Anchoring in international merger and acquisition equity decisions: evidence from Chinese firms

2020 ◽  
Vol 15 (3) ◽  
pp. 395-410
Author(s):  
Huimin Xiao
Keyword(s):  
Positive Impact ◽  
Merger And Acquisition ◽  
Tobit Regression ◽  
Strategic Decisions ◽  
Host Countries ◽  
Uncertain Environments ◽  
Content Type ◽  
Anchoring Effect ◽  
Top Managers ◽  
Anchoring Effects

PurposeIn uncertain environments, top managers may be inadvertently affected by the anchor information and make sticky decisions. The purpose of this paper is to examine how anchoring influences international merger and acquisition (M&A) equity decisions.Design/methodology/approachBased on the data of Chinese international M&A deals from 2007 to 2018, this paper uses the Tobit regression method to examine the anchoring effects on international M&A equity decisions.FindingsThe study shows that the acquiring firm's previous international M&A equity level as a self-generated anchor has a positive impact on the focal international M&A equity level. The local market's previous international M&A equity level as an externally provided anchor has a positive impact on the focal international M&A equity level. When there are self-generated anchors and externally provided anchors, the self-generated anchoring effect is stronger than the externally provided anchoring effect. The anchoring effect is stronger when the acquiring firm enters less stable host countries.Research limitations/implicationsThe acquirers in a single-country context may limit the generalizability of the results, and this study does not explicitly determine whether managers' decisions are unintentional or deliberate.Originality/valueThe study contributes to the discussion of equity-based foreign entry mode decisions by exploring anchoring behavior in strategic decisions. It provides an empirical investigation of the different anchoring effects and draws attention to the boundary conditions surrounding anchoring.

Expatriate assignments: the “same” job may require different tasks

2019 ◽  
Vol 14 (2) ◽  
pp. 227-239
Author(s):  
Scott Martin ◽  
Reynold James
Keyword(s):  
Mixed Method ◽  
Positive Impact ◽  
Host Countries ◽  
Content Type ◽  
Management Processes ◽  
Task Differences ◽  
Expatriate Assignments ◽  
Development And Management ◽  
Method Approach ◽  
Practical Implications

Purpose Given a specific job, this paper aims to examine if the tasks change when moving from one country to another, and if so, whether such changes are at least partly a function of environmental factors. Design/methodology/approach A mixed-method approach (surveys and interviews) with professional-level expatriates based in the UAE. Findings The results indicated that the “same” job often required different tasks depending on the country. Given a matching job between home and host countries, 66 per cent of respondents indicated that the job was different and on average, 20 per cent of the job was perceived to be different. Environmental forces did account for meaningful task differences. Legal and regulatory forces were a particularly important driver of task differences. Practical implications It is important to consider potential task differences in connection with expatriate assignments. Attending to task differences can have a positive impact on staffing, development and management processes. Originality/value Given the “same” job, the specific tasks may be different depending on the country.

Performance feedback and organizational learning: the role of regulatory focus

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Shinhye Ahn ◽  
Cecile K. Cho ◽  
Theresa S. Cho
Keyword(s):  
Organizational Learning ◽  
Performance Feedback ◽  
Learning Process ◽  
Regulatory Focus ◽  
Strategic Change ◽  
Managerial Compensation ◽  
Strategic Decisions ◽  
Content Type ◽  
Top Managers

