Member Firms Research Articles

The Benefits of Access: Evidence from Private Meetings with Portfolio Firms

We analyze the monitoring efforts of a large active asset manager that involve high-level private meetings with portfolio firms that are unobservable to outsiders. Our analysis reveals the inner workings of the asset management organization based on detailed records of contacts with executives and board members of portfolio firms, internal analyst recommendations, voting decisions, and daily fund-level stock holdings. Private meetings generate pronounced trading patterns, with fund managers trading on and around meeting days and votes. Our results show that engagement with target firms generates insights and information advantages, increases trading and is associated with significant abnormal returns.

Factors Affecting CPA Firms Audit reports Quality

The purpose of this study is to examine factors affecting quality of audit reports issued by IACPA audit firm members. The study's sample consists of 192 IACPA audit firm members and covers 2013-2017 period. In this study, seven postulates are examined and relationships between number of partners, number of professional staff, number of CPA employees, number of contracts, annual income, age of the firm and disciplinary sanctions and the quality of audit reports were studied. Results of examination of postulates showed positive and meaningful relationship between audit quality variables including number of partners, number of professional staff, number of CPA employees, number of contracts, age of the firm and disciplinary sanctions, and a negative meaningful relationship between annual income variable and the quality of audit reports exist.

The role of top-level supportive leadership: A multilevel, trickle-down, moderating effects test in Chinese hospitality and tourism firms

This study explores and tests the role of top-level supportive leadership on both individual and group members in hospitality and tourism firms, examining the trickle-down model of top-level supportive leadership through not only middle-level supportive leadership, but group cohesion and also moderation of top-level supportive leadership on both middle-level supportive leadership–service quality and group cohesion–service quality relationships, which extend and enrich the trickle-down model of leadership. Hierarchical linear modeling was used to assess a sample of 2009 employee–supervisor pairs across 112 departments in 35 Chinese hospitality and tourism firms. The results suggest that top-level supportive leadership relates positively to employees’ service quality, which trickles down through middle-level supportive leadership, excepting group cohesion; top-level supportive leadership strengthens the positive effect of middle-level supportive leadership on employee service quality, triggering positive effects of group cohesion.

IPR policies and determinants of membership in Standard Setting Organizations: a social network analysis

Whereas technical standards and Standard Setting Organizations (SSOs) are omnipresent and essential to mass production and communications, relatively little is formally known about the propensity of firms’ decisions to belong to certain SSOs. An understanding of such propensities can explain why some firms join SSOs (and others do not) and have implications for the regulation of SSOs. This paper uses a social network analysis technique to categorize/place firms in SSO communities and then empirically analyzes their propensities to belong to SSOs. We concentrate our study on standard setting organizations’ features and their intellectual property rights (IPR) policies such as licensing rules, disclosure requirements, as well as the features of the decision process of standards. Using data on more than 1060 member firms as participants in 28 SSOs, we are able to uniquely graph the membership of firms in SSOs by highlighting some important characteristics through community detection. The results provide some novel insights into why firms might choose certain SSO communities over others.

Collaborating with Competitors: How Do Small Firm Accounting Associations and Networks Successfully Manage Coopetitive Tensions?*

ABSTRACTThe “coopetition” paradox exists when two or more organizations are simultaneously involved in cooperative and competitive interactions. In the accounting industry, small firms encounter coopetition when they align themselves with other independent firms to form accounting associations and networks (AANs). AANs are a type of interorganizational relationship (IOR) that provide opportunities for member firms to collaborate by sharing important resources such as expertise, best practices, and manpower. However, member firms also compete in the marketplace for clients and human capital, which incentivizes uncooperative and opportunistic behavior. If managed inadequately, coopetitive tensions can significantly hamper AAN benefits and may lead to IOR failure. Given the considerable longevity of AANs, we interview 42 high‐level accounting professionals to understand AANs' apparent successful management of these tensions. Leveraging coopetition and IOR theory, our analysis suggests that transactional mechanisms (contractual agreements, organizational structure, selection/monitoring processes) and relational mechanisms (trust, social ties, reciprocity) play key roles in encouraging healthy cooperation and competition among member firms. One of our main conclusions is that these mechanisms contribute to AAN success because they are leveraged comprehensively across each IOR life cycle phase, and they are mutually reinforcing, with transactional mechanisms providing the foundation to inspire confidence and encourage the development of relational mechanisms. Our research enriches existing accounting and coopetition literature, provides a new perspective for AANs, and responds to calls to understand key factors of IOR success.

