Greek Firms Research Articles

Benefits for the Greek economy from resolving bad loans and zombie firms

We examine the type and magnitude of negative externalities stemming from “zombie” firms in the Greek economy, focusing on investment, employment and productivity. For this purpose, we use a panel dataset of Greek firms broken down by size and sector of economic activity for the period 2002-2021. A descriptive analysis reveals a high positive correlation in the trends between non-performing business loans and the number of zombie companies in the Greek economy over the last twenty years. Through quantitative analysis, significant direct and indirect effects emerge from the degree of density of zombie firms at the total economy and sectoral levels. First, healthy firms outperform zombie firms in terms of investment growth, employment growth and productivity levels. Second, a high concentration of capital in zombie firms negatively affects the rate of investment growth of healthy firms in specific sectors of economic activity. Third, a high concentration of capital in zombie firms forces healthy firms to increase their overall productivity in order to survive. Fourth, a high concentration of capital in zombie firms prevents the reallocation of capital to more productive investments across firms and sectors of activity. Finally, younger and larger companies generally perform better in terms of investment and employment growth, and productivity levels. Overall, a faster resolution of zombie firms and non-performing corporate loans, both on and off bank balance sheets, allows a more efficient allocation of resources and can boost investment, employment and growth rates in the Greek economy in the medium to long term.

Perceived Technological Innovativeness, Entrepreneurial Proactiveness, and Performance in Established Women-Led Companies

The contribution of women as corporate executives to their companies’ entrepreneurial outcomes is significant, as they can often enhance critical aspects of organizational innovativeness and proactiveness. This research investigated the effect of perceived technological innovativeness (PTI) on perceived entrepreneurial proactiveness (PEP) and, subsequently, the effect of PEP on the perceived company performance (PCP) of established firms with females in their top management teams. An examination of a judgmental sample of 83 female executives employed in Greek firms with over €10 million annual turnover showed that PTI had a significant and positive effect on PEP, and subsequently, PEP had a significant and positive effect on PCP. Apart from corroborating existing literature about the positive impact of entrepreneurial proactiveness on company performance, the study indicated that, according to the perceptions of female executives, entrepreneurial proactiveness acts as a bridge between technological innovativeness and company performance. Thus, it appeared that when a company is characterized by (or fosters the advancement of) technological innovativeness, it encourages creative thinking and focuses on opportunity identification and exploitation. This proactive approach to technological innovativeness enables the organization to improve its performance by staying ahead of its competitors, adapting to the dynamic environment, anticipating future market trends and exploiting opportunities.

The Impact of COVID-19 on Attitudes towards Growth Capacity of Tourism Firms: Evidence from Greece

The aim of this study was to examine the overall impact of the COVID-19 outbreak on the growth capacity of tourism firms in Greece during the first wave of the pandemic. To this end, questionnaires were distributed in 548 tourism enterprises operating throughout Greece within different sub sectors (hotels, travel agents, restaurants, etc.) of the domestic tourism industry. Structural equation modeling (SEM) was employed for analyzing data. The results indicated that COVID-19 negatively influenced the growth capacity of tourism firms, which in turn affected their overall performance. In particular, the negative impact on growth capacity is reflected in dimensions such as managing economic losses and meeting financial obligations. On the other hand, factors such as psychological pressure and fear had no direct impact on the growth capacity of Greek companies during the first wave of the pandemic. A slight association between psychological pressure and growth capacity was detected, which needs further scientific investigation to be supported. Overall, the study highlighted how health crises influence the dynamics and operation of firms operating in the tourism sector, offering useful insights for addressing similar turbulences in future. In this context, domestic tourism authorities should take measurers for improving the growth capacity of Greek firms in periods of turmoil to ensure sustainability in the sector.

The role of internal auditors as a tool to boost competitiveness of Greek firms

The role of small and medium-sized enterprises (SMEs) in the modern economy is crucial, and they have emerged as the most alluring and inventive system. To investigate and assess SMEs’ operations, internal auditing was formed as an independent assessment. Internal auditors’ planning and implementation of a quality program of internal audits can result in several advantages to SMEs. The current study investigates how internal auditors might help SMEs become more competitive. To fulfill the study’s requirements, 200 employees of Greek SMEs who were relevant to the internal audit function in their business environment were invited to answer a questionnaire. Internal auditors are viewed positively by most of the (100) employees who responded. Ranging from 34% to 53% in part B of the questionnaire (the role of internal auditors), they strongly agree with the positive role of internal auditors in Greek SMEs. Regarding the evaluation of internal auditors, most respondents gave a relatively negative opinion. From 31% to 34% respondents in part C of the questionnaire (evaluation of internal auditors) agree a little with the positive evaluation of internal auditors in Greek SMEs. Furthermore, the results showed that internal auditors must be professionals, comprehend the audited activities in-depth, offer ways to remedy problematic activities, and voice their thoughts objectively to succeed in the competitiveness of Greek SMEs.

