Debt and ownership structure: evidence from Italy

2016 ◽  
Vol 16 (5) ◽  
pp. 883-905 ◽  
Author(s):  
Fabrizio Rossi ◽  
Richard J. Cebula
Keyword(s):  
Ownership Structure ◽  
Institutional Investors ◽  
Agency Costs ◽  
Generalized Method Of Moments ◽  
Negative Relationship ◽  
Ownership Concentration ◽  
Policy Makers ◽  
Content Type ◽  
Practical Implications

Purpose The purpose of this study is to investigate the relationship between the debt and ownership structure of a sample of Italian-listed companies to measure the role assumed in the control and monitoring of agency costs. Design/methodology/approach This study examines a balanced panel data, using both a random effects model and a generalized method of moments model to better capture any problems related to the endogeneity of the variables in the model. Findings The results provide evidence of a positive relationship between debt and ownership concentration on the one hand and a negative relationship between debt and institutional investors on the other hand. The debt seems to assume both functions, i.e. the disciplinary role of substitute at low levels of ownership concentration and a complementary role at high levels of ownership concentration. Practical implications This study provides three practical implications. The first is that the complementarity between debt and ownership concentration provides evidence of the entrenchment effect and tends to weaken the company financially. Second, the results also provide useful prompts to policy-makers who should encourage the presence of institutional investors. Third, the policy-makers should also encourage the expansion of the stock market to enhance the protection of shareholders, reduce private control benefits and provide Italy the same opportunities as other common and civil law countries to collect risk capital, avoiding the abuse of debt. Originality/value The empirical results suggest that ownership concentration increases the degree of corporate debt, whereas institutional investors assume the disciplinary role of monitoring and controlling agency costs. The results provide evidence of both the entrenchment effect and the alignment-of-interests hypothesis and that the expropriation theory seems to prevail over the control and monitoring role.

Financial decisions and ownership structure as control mechanisms of agency problems: evidence from Italy

2018 ◽  
Vol 18 (3) ◽  
pp. 531-563 ◽  
Author(s):  
Fabrizio Rossi ◽  
Robert Boylan ◽  
Richard J. Cebula
Keyword(s):  
Ownership Structure ◽  
Agency Costs ◽  
Generalized Method Of Moments ◽  
Control Mechanisms ◽  
Minority Shareholders ◽  
Data Set ◽  
Business Decisions ◽  
Content Type ◽  
Financial Decisions ◽  
Practical Implications

Purpose The purpose of this study is to investigate the relationship between financial decisions and ownership structure by using the control contests on a sample of Italian listed companies. Design/methodology/approach The analysis adopts a balanced panel data set of 984 firm-year observations for the period of 2002-2013, with estimation using a generalized method of moments. Findings The results appear to confirm both the hypotheses of the alignment of interests and the entrenchment effect. The entrenchment and alignment effects are not found to be alternatives but rather are found to co-exist. The presence of a coalition of minority shareholders acts as a tool to control agency costs, particularly when the coalition is instrumental in the contestability of corporate control. Practical implications These findings suggest that minority shareholders may have a larger impact than previously identified by strategically aligning with other shareholders to form coalitions. This study provides several practical implications. First, dividend payout is not necessarily a good instrument to control and monitor agency costs. This is because the payout can be used to expropriate benefits from the minority shareholders. Second, high ownership concentration does not always reduce agency costs. Third, a non-collusive coalition can be more useful in the monitoring of agency costs than other tools, such as the debt level. Originality/value This study shows that there is considerable value to the firm when individual blockholders come together in a contestable environment and become instrumental in making business decisions. The results support the contention that contestability is an excellent deterrent to dampen the expropriation of benefits to minority shareholders. This study also provides evidence that cash holding can be a good substitute for dividends and debt in the effort to limit agency costs.

