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1 – 10 of over 3000After completion of the case study, the students will be able to understand the calculation of cost of individual sources of funds and cost of capital, examine various tools such…
Abstract
Learning outcomes
After completion of the case study, the students will be able to understand the calculation of cost of individual sources of funds and cost of capital, examine various tools such as economic value added and cash value added analyses which help determining whether a company has added value to its shareholders or not and explore the application of Benford’s law and the Beneish M-score in detecting manipulation of numbers in financial statements.
Case overview/synopsis
Nimmy Jacob, a newly recruited research analyst with an equity research firm, was entrusted with tracking the “auto ancillary industry”, specifically “Minda Corporation Ltd” (MIL). MIL was a leading diversified auto components manufacturing companies in India. The company’s share price meteorically rose during February 2021–2022 (Figure 1). The company’s turnover over the past few years had grown at a compounded annual growth rate of 15% during the three preceding years. The company had in the recent past bought a 15% stake in another competitor, Pricol Ltd, for a consideration of INR 400 crores and previously had used joint ventures and acquisitions to scale up its operations. Jacob, apart from the conventional financial analysis, had to ascertain whether all the strategic decisions were adding value to the shareholders’ investments by exploring the various tools available for the same and also calculate the minimum expected rate of return for MIL. Jacob was apprehensive about the financial statements, although the numbers for the company were good. Jacob was skeptical about a high-growth company having the incentive to manipulate its earnings. Manipulations could be in the form of abnormal increase in accruals, inconsistency in expenses and high days of receivables. Therefore, Jacobs used certain analytics/statistical tools to detect any manipulation of numbers in the financial statements of the company and to ascertain apt findings about the company.
Complexity academic level
This case study is intended for discussion in corporate finance, financial reporting and analysis and financial analytics at Master of Business Administration/undergraduate level.
Supplementary material
Teaching notes are available for educators only.
Subject code
CSS1: Accounting and finance
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Sophia M. Schwoy, Andreas Dutzi and Juliane Messing
The aim of this study is to critically examine the transparency and reporting practice of Environmental, Social, and Governance (ESG) controversies within the pharmaceutical and…
Abstract
Purpose
The aim of this study is to critically examine the transparency and reporting practice of Environmental, Social, and Governance (ESG) controversies within the pharmaceutical and textile industry. Based on the four core dimensions of transparency, we explore which reporting medium is most frequently chosen for the disclosure of negative ESG contributions, the nature and information content of the disclosed incidents and how voluntary adherence to sustainability reporting standards and independent assurances affect the reporting.
Design/methodology/approach
We use conceptual content analysis and employ a counter-accounting approach to analyse the disclosure of 190 ESG controversies in 104 corporate reports from the pharmaceutical and textile industries, covering a three-year period from 2018–2020.
Findings
The very large majority of controversies are reported only once in the legal proceedings section of the annual report, but not again in the sustainability report, where it would be necessary to provide a balanced picture. Moreover, companies tend to disclose only those controversies that are either associated with high media attention or are expected to be related to litigation, resulting in 26 per cent of controversies not being disclosed at all. The overall quality of disclosure is unsatisfactory and in need of improvement, but comparably higher in the pharmaceutical industry than in the textile industry. Interestingly, neither the application of sustainability reporting standards nor independent assurance seems to positively impact the disclosure behaviour.
Originality/value
Our paper provides new insights into the shortcomings of current ESG controversy disclosures by revealing patterns of selective reporting practices and the strategic framing of issues. In addition, it contributes to the debates on corporate cherry-picking in the adoption of sustainability reporting guidelines and on the effectiveness of external assurance of sustainability reports. Based on the findings, it offers important implications for practitioners, in particular management, policy makers, rating agencies and assurance providers.
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Vishakha Jaiswal and Keyur Thaker
Since the introduction of balanced scorecard by Kaplan and Norton in 1992, it garnered considerable research and practice attention across disciplines. Using bibliometric…
Abstract
Purpose
Since the introduction of balanced scorecard by Kaplan and Norton in 1992, it garnered considerable research and practice attention across disciplines. Using bibliometric analysis, this study examines trends in balanced scorecard research in last 20 years and identifies future areas of research.
Design/methodology/approach
The Web of Science database was used to extract research papers from the 2003 to 2023 period with “Balanced Scorecard” as topic. The final sample consisted of 445 articles. Trends and patterns were analyzed using bibliometric analysis through research profiling and thematic analysis.
Findings
The findings reveal that BSC, spanning across disciplines, including business and operations, has enriched the theory and practice of BSC research. Analytical and survey methods were more prevalent than primary studies. Scholars from the USA and the UK have made noteworthy contributions to balanced scorecard research. Emerging themes include integrating human resources, sustainability, subjectivity in performance evaluation and non-financial performance indicators in BSC for better strategic decision-making.
Practical implications
The study would inspire researchers to generate new research questions and hypotheses and help in identifying gaps in the current knowledge base and areas where further investigation is needed. Managers would gain useful insights into performance management by studying the BSC research evolution to find a fit for modern-day industry needs.
