Improve Firm Performance Research Articles

CEO duality and firm performance - an endogenous issue

Whether dual CEO leadership structure is better for corporations is one of the most hotly debated issues in corporate finance. This paper uses a recent data to re-examine the relationship between CEO duality and firm performance, controlling for other important variables such as firm characteristics, ownership structure, CEO compensation, and agency costs. We find a recent trend of increased number of firms converting from dual to non-dual CEO structure. However, our empirical results do not show a significant relationship between CEO duality and firm performance nor improvement in firm performance after change in leadership structure. We find evidence of endogeneity, and we attribute the insignificance of the relationship between CEO duality and firm performance to the possibility that CEO duality is endogenously and optimally determined given firm characteristic and ownership structure.

Does it pay to pay more to new hires? The cost and effectiveness of new CEOs

Compensation and the post succession performance of 207 newly hired CEOs is examined to determine if there is any evidence that higher initial levels of compensation lead to superior firm performance. Using industry adjusted Tobin’s q as a measure of firm performance this study finds that there is no evidence that either higher initial total compensation levels or greater portions of equity based pay lead to superior firm performance. Increases in levels of compensation do anticipate improvements in firm performance one year in advance. Improved performance leads to increased levels of compensation for up to two subsequent years.

EFFECTS OF ORGANIZATIONAL LEARNING IN THIRD‐PARTY LOGISTICS

Logistics service providers operate in an intense competitive environment that requires continuous improvement in logistics service quality and firm performance. Key organizational resources may contribute toward the improvement in performance of logistics service providers. This paper investigates the effect of organizational learning within logistics service providers on client relationship orientation, logistics service quality and firm performance. The study proposes and examines an original concept in logistics research that contributes to theory in the area, provides the opportunity for further research and addresses how organizational resources can contribute to performance in logistics.

CEO Turnover, Forced Chairman Replacements and Firm Performance: Case of the Costa Rican Banking System

The paper examines the effectiveness of corporate governance mechanisms in the Costa Rican banking sector, an industry characterised by fully outside boards. Using a rich data set from the Costa Rican Central Bank for the period 1999-2004, we carry out a regression analysis using the GMM technique in order to address endogeneity and firm-specific effects. The main contribution of the paper indicates that corporate governance matters for improving performance. Empirical findings indicate that investors view forced Chairman departure followed by an outsider and the appointment of an outside CEO as positive events, since these events create the conditions for organisational change leading to significant improvements in firm performance. In addition, results suggest that forced replacement of board members is an abrupt process that creates costs that outweigh its benefits.

의류기업의 공급사슬관리 기반활동과 마케팅 역량이 업무성과에 미치는 영향

본 연구는 의류기업의 공급사슬 기반활동과 마케팅 역량, 업무성과의 구성차원을 파악하고, 업무성과 향상을 위한 공급사슬 기반활동과 마케팅 역량의 효율적인 활용방안을 모색해 보았다. 공급사슬구조의 중간단계에 위치하고 있어 전체 산업의 전후방에 미치는 효과가 크고, 모든 가치활동을 수행할 능력을 가진 대규모 의류유통기업을 대상으로, 한국패션브랜드연감, 한국의류산업협회 등에 등록된 회원사 리스트를 바탕으로 단순무작위 표집하였다. 설문지 조사방법을 통해 총 95부를 자료분석에 이용하였고, 공급사슬 기반활동, 마케팅 역량, 업무성과 수준을 6점 척도로 측정하였다. 변수의 차원 분류 및 타당도, 신뢰도를 파악하기 위해 요인분석과 신뢰도분석을 실시하였고 공급사슬 기반활동, 마케팅 역량이 업무성과에 미치는 영향을 알아보기 위해 다중회귀분석을 실시하였다. 공급사슬 기반활동은 구조적, 물류적, 기술적 요인으로 분류되었고, 마케팅 역량은 차별화, 비용우위, 경영우위 요인으로 분류되었고, 업무성과는 재무시장, 생산, 고객만족으로 분류되었다. 공급사슬 기반활동이 업무성과에 미치는 영향은 기술적 활동강화를 통해 재무시장, 생산, 고객만족성과를 얻을 수 있었고, 구조적 활동강화를 통해서는 생산성과를 극대화 할 수 있었다. 마케팅 역량이 업무성과에 미치는 영향은 차별화 역량강화를 통해 재무시장과 고객만족성과를 얻을 수 있었고, 비용우위 역량은 생산성과에, 경영우위 역량은 재무시장성과에 영향을 미치는 것으로 나타났다. The purpose of this research is to examine the level of SCM activity, marketing capability, and firm performance for apparel firms, and to investigate the effect of SCM activities and marketing capabilities for firm performance improvement. This study surveyed domestic apparel manufacturing brands that distribute products nationwide. The data was collected through questionnaires sent to managers or executives in large and middle manufacturing corporations among Korea's listed and registered corporations. The data collection has been carried out from November 10 until December 11, 2006. The questionnaires were transmitted by individual visit, fax, and mail. A total of 98 completed responses were returned, three incomplete responses were discarded. The results were as follows: First, SCM activity was classified into 3 dimensions: structural, logistical, and technological factor. Three dimensions of marketing capability were identified with differentiation, cost-leadership, and operational factor. Firm performance was classified into three dimensions: financial, productivity, and customer satisfaction factor. Second, result of analyzing effects of SCM activities for firm performance improvement, it was found that the improvement of technological activities affected acquirement of financial, productivity, and customer satisfaction performs. Structural activities affected factor of productivity performs. Third, result of analyzing effects of marketing capabilities for firm performance improvement, improvement of differentiation capabilities affected acquirement of financial, customer satisfaction performs. And the improvement of operational capability affected acquirement of financial performs and improvement of cost-leadership capability affected factor of productivity performs.