Interactional justice and willingness to share tacit knowledge: perceived cost as a mediator, and respectful engagement as moderator

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Bindu Gupta ◽  
Karen Yuan Wang ◽  
Wenjuan Cai
Keyword(s):  
Tacit Knowledge ◽  
Social Exchange ◽  
Negative Relationship ◽  
Interactional Justice ◽  
Content Type ◽  
Work Related ◽  
The Social ◽  
Tacit Knowledge Sharing ◽  
Practical Implications

PurposeManaging tacit knowledge effectively and efficiently is a huge challenge for organizations. Based on the social exchange and self-determination theories, this study aims to explore the role of social interactions in motivating employees' willingness to share tacit knowledge (WSTK).Design/methodology/approachThe study used a survey approach and collected data from 228 employees in service and manufacturing organizations.FindingsInteractional justice and respectful engagement are positively related to WSTK. The perceived cost of tacit knowledge sharing (CostTKS) partially mediates the relationship between interactional justice and WSTK. Respectful engagement moderates the negative relationship between interactional justice and the perceived CostTKS.Research limitations/implicationsThe study advances the understanding of the role of social interaction in facilitating employee WSTK by integrating the direct and intermediate relationships involving the effect of supervisor's interactional justice and peers' respectful engagement and employee perceived CostTKS on WSTK.Practical implicationsThe findings have important practical implications for organizations as these suggest how organizations can help tacit knowledge holders experience less negative and more supportive behaviors when they engage in voluntary TKS.Originality/valueThis study examines the effect of both vertical and horizontal work-related interactions on perceived CostTKS and sequentially on WSTK, thereby extending existing literature.

Entrepreneurial communities and family enterprises of India

2018 ◽  
Vol 12 (1) ◽  
pp. 32-49 ◽  
Author(s):  
Kanupriya Misra Bakhru ◽  
Manas Behera ◽  
Alka Sharma
Keyword(s):  
Family Businesses ◽  
Government Policies ◽  
Indian Government ◽  
Policy Makers ◽  
Content Type ◽  
Family Enterprises ◽  
Global Presence ◽  
Source Of Information ◽  
Practical Implications

Purpose This paper aims to examine the traditional business communities and family businesses of India, their emergence and sustained growth. Design/methodology/approach The authors analyze the role of business communities in family businesses of India and identify business communities that have still sustained and marked a global presence. Findings Business communities such as Marwaris have the knack for business activities and are leaders of family businesses in India today, who have sustained their past success and continue to create new histories. Other traditional business communities such as Parsis, Sindhis, Chettiars and Gujarati banias have not been able to sustain much. Possible reasons were switching to white-collar jobs, taking up diplomacy and other professions, inter caste marriages, international migration in search of business and Indian government policies. Research limitations/implications This study provides a useful source of information for academics, policy-makers and economists. Practical implications Traditional business communities populate the list of family businesses that have marked their global presence. This paper identifies various factors that are responsible for the growth and sustainability of these business communities. Social implications The study clarifies the role of business communities in domestic economic development. Originality/value The paper explored traditional business communities of India and assessed their role in family businesses of India that currently mark a global presence.

The role of teachers’ self-efficacy between trust and organisational citizenship behaviour among secondary school teachers

2019 ◽  
Vol 49 (3) ◽  
pp. 864-886
Author(s):  
Yuen Onn Choong ◽  
Lee Peng Ng ◽  
Seow Ai Na ◽  
Chun Eng Tan
Keyword(s):  
Secondary School ◽  
Self Efficacy ◽  
Secondary School Teachers ◽  
School Administrator ◽  
School Teachers ◽  
Policy Makers ◽  
Content Type ◽  
Sense Of Efficacy ◽  
Practical Implications

Purpose The purpose of this paper is to examine the effects of teachers’ perception on trust over their willingness to exercise organisational citizenship behaviours (OCB) using self-efficacy as a mediator. Design/methodology/approach Usable questionnaires were collected from 411 teachers in secondary schools. A two-stage analytic approach was used to analyse the data. Findings The results indicated that trust and teachers’ self-efficacy dimensions (general teaching and personal teaching) are positively related to OCB. Additionally, trust in the principal, colleagues and clients are predicted to have indirect influence on OCB through self-efficacy. Practical implications Teachers’ personal sense of efficacy is largely dependent on the amount of efforts devoted in their teaching, their decision-making ability and the degree of persistency in solving problematic issues. School management and policy makers are urged to develop effective human resources initiatives and programmes that can create a trusting relationship in the organisation and enhance teachers’ self-efficacy. These may include the socialisation programmes that can inculcate teachers’ inner natures, confidence and interpersonal skills when directed towards perceived abilities in given specific tasks and responsibilities to make a significant impact on OCB. Apart from this, the school administrator is advised to offer relevant training and workshops that able to enhance the efficacy level of teachers. Originality/value This study explored how teachers’ self-efficacy was related to trust and OCB. Teachers’ positive behaviours enable them to have greater belief in their capability of handling pressures and crises. The study contributes to the current body of literature and creates a comprehensive theoretical framework for teachers to be involved in OCB. Besides, these unique findings served as a reference to management of any school to better understand the importance of trust in the school and how it relates to teacher self-efficacy, which, in turn nurture the citizenship behaviour in workplace.

