Types Of Firms Research Articles

Institutional investors, heterogeneity, and capital structure decisions: Evidence from an emerging market

This paper uses data on Chinese A-share listed firms from 2008 to 2020 to examine the effect of institutional investors on capital structure by considering different types of institutional investors and firms. The results find that institutional investor shareholdings have a significant negative effect on capital structure. Further, compared with pressure-sensitive institutional investors, pressure-resistant institutional investors have a stronger negative effect on capital structure. And compared with non-state-owned firms, institutional investors have a stronger negative effect on the capital structure of state-owned firms. Institutional investors lower firm leverage by decreasing agency costs (governance channels) and reducing information asymmetry (information channels), and the effect of governance channels dominates. Finally, firms become more likely to reduce debt than issue equity to lower leverage in response to increased institutional investor shareholdings. These findings shed light on the role of institutional investors in capital structure decisions in emerging markets.

Firms' uncertainty perceptions and financial misallocation: Evidence from China

Recently, the impact of economic policy uncertainty on economic outcomes has received considerable attention. This research examines the link between firms' perceptions of uncertainty and financial misallocation, with a focus on the differential effects across different types of firms. We find that a heightened sense of uncertainty significantly reduces financial misallocation. This relationship remains robust to rigorous validity checks. Interestingly, we find that private firms, those operating in highly competitive arenas and those with minimal financing barriers are more attuned to economic uncertainty. Hence, for these firms, the moderating effect of uncertainty perception on financial misallocation is particularly pronounced.

Does Financial Performance in Firms Benefit from Sustainability Performance? The Mediating Effect of Governance on Firm Performance of Listed Firms in Canada

Relying on dynamic agency and stakeholder perspectives as theoretical underpinnings, this paper analyzes the mediating effect of board governance and operational governance in the relationship between sustainability and financial performance of firms. Using a sample of 224 large and actively traded Canadian firms listed on the Toronto Stock Exchange, the authors use the partial least squares-structural equation modeling (PLS-SEM) approach to analyze the data. The results show that there is a good fit between the data for both the measurement and structural equation models, and they further reveal partial mediation effects of board governance and operational governance singly and jointly as full mediation in the relationship between sustainability and financial performance of firms. The results are robust to controlling for various factors that affect firms’ sustainability and financial performance, such as firm type, firm age, and other industry-specific characteristics. This study provides valuable insights for corporate governance and sustainability scholars and practitioners that may allow them to link governance structures with sustainability for better financial performance outcomes, as well as to include an integrated sustainability focus into their competitive strategies.

Mobile payments and interoperability: Insights from the academic literature

We connect various streams of academic literature to analyze how alternative competition and regulatory policies may affect the development of digital financial services, and particularly of mobile payments. Our main objective is to highlight the extent to which existing models, often coming from related industries (such as telecom, payments, and banking) can be applied to study the effects of mobile money interoperability. We focus on four dimensions of interoperability. First, we consider mobile network interoperability (whether clients of one telecom can access another telecom's payment services) in connection with the IO literature on tying. Second, we discuss platform level interoperability (the ability to send money off-network) in light of the literature on compatibility. We also build on the behavioral IO literature to suggest how the effects of interoperability may be very heterogeneous across various types of firms and consumers, or even backfire. Third, we consider interoperability in the cash-in-cash-out agent network, in light of the literature on co-investment in network industries, and of more specific studies on ATMs' interoperability. Fourth, we discuss how the literature in banking and on data ownership can be used to understand interoperability of data. We conclude with some broader remarks on policy implications and on possible directions for future research.

How Do Heterogeneous Networks Affect a Firm's Innovation Performance? A Research Analysis Based on Clustering and Classification.

