Corporate Resources Research Articles

ОСОБЛИВОСТІ ФОРМУВАННЯ ТА ФУНКЦІОНУВАННЯ СИСТЕМИ ФІНАНСОВО-ЕКОНОМІЧНОЇ БЕЗПЕКИ ПРОМИСЛОВОГО ПІДПРИЄМСТВА В УМОВАХ ІНДУСТРІЇ 4.0: СТРАТЕГІЧНИЙ АСПЕКТ

Introduction . The connection of financial and economic spheres in a high-risk environment of domestic industry allows us to talk about the problems of financial and economic security both in terms of public administration and in the functioning of economic structures. Traditional types of risks, the impact of which changes the effectiveness and efficiency of business structures, have long been studied within the classical approaches to risk management, while the risks caused by the spread of Industry 4.0 trends are still poorly amenable to management, control, minimization, which indicates the need to review and optimize the processes of formation and operation of economic security systems of industrial enterprises. Building a comprehensive system of financial and economic security of the enterprise is a long process, and its implementation requires resources, which encourages the search for evidence necessary to justify its need for company management. Purpose. The purpose of the study is to establish the peculiarities of the formation and functioning of financial and economic security systems of Ukrainian industrial enterprises in the context of the spread of Industry 4.0. Methods. In the course of research the monographic method and a method of the theoretical analysis are used. Methods of analysis and synthesis are also used. The method of generalization was used in the process of forming conclusions based on the results of the study. Results. The article examines the peculiarities of the formation and functioning of the system of financial and economic security at modern Ukrainian industrial enterprises, taking into account the risks of Industry 4.0. The characteristic of the structural and logical scheme of construction and functioning of the system of financial and economic security of the enterprise is given. The mechanism of ensuring financial and economic security of the enterprise is described. The features of strategic management of the system of financial and economic security of industrial enterprises are established. Originality. Financial and economic security of an industrial enterprise is a state of functioning of mechanisms for counteracting the negative impact of threats and risks of financial and economic nature on the results of its production and economic processes, which minimizes their destructive consequences for financial and economic interests of the enterprise and guarantees its ability to operate continuously. Industry 4.0 as the newest form of organization of industrial relations, has become a source for the emergence of new risks, threats and challenges for industrial enterprises. In particular, the low level of information and digital literacy of employees, digitalization of production processes, the rapid increase in information resources of different quality levels, the need for management decisions in time constraints, rising costs for innovative restructuring of production technologies, high obsolescence of equipment - all noted facts and should become catalysts for finding ways to form an effective system of financial and economic security in domestic enterprises and develop mechanisms for effective management in the strategic and tactical areas. In terms of Industry 4.0, the tasks of the economic security system include ensuring the protection of automated and digital processes, developing a mechanism to prevent cyberattacks, developing standards of security behavior with information resources of the enterprise, control of impersonal communication with stakeholders, security of digital financial settlements. Conclusion. The complex approach to formation and functioning of system of financial and economic security of the enterprise which should include the purpose, tasks, principles of functioning, objects and subjects, strategy and the mechanism of system strategic management of financial and economic safety of the industrial enterprises at their integration to Industry 4.0 is investigated. The purpose of the financial and economic security of the entity is the timely detection and prevention of external and internal dangers and threats, ensuring the integrity of corporate resources and achieving financial and economic interests of the enterprise, the implementation of its planned business goals in the short and strategic perspectives. With the spread of Industry 4.0, the problem of an integrated approach to economic and financial security is critical to building an effective management system of financial and economic security of the enterprise and maintaining its functional state at a high level. This will help prevent the loss of financial stability, solvency, competitiveness of the industrial enterprise and allow it to gain important market advantages, including the ability to develop and adapt to changing conditions of a risky economic environment.

