Firm Operating Research Articles

Computational Methods of Ruin Probability: Actuarial Comparison of De-Vylder and Tijim’s Models

The underwriting operation of insurance firms is to assume the risk of the insured in return of premium received. In order to shield itself against extreme losses and avoid the risk of insolvency, it becomes necessary to examine how the portfolio is expected to perform over a long-time horizon. The surplus process is connected with the excess of the premium received over claims outgo of the insurer’s portfolio to enable it predict the level at which the insurer could survive. When the surplus approaches a defined lower limit irrespective of the initial reserve, then the insurer is ruined. The probability of ruin apparently defines the volatility embedded in underwriting process as a useful tool of risk measurement in long range planning of premium rate. This paper is anchored on the following objectives: solve the adjustment co-efficient using the moment generating function, compute the De-Vylder’s ruin, compute the Tijim’s ruin approximation and then compare the two. Although it was verified that as the initial capital increases, the probability of ruin decreases under the two models, computational evidence from our results in tables 2 and 3 shows that the Tijim’s approximation to ruin probability is higher than the De-Vylder’s approximation at the same level of initial capital and safety loading. The implication is that the De-Vylder’s approximation to ruin probabilities is an improvement over Tijim’s ruin model and hence De-Vylder’s approximation is recommended for the insurer’s ruin assessment

The Shock of US-China trade war and the job Market: Downstream shrinkage and upstream employment

Using the 2018 US-China trade war as a quasi-natural experiment, we investigate how downstream shrinkage affects upstream employment. Utilizing a difference-in-differences (DID) approach, we reveal a negative effect of downstream shrinkage on upstream firm employment. Our mechanism analysis indicates that trade wars increase the tax burden, inventories, and accounts payable for downstream firms while reducing their employment. This shrinkage of downstream firms limits the scale of investment and operations for upstream firms through supply chain transmission, thereby decreasing employment of upstream firms. Moreover, our finding is more pronounced for specific types of firms, such as non-state-owned firms, firms operating across multiple industries. Our study provides an essential reference for firms in building resilient supply chain networks to better cope with potential negative shocks.

A Financial Analysis and Valuation of Home Depot

This study aims to research and analyze the firm’s valuation of Home Depot by exploring the company’s background and recent events, evaluating company performance, forecasting future development, and discovering the firm’s strategy and risk. The performance evaluation uses liquidity, solvency, and profitability to assess the firm operations and use of resources. The additional valuation adopts current and next year’s forecast financial data to measure the company’s EPS and revenue growth rate, P/E, PEG, and GP/A ratios. The results show that Home Depot has high liquidity, high profitability, and low solvency from its operational performance, as well as a high long-term valuation forecast in the home improvement retail industry. This consequence implies that Home Depot may have efficient business management and sound financial health by effectively meeting short-term obligations and using assets to generate revenue. Meanwhile, the company may also pose several risks, including an unstable economic environment, difficulty meeting long-term obligations, the continued decline in annual gross margins and ROIC, and potential stock overvaluation for investors.

Corporate Environmental Reporting: Do Firms Operating in Environmentally Sensitive Sectors Disclose Enough?

Corporate environmental disclosure has been increasing steadily as it is an essential factor for sustainable development. However, this factor seems to be insufficientl recognised within the Nigerian corporate world. The objective of this study is to assess the level of corporate sustainability disclosures in environmentally sensitive industries in Nigeria. This study is based on secondary data obtained from annual reports of firms listed on the Nigerian Exchange Group (NGX). Data used were collected from 45 sampled companies listed under 6 environmentally sensitive sectors for the 2021 financial year. Content analysis was applied to measure the level of environmental disclosures. The Environmental Disclosure Index (EDI) was prepared based on the Global Reporting Initiative (GRI) Standards. This research used independent sample t-test, analysis of variance, and the Kruskal-Wallis test as techniques of analysis. There were statistically significant differences in firms’ disclosure levels based on environmental certifications. The agriculture industry made the highest environmental disclosure, whereas the companies in the natural resources industry disclosed the least. It was found that companies revealed maximum information on their energy and environmental compliance initiatives, while there was inadequate information in other areas of environmental disclosure, such as supplier environmental assessment, effluents and wastes, and materials. The study provides implications for the strict adoption of a systematic reporting framework, especially for environmentally sensitive firms, while offering insights to guide policymakers, regulatory bodies, industry associations, and businesses in Nigeria to promote transparency and responsible environmental reporting.

