Pablo de Andrés, Gabriel de la Fuente and Pablo San Martin
The way business practice adjusts to the models proposed by financial theory has been under moderate yet constant scrutiny from the academic world. The purpose of this paper is to…
Abstract
Purpose
The way business practice adjusts to the models proposed by financial theory has been under moderate yet constant scrutiny from the academic world. The purpose of this paper is to contribute to this line of research by showing CFOs’ perceptions of Spanish companies with regard to their capital structure decisions.
Design/Methodology
The empirical approach is examined using information gathered through a survey answered by 140 CFOs of Spanish companies during 2011. Results are obtained from mean difference tests and ordered probit estimations.
Findings
The results of the paper show that managers attach importance to establishing and monitoring a target debt ratio and the capacity to maintain additional debt in order to provide financial flexibility. In addition, CFOs prefer internal financing to external, using debt when internal funds do not allow investments to be funded.
Originality/Value
On the whole, the results of this research show that trade-off and pecking order theories are not alternative views of the same problem, but represent complementary approaches of how companies define their capital structures.
Objetivo
El modo en que la práctica empresarial se ajusta a los modelos propuestos por la teoría financiera ha sido objeto de un tímido pero constante escrutinio por parte del mundo académico. En este trabajo, se contribuye a esta línea de investigación mediante la exploración de las percepciones que los directivos financieros de empresas españolas mantienen sobre sus decisiones de estructura de capital.
Diseño/Metodología
El análisis empírico explota las respuestas de 140 directores financieros de empresas españolas a una encuesta realizada en el año 2011. Los principales resultados son obtenidos de los tests de diferencias de medias y la estimación de modelos Probit ordenado.
Resultados
Nuestros resultados muestran que los directivos financieros consideran importante el establecimiento y persecución de un objetivo de deuda objetivo y la flexibilidad financiera que otorga el mantenimiento de capacidad de endeudamiento adicional. Además los directores financieros prefieren utilizar los recursos generados internamente antes que la financiación externa, utilizando deuda cuando los fondos internos son insuficientes para financiar sus inversiones.
Originalidad/Valor
En conjunto, los resultados de nuestra investigación muestran que la teoría del trade-off y del pecking-order no son soluciones alternativas de un mismo problema, sino enfoques complementarios sobre las decisiones de estructura de capital adoptadas en la práctica.
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Cristian Sosa Vera and Pablo Andres
A user-friendly HTML-based open-source software has been developed for structural shielding design of medical X-ray imaging facilities. Based on values published by the NCRP…
Abstract
A user-friendly HTML-based open-source software has been developed for structural shielding design of medical X-ray imaging facilities. Based on values published by the NCRP Report N° 147 the software allows thickness calculations for different materials used in conventional X-ray rooms, mammography rooms and computed tomography rooms, diminishing errors resulting from the use of curves. The software focuses on the optimization principle by considering workload distributions instead of applying all the workload at a single high operating potential. The input data can be those recommended by the NCRP Report N° 147 or, if the facility has its own data, they can be used instead. With the implemented methodology, the code validation was performed by comparison of the results with a study case provided by the Report. The software application is available in two languages (English and Spanish) and provides the accuracy of the method presented, as well as assisting the physicist in shielding computations in a user-friendly manner. This software tool is available upon request to the corresponding author.
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Syeda Ikrama and Syeda Maseeha Qumer
This case study is intended to help students to evaluate Kavak’s business model, examine the global expansion strategy of Kavak, analyze the competitive strategy adopted by Kavak…
Abstract
Learning outcomes
This case study is intended to help students to evaluate Kavak’s business model, examine the global expansion strategy of Kavak, analyze the competitive strategy adopted by Kavak, recognize the ways in which Kavak leveraged technology in all its business operations, examine the key challenges faced by Kavak in the fragmented Latin American as well as global used car market and explore strategies that Kavak can adopt in future to maintain its dominance in the global used car market.
