Corporate hedging, firm focus and firm size: the case of REITs

2017 ◽  
Vol 43 (3) ◽  
pp. 313-330 ◽  
Author(s):  
Peihwang Wei ◽  
Li Xu ◽  
Bei Zeng
Keyword(s):  
Firm Size ◽  
Linear Relation ◽  
Large Firms ◽  
Corporate Hedging ◽  
Content Type ◽  
Geographic Concentration ◽  
Property Type ◽  
Regression Approach ◽  
Non Linear ◽  
Diversified Firms

Purpose The purpose of this paper is to investigate the substitutability of corporate hedging and diversification in the real estate investment trusts (REITs) industry. The authors hypothesize that, relative to diversified firms, focused firms are more likely to be associated with hedging. The role of firm size is also analyzed. Design/methodology/approach The logistic regression approach is utilized to analyze the probability of hedging and the panel regression approach is used to examine the amount of hedging. Findings The authors find that, relative to diversified firms, firms focused on a single property type are more likely to engage in hedging. However, this finding is significant only for smaller firms, which implies a non-linear relation between hedging and firm size. The evidence is not as strong when firm focus is measured by geographic concentration. In terms of hedging amount, smaller firms’ average hedge ratio is greater than that of larger firms. For either small or large firms group, hedging amounts increase with firm focus measured by either property or geographic concentration and increase with firm sizes. Research limitations/implications The results imply that, relative to diversified REITs, REITs focused on a single property type are more likely to engage in hedging. However, this finding is significant only for smaller firms, which implies a non-linear relation between hedging and firm size. The evidence is not as strong when firm focus is measured by geographic concentration, suggesting that geographic concentration is perceived to be less risky than property type concentration. For either small or large firms group, hedging amounts increase with firm focus measured by either property or geographic concentration and increase with firm sizes, which implies that hedging amount does not depend on firm size. The sample period is limited to the years 2010 to 2013 because some data needs to be manually collected. Practical implications The results imply that REITs consider both property diversification and hedging in managing their risk. Originality/value The research represents an early attempt to investigate the relation between corporate hedging and diversification. The investigation into the REIT industry has several advantages such as a lower likelihood of using derivatives for speculation.

The impact of firm size on competitive intelligence activities

foresight ◽  
2020 ◽  
Vol 22 (5/6) ◽  
pp. 563-577
Author(s):  
Jonathan Calof
Keyword(s):  
Firm Size ◽  
Design Methodology ◽  
Competitive Intelligence ◽  
Full Time ◽  
Business Analytics ◽  
Large Firms ◽  
Process Variables ◽  
Content Type ◽  
Study Results ◽  
The Impact

Purpose Given the importance of competitive intelligence (CI) to the economic performance of firms, understanding whether CI practice is impacted by firm size or by their awareness of CI maybe important when creating programs designed to improve firms’ CI performance. This paper aims to address this by examining the extent to which the CI practices of small and medium-sized enterprises (SMEs) and large firms differed using a sample of firms with knowledge/awareness of CI. Design/methodology/approach A survey was developed that included 10 CI organization questions and 67 CI process questions. The survey was sent to a sample with awareness/knowledge of CI – strategic and CI professionals (SCIP) members and individuals who had attended SCIP events T-tests were then used to compare the SME’s and large firms’ responses to the 10 CI organization and 67 CI process questions. Findings For firms with CI awareness/knowledge, the study results suggest that size has very little relationship with CI practice. Of the 10 CI organization variables, only two were significantly different between the SME’s and the large firms. Large firms had more full-time CI staff and were more likely to have a formal intelligence unit compared to the SME’s. Of the 67 CI process variables, only four were significantly different between the SME’s and the large firms. Large firms made more use of company intranet for distributing CI findings use business analytics software and use commercial databases for information than SME’s while the SME’s used social media, in particular Facebook more than large firms, in their competitive intelligence activities. Originality/value This study uses a sample frame of firms with CI awareness/knowledge in examining differences between SME’s and large firms CI practices.

