Search results for: firm performance

Authors: Henry Ataburo, Dominic Essuman, Emmanuel Kwabena Anin

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Recent trends of catastrophic events, such as the Covid-19 pandemic, the Suez Canal blockage, the Russia-Ukraine conflict, the Israel-Hamas conflict, and the climate change crisis, continue to devastate supply chains and the broader society. Prior authors have advocated for a simultaneous pursuit of resilience and sustainability as crucial for navigating these challenges. Nevertheless, the relationship between resilience and sustainability is a rather complex one: resilience and sustainability are considered unrelated, substitutes, or complements. Scholars also suggest that different firms prioritize resilience and sustainability differently for varied strategic reasons. However, we know little about whether, how, and when these choices produce different typologies of firms to explain differences in financial and market performance outcomes. This research draws inferences from the systems configuration approach to organizational fit to contend that a taxonomy of firms may emerge based on how firms configure resilience and environmental sustainability. The study further examines the effects of these taxonomies on financial and market performance in differing transportation disruption conditions. Resilience is operationalized as a firm’s ability to adjust current operations, structure, knowledge, and resources in response to disruptions, whereas environmental sustainability is operationalized as the extent to which a firm deploys resources judiciously and keeps the ecological impact of its operations to the barest minimum. Using primary data from 199 firms in Ghana and cluster analysis as an analytical tool, the study identifies four clusters of firms based on how they prioritize resilience and sustainability: Cluster 1 - "strong, moderate resilience, high sustainability firms," Cluster 2 - "sigh resilience, high sustainability firms," Cluster 3 - "high resilience, strong, moderate sustainability firms," and Cluster 4 - "weak, moderate resilience, strong, moderate sustainability firms". In addition, ANOVA and regression analysis revealed the following findings: Only clusters 1 and 2 were significantly associated with both market and financial performance. Under high transportation disruption conditions, cluster 1 firms excel better in market performance, whereas cluster 2 firms excel better in financial performance. Conversely, under low transportation disruption conditions, cluster 1 firms excel better in financial performance, whereas cluster 2 firms excel better in market performance. The study provides theoretical and empirical evidence of how resilience and environmental sustainability can be configured to achieve specific performance objectives under different disruption conditions.

Keywords: resilience, environmental sustainability, developing economy, transportation disruption

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Authors: Olakunle Felix Adekunle

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Innovation has become the key to firm success, and entrepreneurial leadership displayed by the top management team fundamentally drives innovation in firms. This paper discusses findings from an empirical study of factors influencing the success of firms operating in developing economies in an industry where science drives the pace of change. We find that success of firms in such industries depends on thriving innovation activity that in turn is primarily driven by effective entrepreneurial leadership of the top management team. The paper presents the dimensions of entrepreneurial leadership and its linkage to innovation and firm success in the form of testable propositions. Finally, a preliminary theory of firm success in industries where science drives the pace of change is also inducted from this empirical study and presented.

Keywords: leadership, innovation, firms, economic, efficiency, industry, resources

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Authors: Nalanda Matia, Julia Zhao, Amber Jaycocks, Divya Sinha

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Social assistance programs for businesses are intended to improve their survival and growth in the face of catastrophic events like the COVID-19 pandemic. However, that goal remains unfulfilled when the mostwantingbusinesses fail to participate in such programs. Reasons for non-participation can include lack of information, inability to cope with applications and program compliance, as well as some programs’ non-entitlement status. Some of these factors may be associated with the organizational and locational characteristics of these businesses. This research investigates these organizational and locational factorsthat determine receipt and effectiveness of social assistance among the firms that receive it. of A sample of firms from the universe of 3 rounds of Small Business Administration backed Paycheck Protection Program recipient and similarly profiled non recipient businesses are used to analyze this question. Initial results show firm organizational factors like size and spatial factors like broadband coverage at firm location impact application for and subsequent receipt of assistance for digitally administered programs. Further, Line of business and wage structure of recipients’ impact effectiveness of the assistance dollars.

Keywords: public economics, economics of social assistance, firm organizational structure, survival analysis

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Authors: I Putu Deny Arthawan Sugih Prabowo, Eko Nugroho, Rudy Hartanto

