Non-founder CEOs, R&D investment and output

2019 ◽  
Vol 11 (2) ◽  
pp. 143-169
Author(s):  
Nan Xu ◽  
Hanyi Tian ◽  
Jing Cai
Keyword(s):  
Human Capital ◽  
Internal Control ◽  
Economic Consequences ◽  
Ceo Succession ◽  
Entrepreneurial Firms ◽  
Content Type ◽  
Growth Enterprise Market ◽  
Level Information ◽  
The Impact ◽  
D Investment

Purpose The purpose of this study is to investigate the impact of non-founder CEO succession on firms’ research and development (R&D) decision, and further explore its mechanism and economic consequences. Design/methodology/approach Using founders’ personal-level information of entrepreneurial firms in the Chinese growth enterprise market from 2009 to 2015, the authors empirically investigate whether firms can be motivated to launch more R&D activities as the result of switching to non-founder CEOs. The author’s further test the impact of non-founder CEOs on R&D output to distinguish their motivation. Moreover, the authors use stepwise regression to explore the mechanism and possible channels. Findings The authors find that R&D investment significantly increases in firms with non-founder CEOs and the R&D output that comes in the form of patent exhibits an upward trending in numbers, too, ruling out non-founder CEOs’ incentive to chase private benefits. Specifically, the authors find that non-founder CEOs can promote R&D investment through their more professional human capital and better internal control. The authors also show mitigating effects under different circumstances on the relationship between non-founder CEOs and R&D investment. Practical implications This study helps the authors to understand the impact of non-founder CEO succession on R&D investment in emerging markets. It also indicates that human capital of non-founder CEOs is critical in driving firms’ innovation, proposing policy suggestions to improve formal intermediary labor market of professional CEOs. Originality/value This study provides elaborate theoretical analysis and empirical tests on the mechanism and economic consequences of (non-)founders’ impact on R&D activities.

Network centrality and innovation performance: the role of formal and informal institutions in emerging economies

2019 ◽  
Vol 34 (6) ◽  
pp. 1388-1400 ◽  
Author(s):  
Haifeng Wang ◽  
Yapu Zhao ◽  
Beilei Dang ◽  
Pengfei Han ◽  
Xin Shi
Keyword(s):  
Social Cohesion ◽  
Emerging Economies ◽  
Informal Institutions ◽  
Innovation Performance ◽  
Network Centrality ◽  
Entrepreneurial Firms ◽  
Content Type ◽  
Growth Enterprise Market ◽  
Formal And Informal Institutions ◽  
The Impact

Purpose The impact of network centrality on innovation performance is inconclusive. The purpose of this paper is to examine how formal and informal institutions affect the influence of network centrality on firms’ innovation performance in emerging economies by integrating social network theory and institutional theory. Design/methodology/approach Multisource and lagged data from 234 technology-based entrepreneurial firms listed on the Chinese Growth Enterprise Market were leveraged to test a proposed research model. Findings Results suggest that formal institutions (marketization) positively moderate the relationship between network centrality and innovation performance, whereas informal institutions (social cohesion) negatively moderate this relationship. Moreover, formal and informal institutions have a strong joint impact on such relationship, that is, the effect of network centrality on innovation performance is most positive when marketization is high and social cohesion is low. Originality/value This empirical research provides new insights into whether and how firms can grasp the innovation benefits of network centrality by exploring institutional contingencies. It further sheds on light the scope of the network centrality–innovation issue by extending its research context to Chinese entrepreneurial firms.

Internal control weakness and accounting conservatism in China

2016 ◽  
Vol 31 (6/7) ◽  
pp. 688-726 ◽  
Author(s):  
Xudong Ji ◽  
Wei Lu ◽  
Wen Qu
Keyword(s):  
Internal Control ◽  
Negative Impact ◽  
Ordinary Least Squares ◽  
Economic Consequences ◽  
Accounting Conservatism ◽  
Research Approach ◽  
Content Type ◽  
Listed Firms ◽  
The Impact ◽  
The Relationship