Appalachia North by Matthew Ferrence

Reviewed by: Appalachia North by Matthew Ferrence Emily Masters (bio) Matthew Ferrence. Appalachia North. Morgantown, W.Va.: West Virginia University Press, 2019. 274 pages. Softcover. $26.99. Matthew Ferrence. Appalachia North. Morgantown, W.Va.: West Virginia University Press, 2019. 274 pages. Softcover. $26.99. Water is the current carrying Matthew Ferrence along the map of his life in his memoir Appalachia North. From the water in our streams to the water in our ponds to the water in the blood running through our veins, he traces his life through the moments of transition and movement visible in water. When he moves away from his home in southern Pennsylvania, what he misses most is the water constantly shaping the landscape. As a child, he spent his time playing in the streams at the bottom of his parent's farm, and as an adult, he recognizes how politicized his known landscapes are by corporate resource ownership and lack of respect for the environment, especially when it comes to damaging water sources. He explores shifting landscapes, questions ownership, and asks what it means when the maps we have of our bodily landscapes are shaken to the core. In a world where Appalachia is a place of fluctuating borders, Ferrence extends his definition of Appalachia all the way up through the eroded ranges of Canada, what he calls "Canappalachia." While this may irk some readers, especially those with a narrow view of what defines Appalachia, it is powerful to hear the perspective of someone who is from the often-overlooked northern Appalachia. He argues for a [End Page 123] continuation of the definition based on landscape—on the connection drawn by lines of the long-standing, long-eroded Appalachian mountain range, and he questions powers that be who define maps for and profit from some of the nation's poorest areas and people. The environmental bent of Appalachia North is a powerful one. From the beginning, Ferrence emphasizes how from an early age he has been conscious of industrial destruction of the environment. From water pollution to issues of returning a mountain to contour to destruction of private property for mineral rights, he is outspoken about his desire for the landscape he has known since childhood to remain stable. He's disappointed, however, when he returns to his family's farm to find gas wells marked with wooden stakes across the property. In a moment of empowerment, he uproots one and hurls it across the field, one small act of rebellion speaking volumes. As I read Ferrence's memoir, I found myself drawn to his constant need to redefine: our bodies, our identities, our maps. He writes of tension in self-identification growing up in a place technically within the Appalachian Regional Commission defined territory of the region in Pennsylvania, but both inside and outside of what he sees as the typical Appalachian experience. He doesn't discover his Appalachian-ness until attending college in West Virginia. As someone who had never thought of myself as Appalachian until college, his questioning of and redefining identity rings true. While it is clear Ferrence is winding together tributaries of defining what Appalachia means to him and what a brain cancer diagnosis does to his sense of self, the latter thread is often lost, turning more into a trickle than a stream, and resurfacing when it is least expected and sometimes nearly forgotten. I expected more emphasis on what seems like such a pillar of how Ferrence defines his relationship to the world [End Page 124] around him. More focus on the emotional side of his story would have been welcomed in a memoir sometimes bogged down in fact and research above emotional plight. The academic tone Ferrence takes on is most evident in his eighth chapter "Reading Like an Appalachian." He takes it upon himself to review books set in and near his hometown, tearing apart what he feels like does not do his place justice. The chapter feels misplaced, like it would sit more at home in a magazine or journal than in his memoir. That said, the entirety of his memoir is well-researched, and Ferrence makes sure to support every claim he makes...

Развитие корпоративных ресурсов бизнес-структур в условиях становления цифровой экономики

Цель статьи – проанализировать основные направления развития и совершенствования корпоративных ресурсов бизнес-структур в условиях становления цифровой экономики. Предметом исследования являются основные направления развития корпоративных ресурсов организаций в условиях цифровизации всех сфер общественной жизни. Материалы и методы. Методологической основой статьи стали исследования российских и зарубежных ученых в сфере развития корпоративных ресурсов организации. Автором статьи использованы такие общенаучные методы как анализ и синтез для изучения особенностей развития корпоративных ресурсов организации, системный и ситуационный подходы для изучения корпоративных ресурсов как системы взаимодействующих элементов, метод экономико-статистического анализа для изучения динамики и закономерностей развития основных индикаторов корпоративных ресурсов и анализа открытых эмпирических данных по изучаемой проблеме. Результаты. В статье проанализированы особенности корпоративных ресурсов, основные тенденции их развития, необходимые пути совершенствования в условиях глобальной информатизации и становления цифровой экономики. Выводы. Развитие корпоративных ресурсов бизнес-структур должно носить комплексный и многоуровневый характер, организующее и направляющее воздействие должно осуществляться на макро-, мезо- и микроуровнях. Применение. Полученные результаты могут быть использованы для дальнейшего более глубокого анализа направлений развития корпоративных ресурсов в контексте повышения уровня экономической безопасности бизнес-структур.