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Known, Green IT is a concept about how to use the technology (IT) wisely, efficiently, and environmentally. However, it exists as the consequence of the rapid-growth of the technology (especially IT) currently. Not only for the environments, the usage of Green IT applications, e.g. Cloud Computing (Cloud Storage) and E-Money (E-Cash), also gives its benefits for the organizational business strategy (especially the organizational product/service strategy) in order to gain the organizational competitive advantage (to be the market leader). This paper takes the case at E-Money as a Value-Added Services (VAS) of a telecommunication firm (company) in Indonesia which it also competes with the competitors’ similar product (service). Although it has been a popular telecommunication firm’s product/service, but its strategic values for the organization (firm) is still unknown, and therefore, the aim of this paper is for analyzing its strategic values for gaining the organizational competitive advantage. However, in this paper, its strategic value analysis is viewed by how to assess (consider) its strategic benefits and also manage the challenges or risks of its implementation at the organization as an organizational product/service. Then the paper uses a research model for investigating the influences of both perceived risks and the organizational cultures to the usage of Green IT Application at the organization and also both the usage of Green IT Application at the organization and the threats-challenges of the organizational products/services to the competitive advantage of the organizational products/services. However, the paper uses the quantitative research method (collecting the information from the field respondents by using the research questionnaires) and then, the primary data is analyzed by both descriptive and inferential statistics. Also in this paper, SmartPLS is used for analyzing the primary data by the quantitative research method. Besides using the quantitative research method, the paper also uses the qualitative research method, such as interviewing the field respondent and/or directly field observation, for deeply confirming the quantitative research method’s analysis results at the certain domain, e.g. both organizational cultures and internal processes that support the usage of Green IT applications for the organizational product/service (E-Money in this paper case). However, the paper is still at an infant stage of in-progress research. Then the paper’s results may be used as a reference for the organization (firm or company) in developing the organizational business strategies, especially about the organizational product/service that relates to Green IT applications. Besides it, the paper may also be the future study, e.g. the influence of knowledge transfer about E-Money and/or other Green IT application-based products/services to the organizational service performance that relates to the product (service) in order to gain the competitive advantage.

Keywords: Green IT, competitive advantage, strategic value, organization (firm or company), organizational product (service)

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Authors: Sevde D. Karayel, Ediz Atmaca

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Supplier selection subject is vital because of development competitiveness and performance of firms which have right, rapid and with low cost procurement. Considering the fact that competition between firms is no longer on their supply chains, hence it is very clear that performance of the firms’ not only depend on their own success but also success of all departments in supply chain. For this purpose, firms want to work with suppliers which are cost effective, flexible in terms of demand and high quality level for customer satisfaction. However, diversification and redundancy of their expectations from suppliers, supplier selection problems need to be solved as a hard problem. In this study, supplier selection problem is discussed for critical piece, which is using almost all production of products in and has troubles with lead time from supplier, in a firm that produces medical devices. Analyzing policy in the current situation of the firm in the supplier selection indicates that supplier selection is made based on the purchasing department experience and other authorized persons’ general judgments. Because selection do not make based on the analytical methods, it is caused disruptions in production, lateness and extra cost. To solve the problem, AHP and TOPSIS which are multi-criteria decision making techniques, which are effective, easy to implement and can analyze many criteria simultaneously, are used to make a selection among alternative suppliers.

Keywords: AHP-TOPSIS methods, multi-criteria decision making, supplier selection problem, supply chain management

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Authors: Po-Chien Li

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Despite the extant literature has hosted a wide-range of knowledge about trade shows, this knowledge base deserves to be further expanded and extended because there exist many unclear issues and overlooked topics. One area that needs much research attention is regarding the behavior and performance of booth workers at the exhibition site. Booth staffs play many key roles in interacting with booth visitors. Their exhibiting-related attitudes and motivations might have significant consequences on a firm’s exhibition results. However, to date, little research, if any, has studied how booth workers are affected and behave in the context of trade fair. The primary purpose of the current study is to develop and test a research model, derived from role theory and resource-based viewpoint, that depicts the effects of a firm’s pre-exhibition resource investment behavior on booth staff’s role perceptions and work behavior during the exhibition period. The author collects data with two survey questionnaires at two trade shows in 2016. One questionnaire is given to the booth head of an exhibiting company, asking about the firm’s resource commitment behavior prior to the exhibition period. In contrast, another questionnaire is provided for a booth worker of the same firm, requesting the individual staff to report his/her own role perceptions, degree of exhibition goal acceptance, and level of work effort during the exhibition period. The study has utilized the following analytic methods, including descriptive statistics, exploratory factor analysis, reliability analysis, and regression analysis. The results of a set of regression analyses show that a firm’s pre-exhibition resource investment behavior has significant effects on a booth staff’s exhibiting perceptions and attitudes. Specifically, an exhibitor’s resource investment behavior has impacts on the factors of booth staff’s role clarity and role conflict. In addition, a booth worker’s role clarity is related to the degree of exhibition goal acceptance, but his/her role conflict is not. Finally, a booth worker’s exhibiting effort is significantly related to the individual’s role clarity, role conflict and goal acceptance. In general, the major contribution of the current research is that it offers insight into and early evidence on the links between an exhibiting firm’s resource commitment behavior and the work perceptions and attitudes of booth staffs during the exhibition period. The current research’s results can benefit the extant literature of exhibition marketing.