Are non-blood related “family” members treated differently? Determinants of bifurcation bias among family members in the family firm

PurposePossible asymmetric treatment among family members has long been neglected in the field of family firm research. To fill this gap, the purpose of this study is to shed light on the heterogeneity of treatment of family members in family firms by proposing factors that influence the likelihood of bifurcation bias among “family” members.Design/methodology/approachDrawing upon social identity theory and the concept of bifurcation bias, the authors theorize that family members working in family firms are not a homogenous entity, but rather a heterogeneous entity contingent on their status and/or position in the family. To provide a comprehensive understanding of heterogeneous treatment among family members, both individual factors and societal factors should be considered.FindingsBlood relatedness of family members is suggested as an important determinant of the likelihood of bifurcation bias among family members. It is also proposed that the impact of blood relatedness is likely influenced by both individual factors (familial proximity and familial tenure) and a societal factor (collectivism).Originality/valueTheorizing takes a step forward to advance the understanding of interpersonal dynamics in family firms. In particular, this article expands the research boundaries of family business research by taking into account that not all “family” members are treated preferentially. Moreover, this article deepens our understanding of the nature and status of non-blood related family members by unveiling the influence of both individual and societal factors. This article also provides a theoretical foundation for human resource management (HRM) research in family businesses by addressing bifurcation bias among family members.

Office Design, Neoliberal Governmentality and Professional Service Firms

This paper examines how neoliberal governmentality is conveyed and promoted through office design technologies within professional service firms (PSFs). Our data, constituted through interviews with firm representatives and site visits, points to the pursuit by PSF management of a core principle of marketization, which is promoted through a range of spatial technologies inscribed in the office space to sustain the development of subjectivities reflective of Homo economicus. Specifically, we found that fluid open-plan layouts and adaptable workplaces constitute technologies of government with great ambitions, aiming to cultivate a paradoxical climate of cooperative competitiveness within the firm, a constant endeavor toward efficiency, and a transformation of firm members into neoliberal self-entrepreneurs. One of the chief ideas that motivates office designers is to provide PSF members with the freedom to work how, where, and when they want in order to meet their firm’s imperatives of effectiveness and client satisfaction. Ultimately, our study shows that office design initiatives within PSFs constitute tools of neoliberal governmentality that aim to govern subtly the emancipation of firm members as accomplished self-entrepreneurs.

Data sharing, international property practices and the GDPR: communicating with your consumers

PurposeThe purpose of this paper is to examine the requirements of the General Data Protection Regulation (“GDPR”) in order to: identify its requirements for the Australian and New Zealand based members of multi-national property firms (“MNPF”); and understand how those firms are currently engaging with customers regarding the obligations the GDPR imposes.Design/methodology/approachThe research was undertaken by means of doctrinal legal research that engaged with statutory law, related policy documents, accessible private firm documents and website materials, and academic and other related writings. The authors considered these in the context of the GDPR's requirements, and how relevant obligations were communicated to the public on the MNPF Australian and New Zealand members' websites.FindingsThe research confirms the available literature's observations of the GDPR's broad reach and the firms to which it applies. The difficulties experienced in locating relevant information highlights the need for a change to firm processes to ensure that any communication obligations are met. The cases engaged with also serve to highlight the need to ensure that the actual practice is consistent with required GDPR processes.Research limitations/implicationsThe research faced three limitations. First: there was a limited number of relevant Australian and New Zealand based property related firms available to consider: not all property related firms were members of a MNPF or had business partners or customers/clients in the European Union or European Economic Area. Second: one of the relevant firms had already identified it was withdrawing from the Australian market. Third: there was a lack of public access to all materials as, while privacy policies as required by domestic laws were readily accessible, access was not readily available to GDPR related or required information or documents.Originality/valueThe research adds to the academic literature in this emerging area of international legal obligation.

