Wanyi Chen, Qingchuan Hou, Gary Tian and Lanfang Wang
This study examines whether recruitment of local managers helps foreign venture capital (VC) firms mitigate the liability of foreignness measured by cultural differences and…
Abstract
Purpose
This study examines whether recruitment of local managers helps foreign venture capital (VC) firms mitigate the liability of foreignness measured by cultural differences and improves their performance in relationship-based emerging markets such as China.
Design/methodology/approach
From a data set comprising 1,939 Chinese portfolio companies with first-round investments by 282 foreign lead VC firms during 2000–2015, the study tracks the outcome of each investment until the end of 2018 and collects the background information of partners of lead VC firms. A survival analysis using the Cox hazard model is conducted.
Findings
Cultural differences of the foreign VC's home country, when compared to China, positively influence the success of VC firms. Recruitment of local managers reinforces this positive influence. The influence of local manager recruitment is more pronounced for VC firms with politically connected local managers, during politically uncertain periods, in industries supported by the government, in provinces with high government intervention and in VC firms with decentralized decision rights given to local managers.
Originality/value
This research complements the international business literature on the advantages of hiring local managers and identifies the channels through which local managers help foreign VC firms obtain relationship-based resources. The findings also have practical implications for those foreign investors who intend to enter into relationship-based emerging markets.
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Mohammad Al Mutairi, Gary Tian, Helen Hasan and Andrew Tan
This paper aims to explore the issue of corporate governance mechanisms by including the importance of stakeholders, primary objectives of the firm and the ownership of top…
Abstract
Purpose
This paper aims to explore the issue of corporate governance mechanisms by including the importance of stakeholders, primary objectives of the firm and the ownership of top financial managers of listed firms in Kuwait in the survey tool. It attempts to investigate whether theory aligns with the behaviour of financial managers in practice in an emerging market case.
Design/methodology/approach
A survey was developed to focus primarily on the current corporate finance practices implemented by CFOs in listed companies in Kuwait. The target respondents are listed firms in the Kuwaiti Stock Exchange (KSE). The survey includes questions on topics that are closely related to capital budgeting, capital structure, cost of capital and dividend policy. For example, the survey asks the managers how they estimate their cost of equity (CAPM or other methods) and whether the impact of the weighted average cost of equity is taken into consideration in their capital structure choices.
Findings
A surprising number of firms are now widely using IRR for decision making. CAPM is also in use, whereas WACC remains the most popular method used. There is some support for the “bird‐in‐hand” dividend theory in the tax‐free environment. Firms in Kuwait do not have any particular source of capital structure choices when it comes to how best to finance their projects as is the case in the US market. Firms in Kuwait are consciously striving for maximizing profits and those managers are regarded as their most important stakeholders. This may indicate the existence of agency problems.
Research limitations/implications
The limitation of this study lies in the absence of empirical investigation on how corporate finance decisions may affect firms' performance in Kuwait. Hence, empirical validation will be performed by the authors in the next stage of this research, which will form the basis for further research. Empirical validation for the impact of corporate governance on performance is needed.
Practical implications
This research may benefit managers and decision makers in many aspects, including having an understanding of applying popular and the most suitable corporate finance and corporate governance techniques in the management of their companies. In this research, the authors have identified the gap between practice and academia.
Originality/value
To the best of the authors' knowledge, this is the first study to examine comprehensively major areas of financial policies and practices and corporate governance in an emerging market case, especially in the Middle East. Kuwait provides a unique institutional setting in its taxation system. Therefore, this study will make a contribution to the general literature in this field.
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Rami Zeitun and Gary Gang Tian
This paper seeks to examine the impact of ownership structure on firm performance and the default risk of a sample of publicly listed firms.
Abstract
Purpose
This paper seeks to examine the impact of ownership structure on firm performance and the default risk of a sample of publicly listed firms.
Design/methodology/approach
This paper examines the impact of ownership structure on firm performance and the default risk of a sample of 59 publicly listed firms in Jordan from 1989 to 2002.
Findings
The main findings were: ownership structure has significant effects on the accounting measure of performance return on assets (ROE); government shares are significantly negatively related to the firm's performance ROE; defaulted firms have a high concentration ownership compared with non‐defaulted firms and also high foreign ownership firms have a low incidence of default; government ownership is significantly negatively related to the firm's probability of default; both mix and concentration ownership structure data can be used to predict the probability of default as the largest five shareholders (C5) and government ownership fraction (FGO) are significantly negatively correlated with the probability of the default. These results further suggest that reducing government ownership can increase a firm's performance but will also cause some firms to go bankrupt, at least in the short term.