PurposeThis study investigates how a firm's regulatory focus (i.e. promotion and prevention foci) affects growth- and efficiency-oriented strategic change, highlighting the role of organizational-level regulatory focus as a cognitive frame within which to interpret performance feedback and its subsequent effects on strategic decisions.Design/methodology/approachThe authors collected longitudinal data on 98 S&P 500 manufacturing firms for a seven-year period. The panel data, which includes texts from the firms' 10-K filings, were then analyzed using a feasible generalized least squares (FGLS) regression estimator to test the authors’ hypotheses.FindingsA firm's strategic change orientation is affected by its regulatory focus and performance feedback: a promotion focus increases the magnitude of growth-oriented strategic change, while a prevention focus favors efficiency-oriented strategic change. Furthermore, both foci moderate the effect of performance feedback on the strategic change orientation: under negative performance feedback, a promotion (prevention) focus increases (decreases) the magnitude of growth-oriented strategic change relative to that of efficiency-oriented change. The findings provide robust evidence that regulatory focus can influence how organizations learn from feedback and formulate strategic change.Research limitations/implicationsThe authors’ examination of regulatory focus and organizational learning process relied on large manufacturing firms in the USA. However, learning process could be quite different in small and/or young firms. Future work should expand to a wider range of organizational types, such as nascent entrepreneurial ventures. In addition, the authors’ measurement of regulatory focus using corporate text has inherent weakness and could be supplemented with alternative research methods, such as surveys, interviews or experiments. All in all, however, the findings of this study offer a novel behavioral perspective while demonstrating that a regulatory focus is an important antecedent of organizational learning.Practical implicationsThis study highlights the importance of motivational characteristics of the top managers in the process of organizational learning from performance feedback. Furthermore, recruitment of a new top manager should be aligned with the organizational context, values and goals. In addition, corporate governance systems such as managerial compensation schemes need to be carefully designed so as to maximize organizational resilience, especially in the context of performance downturn or environmental change. Establishing a constructive organizational culture so that strategic decisions are not overly swayed by the performance outcomes would also be crucial to the organizational learning process.Social implicationsThis study highlights the importance of understanding the motivational orientations of top managers in organizational learning. In terms of managerial compensation, for instance, an optimal incentive system should reflect the desired performance output by encouraging managerial behavior that corresponds to its objective. Furthermore, motivational orientation of new recruits should be considered in the context of the composition of the top management team members in order to achieve “optimal fit.” In addition, this study suggests that top executives' regulatory focus can be a key factor for organizations in balancing goals of different value orientations.Originality/valueThe findings of this study demonstrated that a firm-level regulatory focus has a significant effect on organizational learning and strategic change following performance feedback. The authors hope this study provides an impetus for future discussions on the microcognitive mechanisms of organizational learning by exploring the relations between organizations' regulatory foci, performance feedback and strategic change orientations.

scholarly journals Impact of external assurance on corporate climate change disclosures: new evidence from Finland

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Probal Dutta ◽  
Anupam Dutta
Keyword(s):  
Climate Change ◽  
Information Asymmetry ◽  
Voluntary Disclosure ◽  
Positive Impact ◽  
Tobit Regression ◽  
Control Variables ◽  
Accounting Firms ◽  
Content Type ◽  
Corporate Managers ◽  
The Impact

PurposeThe purpose of this research is to examine the impact of external assurance on the level of voluntary corporate climate change disclosures by Finnish firms.Design/methodology/approachThe sample of this study includes 228 firm-year observations over the period 2008–2015 for listed Finnish companies that have issued sustainability reports and responded to the Carbon Disclosure Project (CDP) questionnaire at least once during the sample period. The authors conduct a panel regression analysis to study the afore-mentioned linkage. In addition, the Tobit regression model is also estimated to check the robustness of our findings.FindingsThe findings suggest that assurance has a highly significant positive impact on the level of corporate climate change disclosures even after controlling for the effect of a number of control variables. Moreover, among the control variables, firm size and asset age are found to have significant effect on the extent of carbon emissions disclosure. Furthermore, the additional analysis reveals that the type of assurance providers (accounting firms vs non-accounting firms) and the type of financial auditors (Big4 financial auditors vs non-Big4 financial auditors) do not influence the level of climate change disclosure of assured companies.Research limitations/implicationsThis research is subject to certain limitations. First, the source of the data used in this research is the CDP database which has limitations in that it is a voluntary disclosure process where all the observations collected are self-reported by the responding firms. This may bias the reported findings. Second, our sample includes only listed companies and hence the results might have limited explanatory capacity for unlisted firms.Practical implicationsBy using the results of this research, corporate managers will be able to reduce the information asymmetry between various stakeholders and them through disclosure of accurate, reliable and credible environmental information. Such disclosures will, in turn, allow socially responsible investors to choose eco-friendly investments and will thus enable them to make appropriate investment decisions.Originality/valueResearch on the external assurance-corporate climate change disclosure nexus is scarce. This study addresses this gap in the nonfinancial disclosure assurance literature by demonstrating that external assurance increases the level of voluntary corporate climate change disclosure. Drawing on stakeholder-agency theory, this study views external assurance as a monitoring structure that potentially curbs the monitoring problem between corporate managers and other stakeholders and increases the amount of climate change disclosures making a possible avenue for the reduction of the information asymmetry between them.