Why do large firms pay higher wages? Evidence from matched worker‐firm data

2005 ◽  
Vol 26 (7/8) ◽  
pp. 705-723 ◽  
Author(s):  
Thierry Lallemand ◽  
Robert Plasman ◽  
François Rycx
Keyword(s):  
Private Sector ◽  
Firm Size ◽  
Wage Premium ◽  
Individual Characteristics ◽  
Substantial Part ◽  
Large Firms ◽  
Skilled Workers ◽  
Data Set ◽  
Content Type ◽  
Firm Data

PurposeThis paper analyses the magnitude and sources of the firm‐size wage premium in the Belgian private sector.Design/methodology/approachUsing a unique matched employer‐employee data set, our empirical strategy is based on the estimation of a standard Mincer wage equation. We regress individual gross hourly wages (including bonuses) on the log of firm‐size and insert step by step control variables in order to test the validity of various theoretical explanations.FindingsResults show the existence of a significant and positive firm‐size wage premium, even when controlling for many individual characteristics and working conditions. A substantial part of this wage premium derives from the sectoral affiliation of the firms. It is also partly due to the higher productivity and stability of the workforce in large firms. Yet, findings do not support the hypothesis that large firms match high skilled workers together. Finally, results indicate that the elasticity between wages and firm‐size is significantly larger for white‐collar workers and comparable in the manufacturing and the service sectors.Research limitation/implicationsUnfortunately, we are not able to control for the potential non‐random sorting process of workers across firms of different sizes.Originality/valueThis paper is one of the few to test the empirical validity of recent hypotheses (e.g. productivity, job stability and matching of high skilled workers). It is also the first to analyse the firm‐size wage premium in the Belgian private sector.

scholarly journals Corporate diversification and accrual and real earnings management

2018 ◽  
Vol 17 (2) ◽  
pp. 198-214 ◽  
Author(s):  
Mohammad Alhadab ◽  
Thang Nguyen
Keyword(s):  
Earnings Management ◽  
Linear Relationship ◽  
Real Earnings Management ◽  
Corporate Diversification ◽  
Publicly Traded ◽  
Content Type ◽  
Non Linear ◽  
The Usa ◽  
Diversified Firms ◽  
Reported Earnings

Purpose This study aims to examine the non-linear relationship between corporate diversification and real and accrual earnings management, using a sample of 5,659 US firm-year observations for 1,221 firms covering the period from 2001 to 2012. Design/methodology/approach The authors use various techniques and regressions to test the hypotheses. Following prior research, several proxies have been used to measure diversification, accrual earnings management and real earnings management. Findings The study produces several important findings. First, the study provides evidence that diversified firms engage in real and accrual earnings management to manage their reported earnings upward. These results are consistent with recent research (Farooqi et al., 2014; Jirapon et al., 2008) that finds that diversified firms engage in earnings manipulation. Second, and most importantly, the study contributes to the literature by providing the first evidence on a non-linear relationship between corporate diversification and earnings management. Specifically, the study provides evidence that diversified firms engage in accrual (real) earnings management, but this engagement is associated with level of diversification in a non-linear U-shaped (inverted U-shaped) relationship. Research limitations/implications Like all other studies, the current study has some limitations. The study was conducted only on the largest firms in the USA that have market capitalization of more than US$10m; hence, the findings may not be generalizable to small publicly traded firms. Further, the findings may not be generalizable to other markets, given the unique characteristics of US markets such as the presence of very sophisticated investors. Practical implications This study provides some important implications for US regulators to revise their regulations to prevent diversified firms from using earnings management to manipulate reported earnings. Originality/value This study is the first in the USA to examine the non-linear relationship between corporate diversification and earnings management. The study focuses on one of the most active, most attractive and largest capital markets throughout the world, that of the USA. Also, this study is one of the few studies that examine whether diversified firms use real activities manipulation to manage their reported earnings.

Internationalization and performance: evidence from Chinese firms

2018 ◽  
Vol 12 (1) ◽  
pp. 19-34 ◽  
Author(s):  
Chao Zhou
Keyword(s):  
Firm Size ◽  
Small Firms ◽  
Manufacturing Firms ◽  
Research Database ◽  
Large Firms ◽  
Chinese Firms ◽  
Content Type ◽  
The Impact ◽  
Overseas Subsidiaries ◽  
A Share

