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Article
Publication date: 29 January 2020

Sungwook Min, Namwoon Kim and Carlos Lo

The purpose of this study provides the enhancing factors of corporate social responsibility (CSR) and examines their differential effects on corporate social performances for…

400

Abstract

Purpose

The purpose of this study provides the enhancing factors of corporate social responsibility (CSR) and examines their differential effects on corporate social performances for business-stakeholder groups (i.e. investors, employees, suppliers and customers) and public-stakeholder groups (i.e. communities and the environment).

Design/methodology/approach

This study uses a differenced-equation model to test the differential effects of CSR-enhancing factors. The study tests the impact of each factor controlling the effects of the other CSR-enhancing factors in one multivariate analysis with survey data of 776 small and medium-sized enterprises from Hong Kong.

Findings

This study finds that firms give more CSR efforts for public stakeholders than for business stakeholders as firms’ financial resources, institutional conformity and their perceived regulatory pressure increase. On the other hand, firms provide more CSR efforts for business stakeholders than for public stakeholders when such efforts are based on their strategic motivation.

Originality/value

The main contribution of this study is to clarify diverse CSR-enhancing factors for different stakeholders, in particular, business vs public stakeholders, thus to help firms understand the effective ways to increase CSR actions for specific target stakeholder groups.

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Article
Publication date: 13 February 2017

Sungwook Min, Namwoon Kim and Ge Zhan

The purpose of this study is to offer explanations of the wide variation in the impact of market size on new market entry decisions – i.e. its positive impact lessens because of…

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Abstract

Purpose

The purpose of this study is to offer explanations of the wide variation in the impact of market size on new market entry decisions – i.e. its positive impact lessens because of unreliable predictability of market size on post-entry profit and entry motivations other than post-entry profit.

Design/methodology/approach

On the basis of the two explanations, this paper builds a contingency frame that the impact of market size on new market entry depends on entry-context-specific variables. It validates the contingency frame, empirically analyzing 219 parameter estimates of the impact of market size on market entry obtained from 41 existing empirical studies.

Findings

The meta-analysis results reveal that the entry-context-specific variables used in this study – niche market entry, high-tech market entry, entry by industry incumbent firms and the year of market entry – notably moderate the impact of market size on new market entry decisions, as the research frame suggests.

Research limitations/implications

This study examines the various literature and study outcomes in the areas of marketing, economics and strategy to elucidate whether and when market size is a critical driver of new market entry. In most cases, the greater the new market size, the greater is the propensity to enter the market. However, the contingency arguments stated in this paper suggest that firms may and do enter a new market even if the market size is not large at the time of entry.

Originality/value

This paper enhances the understanding of the relative importance of market size in market entry decisions, which depend on various entry contexts. It clarifies the direction and magnitude of the impact of such entry contexts.

Details

European Journal of Marketing, vol. 51 no. 1
Type: Research Article
ISSN: 0309-0566

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Article
Publication date: 14 May 2019

Daniel Gyung Paik, Timothy Hamilton, Brandon Byunghwan Lee and Sung Wook Yoon

The purpose of this paper is to investigate the association between the purpose of a loan and the type of debt covenants, separated into balance sheet-based and income…

544

Abstract

Purpose

The purpose of this paper is to investigate the association between the purpose of a loan and the type of debt covenants, separated into balance sheet-based and income statement-based covenants.

Design/methodology/approach

Using private loan deal observations obtained from the DealScan database over the period between 1996 and 2013, the authors classify the sample loan deals into three categories based on the purpose of borrowing, namely, borrowings for corporate daily operating purposes, financing purposes and acquisition and investing purposes. The authors conduct multinomial logistic regression analysis to test the relationship between the choice of financial ratios in a debt covenant and the purpose of a loan, controlling for financing constraints and other factors that have been identified as important to debt covenant analysis in prior studies.

Findings

The results provide evidence that the purpose of the loan is significantly associated with the type of debt covenants, suggesting that the lender and the borrower have considered the loan purpose when structuring their debt agreements. More specifically, the results indicate that the loans borrowed to fund acquisitions or long-term investment projects are more likely to have income statement-based covenants and less likely to have balance sheet-based covenants. In contrast, the loans borrowed for corporate daily operating purposes or financing purposes are more likely to contain balance sheet-based covenants relative to income statement-based covenants.

Research limitations/implications

The authors show that loan purpose is significantly associated with the choice between income statement-based and balance sheet-based covenants. This result further illustrates ways in which accounting information improves contracting efficiency. The results are limited to the US market with its institutional structure. In future studies, it would be interesting to perform similar investigations on firms in other countries.

Practical implications

The findings contain important and economically significant implications indicating that loan lenders and borrowers agree to include different types of accounting information (that is, income statement- versus balance sheet-based financial ratios) in their loan covenants for different purpose loans.

Social implications

Overall, the results provide important evidence regarding the connection between debt covenant structure and loan purpose. In doing so, it contributes to the literature on debt contract design (Dichev and Skinner 2002; Chava and Roberts 2008; Demerjian 2011; Christensen and Nikolaev 2012). Despite much interest in debt contract design, Skinner (2011) argues that there still exists incomplete knowledge of the economic factors that structure debt contracts. Income statement-based covenants depend on measures of profitability and efficiency and act as trip wires that transfer control rights to lenders when borrowing firms’ performance deteriorates. On the other hand, balance sheet-based covenants rely on information about sources and uses of capital and align interests between borrowing firms and lenders by restricting the borrower’s capital structure. The authors show that loan purpose is significantly associated with the choice between income statement-based and balance sheet-based covenants. This result further illustrates ways in which accounting information improves contracting efficiency.

Originality/value

This study is the first to identify differences in trends over time for the use of income statement- and balance sheet-based covenants as it relates to different loan purposes. The authors build on prior research to examine the degree to which loan purpose is associated with the choice between income statement-based and balance sheet-based covenants.

Details

Review of Accounting and Finance, vol. 18 no. 2
Type: Research Article
ISSN: 1475-7702

Keywords

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