Managing Corporate Sustainability and Responsibility Efficiently: A Review of Existing Literature on Business Groups and Networks

Given the global relevance of business groups (BG) and networks as efficient organizational forms for corporate sustainability and responsibility systems (CSR), and seeing that management control systems (MCS) play a pivotal role in transmitting authority to CSR and formalizing a sustainability organizational culture, this paper aims to review the available literature in order to investigate efficient adoptions of CSR by BGs or networks. Both organizational forms have positive effects on CSR development, on three levels: (a) setting industry standards (macro—external environment); (b) stimulating sustainability-oriented innovations (mezzo—member firms); (c) reputational gains, CSR expenses mitigation, and optimization of organizational capabilities (micro—individual SMEs). The studies on SMEs were useful in identifying current sustainability practices: both partial (social, environmental) and complete sustainability systems were susceptible to being integrated with management accounting, making them an almost implicit tool for proper CSR. Finally, by gathering the empirical literature on sustainability transitions of networks and groups, it was possible to trace a comprehensive introductory plan that operators could resort to for initial guidance. The six steps of this process are (1) project initiation, (2) preliminary actions, (3) change management decision, (4) firm-level activities, (5) auditing, (6) transition to territorial social responsibility (optional).

Attributes of Internal Audit and Prevention, Detection and Assessment of Fraud in Pakistan

With it being considered as avalue-added activity,theInternal Auditfunction (IAF)of a firm is one of the most important functionsin anorganization. During the last decade,the roleof this particular functionhas become very useful,especially in creating awareness regarding the Prevention, Detection and Assessment (PD&A) of fraudulent activities. In many countries, carrying out an Internal Audit isa legal compulsion for public companies, in orderto establish an effective,and efficient IAF.This study aims to explore the relationship between the various attributes of IAF(effectiveness, independence, staff training, qualification and experience),and the PD&A of fraudulent activitiesin Pakistan. For this purpose, the convenientsampling technique,for data collection,is used and the questionnaires are collected fromtherespondents belonging to Pakistan. The questionnaire has been prepared in the form of a Likert scale. Respondents for this study include (1) staff members working in the Internal Audit (IA),finance and accounting departments of the companies listed on the Pakistan Stock Exchange(PSX), and(2) staff members of firms that are engaged in external statutory audit in Pakistan. Descriptive statistics show the details regarding the demographic questions, IAFand PD&A ofthefraudulent activitiesthat take place in the companies. Moreover, in order to get to the effective and relevant results, the regression analysis is performed in order to find out if there exists any relationship between these variables. The results show that all five independent variables positively affect the PD&A of fraudulent activities. However, three of the independent variables (IAE, IAT, and IAQ) are statistically significant,whereas twoof thevariables taken into account (IAI, and IAE) are statistically insignificant. It is recommended thattheIAFshould be more independent,and effectiveso asto attainthe required results. Moreover, firms should also focus on the qualificationsand proper training of the staff that are responsible forexecutingthe IAF.

Coopetition for innovation in R&D consortia: Moderating roles of size disparity and formal interaction

Increasingly, firms are forming alliances to engage in cooperative innovation activities with their competitors. Participating firms in an R&D consortium can not only obtain the general benefits from cooperation, but also further promote communication and mutual learning due to the common knowledge base with their competitors in the consortium. However, R&D consortium as a typical cooperative innovation alliance has downsides too - competition in a cooperative consortium provides member firms with not only benefits, but also challenges. The opportunistic nature of competition poses a dilemma for member firms when they decide how much effort should be committed to cooperative R&D activities. This study aims to investigate the benefits and costs of competition for firm innovation in cooperative R&D consortia. The study will also identify the boundary conditions to amplify the advantages of competition in terms of the network properties of consortia. The study employs data from 649 firms in 50 Japanese R&D consortia to analyze the curvilinear relationship between the intensity of competition and firm innovation in a cooperative consortium. It was found that a focal firm with a moderate level of competition will have better innovation performance compared to those with either a low or high level of competition. Moreover, it investigates the moderating roles of the firms’ size disparity of R&D consortia and the consortium-organized interaction. The results indicate that the R&D consortium with a low size disparity amplifies the linear effect of the competition on cooperative innovation, which can help the focal firm achieve more gains from cooperative R&D. The consortium-organized interaction strengthens the curvilinear effect of the competition intensity on innovation. This study, using resource dependence theory and social network lenses, extends our understanding of the role of coopetition in firm innovation performance by filling the gap in when and to what extent the intensity of competition matters in multiparty cooperative R&D consortia. It also provides new evidence on the boundary conditions of R&D consortia managing the tension.