Based on authorized patents of China's artificial intelligence industry from 2013 to 2022, this paper constructs an Industry-University-Research institution (IUR) collaboration network and an Inter-Firm (IF) collaboration network and used the entropy weight method to take both the quantity and quality of patents into account to calculate the innovation performance of firms. Through the hierarchical clustering algorithm and classification and regression trees (CART) algorithm, in-depth analysis has been conducted on the intricate non-linear influence mechanisms between multiple variables and a firm's innovation performance. The findings indicate the following: (1) Based on the network centrality (NC), structural hole (SH), collaboration breadth (CB), and collaboration depth (CD) of both IUR and IF collaboration networks, two types of focal firms are identified. (2) For different types of focal firms, the combinations of network characteristics affecting their innovation performance are various. (3) In the IUR collaboration network, focal firms with a wide range of heterogeneous collaborative partners can obtain high innovation performance. However, focal firms in the IF collaboration network can achieve the same aim by maintaining deep collaboration with other focal firms. This paper not only helps firms make scientific decisions for development but also provides valuable suggestions for government policymakers.

The abatement game in a dynamic oligopoly: social welfare versus profits

This article considers an N-firm oligopoly with abating and non-abating firms and analyses a dynamic setting in which the environmental regulator sets the tax rate to incentivise firms to undertake emission-reduction actions according to different hypotheses (fixed rule and optimal rule). The behaviour of the public authority sharply affects the firm’s (individual) incentive to move towards the abatement activity over time. This changes the number of (non)abating firms on the market and the corresponding social welfare outcomes. The article eventually shows that the environmental policy may cause oscillations resulting in a coexistence of the two types of firms in the long term and pinpoints the welfare outcomes emerging in the model.

Evaluating the relationship between IFA remuneration and advice quality

This article deals with the interaction between commission remuneration of independent financial advisers and selected sales factors, including the quality of advice. Utilizing data on investment transactions and a linear model with mixed effects, we have found that the link between commission and quality of the subsequent recommendation is not homogeneous, and advice-bias potential is present only in a limited range of organizational environments, connected mainly to the flat-structure business model. On the other hand, arbitrage between different product classes was found to create a biasing potential across almost all types of firms, creating potential for market systemic risk. Finally, the effect of information provided was proved to be significant only to a very limited extent. © 2017 Academy of Financial Services.

Key factors influencing the sustained growth of high-tech SMEs in South Korea: the perspectives of founder owner-managers

PurposeThis paper explores key factors influencing high-performing, sustained growth, high-tech small- and medium-sized enterprises (SMEs) in South Korea.Design/methodology/approachA qualitative study is adopted to explore seventeen founder owner-managers of high-tech SMEs who sustained consistent employment growth, greater than the industry average, for seven years. Within the sample, those with higher (10% or over) employment compound annual growth rates (CAGRs) over this period are also compared to those with lower rates.FindingsThe study suggests that proactive approaches, such as flexible organization, risk management, fast decision-making and international market entry, are seen as important contributing factors to sustained growth. These findings contribute to a better theoretical and empirical understanding of sustained high-tech SME growth, in a country with a strong entrepreneurial and internationally competitive information technology sector. Also, collaboration across the SME was perceived as making an important contribution to staff development and growth, consistent with stewardship theory.Research limitations/implicationsThe sample is based on successful high-tech SMEs, so there are limitations in extrapolating results to other types of firms, sectors or countries.Practical implicationsKey factors identified in this study can be considered by entrepreneurs seeking to achieve sustainable business. These also provide improved understanding for policymakers into the complexity of factors related to sustained and high growth of technology-based SMEs, which many countries are keen to foster to aid national economic growth.Originality/valueThe research provides new evidence exploring the diverse perspectives of founder owner-managers, on the sustained growth and failure in South Korean high-tech SMEs, and how these have changed since the inception of their business.

Relationship between different resource and capability configurations and competitiveness – comparative study of Hungarian family and nonfamily firms