Fundamentals of financial and economic security management of Ukrainian enterprises

The financial and economic security of an enterprise is a complex system that includes a certain set of internal characteri-stics aimed to ensure the efficiency of corporate resources use in each direction of activity. The basis of the development of a complex system of financial and economic security of an enterprise should be a defined concept. Each enterprise is a system that includes different, interconnected components, which in order to ensure proper degree of protection against possible negative impacts should be considered comprehensively. The content and structure of the financial and economic security system depend on the specifics and nature of the activity of the enterprise, its potential, the markets that it ope-rates, as well as its management. The financial and economic security system of an enterprise must be comprehensive and independent from similar systems of economic entities.

Financial Statement Comparability and Managers’ Use of Corporate Resources

We examine the impact of financial statement comparability on managers’ use of corporate resources. Using the comparability measures of De Franco, Kothari, and Verdi (2011) as proxies for financial statement comparability, we find that, as comparability increases, corporate cash holdings are worth more to outside shareholders, capital expenditure contributes more to shareholder value, and corporate acquisitions made by the firm have a more favorable impact on shareholder value. We also find that higher comparability leads to both lower under- and overinvestment. Our results suggest that comparability facilitates investor monitoring of managers’ use of corporate resources, which enhances shareholder value.

Komparativna analiza tradicionalnog i savremenog pristupa merenja efikasnosti u preduzećima

Nowadays, corporation efficiency measurement is a modern and important trend in various disciplines, such as accounting, finance and especially marketing. The main purpose of this research is to find out whether and to what extent does a systematic approach to financial performance measurement, analysis and evaluation, as well as other non-financial types of performance caused by them and related to them contribute to higher corporate efficiency. The traditional efficiency measurement model is based on the traditional financial statements and financial performance criteria. The accounting criteria have been largely implemented in corporate financial analyses, and it can be significant for business portfolio management, i.e. capital allocation and reallocation, disinvestment, credit rating assessment and analysis, key area identification in strategic decision making, etc. However, successful business operations and effective strategic decision making demand a complex approach to modelling a measurement system for the usage of resources. Therefore, an efficient measurement system demands multidisciplinary theoretical and methodological knowledge for the choice and construction of the most appropriate analytical model. This is why factor approach is necessary in addition to the integral approach for the indicator measurement of corporate resources usage. Only a carefully conceptualized and implemented system of efficiency measurement, focusing on the analysis of relevant factors, can be an important instrument triggering strategic changes in corporate business activities.

Customer Service Quality Practice in District Co-Operative Bank - with Reference to Thiruvananthapuram District Cooperative Bank

As the entry of sophisticated technology has paved way for greater developments in every field including the banking sector, the banking sector too is characterized by rapid change and increasingly sophisticated customers. It has become very important that banks in India determine the service quality factors, which are pertinent to the customer’s selection process. With the advent of international banking, the trend towards larger bank holding companies, and innovations in the marketplace, the customers have greater and greater difficulty in selecting one institution from another (Choudhury, K. (2018)). Therefore the current problem for the banking industry in India is to determine the dimensionality of customer- perceived service quality. If service quality dimensions are identified, the service managers should be able to improve the delivery of customer perceived quality during the service process and have greater control over the overall outcome. A better understanding of the effects of service quality and customer satisfaction on service loyalty can help academics in the development of a model of service marketing. It can also provide practitioners with indications as to where best to devote marketing attention and scarce corporate resources.