The role of owner/manager in adoption of electronic commerce in small businesses

2013 ◽  
Vol 20 (4) ◽  
pp. 754-787 ◽  
Author(s):  
Morteza Ghobakhloo ◽  
Sai Hong Tang
Keyword(s):  
Electronic Commerce ◽  
Small Businesses ◽  
Research Model ◽  
Cross Sectional ◽  
Policy Makers ◽  
Content Type ◽  
Research Findings ◽  
Managerial Level ◽  
Practical Implications

Purpose – Based on theories from the innovation diffusion literature, the purpose of this paper is to develop an integrated model of electronic commerce (EC) adoption in small businesses (SBs) of developing countries. The research model specifies variables at managerial level as the primary determinants to EC adoption in SBs. Design/methodology/approach – A questionnaire-based field survey was conducted to collect data from 268 owner/managers of SBs in Iran. The data were analysed using factorial analysis. Subsequently, six hypotheses were derived and tested by hierarchical multiple regression and logistic regression analysis. Findings – Perceived benefits, perceived compatibility, perceived risks, perceived costs, and innovativeness were found to be the significant determinants of decision to adopt EC. Likewise, discussion on discriminators between adopters and non-adopters of different EC applications has been provided. Research limitations/implications – Cross-sectional data of this research tends to have certain limitations when it comes to explaining the direction of causality of the relationships between the variables. The study focuses only on the manufacturing SBs of Iran. Practical implications – The research findings have important implications for practising managers, information systems experts, and policy-makers. Governments should follow specific policies to facilitate institutionalisation of EC in SBs. Similarly, EC vendors and technology providers should collaborate with SBs to enhance the compatibility of different EC applications with specific characteristics of these businesses. Originality/value – To the best of the authors' knowledge, this paper is perhaps one of the first that examines the adoption of EC by SBs in a developing country context, using a research model which tests the effects of owner/managers' attributes on adoption of simple and advanced EC applications.

Corporate disclosure of human capital via LinkedIn and ownership structure

2017 ◽  
Vol 18 (1) ◽  
pp. 102-127 ◽  
Author(s):  
Sabrina Pisano ◽  
Luigi Lepore ◽  
Rita Lamboglia
Keyword(s):  
Human Capital ◽  
Ownership Structure ◽  
Ownership Concentration ◽  
Quantitative Methodology ◽  
Corporate Disclosure ◽  
Content Type ◽  
The Relationship ◽  
Stock Of Knowledge ◽  
Practical Implications

Purpose The purpose of this paper is to investigate the relationship between ownership concentration and human capital (HC) disclosure released via LinkedIn. Design/methodology/approach This study uses a quantitative methodology. The sample is composed of 150 European companies. Content analysis was used to examine HC disclosure via LinkedIn. Regression analysis was used to test the hypothesis. Findings The results indicate that ownership concentration negatively influences HC disclosure via LinkedIn, confirming that closely held firms have little motivation to voluntarily release information. Research limitations/implications The main limitation of this study relates to the sample size. Furthermore, this study investigates only the quantity of HC disclosure; it does not consider the quality of this information. Practical implications The typical ownership structure of European firms generates a force that opposes the growing pressure for internationalization and global transparency. This important issue needs to be considered in investor decisions, HC management and reporting and in setting accounting standards. Moreover, the study points out that, despite the potential opportunities provided by LinkedIn to build and enforce relationships with their stakeholders, companies mainly use LinkedIn for recruitment purposes. Originality/value This study contributes to the literature on HC disclosure because it is, to the best of the authors’ knowledge, the first study that exclusively examines HC disclosure by European companies via LinkedIn and because it develops a disclosure index that includes items concerning the stock of knowledge and capabilities of employees in addition to the practices in human resource management.

