Kane Smith, Manu Gupta, Puneet Prakash and Nanda Rangan
Ethereum-based blockchain technology (EBT) affords members of the Enterprise Ethereum Alliance (EEA) a market advantage in deploying blockchain within their organizations…
Abstract
Purpose
Ethereum-based blockchain technology (EBT) affords members of the Enterprise Ethereum Alliance (EEA) a market advantage in deploying blockchain within their organizations, including cybersecurity and operational benefits, that leads firms to strategically invest in this nascent technology. However, the impact of such strategic investments in EBT has yet to be explored in the context of its relationship to firm value. Therefore, this study explores EBT-specific firm-level characteristics that result in a stock market reaction to announcements of strategic investments.
Design/methodology/approach
The authors use the event study methodology, strategic investment literature and signaling theory as contextualizing frameworks for their study. Additionally, the authors explore a new method for examining technology investments as a strategic counter to cybersecurity threats.
Findings
Firms that signal to the market their strong commitment to their strategic investment by developing an EBT proof of concept see significantly higher market returns. Firms that have had prior cybersecurity incidents are rewarded by the market for strategically investing in EBT, and when firms with large undistributed free cash flows utilize this cash for strategic EBT investment, the market is more likely to reward these firms, indicating the market views EBT investment positively in these circumstances.
Originality/value
The results of this study provide new evidence of the value impact of EBT for firms that suffered cybersecurity events in the past. The authors provide empirical evidence of firm-level characteristics that investors use to discern whether a strategic investment in EBT will drive organizational value. Likewise, the authors demonstrate how signaling affects investor perceptions of strategic information technology (IT) investments in EBT.
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The importance of the market for corporate control as a disciplining device has received considerable research interest in recent years. Since the advent of event study…
Abstract
The importance of the market for corporate control as a disciplining device has received considerable research interest in recent years. Since the advent of event study methodology pioneered by Fama, Fisher, Jensen and Roll (1969), and the availability of machine readable returns data from the Center of Research on Security Prices, the effects of various control related corporate events have been well documented. Jensen and Ruback (1983) in their review of the empirical literature on the market for corporate control report that the findings in general support the hypothesis that outside takeover mechanisms do act efficiently to limit managerial departures from the objective of maximising the economic well‐being of its shareholders. They further point out that studies using the event study methodology cannot distinguish between the different sources of gains in the takeover process, namely those due to synergies, or those due to lack of efficient management in the acquired firm.
Soumendra De, Ike Mathur and Nanda Rangan
The empirical evidence on mergers and takeovers indicates that positive gains due to mergers and takeovers ac‐crue almost entirely to the target firms. While average abnormal…
Abstract
The empirical evidence on mergers and takeovers indicates that positive gains due to mergers and takeovers ac‐crue almost entirely to the target firms. While average abnormal returns to target firms are invariably positive, returns to bidding firms are negative in case of mergers and not significantly different from zero in case of takeovers (see Jensen and Ruback [1983] and De and Mathur in this issue for a review of the empirical evidence). That acquiring firms should offer the shareholders of the target firms such handsome rewards and accept marginal returns for themselves is one of the unresolved problems in the context of mergers and takeovers.
Kathleen A. Farrell, Gordon V. Karels, Kenneth W. Montfort and Christine A. McClatchey
An interesting issue little explored in the celebrity endorsement literature is whether or not the activities of a celebrity endorser affect company performance. We examine the…
Abstract
An interesting issue little explored in the celebrity endorsement literature is whether or not the activities of a celebrity endorser affect company performance. We examine the impact of Tiger Woods’s tournament performance on the endorsing firm’s value subsequent to the contract signing. We do not find a relationship between Tiger’ss tournament placement and the excess returns of Fortune Brands (parent of Titleist). This is likely due to Titleist being a very small contributor to the total market value of Fortune Brands. We also fail to find a significant relationship for American Express suggesting the market does not view a golfer endorsing financial services as credible. We do, however, find a positive and significant impact of Tiger’s performance on Nike’s excess returns suggesting that the market values the additional publicity that Nike receives when Tiger is in contention to win.
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Ravindra Nath Shukla, Vishal Vyas and Animesh Chaturvedi
We aim to analyze the capital structure heterogeneity for manufacturing and service sector firms. Additionally, we analyze the impact of the COVID-19 pandemic on the leverage…
Abstract
Purpose
We aim to analyze the capital structure heterogeneity for manufacturing and service sector firms. Additionally, we analyze the impact of the COVID-19 pandemic on the leverage adjustments of corporate firms.
Design/methodology/approach
This study applies the two-step system generalized method of moments (system-GMM) and panel data of 1,115 manufacturing and 482 service sector firms listed with the Bombay Stock Exchange (S&P BSE) from 2010 to 2023. We developed and analyzed three models. Model 1 analyzes the leverage determinants and speed of adjustment (SOA) for the manufacturing and service sectors. Model 2 evaluates the leverage SOA for various sub-sectors, and Model 3 analyzes the impact of the COVID-19 pandemic on the leverage SOA.