El proceso de acumulación financiera y la capacidad de endeudamiento en el ciclo financiero de las corporaciones bursatiles que cotizan en la BMV.

Corporations have reoriented their financing strategies, during the financialization process, to increase their borrowing capacity and es­tablish speculative financial strategies during the financial cycle. The objective of this paper is to analyze the process of financial accumula­tion during the financial cycle and under a context of financialization. The inclusion of the endogenous money theory and the hierarchy in the financing structure allow us to identify the strategies used to accu­mulate financial resources in corporations. The analysis will be carried out using a dynamic econometric model with panel data applied to 26 BMV corporations during the period 2002-2014. In these corporations, the results show that the indebtedness behavior is cumulative and is led by the financial cycle.

Agency problem in management as a challenge for the corporation accounting system

Introduction. Corporate governance, as a basis for ensuring the efficient use of corporate resources, can be built on a range of models that have both advantages and disadvantages. Neo-institutional theory, in particular its separate component is agency theory. It is one of the theories that allows to substantiate the reasons for the decline in the quality of implemented corporate governance systems and to formulate ways to improve it, in particular, taking into account the role of accounting in ensuring the effectiveness of their functioning.Purpose. The aim of the article is to monitor essence and peculiarities of manifestation of agency problem in corporate governance and substantiation of place of accounting in its solution.Methods. The range of research methods related to the solution of the agent problem in the corporate governance system is applied. Dialectical method of cognition and the systematic approach to the interpretation of corporate governance, the monographic method for monitoring the positions of scientists in the sphere of solving the agent problem, the abstract and logical method for theoretical generalizations and formulation conclusions are used in the research.Results. The necessity of accounting development in solving the agency problem in corporate management is substantiated. The peculiarities of the development of neo-institutional theory as a theoretical basis of corporate governance are revealed. The necessity to study agency theory as a means of solving problems in corporate governance is substantiated. The essence of agency problem in corporate structures is revealed and the causes of its occurrence are identified. The theoretical principles of agency problem in corporate structures are highlighted. Cases of manifestation of agency problem in corporate structures are analyzed. The basic directions of improvement of the accounting system of the corporate structure with the purpose of minimizing consequences of occurrence of agency problem are highlighted.Discussion. It is advisable to focus on optimizing specific elements of the corporate accounting system in further research in order to avoid agency issues in the corporate governance system.

Organizational and economic mechanism of a business security as a guarantee of its sustainable development

In the process of the writing of this article, it was established that the organizational and economic mechanism of a business security ensuring involves the use of various techniques, methods, and tools. Their combination is necessary to ensure a reliable security system and stable sustainable development of a business activity as a whole. It has been established that enterprises of different sizes, types, volumes of activity possess unequal organizational and financial capabilities. In addition, various is the level of risk under which business entities are engaged. However, the conclusion is definite that the implementation of the organizational and economic mechanism for the enterprise security ensuring is vital in financial and economic aspects and can be organized in different business areas in different ways. It is proved that the security mechanism action from the point of view of financial and economic aspect implies enterprise adaptation to innovations under the following conditions: the innovations are to be maximally ready for implementation; the motivation to implement them is the need to protect the enterprise interests; the probability of obtaining a positive result in the implementation of innovations should be high. It has been established that significant factors in the process of increasing the level of a business security are the financial and economic measures, which aim to cover losses and to eliminate the causes of their occurrence, to recover (preserve) the liquidity and solvency, to reduce the amount of debt, to improve the working capital structure, etc. It is proved that further research in the field of planning and implementation of tactical measures for ensuring the financial and economic security of business is needed. It is aimed at the assessment and analysis of the level of a business security and its dynamics, which will allow to determine the effectiveness of the implemented measures; an assessment of the efficiency of utilization of the enterprise financial potential, which is the main basis for the implementation of measures to ensure the organizational and economic mechanism of a business security. Since the implementation of organizational and economic tools into the security field often requires the allocation of significant financial resources and opportunities (financial potential), the substantiation of scientific recommendations for assessing cost-effectiveness become significant. It was found that the organizational and economic mechanism of a business security ensuring would effectively use corporate resources, create preconditions for achieving business targets, timely identify and optimize all possible hazards, threats, and risks of the enterprise activity in the conditions of acute competition and changing environment. It is recommended to propose the following measures to enhance business security: development and implementation of security system (structure) in business processes of the enterprise activity; improvement and optimization of the existing enterprise security service; business security outsourcing services; services of the enterprise personnel security; provision of services to provide economic and internal security of the enterprise; providing necessary data and information for the business functioning security insurances; checking (auditing) of existing security services of enterprises for their effective work and reliability; services for the enterprise security employees training (advanced training); personnel selection of professionally trained staff for the enterprise security service.

