Studies of firm efficiency on stock returns

 The thesis provides strong evidence for a negative relationship between firm efficiency and average stock returns in the Australian market. Moreover, the findings indicate that the return anomalies are more likely due to mispricing in which arbitrage costs play an important role in explaining the efficiency effect.

Firm compliance with social insurance obligations where there is a weak surveillance and enforcement mechanism: empirical evidence from Shanghai

This article examines why firms in Shanghai comply or over-comply with social insurance obligations in a regulatory environment where the expected punishment for non-compliance is low. Our first finding is that firms found to be in non-compliance in the first audit in 2001 were moved into a separate violation category and the probability of being reaudited in 2002 was significantly higher if the firm was in that category. Our second main result is that, across the board, firms which were reaudited continued to underpay in 2002 but the extent of underpayment was significantly reduced. © 2007 The Authors. Journal compilation © 2007 Blackwell Publishing Ltd.

Board composition, board activity and ownership concentration, the impact on firm performance

This paper provides a parallel investigation on the impact of board composition, board activity and ownership concentration on the performance of listed Chinese firms. We find that independent directors enhance firm performance effectively than other board factors. The frequency of shareholder meetings, rather than board meetings, is positively associated with firm value. Tradable share ownership concentration has a positive and linear relationship with firm value, while state and total share ownership concentration represent U(V) shapes. Importantly, companies with the highest levels of both total share and tradable share ownership concentration have a greater firm values than companies with the highest levels of only a single concentration.

Corporate governance and corporate finance practices in a Kuwait Stock Exchange market listed firm: a survey to confront theory with practice

Purpose– This paper aims to explore the issue of corporate governance mechanisms by including the importance of stakeholders, primary objectives of the firm and the ownership of top financial managers of listed firms in Kuwait in the survey tool. It attempts to investigate whether theory aligns with the behaviour of financial managers in practice in an emerging market case.Design/methodology/approach– A survey was developed to focus primarily on the current corporate finance practices implemented by CFOs in listed companies in Kuwait. The target respondents are listed firms in the Kuwaiti Stock Exchange (KSE). The survey includes questions on topics that are closely related to capital budgeting, capital structure, cost of capital and dividend policy. For example, the survey asks the managers how they estimate their cost of equity (CAPM or other methods) and whether the impact of the weighted average cost of equity is taken into consideration in their capital structure choices.Findings– A surprising number of firms are now widely using IRR for decision making. CAPM is also in use, whereas WACC remains the most popular method used. There is some support for the “bird‐in‐hand” dividend theory in the tax‐free environment. Firms in Kuwait do not have any particular source of capital structure choices when it comes to how best to finance their projects as is the case in the US market. Firms in Kuwait are consciously striving for maximizing profits and those managers are regarded as their most important stakeholders. This may indicate the existence of agency problems.Research limitations/implications– The limitation of this study lies in the absence of empirical investigation on how corporate finance decisions may affect firms' performance in Kuwait. Hence, empirical validation will be performed by the authors in the next stage of this research, which will form the basis for further research. Empirical validation for the impact of corporate governance on performance is needed.Practical implications– This research may benefit managers and decision makers in many aspects, including having an understanding of applying popular and the most suitable corporate finance and corporate governance techniques in the management of their companies. In this research, the authors have identified the gap between practice and academia.Originality/value– To the best of the authors' knowledge, this is the first study to examine comprehensively major areas of financial policies and practices and corporate governance in an emerging market case, especially in the Middle East. Kuwait provides a unique institutional setting in its taxation system. Therefore, this study will make a contribution to the general literature in this field.

Managerial ownership, capital structure and firm value: Evidence from China’s civilian-run firms

This paper examines the influence of managerial ownership on firm performance through capital-structure choices, using a sample of China’s civilian-run firms listed on the Chinese stock market between 2002 and 2007. The empirical results demonstrate a nonlinear relationship between managerial ownership and firm value. Managerial ownership drives the capital structure into a nonlinear shape, but in an opposite direction to the effect of managerial ownership on firm value. The results of simultaneous regressions suggest that managerial ownership affects capital structure, which in turn affects firm value. Our findings imply that the “interest convergence” and “entrenchment” effects of managers’ behaviour in terms of managerial ownership can also explain the agency-relevant situation of China’s civilian-run firms.

Managerial ownership, capital structure and firm value

This paper extends prior research to examine the managerial ownership influences on firm performance through the choices of capital structures by using a new sample of S& P 500 firm in 2005. The empirical results of OLS regressions replicate the nonlinear relationship between managerial ownership and firm value. However, we found that the turning points had moved up in our sample compared with previous papers, which implies that the managerial control for pursuing self-interst, and the alignment of interests between managers and other shareholders can only be achieved now by management holding more ownership in a firm than that found in previous studies. Managerial ownership also drives the capital structure as a nonlinear shape, but with a direction opposite to the shape of firm value. the results of simultaneous regressions suggest that managerial ownership affects capital structure, which in turn affects firm value. Capital structure is endogenously determined by bith firm value and managerial ownership; while managerial ownership is not endogenously determined by the other two variables.