Originality/value
The authors’ contribution fills the void by providing useful account of extent research over last 20 years using bibliometric analysis and motivate future research directions.
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Research has focused primarily on the antecedents that influence the risk taking of CEOs themselves. This study examines how an important event experienced by a CEO at a direct…
Abstract
Purpose
Research has focused primarily on the antecedents that influence the risk taking of CEOs themselves. This study examines how an important event experienced by a CEO at a direct rival firm influences a CEO's risk-taking. It also examines how prior firm performance relative to aspirations moderates the relationship.
Design/methodology/approach
In order to test the hypothesis, the authors perform an a difference-in-differences methodology.
Findings
Using a difference-in-differences methodology, we find that when a CEO wins a prestigious CEO award, competitor CEOs increase their firm risk-taking in the post-award period. The proclivity becomes stronger when their prior firm performance relative to aspirations is better. These findings suggest that a CEO winning a prominent CEO award influences competitor CEOs' risk-taking.
Originality/value
This study contributes to the literature on managerial risk-taking by highlighting that a star CEO winning a prominent award may serve as a striving aspiration and induce competitor CEOs to take risks, and that two different types of aspirations – striving and competitive aspirations – interact to influence the competitor CEOs' risk-taking.
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Chandan Maheshkar and Jayant Sonwalkar
This paper aims to explore the key factors through which an optimum pedagogy mix can be determined towards effective teaching practice and enhanced student learning outcomes in…
Abstract
Purpose
This paper aims to explore the key factors through which an optimum pedagogy mix can be determined towards effective teaching practice and enhanced student learning outcomes in business/management education.
Design/methodology/approach
An exploratory research design has been used. A sample of 310 was analyzed using exploratory factor analysis. A structured questionnaire was developed to collect data. It was pre-tested, and essential modifications were made before its final implementation.
Findings
The study has presented the idea of pedagogy mix, which refers to a set of most obvious teaching methods/tools suitable to deliver marketing education in a context-bound manner. Eight factors have been identified that help to decide and/or maintain an optimum mix of pedagogies for effective teaching. An adequate “pedagogy mix” would help achieve educational objectives and equip students with the essential competencies.
Practical implications
The study is particularly significant to educators who are in the initial years of their careers. The identified factors help educators decide and/or maintain an optimum mix of pedagogies by offering an understanding of different pedagogies, their strategic relevance and student needs.
Originality/value
An institution's academic philosophy and commitment to the learning outcomes make it excellent or poor. Present institutions have and retain a main focus on preparation for professional careers, and without a perfect blend of pedagogies, it cannot be achieved. An optimum pedagogy mix would facilitate the key learning process and proffer the intricacies of the concerned profession. In this sense, this paper is a significant attempt, particularly in management education and higher education in general, that enables the educators of higher academics to decide and utilize an idyllic blend of pedagogies towards the successful execution of an educational process of higher order and ensuring the holistic student development.
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The purpose of this paper is to determine if there is a link between corporate shareholder value creation and economic growth. The first objective of this paper is to determine…
Abstract
Purpose
The purpose of this paper is to determine if there is a link between corporate shareholder value creation and economic growth. The first objective of this paper is to determine which specific shareholder value measurement best explains shareholder value creation for a particular industry. The next objective of the study is to establish, for each of nine different categories of firms examined, a set of value drivers that are unique and significant in expressing shareholder value for that particular category of firms. Lastly, the relationship between shareholder value creation and economic growth is tested.
Design/methodology/approach
To quantify and measure value creation, the paper investigates the various value creation measurements that are being applied. The next step is to ascertain whether various industries have different value creation measures that best explain value creation for the respective industries. Then, the value drivers of these specific value creation measures can be determined and their relationship with economic growth tested.
Findings
The results of this study indicate that each industry does have a specific shareholder value creation measurement that best explains shareholder value creation for that industry; for example, for five of the nine categories (industries) that were analyzed, market value added was found to be the best shareholder value creation measurement, but for capital-intensive firms and manufacturing firms, the Qratio is the best measure, while for the food and beverage industry, the market to book ratio was found to be a better measure of shareholder value creation than other measures tested. It was further found that an increase in corporate shareholder value creation is to the detriment of economic growth.
Originality/value
The contribution of the present study is its determination of a unique shareholder value creation measurement for particular industries. In addition, a specific set of variables per industry that create shareholder value is identified. Lastly, the important link between shareholder value creation and economic growth is exposed.
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Janice Wobst, Parvina Tanikulova and Rainer Lueg
The purpose of this article is to synthesize the topics, conceptualizations and measurements of value-based management (VBM) and to suggest a research agenda covering its next…
Abstract
Purpose
The purpose of this article is to synthesize the topics, conceptualizations and measurements of value-based management (VBM) and to suggest a research agenda covering its next evolution as sustainable governance.
Design/methodology/approach
The authors conducted a systematic literature review of 80 seminal studies published between 1979 and 2022. The authors synthesized the studies by their conceptualizations of VBM in an inductively developed framework.