How do formal and informal institutional distance affect the reverse knowledge spillover of Chinese MNCs?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Yi She ◽  
Jin Hong ◽  
Chuwei Ji
Keyword(s):  
Multinational Corporations ◽  
Knowledge Spillovers ◽  
Positive Impact ◽  
Innovation Performance ◽  
Parent Company ◽  
Practical Significance ◽  
Host Countries ◽  
Content Type ◽  
Chinese Mncs ◽  
The Impact

PurposeThis study examines the impact of outward foreign direct investment (OFDI) of Chinese multinational corporations (MNCs) and formal and informal institutional distances between the home and host countries on the innovation performance of parent company.Design/methodology/approachThis study uses panel data to conduct an empirical analysis on the data of 59 mature Chinese MNCs and their 872 overseas subsidiaries over the past 11 years and draws interesting results.FindingsResults show that OFDI and formal and informal institutional distances between countries exert a significant positive impact on the innovation performance of the parent company and formal and informal institutional distances negatively moderate the impact between OFDI and the parent company's innovation performance.Originality/valueAlthough international business research pays increasing attention to transnational differences in institutions and cultures, research on the relationship between technology spillover and distance is relatively limited. In addition, few studies consider the impact of FID and IFID on transnational reverse knowledge spillovers. This research fills these research gaps, and the conclusions have certain practical significance for multinational companies.

How ordinary returnees and foreigners drive firms’ exports?

2019 ◽  
Vol 29 (1) ◽  
pp. 2-24 ◽  
Author(s):  
Xiaoting Hu ◽  
Jizhen Li ◽  
Zhanming Jin
Keyword(s):  
Design Methodology ◽  
Export Performance ◽  
Positive Influence ◽  
Substitution Effects ◽  
Tobit Regression ◽  
Science Park ◽  
Content Type ◽  
Positive Effects ◽  
Top Managers ◽  
The Relationship

PurposeThe purpose of this paper is to examine the influence of ordinary returnee and foreign employees in firm export performance, whose impacts have been overseen in prior research. This study also explores whether returnee and foreign employees function as substitutes or complements, and simultaneously considers the impacts of contextual factors on the relationship between returnee (foreign) employees and firm export performance.Design/methodology/approachUsing panel data of Beijing’s Zhongguancun Science Park manufacturing firms over a seven-year period, from 2009 to 2015, the paper applies panel Tobit regression to deal with the left-censoring dependent variable.FindingsThis paper finds the number of returnee and foreign employees has significantly positive influence in promoting firm export performance; however, substitution effects exist between them. In addition, the positive effects of returnee and foreign employees on firm export performance are conditional. For foreign employees, the presence of corporate president with international background and firm imports will weaken their positive impacts. In terms of returnee employees, their positive influence proves not to be significantly reduced by corporate president’s international background but weakened by firm imports.Originality/valuePrevious research only highlights returnee entrepreneurs’ and top managers’ positive influence on firm export performance. However, with the development of emerging countries, for instance, China in this paper, ordinary returnee and foreign employees are playing more and more critical roles in firms’ internationalization process. This paper responds to the practical needs to focus on ordinary returnee and foreign employees.