The relationships between supplier development, commitment, social capital accumulation and performance improvement

This study investigates the relationships between U.S. buying firms’ supplier development efforts, commitment, social capital accumulation with key suppliers, and buying firm performance. We identify linkages between supply chain management research on supplier development and organization theory research on social capital to consider how buying firm commitment to a long-term relationship, cognitive capital (goals and values), structural capital (information sharing, supplier evaluation, supplier development), and relational capital (length of relationship, buyer dependency, supplier dependency) are related to buying firm performance improvements (cost improvements, and quality, delivery, flexibility improvements). Analysis of buying firms from the U.S. automotive and electronics industries provides support for the theory that buyer commitment and social capital accumulation with key suppliers can improve buying company performance. Moreover, the findings suggest that the relationships of structural and relational capital vary depending on the type of performance improvement considered.

Does it Really Pay to Be Green? Determinants and Consequences of Proactive Environmental Strategies

We hypothesize that firms pursuing a proactive environmental strategy: (1) possess resources and capabilities not available to the other firms and (2) enjoy better financial performance subsequently. Using longitudinal data between 1990 and 2003 from the four most polluting industries in the U.S., we show that firms with superior environmental performance have more resources and enjoy better financial performance subsequently. In contrast, firms with poor relative environmental performance face resource constraints and their financial performance deteriorates further. Our results are consistent with the resource based view of the firm and indicate that although becoming green is associated with improvement in firm performance, such a strategy cannot be easily mimicked by all firms.

Does Manager Turnover Improve Firm Performance? New Evidence Using Information from Dutch Soccer, 1986-2004

This research examines the impact of manager turnover on firm performance using information from the Dutch soccer league in the period 1986-2004. The advantage of using sports data is that both manager characteristics and decisions and firm outcomes are directly observable. Both difference-in-difference and 2SLS estimates suggest no improvements in firm performance after manager turnover, whereas previous research based on publicly traded firm data has found positive but very small effects of manager turnover on firm performance. In addition, manager quality does not seem to matter in predicting turnover. These estimates are compared and contrasted with studies using publicly traded firm data.

The impact of organizational learning on relationship orientation, logistics service effectiveness and performance

The paper investigates the effects of organizational learning on inter-firm relationship orientation in the logistics service provider–client interaction. A conceptual model is developed and four research hypotheses are empirically examined using structural equation modelling. The data were collected via a survey of Hong Kong based logistics service providers. The results indicate that organisational learning has a positive influence on relationship orientation as well as on the improvement of logistics service effectiveness and firm performance. Theoretical, managerial and research implications are discussed.

Asset Sales, Operating Performance and Firm Strategy: An Empirical Analysis

This paper examines the operating performance of UK firms following a decision to sell off non-financial assets as part of a new or ongoing restructuring program. We report that asset sales normally follow a sustained period of poor operating performance, and tend to occur in well-diversified firms with high levels of financial leverage. In general, asset sales lead to a significant improvement in firm operating performance. Our findings suggest that, for the UK at least, managers sell assets in response to discipline from lender monitoring, product markets and markets for managerial labour.

