Bankruptcy protection duration and outcome of Canadian public firms

2019 ◽  
Vol 15 (5) ◽  
pp. 858-888 ◽  
Author(s):  
Mohamed A. Ayadi ◽  
Skander Lazrak ◽  
Dan Xing
Keyword(s):  
Interest Rates ◽  
Design Methodology ◽  
Final Solution ◽  
Survival Analyses ◽  
Content Type ◽  
Public Firms ◽  
Listed Firms ◽  
Term Spread ◽  
Practical Implications ◽  
Protection Period

PurposeThe purpose of this paper is to investigate the determinants of bankruptcy protection duration of Canadian public firms, and also investigate the duration for various bankruptcy outcomes including the liquidation and re-emergence of bankrupt firms.Design/methodology/approachThis study uses data on all Canadian public firms that applied for bankruptcy protection over the period 1992–2014. The authors mainly apply duration and survival analyses to draw the main conclusions.FindingsThe authors find that larger and older firms with more complicated structures and issues to settle tend to remain under protection from creditors longer, and also ascertain that the fate of relatively successful companies is determined faster. Moreover, the authors report that it takes less time to achieve a final solution for firms under bankruptcy protection when interest rates are increasing and the term spread is high. Finally, firms that file for protection under the Companies’ Creditors Arrangement Act (CCAA) spend longer restructuring than firms that file under the Bankruptcy and Insolvency Act.Research limitations/implicationsThe paper investigates only publicly listed firms. The data on private firms that are required to conduct the research are not available.Practical implicationsVarious stakeholders including regulators can predict the bankruptcy protection period using the paper’s findings. Depending on the desired outcomes (reduce uncertainly, safeguard jobs or protect creditors’ rights), specific rules can be followed.Originality/valueTo the authors; knowledge, this is the first paper that investigates the Canadian bankruptcy protection duration. It uses the unique Canadian framework to infer the determinants of bankruptcy protection duration and bankrupt firms’ outcomes.

The impact of corporate governance code on earnings management in listed non-financial firms

2017 ◽  
Vol 7 (4) ◽  
pp. 428-444 ◽  
Author(s):  
Erick Rading Outa ◽  
Paul Eisenberg ◽  
Peterson K. Ozili
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Design Methodology ◽  
Explanatory Variable ◽  
Content Type ◽  
Listed Firms ◽  
Financial Firms ◽  
New Institutions ◽  
The Impact ◽  
Practical Implications

Purpose The purpose of this paper is to examine whether voluntary corporate governance (CG) code issued in 2002 constrain earnings management (EM) among listed non-finance companies in Kenya. Design/methodology/approach Using a panel data of 338-firm year’s observations between 2005 and 2014, the authors test the hypothesis that CG constrains EM in non-finance firms listed in Kenya. The authors regress discretionary accruals (DA) against a developed Corporate Governance Index (CGI). Findings The overall results show that DA is not significantly related to CG suggesting the voluntary CG code does not deter EM in non-finance companies in Kenya. Practical implications Evidence of income decreasing\increasing accruals implies EM still exists among the listed firms. This suggests that policymakers may need to consider radical actions including alternative or new CG approaches and new institutions to improve the effectiveness of CG. Originality/value This study extends existing studies by including composite CG as possible explanatory variable for constraining EM. The authors contribute to the debate by demonstrating that the voluntary CG code in Kenya is not effective in constraining DA and therefore the current initiatives by the regulator to change the current CG code are appropriately directed.

Divestiture of prior acquisitions: competing explanations of performance

2019 ◽  
Vol 13 (1) ◽  
pp. 33-50
Author(s):  
Sina Amiri ◽  
David King ◽  
Samuel DeMarie
Keyword(s):  
Design Methodology ◽  
High Technology ◽  
Positive Relation ◽  
Multiple Perspectives ◽  
Press Releases ◽  
Improve Performance ◽  
Content Type ◽  
Public Firms ◽  
Treat All ◽  
Practical Implications

