Human resource executives and post-IPO firm growth

2018 ◽  
Vol 31 (7) ◽  
pp. 1401-1418
Author(s):  
Carrie A. Belsito ◽  
Christopher R. Reutzel ◽  
Jamie D. Collins
Keyword(s):  
Human Resource ◽  
Initial Public Offerings ◽  
Firm Growth ◽  
Ordinary Least Squares ◽  
Top Management ◽  
Least Squares Regression ◽  
Firm Level ◽  
Content Type ◽  
Public Firms ◽  
Test Study

Purpose The purpose of this paper is to examine the relationship between human resource (HR) executive representation in top management and the growth of newly public firms. It draws upon research on strategic leadership, strategic HR management and Penrose’s theory of firm growth to consider the role of HRs executives in addressing demands placed upon top managers in the pursuit of firm growth. This study attempts to extend the focus of research on the influence of HR executives on organizational outcomes Design/methodology/approach In order to test study hypotheses, this study analyses data from a sample of US newly public firms that underwent initial public offerings (IPO) during the 2007 calendar year. Study data were analyzed using ordinary least squares regression in order to test study hypotheses. Findings This study provides general support for study hypotheses. First, HR executive presence in top management was found to be positively related to post-IPO firm growth. Second, upper echelon size and the number of firm employees were found to weaken the positive effect of HR executive presence in top management on post-IPO firm growth. Research limitations/implications As a consequence of study design, the results found in this study may be limited with respect to their external validity. Therefore, researchers and practitioners are encouraged to use caution before generalizing study findings to other contexts. Practical implications This study provides implications for top management team staffing and the pursuit of firm growth. Newly public firms appear to benefit in terms of firm growth by including HR executives in top management. The benefits of doing so appear to be reduced for newly public firms as the size of their upper echelons and number of employees increase. Originality/value This study extends research on the firm level consequences of HR executive presence in top management as well as research on factors which influence firm growth.

Audit committee characteristics and the moderating effect of Malaysian code of corporate governance on IPO liquidity

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Amal Mohammed Al-Masawa ◽  
Rasidah Mohd-Rashid ◽  
Hamdan Amer Al-Jaifi ◽  
Shaker Dahan Al-Duais
Keyword(s):  
Corporate Governance ◽  
Initial Public Offerings ◽  
Audit Committee ◽  
Ordinary Least Squares ◽  
Moderating Effect ◽  
Least Squares Regression ◽  
Content Type ◽  
Code Of Corporate Governance ◽  
The Impact ◽  
The Relationship

Purpose This study aims to investigate the link between audit committee characteristics and the liquidity of initial public offerings (IPOs) in Malaysia, which is an emerging economy in Southeast Asia. Another purpose of this study is to examine the moderating effect of the revised Malaysian code of corporate governance (MCCG) on the link between audit committee characteristics and IPO liquidity. Design/methodology/approach The final sample consists of 304 Malaysian IPOs listed in 2002–2017. This study uses ordinary least squares regression method to analyse the data. To confirm this study’s findings, a hierarchical or four-stage regression analysis is used to compare the t-values of the main and moderate regression models. Findings The findings show that audit committee characteristics (size and director independence) have a positive and significant relationship with IPO liquidity. Also, the revised MCCG positively moderates the relationship between audit committee characteristics and IPO liquidity. Research limitations/implications This study’s findings indicate that companies with higher audit committee independence have a more effective monitoring mechanism that mitigates information asymmetry, thus reducing adverse selection issues during share trading. Practical implications Policymakers could use the results of this study in developing policies for IPO liquidity improvements. Additionally, the findings are useful for traders and investors in their investment decision-making. For companies, the findings highlight the crucial role of the audit committee as part of the control system that monitors corporate governance. Originality/value To the authors’ knowledge, this work is a pioneering study in the context of a developing country, specifically Malaysia that investigates the impact of audit committee characteristics on IPO liquidity. Previously, the link between corporate governance and IPO liquidity had not been investigated in Malaysia. This study also contributes to the IPO literature by providing empirical evidence regarding the moderating effect of the revised MCCG on the relationship between audit committee characteristics and IPO liquidity.