Purpose The purpose of this study is to investigate the impact of internal control weaknesses on accounting conservatism in Chinese listed firms. It also investigates the relationship between the demand for external audit and accounting conservatism, and whether additional assurance of internal control reports (ICRs) can mitigate the negative impact of ICWs on accounting conservatism. Design/methodology/approach An empirical research approach is taken through the use of ordinary least squares (OLS) models and hand-collected internal control weakness data from ICRs released by Chinese listed firms. Findings The results of this paper show that the existence of ICWs has a negative effect on accounting conservatism in China. Further, the results demonstrate that both accounting-related and non-accounting-related ICWs affect accounting conservatism. The authors also find that there is a complementary relationship between accounting conservatism and the demand for additional assurance of ICRs, and additional assurance of ICRs can mitigate the negative impact of ICWs on accounting conservatism. Practical Implications This study provides timely evidence to Chinese regulators of the possible economic consequences of the official implementation of internal control standard in China from 2012. The findings of this paper can also benefit regulators around the world and, in particular, the regulators in emerging markets that are considering implement regulations similar to the US SOX. Originality/value The paper demonstrates that a wider scope of ICWs, including non-accounting-related ICWs, also has a significant impact on accounting conservatism. Therefore, this research provides a more general evidence on the relationship between internal control quality and accounting conservatism.

scholarly journals Bank diversification strategy and intellectual capital in Ghana: an empirical analysis

2019 ◽  
Vol 4 (2) ◽  
pp. 246-259 ◽  
Author(s):  
King Carl Tornam Duho ◽  
Joseph Mensah Onumah
Keyword(s):  
Human Capital ◽  
Intellectual Capital ◽  
Internal Control ◽  
Value Added ◽  
Diversification Strategy ◽  
Income Diversification ◽  
Data Set ◽  
Content Type ◽  
Focus Strategy ◽  
The Impact

Purpose The purpose of this paper is to examine the impact of intellectual capital and its components on bank diversification choice. Design/methodology/approach Both asset and income diversification are computed and an unbalanced panel data set of 32 banks covering the period 2000–2015 have been used. The panel corrected standard error regression has been used to account for serial correlation and heteroscedasticity. Findings The study found that intellectual capital determines the choice of diversifying. Precisely, intellectual capital motivates asset diversity but it dissuades income diversification. Human capital and structural capital are major components that determine asset diversity decisions. Income diversification decision, in this case to choose a focus strategy, is determined by human capital. This gives credence for the human capital theory in Ghana. Competition encourages a focus strategy. Bank size and leverage enhances income diversification while stock exchange listing and government ownership fosters the focus strategy. Practical implications Diversification strategy, knowledge base of staff, corporate governance and internal control have been considered as factors leading to the collapse of some Ghanaian banks in 2017–2018. The study provides relevant insights for regulators, decision support units and corporate boards. Intellectual capital and value added metrics should be used for modelling and decision making as they have value relevance. Originality/value This is a premier study that has examined the nexus between diversification strategy and intellectual capital in banks.

Board structure changes after accounting fraud: the case of Schneider Electric

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Benedicte Millet-Reyes ◽  
Nancy Uddin
Keyword(s):  
Corporate Governance ◽  
Internal Control ◽  
Multinational Corporation ◽  
Business Case ◽  
Annual Reports ◽  
Board Structure ◽  
Control Mechanisms ◽  
Accounting Fraud ◽  
Content Type ◽  
The Impact

Theoretical basis The impact of corporate governance on internal controls and quality of financial disclosures. Research methodology Analysis of a real financial fraud event for a non-US multinational corporation. The case relies on accessing and analyzing annual reports for the firm, both before and after the fraud. Additional information on industry governance characteristics are provided in the case itself so that students can compare the firm to the industry. Case overview/synopsis This business case is centered on the analysis of Schneider Electric, a French multinational corporation, which had to restate their financial statements in 2011 because of accounting fraud. Following this event, Schneider undertook major changes in their board structure to improve internal control mechanisms. This pedagogical business case familiarizes students with international differences in ownership and board structure and emphasizes potential corporate governance changes after financial statement fraud. Complexity academic level Managerial finance, corporate finance, international finance, auditing. This case is more appropriate for upper-level undergraduate and graduate courses.

Could CSR improve the financial performance of developing countries’ firms? Analyses of mediating effect of intangible resources

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mohamed Hamdoun ◽  
Mohamed Akli Achabou ◽  
Sihem Dekhili
Keyword(s):  
Developing Countries ◽  
Human Capital ◽  
Financial Performance ◽  
Competitive Advantage ◽  
Mediating Effect ◽  
Social Dimension ◽  
Content Type ◽  
Intangible Resources ◽  
The Impact

