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Book part
Publication date: 11 August 2016

Nityanand Tripathi and Naseem Ahamed

This chapter examines the impact of working capital management (WCM now onwards) which is measured by cash conversion cycle (CCC now onwards) on the financial performance of firms…

Abstract

This chapter examines the impact of working capital management (WCM now onwards) which is measured by cash conversion cycle (CCC now onwards) on the financial performance of firms in the Indian context. The period of study is from the year 2000 to 2014, that is, for a span of 15 years for 4,687 companies listed on the National Stock Exchange. This chapter uses regression model to analyze panel data. Data for 4,687 listed companies have been analyzed for a period of 15 years. For some companies with data availability issues, the period of inclusion is less than 15 years. This chapter is limited to a sample of Indian firms; further research could examine the generalizability of these findings to other countries. Some previous studies have been undertaken on this topic, but the dataset used for this chapter is comprehensive enough to delineate the WCM and performance dynamics in the Indian context. Improved working capital policy could improve firm profitability by reducing the firm’s CCC, thereby creating additional firm value. In addition, the results can be used for other purposes, including monitoring of firms by auditors, debt holders, and other stakeholders. This chapter contributes to the literature by extending the extant literature in an emerging market context. To the authors’ knowledge, this is the first empirical study to address this issue in the Indian context based on a large dataset covering more than 4000 companies.

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The Spread of Financial Sophistication through Emerging Markets Worldwide
Type: Book
ISBN: 978-1-78635-155-5

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Book part
Publication date: 6 September 2019

Robert A. Peterson and David Altounian

This chapter reports the results of an empirical study on the “gender–performance gap,” the alleged difference in business performance between firms started or owned by females…

Abstract

This chapter reports the results of an empirical study on the “gender–performance gap,” the alleged difference in business performance between firms started or owned by females and males. Although numerous studies have compared the business performance of firms started by or owned by female and male entrepreneurs, most research to date has employed financial performance metrics and has often produced inconsistent results. The present research compared gender-based business performance by examining self-perceptions of a large sample of female and male Black and Mexican-American entrepreneurs. As such, the present study overcame several limitations of prior gender–performance gap research and addressed entrepreneurial groups seldom studied. While there were no perceptual differences between female and male entrepreneurs surveyed regarding the performance of their respective businesses, Mexican-American entrepreneurs surveyed perceived the performance of their business as being better than Black entrepreneurs surveyed, and this result held for both females and males. Findings from the study provide insights into the perceptions held by Black and Mexican-American female and male entrepreneurs and provide a context for further race and gender studies.

Book part
Publication date: 17 December 2003

Jihui Chen and Patrick Scholten

We study how price dispersion varies with product characteristics at a popular online price comparison site – Shopper.com. Our primary finding suggests that price dispersion in…

Abstract

We study how price dispersion varies with product characteristics at a popular online price comparison site – Shopper.com. Our primary finding suggests that price dispersion in online markets varies with product characteristics and firm behavior. We also find evidence that the level of dispersion varies with the percent of firms listing price information in multiple categories. When the percent of firms listing prices in multiple categories is relatively high (low), price dispersion is low (high).

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Organizing the New Industrial Economy
Type: Book
ISBN: 978-0-76231-081-4

Book part
Publication date: 19 February 2024

Quoc Trung Tran

This chapter analyzes how the industry environment determines corporate dividend decisions. First, common participants in the product market are competitors, suppliers, and…

Abstract

This chapter analyzes how the industry environment determines corporate dividend decisions. First, common participants in the product market are competitors, suppliers, and customers. These micro-stakeholders create competitive pressures on firms and thus affect their current and future performance. Competitors influence dividend decisions through three mechanisms, namely predation threat, corporate governance, and imitation. Predation threat reduces firms' incentives to pay dividends when facing high rivalry. Competition helps firms improve corporate governance. However, strong corporate governance may increase or decrease dividend payments since dividend policy may be the outcome of strong corporate governance or the substitute for weak corporate governance, respectively. Besides, firms tend to imitate their industry peers in dividend policy. Second, as a financial policy, dividend policy is also affected by participants in the financial market like investors, creditors, and auditors. These financial stakeholders' behaviors are important to stock prices. Due to the agency problem, creditors have high incentives to restrict firm's dividend payments in order to protect their benefits. On the other hand, creditors are effective external monitors who help firms improve their corporate governance. Outside investors affect corporate dividend policy through their valuation. Firms pay more dividends if investors prefer dividends to capital gains. Auditors play the role of a third-party monitor, and thus, they help firms reduce managers' expropriation of shareholders and improve the quality of accounting information. Furthermore, we also investigate dividend policy of regulated industries in both financial sector (banking, insurance, and real estate) and utilities sector (energy, telecommunications, and transportation).

Book part
Publication date: 29 August 2005

Alison Mackey and Jay B. Barney

This chapter applies arguments advanced by Drnevich and Shanley (this volume) to the strategic leadership literature – an area of work where such multi-level analyses seem likely…

Abstract

This chapter applies arguments advanced by Drnevich and Shanley (this volume) to the strategic leadership literature – an area of work where such multi-level analyses seem likely to be particularly appropriate. In an analysis of the relationship between managerial capabilities and firm performance, this chapter breaks from tradition in the strategic leadership literature by examining the interaction between three levels of analysis. In doing so, this chapter identifies the conditions under which leadership can be a source of competitive advantage for a firm, when labor markets will allocate managerial talent imperfectly across competing firms, and when managers will and will not be able to appropriate the rents their specific managerial talents might generate.