An evaluation of the role of green marketing and a firm's internal practices for environmental sustainability

The management of a firm's green operations is increasingly important for marketing strategists. The purpose of this study is to investigate the cross-influences of green marketing strategy and the key internal green functional areas in a firm. We use the antecedents of marketing strategy and identify relationships between green marketing strategy and key supporting internal environmental operations of firms with respect to (1) green suppliers, (2) environmental resource management, (3) green research and development, and (4) environmental manufacturing processes and procedures. The statistical techniques of parallel analysis, factor analysis and multiple regressions are used to analyze data collected from 332 firms. The results identify that among the four functional areas of firms adopting green marketing strategy. Two are more likely to influence green marketing strategy – supplier selection and research and development. Implications are discussed. The findings contribute to the theory of green marketing strategy. Future research is recommended.

HRM retrenchment practices and firm performance in times of economic downturn: exploring the moderating effects of family involvement in management

A substantial number of studies have indicated a significant negative relationship between human resource management (HRM) retrenchment practices such as downsizing, and firm performance. However, a consideration of the potential effects of business family involvement in management is largely absent from the general employment restructuring literature. Using a sample of 218 Taiwanese publicly listed firms, this study seeks to further our understanding in this area by examining the moderating effects of family involvement in management on the relationship between the adoption of HRM retrenchment practices and firm performance during the period of global economic downturn that erupted in the middle of 2008. Data analysis reveals that HRM retrenchment practices had a negative influence on firm performance, and that the relationship between HRM retrenchment practices and firm performance was negatively and significantly moderated by family involvement in management.

Investor protection, firm informational problems, big N auditors, and cost of debt around the world

This paper examines the effects of investor protection, firm informational problems (proxied by firm size, firm age, and the number of analysts following), and Big N auditors on firms' cost of debt around the world. Using data from 1994 to 2006 and over 90,000 firm-year observations, we find that the cost of debt is lower when firms are audited by Big N auditors, especially in countries with strong investor protection. Second, we find that firms with more informational problems (i.e., higher information asymmetry problems) benefit more from Big N auditors in terms of lower cost of debt only in countries with stronger investor protection.

Managerial entrenchment and firm value: a dynamic perspective

We examine the impact of managerial entrenchment on firm value using a dynamic model with firm fixed effects. To estimate the model, we employ the long-difference technique, which is shown by our simulation to deliver the least biased estimates. Based on a large sample of U.S. companies, we document a significantly negative and causal effect of managerial entrenchment on firm value after taking into account omitted variables, reverse causality, and highly persistent endogenous variables. Additional analysis suggests that the causality running from managerial entrenchment to firm value is more pronounced than that for reverse causality.

The natural resource-based view of the firm (NRBV): constraints and opportunities for a green team in professional sport

Burgeoning expectations of the sport industry’s role in managing the environmental impact on its community are increasing. While previous research has focused on factors contributing to environmental involvement, little is known about the organization’s approach in dealing with these responsibilities. An exploratory case evaluation of a Major League Baseball team in evaluating the constraints, demands and opportunities of managing environment issues is undertaken. Specifically, the Natural-Resource-Based View of the firm (NRBV) is used to frame the assessment of the team’s capabilities and strategies with consideration of internal and external dynamics. Qualitative methods were which resulted in the identified key themes and implications

Non-wage benefits, corporate ownership and firm performance in post-communist economies: evidence from Ukraine

The economic reforms in the transition economies of Central and Eastern Europe have fundamentally reshaped ownership and governance of economic production, notably through the privatization of former state-owned enterprises. These reforms were expected to transform management practices by displacing ‘cradle-to-grave’ welfare arrangements administered by state-owned enterprises. Using data drawn from two large samples of Ukrainian establishments, we investigate, in two different time points, the relationship between non-wage benefits and firm performance during the period of transition to a market economy (1994–2004). We found that non-wage benefits continued to be a critical feature of HRM practices in Ukraine during this period, and were positively associated with firm performance.

Stock market liquidity and firm value : an empirical examination of the Australian market

We document a positive relation between stock liquidity and firm value. We examine the mechanism through which stock market liquidity enhances firm value by dividing firm value, as measured by Tobin’s Q, into three components, namely, operating income to price, leverage, and operating income to assets. Using the switch to broker anonymity as an exogenous shock to market liquidity, we show that the increase in liquidity around the shock leads to an increase in firm value. Our results suggest that higher firm value for more liquid stocks seems to stem from enhanced stock prices rather than from better operating performance.