Keywords: exhibition resource investment, role perceptions, goal acceptance, work effort

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Authors: Hien T. T. Ho, Tsunemi Watanabe

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The regulatory and market pressures on the restriction of nonylphenol and its ethoxylates in textile articles have confronted the textile manufacturers, particularly those in developing countries. This study aimed to examine the tentative behavior of the textile manufacturers in Vietnam from the perspectives of attitude and the perceptions of technical and organizational adaptabilities, risks, benefits, and barriers. Personal interviews were conducted with five technical specialists from four textile firms and one chemical supplier. The environmental regulatory and market situations regarding the chemical use in Vietnam were also described. The findings revealed two main opposing trends of chemical substitution depending on the market orientation of firms that governed the patterns of risk and benefit perception. The indirect influence of perceived adaptabilities on firm tentative behavior through perceived risks was elucidated, which initiated a conceptual model of firm’s behavior combining the organizational-based and the rational-based relationships. The intermediary role of non-governmental textile and garment industrial/ trade associations is highlighted to strengthen private firm’s informative capacity.

Keywords: firm behavior, institutional analysis, organizational adaptation, technical adaptation

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Authors: Nithi Sermsiriviboon, Somchai Supattarakul

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Dividend initiations are an economically significant event that has important implications for a firm’s future financial capacity. Given that the market’s expectation of a consistent payout, managers of IPO firms must approach the initial dividend decision cautiously. We compare the long run performance of IPO firms that initiated dividends with those of similarly matched non-payers. We found that firms which initiated dividends perform significantly better up to three years after the initiation date. Moreover, we measure investor reactions by 2-day around dividend announcement date cumulative abnormal return. We evidence no statistically significant differences between cumulative abnormal returns (CAR) of IPO firms and cumulative abnormal returns of Non-IPO firms, indicating that investors do not respond to dividend announcement of IPO firms more than they do to the dividend announcement of Non-IPO firms.

Keywords: dividend, initial public offerings, long-run performance, finance

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Authors: Eda Orhun

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Purpose: This paper analyzes a target firm’s decision to voluntarily disclose information during a takeover event and the effect of such disclosures on the outcome of the takeover. Such voluntary disclosures especially in the form of earnings forecasts made around takeover events may affect shareholders’ decisions about the target firm’s value and in return takeover result. This study aims to shed light on this question. Design/methodology/approach: The paper tries to understand the role of voluntary disclosures by target firms during a takeover event in the likelihood of takeover success both theoretically and empirically. A game-theoretical model is set up to analyze the voluntary disclosure decision of a target firm to inform the shareholders about its real worth. The empirical implication of model is tested by employing binary outcome models where the disclosure variable is obtained by identifying the target firms in the sample that provide positive news by issuing increasing management earnings forecasts. Findings: The model predicts that a voluntary disclosure of positive information by the target decreases the likelihood that the takeover succeeds. The empirical analysis confirms this prediction by showing that positive earnings forecasts by target firms during takeover events increase the probability of takeover failure. Overall, it is shown that information dissemination through voluntary disclosures by target firms is an important factor affecting takeover outcomes. Originality/Value: This study is the first to the author's knowledge that studies the impact of voluntary disclosures by the target firm during a takeover event on the likelihood of takeover success. The results contribute to information economics, corporate finance and M&As literatures.

Keywords: takeovers, target firm, voluntary disclosures, earnings forecasts, takeover success

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Authors: Sylvester S. Horvey, Jones Mensah

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The growing complexities and dynamics in the business environment have led to a new approach to risk management, known as enterprise risk management (ERM). ERM is a system and an approach to managing the risks of an organization in an integrated manner to achieve the corporate goals and strategic objectives. Regardless of the diversities in the business environment, ERM has become an essential factor in managing individual and business risks because ERM is believed to enhance shareholder value and firm growth. Despite the growing number of literature on ERM, the question about what factors drives ERM remains limited. This study provides a comprehensive literature review of the main factors that contribute to ERM implementation. Google Scholar was the leading search engine used to identify empirical literature, and the review spanned between 2000 and 2020. Articles published in Scimago journal ranking and Scopus were examined. Thirteen firm characteristics and sixteen articles were considered for the empirical review. Most empirical studies agreed that firm size, institutional ownership, industry type, auditor type, industrial diversification, earnings volatility, stock price volatility, and internal auditor had a positive relationship with ERM adoption, whereas firm size, institutional ownership, auditor type, and type of industry were mostly seen be statistically significant. Other factors such as financial leverage, profitability, asset opacity, international diversification, and firm complexity revealed an inconclusive result. The growing literature on ERM is not without limitations; hence, this study suggests that further research should examine ERM determinants within a new geographical context while considering a new and robust way of measuring ERM rather than relying on a simple proxy (dummy) for ERM measurement. Other firm characteristics such as organizational culture and context, corporate scandals and losses, and governance could be considered determinants of ERM adoption.

