Aidan Vining, Mark Moore and Claude Laurin
This paper addresses the social value of commercial enterprises that are jointly owned by a government and private sector investors and where the shares are listed on a stock…
Abstract
Purpose
This paper addresses the social value of commercial enterprises that are jointly owned by a government and private sector investors and where the shares are listed on a stock exchange: thus, “listed public–private enterprises” (LPPEs). The theoretical part of the paper addresses how differences in ownership patterns influence the behavior and performance of LPPEs.
Design/methodology/approach
We develop a conceptual taxonomy, drawing on the empirical evidence on the behavior and performance of public–private hybrid enterprises and on the application of agency theory to that evidence. The taxonomy discussion predicts how different ownership patterns affect enterprise productive efficiency and the ability of governments to achieve social goals through LPPEs. We review the empirical literature on government enterprise ownership and on the concentration of private share ownership to deduce how these matter for owner and managerial behavior and productive efficiency. We review the literature that considers the informational content that listing of an enterprise's shares on a stock exchange can provide to enterprise owners, managers and other domestic audiences with a policy interest. We employ a social welfare perspective to derive policy implications as to when the LPPE governance structure is most appropriate.
Findings
We show how the monitoring and performance weaknesses of state ownership are offset by some private ownership, particularly when combined with listing on a stock exchange. We demonstrate the effects of different governance structures on enterprise productive efficiency. We find that the LPPE structure is particularly appropriate as an alternative to nationalization or to full privatization and regulation of natural monopoly public utilities, and as an alternative to full private ownership and taxation of non-renewable natural resource extractive enterprises.
Originality/value
This paper explicitly addresses the question of why and how the combination of government ownership, private investor ownership and listing on an exchange is socially valuable in providing information on productive efficiency to governments.
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Elodie Allain and Claude Laurin
The purpose of this paper is to explore how and why the uses (enabling or controlling) of an activity-based costing system could cause difficulties in implementing such a cost…
Abstract
Purpose
The purpose of this paper is to explore how and why the uses (enabling or controlling) of an activity-based costing system could cause difficulties in implementing such a cost system.
Design/methodology/approach
The authors conducted a case study in a French insurance company. Three successive research periods were undertaken: from March to August 2005, between October 2008 and June 2009, and in 2012. In total, 51 interviews were conducted during these periods. Other useful information was also collected through conversations, observation, and through the consultation of internal documents.
Findings
The results show that designing a cost system aimed at being simultaneously used in controlling and enabling ways can generate important difficulties. Furthermore, the results show that attempting to get around these difficulties could result in investing significant amounts of resources with no guarantee of success.
Research limitations/implications
Beyond the difficulties of extending the scope of application of case studies, the study was conducted in an organization involved in the insurance industry which could further limit its general applicability.
Practical implications
Based on the experience at Rassura, the authors argue that managers should be aware that designing and implementing a cost system that can simultaneously be used in both controlling and enabling ways is a very difficult, if not an insurmountable challenge.
Originality/value
The results highlight that one important characteristic of a cost system, how it is used, could explain, at least partially, implementation difficulties related to technical challenges, resistance to change and lack of resources.
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Yves Bozec, Claude Laurin and Iwan Meier
The purpose of this study is to investigate the relationship between dominant shareholders, whose voting rights exceed cash flow rights (excess control), and firms’ cost of…
Abstract
Purpose
The purpose of this study is to investigate the relationship between dominant shareholders, whose voting rights exceed cash flow rights (excess control), and firms’ cost of capital, including both equity capital and debt.
Design/methodology/approach
This research is conducted in Canada over a four-year period from 2002 to 2005 and uses panel data of 155 S&P/TSX firms. The weighted average cost of capital is regressed on excess control using fixed-effect regressions in a two-stage least squares framework.
Findings
The paper finds evidence that the cost of capital increases with excess control. The paper also confirms that for firms incorporated under the less protective Quebec incorporation law the excess control and, therefore, cost of capital is higher than for firms incorporated in the other provinces under the common law regime.
Originality value
Prior work examined the relationship between excess control and firm value, mostly Tobin's Q. By using cost of capital, the study explores another channel through witch excess control may affect firm value.
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Iwan Meier, Yves Bozec and Claude Laurin
The objective of this study is to test whether financial flexibility has value. Using the current financial crisis, the authors investigate whether firms that built up financial…
Abstract
Purpose
The objective of this study is to test whether financial flexibility has value. Using the current financial crisis, the authors investigate whether firms that built up financial flexibility over the years preceding the crisis yield superior performance during the financial crisis.