DIFFERENCES IN FIRM FINANCIAL PERFORMANCE BEFORE AND DURING THE COVID-19: A STUDY ON FNB SECTOR

<p><strong>Background</strong>: Covid-19 has had a major impact on the global economy, including in Indonesia. One of the most notable impacts has been felt by food and beverage firm. Indonesia government gives more attention for this sector due to its importance for public needs. This research is used to obtain the difference ROA ratio before and during Covid -19 period using statistical approach. This approach was chosen for finding is there a significant differences firm performance between before and during Covid-19 period.</p><p><strong>Objective</strong>: This approach was chosen for finding is there a significant differences firm performance between before and during Covid -19 period and analyze the differences.</p><p><strong>Research Methodology</strong>: Paired test approach for this research uses non-parametric Wilcoxon Ranks test by measuring return on assets (ROA). The population in this research were all firm operating in food an beverages sector from 2018-2021 which were listed on Indonesia for four consecutive years by classifying these four years in to before (2018-2019) and during Covid-19 (2020-2021).</p><p><strong>Research Findings</strong>: This research gained significantly different firm performance between before and during Covid-19. Wilcoxon Rank test performing this research gained a significant value 0.001<0.05. This difference is because the firm's ROA level tends to decline and suffer losses, the effect of implementing Perlakuan Pembatasan Kegiatan Masyarakat (PPKM) which seeks to reduce transmission through community mobility.</p><p><strong>Originality/Novelty of Research</strong>: This research provides a difference in firm financial performance with extended period data over two years before (2018-2019) and two years during Covid-19 (2020-2021).</p>

THE EFFECT OF GOOD CORPORATE GOVERNANCE, LEVERAGE, AND COMPANY SIZE ON THE VALUE OF PROPERTY AND REAL ESTATE SECTOR COMPANIES

This study was meant to uncover the impact of good corporate governance, leverage, and company size on firms' value in the property and real estate sector listed on the Indonesia Stock Exchange for the period 2020-2022. The population taken into consideration in the research is the firm operating in the property and real estate sector listed on the IDX. The sample selection is by purposive sampling with certain criteria so that 81 data samples are obtained to be studied. The present investigation uses secondary data that came from financial records. The analysis of the data in this study was analyzed by utilizing SPSS for Windows software, which has given deep insight into the relationship between variables. According to the findings of the investigation, proper corporate governance represented by managers’ awareness is one of the factors that raise the worth of a business, in that increased stock ownership by management will lead to more motivation for performance improvement hence increasing the firm’s worth. If handled properly and effectively, leverage can enhance organizational value since increased leverage leads to increased company worth. On the other hand, when total assets are seen as being too large by investors who regard it as a bad signal therefore this may lead to decline in company value. Consequently, a negative relationship exist between company size and firm value.

Health and equity impacts of global consultancy firms

BackgroundConcern is growing over the power, influence, and threats to health and equity from the operations of large global consultancy firms. Collectively, these firms support a neoliberal policy environment promoting business interests ahead of public health. Global consultancy firms act as commercial determinants of health, an evolving area of research over recent years. However, this research mainly focuses on specific corporations or industry sectors, especially those which produce harmful products, including ultra-processed food, alcohol, and fossil fuels. It is therefore important to expand the focus to include large global consultancy firms and place a public health and equity lens over their operations.Main bodyGlobal consultancy firms have wide-ranging conflicts of interest. These arise from the ‘revolving door’ employment strategies between their own staff and those from government and regulatory bodies. These firms also advise governments on taxation and other matters while concurrently advising corporate clients on ways to minimise taxation. They advise fossil fuel corporations while also advising governments on climate and health policies. These firms undermine the capabilities of the public sector through the outsourcing of traditional public sector roles to these private interests. Consultancy firms foster private interests through their engagement with the higher education sector, and thereby weaken the tradition of transparent management of university affairs by accountable university councils. While private consultancies cannot be blamed for all the negative consequences for health and equity caused by the problems associated with globalisation and advanced capitalism, they have played a role in amplifying them.ConclusionAddressing the negative impacts of global consultancy firms will require strengthening the public sector, enforcing greater transparency, accountability, and minimising conflicts of interest. It will also demand critical thought, counter discourses, and activism to reframe the narratives supporting neo-liberal ideas of governance that are promoted in both government and business arenas.