Supply and demand for gender diversity in corporate leadership – the critical mass: evidence from Greece

PurposeThis study aims to examine whether a change in the regulatory requirement toward gender quota for corporate leadership significantly affects the demand and therefore, it increases the presence of women directors and women CEOs. Examining the supply-side, the study also examines whether the supply for women directors and women CEOs based on the presence of qualified women who currently hold upper, middle, or lower management positions is positively related with the presence of women directors and women CEOs. Furthermore, based on the critical mass hypothesis, this study examines whether the presence of women CEOs and critical mass for women directors bring significant impacts on firms' financial and environmental, social and corporate governance (ESG) performance during the subsequent period.Design/methodology/approachUsing the multivariate regression analysis, this study empirically examines the impact of the shift in the demand for women directors and CEOs from the enactment of the Greek Law 4403/2016 on gender quota for corporate leadership. This study also examines the impact of the supply for women in corporate leadership, measured by the percentage of women who hold upper, middle, or lower management positions, on the presence of women directors and CEOs. Then, this study examines the impact of women directors and women CEOs on firms' subsequent financial and ESG performance.FindingsBased on a sample of 71 publicly listed Greek firms and 20 Cyprus listed firms as a control group during 2006–2019, the study finds evidence that both the supply-side and the demand-side bring positive effects on greater women participation in corporate boards. However, there is no evidence that the supply and demand affect the presence of women CEOs. The presence of women CEOs has a positive effect on ESG through environmental and social pillars. The study finds evidence to support the critical mass hypothesis that firms with three or more women boards tend to have higher financial and ESG performance.Social implicationsUnderstanding the supply and demand for gender diversity in corporate leadership in countries that are considered as lagging is critical to foster the global objective to level the playing field for women to participate in corporate management leadership as important part the United Nations Sustainable Development Goal (UNSDG) 5.5. The positive impact of women directors on corporate financial and social performance can be achieved, especially when the critical mass is reached. This highlights the importance of greater gender representations in corporate boards and top executive level in order to make a meaningful social change.Originality/valueThis study demonstrates that the supply of women who currently hold corporate management positions has positive influence on the presence of women boards. This study also demonstrates that a national legislation that promotes gender diversity for corporate board has a positive impact on board gender diversity among Greek listed firms. This study also highlights the importance of integrating the critical mass perspective in considering the impact of supply and demand for women in corporate leadership on firms' financial and ESG performance.

The economic impact of broadband access for small firms

AbstractThis paper investigates the economic effects of improved broadband access at the firm level. Using a detailed micro data set from 2002 to 2017, we cover almost 20,000 small, medium and large Greek firms and test the relationship between their economic performance with the availability and use of broadband services at the postcode level. We trace the effect of increased access and speeds across industrial sectors and firm sizes. Our results highlight that increases in broadband speeds can improve the financial performance of adopting small firms (sales, profits and labour productivity) by 2% for every speed doubling beyond basic broadband access. Unlike other output metrics, small firms do not generate increasing shares of intangible capital through this adoption process. These effects, which remain strong across a range of robustness checks, suggest that the digital transition for small firms should focus on the causes of adoption (including training and skill development) and move beyond policies aimed at increased broadband availability alone.

Expanding strategic flexibility through organizational culture, industry 4.0 and market orientation

PurposeThe purpose of this study is to build a theory on management investigating the relationship between organizational culture and strategic flexibility in firms, and how this relationship is affected through industry 4.0 capabilities and the market orientation of firms.Design/methodology/approachAs a methodological approach, this paper uses a rich combination of literature review and exploratory interviews with managers and academics. Data were collected from 379 industrial managers; confirmatory factor analysis (CFA) and finally structural equation modeling (SEM) were performed to validate the data and examine the hypothesized relationships.FindingsThe results show that organizational culture drives firms to strategic flexibility, but the introduction of industry 4.0 capabilities and market orientation fully mediate this relationship, revealing their significance to strategic flexibility.Research limitations/implicationsAll the respondents of the study's dataset were from Greek firms; the role of national culture should be considered. Moreover, the comprehension of I4.0 is a quite recent concept that is still being formulated, this feature may modify the results of future studies.Practical implicationsManagers should allocate resources for the concurrent adoption of digital technologies capabilities and suitable market-oriented strategies in order for them to be key drivers for enhanced strategic flexibility.Originality/valueThe current state of knowledge of both theory and practise for critical organizational factors such as organizational culture, strategic flexibility, industry 4.0 capabilities and market orientation will be extended.