Case overview/synopsis
This case study is about the meteoric rise of Kavak, a Mexican used car retailer that aimed to disrupt the emerging pre-owned car markets with its unique value propositions and compelling global expansion strategy. Co-founded in 2016 by Carlos García Ottati (Ottati), in Mexico City, Kavak emerged as an end-to-end solution to buy, manage, sell and finance pre-owned cars. Using pricing algorithms driven by artificial intelligence and machine learning-based inspection tools and personalized recommendations, Kavak reshaped the mobility sector in the Latin American and Middle Eastern regions. In a mere six years of operation, the company established its presence in nine countries: Argentina, Brazil, Chile, Colombia, Mexico, Peru, Turkey, the UAE and Oman. Kavak’s innovative yet simple business model ensured transparency and guarantees in all its transactions where reconditioned vehicles were sold to thousands of customers through its e-commerce platform as well as a network of brick-and-mortar hubs. Its in-house financing arm Kavak Capital was at the core of its business model, as it offered affordable leasing options, making car ownership possible for both first- and second-time car owners within just a few minutes of applying. The platform had an inventory of 40,000 vehicles as of 2023 with more than 50% of Kavak’s sales being financed by Kavak Capital. The case study discusses the challenges faced by Kavak in the fragmented used car market including rising interest rates for vehicle loans, managing capital-intensive operations, rising competition and external economic headwinds such as inflation and slowing economic growth. Going forward, the challenge before Ottati and his team was how to make profits, build customer trust, attract customers and achieve global success.
Complexity academic level
This case study is suitable for MBA/MS level and is designed to be a part of the business strategy/and international business curriculum.
Subject code
CSS: 5: International business.
Supplementary materials
Teaching notes are available for educators only.
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Barbara de Lima Voss, David Bernard Carter and Bruno Meirelles Salotti
We present a critical literature review debating Brazilian research on social and environmental accounting (SEA). The aim of this study is to understand the role of politics in…
Abstract
We present a critical literature review debating Brazilian research on social and environmental accounting (SEA). The aim of this study is to understand the role of politics in the construction of hegemonies in SEA research in Brazil. In particular, we examine the role of hegemony in relation to the co-option of SEA literature and sustainability in the Brazilian context by the logic of development for economic growth in emerging economies. The methodological approach adopts a post-structural perspective that reflects Laclau and Mouffe’s discourse theory. The study employs a hermeneutical, rhetorical approach to understand and classify 352 Brazilian research articles on SEA. We employ Brown and Fraser’s (2006) categorizations of SEA literature to help in our analysis: the business case, the stakeholder–accountability approach, and the critical case. We argue that the business case is prominent in Brazilian studies. Second-stage analysis suggests that the major themes under discussion include measurement, consulting, and descriptive approach. We argue that these themes illustrate the degree of influence of the hegemonic politics relevant to emerging economics, as these themes predominantly concern economic growth and a capitalist context. This paper discusses trends and practices in the Brazilian literature on SEA and argues that the focus means that SEA avoids critical debates of the role of capitalist logics in an emerging economy concerning sustainability. We urge the Brazilian academy to understand the implications of its reifying agenda and engage, counter-hegemonically, in a social and political agenda beyond the hegemonic support of a particular set of capitalist interests.
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Paolo Saona Hoffmann and Eleuterio Vallelado González
Our aim is to analyze the type of lender and the debt maturity of Chilean firms as a function of their ownership structure and their growth opportunities. We perform the empirical…
Abstract
Our aim is to analyze the type of lender and the debt maturity of Chilean firms as a function of their ownership structure and their growth opportunities. We perform the empirical analysis using an unbalanced panel data of 169 firms from 1990 to 2001. Our results show that Chilean firms with growth opportunities, ownership concentration, and a need for external funds issue short‐term bank debt to finance their new investments. This financing source is an efficient mechanism in Chile to alleviate agency and asymmetric information problems. The Chilean institutional environment influences firms’ decisions on banking debt.
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Esman Morekwa Nyamongo and Kebede Temesgen
The purpose of this paper is to investigate the effect of corporate governance on the performance of 37 commercial banks in Kenya over the period 2005‐2009.
Abstract
Purpose
The purpose of this paper is to investigate the effect of corporate governance on the performance of 37 commercial banks in Kenya over the period 2005‐2009.
Design/methodology/approach
The paper uses two measures of performance, i.e. return on assets (ROA) and return on equity (ROE), and the dependent variables and three measures of governance – namely the board size, independent directors, and CEO duality – as the key independent variables. The study follows a panel econometrics technique to investigate the relationship between governance variables and bank performance.
Findings
The main findings are as follows: a large board size tends to impact performance negatively; the existence of independent board directors tends to enhance the performance of the banks; and there is no evidence that CEO duality or otherwise has impact on the performance of commercial banks in Kenya.
Practical implications
The study therefore recommends that for commercial banks in Kenya to register high performance they need to check the size of their board of directors and also increase the number of independent directors.
Originality/value
To the authors' best knowledge, this is the first study on Kenya that has used advanced panel data techniques.
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Paolo Saona and Eleuterio Vallelado
The purpose of this paper is to determine whether bank debt‐maturity decisions are conditioned by growth opportunities, the firms’ ownership structure, or the institutional…
Abstract
Purpose
The purpose of this paper is to determine whether bank debt‐maturity decisions are conditioned by growth opportunities, the firms’ ownership structure, or the institutional environment.
