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Book part
Publication date: 27 November 2017

Tarek Ibrahim Eldomiaty, Islam Azzam, Mohamed Bahaa El Din, Wael Mostafa and Zahraa Mohamed

The main objective of this study is to examine whether firms follow the financing hierarchy as suggested by the Pecking Order Theory (POT). The External Funds Needed (EFN…

Abstract

The main objective of this study is to examine whether firms follow the financing hierarchy as suggested by the Pecking Order Theory (POT). The External Funds Needed (EFN) model offers a financing hierarchy that can be used for examining the POT. As far as the EFN considers growth of sales as a driver for changing capital structure, it follows that shall firms plan for a sustainable growth of sales, a sustainable financing can be reached and maintained. This study uses data about the firms listed in two indexes: Dow Jones Industrial Average (DJIA30) and NASDAQ100. The data cover quarterly periods from June 30, 1999, to March 31, 2012. The methodology includes (a) cointegration analysis in order to test for model specification and (b) causality analysis in order to show the generic and mutual associations between the components of EFN. The results conclude that (a) in the majority of the cases, firms plan for an increase in growth sales but not necessarily to approach sustainable rate; (b) in cases of observed and sustainable growth of sales, firms reduce debt financing persistently; (c) firms use equity financing to finance sustainable growth of sales in the long run only, while in the short run, firms use internal financing, that is, retained earnings as a flexible source of financing; and (d) the EFN model is quite useful for examining the hierarchy of financing. This study contributes to the related literature in terms of utilizing the properties of the EFN model in order to examine the practical aspects of the POT. These practical considerations are extended to examine the use of the POT in cases of observed and sustainable growth rates. The findings contribute to the current literature that there is a need to offer an adjustment to the financing order suggested by the POT. Equity financing is the first source of financing current and sustainable growth of sales, followed by retained earnings, and debt financing is the last resort.

Details

Growing Presence of Real Options in Global Financial Markets
Type: Book
ISBN: 978-1-78714-838-3

Keywords

Article
Publication date: 6 July 2020

Yuxiao Ye, Andy C.L. Yeung and Baofeng Huo

In this research, we examine the impact of ISO 14001, an international environmental management accreditation, on the long-term financial risk and sales growth of firms.

Abstract

Purpose

In this research, we examine the impact of ISO 14001, an international environmental management accreditation, on the long-term financial risk and sales growth of firms.

Design/methodology/approach

We employ a quasi-experimental design and construct 682 treated and control firms that are matched using propensity score matching. We then test our hypotheses using the difference in difference model.

Findings

We find that, although ISO 14001 leads to lower financial risk, standard management systems such as ISO 14001 actually hinder the sales growth of firms, an unanticipated outcome. In particular, this trade-off worsens over time, becoming particularly more severe among firms that adopt ISO 14001 early and operate in less-polluting industries.

Research limitations/implications

We present a hidden side of environmental accreditations, indicating a potential trade-off in the long-term efficacy of environmental standard management systems.

Practical implications

Firms must be cautious about adopting environmental management systems. Over time, a focus on environmental certification could potentially hinder firms' long-term growth. Firms should also be aware of certification timing and levels of industry pollution to resolve the tension in the trade-off.

Originality/value

This research is one of the first studies demonstrating that environmental accreditations result in a trade-off between reducing financial risk and improving sales growth.

Details

International Journal of Operations & Production Management, vol. 40 no. 12
Type: Research Article
ISSN: 0144-3577

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Article
Publication date: 29 November 2018

Luiz Paulo Lopes Fávero, Ricardo Goulart Serra, Marco Aurélio dos Santos and Eduardo Brunaldi

The purpose of this paper is to analyze the influence of firm-, industry- and country-level determinants on real annual sales growth in the context of a cross-classified…

Abstract

Purpose

The purpose of this paper is to analyze the influence of firm-, industry- and country-level determinants on real annual sales growth in the context of a cross-classified multilevel perspective.

Design/methodology/approach

The authors studied 11,381 firms from 17 industries in six Latin American countries based on the data collected up to 2015. Since the data are nested in two levels (level 1: firms; level 2: cross-classification of industries and countries), the authors use a cross-classified multilevel model. The significant variability in all levels of analysis confirms the option for the multilevel model.