Design/methodology/approach
Financial flexibility is measured along the following dimensions: cash and cash equivalents, debt (short‐term and total) and net debt. These proxies are measured as an average over the five years prior to the crisis, from September 2002 to August 2007. Firms are then sorted into ten portfolios and monthly stock returns for each portfolio are evaluated over the crisis period from September 2007 to March 2010.
Findings
The authors' results show that high pre‐crisis levels of cash do not seem to have a positive impact on firm value during the crisis. However, the results provide evidence that high pre‐crisis levels of debt had a negative impact on firm value during the latest financial crisis, supporting the hypothesis that financial flexibility has value.
Originality/value
The originality of the authors' approach is to evaluate the value of financial flexibility during a financial crisis. The recent financial crisis offers an ideal test case to evaluate whether financial flexibility has indeed value for the firm.
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The aim of this paper is to bridge the gap between the organizational effectiveness (OE) models developed in the field of organizational theory and the performance measurement…
Abstract
The aim of this paper is to bridge the gap between the organizational effectiveness (OE) models developed in the field of organizational theory and the performance measurement models presented within the management accounting literature. The specific evolution of these two complementary streams of research stemming from two different fields of research are reconciled and integrated by analyzing their convergences and divergences. As a response to theoretical and practical pressures, the evolution of OE models reflects a construct perspective, while the evolution of performance measurement models mirrors a process perspective. Performance measurement models have moved from a cybernetic view whereby performance measurement was based mainly on financial measures and considered as a component of the planning and control cycle to a holistic view based on multiple nonfinancial measures where performance measurement acts as an independent process included in a broader set of activities. This paper contributes to the performance measurement literature by establishing the origins of the performance measurement models and by shedding light on unexplored fertile areas of future research.
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Tarek El Masri, Matthäus Tekathen, Michel Magnan and Emilio Boulianne
Family firms possess dual identities, being the family and the business, which can be segmented and integrated to various degrees. This study examines whether and how management…
Abstract
Purpose
Family firms possess dual identities, being the family and the business, which can be segmented and integrated to various degrees. This study examines whether and how management control technologies are calibrated to fit into the dual identities of family firms.
Design/methodology/approach
A qualitative study of 20 family firms was conducted using semi-structured, in-depth interviews with owner-managers, drawings of mental maps and publicly available information. The notion of calibration was developed and used, with its three components of graduation, purpose and reference, as an organizing device for the interpretive understanding of the management control usage and its relation to family firms’ dual identities.
Findings
The study finds that the use of calculative, family-centric and procedural management controls – in sum the pervasive use of management control technologies – are associated with a professionalization of the family firm, a foregrounding of the business identity and a reduction of the disadvantageous side of familiness. In comparison, the pragmatic and minimal use of management control technologies are found to be associated with an emphasis on family identity. It transpires as liberating, engendering trust and unfolding a familial environment.
Research limitations/implications
Because results are derived from a qualitative approach, they are not generalizable at an empirical level. By showing how the use of management control technologies is calibrated with reference to family firms’ dual identities, the paper reveals the perceived potency of control technologies to affect the identity of firms.
Practical implications
The study reveals how family firms perceive management control technologies as strengthening their business identity while weakening their family identity. Thereby, this study provides an account of how management control technologies are expected to change the identity of firms.
Originality/value
This paper contributes to the management control and family business literatures because it uncovers how management control technologies are calibrated in reference to family firms’ dual identities. It shows that calculative, family-centric and procedural management controls are used to professionalize the firm and strengthen its business identity as well as to reduce the negative effects of the family identity. The paper also illustrates how the liberating force of using pragmatic and minimal control technologies can serve to give prominence to the family identity.
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Claude Francoeur, Walid Ben Amar and Philémon Rakoto
The purpose of this paper is to investigate the link between ownership structure, earnings management (EM) preceding mergers and acquisitions (M&A) and the acquiring firm's…
Abstract
Purpose
The purpose of this paper is to investigate the link between ownership structure, earnings management (EM) preceding mergers and acquisitions (M&A) and the acquiring firm's subsequent long‐term market performance.
Design/methodology/approach
The authors measure the magnitude of discretionary current accruals using two methodologies, that of Teoh et al. and that of Kothari et al. The latter methodology is used to control for the presence of extreme performance prior to the event. The calendar‐time Fama‐French three‐factor model was used to evaluate long‐term stock performance and to minimize potential problems related to the cross‐sectional dependence of the returns.