Factors Explaining ICT Investment Behavior of Firms During the 2008 Economic Crisis

ABSTRACT In this paper, we develop a set of research hypotheses concerning the effects of six groups of factors on firms’ behavior during the 2008 global economic crisis with respect to ICT investment: three groups of internal factors (overall firm resource endowment, ICT-related resource endowment, ICT-related capabilities) and three groups of factors (competition, liquidity problems, macroeconomic conditions concerning demand). These research hypotheses are tested using data from Greek firms for the economic crisis period 2009–2014.

R&D contribution in TFP growth of Greek industry: A limited information likelihood approach

ABSTRACTWe provide a novel panel model to decompose total factor productivity (TFP) growth in the Greek industry at the firm level while we tackle the contribution of R&D. We, therefore, opt for parametric methodology that provides statistical inference and would validate the results. Our modeling departs from prior strong assumptions such as error terms across firms being independent. In fact, we provide a novel limited information maximum likelihood (LIML) estimation method that adequately deals with the issue of endogeneity and model misspecification. We demonstrate that our model detects variability in terms of TFP growth components across industries and firms. Our results show that R&D would enhance TFP of Greek firms, albeit the crisis has had a detrimental impact. Financial ratios such as liquidity and solvency ratios also affect TFP as we demonstrate that both would enhance TFP. The solvency ratio is important as it provides an estimate of whether the firm can cope with debt. We also note variability across small versus medium and large firms and report that small firms are more productive and spend more of their revenues on R&D. In terms of policy, our evidence warrants higher R&D spending to enhance TFP growth, though R&D funding is a concern.

Statutory Auditors and Tax Compliance: Evidence from a Quasi-Natural Experiment

The research problem We evaluated the effectiveness of statutory auditors as a tax inspection mechanism and examine a regulation change that occurred in Greece. In 2011, the Greek State passed a directive requiring that statutory auditors audit and certify the tax compliance of medium and large firms, and issue a Tax Compliance Report (TCR). Motivation The evidence on the auditors’ effect on tax avoidance is quite limited. Our research setting constitutes a unique quasi-natural experiment to evaluate auditors’ effectiveness and firms’ tax avoidance behavior under a new tax compliance regime. The test hypothesis We tested the following hypothesis: Tax avoidance was significantly reduced in the post-TCR period for firms subject to TCR. Target population Our target population consisted of firms that are subject to audits from statutory auditors for tax compliance purposes. Adopted methodology We employed a difference-in-differences design with Greek firms subject to TCR as the treated group and the rest of the Greek firms as the control group. We examined potential differences from the TCR enforcement for the two groups. Analysis Our main analysis presents results for the treated and the control groups regarding their non-conforming and conforming tax avoidance behavior in the pre- and the post-TCR period. Non-conforming refers to activities that reduce taxable income but leave book income unaffected, whereas conforming tax avoidance refers to activities that reduce both taxable income and book income. Additional analysis evaluates the effect of Big 4 audit firms, increased audit effort, and assignment of the TCR to the financial statements’ auditor. Findings Our empirical results suggest that non-conforming tax avoidance for treated firms (i.e., firms subject to tax audits) significantly decreased in the post-TCR period compared with that of the control sample (i.e., firms not subject to tax audits). Conversely, conforming tax avoidance increased. This evidence suggests that treated firms switched from non-conforming to conforming tax avoidance activities. Our results hold irrespective of the size of the audit firm that performed the TCR program, but we find that increased audit effort to accomplish the TCR program and the assignment of the TCR to the auditor who also audited the financial statements had an incremental impact on the reduction of non-conforming tax avoidance.