Keywords: enterprise risk management, determinants, ERM adoption, literature review

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Authors: Asif Iqbal

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Working capital management has its effect on liquidity as well as on profitability of a firm. In this research we have selected a sample of 100 respondents whose firms are listed on Karachi stock exchange. We have studied the effect of different variable s of working capital management. We find that organizations throughout the world as well as in Pakistan have to give immense recognition to the working capital management as it is an effective thing from their long term perspective especially to their shareholders to have a firm confidence over the companies for investment purpose.

Keywords: working capital management, Karachi stock exchange, shareholders, capital management

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Authors: Adel Almasarwah

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This study investigates the nature of association between profit warnings and stock price informativeness in the context of Jordan as an emerging country. The analysis is based on the response of stock price synchronicity to profit warnings percentages that have been published in Jordanian firms throughout the period spanning 2005–2016 in the Amman Stock Exchange. The standard of profit warnings indicators have related negatively to stock price synchronicity in Jordanian firms, meaning that firms with a high portion of profit warnings integrate with more firm-specific information into stock price. Robust regression was used rather than OLS as a parametric test to overcome the variances inflation factor (VIF) and heteroscedasticity issues recognised as having occurred during running the OLS regression; this enabled us to obtained stronger results that fall in line with our prediction that higher profit warning encourages firm investors to collect and process more firm-specific information than common market information.

Keywords: Profit Warnings, Jordanian Firms, Stock Price Informativeness, Synchronicity

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Authors: Abdul-Nasser El-Kassar, Walid Elgammal, Hisham Jawhar

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This paper studies the determinants of the dividends payout ratio. The factors affecting the dividends payout ratio are to be identified. The study focuses only on the cement and construction industry within the MENA region in an attempt to isolate any incoherent behavior. The factors under consideration are: sales growth, ROE, ROA, ROS, debt to equity ratio, firm size, and free cash flow. Data were collected from official stock exchange markets in addition to annual reports. The study considered all firms that paid dividend in each of the three consecutive years starting from 2010 till 2012. Out of the 123 listed firms that work in cement and construction industry in MENA region, only 19 paid dividends in the three consecutive years 2010-12. Our sample consists of the 19 firms (57 observations) which are selected according to purposive sampling. Moreover, the study uses the homogeneous subcategory within the purposive sampling since only similar firms in the construction industry had been examined. The outcome of the study provides a vital insight into the determinants of dividends payout ratio of companies in MENA region. The results showed that the dividend payout ratio has a strong and positive relationship with return on assets and strong but negative relationship with return on equity. On the other hand, the results detected weak relationships between dividend payout ratio and sale growth, debt to equity ratio, firm size, and free cash flow. The study suggests that board of directors tend to compensate shareholders and minimize the agency cost by distributing a high portion of profits in form of dividends whenever return on equity decreases. Also, when the performance of the firm improves, and hence return on assets increases, boards of directors are more generous in distributing profits.

Keywords: dividends payout ratio, profitability firm size, free cashflow, debt to equity ratio

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Authors: Anita Richter

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Innovation is one of the key foundations of competitive advantage, generating growth and welfare worldwide. Consequently, all firms should innovate to bring new ideas to the market. Innovation is a vital growth driver, particularly for transition countries to move towards knowledge-based, high-income economies. However, numerous barriers, such as financial, regulatory or infrastructural constraints prevent, in particular, new and small firms in transition countries from innovating. Thus SMEs’ innovation output may benefit substantially from government support. This research paper aims to assess the effect of government interventions on innovation activities in SMEs in emerging countries. Until now academic research related to the innovation policies focused either on single country and/or high-income countries assessments and less on cross-country and/or low and middle-income countries. Therefore the paper seeks to close the research gap by providing empirical evidence from 8,500 firms in 15 transition countries (Eastern Europe, South Caucasus, South East Europe, Middle East and North Africa). Using firm-level data from the Business Environment and Enterprise Performance Survey of the World Bank and EBRD and policy data from the SME Policy Index of the OECD, the paper investigates how government interventions affect SME’s likelihood of investing in any technological and non-technological innovation. Using the Standard Linear Regression, the impact of government interventions on SMEs’ innovation output and R&D activities is measured. The empirical analysis suggests that a firm’s decision to invest into innovative activities is sensitive to government interventions. A firm’s likelihood to invest into innovative activities increases by 3% to 8%, if the innovation eco-system noticeably improves (measured by an increase of 1 level in the SME Policy Index). At the same time, a better eco-system encourages SMEs to invest more in R&D. Government reforms in establishing a dedicated policy framework (IP legislation), institutional infrastructure (science and technology parks, incubators) and financial support (public R&D grants, innovation vouchers) are particularly relevant to stimulate innovation performance in SMEs. Particular segments of the SME population, namely micro and manufacturing firms, are more likely to benefit from an increased innovation framework conditions. The marginal effects are particularly strong on product innovation, process innovation, and marketing innovation, but less on management innovation. In conclusion, government interventions supporting innovation will likely lead to higher innovation performance of SMEs. They increase productivity at both firm and country level, which is a vital step in transitioning towards knowledge-based market economies.