PurposeThe purpose of this paper is to identify different types of resource and capability configurations among Hungarian family and nonfamily firms and explore which compositions can be considered competitive. In a rivalrous, dynamic world, understanding which sets of resources and capabilities lead to a higher level of competitiveness is vital.Design/methodology/approachThis paper is based on a quantitative competitiveness survey carried out between November 2018 and July 2019 in Hungary. The authors used the Firm Competitiveness Index (FCI) to measure competitiveness and the resource-based view (RBV) approach to understand which configurations of resources and capabilities are responsible for a higher level of competitiveness based on 32 variables. An exploratory factor and cluster analysis were conducted to analyze the ownership's effect on firm competitiveness. The final sample size contained 111 companies, of which 53 were identified as family and 58 as nonfamily firms.FindingsFactor analysis reveals five factors determining resources and capabilities: “operational,” “leadership,” “knowledge management,” “transformation” and “networking.” Based on these factors, the cluster analysis identified five groups in terms of types of family and nonfamily firms: “Lagging capabilities,” “Knowledge-based leadership,” “Innovativeness and transformation-oriented management,” “Relationship-oriented management” and “Business operation-oriented management.” Results show that nonfamily businesses focus on operational and leadership capabilities, reaching a higher FCI than family businesses, which are likely to invest more in their networking, transformation and knowledge management capabilities.Originality/valueBy defining the different configurations family and nonfamily firms rely on to reach competitiveness, the paper applies an essential element to the Hungarian and Middle Eastern European contexts of family business research. The findings contribute to developing family business literature and point out specific resources and capabilities family firms should focus on to shift toward reaching a higher level of professionalization and competitiveness. The characterization of different types of competitiveness comparing family and nonfamily firms enables the firms to assess customized implications.

Unraveling the price-concentration relationship: The Role of national distribution centers in Chilean supermarket industry consolidation

We examine the relationship between prices, costs, concentration, and the intensity of competition in the Chilean supermarket industry during its consolidation process in the late 1990s. This process was characterized by increased concentration, lower prices paid by consumers, and higher levels of competition between firms. We argue that behind this phenomenon lies the adoption of National Distribution Centers by supermarket chains, which represented a technological cost-saving change that intensified competition and reduced profit margins. We develop a simple theoretical model that allows for cost heterogeneity across firm types and provides testable empirical implications regarding the underlying price-concentration relationship. Our results are consistent with a higher degree of price competition in food retailing and can explain the structure of this industry 20 years after the start of its consolidation process.

Are shariah and non-shariah firms’ capital structure determinants and financial performance related? Evidence from Malaysia

This comparative analysis is an attempt to explore the core differences among the capital structure determinants of Malaysian Shariah and non-Shariah firms. Besides, this investigation also explores which financial category in Malaysia, either Shariah or non-Shariah, maintained its performance, i.e., earnings; during the peak period of the COVID-19 pandemic and to what extent their performance is related. For analysis purposes, this investigation used 454 firms’ 17 years’ financial data, i.e., 2005-2021. The Panel Data Static models are executed to perform the empirical investigation. The debt-to-equity ratio is selected as a dependent variable, whereas total assets, sales, current assets, growth, return on equity, non-debt tax shield, and earnings per share are nominated as independent variables. The results indicate that fixed assets and growth are core determinants for both types of firms. This endorses the validity of these two investigated determinants for the whole Malaysian firm. Moreover, current assets, non-debt tax shield, fixed assets, growth, and earnings per share are also observed as main and significant determinants for Shariah-tagged firms. The positive significance of tangibility, non-debt tax shield, and liquidity explain why the Trade-off theory is more dominant in the Malaysian context. Besides, the outcomes obtained from descriptive statistics and Independent Two-sample t Test explain that both financial categories of Malaysian listed firms maintained negative earnings during the COVID-19 peak period, i.e., 2020. The results will help policymakers devise the best financing model i.e., Shariah and non-Shariah, specifically during the uncertain financial fiascos.

Secret sentiments make for good announcements: Does unjustified managerial belief benefit tourism firm performance?

Restructuring announcements are an important medium through which tourism managers communicate with market participants. This study is an initial investigation of whether and how managerial secret sentiment expressed in restructuring announcements impacts the short-term stock market performance. The results show that: 1) managerial secret sentiment positively influences tourism firm performance; 2) when the sentiment is categorized as optimistic, cautious or uncertain, the three categories are seen to have different effects on performance in terms of both strength and timing; and 3) managers' tourism-related experience, firm type and restructuring strategy type all can moderate the benefit boundary of managerial secret sentiment on firms. This research contributes to corporate governance literature by proposing a new theory impacting firm performance, i.e., frame-sentiment theory.

