counterfeited products such as risks, ethics and social norms. Confirmatory factor analysis and structural equation modelling were performed to test the measurement and structural models.

Findings

Value consciousness, performance risk (negative relationship), norms (subjective and descriptive) and ethical consciousness influence attitude. Previous purchase moderates attitude and intention. Attitude explains a considerable percentage of the variance of intention to purchase counterfeits. Beliefs explain attitude to a large extent.

Research limitations/implications

There is a lack of product specification; also respondents were more educated than the population (73.3 per cent have a university degree).

Practical implications

People do not see themselves as being unethical in buying counterfeits, even in a religious environment and do not perceive prosecution risks. Government enforcement is important to alter these perceptions. Finding the right price that preserves a premium price for the brand and a perceived “fair” price may be the answer to the problem.

Originality/value

The paper describes a study conducted in an Arab Muslim and rich Middle Eastern country. Previous studies in Asian countries, less economically advantaged and with Muslim populations, have not related their findings to religious beliefs or ethical consciousness.

Details

Education, Business and Society: Contemporary Middle Eastern Issues, vol. 5 no. 1
Type: Research Article
ISSN: 1753-7983

Keywords

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Book part
Publication date: 15 October 2020

Elizabeth H. Gorman and Fiona M. Kay

In elite professional firms, minorities are actively recruited but struggle to move upward. The authors argue that initiatives aimed at general skill development can have…

Abstract

In elite professional firms, minorities are actively recruited but struggle to move upward. The authors argue that initiatives aimed at general skill development can have unintended consequences for firm diversity. Specifically, the authors contend that approaches that win partner support through motivational significance and interpretive clarity provide a more effective avenue to skill development for minorities, who have less access than White peers to informal developmental opportunities. The authors also argue that a longer “partnership track,” which imposes a time limit on skill development, will benefit minority professionals. Using data on 601 offices of large US law firms in 1996 and 2005, the authors investigate the effects of five developmental initiatives and partnership track length on the representation of African-Americans, Latinxs, and Asian-Americans among partners. Observed effects are consistent with expectations, but patterns vary across racial-ethnic groups.

Details

Professional Work: Knowledge, Power and Social Inequalities
Type: Book
ISBN: 978-1-80043-210-9

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Article
Publication date: 1 May 1986

David Rees

In May 1986, the Planning Forum's Southern California Chapter presented its Award for Excellence in Strategic Management and Planning to Robert E. Wycoff, the…

Abstract

In May 1986, the Planning Forum's Southern California Chapter presented its Award for Excellence in Strategic Management and Planning to Robert E. Wycoff, the fifty‐five‐year‐old president and chief operating officer of Atlantic Richfield Co. Arco is the twelfth largest industrial corporation in the United States, based on 1985 revenues of $22.5 billion. The Chapter's selection committee picked Arco out of a field of a hundred companies, comparing them against a list of criteria that included: commitment to planning, the company's planning system, and the results of that planning.

Details

Planning Review, vol. 14 no. 5
Type: Research Article
ISSN: 0094-064X

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Article
Publication date: 4 September 2017

Harsh Pratap Singh and Satish Kumar

The purpose of this paper is to analyze the effects of various factors like profitability, growth opportunity, financial leverage, assets tangibility, operating cash…

Abstract

Purpose

The purpose of this paper is to analyze the effects of various factors like profitability, growth opportunity, financial leverage, assets tangibility, operating cash flows, age and size of firm on working capital requirements (WCR) of manufacturing SMEs in India.

Design/methodology/approach

The paper uses a panel data regression model with fixed and random effect estimations. The data utilized in this study includes financial data of 254 manufacturing SMEs operating in India for the period 2010 to 2014.

Findings

The overall results of the study indicate that operating cash flow, financial leverage, profitability, sales growth and asset tangibility are the key drivers of WCR for Indian manufacturing SMEs. Profitability of firm and sales growth are found to be positively related to WCR. In contrast, asset tangibility, operating cash flow and financial leverage are found to be negatively related to WCR.

Research limitations/implications

This paper investigates firm-specific factors while ignoring external factors like GDP growth, business indicators and industry type. Further research can be done to assess the effect of these external factors on WCR.

Originality/value

This research contributes to the working capital literature by providing empirical evidence on determining factors of WCR in manufacturing SMEs.

Details

Review of International Business and Strategy, vol. 27 no. 3
Type: Research Article
ISSN: 2059-6014

Keywords

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Article
Publication date: 12 November 2020

Rana Yassir Hussain, Xuezhou Wen, Haroon Hussain, Muhammad Saad and Zuhaib Zafar

Corporate boards monitor managerial decisions as concluded by the monitoring hypothesis. In this scenario, the present study stresses that leverage decisions can be used…

Abstract

Purpose

Corporate boards monitor managerial decisions as concluded by the monitoring hypothesis. In this scenario, the present study stresses that leverage decisions can be used as a tool to control insolvency risk.