How Open-System Intermediaries Stimulate Bridging Among Firms: Evidence from Science Parks in Europe

Increasing attention has been devoted to open-system intermediaries, such as science parks, which are aimed at stimulating bridging among their member firms. However, prior evidence, providing contradictory findings regarding the ability of open-system intermediaries to facilitate bridging, reflects the need for insights into the conditions under which open-system intermediaries stimulate their member firms to interact. By drawing on the embeddedness theory, we examine how specific design characteristics of open-system intermediaries affect the interaction frequency among member firms and the networking benefits member firms gain. Practically, we test our hypotheses by means of a multilevel analysis conducted on a sample of 29 science parks in Europe and 206 member firms. This study contributes to the open-system intermediary literature, the embeddedness perspective, and the bridging literature.

Strategizing Through Discourse: An Analysis of Energy Industry Associations’ Public Discourses

Industry associations represent the interests of member firms operating within an industry. Given their influence in both their industries and external environments, they are important actors for strategy research. Prior research has largely focused on the relationships between industry associations and their members as well as the benefits and dynamics that arise from this link. In this study, we investigate how industry associations represent their respective industries’ interests as cultural actors through production of meaning with the aim of influencing the social and institutional environments of their industries. Based on a discourse analysis of the bodies of texts produced and disseminated by energy industry associations for consumption by relevant stakeholders and the public at large, our findings reveal how the studied industry associations’ discourses establish specific problems at the industry, national, and sometimes global level while concurrently providing solutions to these problems. These findings contribute to our understanding of industry associations’ roles and activities as cultural actors. We conclude the paper with a discussion of our study’s implications.

Firm heterogeneity and international trade: A cross-country analysis within the EU

ABSTRACT By exploiting cross-country micro-aggregated CompNet data, this study investigates the main implications of firm heterogeneity for international trade of EU countries, distinguishing between old and new Member States. On the one hand, exporting firms are larger, more productive and pay higher wages than non-exporting firms, especially in new EU economies. Only the former firms are indeed able to bear export costs, which are higher in new EU countries and are related to various factors, such as the quality of the legal system, the restrictiveness of labour-market regulation and the degree of access to finance. Hence, only few enterprises actually export, and the intensity of aggregate export concentration within few firms varies across countries and sectors. On the other hand, opening to trade boosts individual firms’ productivity, via a number of channels (including GVC integration, which is particularly important for new EU countries), and also enhances allocative efficiency across firms, in turn increasing aggregate productivity growth. One of the main standard determinants of export growth, namely changes in the real effective exchange rate, impacts aggregate performance differently across countries and sectors, depending on sectoral composition and on firm characteristics, in both old and new Member States.

Antecedentes contextuales de la participación Femenina en juntas directivas: el caso de Colombia

Este artículo tiene el objetivo de identificar y analizar las tendencias de participación femenina en juntas directivas en Colombia. Se argumenta que el isomorfismo institucional influencia la dinámica del nombramiento de mujeres directoras en contextos en los que no existe una normatividad que la promueva. De esta forma, las prácticas de las organizaciones más visibles en contextos específicos influencian estos nombramientos en otras organizaciones en dichos contextos. El estudio utiliza información reportada por empresas colombianas para el periodo 2000-2009. Los resultados muestran una tendencia creciente, aunque lenta, en el nombramiento de mujeres directoras, lo cual se explica por la existencia de factores contextuales. El nombramiento de mujeres directoras en empresas del Gobierno y en las empresas dominantes por industria tiene un efecto positivo sobre el nombramiento de mujeres en otras empresas; por su parte, el nombramiento de mujeres directoras en las empresas más longevas es muy bajo y se relaciona de forma negativa con estos nombramientos en las demás empresas.