Impact of disclosure of risk factors on the initial returns of initial public offerings (IPOs)

2018 ◽  
Vol 31 (1) ◽  
pp. 46-62 ◽  
Author(s):  
Shaista Wasiuzzaman ◽  
Fook Lye Kevin Yong ◽  
Sheela Devi D. Sundarasen ◽  
Noor Shahaliza Othman
Keyword(s):  
Risk Factors ◽  
Initial Public Offerings ◽  
Ordinary Least Squares ◽  
Investment Risk ◽  
Least Squares Regression ◽  
Risk Disclosure ◽  
Content Type ◽  
Public Offerings ◽  
The Individual ◽  
Overall Risk

Purpose When a firm goes public for the first time, its prospectus serves as an important reference for investors. It is required by regulation that the risk factors which have significant influence on the business be disclosed in the prospectus. The purpose of this study is to analyze how disclosure of these risk factors influences the initial returns of initial public offerings (IPOs). Design/methodology/approach To do this, a sample of 96 Malaysian new equity offerings (IPOs) from year 2009 to year 2013 is used. Ordinary least squares regression technique is used to regress initial returns against risk disclosures. Aside from overall risk disclosure, individual dimensions of risk (internal risk, external risk and investment risk) are also considered. Findings Results of the regression analyses reveal a direct relationship between the IPO initial returns and the disclosure of risk. Overall risk disclosure is found to be highly significant in influencing initial returns. However, further investigation into the individual group of risks shows that only investment risk is highly significant in influencing IPO initial returns. Originality/value The results found in this study are interesting as, unlike prior studies, it is shown that disclosures of internal and external risks are not significant in influencing investors’ actions possibly because of their generalizability, whereas disclosures related to investment risks are significant. Equity of firms which disclose more of its risk factors can be expected to generate higher initial returns.

Characteristics and determinants of the board of directors of growing Spanish SMEs going public

2019 ◽  
Vol 26 (3) ◽  
pp. 363-380 ◽  
Author(s):  
María-José Palacín-Sánchez ◽  
Francisco Bravo ◽  
Nuria Reguera-Alvarado
Keyword(s):  
Board Of Directors ◽  
Initial Public Offerings ◽  
Ordinary Least Squares ◽  
Board Structure ◽  
Least Squares Regression ◽  
Going Public ◽  
Content Type ◽  
The Board Of Directors ◽  
Study Characteristics ◽  
The Moment

Purpose The purpose of this paper is to examine the characteristics and the determinants of board structure in small- and medium-sized enterprises (SMEs) in the process of going public within the continental European corporate system. Design/methodology/approach These issues are explored through the study of all the initial public offerings (IPOs) in the Spanish equity market for growing SMEs, and the statistical methodologies of ordinary least squares regression and stepwise regression are applied. Findings The results show that board size is larger than the minimum level established in law and that boards are composed of a majority of non-executive directors. In addition, the determinants of firm characteristics of board structure are firm age, level of financial leverage, and ownership structure. Practical implications This research is significant since its findings should help entrepreneurs reflect on which board structure is most appropriate for this new stage of the life cycle of their company as a listed firm. This evidence is also of interest for regulators and investors, who can, therefore, better understand board structures of SMEs at the moment of IPO. Originality/value This paper is the first to study characteristics and determinants of the board of directors of growing SMEs at the moment of going public. This study implies a step forward in research into the governance of small business and IPO literature, since the results differ from the evidence found for large company IPOs and contribute towards the debate regarding the need to consider the context and the type of firm in corporate governance studies.

scholarly journals Tone disclosure and financial performance: evidence from Egypt

2018 ◽  
Vol 31 (1) ◽  
pp. 63-74 ◽  
Author(s):  
Doaa Aly ◽  
Sherif El-Halaby ◽  
Khaled Hussainey
Keyword(s):  
Financial Performance ◽  
Financial Reporting ◽  
Firm Growth ◽  
Positive Association ◽  
Ordinary Least Squares ◽  
Bad News ◽  
Good News ◽  
Annual Reports ◽  
Least Squares Regression ◽  
Content Type

Purpose This paper aims to examine the extent to which financial performance (FP) represents one of the main determinants for tone disclosure (TD) in Egyptian annual reports. The authors also measure the bidirectional relationship between TD and FP. Design/methodology/approach The manual content analysis is used to measure the levels of TD in annual reports for a sample of 105 firms listed on the Egyptian stock market. The sample covers a three-year period (2011-2013). Findings The descriptive analysis in this paper shows that Egyptian firms disclose more good news than bad news. Therefore, the net news disclosure, or net variances, between good/bad is positive. The empirical analysis shows a positive association between the narrative disclosure of good/bad news and FP based on return on assets. The authors also find a highly significant association between the auditor, profitability, leverage, firm growth and financial reporting of good/bad news information. Finally, the results of the ordinary least squares regression show that the causality between the two endogenous variables runs from FP to TD. Thus, TD is determined by FP. Originality/value This study offers a novel contribution to disclosure studies by being the first study to examine TD in one of the developing countries.

