Institutional blockholders and the variability of firm performance

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Peng Huang ◽  
Yue Lu
Keyword(s):  
Firm Performance ◽  
Stock Returns ◽  
Time Variability ◽  
Content Type ◽  
Performance Variability ◽  
Risk Appetite ◽  
Underlying Mechanisms ◽  
The Impact ◽  
Practical Implications ◽  
Different Levels

PurposeWe examine the effect of institutional blockholders on the variability of firm performance.Design/methodology/approachWe use OLS regression models to estimate the effect of institutional blockholders on within-firm, over-time variability of firm performance.FindingsWe find that firms with more institutional blockholders experience less variable firm performance. In particular, more institutional blockholders are associated with less variability of annual stock returns, ROA and the market-to-book ratio. We further explore several underlying mechanisms through with institutional blockholders reduce firm performance variability. We find that more institutional blockholders are associated with less variable capital expenditures and R&D investments, and less frequent acquisition activities.Research limitations/implicationsA limitation of this paper is that our sample period only covers 1996–2006. Future studies can extend our research to a more recent period (e.g. 2009–2019) to test whether our findings remain valid in other periods.Practical implicationsWe document a significant relation between institutional blockholders and firm performance variability in this paper. However, we do not make any judgment as to whether firms should increase their institutional blockholders as it is unclear whether the caused reduction in risk-taking is socially efficient. We argue that the value implication of institutional blockholders depends on the existing blockholder structure and the different levels of risk appetite between the CEO and shareholders. Thus, the decision on the increase or decrease of institutional blockholders should be carefully made based on a firm’s specific characteristics.Originality/valueThis paper is a first study which examines the impact of the presence of institutional blockholders on the variability of firm performance, while most prior studies focus on the stock ownership of institutional blockholders and examine its impact on the level of firm performance.

Does the second wave of COVID-19 undermine corporate immunity? International evidence

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Huy Viet Hoang ◽  
Cuong Nguyen ◽  
Khanh Hoang
Keyword(s):  
Stock Returns ◽  
Stock Price ◽  
Fixed Effects ◽  
Management Strategies ◽  
The United States ◽  
Least Square ◽  
Content Type ◽  
The Impact ◽  
Second Wave ◽  
Practical Implications

PurposeThis study compares the impact of the COVID-19 pandemic on stock returns in the first two waves of infection across selected markets, given built-in corporate immunity before the global outbreak.Design/methodology/approachThe data are collected from listed firms in five markets that have experienced the second wave of COVID-19 contagion, namely the United States (US), Australia, China, Hong Kong and South Korea. The period of investigation in this study ranges from January 24 to August 28, 2020 to cover the first two COVID-19 waves in selected markets. The study estimates the research model by employing the ordinary least square method with fixed effects to control for the heterogeneity that may confound the empirical outcomes.FindingsThe analysis reveals that firms with larger size and more cash reserves before the COVID-19 outbreak have better stock performance under the first wave; however, these advantages impede stock resilience during the second wave. Corporate governance practices significantly influence stock returns only in the first wave as their effects fade when the second wave emerges. The results also suggest that in economies with greater power distance, although stock price depreciation was milder in the first wave, it is more intense when new cases again surge after the first wave was contained.Practical implicationsThis paper provides practical implications for corporate managers, policymakers and governments concerning crisis management strategies for COVID-19 and future pandemics.Originality/valueThis study is the first to evaluate built-in corporate immunity before the COVID-19 shock under successive contagious waves. Besides, this study accentuates the importance of cultural understanding in weathering the ongoing pandemic across different markets.

Increasing the impact of SHRM on organizational performance

2019 ◽  
Vol 27 (5) ◽  
pp. 7-8
Keyword(s):  
Firm Performance ◽  
Organizational Performance ◽  
Design Methodology ◽  
Reading Time ◽  
Content Type ◽  
Pertinent Information ◽  
The Impact ◽  
Practical Implications ◽  
Overall Effectiveness

Purpose This paper aims to review the latest management developments across the globe and pinpoint practical implications from cutting-edge research and case studies. Design/methodology/approach This briefing is prepared by an independent writer who adds their own impartial comments and places the articles in context. Findings The role of HRM is increasingly being viewed in strategic as well as functional terms. The impact of SHRM on firm performance is also determined by factors in its internal and external contexts. Balance between these contextual dimensions and input from various actors in the organization can help increase the overall effectiveness of a SHRM system. Originality/value The briefing saves busy executives and researchers hours of reading time by selecting only the very best, most pertinent information and presenting it in a condensed and easy-to-digest format.