Purpose This paper aims to test the internationalization–performance relationship based on data of Chinese firms and the impact of firm size on the internationalization–performance relationship. Design/methodology/approach This paper uses overseas subsidiaries as a percentage of total subsidiaries to measure the degree of internationalization. As the overseas subsidiaries and total subsidiaries data of Chinese A-share listed firms are not available in any existing databases, the author hand-collected information on subsidiaries of Chinese A-share listed manufacturing firms from their annual financial reports during 2001-2014. The basic accounting and market information is collected from the China Stock Market and Accounting Research Database. This paper finally gets 535 manufacturing firms. Findings The empirical results suggest that the internationalization–performance relationship is W-shaped in overall samples, but varies with firm size. Specifically, the internationalization–performance relationship is W-shaped in small firms and U-shaped in large firms. Research limitations/implications Future studies based on unlisted Chinese firms or other measurement of internationalization may provide further understanding of the internationalization–performance relationship. Practical implications Policymakers should help small firms prepare a long-term internationalization strategy, giving more support for small firms in the first and third phases of internationalization and helping them to reach the second and fourth phases. Policymakers should also pay more attention to limit the aggressive internationalization behavior of large firms. Originality/value This study provides new evidence for the internationalization–performance relationship by using the unique longitude sample from China and the unique measurement of internationalization. We also highlight the importance of firm characteristics in the examination of internationalization–performance relationship, which provides a potential explanation for previous mixed evidence.

The uncertainty–investment relationship: scrutinizing the role of firm size

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Abdul Rashid ◽  
Assad Naim Nasimi ◽  
Rashid Naim Nasimi
Keyword(s):  
Panel Data ◽  
Adverse Effects ◽  
Firm Size ◽  
Political Risk ◽  
The Political ◽  
Large Firms ◽  
Political Uncertainty ◽  
Content Type ◽  
Macroeconomic Uncertainty

PurposeThe objective of this paper is threefold. First, it aims to empirically study whether firm-specific/idiosyncratic uncertainty, macroeconomic/aggregate uncertainty and political uncertainty have an adverse influence on firms' investment decisions in Pakistan. After establishing this, it scrutinizes whether the uncertainty effects on investment are different for firms of different sizes. Finally, it investigates whether any heterogeneity exists in the uncertainty impacts across different industries.Design/methodology/approachThe empirical analysis is based on an unbalanced panel data of 468 nonfinancial firms listed at the Pakistan Stock Exchange (PSX) during the period 2000–2018. Departing from the literature, the paper builds a time-varying composite volatility/uncertainty index based on the principal component analysis (PCA) by utilizing the constructed volatility series for sales, cash flows and return on assets to gauge firm-specific uncertainty for each firm included in the analysis. Likewise, the paper develops a PCA-based composite index for macroeconomic uncertainty by using the conditional variance series of consumer price index (CPI), industrial production index (IPI), the interest rate and the exchange rate obtained by estimating the (generalized) autoregressive conditional heteroscedastic, (G)ARCH, models. Finally, political uncertainty is measured by political risk components maintained by the Political Risk Services Group. The empirical framework of the paper augments the standard investment equation by incorporating all three types of uncertainty. Firms are grouped into small, medium and large categories based on firms' total assets and the size indicators are generated. Next, the indicators are multiplied by each uncertainty measure to quantify the differential effects of uncertainty across firm size. Firms are also differentiated by sectors to explore the sector-based asymmetries in the uncertainty effects. The “robust two-step system generalized method of moments (2SYS GMM) (dynamic panel data) estimator” is applied to estimate the empirical models.FindingsThe results provide robust and strong evidence of the detrimental influence of all three types of uncertainty on investment. Yet, it is observed that the strength of the influence considerably varies across uncertainty types. In particular, compared to firm-specific uncertainty, both macroeconomic and political uncertainties have more unfavorable effects. The analysis also reveals that the effects of all three types of uncertainty are quite different at small, medium and large firms. Specifically, it is observed that although the investment of all firms is influenced adversely by magnified uncertainty, the adverse effects of all three kinds of uncertainty are quite stronger at small firms than medium and large firms. These findings support the phenomenon of size-based asymmetries in the effects of uncertainty on investment. The results also provide evidence that either type of uncertainty quite differently affects the investment policy of firms in different sectors.Practical implicationsThe findings help different stakeholders to know how different types of uncertainty differently affect corporate firms' investments. Further, they suggest that firm size has a vital role in ascertaining the adverse effects of uncertainty on investment. The paper identifies to which type of uncertainty investors and policymakers should care more about and to which types of firms and industries they should concern more during volatile times. Firms should have more fixed assets and expand their size to mitigate the detrimental effects on investment of internal and external uncertainties. The government should enhance the political stability to induce firms for a higher level of investment, which, in turn, will result in higher growth of the economy.Originality/valueThe originality of the paper is credited to four aspects. First, unlike most previous studies that have utilized a single volatility measure, this paper constructs composite uncertainty indices based on the weights determined by the PCA. Second, it examines the effect of political uncertainty over and above the effects of idiosyncratic and aggregate (macroeconomic uncertainty) for an emerging economy. Third, and most important, it provides first-hand empirical evidence on the role of firm size in establishing the asymmetric effects of uncertainty on investment. Finally, it provides evidence on the industry-based heterogeneity in the uncertainty effects.