A diverse, unbiased group decision-making framework for assessing drivers of the circular economy and resilience in an agri-food supply chain

The circular economy (CE) and supply chain resilience have received significant scientific attention in the recent supply chain literature. Incorporating CE practices and resilience practices into a supply chain enables companies to address their sustainability goals. This research explores the joint impact of implementing CE practices and resilience practices in an agri-food supply chain in Peru. The synergetic assessment of CE practices and resilience practices in a supply chain constitutes a multi-criteria decision-making challenge, requiring the involvement of subject-matter experts. Most studies have selected subject-matter experts based on the researchers’ convenience, which may lead to biased evaluations by some experts, resulting in unreliable study results. To mitigate potential bias, this research introduces a new framework named Diverse and Unbiased Group Decision-Making (DUGDM). Subsequently, the study examines the interaction between the drivers of CE and resilience using the Grey-DEMATEL method. The results indicate that drivers, such as the economic growth level, agricultural contamination, and collaborative operation of multiple firms are most influential in the successful integration of circular economy and resilience into a Peruvian agri-food supply chain system.

Modeling and Resolving Uncertainty in DIKWP Model

The paper examines the various uncertainties encountered in high-frequency trading (HFT) environments and delves into the multiple challenges faced by HFT firms in navigating the Dodd–Frank Wall Street Reform and Consumer Protection Act (referred to as the “Dodd–Frank Act”), particularly during the initial stages of its enactment. These challenges include the ambiguity surrounding the definition of HFT, the lack of clarity regarding regulatory requirements and boundaries, inconsistencies in enforcement resulting from deviations in understanding the content, and the absence of detailed descriptions of the Act’s provisions. These hurdles significantly impact not only the daily operations of HFT firms but also pose higher demands on their long-term strategic planning and risk management. Drawing upon the Data, Information, Knowledge, Wisdom, and Purpose (DIKWP) model, this study employs an innovative analytical framework. Through the comprehensive application of Cognitive Space, Concept Space, and Semantic Space, it provides a systematic methodology for identifying and analyzing the aforementioned issues. This approach not only aids firms in better comprehending and adhering to complex regulatory requirements but also enables them to explore new business opportunities and competitive advantages while ensuring compliance.

Data-Driven Mechanisms for a Newsvendor Problem: A Case Study

Reducing food waste is paramount for a sustainable future as its implications are important to achieve sustainable development goals set by the United Nations. In many industry groups, the public awareness of reducing food waste that may potentially emerge along firms’ operations has grown. In the era of Big Data, one of the most pursued exercises of this escalating attention on reducing food waste is to utilize artificial intelligence techniques to incorporate sustainability concerns into the decision framework. Many firms embrace machine learning methods to build effective decision mechanisms that help make efficient and sustainable decisions. In this study, we analyze the impact of blending machine learning approaches with demand forecasting and order quantity decisions for a firm operating in a setting where the market demand is random, and the demand structure is not observable to the firm. The performance of the methodology is evaluated on sunflower seed demand data taken from Tadım company. Our results suggest that the joint consideration of forecasting and ordering decisions using the quantile regression approach can lead the firm to decrease its operational cost by 6% on average.

Enabling older employees' well‐being through HR attributions: The moderating role of management context

AbstractFusing the extant literature on successful aging at work (SAW) and HR attributions, we examined the confluence of employee‐oriented internal HR attributions and unit‐level employee management context on burnout for employees across the age spectrum. Time‐lagged, multi‐level survey data were collected from a sample of 1762 blue‐collar employees from 178 work units at the manufacturing plants of a large firm operating in the Turkish energy industry, which is characterized as a high‐risk safety environment. A cross‐level moderated mediation model was tested using multi‐level structural equation modeling (MSEM). Results supported study hypotheses such that the negative association between age and burnout was mediated by employee‐oriented positive HR attributions, and this indirect association was moderated by unit‐level perceptions of the employee management context. Development‐oriented contexts that emphasized personal development/growth—indicated by the degree of emphasis on innovation strategy, safety training, and active unit safety leadership—weakened the negative indirect (i.e., buffering) effect of age on burnout via less positive HR attributions. Conversely, a maintenance‐oriented context that emphasized maintaining the status quo—indicated by passive unit safety leadership—strengthened said effect through more positive HR attributions. The theoretical and practical implications of these findings for fostering employee well‐being across the age spectrum are discussed.