Findings
The authors find that scholars explore diverse topics related to VBM with a prevailing focus on shareholder primacy. There is a paucity of studies that focus on the integration of shareholder maximization and stakeholder management practices. The authors explain which studies will form a promising foundation for advanced research on sustainable governance that will reach beyond current VBM research.
Originality/value
The authors' research agenda addresses new future topics on conflicting goals within and between shareholder groups, offers specific suggestions for using new research methods and untapped data sources for VBM and paves the way to substantially extend the boundaries of the firm in VBM research to include stakeholders, strategic alignment and new sustainability measures.
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Audit hour reporting is rare internationally. Thus, to what extent shareholders have the power to influence audit effort/hour demand is a question left unanswered. This study aims…
Abstract
Purpose
Audit hour reporting is rare internationally. Thus, to what extent shareholders have the power to influence audit effort/hour demand is a question left unanswered. This study aims to use unique South Korean data to determine whether the increasing power of the largest foreign/domestic shareholders and blockholders can influence audit hour demand.
Design/methodology/approach
In this study ordinary least squares (OLS) regression analysis is conducted using a sample of Korean listed firms over the 2004–2018 sample period.
Findings
The results show: as the percentage equity holding of the largest foreign shareholder and blockholder (>5%) increases, audit hour demand increases. As the shareholding of the largest domestic shareholder increases, audit hour demanded decreases. The association between audit fees/hours is not qualitatively indifferent, after controlling for the audit fee premium effect. Furthermore, the largest foreign shareholder is shown to demand increasingly higher levels of audit hours from Big4 auditors, relative to NonBig4. All results are consistent with audit demand theory.
Originality/value
Whilst previous studies offer audit fee/risk interpretations, this study extends the literature by developing a framework to explain why audit hour demands differ for specific groups. Because audit hour information is rare internationally, the study has important policy implications.
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Mohammad Mehdi Mohammadi, Mehdi Safari Gerayli, Maryam Shahri, Hasan Valiyan and Farhad Dehdar
The citizen-shareholder approach in the capital market is considered a knowledge-enhancing and emerging concept in financial and accounting offerings. Its reliable background in…
Abstract
Purpose
The citizen-shareholder approach in the capital market is considered a knowledge-enhancing and emerging concept in financial and accounting offerings. Its reliable background in management and human sciences makes it an essential basis for protecting the interests of shareholders and investors. Shareholders are considered a necessary part of the social platforms that are companies and regulatory institutions in the capital market; beyond being obligated to protect their material and intellectual rights, they are responsible for developing norms and facilitating investment values and gaining trust through mutual interactions based on respect for their interests. The purpose of this paper is to perform interactive qualitative analysis of the requirements for protecting the rights of citizens of capital market shareholders.
Design/methodology/approach
The methodology of the research is mixed, so that in the qualitative part, through content screening, the dimensions related to the protection of the citizen rights of the capital market shareholders were identified through a systematic review of 10 research in the period of 2017–2022. Then, the reliability of the specified dimensions was examined through Delphi analysis; in the quantitative part of the research, the criteria identified through the pairwise comparison matrix were first determined by the level of their relationships to determine based on the pattern of systemic representation of drivers and the consequences of requirements to protect the rights of citizens of capital market shareholders.
Findings
The research results in the qualitative part indicated the existence of 12 primary themes; during the two stages of Delphi analysis, three themes were removed, and a total of nine themes entered the quantitative phase. The results in a quantitative part indicate the creation of specialized and active committees of the board of directors as the primary driver and the reliability and timely disclosure of information in the long term as a systemic consequence.
Originality/value
To the best of the authors’ knowledge, this is the first research that presents the new concept of citizen shareholders to strengthen the requirements of protecting the rights of shareholders in the capital market while developing new theoretical literature.
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Kawther Dhifi and Karima Lajnef
This study aims to investigate the relationship between integrated reporting, environmental innovation and the mediating effect of shareholder scores within the context of Japan.
Abstract
Purpose
This study aims to investigate the relationship between integrated reporting, environmental innovation and the mediating effect of shareholder scores within the context of Japan.
Design/methodology/approach
SEM on panel data are used to study the impact of the role of shareholder scores in mediating the effect of integrated reporting on environmental innovation. This empirical study was based on a sample of 420 companies operating in Japan for the period spanning 2010 and 2022.
Findings
Drawing upon empirical results, this research uncovers the pivotal role of the shareholder's score as a mediating factor in this relationship. A higher shareholder score signifies a governance structure that values shareholder input and fairness in treatment. Empowered shareholders leverage their influence to advocate for transparent reporting practices that encompass environmental considerations. Consequently, firms with elevated shareholder scores are more inclined toward environmental innovation, aligning their strategies with sustainability imperatives.
Originality/value
The findings contribute to understanding of how corporate governance mechanisms, particularly shareholder empowerment, interact with reporting practices to drive environmental initiatives, providing valuable implications for sustainable business practices globally.
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