Do zombie firms affect healthy firms' exporting? Evidence from China

AbstractThis paper empirically investigates whether zombie firms affect healthy firms' exporting. Using the 1998–2007 Chinese firm‐level dataset, we provide strong evidence that zombie firms significantly decrease exports of healthy firms in each city‐industry cluster, that is, both whether to export and export values are affected by zombie firms. Specifically, non‐stated‐owned enterprises (non‐SOEs) are more vulnerable to the effect than their SOE counterparts. In addition, we also identify government subsidies, financial resources and total factor productivity as the sources of the effect, and the heterogeneous export performances of different types of firms are due to the variation in these sources.

How does CEO green experience affect green innovation of energy firms? Evidence from China

CEO characteristics influence their strategic preferences, which are crucial for promoting corporate green innovation (GI). However, the influence and its mechanisms of CEO green experience (GreCEO) on GI of energy firms, especially when comparing different firm types holistically, remain understudied. This study used a moderated mediation model with fixed effects to examine the relationship between GreCEO and GI of energy firms, based on the unbalanced panel data of 821 listed Chinese energy firms during 2004–2021. We find that: (1) GreCEO positively affects energy firms’ GI. (2) Heterogeneity exists in the GI effect of GreCEO regarding business ownership and industry characteristics, and this effect is more prominent in non-state-owned energy firms and high-tech energy firms. (3) Green management (GM) and debt-to-asset ratio (DAR) partially mediate GreCEO's impact on GI of energy firms. (4) Renewable energy policy (REP) moderates the relationship between GreCEO and GI of energy firms, and its influencing mechanisms. In contrast to studies that focus on the direct effect of CEO characteristics on GI, this study identifies the potential influencing mechanisms through which GreCEO affects GI of energy firms. In addition, the moderation analysis reveals the boundary condition that GreCEO affects GI, enriching our understanding of GreCEO's effect on GI from the perspective of a firm's internal conditions and external policy environment. Regarding green development, CEOs’ early experience should be included in the management system and evaluation criteria of energy firms. The Chinese government should continue to implement the REP and accelerate energy firms’ green transition.

Managers’ risk preferences and firm training investments

This study analyses the impact of managers’ risk preferences on their training allocation decisions. We begin by providing nationally representative evidence that managers’ risk-aversion is negatively correlated with the likelihood that their firms engage in any worker training. Using a novel vignette study, we then demonstrate that risk-tolerant and risk-averse decision makers have significantly different training preferences. Risk aversion results in increased sensitivity to turnover risk. Managers who are risk-averse offer less general training and are more reluctant to train workers with a history of job mobility. Adopting a weighting approach to flexibly control for observed differences in the characteristics of risk-averse and risk-tolerant managers, we show that our findings cannot be explained by heterogeneity in either managers’ observed characteristics or the type of firms where they work. All managers, irrespective of their risk preferences, are sensitive to the investment risk associated with training, avoiding training that is more costly or that targets those with less occupational expertise or nearing retirement. This provides suggestive evidence that the risks of training are primarily due to the risk that trained workers will leave the firm (turnover risk) rather than the risk that the benefits of training do not outweigh the costs (investment risk).

Winners and Losers From Trade Agreements: Stock Market Reactions to TPP and TTIP

Which companies gain and which companies lose from trade agreements? In contrast to a view that sees the largest companies as the main beneficiaries of trade agreements, we argue that medium-sized companies gain the most from them. Moreover, we examine whether more capital-intensive and more diversified companies benefit more than other firms. Our empirical test relies on a dataset with daily firm-level stock price data for close to 4,000 US companies over the period 2009–2016. Concretely, we assess how the shares of different types of firms reacted to the news on the (lack of) progress of the negotiations aimed at concluding the TPP and TTIP. We find support for the view that medium-sized and diversified companies win the most from trade agreements. Besides speaking to the literature on the distributional effects of trade agreements, the article contributes to recent research on the role of firms in the international political economy and the stock market consequences of political events. It also presents a novel approach to measuring progress and stagnation in international trade negotiations using computational text analysis.