Examining the relationship between the economic environment and restaurant merger and acquisition activities

2018 ◽  
Vol 30 (2) ◽  
pp. 1054-1071 ◽  
Author(s):  
Jewoo Kim ◽  
Tianshu Zheng ◽  
Thomas Schrier
Keyword(s):  
Positive Impact ◽  
Proper Time ◽  
Low Cost ◽  
Merger And Acquisition ◽  
Restaurant Industry ◽  
Economic Environment ◽  
Economic Factors ◽  
Content Type ◽  
The Relationship

Purpose The purpose of this study is to determine whether the economic environment affects the merger and acquisition (M&A) activities in the restaurant industry. Design/methodology/approach The M&A transactions in the restaurant industry between 1981 and 2013 (n = 1,415) were examined. Data were collected from the Securities Data Corporation (SDC) database. Using an autoregressive distributed lag approach, this study developed three error correction models to explore the short- and long-term relationships between restaurant M&A activities and four macro-economic factors. Findings This study found that there was a long-term equilibrium relationship between the M&A activities and the four economic factors and that economic outlook had a significantly positive impact in the long term, while the effect of cost of debt was significantly negative in both the short and long terms. The findings suggest that restaurant firms are more likely to adopt M&A strategy when they are optimistic about the future economy and can take on debt at a low cost. Practical implications The findings of this study are expected to help practitioners make informative M&A decisions in the restaurant industry taking into consideration the economic environment. They will also help investors effectively manage their portfolios by predicting and ascertaining the proper time to invest in the restaurant industry based on the changes of economic environment. Originality/value No known study has been identified that examined the relationship between macro-economic factors and M&A activities in the restaurant industry. The findings of the study are expected to fill the gap in the literature by demonstrating the economic environment and the M&A activities in the restaurant industry are in a long-term equilibrium achieved by self-correction of their short-term disequilibrium.

Owners vs executives and decisions vs control

2019 ◽  
Vol 19 (3) ◽  
pp. 458-470 ◽  
Author(s):  
Jon Aarum Andersen
Keyword(s):  
Corporate Governance ◽  
Boards Of Directors ◽  
Management Theory ◽  
Strategic Decisions ◽  
Content Type ◽  
Planning And Control ◽  
Top Managers ◽  
Decision Control ◽  
Decision Management ◽  
And Control

Purpose Some scholars have claimed that CEOs make decisions, while boards of directors control these decisions by applying the concepts of decision management and decision control. These concepts were suggested more than 30 years ago and are still applied in corporate governance research. They are now challenged on the basis of scholarship on corporate governance and management. Design/methodology/approach Corporate governance addresses the authority and responsibility that boards of directors and executives have. Management theory addresses planning and control in corporations. Findings The relationship between the owners (the boards of directors) and the top managers is hierarchical. This paper concludes that owners or boards of directors make decisions on main and strategic goals. Decisions cannot be controlled, but the implementation and outcomes of plans can. The latter is managers’ responsibility. The terms “decision management” and “decision control” are undefined and do not describe what takes place in organizations. Research limitations/implications This paper does not contain any new empirical data. Originality/value Management theory offers clear definitions of decisions, decision-making and control. The concepts of decision management (initiation and implementation) and decision control (ratification and monitoring) neither properly describe who makes major and strategic decisions nor how and who controls the consequences of these decisions.

Impact of gender diversity in boardroom on risk-return profile of Indian corporates

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Narander Kumar Nigam ◽  
Kirtivardhan Singh ◽  
Purushottam Arya
Keyword(s):  
Firm Performance ◽  
Positive Impact ◽  
Stock Exchange ◽  
Gender Diversity ◽  
Women Directors ◽  
Tobit Regression ◽  
Firm Risk ◽  
Risk And Return ◽  
Content Type ◽  
Female Director

Purpose The existing literature point that the presence of women directors in a firm reduces its risk. However, the relation between boardroom gender diversity and a firm’s return is widely disputed leading to no concrete answer. Some studies mention that women directors have a positive impact on firm performance, whereas, on the other hand, some findings suggest that women directors reduce financial performance. This paper aims to study the relationship of firm risk and return with boardroom gender diversity and the net impact on firm performance in the Indian context. This study uses not only traditional measures of risk and return but also the third measure of risk-adjusted returns to postulate its findings. Design/methodology/approach Based upon the data of the top 100 of the Bombay Stock Exchange-500 firms for the period FY 2009–2010 to FY 2018–2019, this study applied fixed effect panel regression and random effects Tobit regression to examine the effect of board gender diversity on firm performance. Findings The study concludes that firms with women directors on board have lower risk and lower returns. It also results in a higher risk-adjusted return, creating a positive impact on a firm’s performance. Originality/value The paper contributes to the existing literature on corporate governance by considering return, risk and risk-adjusted returns in single research to have a holistic measure of firm performance. It provides empirical evidence from one of the largest emerging economies, India where the female director and independent female director have been introduced recently.