Keywords: innovation, research and development, government interventions, economic development, small and medium-sized enterprises, transition countries

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Authors: Javad Izadi, Sahar Majioud

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This study presents an approach of assessing the choice of performance measures of companies in the United Kingdom after the application of IFRS in 2005. The aim of this study is to investigate the effects of IFRS on the choice of performance evaluation methods for UK companies. We analyse through an econometric model the relationship of the dependent variable, the firm’s performance, which is a nominal variable with the independent ones. Independent variables are split into two main groups: the first one is the group of accounting-based measures: Earning per share, return on assets and return on equities. The second one is the group of market-based measures: market value of property plant and equipment, research and development, sales growth, market to book value, leverage, segment and size of companies. Concerning the regression used, it is a multinomial logistic regression performed on a sample of 130 UK listed companies. Our finding shows after IFRS adoption, and companies give more importance to some variables such as return on equities and sales growth to assess their performance, whereas the return on assets and market to book value ratio does not have as much importance as before IFRS in evaluating the performance of companies. Also, there are some variables that have no impact on the performance measures anymore, such as earning per share. This article finding is empirically important for business in subjects related to IFRS and companies’ performance measurement.

Keywords: performance’s Measure, nominal variable, econometric model, evaluation methods

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Authors: Núria Arimany Serrat, Xavier Ferràs Hernández, Petra A. Nylund, Eric Viardot

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Innovation is an increasingly important antecedent to firm competitiveness and growth. Successful innovation, however, requires a significant financial commitment and the means of financing accessible to the firm may affect its ability to innovate. The access to equity financing such as venture capital has been connected to innovativeness for young firms. For established enterprises, debt financing of innovation may be a more realistic option. Continuous innovation and growth would otherwise require a constant increase of equity. We, therefore, investigate the relation between debt financing and innovation for large firms and hypothesize that those firms that carry more debt will be more innovative. The need for debt financing of innovation may be reduced for very profitable firms, which can finance innovation with cash flow. We thus hypothesize a moderating effect of profitability on the relationship between debt financing and innovation. We carry out an empirical investigation using a longitudinal data set including 167 large European firms over five years, resulting in 835 firm years. We apply generalized least squares (GLS) regression with fixed firm effects to control for firm heterogeneity. The findings support our hypotheses and we conclude that access to debt finding is an important antecedent of innovation, with profitability as a moderating factor. The results do however differ across national innovation systems and we find a strong relationship for British, Dutch, French, and Italian firms but not for German and Spanish entities. We discuss differences in the national systems of innovation and financing which contextualize the variations in the findings and thus make a nuanced contribution to the research in innovation financing. The cross-country differences calls for differentiated advice to managers, institutions, and researchers depending on the national context.

Keywords: innovation, R&D, national innovation systems, financing

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Authors: Farheen Akram

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Research and Development (R&D) is the most crucial element of the firm’s survival in a competitive business environment. R&D is a long-term investment; therefore, executives having the power to make the investment decisions may be pessimistic when their compensation is closely linked with short-term firm performance. Thus, the current study investigates the impact of board composition and executives’ compensation (cash or short-term benefits and LTIs) on R&D spending using a sample of 85 S&P/100 firms listed on the Australian Stock Exchange (ASX) in 2017. SmartPLS (v.3.2.7) was used to evaluate the proposed model of current research. The empirical findings of this study indicate that board composition has a significant and positive effect on R&D spending. While, as expected, executive cash compensation has negative and Long-Term-Incentives (LTIs) has a positive impact on R&D spending. Based on current findings, the study suggested that myopic behavior of CEOs and top management towards long-term value creation investment like R&D can be controlled by using long-term compensation rewards.

Keywords: cash compensation, LTIs, board composition, R&D spending

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Authors: Edmund Gyimah

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Using data from 146 annual reports of listed firms in Ghana for the period 2013-2020, this study presents indicative findings which inspire practical actions and future research. Firms which prepared and presented sustainability reports were excluded from this study for a coverage of corporate sustainability disclosures centred on annual reports. Also, corporate sustainability disclosures of the firms on corporate websites were not included in the study considering the tendency of updates which cannot easily be traced. The corporate sustainability disclosures in the annual reports since the commencement of the G4 Guidelines in 2013 have been below average for all the dimensions of sustainability and the general sustainability disclosures. Few traditional elements of the board composition such as board size and board independence could affect the corporate sustainability disclosures in the annual reports as well as the age of the firm, firm size, and industry classification of the firm. Sustainability disclosures are greater in sustainability reports than in annual reports, however, firms without sustainability reports should have a considerable amount of sustainability disclosures in their annual reports. Also, because of the essence of sustainability, this study suggests to firms to have sustainability committee perhaps, they could make a difference in disclosing the enough sustainability information even when they do not present sustainability information in stand-alone reports.