Findings
It was found that firms using stock as a financing medium exhibit significant positive discretionary accruals during the year preceding the M&A and during the year of the acquisition. It was also documented that voting right concentration and control‐enhancing mechanisms are not associated with any significant level of earnings management. Finally, a negative association was found between EM and abnormal stock returns over a three‐year period following the acquisition.
Research limitations/implications
These results suggest that the concentrated ownership alignment effect dominates the entrenchment motives and acts as a deterrent mechanism to prevent controlling shareholders from managing earnings in stock‐financed M&A.
Practical implications
The authors’ results highlight the importance of maintaining good legal and extra‐legal protection of minority shareholders. Regulators can play an important role in preventing dominant shareholders from engaging in opportunistic EM in stock‐financed M&A.
Originality/value
The paper extends prior literature by taking a closer look at dominant shareholders’ motivations to manage earnings in stock‐financed M&A. Large shareholders have strong incentives to manage earnings upward prior to stock‐financed transactions to limit the dilution of their controlling position.
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Lode De Waele, Liselore Berghman and Paul Matthyssens
The discussion about public sector performance is still present today, despite the profound research that has already tried to address this subject. Furthermore, theory links…
Abstract
Purpose
The discussion about public sector performance is still present today, despite the profound research that has already tried to address this subject. Furthermore, theory links negative effects on organizational performance with increased levels of organizational complexity. However, literature thus far did not succeed to put forward a successful theory that explains why and how public organizations became increasingly complex. To answer this question, we argue that increased organizational complexity can be explained by viewing public organizations as the hybrid result of different institutional logics, which are shaped by various management views. However, former research mainly concentrated on the separate study of management views such as traditional public management (TPM), NPM, and post-NPM. Although appealing, research that approaches hybridity from this perspective is fairly limited.
Methodology/approach
We conducted a literature review in which we studied 80 articles about traditional public management, NPM, and post-NPM.
Findings
We found that these management views essentially differ on the base of three fault lines, depending on the level of the organizational culture. These fault lines, according to the management view, together result in nine dimensions. By combing dimensions of the different management views, we argue that a public organization becomes hybrid. Furthermore, in line with findings of contingency theory, we explain the level of hybridity might depend on the level of tight coupling for a given organization. Finally, we developed propositions that explain hybridity as the result of isomorphic forces, organizational change, and organizational resistance to change and that link hybridization with processes of selective coupling.
Originality/value
The value of this chapter lies in its real-life applicability.
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Igor de Jesus Lobato Pompeu Gammarano, Nikhilesh Dholakia, Emílio José Montero Arruda Filho and Ruby Roy Dholakia
This paper aims to the intricate relationship between digital influencers (DIs) and their followers, aiming to develop a comprehensive framework that explains how influence works…
Abstract
Purpose
This paper aims to the intricate relationship between digital influencers (DIs) and their followers, aiming to develop a comprehensive framework that explains how influence works in the digital world. It focuses on understanding the cultural aspects that shape these relationships in today’s global and digital marketplace.
Design/methodology/approach
This study employs a holistic methodology, intertwining historical, cultural and theoretical insights to decode the DI phenomenon. Applying a Grounded Theory approach, this paper coded articles into categories, developed abstract concepts and refined them through cycles of literature collection and analysis that allowed identifing gaps in the Influencer Marketing field. This comprehensive review and inductive analysis of globalization, mediated communication and digital interactions aim to unravel the intricacies of digital and virtual influence. This paper’s theoretical development advances propositions that dissect the facets influencing digital adoption, usage, interest and value perception, leading to a detailed model of digital influence grounded in both theory and real-world examples.
Findings
This research uncovers the significant impact DIs have, driven by global connections and the way we communicate in the digital age. Historical context situates DIs within the broader narrative of mediated persuasive communication. A preliminary typology of DIs and influence contexts forms the foundation for further exploration.
Research limitations/implications
This study enhances the discussion around DIs by considering the influence of technology and culture together. It draws from the thoughts of leading thinkers on how technology connects us, providing a strong foundation for future studies.
Practical implications
As digital influence and the surrounding technology continue to change, it’s important to think critically about these trends. This research offers valuable insights for businesses looking to navigate the digital landscape effectively, helping them make better strategic decisions about their online presence.
Originality/value
This study breaks new ground by offering a detailed categorization of DIs and proposing a fresh way to understand their role. It links important ideas from the past about persuasion through media to the current state of digital influence, offering insights into how digital trends might affect communication strategies.