Findings

Differences in industries account for the largest proportion of variance (77.2 percent). This finding indicates that industry-level characteristics should be explored in the sales growth literature (it seems to the authors that they were neglected). This finding also calls attention to the roles of policy-makers in facilitating firm growth. The final model indicates that the considered variables explain approximately 55 percent of the differences in real annual sales growth in the same industry and country after having accounted for the impacts of the differences in firms. After accounting for the impacts of the differences in firms’ and countries’ characteristics, 43 percent of the variation in average real annual sales growth is due to differences in industries. The obtained results indicate that while firms from countries with higher GDP growth and more effective corporate boards present higher real annual sales growth, firms that operate in commodity producer industries have worse performance in this indicator. With respect to firm’s characteristics, larger firms (contradicting Gibrat’s law) and exporters grew less. Some results could be explained by the decrease in commodities’ prices and global purchases between 2012 and 2015.

Originality/value

The paper fills some gaps in the firm growth literature by testing Gibrat’s law in non-developed countries (not yet done, to the best of the authors’ knowledge) and exploring variables other than size in the explanation of firm growth (rarely used, to the best of the authors’ knowledge). Moreover, the adopted model correctly estimated the origin of the variability in firm growth in its natural cross-classified distinct levels.

Details

International Journal of Emerging Markets, vol. 13 no. 5
Type: Research Article
ISSN: 1746-8809

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Article
Publication date: 1 June 1999

George K. Chacko

Gives an in depth view of the strategies pursued by the world’s leading chief executive officers in an attempt to provide guidance to new chief executives of today…

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Abstract

Gives an in depth view of the strategies pursued by the world’s leading chief executive officers in an attempt to provide guidance to new chief executives of today. Considers the marketing strategies employed, together with the organizational structures used and looks at the universal concepts that can be applied to any product. Uses anecdotal evidence to formulate a number of theories which can be used to compare your company with the best in the world. Presents initial survival strategies and then looks at ways companies can broaden their boundaries through manipulation and choice. Covers a huge variety of case studies and examples together with a substantial question and answer section.

Details

Asia Pacific Journal of Marketing and Logistics, vol. 11 no. 2/3
Type: Research Article
ISSN: 1355-5855

Keywords

Article
Publication date: 1 April 2004

David S. Jenkins, Gregory D. Kane and Uma Velury

We investigate the relative roles of key components of earnings change in explaining the value relevance of earnings across different life‐cycle stages of the firm. We…

Abstract

We investigate the relative roles of key components of earnings change in explaining the value relevance of earnings across different life‐cycle stages of the firm. We hypothesize that firms in different life‐cycle stages take different strategic actions: change in sales is emphasized in the growth and mature stages, while in later stages, profitability is emphasized. Because payoffs to such strategies vary across the life‐cycle, the stock market reaction to the success firms have in employing these strategic actions is likely to vary across the life‐cycle. To test our hypotheses, we disaggregate changes in earnings into three key components: earnings change from change in sales, earnings change from change in profitability, and an interaction term comprising both sales change and profitability change. Our findings are consistent with our hypotheses: when firms are in the growth stage, the value‐relevance of change in sales is relatively greater than that of change in profitability. In the mature stage, the value relevance of change in profitability increases, relative to that of change in sales. When firms are in stagnant stage, the value‐relevance of changes in profitability are relatively greater than that of change in sales. Collectively, the results demonstrate a shift in the value relevance of earnings components from a growth emphasis early in the life‐cycle to a profitability emphasis later in the life‐cycle.

Details

Review of Accounting and Finance, vol. 3 no. 4
Type: Research Article
ISSN: 1475-7702

Keywords

Article
Publication date: 1 June 2015

Darush Yazdanfar and Peter Öhman

– The purpose of this paper is to empirically investigate the impact of credit supply on sales growth among small- and medium-sized enterprises (SMEs).

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Abstract

Purpose

The purpose of this paper is to empirically investigate the impact of credit supply on sales growth among small- and medium-sized enterprises (SMEs).