Stock price discreteness and clustering: decimals and ordered probit model

2014 ◽  
Vol 22 (1) ◽  
pp. 49-60
Author(s):  
Haksoon Kim
Keyword(s):  
Firm Size ◽  
Stock Price ◽  
Design Methodology ◽  
Small Firms ◽  
Probit Model ◽  
Ordered Probit ◽  
Ordered Probit Model ◽  
Large Firms ◽  
Content Type ◽  
Explanatory Variables

Purpose – The purpose of this paper is to revisit the ordered probit model of Hausman et al. after the NYSE decimalization. Design/methodology/approach – The changed ordered probit model. Findings – The model can somewhat capture the different impact of trading-related “explanatory” variables on price changes among three different decimals but does not explain much about price discreteness and irregular transaction intervals among the existing models of stock price discreteness. Overall 1/16th and 1/24th range of the dependent variable is better explained by trading-related explanatory variables than 1/8th range of the dependent variable for small firms and there is not much difference in large firms among three decimals. The results imply that finer specification in decimalization and smaller firm size matters in trading after the decimalization project. Originality/value – First paper to revisit the ordered probit model of Hausman et al. after the NYSE decimalization.

scholarly journals Management-employee relations, firm size and job satisfaction

2014 ◽  
Vol 35 (8) ◽  
pp. 1260-1275 ◽  
Author(s):  
Aysit Tansel ◽  
Şaziye Gazîoğlu
Keyword(s):  
Job Satisfaction ◽  
Maximum Likelihood ◽  
Firm Size ◽  
Small Firms ◽  
Policy Implications ◽  
Employee Relations ◽  
Large Firms ◽  
Employee Survey ◽  
Content Type ◽  
Employee Relationships

Purpose – The purpose of this paper is to investigate the job satisfaction in relation to managerial attitudes towards employees and firm size using the linked employer-employee survey results in Britain. Design/methodology/approach – The authors first investigate the management-employee relationships and the firm size using maximum likelihood probit estimation. Next various measures of job satisfaction are related to the management-employee relations via maximum likelihood ordered probit estimates. Four measures of job satisfaction that have not been used often are considered. They are satisfaction with influence over job; satisfaction with amount of pay; satisfaction with sense of achievement and satisfaction with respect from supervisors. Findings – Main findings indicate that management-employee relationships are less satisfactory in the large firms than in the small firms. Job satisfaction levels are lower in large firms. Less satisfactory management-employee relationships in the large firms may be a major source of the observed lower level of job satisfaction in them. Practical implications – These results have important policy implications from the point of view of the firm management while achieving the aims of their organizations in particular in the large firms in the area of management-employee relationships. Improving the management-employee relations in large firms will increase employee satisfaction in many respects as well as increase productivity and reduce turnover. Originality/value – The nature of the management-employee relations with firm size and job satisfaction has not been investigated before.

Does ERP integration foster Cross-Functional Awareness? Challenging conventional wisdom for SMEs and large French firms

2014 ◽  
Vol 20 (6) ◽  
pp. 865-886 ◽  
Author(s):  
Rolande Marciniak ◽  
Redouane E.L. Amrani ◽  
Frantz Rowe ◽  
Frédéric Adam
Keyword(s):  
Firm Size ◽  
Structural Equation ◽  
Implementation Strategies ◽  
Equation Modeling ◽  
Large Firms ◽  
Erp Implementation ◽  
Content Type ◽  
Factors Affecting ◽  
Indirect Relationship ◽  
The Impact