The Stagnation-Financialization Paradox? Macro-Finance Agent-Based Model with Heterogeneous Expectations

Building a macro-finance agent-based model with credit and stock market, we investigate how the increasing role of speculative investors in the ownership structure affects managers’ planning horizons and R&D investment-buybacks decisions and, consequently, the resulting macro-economic dynamics in terms of growth, instability and crisis. Drawing on Keynes’s (1936) characterization of financial market and Minsky’s (1992) notion of money manager capitalism, the idea is that when the stock market is dominated by a speculative sentiment, managers tend to internalize the short-term view of speculative investors and accommodate their demand for high equity returns, by diverting corporate resources from R&D investment towards share buybacks in order to boost the stock price. Simulation results show that the increasing orientation towards shareholder value leads to a lower and less volatile growth in the real sec- tor, but a higher growth in the financial sector, giving rise to what we call a ‘stagnation-financialization paradox’. Yet, in order for this scenario to manifest, it is necessary that the configuration of ownership structure and the degree of market concentration are such that the corporate sector can generate and then distribute a sufficient amount of profits to support the stock price, despite a slowing real economy. Conversely, if the fraction of speculators is too large, the economic growth is so low that the fall in profits drags buybacks spending down, and so does the stock market.

Sarbanes-Oxley, agency conflicts and the marginal value of capital expenditure

PurposeThe purpose of this paper is to examine the relationship between the strength of corporate governance and the value of firm-level investment policies following the passage of the Sarbanes–Oxley (SOX) Act of 2002 and the associated changes to the listing requirements of major stock exchanges. In particular the authors seek to examine potential changes in the market’s assessed value of capital expenditures after the passage of the SOX Act relative to before.Design/methodology/approachThe authors employ a difference-in-difference methodology, centred on the year of the passage of the SOX Act to test for the role of governance on the marginal value of capital expenditures. Excess stock returns are calculated by subtracting Fama and French (1993) size and book-to-market portfolio value-weighted returns from the firms’ annual stock returns. Each firm is grouped into one of 25 size and book-to-market portfolios for each year in the sample, with size and the book-to-market ratio proxying for sensitivity to common risk factors in stock returns (Fama and French, 1993).FindingsThe authors find that markets responded to the change in governance brought about by the new regulation by altering the value of firm-level capital expenditures in a way that is generally consistent with predictions of agency theory. While the overall findings imply a reduction in agency conflicts post-SOX, there is some evidence that certain firms may have suffered excessive costs of compliance, while still others saw managers become excessively risk averse.Research limitations/implicationsThe study has implications related to the efficacy of legislation. Cross-sectional variation in the effect of SOX on the marginal value of capital expenditures suggests that one-size-fits-all legislative approach can have both expected as well as unintended consequences. The study limits its analysis to examining the impact of three significant provisions of the Act. While, the value implications of the Act are largely captured by the selected three, a more comprehensive study could expand on the set of provisions studies to obtain a more granular level impact.Practical implicationsThis research should add to the growing body of the literature examining the effect of SOX on firms’ real activities and decisions, as well as contribute to the debate on whether the Act was beneficial or costly to firms. With particular reference to the impact of capital expenditure on firm value, the research contributes to the sparse literature examining the contribution of capital expenditures to firm value and the role that agency conflicts play in this relationship. Additionally, this research adds to the growing body of the literature that examines the costs and benefits of the sweeping new regulations brought on by the adoption of SOX.Social implicationsGiven the importance of investment policy for economic productivity and growth, the insights provided by findings in this research should benefit lawmakers both within the USA as well as in countries where corporate misconduct and fraud is a concern.Originality/valueThis is the first study that examines the impact of the SOX Act on the way capital markets value firm-level investment in capital expenditures. Since use of corporate resources by managers is fraught with agency conflicts, the role of SOX in potentially alleviating this conflict as revealed by the tests in this study are very valuable.

