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Article
Publication date: 13 September 2023

Aymen Turki and Robert Rieg

Many observers believe that industry experience of entrepreneurs drives successful new entrepreneurial firms. However, whenever it comes to disruptive digital ventures such as…

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Abstract

Purpose

Many observers believe that industry experience of entrepreneurs drives successful new entrepreneurial firms. However, whenever it comes to disruptive digital ventures such as Financial Technologies (Fintechs), the picture may be different due to the cross-industry nature of digital firms. The purpose of this study is to disentangle the impacts of finance, banking and information technology (IT) experiences of founders on performance of European Fintechs around venture capital (VC) investment.

Design/methodology/approach

Based on a data set of 105 Fintechs from European countries, including UK, which are involved in 201 VC rounds between 2006 and 2019, the authors adopt a Bayesian quantile approach to link founders’ experience with two performance measures that identify market success (return on sales) and investment outcome (return on equity).

Findings

The findings indicate that finance and IT-specific experiences seem to matter more often than banking experience and that the extent of their impact depends on level and metric of performance. More specifically, Fintechs in Europe and UK are more able to achieve market success with both finance and IT experiences of their founders, but that does not necessarily transform into higher returns for investors.

Originality/value

This study provides new evidence that not all aspects of industry experience matter for digital ventures, as they must fit to a certain firm, cycle and industry. For Fintech, as the name says, finance and IT experiences matter.

Details

Review of Accounting and Finance, vol. 22 no. 5
Type: Research Article
ISSN: 1475-7702

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Article
Publication date: 14 November 2016

Sébastien Dereeper and Aymen Turki

The purpose of this paper is to address whether the past dividend policy of target firm impacts dividend policies following US mergers and acquisitions (M&A).

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Abstract

Purpose

The purpose of this paper is to address whether the past dividend policy of target firm impacts dividend policies following US mergers and acquisitions (M&A).

Design/methodology/approach

The authors use the catering theory as a theoretical approach to test dividend change after a merger-acquisition. For the empirical design, dividend policy is captured using dividend status, payout ratio and dividend yield, and specifications are estimated using Probit and OLS models.

Findings

The data indicate that dividend policy of the target affects dividend policy of the combined entity in cases of stock-based deals. This result provides support for catering theory, which maintains that managers of acquirers adjust dividend policies following transactions to cater to target shareholders’ preferences.

Research limitations/implications

Although the tests suggest significant results using dividend status and payout ratio as measures of dividend, the authors do not find a similar effect for dividend yield.

Practical implications

Financial analysts evaluating merger-acquisition announcements may wish to predict the dividend policy following stock-based deals as they project the likely impact of past dividend policies of target firms. The results are also likely to be useful to investors.

Originality/value

The paper presents new evidence about dividend policy following M&A. To the authors’ knowledge, this is the first study that examines how an acquirer’s dividend policy is affected by an acquisition.

Details

Managerial Finance, vol. 42 no. 11
Type: Research Article
ISSN: 0307-4358

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Article
Publication date: 19 April 2024

Fidèle Shukuru Balume, Jean-François Gajewski and Marco Heimann

This study aims to analyze the effect of cognitive load and social value orientation on managers’ preferences when they face with two types of restructuring choices in financially…

112

Abstract

Purpose

This study aims to analyze the effect of cognitive load and social value orientation on managers’ preferences when they face with two types of restructuring choices in financially distressed firms: the first belonging to the family of organizational restructuring (massive layoffs) and the second to the family of financial restructuring (debt increases).

Design/methodology/approach

The authors investigate experimentally the impact of managers’ cognitive load and social value orientation on the decision to restructure leveraged buyout (LBO) firms in financial distress by using either massive layoffs or debt increases.

Findings

By investigating the impact of managers’ cognitive load and social value orientation on the restructuring decision of an LBO firm in financial distress, the research reveals that, on average, cognitively loaded managers prefer massive layoffs over increased debt levels. The massive layoffs seemingly provide a relatively easier way to avoid conflict with influential, residual claimants. In contrast, social value–oriented managers actively avoid massive layoffs and prefer to increase debt.

Research limitations/implications

These results imply that the performance mechanisms emphasized to improve agency relations, for example, in LBOs, have their own limitations during periods of financial distress. This study shows that one of these limits is related to cognitive distortions and personality traits.

Originality/value

In this research, the originality lies in understanding how managers’ internal factors affect their restructuring decision-making, in the case of LBO firms in financial distress.

Details

Review of Accounting and Finance, vol. 23 no. 4
Type: Research Article
ISSN: 1475-7702

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