Keywords: disclosures, sustainability, board, reports

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Authors: Iin Mayasari

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This study aims at exploring the influence of aspects of entrepreneurial marketing on a firm’s performance. Entrepreneurs are not only supported by resources control to obtain sustainable competitive advantage, but it should also be supported by intangible resources. Entrepreneurial marketing provides the opportunity for entrepreneurs to proactively find better ways to create value for desired customers, to create innovation, and to build customer equity. Entrepreneurial marketing has the medium between entrepreneurship and marketing, and serves as an umbrella for many of the emergent perspectives on marketing. It has eight underlying dimensions. They are proactiveness, calculated risk-taking, innovativeness, an opportunity focus, entrepreneurial orientation, resource leveraging, customer intensity, and value creating. The research method of the study was a qualitative study by having an interview with 8 small companies in Kudus Region, the Central Java, Indonesia. The interviewees were the owner and the manager of the company that had the scope work of small business enterprise in wood crafting industry. The interview was related to the implementation of the elements of the entrepreneurial marketing. The result showed that the small business enterprises had implemented the elements of entrepreneurial marketing in supporting their daily activities. The understanding based on the theoretical implementation was well executed by the owner and managers. The problems in managing small business enterprises were related to the full support by the government and the branding management. Furthermore, the innovation process should be improved especially the use of internet to promote the product, to expand the market and to increase the firm’s performance.

Keywords: entrepreneurial marketing, innovativeness, risk taking, opportunity focus

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Authors: G. Bruno, A. Ciavarella, N. Linciano

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The proportion of women in boardroom has traditionally been low around the world. Over the last decades, several jurisdictions opted for active intervention, which triggered a tangible progress in female representation. In Europe, many countries have implemented boardroom diversity policies in the form of legal quotas (Norway, Italy, France, Germany) or governance code amendments (United Kingdom, Finland). Policy actions rest, among other things, on the assumption that gender balanced boards result in improved corporate governance and performance. The investigation of the relationship between female boardroom representation and firm value is therefore key on policy grounds. The evidence gathered so far, however, has not produced conclusive results also because empirical studies on the impact of voluntary female board representation had to tackle with endogeneity, due to either differences in unobservable characteristics across firms that may affect their gender policies and governance choices, or potential reverse causality. In this paper, we study the relationship between the presence of female directors and corporate performance in Italy, where the Law 120/2011 envisaging mandatory quotas has introduced an exogenous shock in board composition which may enable to overcome reverse causality. Our sample comprises Italian firms listed on the Italian Stock Exchange and the members of their board of directors over the period 2008-2016. The study relies on two different databases, both drawn from CONSOB, referring respectively to directors and companies’ characteristics. On methodological grounds, information on directors is treated at the individual level, by matching each company with its directors every year. This allows identifying all time-invariant, possibly correlated, elements of latent heterogeneity that vary across firms and board members, such as the firm immaterial assets and the directors’ skills and commitment. Moreover, we estimate dynamic panel data specifications, so accommodating non-instantaneous adjustments of firm performance and gender diversity to institutional and economic changes. In all cases, robust inference is carried out taking into account the bidimensional clustering of observations over companies and over directors. The study shows the existence of a U-shaped impact of the percentage of women in the boardroom on profitability, as measured by Return On Equity (ROE) and Return On Assets. Female representation yields a positive impact when it exceeds a certain threshold, ranging between about 18% and 21% of the board members, depending on the specification. Given the average board size, i.e., around ten members over the time period considered, this would imply that a significant effect of gender diversity on corporate performance starts to emerge when at least two women hold a seat. This evidence supports the idea underpinning the critical mass theory, i.e., the hypothesis that women may influence.

Keywords: gender diversity, quotas, firms performance, corporate governance

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Authors: Hassan Medaghri Alaoui

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The accounting and financial reporting system in use today is over 500 years old and has failed to capture the new knowledge and innovation economy in which intangible assets are becoming increasingly valuable. Yet, there has been a growing acknowledgment among the research community as to the relevance of intellectual capital as a major enhancer of an organization’s well-being. Much of the research provides great support for how the IC is instrumental in determining financial and stock performances. As far as we know, this article is one of the earliest exploratory attempts to examine the intellectual capital impact on the corporate performance of the IT sector in Morocco. The purpose of this study is to verify empirically the influence of intellectual capital on firm performance. We have undertaken, over a fifteen-year period, a longitudinal (2005–2019) case study of a prominent payment-solutions company based in a developing economy with global operations.