Privatization in Mexico

Over the last 20 years, Mexico redefined the role of the state in its economy through an ambitious program to liberalize trade, promote efficiency and reduce the size and scope of the state-owned sector. In Mexico, privatization led to a significant improvement in firm performance, as profitability increased 24 percentage points and converged to levels similar to those of private firms. From this increase, at most 5 percent can be attributed to higher prices and 31 percent to transfers from workers, with the remaining 64 percent representing productivity gains. There is evidence that privatization provides other social benefits, as greater access to services, which usually follows privatization, leads to welfare gains for the poorest consumers that outweigh any increase in prices. Moreover, an often-overlooked aspect of privatization is its fiscal impact, whereby the proceeds from the sale are augmented by reduced subsidies and increased taxes and can help pay off debt or finance social spending. The Mexican privatization program can provide a valuable guide to privatization dos and don’ts: First, the privatization process must be carefully designed and run in a transparent way. Special requirements such as bans on foreign direct investment or cash-only payments lead to substantial price discounts for firms sold, while simplicity breeds competition and leads to higher prices. A transparent program can also help quell the tendency of politicians to favor their friends by tweaking the rules of the game. Second, restructuring firms prior to privatization is counterproductive in raising net sale prices and should be avoided. Governments spend substantial resources on politically motivated investment or efficiency programs that are not valued by bidders and which can rarely be justified on the social ground on which they are sold. Additionally, restructuring programs lengthen the privatization process considerably and lower prices for firms sold— in the case of Mexico, each month of delay reduced the sale price by 2. 2 percent. Finally, this paper argues that it is essential to carefully deregulate and re-regulate privatized firms to ensure that they behave appropriately as well as to provide a corporate governance framework to ensure firms are able to finance their operations without relying on the Government for help.

Efficient Labor and Capital Markets: Evidence from CEO Appointments

An examination of268 CEO appointments in USfirms indicates that, on average, appointment ofa better-quality CEO (a CEO who receives a pay premium ex-ante) is accompanied by an immediate positive revaluation of stock prices, and is followed by an improvement infirm performance. This evidence supports the notion ofjointly efficient and integrated labor and capital markets. The findings are particularly strong in non-regulated industries. The managerial labor market appears somewhat less efficient in internal successions, and the stock market appears less efficient or only relatively weakly integrated with the labor market in smallfirm appointments. This study examines the hypothesis that the managerial labor market and the capital market are jointly efficient and integrated with respect to Chief Executive Officer appointments. In an efficient labor market, the firm hires a new CEO from a slate of internal and external candidates, and offers a compensation contract commensurate with the person's quality and potential contribution to firm value. Further, if labor and capital markets are linked and jointly efficient, the stock market would respond positively to appointments of new CEOs who receive a pay premium in the labor market, indicating they are of better quality. Finding evidence of joint efficiency is a non-trivial task. First, there are doubts about the rationality or efficiency of the managerial labor market. This is because CEO compensation

Privatization and Management Incentives: Evidence from the United Kingdom

This article examines whether privatization affects management incentives and provides an estimate of the magnitude of the change. Using data from large firms in the United Kingdom, we find no relationship between compensation and financial performance in state‐owned firms, both before and after corporate governance reforms. In contrast, we find a strong sensitivity in privatized firms both immediately and in more mature privatized firms driven largely by stock options and shareholding. For more mature privatized firms, compensation and dismissal sensitivities are complementary with our estimates, suggesting a £443,000 increase in management returns for a one standard deviation improvement in firm performance. This estimated incentive intensity is higher than in established publicly traded firms. Our results support the theoretical focus on incentives in the dominant theories of state and private ownership.

Performance consequences of mandatory increases in executive stock ownership

Abstract We examine a sample of firms that adopt “target ownership plans”, under which managers are required to own a minimum amount of stock. We find that prior to plan adoption, such firms exhibit low managerial equity ownership and low stock price performance. Managerial equity ownership increases significantly in the two years following plan adoption. We also observe that excess accounting returns and stock returns are higher after the plan is adopted. Thus, for our sample of firms, the required increases in the level of managerial equity ownership result in improvements in firm performance.

Changes in Collective Bargaining in the U.K.

Perhaps no other country in recent years has witnessed greater change in its collective bargaining framework than the UK. This paper describes the dramatic developments and their consequences. Like Gaul, it is in three parts. The first part charts the six major pieces of legislation; conventionally described as anti-union that were enacted by successive Conservative administrations between 1980 and 1993, and links them to the subsequent decline in unionism and to improvements in firm performance and that of the macro economy. The second part examines the accession of and reviews its domestic reform agenda, today largely in place. That agenda comprises two general pieces of employment and employment relations law plus a new national minimum wage. At first (and second) blush these changes do not return Britain to the mid-1970s even if they do imply an increase in union membership and rising costs for business. For evidence of more profound change one has to turn to the third part of our story: the social policy agenda of the European Union. Almost immediately upon taking office, New Labour signed up to the social chapter. This means that a slew of new legislation seeking to regulate the employment relation (mostly decided by qualified majority) is now in immediate prospect. Europe is therefore set to impact the theory and practice of British industrial relations. We provide a brief review of recent and prospective legislation.