Design/methodology/approach
The empirical analysis is undertaken using an unbalanced panel data of Chilean and Spanish firms.
Findings
The results indicate that when banks are not allowed to become stockholders, managers use bank debt‐maturity as a corporate governance mechanism. When banks can participate in the ownership of the firms that they finance, short‐term bank debt can serve as a substitute for a governance mechanism.
Originality/value
The main contribution of this paper is the analysis of how differences in financial development among countries modify financial decisions by firms.
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Chris Ogbechie, Dimitrios N. Koufopoulos and Maria Argyropoulou
This paper aims to review how corporate governance is institutionalised in Nigeria and examine the relationship between board size, CEOs’ duality, board composition and the…
Abstract
Purpose
This paper aims to review how corporate governance is institutionalised in Nigeria and examine the relationship between board size, CEOs’ duality, board composition and the board's involvement in strategy.
Design/methodology/approach
A structured questionnaire was sent by post to the chairmen of 138 publicly quoted companies in Nigeria in November 2004.
Findings
Using primary and secondary data, our results suggest that the Nigerian public companies have embraced some principles of the Code of Best Practices for Public Companies. There is a high level of board involvement in strategy decision‐making process, but no correlation was found between board involvement and a number of governance variables (board size, board independence and CEO duality).
Research limitations/implications
The sample of 39 responding companies is small although it represents a 28 per cent of response rate and is representative of the Nigerian stock market. However, we are unable to look at other factors such as industry sectors and we cannot generalise our findings regarding corporate governance practices in Nigeria.
Practical implications
The investment climate in Nigeria can become more reassuring than in the past although there is room for further improvements as the effectiveness of the corporate government practices is still in doubt.
Originality/value
This paper adds to the scanty literature available on corporate governance practices in developing, countries. Findings extend our understanding about the strategic functions of the board in Nigeria, which is Africa's most populous nation, and the world's sixth larger producer of oil.
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The purpose of this paper is to examine the Shariah governance mechanisms of takaful insurance and their impact on its financial performance.
Abstract
Purpose
The purpose of this paper is to examine the Shariah governance mechanisms of takaful insurance and their impact on its financial performance.
Design/methodology/approach
The effect of Shariah governance mechanisms on financial performance is analyzed over 2012–2018 on a sample of 11 takaful listed insurances in the Middle East region. Using multiple regression models, four hypotheses addressing Shariah governance mechanisms are tested.
Findings
The findings generally reveal that Shariah governance has an impact on the financial performance of takaful insurance. The Shariah Supervisory Board (SSB) size, the members’ reputation and their qualifications are the main determinants of financial performance for listed takaful insurance.
Research limitations/implications
This paper includes two main limitations that may affect the accuracy of the finding. First, the results are restricted to the Middle East region and may not be generalized to other regions. Second, the sample is dominated by UAE, i.e. 4 takaful insurances out of 11.
Practical implications
Both Shariah governance and regular governance have an impact on the financial performance of takaful insurance. Yet, the effect of Shariah governance is more robust. To improve its financial performance, takaful insurance should expand the size of the SSB, hiring reputable scholars and recruit doctors in Islamic economics.
Originality/value
This research studies takaful insurance, unlike the majority of other works that have focused on Islamic banks.
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Andrés Egido Fernández, Pablo García-Fogeda Nuñez and Félix Arévalo Lozano
This paper aims to investigate the fatigue life and dynamic loads of an arresting cable when a landing aircraft passes through a runway.
Abstract
Purpose
This paper aims to investigate the fatigue life and dynamic loads of an arresting cable when a landing aircraft passes through a runway.
Design/methodology/approach
The cable is assumed to be under tension and with bending rigidity. The normal modes and natural frequencies of the vibrating wire are obtained analytically. The response of the arresting cable owing to the impact of the landing aircraft is modelled as a problem of initial conditions. The maximum normal and tangential stresses are determined for different landing conditions and landing aircraft sizes. The fatigue life of the wire is determined based on classical theories.
Findings
The results show that maximum shear stresses occur at the end of the cable. These shear stresses increased with higher off-centre landing position and decreased tyre width. Between 50 and 70% of the service life of the cable is reduced due to the dynamic loading effects.
Originality/value
A novel technique based on the solution of a continuous elastic system is proposed for analysing the displacements and stresses on an arresting cable due to the impact of a landing aircraft. The derived stresses can be used to calculate the service life of the cable.