Does strategic planning help firms translate slack resources into better performance?

2018 ◽  
Vol 26 (4) ◽  
pp. 395-407 ◽  
Author(s):  
Jinyu Guo ◽  
Bo Zhou ◽  
Haili Zhang ◽  
Chunjia Hu ◽  
Michael Song
Keyword(s):  
Firm Performance ◽  
Strategic Planning ◽  
External Environment ◽  
Organizational Slack ◽  
Low Levels ◽  
Using Data ◽  
The Impact ◽  
Performance Research ◽  
Practical Implications ◽  
Different Levels

AbstractIs organizational slack good or bad for firm performance? Research addressing this question has obtained mixed results. Such studies have focused mainly on the impact of environmental conditions on the slack–performance relationship. In this study, instead of focusing on the uncontrollable external environment, we consider actions determined by firms internally, in particular strategic planning. Using data from 183 US firms, we explore the connection between organizational slack and firm performance with different levels of strategic planning. The results suggest that at low levels of strategic planning the slack–performance relationship is linear, while at high levels of strategic planning this relationship is inverse U shaped. We discuss the theoretical and practical implications of these findings.

scholarly journals Human resource management: the promise, the performance, the consequences

2016 ◽  
Vol 3 (2) ◽  
pp. 181-190 ◽  
Author(s):  
Chris Brewster ◽  
Paul N. Gooderham ◽  
Wolfgang Mayrhofer
Keyword(s):  
Firm Performance ◽  
Journal Articles ◽  
Long Term Effects ◽  
Cross Sectional ◽  
Content Type ◽  
Global Issues ◽  
The Impact ◽  
Practical Implications ◽  
Cross National

Purpose – The dominant focus of HRM research has been that of “strategic HRM”, that is a focus on the impact of HRM on firm performance. The authors argue that not only are the cumulative results of this “dominant research orthodoxy” disappointing in terms of their external validity, but also they are of limited practical value. Further, it has failed not only in terms of its narrow firm performance-oriented agenda, but also the tenets of its agenda have contributed to serious levels of employee dissatisfaction and to the failure to deal with pressing global issues. The paper aims to discuss these issues. Design/methodology/approach – In order to assess the contribution of the dominant research orthodoxy the authors analyse the 16 most cited journal articles in the field of HRM. Findings – The authors find a predominance of US-centric studies and therefore a questionable cross-national generalizability of the dominant research orthodoxy. The use of cross-sectional data means that long-term effects cannot be gauged. The authors observe a lack of consensus on how to operationalize HRM and firm performance. National context is generally absent. Practical implications – The authors show that for HRM to realize its potential for governments, media, or philanthropic agencies, HRM must abandon its restricted scope and mono-dimensional sources of inspiration. Originality/value – The authors not only point to the shortcomings of the dominant research orthodoxy within HRM, but the authors point to how HRM could become significantly more “centre-staged” by addressing the actors searching for contributions to the big questions of the world – the governments, media, and philanthropic agencies.

The relationship between ownership structure and firm financial performance

2018 ◽  
Vol 25 (1) ◽  
pp. 319-333 ◽  
Author(s):  
Tariq Tawfeeq Yousif Alabdullah
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Emerging Economies ◽  
Ownership Structure ◽  
Foreign Ownership ◽  
Fiscal Year ◽  
Content Type ◽  
Firm Financial Performance ◽  
The Impact ◽  
Practical Implications

Purpose Previous studies that dealt with corporate governance have witnessed gradually significant growth that created some new trends. The purpose of this paper is to be involved in such trends through examining the link between ownership structure as one of the important corporate governance mechanisms and firm performance in Jordan as one of emerging economies. Design/methodology/approach The current study used the multiple regression method to analyze available data for non-financial firms listed in the Amman Stock Exchange for the fiscal year 2012. Findings The findings revealed that managerial ownership has a positive impact on performance. On the other hand, the findings surprisingly showed no evidence to support the impact of foreign ownership on performance. Moreover, there is a significant evidence to support the fact that company size has no impact on firm performance. The findings also revealed that industry type has no impact on firm performance. Practical implications The practical implications of the current study demonstrated that good corporate governance is imperative to all organizations and must be encouraged for the interest of all stakeholders. Unlike the majority of the previous studies, the current study unexpectedly found that foreign ownership is not significantly contributing to the firm performance. Thus, Jordanian Government and other related/responsible parties should formulate policies for the foreign investors. Originality/value Interestingly, from developed and developing countries perspective, the study is the first of its kind that exclusively chose the mechanisms of ownership structure in its relationship with firm performance represented by market share, where no previous study has tested foreign ownership in such relationship. In that, this study is the first study in emerging economies to investigate such a link. Such new insights on this relationship by current study provide helpful information that is of great value to the government, academics, policy makers, and other stakeholders.