Does tunneling explain the sensitivity of executive compensation to other member firms’ performance?

AbstractThis study examines how executive compensation is set when a firm is a business group member. Using Korea's unique setting of family‐controlled business groups, we find that a member firm's executive cash compensation is positively linked to the stock performance of other member firms as well as its own. Further analyses reveal that this positive link is consistent with the hypothesis that corporate managers are rewarded for their decision to benefit the controlling family at the expense of the firm they manage. Specifically, we find that the sensitivity of executive pay to other member firms’ performance exists only in respect to firms in which the cash flow rights of the controlling family exceed those of the subject firm. We also find that this sensitivity is strengthened if the controlling family's control–ownership disparity in the subject firm is above the sample median.

Termination of personal relationship and their effects on knowledge sharing in supply chains

The existence of strong personal relationships (friendship, etc.) has been the subject of much research in the supply chain knowledge management literature. Many researchers have argued that such relationships have a positive impact on knowledge sharing across the supply chain. However, it is important to acknowledge that the termination of a personal relationship may well adversely affect the knowledge transfer process between the supply chain member firms. This study addresses the impact of the termination of personal relationships within the supply chain. An exploratory study was employed via semi‐structured interviews with 20 senior managers from 10 different companies based in the United Arab Emirates. The findings reveal five distinct factors that adversely affect knowledge transfer between the managers of buying and supplying firms, once their personal relationships are terminated. These factors further result in inferior knowledge transfer between the partnering firms.

Trading Characteristics of Member Firms on the Korea Exchange

In this paper, we study the characteristics of the member firms on the Korea Exchange. The member firms intermediate between the market participants and the exchange, and all the participants should trade stocks through members. To identify the characteristics of member firms, all member firms are categorized into three groups, such as the domestic members similar to individuals (DIMs), the domestic members similar to institutions (DSMs), and the foreign members (FRMs), in terms of the type of investor. We examine the dynamics of the member firms. The trading characteristics of members are revealed through the directionality and trend. While FRMs tend to trade one-way and move with the price change, DIMs are the opposite. In the market, DIMs and DSMs do herd and the herding moves in the opposite direction of the price change. One the other hand, FRMs do herd in the direction of the price change. The network analysis supports that the members are clustered into three groups similar to DIMs, DSMs, and FRMs. Finally, random matrix theory and a cross-sectional regression show that the inventory variation of members possesses significant information about stock prices and that member herding helps to price the stocks.

Business group affiliation, corporate diversification, and cash holdings

This paper investigates how horizontal business group affiliation affects cash holdings of member firms. Although firm-bank lending and equity ties have weakened since the 1990s, Japanese horizontal keiretsu may still have some financial benefits. We focus on the impact of horizontal business group affiliation on unprofitable cash holdings, which has been one of the most important managerial issue in the past two decades. Using the samples of Japanese firms from 2004 to 2014, we find that horizontal business group affiliation reduces cash holdings even after controlling for firm-bank equity and lending ties. We argue that stable business ties among group firms reduce uncertainty for future cash flows and thus mitigate precautionary demands for cash. Our results also suggest that horizontal business affiliation plays a similar role with corporate diversification in reducing cash holdings.

Investment in Human Capital and Labor Mobility: Evidence from a Shock to Property Rights

We study the effect of a change in property rights on employee behavior in the industry for financial advice. Our identification comes from staggered firm-level entry into the Protocol for Broker Recruiting. The agreement waived non-solicitation clauses for advisor transitions among member firms, effectively transferring ownership of client relationships from the firm to the advisor. After the shock, advisors appear to take better care of client relationships by investing in client-facing industry licenses, shifting to fee-based advising, and garnering fewer customer complaints. Our findings support property rights-based investment theories of the firm and document offsetting costs to restricting labor mobility.