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Article
Publication date: 9 March 2023

Swechha Chada and Gopal Varadharajan

This paper aims to examine the relationship between earnings quality and corporate cash holdings in an emerging economy. Existing literature posits that earnings quality is a…

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Abstract

Purpose

This paper aims to examine the relationship between earnings quality and corporate cash holdings in an emerging economy. Existing literature posits that earnings quality is a result of information asymmetry and firms with lower earnings quality increases cash holdings, to shield the firm from future uncertainties. In this paper, the authors propose a ‘private benefits hypothesis’, which suggests that lower earnings quality is an indicator of opportunism and expropriation of resources in the firm, through tunneling or excessive executive compensations. As a result, firms with lower earnings quality increase cash holdings in their control, to increase their private benefits and to avoid the scrutiny of the external stakeholders. The authors further examine the monitoring role played by institutional investors on cash holdings, with varying degrees of earnings quality.

Design/methodology/approach

This study uses an unbalanced panel data sourced from Prowessdx, from 2000 to 2019. The analysis employs 20,231 firm-year observations from 2,421 firms. Earnings quality is calculated following Dechow and Dichev (2002).

Findings

Empirical analysis confirms that the firms with higher earnings quality reduce cash. Further, institutional investors reduce the cash holdings in firms with higher earnings quality. Institutional investors effectively reduce the cash only in firms with at least 10% of equity shareholding. The results are robust to alternative measures of earnings quality and endogeneity concerns.

Originality/value

This study diverges from the information asymmetry hypothesis in the existing literature on earnings quality and cash holdings and highlights the underlying private benefits hypothesis, that will impact cash holdings. Next, the 10% institutional shareholding is important in the Indian context as it represents the minimum threshold at which block holders can request extraordinary general meetings (Section 100 of the Companies Act 2013) or the involvement of the National Company Law Tribunal (NCLT) (Section 213 of the Companies Act 2013). This study highlights that unlike in Anglo-Saxon economies, institutional investors or other minority shareholders are empowered by the Companies Act 2013 to play a vital role in corporate governance with a mere 10% equity.

Details

International Journal of Managerial Finance, vol. 20 no. 1
Type: Research Article
ISSN: 1743-9132

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Case study
Publication date: 26 June 2018

Neeraj Pandey and Anish Kumar

Marketing, Pricing, Strategic marketing.

Abstract

Subject area

Marketing, Pricing, Strategic marketing.

Study level/applicability

The case is developed for an MBA-level program.

Case overview

In May 2017, the telecom industry in India witnessed an intense price war over 4G (fourth generation) data prices. Gopal Vittal, CEO of Bharti Airtel was exploring various options on how best to respond to the situation. He had to take a final call regarding Bharti Airtel’s marketing team’s counter move to tackle this price war by Jio – should Bharti Airtel ignore it, accommodate it or retaliate with even lower prices? Bharti Airtel strongly believed that Jio pricing structure had violated “fair pricing” norms, and its pricing was anti-competitive. It had filed a case with the Telecom Regulatory Authority of India (TRAI) and the Competition Commission of India (CCI) to restrain Jio from further giving “free” promotional offers and penalize it for it. Could the legal recourse by Bharti Airtel dampen Jio’s consistent subscriber growth rate?

Expected learning outcomes

The case provides the students with an insight into how the competition focused on pricing happens in the telecom industry. The pricing war affects the profit margin of all competing companies. It changes the customer reference point for evaluating the competing products and services. The students would also learn practical applications of positive-sum pricing, pricing war, fair pricing and legal aspects of pricing. This case provides the students with an opportunity to understand the pricing war and how to respond to it in a particular situation; understand positive-sum pricing and negative-sum pricing in telecom industry context; understand legal aspects of pricing; and how to leverage data for gaining newer customer insights.

Supplementary materials

Teaching Notes are available for educators only. Please contact your library to gain login details or email support@emeraldinsight.com to request teaching notes.

Subject code

CSS 8: Marketing.

Details

Emerald Emerging Markets Case Studies, vol. 8 no. 2
Type: Case Study
ISSN: 2045-0621

Keywords

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Article
Publication date: 18 May 2021

Datta Bharadwaz Yellapragada, Govinda Rao Budda and Kavya Vadavelli

The present work aims at improving the performance of the engine using optimized fuel injection strategies and operating parameters for plastic oil ethanol blends. To optimize and…

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Abstract

Purpose

The present work aims at improving the performance of the engine using optimized fuel injection strategies and operating parameters for plastic oil ethanol blends. To optimize and predict the engine injection and operational parameters, response surface methodology (RSM) and artificial neural networks (ANN) are used respectively.

Design/methodology/approach

The engine operating parameters such as load, compression ratio, injection timing and the injection pressure are taken as inputs whereas brake thermal efficiency (BTHE), brake-specific fuel consumption (BSFC), carbon monoxide (CO), hydrocarbons (HC), oxides of nitrogen (NOx) and smoke emissions are treated as outputs. The experiments are designed according to the design of experiments, and optimization is carried out to find the optimum operational and injection parameters for plastic oil ethanol blends in the engine.

Findings

Optimum operational parameters of the engine when fuelled with plastic oil and ethanol blends are obtained at 8 kg of load, injection pressure of 257 bar, injection timing of 17° before top dead center and blend of 15%. The engine performance parameters obtained at optimum engine running conditions are BTHE 32.5%, BSFC 0.24 kg/kW.h, CO 0.057%, HC 10 ppm, NOx 324.13 ppm and smoke 79.1%. The values predicted from ANN are found to be more close to experimental values when compared with the values of RSM.

Originality/value

In the present work, a comparative analysis is carried out on the prediction capabilities of ANN and RSM for variable compression ratio engine fuelled with ethanol blends of plastic oil. The error of prediction for ANN is less than 5% for all the responses such as BTHE, BSFC, CO and NOx except for HC emission which is 12.8%.

Details

World Journal of Engineering, vol. 18 no. 6
Type: Research Article
ISSN: 1708-5284

Keywords

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