Rookie directors and dividend payouts: Evidence from China

This study examines the nexus between rookie independent directors and corporate dividend payouts among Chinese A-share firms between 2006 and 2020. The empirical results imply that rookie independent directors lead to enhanced corporate dividend payouts. This positive association is less pronounced in the presence of strong governance factors such as foreign ownership, Big-4 auditors, and higher analyst coverage. We identify that firm operating performance can work as a channel in the nexus mentioned above. Lastly, in light of our findings, we recommend that policymakers and shareholders in China should give adequate attention to rookie independent directors since they guard the interests of shareholders by efficiently and effectively monitoring corporate management.

Special economic zone dynamics and firm performance: Evidence from an emerging economy

AbstractThe empirical literature on Special economic zones (SEZs) has shown that SEZs have become critical policy tools for advancing economic and firm performance, especially in developing economies where financial capital, human capital, technology and technical know‐how to drive these performances are in limited supply. While the importance and effects of SEZs cannot be overemphasised and are well documented, particularly in Asia, SEZs' operationalisation, structure and policy practice appear to vary, especially in Ghana and hence a need to examine SEZ effects on firm performance in Ghana. Thus, following the difference in the structure and practice of SEZs and its limited empirical evidence in African emerging economies, this present study employs analysis of variance, treatment estimation and regression models covering 328 firms between 2018 and 2021 to shed insights on how SEZ dynamics/features affect firm performance (measured with total factor productivity, labour productivity, profitability, revenue generation and value added) in Ghana. Our results suggest firms operating under SEZ dynamics have varying significant effects on firm performance. Thus, while firms registered as SEZ firms and operating in SEZ enclaves and firms registered as SEZ firms and operating outside SEZ enclaves have significant positive effects on the performance indicators of firms, firms that are not registered as SEZ firms and operating outside SEZ enclaves detracted firm performance. Clearly, firms that possess SEZ dynamics/features tend to promote performance of firms as denoted in the empirical literature and theoretical approaches to SEZ. Arguably, the tax holidays, cheaper tariffs and infrastructural benefits derived by SEZ registered firms boost their productivity, revenue and profit performance higher than non‐SEZ registered firms. These results suggest policymakers/government should reduce administrative bottlenecks of registering as SEZ firms and operating in SEZ enclaves to increase the number of SEZ firm operations to induce performance and create room for fiscal revenue.

Can operational efficiency in the Portuguese electricity sector be improved? Yes, but...

Efficiency has long been an issue of concern in the electricity sector. Most existing studies relate technical efficiency in electricity generation to policy factors while that in transmission and distribution is associated with environmental factors. Although firm operation is also a relevant perspective on this topic, its explicit impact upon technical efficiency has rarely been studied. In order to analyze the evolution and operational determinants of productive and cost efficiency in the Portuguese electricity sector (including generation from different sources, trade, transmission and distribution), this study estimates Stochastic Frontier models using firm-level panel data from 2006 to 2019, covering the period of liberalization of the Portuguese electricity market. The evidence indicates efficiency improvement through time, which is likely to slow down and needs to be consolidated. Results on the inefficiency determinants suggest that it is possible to improve productive technical efficiency by encouraging investment in fixed assets, higher average hourly wage and moderate average working hours. In addition, based on the results, we advocate deepening the integration of the Iberian electricity market and stimulating competition in the renewable energy sector.

Business strategy aggressiveness and firm innovation: evidence from listed companies in China

ABSTRACT Although business strategy aggressiveness plays a fundamental role in firm operations, it is unclear whether and how it affects firm innovation. Drawing on the risk perspective, this paper uses the panel data of A-share listed firms on the Shanghai and Shenzhen stock exchanges from 2008 to 2022 as research sample to explore the impact of business strategy aggressiveness on firm innovation and its boundary conditions. The results show an inverted U-shaped relationship between business strategy aggressiveness and firm innovation. In addition, older CEOs and higher-educated CEOs tend to be risk-averse, which will weaken the inverted U-shaped relationship. Male CEOs are less risk-averse, which will strengthen the inverted U-shaped relationship. The findings help analyse the mechanism of business strategy aggressiveness from the risk perspective, and provide new explanatory logic for the research on firm innovation.

Board Interlocks and Company Outcomes: A Managerial Accounting Case

Board interlocks are formed between two company boards when these companies share at least one common director, resulting in a reciprocal relationship from which both partners expect to benefit. Such conditions imply that directors in these interlocks will be less likely to provide strict monitoring oversight (Beckman, Haunschild, Phillips, 2004). This case examines the ethical and governance issues arising from board interlocks. The analysis examines further how board interlocks are less likely to provide strict monitoring functions on firm operations and financial reporting. Participants noted that since board interlocks imply that companies co-share members on their boards in a reciprocal relationship from which both partners expect to benefit, such conditions lead to less rigorous monitoring oversight. Participants also noted that board interlocks may create openings for operational practices with adverse firm outcomes, such as ineffective internal controls over financial reporting.