How top management's environmental awareness affect corporate green competitive advantage: evidence from China

Kybernetes ◽  
2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Cuizhen Cao ◽  
Xiujun Tong ◽  
Yunqi Chen ◽  
Yue Zhang
Keyword(s):  
Competitive Advantage ◽  
Positive Impact ◽  
Innovation Management ◽  
Environmental Awareness ◽  
Competitive Advantages ◽  
Green Innovation ◽  
Content Type ◽  
Upper Echelons Theory ◽  
Top Managers

PurposeGreen ambidexterity innovation and green competitive advantage are of great significance to enterprises' sustainable development. From the perspective of upper echelons theory, This paper aims to investigate the role of top managers in gaining green competitive advantage and the intermediary effect of the green ambidexterity innovation between them.Design/methodology/approachThis paper uses empirical data from heavily polluting enterprises in China for constructing a model to infer how enterprises achieve the green competitive advantage.FindingsThe paper shows that (a) top managers' environmental awareness and the green ambidexterity innovation are both positively related to the green competitive advantage of enterprises, while there is a difference between the exploitative green innovation and the exploratory green innovation regarding the heterogeneity; the positive effect of the exploratory green innovation on enterprises' green competitive advantage is greater than that of the exploitative green innovation; (b) the green ambidexterity innovation plays a partial intermediary effect between top managers' environmental awareness and enterprises' green competitive advantage and (c) strategic flexibility positively moderates the relation between the green ambidexterity innovation and the green competitive advantage. The study concludes that top managers' environmental awareness has a significantly positive impact on reinforcing green competitive advantages and adopting the green ambidexterity innovation for heavily polluting enterprises in China.Originality/valueThis paper contributes to the green innovation management literature by offering a theoretical framework for examining how top managers' environmental awareness influences enterprises' green competitive advantage.

The integrated impact of new product and market flexibilities on operational performance

2018 ◽  
Vol 29 (7) ◽  
pp. 1163-1187 ◽  
Author(s):  
Ahmed Salameh Alamro ◽  
Abdulkareem Salameh Awwad ◽  
Abdel Latef M. Anouze
Keyword(s):  
New Product Development ◽  
Positive Impact ◽  
Small And Medium Enterprises ◽  
New Product ◽  
Operational Performance ◽  
Strategic Flexibility ◽  
Manufacturing Companies ◽  
Strategic Decisions ◽  
Content Type ◽  
Medium Enterprises

Purpose The purpose of this paper is to investigate and test the relationship between a company’s strategic flexibility, as evidenced by new product development flexibility and market flexibility, and its operational performance (OP) in Jordanian manufacturing companies. Design/methodology/approach Using a survey questionnaire, data were collected against two strategic decisions market and new product flexibility (NPF) from 222 middle and senior managers belonging to 116 Jordanian manufacturing firms. Confirmatory factor analysis was employed to investigate the effects of these two strategic decisions on OP. Findings Results show a significant positive relationship between both NPF and market flexibility and OP. No significant differences between small and medium enterprises and large companies are found, indicating that the model is valid for both sizes. Also, the additional analyses suggest that the proposition that both NPF and market flexibility are important for OP was correct. Research limitations/implications Only two strategic flexibility decisions were considered in this paper, however, researcher could investigate other strategic flexibility decisions on OP. Practical implications The strategic flexibility level, in terms of NPF and market flexibility, that is needed for coping with uncertainty equips managers to handle challenges by enhancing the company’s controlled capacity through a considerable reduction in response time. An improvement in the company’s strategic flexibility enhances its overall performance and competitiveness and this, in turn, has a positive impact on its long-term sustainability. Originality/value The paper provides insights into the strategic flexibility decision practices in a Jordanian context. It provides further evidence that both market flexibility and NPF are significant in enhancing OP.

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