The impact of smart specialization strategies on sub-cluster efficiency: simulation exercise for the case of Mexico

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Viviana Elizabeth Zárate-Mirón ◽  
Rosina Moreno Serrano
Keyword(s):  
Design Methodology ◽  
Data Envelopment ◽  
Content Type ◽  
Smart Specialization ◽  
Cluster Efficiency ◽  
Technological Intensity ◽  
The Impact ◽  
Practical Implications ◽  
Different Levels

Purpose This paper aims to evaluate whether the integration of smart specialization strategies (S3) into clusters significantly impacts their efficiency for countries that still do not implement this policy. This study tests three effects: whether the kind of policies envisaged through an S3 strategy impacts cluster’s efficiency; whether this impact changes with the technological intensity of the clusters; to determine which S3 is more suitable for sub-clusters at different levels of technological intensity. Design/methodology/approach The Mexican economy is taken as case of study because it has a proper classification of its industries intro Porter’s cluster’s definition but still does not adopt the S3 policy. Through data envelopment analysis (DEA), this study evaluates the cluster’s efficiency increment when variables representing the S3 elements are included. Findings The results show that strategies following the S3 had a significant impact in all clusters, but when clusters were classified by technological intensity, the impact on efficiency is higher in clusters in the medium low-tech group. Practical implications According to the results in the DEA, it can be concluded that these S3 strategies have the potential to increase the clusters’ productivity significantly. These results make convenient the adoption of the S3 policy by countries that already count with a properly cluster definition. Originality/value These findings contribute to the lack of studies that analyze the join implementation of S3 on clusters.

The impact of managing IT on business-IT alignment and firm performance: an empirical study

foresight ◽  
2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Aboobucker Ilmudeen
Keyword(s):  
Firm Performance ◽  
Study Finding ◽  
Strong Impact ◽  
Business Managers ◽  
It Investment ◽  
Content Type ◽  
It Alignment ◽  
Business It Alignment ◽  
The Impact ◽  
Practical Implications

Purpose Though prior studies have attempted to explore the various effects of managing information technology (IT) investment on firm performance, the mechanism through which management of IT impact on firm performance rests less clear. The purpose of this study is to examine the impact of managing IT and business-IT alignment on firm performance. Design/methodology/approach Drawing on the resource-based theory and process theory, this study examines how managing IT impacts business-IT alignment and firm performance. The primary survey of 182 responses from IT and business managers from Sri Lanka was empirically examined. Findings The findings reveal that managing IT has a positive and strong impact on business-IT alignment and firm performance. Further, business-IT alignment partially mediates between managing IT investment and firm performance relationships. Research limitations/implications Today, businesses have invested a massive amount of money in IT investment, and the return on this investment is always a serious concern for managers and industry practitioners. This study finding proposes meaningful insights on managing IT, business-IT alignment and firm performance. Originality/value This study opens up the black box on the above nomological linkage and contributes to the literature by extending the theoretical lenses while suggesting insightful and practical implications.

It’s the act that counts: minimizing post-violation erosion of trust

2015 ◽  
Vol 36 (1) ◽  
pp. 81-96 ◽  
Author(s):  
A. R. Elangovan ◽  
Werner Auer-Rizzi ◽  
Erna Szabo
Keyword(s):  
Demographic Variables ◽  
Key Factors ◽  
Organizational Relationships ◽  
Holistic View ◽  
Content Type ◽  
Trust Repair ◽  
One Step ◽  
The Impact ◽  
Practical Implications ◽  
Different Levels