СТРАТЕГИЧЕСКИЙ АНАЛИЗ ПРЕДПРИЯТИЯ РАКЕТНО-КОСМИЧЕСКОЙ ПРОМЫШЛЕННОСТИ

Author researches the general context of a firm operating in Russian space industry. Components of a strategic analysis of such a firm have been highlighted and systemized. Macro and micro environment as well as industry analyses have been made.

“We are the Turkestan Rothschilds”: Jewish Firms and Trading Houses in the Turkestan General-Government

The entrepreneurial activity of the Jews flourished in the Turkestan region after the conquest of the territory of Kokand and part of the Bukhara khanates by the Russian Empire. Starting from the 1870s, Jews who had long lived on the territory of the Bukhara Emirate began to move to the Samarkand and Fergana valleys. The main actors in the economy of Turkestan were the “national” groups of merchants who controlled the entire economic life of the region. On the eve of the conquest of the Turkestan region by Russian troops, Bukharan Jews and the so-called “Sartian” merchants played a significant role in international and domestic trade in the Khanates. In fact, the entire international trade of the khanates was in the hands of intermediaries – Bukharan Jews. With the arrival of the Russians in the region, they stepped up their activities in the newly created Turkestan and tried to take all the threads of the economy into their own hands. The main emphasis is on the activities of Jewish firms and trading houses and their role in the Central Asian economy. For the first time, archival documents are introduced into academic circulation, covering the trading operations of Jewish firms and trading houses in Russian Turkestan. The article also attempts to prove that the adoption of restrictive laws did not affect the successful development of the substantial Bukharan-Jewish capital in the Turkestan region. Based on archival documents, the author demonstrates that the imperial authorities, institutions, and structures actively interacted with substantial Jewish capital in the imperial periphery.

Unpacking Digital Transformation: Identifying key enablers, transition stages and digital archetypes

This study aims to identify recurring Digital Transformation (DT) archetypes within firms and explore the capabilities and values associated with each archetype. Underpinned by the Resource-Based View (RBV) and Socio-Technical Systems (STS) theory, the study provides a framework explicating the enabling factors, their characteristics, interdependencies, operational capabilities, and resultant value creation within the context of digitalizing firm operations. Employing a deductive-inductive approach, an exhaustive literature review combined with an in-depth, multiple case study analysis of sixteen firms provides rich insights into the digital transformation journey. Findings reveal technology, data, human capital, processes, and organization structure as key enablers alongside their critical, complementary roles for transformation. Cross-case analysis identified instances of the DT framework, uncovering three archetypes: process efficiency, responsiveness, and strategic agility. Each archetype exhibits distinct socio-technical enabler configurations and improvements to business processes, resulting in unique operational capabilities and value generation. This research provides actionable guidance for managers in leveraging socio-technical enablers to achieve successful digital transformation. It underscores the need for tailored strategies, recognizing that a one-size-fits-all approach is inadequate. Managers must strategically select desired values and develop the necessary socio-technical system components, processes, and operational capabilities to attain them. OriginalityThis study develops digital archetypes of firm operations linking sociotechnical components, operational capabilities, and goals of firm operations. To the best of our knowledge, no prior research has developed such digital archetypes.

The Indirect Diversification Benefits of Investing in Japanese Firms: An Alternative Perspective

AbstractThis paper examines the role of firm-level multinationality in equity portfolio diversification for Japanese firms from 1998 to 2015. We use a unique multinationality dataset for constituents of the Nikkei 225 based on two measures of sales and subsidiaries. We employ an extended version of the traditional Capital Asset Pricing Model (CAPM) to analyse the exposure of firm returns to various geographical regions. There is evidence that firms are not influenced by the geographic regions where they report operations. The results also indicate that there are benefits from investing in Japanese multinationals but these benefits do not increase with increasing multinationality. A new category of firms is identified that may be beneficial to investors—firms that are influenced by a geographical region where they do not report sales or subsidiaries. This finding has far reaching implications for portfolio management. Investors must do more than analyse the international location of firm operations. They must analyse the geographical influences on firm returns. Existing studies fail to distinguish between these two criteria, assuming them to be the same. We find evidence to the contrary.