Findings
This study suggests the three following. First, the direction of leverage determinants suggests that manufacturing firms are highly tangible. In contrast, service sector firms are high-growth firms and recorded a higher SOA (12.01%) than manufacturing (9.09%). Second, analyzing the leverage heterogeneity, we found that SOA varies across the sub-sectors. For manufacturing, food and beverage sub-sector recorded the highest SOA (12.58%), while consumer durables reported the lowest (6.38%). Communication recorded the highest (24.15%) for services, while industrial services recorded the lowest (11.18%). Third, firms across sectors and sub-sectors increased their SOA during COVID-19 pandemic.
Research limitations/implications
This in-depth analysis of leverage heterogeneity for different sectors and subsectors will assist policymakers, corporate managers and other stakeholders in making agile financial decisions.
Originality/value
The analysis of leverage heterogeneity for the manufacturing and service sector from the emerging Indian economy marks a novel contribution to existing literature.
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Frank Tian Xie and Wesley J. Johnston
An extensive, integrated review of literature precedes a new typology of alliances based on participating firms’ relative position in the supply chain (scale or link) and the…
Abstract
An extensive, integrated review of literature precedes a new typology of alliances based on participating firms’ relative position in the supply chain (scale or link) and the nature of their cooperation (equity or non‐equity). This typology helps to distinguish among a bewildering array of alliances and to explicate alliance motivations and performance on impact of e‐business technological innovations. Theoretical and managerial implications follow.
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The paper explores the impact of the quality of accounting in a given country, as measured by an index of earnings opacity, on the country's level of corruption. The results of a…
Abstract
The paper explores the impact of the quality of accounting in a given country, as measured by an index of earnings opacity, on the country's level of corruption. The results of a regression of corruption on earnings opacity for a sample of 34 countries show significant relationships between the level of corruption and the level of earnings opacity after controlling for economic development, human development, size of government and economic freedom.
Although primarily treated as two distinct research streams, strategic alliances and mergers and acquisitions together occupy much of the strategic management discourse…
Abstract
Although primarily treated as two distinct research streams, strategic alliances and mergers and acquisitions together occupy much of the strategic management discourse. Alliances, in many cases, end in acquisitions as firms use alliances as intermediate strategic options to eventually acquire a partner. As the discipline of strategy matures and the frequency and the volume of inter-firm cooperation continue to rise, it is imperative to integrate these two research streams for a holistic understanding of the theory of the firm. The purpose of this conceptual piece is threefold. First, we review the extant studies that combine these two governance modes: alliance and acquisitions. Second, drawing on the dominant strategic management theories, we highlight how prior inter-firm alliances inform future acquisitions in terms of (a) pre-combination decisions, (b) post-deal integration processes, (c) alternatives and strategies, and (d) performance outcomes. Finally, in view of the emerging trends and evocative gaps, we offer a conceptual road map to encourage future theoretical development and empirical research.
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Tushar Soubhari, Sudhansu Sekhar Nanda and Mohd Asif Shah
Migrants have been posed with less familiarity in their new environment during COVID times, faced with various social, psychological and emotional traumas. Research indicates that…
Abstract
Migrants have been posed with less familiarity in their new environment during COVID times, faced with various social, psychological and emotional traumas. Research indicates that they may have been originating from apprehension of being abandoned by their neighbours. Most of them were precarious with little wages, competing for their basic need fulfilment, putting them under more mental stress. Looking forward to the ancient principle, ‘Athithi Devo Bhavah’ (Visitors are Gods), and immediate response, measures were taken to promote community shelters and kitchens, maintaining social distancing and ensuring physical safety. The governments of different countries took proactive initiatives to study and assess their needs. The study here includes the cases being evaluated regarding migrants' need for surveillance and psycho-social support given by the government and non-profit associations during the pandemic at the global level. Remarkably, certain countries proved the working of their sustainable poverty reduction model by evaluating various factors. The study started by introducing who migrants were, diagnosing their problems faced during the pandemic, how Sustainable Development Goals can be implemented and various measures taken at government and institutional levels to protect the migrant workforce.
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Apoorva Arunachal Hegde, Venkateshwarlu Masuna, Ajaya Kumar Panda and Satish Kumar
This paper aims to conduct bibliometric analysis on the studies dealing with capital structure’s speed of adjustment (SoA) and identify the prominent themes while suggesting…
Abstract
Purpose
This paper aims to conduct bibliometric analysis on the studies dealing with capital structure’s speed of adjustment (SoA) and identify the prominent themes while suggesting future research directions in the area. The existing reviews broadly focus on the capital structure, which provides the scope for conducting a review on this sub-aspect of capital structure.
Design/methodology/approach
This study uses a three-stage process to conduct this review: identification of academic journals, selection and analysis of target papers. This study uses a combination of bibliometric tools and a system thinking approach to assess the current status of publications and emerging themes within the literature.
Findings
This study has found a progressive evolution of SoA in capital structure research from 1984 to 2021. Studies largely focus on implementing the dynamic models to analyse the impact of adjustment costs, dynamic economic conditions, corporate governance practices and other variables on the firms’ adjustment speed and financial decisions. The network analysis of citations, keywords and clusters gives further knowledge on the intellectual structure of the data.
Research limitations/implications
This study is highly dependent on the papers available within the SCOPUS database. Studies not included herein are not part of this analysis, which may or may not bear an effect on the study’s findings.
Originality/value
To the best of the authors’ knowledge, the application of systems engineering concept of “system thinking approach” to identify literature gap and suggest directions for forthcoming research is the first of its kind, thus adding a novel and multidisciplinary aspect to this study.