Keywords: intellectual capital, IT sector, measuring intellectual capital, modified value added intellectual capital coefficient, Morocco

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Authors: Raif Parlakkaya, Ahmet Diken, Erkan Kara

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This paper examines the relationship between corporate governance rating and stock prices of 26 Turkish firms listed in Turkish stock exchange (Borsa Istanbul) by using panel data analysis over five-year period. The paper also investigates the stock performance of firms with governance rating with regards to the market portfolio (i.e. BIST 100 Index) both prior and after governance scoring began. The empirical results show that there is no relation between corporate governance rating and stock prices when using panel data for annual variation in both rating score and stock prices. Further analysis indicates surprising results that while the selected firms outperform the market significantly prior to rating, the same performance does not continue afterwards.

Keywords: corporate governance, stock price, performance, panel data analysis

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Authors: Ons Triki, Fathi Abid

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Along with the increase in the use of leasing contracts in corporate finance, multiple studies aim to model the credit risk of the lease in order to cover the losses of the lessor of the asset if the lessee goes bankrupt. In the current research paper, a convertible lease contract is elaborated in a continuous time stochastic universe aiming to ensure the financial stability of the firm and quickly recover the losses of the counterparties to the lease in case of default. This work examines the term structure of the lease rates taking into account the credit default risk and the capital structure of the firm. The interaction between the lessee's capital structure and the equilibrium lease rate has been assessed by applying the competitive lease market argument developed by Grenadier (1996) and the endogenous structural default model set forward by Leland and Toft (1996). The cumulative probability of default was calculated by referring to Leland and Toft (1996) and Yildirim and Huan (2006). Additionally, the link between lessee credit risk and lease rate was addressed so as to explore the impact of convertible lease financing on the term structure of the lease rate, the optimal leverage ratio, the cumulative default probability, and the optimal firm value by applying an endogenous conversion threshold. The numerical analysis is suggestive that the duration structure of lease rates increases with the increase in the degree of the market price of risk. The maximal value of the firm decreases with the effect of the optimal leverage ratio. The results are indicative that the cumulative probability of default increases with the maturity of the lease contract if the volatility of the asset service flows is significant. Introducing the convertible lease contract will increase the optimal value of the firm as a function of asset volatility for a high initial service flow level and a conversion ratio close to 1.

Keywords: convertible lease contract, lease rate, credit-risk, capital structure, default probability

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Authors: Saqib Mehmood, Naveed Iqbal Chaudhry, Asif Mehmood

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This study intends to investigate the information asymmetry theories of IPO and under-pricing in Pakistan. The purpose of the study is to validate the information asymmetry about firm value which leads to under-pricing. A total of 55 IPOs listed from 2000-2011 were included in this study. OLS multiple regression was applied to achieve the objectives of this study. The findings of the study confirm the significance of information asymmetry on under-pricing in Pakistan. The findings have implications for issuing firms and prospective investors.

Keywords: information asymmetry, initial public offerings, under-pricing, firm value

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Authors: Muhammad Atif, M. Samsul Alam

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The purpose of this study is to investigate the effects of board room gender diversity on firm sustainable investment. We test the extent to which sustainable investment is affected by the presence of female directors on U.S. corporate boards. Using data of S&P 1500 indexed firms collected from Bloomberg covering the period 2004-2016, we estimate the baseline model to investigate the effects of board room gender diversity on firm sustainable investment. We find a positive relationship between board gender diversity and sustainable investment. We also find that boards with two or more women have a pronounced impact on sustainable investment, consistent with the critical mass theory. Female independent directors have a stronger impact on sustainable investment than female executive directors. Our findings are robust to different identification and estimation techniques. The study offers another perspective of the ongoing debate in the social responsibility literature about the accountability relationships between business and society.

Keywords: sustainable investment, gender diversity, environmental proctection, social responsibility

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Authors: Yosra Makni, Mariam Dammak, Dhouha Abed

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Purpose: This paper investigates the mediating role of corporate reputation on the relationship between corporate social responsibility and financial performance. Design/Methodology/Approach: Based on a sample of 4329 drawn from 33 developed and developing countries and over a period of eight-year ranging from 2009 to 2016, we apply an Ordinary Least Squares regression (OLS) regressions to test our hypotheses. Findings: The authors find that there is a positive association between Corporate Social Responsibility (CSR) engagement and the financial performance of a company. They also document that there is a positive association between CSR engagement and a company's reputation and the company's reputation mediates the relationship between engagement in CSR activities and financial performance. Originality Value: This study contributes to the literature in the following ways. First, our research advances the understanding of the link between corporate social responsibility and financial performance by responding to the requests of several researchers to study the mechanisms of mediation between these two concepts given the scarcity relative to currently available research. So we include the most important predicted advantage of CSR, namely reputation, by developing and testing a more complex relationship. Secondly, these relationships have been investigated using an international sample drawn from a large number of countries with a high reputation. Using Judy and Kenny's method, we have confirmed that the company's reputation can play the role of a mediating variable on the relationship between CSR's commitment to operations and the financial performance of the company. More specifically, the more the company is engaged in the activities of CSR, the more it can have a good reputation, more than it has a good financial performance.