Purpose There are multiple perspectives of divestiture and its performance that require reconciliation. While research finds a positive market response to divestment announcement, divestiture of prior acquisitions are generally viewed negatively. The purpose of this paper is to develop and empirically test different explanations for the divestment of prior acquisitions. Design/methodology/approach This research employs event study to capture market reaction at acquisition announcement and subsequent divestments in a sample of 69 public US high-technology acquisitions between 2003 and 2008 that were divested by 2015. Only initial acquisitions involving public firms were included from the Thomson One Banker SDC database. Public press releases and companies’ SEC filings were reviewed to track divestitures back to prior acquisitions. Ordinary least squared regression was used to estimate coefficients. Findings Results indicate a positive relation between acquisition and divestiture performance around announcement dates. This finding rejects the correction of mistake explanation, suggesting that a negative stigma surrounding divestments is largely unwarranted and that investors reward capable acquirer’s divestiture decisions. Practical implications Investors do not treat all information signals at divestiture equally. For example, acquisitions made by larger and more profitable firms, or acquisitions paid for with stock, are associated with lower return upon divestiture announcement. Originality/value This study finds that investors view divestiture as a proactive strategy, suggesting firms can improve performance by actively managing acquisitions and divestments to optimize their portfolio of businesses.

scholarly journals The effect on the performance of listed family and non-family firms

2014 ◽  
Vol 40 (3) ◽  
pp. 234-253 ◽  
Author(s):  
Elisabete F. Simões Vieira
Keyword(s):  
Firm Performance ◽  
Design Methodology ◽  
Family Firms ◽  
Market Performance ◽  
Performance Measure ◽  
Content Type ◽  
Public Firms ◽  
Listed Firms ◽  
Independent Variables ◽  
And Performance

Purpose – The purpose of this paper is to examine whether the ownership of public firms is related to accounting and market performance, comparing family and non-family listed firms. Design/methodology/approach – The paper uses regression analysis, considering a sample of Portuguese family and non-family firms (NFF) for the period between 1999 and 2010. Findings – Overall, the results show that family firms (FF) are older, are more indebted and have higher debt costs than NFF. However, they present lower levels of risk. The evidence suggests that FF outperform NFF when the author considers a market performance measure. The market performance of family-controlled firms is more sensitive to the crisis periods and age, compared to their counterparts. The empirical findings suggest that under economic adversity, the performance is especially compromised by the firms' age. Research limitations/implications – A limitation of this study is the small size of the sample, which derives from the small size of the Portuguese stock market, the Euronext Lisbon. Originality/value – This paper offers some insights on the ownership of public firms and firm performance by investigating a small European economy. The study also contributes to the stream of firm performance, considering new independent variables as determinants of firm performance, such as operational risk. Finally, the study examines the interaction between ownership and performance under both steady and adverse economic conditions, giving the opportunity to analyze whether firm performance differs according to market conditions.

Fundamental analysis and the use of financial statement information to separate winners and losers in frontier markets: evidence from Vietnam

2022 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Tuan Ho ◽  
Y Trong Nguyen ◽  
Hieu Truong Manh Tran ◽  
Dinh-Tri Vo
Keyword(s):  
Financial Reporting ◽  
Design Methodology ◽  
Screening Tool ◽  
Abnormal Returns ◽  
Financial Statement ◽  
Supporting Evidence ◽  
Fundamental Analysis ◽  
Content Type ◽  
Listed Firms ◽  
Practical Implications

PurposeThe pupose of the paper is to study the usefulness of Piotroski (2000)'s F-score in separating winners and losers in Vietnam.Design/methodology/approachThe authors adopt a portfolio analysis and regression analysis on a sample of 501 of listed firms between 2009 and 2019 in Vietnam.FindingsThe authors find that a hedge strategy that buys high-F-score firms and sells low-F-score firms yield market-adjusted return of over 30 percent annually, which is statistically and economically significant. The hedge strategy based on F-score is not only profitable for value (high book-to-market [BM]) firms but also earn abnormal returns in a sample of growth (low BM) firms, suggesting that the usefulness of F-score strategy is not just a phenomenon in value firms as documented in previous literature.Research limitations/implicationsWhilst the authors' paper documents economically significant returns obtained from the F-score strategy, the authors do not examine what drives the abnormal returns.Practical implicationsThe results provide supporting evidence for the use of financial statement analysis as a screening tool to improve the performance of value investment in Vietnam stock market and for the training of financial reporting and fundamental analysis in universities.Originality/valueThe authors' research is the first study examining the F-score strategy in Vietnam that provides insights about the usefulness of fundamental analysis in separating winners and losers in a frontier market and contributes to the literature on fundamental analysis and market efficiency in emerging and frontier markets.