Design/methodology/approach

The three-stage least square (3SLS) method was used to analyse a cross-sectional panel data set covering 13,548 Swedish SMEs across four industry sectors from 2009 to 2012.

Findings

The study provides empirical evidence that trade credit in terms of accounts receivable significantly and positively affects sales growth, indicating that SMEs investing more in accounts receivable are more likely to achieve growth. Furthermore, lagged sales growth and firm size are positively, while firm age is negatively, related to growth.

Practical implications

Managers can increase firm growth by efficiently managing the supply of credit to their customers, especially liquidity-constrained firms, thereby increasing sales growth.

Originality/value

To the authors’ best knowledge, this is one of the first empirical studies of the impact of credit supply in terms of accounts receivable on sales growth. The study applies the 3SLS method to a comprehensive cross-sectoral sample.

Details

International Journal of Managerial Finance, vol. 11 no. 3
Type: Research Article
ISSN: 1743-9132

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Abstract

Details

Review of Marketing Research
Type: Book
ISBN: 978-0-7656-1306-6

Article
Publication date: 1 June 2000

George K. Chako

Briefly reviews previous literature by the author before presenting an original 12 step system integration protocol designed to ensure the success of companies or…

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Abstract

Briefly reviews previous literature by the author before presenting an original 12 step system integration protocol designed to ensure the success of companies or countries in their efforts to develop and market new products. Looks at the issues from different strategic levels such as corporate, international, military and economic. Presents 31 case studies, including the success of Japan in microchips to the failure of Xerox to sell its invention of the Alto personal computer 3 years before Apple: from the success in DNA and Superconductor research to the success of Sunbeam in inventing and marketing food processors: and from the daring invention and production of atomic energy for survival to the successes of sewing machine inventor Howe in co‐operating on patents to compete in markets. Includes 306 questions and answers in order to qualify concepts introduced.

Details

Asia Pacific Journal of Marketing and Logistics, vol. 12 no. 2/3
Type: Research Article
ISSN: 1355-5855

Keywords

Article
Publication date: 24 March 2021

Mei Chen, Peijie Ni, Torger Reve, Jing Huang and Ren Lu

Previous studies primarily focus on how to achieve better performance in the international markets, but few centers on whether internationalization is a promising strategy…

Abstract

Purpose

Previous studies primarily focus on how to achieve better performance in the international markets, but few centers on whether internationalization is a promising strategy for new ventures’ growth and development. Based on two pioneering frameworks Conservative, Predictable, and Pacemaker (CPP) model and the 7-P model, this paper fills this gap by analyzing how exporting exert heterogeneous effects on two types of growth, sales growth and employment growth. Accordingly, this paper aims to favor market-oriented new ventures to make a strategy on expanding international markets.

Design/methodology/approach

This study is based on firm-level data from the Chinese Industrial Enterprises Database. The year 2005 was used as the shock year. By conducting the propensity score matching method, 793 couples of matched new ventures were collected with sales growth and 686 couples with employment growth. The difference-in-differences method was applied to analyze the various influences that exporting has on new ventures’ sales growth and employment growth.

Findings

The main finding of this paper is that new ventures that exported can achieve better sales growth than their counterparts that only operated domestically, whereas new ventures that remain in the domestic market have no difference in employment growth from those that exported.

Research limitations/implications

This study shows that exporting is especially beneficial for market-seeking new ventures. Because the study is based on Chinese data, scholars of international business can conduct further research on other countries with different economic structures.

Originality/value

Theoretically, this paper contributes to both international business theory and entrepreneurship theory by combining the CPP model and the 7-P model. Practically, this paper shows that exports mainly benefit the sales growth of new ventures. This suggests that business practitioners should consider their growth goals before they choose to enter the global market.

Details

Review of International Business and Strategy, vol. 31 no. 4
Type: Research Article
ISSN: 2059-6014

Keywords

Content available
Book part
Publication date: 30 July 2018

Abstract

Details

Marketing Management in Turkey
Type: Book
ISBN: 978-1-78714-558-0

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