scholarly journals CEO power and R&D investment

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Christine Naaman ◽  
Li Sun
Keyword(s):  
Chief Executive ◽  
Ordinary Least Squares ◽  
Financial Accounting ◽  
Least Squares Regression ◽  
Ceo Power ◽  
Firm Level ◽  
Content Type ◽  
Negative Relation ◽  
The Impact ◽  
D Investment

Purpose This study aims to examine whether and how the power of a chief executive officer (CEO) relates to firm-level research and development (R&D) investment. Design/methodology/approach The authors use clustered standard errors ordinary least squares regression using a large sample of US firms from 1994 to 2017. Findings The authors find a significant negative relation between CEO power and R&D investment, suggesting that firms with more powerful CEOs are less likely to invest in R&D activities. Besides, the study finds that this significant negative relation is largely driven by firms with weaker corporate governance. Originality/value This study contributes to the finance literature on the impact and consequences of having powerful CEOs and the financial accounting literature on the determinants of R&D expenditures.

The impact of technological innovation efficiency on firm growth

2019 ◽  
Vol 23 (1) ◽  
pp. 134-155 ◽  
Author(s):  
Rubén Martínez-Alonso ◽  
María J. Martínez-Romero ◽  
Alfonso A. Rojo-Ramírez
Keyword(s):  
Technological Innovation ◽  
Family Involvement ◽  
Firm Growth ◽  
Ordinary Least Squares ◽  
Least Squares Regression ◽  
Content Type ◽  
Family Involvement In Management ◽  
The Impact ◽  
The Relationship

Purpose The purpose of this paper is to offer new insights regarding an issue that has attracted the interest of multitude academics and practitioners in business management and family firm literature: technological innovation (TI). Specifically, this study brings new knowledge regarding both the impact of TI efficiency on firm growth and the moderating role of family involvement in management on such relationship. Design/methodology/approach The authors use a matched-pairs design and an ordinary least squares regression analysis to examine a sample of 152 Spanish manufacturing firms. Findings First, the authors show that firms obtaining higher TI efficiency are also those that achieve superior growth. Second, the authors reveal that as family involvement in management increases, the positive effect that TI efficiency exerts on firm growth is strengthened. Practical implications This study suggests that family managers should essentially consider various aspects such as tacit knowledge, social capital and long-standing collaborations with stakeholders to reinforce the relationship between TI efficiency and firm growth. Originality/value To the best of the authors’ knowledge, this is the first study that analyses the effect of TI efficiency on firm growth, as well as, when and to what extent family involvement in management influences the TI efficiency–growth relationship. Thus, this paper provides a deeper understanding of the importance that family managers could have on firm growth deriving from TI efficiency.

The growth-profitability nexus among Swedish SMEs

2015 ◽  
Vol 11 (4) ◽  
pp. 531-547 ◽  
Author(s):  
Darush Yazdanfar ◽  
Peter Öhman
Keyword(s):  
Financial Management ◽  
Fixed Effects ◽  
Firm Growth ◽  
Management Practices ◽  
Control Variable ◽  
Sustainable Growth ◽  
Least Squares Regression ◽  
Level Control ◽  
Firm Level ◽  
Content Type

Purpose – The purpose of this paper is to examine the growth-profitability nexus among small- and medium-sized enterprises (SMEs). Design/methodology/approach – The data comprise 106,884 observations covering 26,721 Swedish SMEs in six industry sectors over the 2008-2011 period. The data were analysed using several statistical techniques, including two-stage least squares regression, fixed-effects and random regressions, and bootstrapped quantile regression. Findings – Consistent with the hypotheses derived from the resource-based approach, the results indicate that current profitability significantly and positively affects firm growth. The firm-level control variable size significantly and positively affects firm growth, though firm age significantly and negatively affects growth. Firm industry affiliation also affects firm growth. Research limitations/implications – Since SME performance is commonly equated with access to knowledge, consultancy services or business training programmes sponsored by governmental organizations can help SMEs improve their management skills and thereby their performance. Moreover, adopting advanced financial management practices can improve the use of financial resources, leading to higher profitability and thereby sustainable growth. This implies that managers should change their strategy from “growth now, profitability later” to “profitable growth now”. Originality/value – Unlike most previous studies, this study employs several multivariate methods to analyse a comprehensive, cross-sectoral sample comprising non-financial, independent, and active SMEs in several industries. This study focuses explicitly on SMEs, which play a fundamental role in the Swedish economy.