Three views of China’s economic future

2017 ◽  
Vol 45 (5) ◽  
pp. 33-40
Author(s):  
Jonathan Brookfield
Keyword(s):  
Interest Rates ◽  
Rapid Growth ◽  
Design Methodology ◽  
Consumer Spending ◽  
Content Type ◽  
Steady Growth ◽  
Low Interest Rates ◽  
Economic Future ◽  
Practical Implications ◽  
China’S Economy

Purpose The author presents practitioners with an overview of experts’ outlook for China econmic future. While some observers see the likelihood of a decade of continued rapid growth ahead, others see major economic challenges on the horizon. Design/methodology/approach To better understand the forces at play, consider the rationale underpinning three experts’ different perspectives on the future of China’s economy. Findings The author looks at the thinking underlying three vies: Confidence in steady growth: optimism based on China’s continuing “latecomer advantage” and its plentiful investment resources. Cautionary warning: pessimism based largely on his perception of China’s debt load and structural economic limits to consumer spending. Why you shouldn’t bet on pessimism: a rebuttal to much of the reasoning underpinning gloomy growth forecasts. Practical implications Taken together, a weak renminbi, low interest rates, and restrained wage growth would signal efforts to maintain the viability of China’s “latecomer” economic model. Originality/value The article helps practitioners understand the logic behind optimistic and pessimistic view of China’s economy so that as events develop observers can better understand which future is unfolding and what risks increasing or decreasing.

scholarly journals Why do firms appoint former military personnel as directors? Evidence of loan interest rate in militarily connected firms in Indonesia

2018 ◽  
Vol 26 (1) ◽  
pp. 2-18 ◽  
Author(s):  
Iman Harymawan
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Military Personnel ◽  
Design Methodology ◽  
Stock Exchange ◽  
Board Members ◽  
Exact Matching ◽  
Content Type ◽  
Listed Firms ◽  
The Military

Purpose Anecdotal evidence shows that a number of military personnel have been appointed as board members by listed firms in Indonesia. Taking advantage of the unique setting of the strong influence of the military in Indonesian politics, the purpose of this paper is to provide direct empirical evidence on the effect of military connections on interest rate for listed firms in Indonesia. Design/methodology/approach This study uses a sample of 1,818 firm-year observations of firms listed on the Indonesian Stock Exchange (IDX) from 2004 to 2012 and employs Heckman’s two-stage regression and Coarsened Exact Matching methods to address endogeneity concerns on the firms’ establishment of military connections. Findings The finding reveals that connected firms significantly enjoy lower interest rates on debt than non-connected ones. These findings are robust to several robustness checks. Research limitations/implications The results of this study should be treated with caution since the proxy of military connections limited only based on board connections. Hence, this may underestimate the results from this study. This research has implications for Indonesia’s regulators who are striving to improve accounting information and transparency of militarily connected firms. Originality/value The results of this study add to the literature that connected firms enjoy preferential benefits provided by the connections through lower interest charges from banks.

Asset risk and leverage under information asymmetry

2017 ◽  
Vol 18 (3) ◽  
pp. 303-310
Author(s):  
Pascal Nguyen
Keyword(s):  
Interest Rates ◽  
Lower Risk ◽  
Design Methodology ◽  
Cost Of Debt ◽  
Minimum Level ◽  
Content Type ◽  
Asset Risk ◽  
Tax Shields ◽  
Optimal Leverage ◽  
Practical Implications

Purpose The purpose of this paper is to investigate whether higher asset risk can be associated with higher leverage and to provide a rationale for the relatively low debt ratios displayed by many firms. Design/methodology/approach A game is modeled between an informed firm and uninformed lenders. The firm knows the risk of its assets, while lenders only know the minimum level of risk. The author solves for the signaling equilibrium and derive explicit formulas for the firm’s cost of debt and optimal leverage. Findings In contrast to the tradeoff theory of capital structure, it is found that asset risk and leverage are positively (instead of negatively) related. Furthermore, leverage is lower than when lenders are informed about the firm’s risk. These results are illustrated with a numerical example. Practical implications Low-risk firms can choose a lower leverage to signal their lower risk and reduce their cost of debt. High-risk firms may prefer to pay higher interest rates and use higher leverage. Originality/value The paper is able to explain why some firms use surprisingly low leverage and do not appear to take advantage of their debt tax shields.

