Business Groups and Export Performance: The Role of Coordination Failures and Institutional Configurations

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Abstract

We explore the nature of business groups (BGs) and their affiliates in emerging markets through the lens of the coordination failures associated with economic development. We propose that BGs develop distinct economic and political capabilities that provide affiliates with access to the complementary resources required for successful exporting. We further argue that these capabilities are context-specific, based on the market and political institutions of the home country. We propose that the BG advantage in supporting affiliate exporting increases as market institutions strengthen but is reduced (strengthened) as political systems become more democratic (autocratic). We apply Tobit estimation methods to a large sample of firms from emerging and developing countries at different stages of institutional development and find consistent evidence in favour of our hypotheses. We develop a framework to analyse alternative BG internationalization paths in a comparative institutional context.

Multiple‐Principal Demands and CEO Compliance in Emerging Market State‐Owned Enterprises

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Abstract

This study addresses multiple-principal–agent power dynamics in state-owned enterprises (SOEs) in emerging markets. We investigate under what conditions agents (CEOs) accede to demands of government-linked principals. Our qualitative study in Indonesia advances agency theory by disaggregating and categorizing government-linked principals. We also examine three types of principals’ demands (commercial, social, and private) and five types of mechanisms influence agent responses with principals’ private demands (collusion among principals, career-ending threats by principals, plausible deniability through CSR, political ties as enabler, political ties as buffer). Based on our findings and on insights from the public administration literature, we develop a conceptual framework that advances multiple agency theory.

Higher‐order moments and asset pricing in the Australian stock market

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Abstract

This paper investigates a set of realised higher-order co-moment risk–return relationships in the Australian stock market. We test the predictive power of the asset pricing model by implementing the two-, three-, four-moment Capital Asset Pricing Model. Our findings show that investors respond differently to information related to realised higher-order co-moments, and that the corresponding gamma (normalised co-skewness) and kappa (normalised co-kurtosis) risk factors remain priced in the presence of continuous beta and jump beta. Furthermore, we find that the realised high-order co-moment risk measures are priced differently and remain significant even when combined with a set of firm characteristics.

How does credit information sharing affect trade credit? Evidence from China

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Abstract

This paper investigates how credit information sharing affects corporate trade credit financing. Utilising the difference-in-differences method, we find a significant reduction in trade credit for infra-marginal bank borrowers following the introduction of the Chinese National Enterprise Credit Information Publicity System (NECIPS). To reveal the mechanisms underlying the reduction in trade credit, we show that the NECIPS alleviates information asymmetry and increases formal finance access. This financing substitution effect is magnified by weak bargaining power in product markets. Our findings complement the literature on the determinants of trade credit and underscore the indispensable role of the public credit registry.

When Business Model Innovation Creates Value for Companies: A Meta‐Analysis on Institutional Contingencies

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Abstract

Using a meta-analysis based on 147 primary studies from 27 countries, we synthesize extant knowledge on the relationship between business model innovation (BMI) and firm performance. Our results show that the positive BMI-firm performance relationship is robust across various conceptualizations of and measures for BMI. Building on prior research suggesting that not all companies benefit equally from engaging in BMI, we set out to study important institutional-level contingencies for the BMI-performance relationship. We build on the institution-based view as theoretical perspective and combine it with insights from the innovation literature to theorize that the magnitude of the positive effect of BMI on firm performance depends on institutional contingencies, specifically national culture and pro-market institutions, because these national institutions affect BMI-driven organizational learning processes. Specifically, we argue and show that the positive relationship between BMI and performance is weaker in countries characterized by high levels of masculinity and individualism, and stronger in countries characterized by high levels of customer orientation, economic freedom, and education. Besides the country-level contingencies, the inclusion of various control variables in our meta-analysis also reveals that, even if located in the same institutional environment, start-up firms benefit more from BMI than mature firms and that there are no observable differences regarding BMI benefits among different industries. Moreover, a nuanced analysis shows that the positive effect on performance is stronger when BMI rely on changes in cognitive schemas compared to BMI that are of more technical nature.

Impacts of COVID-19 Pandemic on the Price Volatility of Listed Commercial Bank Stocks in Vietnam

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Business Perspectives and Research, Ahead of Print.
This article aims to estimate the relationship between COVID-19 and the price volatility of listed commercial bank stocks in Vietnam during the two most severely affected years of the pandemic (2020–2021), and measuring the impacts of macroeconomic factors on those stocks’ returns and their price volatility (measured by standard deviation of returns) with previous studies’ results before the pandemic. Using the data from 16 listed commercial banks’ stock returns on Ho Chi Minh Stock Exchange (HOSE) and Hanoi Stock Exchange (HNX) during the study period, we used OLS to find the effect, with important findings: (1) COVID-19 daily reported cases had a weak negative effect on Vietnam listed banks’ stock returns and hardly any relation with stock returns’ standard deviation. (2) GDP influenced commercial bank stock returns positively, while CPI, number of COVID-19 cases, and businesses closed had a negative effect. Also, listed commercial bank stock returns were insignificantly impacted by the interest rate. (3) Macroeconomic factors’ impact on the standard deviation of returns were weak, during the pandemic. GDPs and CPIs effect turned out to be insignificant while interest rate had a negative effect on the volatility rate, and was only significant in two out of the three models, implying potential negative impacts of COVID-19 on the macroeconomy.JELClassification: G21, F62, F65, G18, G28

Director awards and board effectiveness

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Abstract

We explore the impact of prestigious director awards on effectiveness in setting CEO compensation. Consistent with the positive announcement effect for firms with awardees, CEO compensation aligns more closely with shareholder interest and includes enhanced risk-taking incentives for boards with awardees. The effect is most pronounced when the awardee is on the compensation committee or a committee chair, and results are robust to a 2SLS estimation using an instrumental variable based on connections to prior award winners. We find evidence that both additional prestigious board appointments and enhanced scrutiny of firms with awardees are channels for improvements in CEO compensation.

Business strategy and strategic deviation in accounting, finance, and corporate governance: A review of the empirical literature

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Abstract

We review the empirical archival literature on the consequences of business strategy and strategic deviation on accounting, finance, and corporate governance outcomes. We use Miles and Snow's (Organizational strategy, structure, and process. McGraw-Hill, 1978; Organizational strategy, structure and process. Stanford University Press, 2003) strategy typology that has been quantified using financial statement data by Bentley et al. (Contemporary Accounting Research, 2013, 30, 780). Research has used this strategy score to investigate the consequences of firms following two distinct strategies namely, prospectors versus defenders, on various organisational outcomes. Our survey provides mixed evidence on the relationship between business strategy, financial reporting quality, finance outcomes, and corporate governance including corporate social responsibility (CSR) activities. We offer some suggestions for future research.

Reducing Symbolic Compliance: The Presence of Multiple Large Shareholders as an Internal Monitoring Mechanism

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Abstract

We propose that in a context where corporate ownership is concentrated, the controlling shareholder of a firm tends to symbolically comply to regulatory requirements that aim to protect minority shareholders; yet the presence of multiple large shareholders can serve as an internal monitoring mechanism that can reduce symbolic compliance. We test this argument through examining firm responses to a regulatory requirement regarding independent accounting director appointments in China. Using data on China's listed non-state-owned enterprises, we find that the presence of multiple large shareholders decreases the likelihood of symbolic compliance, and this negative effect is stronger when noncontrolling large shareholders have low incentives to collude with the controlling shareholder. We also find that a firm engaging in symbolic compliance tends to have a greater level of tunnelling (by the largest shareholder) and earnings management. Our study contributes to the literature on symbolic management in an institutional setting where ownership is concentrated.