Originality/value
This paper provides useful information on the impact of ownership structure on firm performance and the default risk of a sample of publicly‐listed firms.
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Abstract
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Kieran James, Chris Tolliday and Rex Walsh
The purpose of this paper is to review the cancellation of Australia's National Soccer League (NSL) competition and its replacement in 2004 with the corporatist A‐League which is…
Abstract
Purpose
The purpose of this paper is to review the cancellation of Australia's National Soccer League (NSL) competition and its replacement in 2004 with the corporatist A‐League which is based on the North American model of “one team one city”, no promotion and relegation, and private‐equity clubs. The authors believe that one of the aims of the A‐League and its “ground‐zero” ideology was to institute exclusion of the ethnic clubs that had formed the backbone of the NSL for 30 years.
Design/methodology/approach
Extensive literature search, participant‐observation, one personal interview and two group interviews were employed. People interviewed were the President of the Croatian community's Melbourne Knights Football Club, the Club Secretary of Melbourne Knights, and three leaders of Melbourne Knights’ MCF hooligan firm.
Findings
The authors observe the Football Federation Australia hiding behind the perceived scientific nature and technical veracity of budgeted accounting numbers to set the financial bar too high for the ethnic clubs to find a place in the brave new world that has been called “Modern Football”. However, capitalism creates its own discontents. Online forums and homemade fence banners are the new vehicles for dissent for the supporters of “Old Soccer”.
Originality/value
There is still only a small academic literature on Australian football and most of this has been written by humanities lecturers. The paper offers a business school perspective.
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A religious revival is occurring in the United States today as the traditional wall preventing faith from entering the work place is crumbling. With workers increasingly…
Abstract
A religious revival is occurring in the United States today as the traditional wall preventing faith from entering the work place is crumbling. With workers increasingly practicing their religion at work, employers face a growing cavalcade of dilemmas, including those where employees discuss religious tenets, wear religious symbols, object to employer edits on the basis of faith, and proselytize. The faith/work challenge is made even more complex because of the greater number of religions practiced today (both traditional religions based on Judeo‐Christian principles and the so‐called “immigrant religions” that have blossomed during recent decades) coupled with the growing popularity of a host of “spirituality” movements. As the mixing of faith and work becomes common place, employers and employees naturally look to the law to establish concomitant rights and duties.
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Jun Huang, Haibo Wang and Gary Kochenberger
The authors develop a framework to build an early warning mechanism in detecting financial deterioration of Chinese companies. Many studies in the financial distress and…
Abstract
Purpose
The authors develop a framework to build an early warning mechanism in detecting financial deterioration of Chinese companies. Many studies in the financial distress and bankruptcy prediction literature rarely do they examine the impact of pre-processing financial indicators on the prediction performance. The purpose of this paper is to address this shortcoming.
Design/methodology/approach
The proposed framework is evaluated by using both original and discretized data, and a least absolute shrinkage and selection operator (LASSO) selection technique for choosing an appropriate subset of financial ratios for improved predictive performance. The financial ratios are then analyzed by five different data mining techniques. Managerial insights, using data from Chinese companies, are revealed by the methodology employed.
Findings
The prediction accuracy increases after we discretized the continuous variables of financial ratios. A better prediction performance can be achieved by including fewer, but relatively more significant variables. Random forest has the highest overall performance following closely by SVM and neural network.
Originality/value
The contribution of this study is fourfold. First, the authors add to the literature on defaults by showing variable discretization to be an essential pre-processing step to improve the prediction performance for classification problems. Second, the authors demonstrate that machine learning approaches can achieve better performance than traditional statistical methods in classification tasks. Third, the authors provide the evidence for the adoption of C5.0 over other methods because rules generated with C5.0 provide managerial insights for managers. Finally, the authors demonstrate the effectiveness of the LASSO technique for identifying the most important financial ratios from each category, enabling one to build better predictive models.
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Martin H. Kunc, Federico Barnabè and Maria Cleofe Giorgino
The study aims to contribute to the debate on how to identify and manage an organization’s sustainability-related resources and processes by understanding the impact of business…
Abstract
The study aims to contribute to the debate on how to identify and manage an organization’s sustainability-related resources and processes by understanding the impact of business activities on the environment and evaluating actions to ameliorate their impacts. Within this debate, and specifically taking into consideration the opportunity to support circular economy actions and initiatives, the study focuses on integrated reporting (IR) practices. In detail, this study advocates the joint use of IR principles with the dynamic resource-based view (DRBV) of the firm, adopting their representation of resources and impact of the business activities to identify environmental friendly “hot spots” in organizations. The framework is illustrated through two exploratory case studies.