Consumer value creation through WhatsApp use

2019 ◽  
Vol 32 (4) ◽  
pp. 455-471
Author(s):  
Jorge Cruz-Cárdenas ◽  
Jorge Guadalupe-Lanas ◽  
Ekaterina Zabelina ◽  
Andrés Palacio-Fierro ◽  
Margarita Velín-Fárez ◽  
...  
Keyword(s):  
Latin American ◽  
Value Creation ◽  
Emotional Support ◽  
Design Methodology ◽  
Instant Messaging ◽  
Role Performance ◽  
Content Type ◽  
Consumer Value ◽  
Depth Interviews ◽  
Practical Implications

Purpose The purpose of this paper is to understand in-depth how consumers create value in their lives using WhatsApp, the leading mobile instant messaging (MIM) application. Design/methodology/approach The study adopts the perspective of customer-dominant logic (CDL) and uses a qualitative multimethod design involving 3 focus groups and 25 subsequent in-depth interviews. The research setting was Ecuador, a Latin American country. Findings Analysis and interpretation of the participants’ stories made it possible to identify and understand the creation of four types of value: maintaining and strengthening relationships; improving role performance; emotional support; and entertainment and fun. In addition, the present study proposes a conceptual model of consumer value creation as it applies to MIM. Practical implications Understanding the way consumers create value in their lives using MIM is important not only for organizations that offer MIM applications, but also for those companies that develop other applications for mobile phones or for those who wish to use MIM as an electronic word-of-mouth vehicle. Originality/value The current study is one of the first to address the topic of consumer behavior in the use of technologies from the perspective of CDL; this perspective enables an integrated qualitative vision of value creation in which the consumer is the protagonist.

scholarly journals Advantages and potential challenges of data management in e-maintenance

2019 ◽  
Vol 25 (3) ◽  
pp. 378-396 ◽  
Author(s):  
Arian Razmi-Farooji ◽  
Hanna Kropsu-Vehkaperä ◽  
Janne Härkönen ◽  
Harri Haapasalo
Keyword(s):  
Data Management ◽  
Design Methodology ◽  
Management Practices ◽  
Future Research ◽  
Conceptual Approach ◽  
Content Type ◽  
Different Types ◽  
Maintenance Systems ◽  
Industry Leader ◽  
Practical Implications

Purpose The purpose of this paper is twofold: first, to understand data management challenges in e-maintenance systems from a holistically viewpoint through summarizing the earlier scattered research in the field, and second, to present a conceptual approach for addressing these challenges in practice. Design/methodology/approach The study is realized as a combination of a literature review and by the means of analyzing the practices on an industry leader in manufacturing and maintenance services. Findings This research provides a general understanding over data management challenges in e-maintenance and summarizes their associated proposed solutions. In addition, this paper lists and exemplifies different types and sources of data which can be collected in e-maintenance, across different organizational levels. Analyzing the data management practices of an e-maintenance industry leader provides a conceptual approach to address identified challenges in practice. Research limitations/implications Since this paper is based on studying the practices of a single company, it might be limited to generalize the results. Future research topics can focus on each of mentioned data management challenges and also validate the applicability of presented model in other companies and industries. Practical implications Understanding the e-maintenance-related challenges helps maintenance managers and other involved stakeholders in e-maintenance systems to better solve the challenges. Originality/value The so-far literature on e-maintenance has been studied with narrow focus to data and data management in e-maintenance appears as one of the less studied topics in the literature. This research paper contributes to e-maintenance by highlighting the deficiencies of the discussion surrounding the perspectives of data management in e-maintenance by studying all common data management challenges and listing different types of data which need to be acquired in e-maintenance systems.

An exploratory empirical study of whistleblowing and whistleblowers

2020 ◽  
Vol 27 (3) ◽  
pp. 755-770
Author(s):  
Maria Krambia-Kapardis
Keyword(s):  
Statistical Analysis ◽  
Design Methodology ◽  
Research Topic ◽  
Due Date ◽  
Content Type ◽  
Unethical Behaviour ◽  
Eu Member States ◽  
European Directive ◽  
Original Survey ◽  
Practical Implications

Purpose The purpose of this study is to develop a profile of whistleblowers and to determine whether whistleblowing legislation would encourage those individuals to bring to light some illegal or unethical behaviour that otherwise would remain in the shadows. Design/methodology/approach Having identified whistleblowing correlation, a survey was carried out in Cyprus of actual whistleblowers and could-have-been whistleblowers. Findings Males between 46 and55 years of age, regardless of whether they have dependents or hold senior positions in organizations are significantly more likely to blow the whistle. However, could-have-been whistleblowers did not go ahead because they felt that the authorities would not act on their information. Research limitations/implications Because of the sensitive nature of the research topic and the fact that only whistleblowers or intended whistleblowers could participate in the study, the sample size is limited as a result. This, in turn, limits both the number of respondents in each category (actual and intended) as well as constrains the statistical analysis that could be carried out on the data. Practical implications It remains to be seen whether EU Member States shall implement the European Directive 2019/1937 on the protection of persons who report breaches of Union Law, in its entirety by the due date, namely December 2021. Originality/value This study provides a literature review of whistleblowing and reports an original survey against the backdrop of the European Directive.

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