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Multi-Level Issues in Strategy and Methods
Type: Book
ISBN: 978-1-84950-330-3

Book part
Publication date: 27 November 2017

Benjamin Bae and Mahdy F. Elhusseiny

This chapter investigates the relationship between financial measures and dividend payout policy choices of firms. We examine why firms choose to pay dividends continuously…

Abstract

This chapter investigates the relationship between financial measures and dividend payout policy choices of firms. We examine why firms choose to pay dividends continuously, intermittently, or not pay them. Specifically, the findings provide evidence that firms with relatively larger debts tend to pay dividends less frequently than firms with smaller debts.

The results also suggest that good financial performers are more likely to pay dividends more regularly. Additionally, the results of this study indicate that highly leveraged firms tend to make less frequent payouts than lowly leveraged firms.

Overall, this research adds to our understanding of firms’ dividend payout policy choices. First, evidence on the relationship between the various types of financial measures and firms’ choice of dividend payout frequencies should be useful to investors. Second, the findings of this study provide financial statement users with useful information about the firm’s dividend payout patterns. Third, in general, it also adds to the accounting and finance literature on dividends.

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

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Book part
Publication date: 21 July 2004

Kwang-Hyun Chung

Acquisition is one of key corporate strategic decisions for firms’ growth and competitive advantage. Firms: (1) diversify through acquisition to balance cash flows and spread the…

Abstract

Acquisition is one of key corporate strategic decisions for firms’ growth and competitive advantage. Firms: (1) diversify through acquisition to balance cash flows and spread the business risks; and (2) eliminate their competitors through acquisition by acquiring new technology, new operating capabilities, process innovations, specialized managerial expertise, and market position. Thus, firms acquire either unrelated or related business based on their strategic motivations, such as diversifying their business lines or improving market power in the same business line. These different motivations may be related to their assessment of market growth, firms’ competitive position, and top management’s compensation. Thus, it is hypothesized that firms’ acquisition decisions may be related to their industry growth potential, post-acquisition firm growth, market share change, and CEO’s compensation composition between cash and equity. In addition, for the two alternative acquisition accounting methods allowed until recently, a test is made if the type of acquisition is related to the choice of accounting methods. This study classifies firms’ acquisitions as related or unrelated, based on the standard industrial classification (SIC) codes for both acquiring and target firms. The empirical tests are, first, based on all the acquisition cases regardless of the firm membership, and then, deal with the firms acquiring only related businesses or unrelated businesses exclusively.

The type of acquisitions was more likely related to industry growth opportunities, indicating that the unrelated acquisition cases are more likely to be followed by higher industry growth rate than the related acquisition cases. While there were a substantially larger number of acquisition cases using the purchase method, the related acquisition cases used the pooling-of-interest method more frequently than in the unrelated acquisition cases. The firm-level analysis shows that the type of acquisition decisions was still related to acquiring firms’ industry growth rate. However, the post-acquisition performance measures, using firm’s growth and change in market share, could support prior studies in that the exclusive-related acquisitions helped firms grow more and get more market share than the exclusive-unrelated acquisitions. CEO’s compensation composition ratio was not related to the types of acquisition.

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Advances in Management Accounting
Type: Book
ISBN: 978-0-76231-118-7

Abstract

Details

The Political Economy of Antitrust
Type: Book
ISBN: 978-0-44453-093-6

Book part
Publication date: 20 June 2005

J. Rajendran Pandian and Peter McKiernan

The concept of core competence underlies competence-based competition and competence-based management. When new firms get established, due to resource constraints, managers have…

Abstract

The concept of core competence underlies competence-based competition and competence-based management. When new firms get established, due to resource constraints, managers have to make conscious decisions to develop certain competencies and not others. In order to have all competencies that are required to be successful, firms look for strategic alliances and to leverage their partner firms’ competencies. In this paper, we develop a contingency model for firms that have to go for strategic alliances to explain which core competencies should be developed internally, which core competencies could be from the alliance partner, which type of alliance will be suitable and whether the firm should choose a short-term, long-term or permanent alliance. Using Hamel’s (1994) generic core competencies and the type of market (industrial or individual), we suggest which type of strategic alliance should be chosen for leveraging a partner’s competencies.

Details

Competence Perspectives on Managing Interfirm Interactions
Type: Book
ISBN: 978-0-76231-169-9

Article
Publication date: 1 March 2016

Manon Deslandes, Anne Fortin and Suzanne Landry

The objective of this study is to explain family firm payout decisions based on socioemotional wealth (SEW) considerations.

Abstract

Purpose

The objective of this study is to explain family firm payout decisions based on socioemotional wealth (SEW) considerations.

Design/methodology/approach

A sample of publicly listed Canadian companies is examined for the period from 2003 to 2008. Distinguishing family firms from nonfamily firms, a Probit regression is used to analyze the likelihood of making a payout. For payout firms, regressions are used to analyze the relationship between payout level (dividends and share repurchases) and payout mix and family firms.

Findings

Results indicate that family firms are more likely to make a payout than nonfamily firms. Among payout firms, the level of payout among payout firms is lower for family firms than for nonfamily firms and their portion of payout in the form of dividends is higher. Lone founder family firms have a lower likelihood of making payouts than other family firms. However, among payout firms, they pay out more than other family firms and have a smaller percentage of their total payout in dividends than other family firms.

Research limitations/implications

Results are impacted by the definition of what constitutes a family firm. Family ownership was used as a proxy for the underlying SEW considerations. Future research could involve interviews with family firm representatives to investigate the relative importance of SEW considerations in their payout decisions.

Originality/value

In providing an alternative theoretical framing of family firms’ payout policies, the study suggests that payout differences between family and nonfamily firms may be driven in part by SEW considerations.

Details

Journal of Family Business Management, vol. 6 no. 1
Type: Research Article
ISSN: 2043-6238

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