scholarly journals The moderating role of family ownership on the relationship between ownership concentration and comply-or-explain disclosure: An analysis on Italian listed companies

2019 ◽  
Vol 15 (3) ◽  
pp. 27-42
Author(s):  
Federico Alvino ◽  
Luigi Lepore ◽  
Sabrina Pisano ◽  
Gabriella D'Amore
Keyword(s):  
Ownership Structure ◽  
Boards Of Directors ◽  
Negative Relationship ◽  
Listed Companies ◽  
Ownership Concentration ◽  
Family Ownership ◽  
The Relationship ◽  
Moderating Role ◽  
Comply Or Explain

The aim of the paper is to investigate the relationship between ownership concentration and the degree of comply-or-explain disclosure regarding the composition and functioning of boards of directors, also considering the moderating role played by family ownership. The study is conducted on a sample of 227 Italian non-financial listed companies. The results reveal a negative relationship between ownership concentration and the degree of comply-or-explain disclosure. Moreover, this relationship is stronger in companies having a family firm as a dominant shareholder. The paper contributes to previous studies on the degree of adherence to corporate governance code by investigating both the comply aspect and the explanations provided in cases of non-compliance. Moreover, the study contributes to previous research on the relationship between ownership structure and disclosure by considering the moderating role played by shareholder identity.

scholarly journals Do ownership structures affect risk disclosure in Islamic banks? International evidence

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Rihab Grassa ◽  
Nejia Moumen ◽  
Khaled Hussainey
Keyword(s):  
Emerging Economies ◽  
Ownership Structure ◽  
Generalized Method Of Moments ◽  
Policy Implications ◽  
Ownership Concentration ◽  
Annual Reports ◽  
Islamic Banks ◽  
Risk Disclosure ◽  
Content Type ◽  
Transparency And Disclosure

Purpose Previous works assessing the determinants of banks’ risk disclosure in emerging economies focused on one aspect of risk reporting such as market risk disclosure or operational risk disclosure. While banks’ transparency about other major risk types (e.g. capital adequacy, liquidity risk…) is important for both market discipline and for their financial stability, no previous research has tried to discuss their determinants for Islamic banks. This paper aims to fill the gap by assessing the effects of deposits structure and ownership concentration on risk disclosure for Islamic banks. Design/methodology/approach The authors based on a sample of 71 Islamic banks operating in 12 emerging economies and observed over the period 2009–2014. The authors used a risk disclosure index covering nine dimensions, and the authors used both generalized least squares (GLS) regression and generalized method of moments (GMMs) as econometric tools. Findings The findings suggests that the level of risk disclosure is lower for Islamic banks with higher ownership concentration, leveraged bank, listed banks and Islamic banks. However, risk disclosure is higher for Islamic banks with higher concentration of profit sharing investment account (PSIA) and higher foreign ownership, large Islamic banks, aged banks, Islamic banks operating in country with higher country transparency index, positively correlated to gross domestic products and Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) adoption. By disaggregating total risk disclosure into the nine sub-categories, the authors are able to specify, also, the components of risk disclosure impacted by various determinants. Research limitations/implications This paper’s findings are subject, also, to a number of limitations. First, there was manual scoring of annual reports (subjectivity). Second, while some items might have higher information content or be more useful than others for users of Islamic banks’ annual reports, no weighting is assigned to items. Third, the research focuses exclusively on the 12 countries and excludes the other Middle East, Southeast Asia and Far East countries where ownership structure and deposits structure might affect risk disclosure differently. Originality/value The findings suggest many policy implications. First, regulators have to improve corporate governance mechanisms in Islamic banking system through the optimization of ownership structure (dispersed ownership) to promote transparency and disclosure. Second, regulators and policymakers should revise guidelines in the main purpose to protect PSIAs holders (considered as minor shareholders without voting power) through promoting disclosure and transparency. Third, the findings can be useful for many international supervisory bodies such as the IFSB and AAOIFI to evaluate transparency and disclosure standards.