The impact of debt, taxation and financial crisis on earnings management: the case of Greece

PurposeThe purpose of this study is to empirically investigate the Greek firms' earnings management policies compared with debt, taxation and the financial crisis.Design/methodology/approachIn this paper, the authors show that existed measures of real earnings management, whether corrected for performance or not, rely crucially on strong assumptions. The authors provide a novel modelling that permits panel structure so as to correct for heterogeneity across firms while permitting to determine endogenously the number of underlying firm-groups in the data generating process.FindingsThe empirical results indicate that Greek firms are likely to reduce earnings manipulation activities when they face liquidity risk. Taxation and financial crisis have a negative and positive effect on earnings management, respectively.Originality/valueThe effect of debt, taxation and financial crisis on earnings management has never been investigated in Greece. The empirical results offer valuable information to shareholders and investors as they can understand how some main factors, such as debt, taxation and financial crisis, influence firm's accounting practices.

Alternative Methods for Assessing Financial Motives for Asset Revaluation Using IAS: Empirical Results from Greek Firms During the Financial Crisis

Alternative Methods for Assessing Financial Motives for Asset Revaluation Using IAS: Empirical Results from Greek Firms During the Financial Crisis

Digital responses of SMEs to the COVID-19 crisis

PurposeThis paper aims at exploring the factors that are important for the digital development of small and medium-sized enterprises (SMEs) in response to the coronavirus disease 2019 (COVID-19) crisis compared to large-sized enterprises.Design/methodology/approachUsing data from a survey in Greek firms during the pandemic, econometric models are estimated to identify factors that are related to the expansion of digital marketing and e-commerce practices of SMEs and large-sized enterprises based on the technology–organization–environment framework.FindingsThe results suggest that while further investments in information and communication technology (ICT) infrastructure are important for the digital development of SMEs during the COVID-19 crisis, it is the innovative activities that advance the digitalization of large-sized enterprises. Also, SMEs, which implement flexible human resource (HR) practices (such as remote work) and face delays in the supply chain due to the pandemic, appear to have increased probability of expanding their digital marketing and e-commerce. On the contrary, HR practices do not seem to matter for large firms, while new regulations appear to discourage their digital development during the COVID-19 crisis.Originality/valueThis is the first study which empirically explores the digital reactions of SMEs compared to those of large-sized enterprises in a pandemic crisis context. It advances the limited knowledge on the potentially different responses of SMEs and large-sized enterprises to major external shocks with respect to their digital marketing and e-commerce expansion.

Skills, management practices and technology adoption in Greek manufacturing firms

The Greek economy has so far failed to shift its production structure towards more complex, high value-added activities incorporating knowledge-intensive practices. Greece lacks a systemic “activating knowledge” dimension. Given the country’s low performance in innovation and knowledge diffusion relative to EU peers, we focus on two specific problem areas of Greek industry: skills and management practices. Both areas are key requirements to achieve robust productivity growth, in which Greece has been shown to be chronically lagging behind its peers. First, we provide an in-depth look at skills indicators to identify the scope for action, particularly in addressing mismatch. A novel result is that, by utilising mismatch indicators aggregated from microdata sourced from the recent OECD Survey of Adult Skills that was conducted as part of the Programme for the International Assessment of Adult Competencies (PIAAC), we show that Greece has the highest overskilling for professional occupations. We also corroborate previous findings about the negative relationship between skills mismatch and firm productivity. Second, we use firm-level data from the World Management Survey to give a review of management practices in Greek industry and explore the quality of these practices and their association with productivity. Finally, we use information from a novel survey on entrepreneurship, technological developments and regulatory change, and examine structural characteristics of innovation activity and technology adoption by Greek firms, with a focus on the role of size, ownership structure, global value chain participation and human resource practices. Our empirical findings provide valuable input into concrete policy proposals to increase productivity in Greek manufacturing.

Earnings management during financial crisis: The case of Greece

Research Question: Did Greek listed firms engage in earnings management practices during the initial phase of the 2010's economic crisis? Motivation: Impact of structural attributes of a country along with firms' characteristics on economic entities' accounting policy decisions. Idea: Firms' accounting policy decisions are conditioned upon their characteristics and the conditions prevailing in the broader economic and business environment. We investigate whether these factors affect firms' propensity to engage in earnings management within a context of financial distress. Data: The sample consists of all Greek listed firms which were active for the period 2009-2014. Tools: We employ the Kothari et al (2005) model to estimate discretional accruals of Greek listed firms. Findings: The family-controlled Greek firms that are audited by Big-4 Auditing firms are likely to use discretionary accruals in order to affect accounting figures. This finding may be attributable to the family control of the firms, along with the weak legal enforcement and investor protection that prevail in Greece. In addition, discretionary accruals show a positive relation with firm’s ability to cover its current liabilities using current assets while they are negatively associated with cash-flow from operations. Contribution: This study contributes to the existing literature on earnings management. Our research has been conducted in the initial phase of financial crisis and within an economic environment which is characterized by family-controlled firms, dependency on debt financing and low investor and creditor protection.