Tax Avoidance, Firm Value, and Comparability

The purpose of this study is to examine whether financial reporting comparability affects the relation between tax avoidance and firm value. There are two conflicting views on the relation between tax avoidance and firm value. One is the traditional perspective that views tax avoidance as value-enhancing transfer of corporate resources from the government to the shareholders. The other is an agency theory perspective that views tax avoidance as an effective monitoring vehicle for managerial private interests, and thus the effect of tax avoidance on firm value varies depending on the size of non-tax costs of tax avoidance. Using 3,123 firm-year observations listed on Korea Exchange over 2006~2015, we find that the negative relationship between tax avoidance and firm value weakens as the level of comparability increases. Investors place a price discount on tax avoidance on average because the increase in non-tax costs due to tax avoidance is more severe than tax savings itself. However, as comparability increases, the decline in corporate value is partially alleviated due to a decrease in non-tax costs of tax avoidance. In short, financial reporting comparability has a positive impact on the relationship between tax avoidance and firm value. These results can be seen in both accounting-based and market-based comparability. This study contributes to the literature on the relationship between tax avoidance and firm value by focusing on the effect of comparability. As the comparability among firms enhances, it will increase market participants'' understanding of the economic consequences of tax avoidance. Further, this study provides evidence of the role of Peterson, Schmardebeck, and Wilks''s (2015) text-based accounting consistency beyond De Franco, Kothari, and Verdi''s (2011) market-based comparability in explaining the relationship between tax avoidance and firm value. measure, it has limitation in that it is highly influenced by stock returns.1) In contrast,

Hello, is anybody there? Corporate accessibility for outside shareholders as a signal of agency problems

In this paper, we develop a corporate accessibility measure for publicly listed firms in China based on their responses to outside market participants’ attempts to communicate with them (via telephone, e-mail, and online discussion forum), and examine whether the provision of corporate accessibility signals the incidence of agency problems. We find robust evidence that non-accessible firms are associated with more agency problems, manifested in greater tunneling of corporate resources through inter-corporate loans and related-party transactions, greater consumption of managerial slack, more earnings management, and a higher probability of committing corporate fraud. We also find that non-accessible firms are more likely to conduct value-destroying acquisitions than accessible firms. Furthermore, we find that non-accessible firms underperform accessible firms in both firm valuation and operating performance. Overall, our results suggest that a firm’s decision to provide corporate accessibility is a value-relevant signal for informing investors of the severity of agency problems in publicly listed firms.