The effects of ownership structure on likelihood of financial distress: an empirical evidence

2017 ◽  
Vol 17 (4) ◽  
pp. 589-612 ◽  
Author(s):  
Shahab Udin ◽  
Muhammad Arshad Khan ◽  
Attiya Yasmin Javid
Keyword(s):  
Corporate Governance ◽  
Ownership Structure ◽  
Financial Distress ◽  
Generalized Method Of Moments ◽  
The Body ◽  
Content Type ◽  
The Government ◽  
The Impact

Purpose The purpose of this paper is to explore the role of corporate governance proxies by ownership structure on the likelihood of firms’ financial distress for a sample of 146 Pakistani public-limited companies listed at the Karachi Stock Exchange over the period of 2003-2012. Design/methodology/approach The dynamic generalized method of moments (GMM) estimator and panel logistic regression (PLR) are used to determine the impact of corporate governance on the financial distress. The ownership structure is used as a determinant of corporate governance, while the Altman Z-score is utilized as an indicator of financial distress, as it measures financial distress inversely. The smaller the values of the Z-score, the higher will be the risk of financial distress. Findings The authors find insignificant impact of ownership structure on firms’ likelihood of financial distress based on the dynamic GMM method. However, the PLR results indicate that foreign shareholdings have a significant negative association with firms’ likelihood of financial distress, in the case of Pakistan. An evidence of a negative and insignificant relationship between institutional ownership and financial distress was observed, which indicates the passive role of institutional investors in Pakistan. The results also reveal a positive and significant relationship between insider’s ownership and likelihood of financial distress. This finding is consistent with the entrenchment hypothesis which predicts that insiders are more aligned with their self-interest than outside shareholders’ interest when their shareholding increases in the business. Furthermore, the results also reveal insignificant association between government shareholdings and the probability of financial distress. The reason could be the social welfare objective of the government entities rather than profit maximization. Practical implications The findings of this study provide more insight to corporate managers and investors about the association between the quality of corporate governance and the degree of financial distress, with respect to Pakistani firms. Furthermore, this study contributes to the existing literature by adding new evidence from developing countries like Pakistan which are helpful for regulatory bodies and policymakers in the formulation of long-term corporate governance strategies to manage the financial distress. It is well established that strengthening the quality of corporate governance practices enhances the efficiency of capital markets and reduces the probability of financial distress. Originality/value The study extends the body of existing literature on corporate governance and the likelihood of financial distress with reference to Pakistan. The results suggest that policymakers may pay special attention to the quality of corporate governance, specifically ownership structure, while predicting corporate financial distress.

Board size, ownership concentration and future firm risk

2016 ◽  
Vol 10 (4) ◽  
pp. 692-709 ◽  
Author(s):  
Junaid Haider ◽  
Hong-Xing Fang
Keyword(s):  
Fixed Effects ◽  
Generalized Method Of Moments ◽  
Ownership Concentration ◽  
Firm Risk ◽  
Board Size ◽  
Content Type ◽  
Managerial Decisions ◽  
Large Shareholders ◽  
Moderating Role

Purpose The purpose of this paper was first to find out whether the negative relationship between board size and future firm risk persists in China while contemplating all sorts of endogeneity. Second, the authors have investigated the role of large shareholders in influencing the managerial decisions concerning future firm risk via board size. Finally, the authors examined whether the moderating role of large shareholders is any different in state-owned enterprises (SOEs) and non-state-owned enterprises (NSOEs) in China. Design/methodology/approach The sample included all the A-listed firms listed on the Shanghai and the Shenzhen stock exchanges over a sample period from 2008 to 2013. The authors used fixed effects regression and the generalized method of moments (GMM) to test the three hypotheses. Findings The authors found that board size is negatively associated with future firm risk when measured as volatility in future stock prices and future cash flows. Second, large shareholders directly influence managerial decisions about future firm risk, irrespective of board size. Third, the moderating role of ownership concentration is insignificant in both SOEs and NSOEs. Originality/value To the best of the authors’ knowledge, this is the first study which has analyzed the role of large shareholders in the relationship between board size and future firm risk. This study provides valuable insights, particularly in the context of a developing country, into the role played by large shareholders in influencing managerial decisions concerning future firm risk.

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