Design/methodology/approach

This study aims at investigating the intervention of capital structure and debt maturity on the relationship between corporate board composition and insolvency risk by employing Preacher and Hayes’s (2008) approach. The study sample comprises 284 firms from 2013 to 2017. Structural equation modeling is used to study the direct and indirect relationships among study variables.

Findings

Results show that debt maturity is a significant mediator between CEO duality and insolvency risk and between board size and insolvency risk relationships. However, the capital structure did not mediate any of the proposed links.

Research limitations/implications

This study suggests using more long-term debt to tackle insolvency risk in listed non-financial firms of Pakistan. It is also inferred that decisions regarding debt maturity are more crucial than capital structure decisions because insolvency risk is concerned.

Originality/value

This study evaluates the comparative mediating role of the debt maturity and the capital structure. Such role is uncommon in the literature addressing the relationship between governance variables and insolvency risk.

Details

South Asian Journal of Business Studies, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2398-628X

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Article
Publication date: 19 February 2021

Jonathan J. Burson and Marlin R.H. Jensen

This study aims to examine institutional ownership of companies that go public with dual-class share structures.

Abstract

Purpose

This study aims to examine institutional ownership of companies that go public with dual-class share structures.

Design/methodology/approach

Several recent studies have discussed the potential advantages and disadvantages of the dual-class structure, which allows founders and insiders to maintain control of the firms they created through superior voting rights. Institutional investors oppose the dual-class structure, arguing that inferior voting rights make it difficult to respond to poor governance or performance. Previous research has shown the early value-added to the dual-class firm declines through time. This study examines institutional ownership of dual-class companies through time and compares institutional investments in initial public offerings with perpetual superior-class structures versus those with provisions to sunset those shares to one-share, one-vote structures.

Findings

Evidence suggests that institutional investors view perpetual dual-class structures as potentially riskier in terms of poor governance or performance and prefer dual-class companies with sunset provisions.

Originality/value

This study suggests that founders and insiders should consider either the dual-class structure with a sunset provision or if they choose the perpetual dual-class, it should include some type of event-driven safeguards.

Details

Journal of Financial Economic Policy, vol. 13 no. 2
Type: Research Article
ISSN: 1757-6385

Keywords

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Article
Publication date: 12 August 2014

Qin Lei, Murli Rajan and Xuewu Wang

The purpose of this paper is to investigate how insiders’ trades are executed and whether and how outside investors can mimic outperforming insiders and reap substantial…

Abstract

Purpose

The purpose of this paper is to investigate how insiders’ trades are executed and whether and how outside investors can mimic outperforming insiders and reap substantial portfolio returns that withstand the erosion from adjustments for both the standard factors and stock characteristics in the asset pricing literature.

Design/methodology/approach

The authors design a metric for measuring insiders’ trade execution quality: the trading alpha. The authors run regression analysis to control for trade difficulty, insider reputations and the corporate role ranks of insiders and document the existence of the abnormal trading alpha. The authors further form portfolios based on the abnormal trading alpha and document a significant abnormal return that is robust to both standard asset pricing factors model and the stock characteristics adjustments.

Findings

Outperforming insiders at the aggregate level resemble value investors who trade on long-term fundamental information, trade patiently and earn rents from providing liquidity. Outside investors can mimic the outperforming insiders and reap significant abnormal portfolio returns.

Research limitations/implications

Data limitations on insider trades and their association/interaction with their brokers prevent us from having a conclusive investigation of the trading skill hypothesis. The authors hope to further research along the lines of the trading skill hypothesis as compared to investment style hypothesis with more detailed data about the brokers used by insiders.

Practical implications

The findings can be applied for money management profession in that outsider investors can monitor the trading execution and construct portfolios based on the adjusted abnormal trading alpha. The resulting portfolio has been documented to be highly profitable after risk adjustments using standard asset pricing factors as well as stock characteristics.

Social implications

Professional money managers and outsider investors should be able to benefit from the findings in this paper and use the proposed trading alpha metric to construct and rebalance real-time investment portfolios.

Originality/value

Outperforming insiders at the aggregate level resemble value investors who act on long-term fundamental information, trade patiently and earn rents from providing liquidity. From the perspective of investment implications, outside investors can mimic the outperforming insiders and reap substantial portfolio returns that withstand the erosion from adjustments for both the standard factors and stock characteristics in the asset pricing literature.

Details

China Finance Review International, vol. 4 no. 3
Type: Research Article
ISSN: 2044-1398

Keywords

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