Purpose – The purpose of this paper is to explore the concept of Cross-Functional Awareness (CFA) and to question how firm size influences the impact of ERP implementation strategies on CFA. Specifically, the paper questions whether size moderates the capability of the firm to achieve CFA. Design/methodology/approach – The authors developed and empirically tested a conceptual framework using the partial least squares structural equation modeling approach. This study gathered data from a sample of 45 French SMEs and 55 French large firms. Findings – The results show that ERP implementation strategies (flexibility, organizational vision, Business Process Re-Engineering, speed of implementation, and focus on core modules) have a direct positive relationship and, in large firms, an indirect relationship (via data quality improvement) with the emergence of CFA. The study also suggests that firm size moderates the resulting emergence of ERP-enabled CFA. The findings will help researchers understand the factors associated with ERP implementation and use that promote or inhibit successful use of ERP systems. Research limitations/implications – Similar to many published ERP surveys, the sample size is small. In addition, the authors examined CFA in the survey from the perspective of a single respondent per firm. Finally, there may be a cultural limitation linked to the respondents all being French firms. Practical implications – The findings will promote a better understanding of the concept of CFA and its benefits amongst managers, leading to increased productivity and efficiency with ERP. In particular, they will help practitioners identify and manage the right factors during ERP implementations. Originality/value – In the expanding world of Enterprise System research, this paper is significant in that it studies the effect of ERP implementation on CFA rather than investigating the factors affecting ERP implementation or the outcomes of ERP implementations. To the best of the knowledge, this is one of the few papers that theoretically articulates and empirically explores the concept of CFA, and tests the relationship between implementation strategy factors and CFA, including the moderating role of size in the context of ERP. The contribution shows that the firm size effect should be examined at the level of SMEs and larger firms separately, rather than at an overall level.

scholarly journals Industry capital intensity and firms’ utilization of HCWS: does firm size matter?

2019 ◽  
Vol 48 (2) ◽  
pp. 492-510 ◽  
Author(s):  
Bo Zhang ◽  
Jianxun Chen ◽  
Amy Tian ◽  
Jonathan Morris ◽  
Hejun Fan
Keyword(s):  
Firm Size ◽  
Capital Intensity ◽  
Large Firms ◽  
Beijing City ◽  
Content Type ◽  
Strategic Hrm ◽  
Size Matter ◽  
The Relationship ◽  
Moderating Role

Purpose Following industry-based view’s (IBV) isomorphic trend among firms in the same industries, the purpose of this paper is twofold: first, to investigate whether industry capital intensity encourages or inhibits firm’s utilization of strategic HRM systems, particularly, high-commitment work systems (HCWS); and second, to examine the quadratic moderating role of firm size on the relationship between industry capital intensity and firms’ utilization of HCWS, drawing on the interactionist view of IBV and the resource-based view, as well as the interactive perspective in the contextualized HRM field. Design/methodology/approach The research design was time lagged. Firm-level subjectively rated data were collected from 168 large firms with more than 200 employees in Beijing. Industry-level objectively rated data were collected from the statistics yearbooks of Beijing city. Findings The industry capital intensity was positively related to firms’ utilization of HCWS, all else being equal. For large firms in this research, the relationship between industry capital intensity and firms’ utilization of HCWS was moderated by firm size in a quadratic way. Originality/value This research contributes to contextualized HRM literature by empirically examining the complex interactive effects of industry capital intensity and firm’s utilization of HCWS. First, it established the direct cross-level relationship between industry capital intensity and firms’ utilization of strategic HRM systems. Moreover, it explored the boundary conditions of such relationship by investigating the quadratic moderating role of firm size.

Firms and export performance: does size matter?

2020 ◽  
Vol 47 (5) ◽  
pp. 985-999
Author(s):  
Van T.C. Ha ◽  
Mark J. Holmes ◽  
Trang M. Le
Keyword(s):  
Firm Size ◽  
Design Methodology ◽  
Positive Relationship ◽  
Manufacturing Sector ◽  
Export Performance ◽  
Nonlinear Relationship ◽  
Content Type ◽  
Regression Approach ◽  
Size Matter ◽  
The Relationship

PurposeThe purpose of this paper is to examine the relationship between export performance and firm size.Design/methodology/approachAnalysing a large sample of firms in the Vietnamese manufacturing sector, the authors employ a quantile regression approach to asses whether or not the relationship between exporting and firm size is dependent upon the extent of exporting that firms already undertake.FindingsThe authors find that increased firm size leads to higher export volumes. However, in sharp contrast to literature that largely focuses on considering a linear relationship between these two variables, the authors further find that the positive relationship becomes weaker as the extent of exporting activity increases.Originality/valueIn contrast to the earlier literature, a key novelty of the approach is that the authors obtain new insights in terms of establishing a nonlinear relationship between firm size and export performance in the case of Vietnamese manufacturing.

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