Purpose This paper aims to examine the link between corporate social responsibility (CSR) and financial performance in the context of developing countries. More specifically, the mediating role of a firm’s competitive advantage and intangible resources, namely, human capital and reputation are studied. Design/methodology/approach The study considered a sample of 100 Tunisian firms. The analysis makes use of the structural equation modelling method to explore the relationship between CSR and financial performance, by including mediator variables. Findings The results confirm that CSR has no significant direct effect on financial performance. In particular, they indicate that the social dimension of CSR has a negative impact on performance. However, CSR does have a positive impact on competitive advantage via the two intangible resources considered, human capital and company reputation. Research limitations/implications The research fills a gap that occurred in the previous literature. In effect, previous studies focussed only on the direct link between CSR and financial performance. In addition, it enriches the limited literature on CSR strategies in the context of developing countries. However, further studies should explore the opposite relationship, i.e. the impact of financial performance on CSR strategy. In addition, the authors believe that amongst other potential research avenues, it would be interesting to study the moderating role of the activity sector. Practical implications From a practical point of view, this study suggests new applications with respect to the link between CSR and financial performance. To enhance their company’s financial performance, managers need to ensure that intangible resources are managed efficiently. Originality/value The paper contributes to the literature by examining how a firm’s intangible resources mediate between CSR and competitive advantage and how competitive advantage mediates between intangible resources and financial performance. Second originality is related to the study of the link between CSR and the financial performance of business organisations in the context of a developing country.

Organizational identity, professional identity salience and internal auditors’ assessments of the severity of internal control concerns

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ian Burt ◽  
Theresa Libby
Keyword(s):  
Professional Identity ◽  
Internal Control ◽  
Organizational Identity ◽  
Internal Audit ◽  
Identity Salience ◽  
Content Type ◽  
Internal Auditors ◽  
Internal Control Weaknesses ◽  
The Impact ◽  
Benefits And Costs

Purpose This paper aims to examine whether increasing the salience of the internal auditor’s professional identity, defined by the expectations of their professional group, increases internal auditors’ judgments of the severity of internal control concerns when their organizational identity is high. Design/methodology/approach This paper tests the hypothesis using a laboratory experiment with internal auditors as participants. Findings The results support the hypothesis that professional identity salience moderates the relation between organizational identity and the assessed severity of identified internal control weaknesses. Increasing the salience of professional identity results in a more severe assessment of identified internal control weaknesses when organizational identity is high than when it is low. Originality/value Prior research in the lab and in the field provides mixed results about the impact of organizational identity on internal auditors’ judgments of the severity of identified internal control concerns. This paper contributes to the discussion on this issue. In addition, the results have implications for the debate about the benefits and costs of in-house versus out-sourced internal audit functions.

Exploring the impact of intellectual capital on company reputation and performance

2018 ◽  
Vol 19 (5) ◽  
pp. 915-934 ◽  
Author(s):  
Gianluca Ginesti ◽  
Adele Caldarelli ◽  
Annamaria Zampella
Keyword(s):  
Human Capital ◽  
Intellectual Capital ◽  
Corporate Reputation ◽  
Intangible Asset ◽  
Competition Authority ◽  
Data Set ◽  
Content Type ◽  
Capital Efficiency ◽  
And Performance ◽  
The Impact

Purpose The purpose of this paper is to analyse the impact of intellectual capital (IC) on the reputation and performance of Italian companies. Design/methodology/approach The paper exploits a unique data set of 452 non-listed companies that obtained a reputational assessment from the Italian Competition Authority (ICA). To test the hypotheses, this study implemented several regression analyses. Findings Results support the argument that human capital efficiency is a key driver of corporate reputation. Findings also reveal that companies, which obtained reputational rating under ICA scrutiny, show a positive relationship between IC elements and various measures of financial performance. Research limitations/implications The study focuses on a single country; it is not free from the imprecisions of Pulic’s VAIC model. Practical implications This paper recommends companies that are interested to achieve a robust reputation should consider the human capital as a strategic intangible asset. Second, the results suggest that companies with an ICA reputational rating are able to leverage their intangibles to potentiate performance and competitiveness. Originality/value This is the first empirical investigation on the contribution of IC in generating value for corporate reputation. Additionally, the study contributes to the literature on the link between IC and performance by examining a sample of firms not yet explored in prior research.

The impact of intellectual capital and knowledge flows on incremental and radical innovation

2018 ◽  
Vol 10 (2/3) ◽  
pp. 149-170 ◽  
Author(s):  
Duy Quoc Nguyen
Keyword(s):  
Social Capital ◽  
Human Capital ◽  
Intellectual Capital ◽  
Radical Innovation ◽  
Knowledge Flows ◽  
Innovation Performance ◽  
Incremental Innovation ◽  
Content Type ◽  
Radical Innovations ◽  
The Impact