Keywords: corporate social responsibility, company's reputation, financial performance, mediating variable

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Authors: S. Sundarasen, I. Ibrahim

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This study examines whether the legal origin of a country alters the association between corruption and corporate performance in the East Asia and South East Asia Region. A total of 18,286 companies from 14 countries in the East Asia and South East Asia Region are tested using Generalized Least Square (GLS) panel and pool data analysis with the cross-section being the income level. The data is further analyzed in terms of high income, upper middle income and low-income countries within the East and South Asia region. The empirical results indicate that legal origin positively moderates the relationship between a country’s corruption level and firm performance. As for the sub-analysis, legal origin positively moderates only in the high and upper middle-income countries. As for the low-income countries, no significance is documented in both the common and civil law.

Keywords: corruption, performance, legal origin, East Asia and South East Asia Region

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Authors: Amneh Alkurdi, Yasean Tahat, Hamzeh Almuali

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Purpose: The primary objective of the present paper is to examine the impact of CG attributes, including the board size, independency, separation and managerial ownership) on firm dividend payouts policy; using a sample of 72 Jordanian listed companies for the period of 2007-2013. Methodology: The study does manually review the sample firm’s annual reports for data collection and use OLS regression to carry out this investigation. Findings: The findings indicate that CG attributes have a strong impact on dividend payouts policy. In particular, board size, independency and separation have had significant associations with dividends payouts indicating that such variables matter when determining on dividends which may mitigate the conflicts between stakeholders’ and managers’ interests. The results also indicate that managerial ownership has had no significant impact on the dividends policy suggesting that managers do not use the strength of their position to influence the dividends policy. Finally, the results show that firm size and profitability have had statistically positive associations with dividend payouts, while this was not the case for firm leverage and growth where significant and positive relationships were documented. Originality/implication: The current paper extends the extant literature in this field by investigating the impact of the board composition on dividends and provides some insights for policy makers in emerging markets.

Keywords: corporate governance, dividends payouts policy, jordan, accounting

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Authors: Maryam Goodarzi, Mahdieh Sheikhi, Mehdi Goodarzi

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This study intends to offer an appropriate strategy development framework for a telecommunication firm (as a case study) which works on Information and Communication Technology (ICT) projects, development of telecommunication networks, and maintenance of local networks, according to its dominant condition. In this approach, first, the objectives were set and the mission was defined. Then, the capability was assessed by SWOT matrix. Using SPACE matrix, the strategy of the company was determined. The strategic direction is set and an appropriate and superior strategy was developed and offered employing QSPM matrix. The theoretical framework or conceptual model of the present study first involves 4 stages of framework development and then from stage 3 (assessing capability) onward, a strategic management model by Fred R. David. In this respect, the tools and methods offered in the framework are appropriate for all kinds of organizations, particularly small firms, and help strategists identify, evaluate, and select strategies.

Keywords: strategy formulation, firm mission, strategic direction, space diagram, quantitative strategic planning matrix, SWOT matrix

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Authors: Renata Konadu

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Over the last two decades, the concept of environmental management and its related issues have received increased attention in global discourse and on management research agenda due to climate change and other environmental challenges. To abate and avert these challenges, diverse environmental policies, strategies and practices have been adopted by businesses and economies as a whole. Extant literature has placed much emphasis on whether improved environmental operational performance improves firm performance. However, there is a huge gap in the literature with regards to whether the adoption of environmental management practices and policies has a direct relationship with environmental operational performance (EOP). The current paper is intended to provide a comprehensive perspective of how different aspects of environmental management can relate to firms EOP. Using a panel regression analysis of 149 large listed firms in the UK, the study found evidence of both negative and positive statistically significant link between some Environmental Policies (EP), Environmental Processes (EPR), Environmental Management Systems (EMS) and EOP. The findings suggest that in terms of relating EP, EPR and EMS to Greenhouse Gases (GHGs) emissions for instance, the latter should be viewed separately in Scopes 1, 2 and 3 as developed by GHG protocol. The results have useful implication for policy makers and managers when designing strategies and policies to reduce negative environmental impacts.

Keywords: environmental management, environmental operational performance, GHGs, large listed firms

Procedia PDF Downloads 222