Resource Redeployment and Corporate Strategy

Resource Redeployment and Corporate Strategy

Cyber Industry Networks as an environment of the Industry 4.0 implementation

The fourth industrial (r)evolution called Industry 4.0 transfers production to a different dimension of productivity, flexibility and also mobility. Enterprises using advanced technologies such as Mobile Technologies, Big Data Analytics, Cloud Computing, Internet of Things, etc. and using intelligent resources (e.g. mobile devices, mechatronic machines, means of transport) communicating with each other via the Internet in real time can produce customized products quickly and at low cost. On the one hand the Industry 4.0 concept creates great benefits for the client, and on the other hand raises challenges for industrial enterprises. There is a need to improve existing and create new business models that will combine the potential of many enterprises and together create innovative, very modern production networks based on mobile technologies and the Internet of Things. The article presents the results of research about the creation of innovative production networks operating in the environment of advanced technologies within the Industry 4.0. The aim of the research is to develop the concept of creating temporary Cyber Industry Networks based on e-business platforms that integrate dispersed enterprise resources through mobile devices and mobile software, creating a temporary network in the situation of emerging business opportunities. The main benefit of such networks is the ability to manufacture products through geographically dispersed corporate resources. The Cyber Industry Network allows business processes through the integration of mobile technologies in real time to be managed, and enables to reduce costs, improve flexibility, and as a result increase the competitiveness of manufacturing enterprises.

Innovative approaches to the history of exploitation and new development of the Russian Arctic

The placement of productive forces, endogenous economic growth and innovative search with creative destruction are the three sources of forming the new economic development theory of the Russian Arctic. From the Soviet school the tradition of linking the process of exploitation with the placement of productive forces was used. From the European regional science, the notion that every social process in the regions is subject to the general laws in the framework of the new theory of endogenous economic growth was used. From the North American frontier theory there was used the notion of an innovative search for opportunities for economic development in the newly exploited territory.The modern process of exploitation is characterized by spatial unevenness, center-peripherality, multiactor, the unprecedented role of resource corporations as agents of glocalization; the heterogeneity of time by the stages of the exploitation process (what was expressed significantly lesser in the planned administrative-command model of new exploitation) and the enormous role of project management (project financing, project legislation developed for a specific project of new resource exploitation). A feature of modern exploitation is that it implies the coexistence of two schemes - “from scratch” and on the foundation of the former infrastructural exploitationб which have different effects and regularities in territorial structures, exploitation cycles, etc.Innovative approaches to the history of exploitation and new development of the Russian Arctic on the example of modern exploitation projects that link the global conjuncture and local technological processes as well as a new nature of an experimental, educational and spatially localized type was considered.

Social Capital and Managers’ Use of Corporate Resources

This study investigates how social capital affects managers’ use of corporate resources. We find that for firms located in U.S. counties with a high level of social capital, (i) corporate cash holdings have higher marginal value, (ii) the contribution of capital expenditures to shareholder value is higher, and (iii) acquirers experience higher announcement-period abnormal stock returns. We further find that social capital decreases both over- and under-investment, and thus improves ex post corporate investment efficiency. Our evidence suggests that in communities with a high level of social capital, strong social norms and dense social networks constrain unethical corporate behavior, which induces more efficient use of corporate resources.

Owning Ethics: Corporate Logics, Silicon Valley, and the Institutionalization of Ethics

Ethics is arguably the hottest product in Silicon Valley’s1 hype cycle today, even as headlines decrying a lack of ethics in technology companies accumulate. After years of largely fruitless outside pressure to consider the consequences of digital technology products, the very recent past has seen a spike in the assignment of corporate resources in Silicon Valley to ethics, including hiring staff for roles we identify here as “ethics owners.” In corporate parlance, “owning” a portfolio or project means holding responsibility for it, often across multiple divisions or hierarchies within the organization. Typically, the “owner” of a project does not bear sole responsibility for it, but rather oversees integration of that project across the organization.

Corporate diversification, firm productivity and resource allocation decisions: The data envelopment analysis approach

Corporate diversification has been an important research topic in the field of business administration. Although it is regarded as an essential strategy for firms, its relationship with firm performance seems inconclusive in the literature. To fill this gap, our study uses data envelopment analysis (DEA) to develop models that help diversified firms more accurately calculate productivity at both the firm and its business segment levels, and then reallocate resources among business segments in order to achieve better firm overall performance. We empirically test the models using a sample of U.S. public firms for a period of 2012–2016. The results show that in comparison with two conventional DEA models, our model provides more useful productivity expression for diversified firms, and that the model-suggested resource reallocation is linked to better firm performance.