Chinese Business Groups: The Structure and Impact of Interfirm Relations during Economic Development. Lisa A. Keister

Previous articleNext article No AccessReviewsChinese Business Groups: The Structure and Impact of Interfirm Relations during Economic Development. Lisa A. Keister Tomoo MarukawaTomoo Marukawa Search for more articles by this author PDFPDF PLUS Add to favoritesDownload CitationTrack CitationsPermissionsReprints Share onFacebookTwitterLinkedInRedditEmail SectionsMoreDetailsFiguresReferencesCited by The China Journal Volume 47Jan., 2002 Published on behalf of the Australian Centre on China in the World at the Australian National University Article DOIhttps://doi.org/10.2307/3182095 Views: 6Total views on this site Citations: 2Citations are reported from Crossref Copyright 2002 The China JournalPDF download Crossref reports the following articles citing this article:Huanjun Yu, Hans Van Ees, Robert Lensink Does Group Affiliation Improve Firm Performance? The Case of Chinese State-Owned Firms, Journal of Development Studies 45, no.1010 (Nov 2009): 1615–1632.https://doi.org/10.1080/00220380902952365Huanjun Yu, Hans van Ees, Robert Lensink Does Group Affiliation Improve Firm Performance? The Case of Chinese State-Owned Firms, SSRN Electronic Journal (Jan 2008).https://doi.org/10.2139/ssrn.1091465

Financial impacts of enterprise resource planning implementations

Debate exists regarding the contribution of information technology to firm performance reflecting predictions of a positive, negative, or nonexistent relationship. Prior research has examined technology and firm performance in the aggregate, however, this study focuses on a specific technology — Enterprise Resource Planning (ERP) and its impact on firm performance. Economic and industrial organization theories provide the basis for the examination of how ERP systems affect firm coordination and transaction costs. ERP systems are expected to: (1) reduce costs by improving efficiencies through computerization; and (2) enhance decision-making by providing accurate and timely enterprise-wide information. These effects should be associated with improved firm performance. This research finds, after accounting for within-firm variances, no significant improvement associated with residual income or the ratio of selling, general, and administrative expenses in each of the 3 years following the implementation of the ERP system. However, a significant improvement in firm performance resulting from a decrease in the ration of cost of goods sold to revenues was found 3 years after the ERP system implementation (but not in the first or second year after implementation). Further, there was a significant reduction in the ratio of employees to revenues for each of the 3 years examined following the ERP implementation.

Advertising Agency Terminations and Reviews: Stock Returns and Firm Performance

A key element in generating firm cash flows is the marketing strategy developed by a firm's advertising agency. This study examines both the stock market reaction and selected firm performance measures associated with Wall Street Journal announcements of advertising agency terminations and accounts placed in review (potential terminations). Besides finding a negative investor response to each event type, we report a significant decline in stock market values before such announcements. An examination of time series accounting data reveals a deterioration in firm sales growth before and after the announcement. Declines also occur in both liquidity and operating income. Our evidence is mixed regarding whether industry trends are responsible for these changes in financial position. We do not find an improvement in firm performance following the agency termination or potential termination. Strategic implications and directions for future research are discussed.

Performance Consequences of Mandatory Increases in Executive Stock Ownership

We examine a sample of firms that adopt target ownership plans, under which managers are required to own a minimum amount of stock. We find that prior to plan adoption, such firms exhibit low managerial equity ownership and low stock price performance. Managerial equity ownership increases significantly in the two years following plan adoption. We also observe that excess accounting returns and stock returns are higher after the plan is adopted. Thus, for our sample of firms, the required increases in the level of managerial equity ownership result in improvements in firm performance.

Measuring Competitiveness and its Sources: The case of Mali's Manufacturing Sector

ABSTRACT Competitiveness is a hot debate between policy-makers and businessmen in the world, which has been subject to little rigorous economic analysis. We present a method that draws on economic theory to measure its sources at the firm and industry levels, using the case of Mali. In Mali, manufactures are competitive only on their local market where protection offsets a fundamental lack of comparative advantage. Regional integration and trade liberalization thus constitue major challenges and only the textile sector appears to be in a position to exploit the resulting export opportunities. However, the situation is not hopeless for the other industries, and areas for improvement in firm performance and policy reform are pointed out. Given Mali's low wages, its manufacturing potential lies in labour-intensive industries rather than in the capital- and material input-intensive activities that have predominated in the past.