More is better or in waste? A resource allocation measure of government grants for facilitating firm innovations

To strengthen firms' innovation capability and improve innovation performance, it is not surprising for the government to grant them financial funding. Previous research in allocation of government grants fails to quantitatively identify the wastes within, which leaves a significant research gap. This study contributes to the literature by proposing a novel data envelopment analysis model to deal with the misallocation issue. We first propose a centralized allocation model with the output-oriented focus to identify the effectively used resources or wastes. An algorithm is then proposed to determine the optimal total amounts of allocated resources and eliminate possible wastes. In an application of allocating government grants for high-tech firms, the proposed approach investigates government’s optimal allocation plan of innovative subsidy and tax reduction. We find the mixed impacts of grants on innovation performance and diverse allocation results across different types of firms. More government grants are suggested to be allocated, but excessive investment and unnecessary waste should be alerted in allocation. Impacts of returns to scale characteristics and innovation failure rates on allocation results are also explored. Our results affirm the effectiveness of the proposed approach and provide solid policy implications.

Peer effect on low-carbon practices of firms along the value chain: Evidence from China

A significant number of papers have found that the behavior and actions of firms are directly related to their peers and surrounding conditions. However, the spillover effects in low-carbon practices, especially the mimicry of firms on low-carbon practices from their peers in upstream and downstream industries along the value chain are barely discussed in the literature. In this paper, we extend the research on peer effect to the convergence of peers in the upstream and downstream industries, explore the spillover effects and mechanism of low-carbon practices among firms along the entire value chain, and further explore whether the degree of environmental regulation influences the peer effect.Our results suggest that there is a significant peer effect on low-carbon practices along the entire value chain. The intensities of carbon emissions of the focal firms are not only influenced by the low-carbon practices of their peers in the same industry, but also influenced by the low-carbon practices of their peers in the upstream and downstream industries. The results are robust when substituting the indicators of low-carbon practices, the scope of peers, and linkages of the value chain. The heterogeneity analysis by different city groups, firm types, and industry groups is also conducted. The results provide important implications for the policymakers to better understand and promote the low-carbon practices at the firm level.

Digitalization, Resource Mobilization and Firm Growth in Emerging Industries

AbstractWhile most firms do not grow, a small number of firms grow and enhance their equity and debt capital intensity. Researchers, managers and policymakers question the role that digital technologies play in propelling firm growth and resource mobilization. Using a longitudinal dataset from emerging industries in the United Kingdom during 2010–2019, we distinguish three types of firms and examine their growth and resource mobilization. First, we find that digitally advanced firms grow faster and enhance equity capital intensity while reducing debt capital intensity. Second, we find that the relationship between digitally advanced firms and firm growth is mediated by equity capital intensity. Third, firm size positively moderates the effect of digitally advanced firms on firm growth. Firm age does not moderate this relationship. Other firm‐level characteristics, such as number of digital tools, firm productivity, accelerator experience and stage of growth, may either impede or facilitate a firm's growth and resource mobilization. This study helps policymakers and firm managers in emerging industries better understand the role of digitalization and resources in firm growth.

How Does Protectionism Impact Multinational Firm Reshoring? Evidence from the UK

There is growing interest in the nature and possible extent of de-globalization. This paper explores the impact that protectionist measures have on multinational enterprise (MNE) reshoring back to the UK. Besides taking into account the global trends indicating a return to protectionism, the existing literature highlights various firm-level and structural country-level determinants of reshoring decisions. We test a conceptual model with parent-subsidiary firm-level data for the period 2009 to 2017. We conclude that firms that are more sensitive to wage costs in their overseas subsidiaries were more likely to reshore. We did not find that more capital-intensive firms had a higher propensity to reshore. We find that our results are mostly driven from UK MNEs with subsidiaries in EU. This result has clear implications for a potential Brexit effect. Theoretically, we base our findings in transactional cost economics to help explain why different types of firms behave in the way they do, and why different types of firms may respond in quite different ways to the same mix of institutions.