Purpose – The purpose of this paper is to examine the effects of damage incurred by the trustor as a result of a trust violation and the impact of different levels of post-violation trust repair behaviours by the trustee on the subsequent erosion of trust. Design/methodology/approach – Data were collected from 232 middle to senior level managers using a two-part scenario-based experimental design to test the impact of damage incurred (avoided) and post-violation repair behaviour. Respondents’ levels of trust were measured pre- and post-violation as well as forgiving and a range of demographic variables. Findings – Results showed that trust eroded independent of the level of damage that may have been caused. Further, post-violation trust repair behaviour by the trustee led to a significantly lower erosion of trust as compared to not engaging in such behaviours. Furthermore, erosion of trust was minimized, when the trustee engaged in increasing levels of trust repair behaviour. Results also showed that trustors who were relatively more forgiving were less likely to lose trust in the trustee after a violation. Research limitations/implications – In this study we focused on two key factors influencing the erosion of trust. Further factors need to be identified and empirically tested in order to get a more holistic view on how trust erodes. The results serve as one step towards building an integrated model of trust erosion. Practical implications – For practicing managers, the results imply that the actual incurrence or avoidance of damages from a trust violation appears to be peripheral – trustors are more concerned about the violation as a principle and a harbinger of similar future incidents. Further, quickly engaging in trust repair behaviours, such as offering an a good explanation, a heartfelt apology, and appropriate remedy, helps minimize the erosion of trust. Originality/value – This paper addresses an under-investigated facet of trust research in organizations – erosion of trust – which is especially crucial in light of the growing awareness that most organizational relationships actually start off with high levels of trust rather than low trust. Thus, this study offers insights into maintaining (as opposed to building) trust.

Hotel chain development pipelines in Africa: implications for human capital development

2016 ◽  
Vol 8 (2) ◽  
pp. 134-148 ◽  
Author(s):  
Trevor Ward
Keyword(s):  
Human Capital ◽  
Design Methodology ◽  
Content Type ◽  
Hotel Chains ◽  
Development Pipeline ◽  
Capital Development ◽  
The Impact ◽  
Hotel Chain ◽  
Practical Implications ◽  
Different Levels

Purpose Hotel development in Africa is at an all-time high, as entrepreneurs and institutional investors recognise and understand the opportunities, and as the international brands identify the gaps in their system coverage. The purpose of this paper is to quantify the chains’ future development pipelines and the requirement for human capital in those hotels. Design/methodology/approach Information was obtained from the international and regional (African) hotel chains that are signing deals to manage and brand new hotels in Africa, including location, number of rooms, brand and expected opening date. From this, a calculation was made regarding the number of jobs that will be created at different levels. Findings The findings show the number of hotels in the chains’ development pipeline in Nigeria and the human capital requirement in those hotels. Practical implications Governments, investors, operators and educators can benefit from the findings presented and develop relevant policies that will impact positively on human capital in Africa. Originality/value This paper outlines the impact of hotel growth on human capital needs in Africa.

IPO overvaluation and returns prior to lockup expiration

2017 ◽  
Vol 43 (12) ◽  
pp. 1392-1410 ◽  
Author(s):  
K. Stephen Haggard ◽  
Yaoyi Xi
Keyword(s):  
Stock Returns ◽  
Initial Public Offering ◽  
Price Reduction ◽  
Content Type ◽  
Investment Portfolios ◽  
Public Offering ◽  
Lockup Expiration ◽  
The Impact ◽  
Practical Implications ◽  
Lockup Period

Purpose Conventional wisdom says that the price reduction stocks experience at expiration of the initial public offering (IPO) lockup period is due to relaxation of selling constraints. Findings from more recent literature question this explanation. The purpose of this paper is to examine a different cause for this price drop, IPO overvaluation. Design/methodology/approach Using the IPO overvaluation measures of Purnanandam and Swaminathan (2004), the authors examine IPO lockup period stock return differences between stocks in the highest and lowest overvaluation quintiles. Findings The authors show that the IPO lockup period price reduction is strongly related to overvaluation. Zero-investment portfolios long in the lowest overvaluation quintile and short in the highest overvaluation quintile of IPO firms have positive significant returns. Practical implications IPO investors can use the technique to identify firms likely to underperform in the IPO lockup period, potentially avoiding bad investments. Originality/value This is the first study to link IPO lockup period stock returns to IPO overvaluation, providing evidence on the impact of both overvaluation and short-selling constraints on stock returns in the IPO lockup period.

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