The influence of leadership on strategic flexibility and business performance: the mediating role of talent management

PurposeThe aim of this paper is to determine whether leadership affects strategic flexibility and business performance taking into consideration the mediating role of talent management in these relationships.Design/methodology/approachThe proposed framework is tested by confirmatory factor analysis (CFA) and finally structural equation modeling (SEM), using the survey data from 462 Greek firms. The mediation effect of talent management was tested by the Sobel test.FindingsThe results show that leadership drives firms to strategic flexibility and business performance, but the introduction of talent management fully mediates these relationships. Strategic flexibility also affects business performance positively.Research limitations/implicationsThis study explores a formal style of leadership; many leadership styles remain unexplored. The field of talent management is in urgent need of more empirical research to explain its importance and how talent management is handled in the 21st-century.Practical implicationsThis study proves that managers should invest more in talent management; outstanding talent can be leveraged to implement the best operational practices while managers' motivation for talent management contributes to a deeper anchoring of strategic flexibility and performance efforts in firms.Originality/valueThe current state of knowledge of both theory and practice for critical organizational factors such as strategic flexibility and talent management will be extended.

Foreign Direct Investment and the Role of Institutional Framework: Evidence from Greek Outward FDI

The present study analyses MNEs’ internationalization’s strategic motivation within different institutional and regulatory contexts through a study of Greek firms. Based on home country deficiencies, the study conceptualizes different internationalization motives in different regions, particularly CEECs and Western European countries. We use a unique database consisting of macro- and micro-level data covering the entire population of greenfield investments made from 2003 to 2019. Our analysis is based on Dunning and Lundan’s eclectic paradigm. Empirical evidence resulting from a panel data analysis and the fixed effects method corroborates our conceptualization of dualism on FDI motivations among the regions. In addition, a significant role of investment freedom is identified, which, depending on the region, either reinforces or moderates the importance of firm efficiency.

Reforming the corporate governance in Greece: After the introduction of Law 4706/2020

Good corporate governance undoubtedly is a key to sustainable private sector development and a basic element for healthy firms (Kostyuk, Braendle, & Capizzi, 2018). However, in Greece, the relevant legal framework was until recently anachronistic, whilst recent scandals in the Greek capital market revealed the regulatory gaps in the internal and external control mechanisms applied by listed companies and exacerbated the need for a significant reform in the corporate governance legal framework in force. The purpose of this article is to enrich the literature in this area and to present an overview of the state of corporate governance in Greece and particularly the innovations introduced by the new Law 4706/2020 on corporate governance as well as the good practices recommended by the recently adopted new code. By comparing the previous and the new corporate governance laws, as well as the existing literature in the field, our paper concludes that the adaptation to the general principles of corporate governance is quite difficult for most of the traditional Greek firms which are based on family ties. Furthermore, the financial crisis, and the current COVID-19 pandemic, created a highly unfavourable and challenging economic environment for Greek firms

The role of a well-established food retail firm in Greek economy in the era of economic crisis

The economic crisis in Greece has provoked a number of financial problems in Greek firms in all sectors. High tax rates, low payments and in sequence low demand for goods and services are a few of the problems confronted by firms and consumers. Within the framework of the Memorandum, a number of different corporate efforts have become a cornerstone of economic recovery. An effective and critical factor for venture success has validated the networking along with entrepreneurial competencies (Kyrgidou Mylonas, Petridou, & Vacharoglou, 2021). The present work makes an effort with the assistance of visual tools and descriptive statistics to unveil the role of a retail market firm in the developing economy of Greece. Using an analytical presentation of financial and innovation initiatives in the retail market store chain of Masoutis and based on our findings we confirm a positive contribution to the country’s economic growth in a disproportionate rate to the country’s economic performance. The specific effect is attributed to the growth rates in employment, productivity and sales. Our findings are in line with Kyrgidou et al. (2021) since we implicitly confirm that well-organized initiatives concerning networking coupled with good marketing practices provide opportunities to firms for expansion, and efforts of this type may add value to the sector and the total economy opening the way to recovery from the economic crisis.

Borrower characteristics and loan performance: evidence from micro and small Greek firms

Borrower characteristics and loan performance: evidence from micro and small Greek firms