PurposeThe purpose of this paper is to develop a theoretical and empirical exploration of link between organization intellectual capital and knowledge flows with its incremental and radical innovation performance.Design/methodology/approachThis paper adopts relevant literature of social capital and organizational learning to examine the impact of intellectual capital and knowledge flows on incremental and radical innovation based on surveying 95 firms. To test the research hypotheses, regression analysis is used.FindingsResults of the study show that human capital and top-down knowledge flows significantly and positively influence both incremental and radical innovations. Social capital and bottom-up knowledge flows do not have any significant impact on incremental or/and radical innovation. Organizational capital has a positive impact on incremental innovation as expected.Practical implicationsThe results offer several practical implications for business managers to harvest its knowledge bases resident in the firm’s different forms appropriately to make innovation successful. Particularly, knowledge resident in human capital and organizational capital is useful for making incremental innovation. Especially, new knowledge, new skills and new perspectives resident in human capital are crucial important for making radical innovation. Both incremental and radical innovations are positively influenced by dynamic managerial capabilities.Originality/valueThis study contributes to literature by providing new evidence linking organization intellectual capital and knowledge flows with its innovation performance. Especially, the missing link between top-down knowledge flows and radical innovation is empirically examined. Value of this study is that social capital and bottom-up knowledge flows are not universally beneficial for enhancing innovation and their impacts on innovation performance are context dependent and more sophisticated than it is recognized in the literature.

The impact of research and development and marketing costs on the profitability of pharmaceutical companies of Tehran Stock Exchange using panel data 2001-2013

2016 ◽  
Vol 10 (4) ◽  
pp. 467-476 ◽  
Author(s):  
Yahya Bayazidi ◽  
Enayatollah Homaie Rad ◽  
Mehdi Mojahedian ◽  
Mehdi Toroski ◽  
Azita Nabizadeh ◽  
...  
Keyword(s):  
Panel Data ◽  
Research And Development ◽  
Stock Exchange ◽  
Random Effect ◽  
Patent Law ◽  
Pharmaceutical Companies ◽  
Content Type ◽  
Marketing Costs ◽  
The Impact ◽  
D Investment

Purpose The main aim of this study is to investigate the effects of marketing and costs and research and development (R&D) investments on profitability of pharmaceutical companies of Iran. Design/methodology/approach In this study, pharmaceutical companies that have been accepted in Tehran Stock Exchange until March 19, 2013 were investigated. Random-effect panel data estimator was used for this purpose. Findings The findings indicate that variables such as company size, capital-to-total asset ratio and debt-to-asset ratio have an effect on profitability. But, company life, advertising cost and R&D investment are ineffective on profitability. Originality/value Legal issues like not having patent law and pricing mechanism are reasons for the ineffective relationship between R&D and marketing costs and its effect on profitability of the Iran pharmaceutical industry.

Capital regulation, competition and risk-taking behavior of Indian banks in a simultaneous approach

2018 ◽  
Vol 44 (4) ◽  
pp. 459-477 ◽  
Author(s):  
Santi Gopal Maji ◽  
Preeti Hazarika
Keyword(s):  
Human Capital ◽  
Risk Taking ◽  
Value Added ◽  
Capital Adequacy ◽  
Bank Risk ◽  
Capital Regulation ◽  
Content Type ◽  
Risk Taking Behavior ◽  
Indian Banks ◽  
The Impact

Purpose The purpose of this paper is to investigate the association between capital regulation and risk-taking behavior of Indian banks after incorporating the influence of competition. Further, the study intends to enrich the existing literature by providing empirical evidence on the role of human resources in managing risk along with the influence of other bank specific and macroeconomic variables. Design/methodology/approach Secondary data on 39 listed Indian commercial banks are collected from “Capitaline Plus” corporate data database for a period of 15 years. Capital is measured by capital adequacy ratio as defined by the regulators, and two definitions of risk – credit risk and insolvency risk – are employed. Competition is measured by Herfindahl-Hirschman deposits index, concentration ratio and H-statistic. The value-added intellectual coefficient model is employed to compute human capital efficiency (HCE). Three-stage least squares technique in a simultaneous equation framework is used to estimate the coefficients. Findings The study finds that absolute level of regulatory capital and bank risk are positively associated, although the influence of capital on risk is not statistically significant. The influence of competition on risk is negative for all the models, which supports the “competition stability” view. The impact of human capital on bank risk is also negative for all cases. Practical implications The findings of the study are useful for the decision makers in several ways based on the inverse influence of competition and HCE on bank risk. Further, the observed positive association between capital and risk indicates that the capital regulation is not sufficient to enhance the stability in the banking sector. Originality/value This is the first study in the Indian context that incorporates the competition in the banking industry as an explanatory variable in the extant bank capital and risk relationship.

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