The determinants of accounting comparability around the world

2019 ◽  
Vol 28 (1) ◽  
pp. 69-88
Author(s):  
Jonathan Ross ◽  
Linna Shi ◽  
Hong Xie
Keyword(s):  
Financial Reporting ◽  
Ordinary Least Squares ◽  
International Accounting ◽  
Least Squares Regression ◽  
Firm Level ◽  
Content Type ◽  
Country Level ◽  
The Usa ◽  
Prior Literature ◽  
Accounting Comparability

Purpose The purpose of this paper is to investigate country-level and firm-level determinants of within-country accounting comparability for 16 European Union countries plus the USA in the post-International Financial Reporting Standards adoption period. Design/methodology/approach The authors use ordinary least squares regression to test the hypotheses with a correction for heteroscedasticity. Findings The authors find that firms in countries with rules-based accounting, higher quality public auditor work environments, stricter enforcement of accounting standards and more reliance on equity-market financing have higher within-country comparability with each other. At the firm-level, the authors find that firms which are larger, engage in less earnings management, and have lower return-on-asset volatility have higher within-country comparability with each other. Research limitations/implications The authors use one measure of accounting comparability. Alternative measures of accounting comparability could test the hypotheses more completely. Practical implications The findings of the paper may help the regulators make more efficient policies to establish an efficient financial market within their country. Originality/value The paper is the first, to the authors’ knowledge, to identify country-level and firm-level determinants of within-country accounting comparability. It contributes to the accounting literature by completing the theory of international accounting comparability from the within-country perspectives, as prior literature focuses on the cross-country perspective of international accounting comparability.

Ownership dilution and earnings management: evidence from Indian IPOs

2019 ◽  
Vol 46 (3) ◽  
pp. 344-359
Author(s):  
Priyesh Valiya Purayil ◽  
Jijo Lukose P.J.
Keyword(s):  
Earnings Management ◽  
Emerging Market ◽  
Ordinary Least Squares ◽  
Least Squares Regression ◽  
Content Type ◽  
Public Firms ◽  
Security Offerings ◽  
Lockup Expiration ◽  
The Impact ◽  
The Relationship

Purpose Prior research on earnings management largely assumes that newly public firms manage earnings opportunistically around IPOs. However, only a few studies have empirically examined the real motives behind newly public firms’ earnings management. The purpose of this paper is to examine the impact of ownership dilution on earnings management among IPO firms. The authors chose the setting of security offerings in an emerging market, which is characterised by unique ownership structure, to examine the possible incentive of owners or pre-IPO shareholders to engage in earnings management. Design/methodology/approach The study employs accrual and real transactions measures to check the presence of earnings management among 409 IPO firms from India during the period 2000‒2018. Subsequently, using ordinary least squares regression models with heteroscedasticity-robust standard errors, this paper examines the relationship between earnings management and selling or dilution incentives of pre-IPO shareholders. Findings The study finds that the degree of earnings manipulation by issuer firms is positively associated with the ownership dilution at the time of IPO as well as around lockup expiration. Practical implications The findings of this study will help the investors and regulators to understand the practice of earnings management among IPO firms and how it is linked to the ownership dilution of pre-IPO shareholders. Originality/value The paper contributes to the limited stream of research that investigates the motives of earnings management among IPO firms. It empirically establishes an association between the selling incentive of pre-IPO shareholders and earnings management.

An examination of SEC revenue recognition comments and IPO earnings management

2018 ◽  
Vol 31 (3) ◽  
pp. 371-387 ◽  
Author(s):  
Michael Schuldt ◽  
Jose Vega
Keyword(s):  
Earnings Management ◽  
Initial Public Offerings ◽  
Positive Association ◽  
The United States ◽  
Ordinary Least Squares ◽  
Least Squares Regression ◽  
Revenue Recognition ◽  
Content Type ◽  
Management Measures ◽  
Regulatory Scrutiny

Purpose The purpose of this study is to examine the association between revenue-based earnings management in the periods immediately before and after firms’ initial public offerings (IPOs) and regulatory scrutiny by the United States Securities and Exchange Commission (SEC) during review of IPO firms’ registration statements. Design/methodology/approach This paper uses conditional discretionary revenues (Stubben, 2010) as its measure of earnings management, and revenue recognition comments delivered by the SEC as its measure of regulatory scrutiny. The authors use ordinary least squares regression (OLS) models, as well as a supplemental count model, to assess the association between conditional discretionary revenues and revenue recognition comments delivered by the SEC. Findings This study finds evidence of a positive association between earnings management measures in the pre-IPO period and the number of revenue recognition comments received by those firms during the SEC’s review. Furthermore, this study provides evidence that greater numbers of comments are associated with declining earnings management measures in the post-IPO period. However, the evidence suggests that these associations apply only to income-decreasing earnings management. Originality/value This paper extends the IPO earnings management literature by using conditional discretionary revenues as the measure of earnings management, and contributes to a nascent research stream in the accounting literature by investigating the SEC’s comment letter process and its association with, and impact upon, earnings management in the IPO process.

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