Global financial crisis, ownership structure and firm financial performance

2017 ◽  
Vol 34 (4) ◽  
pp. 447-465 ◽  
Author(s):  
Ali Salman Saleh ◽  
Enver Halili ◽  
Rami Zeitun ◽  
Ruhul Salim
Keyword(s):  
Financial Crisis ◽  
Financial Performance ◽  
Ownership Structure ◽  
Family Firms ◽  
Global Financial Crisis ◽  
Ownership Concentration ◽  
Financial Leverage ◽  
Content Type ◽  
Crisis Period ◽  
The Global Financial Crisis

Purpose This paper aims to investigate the financial performance of listed firms on the Australian Securities Exchange (ASX) over two sample periods (1998-2007 and 2008-2010) before and during the global financial crisis periods. Design/methodology/approach The generalized method of moments (GMM) has been used to examine the relationship between family ownership and a firm’s performance during the financial crisis period, reflecting on the higher risk exposure associated with capital markets. Findings Applying firm-based measures of financial performance (ROA and ROE), the empirical results show that family firms with ownership concentration performed better than nonfamily firms with dispersed ownership structures. The results also show that ownership concentration has a positive and significant impact on family- and nonfamily-owned firms during the crisis period. In addition, financial leverage had a positive and significant effect on the performance of Australian family-owned firms during both periods. However, if the impact of the crisis by sector is taking into account, the financial leverage only becomes significant for the nonmining family firms during the pre-crisis period. The results also reveal that family businesses are risk-averse business organizations. These findings are consistent with the underlying economic theories. Originality/value This paper contributes to the debate whether the ownership structure affects firms’ financial performance such as ROE and ROA during the global financial crisis by investigating family and nonfamily firms listed on the Australian capital market. It also identifies several influential drivers of financial performance in both normal and crisis periods. Given the paucity of studies in the area of family business, the empirical results of this research provide useful information for researchers, practitioners and investors, who are operating in capital markets for family and nonfamily businesses.

scholarly journals The Integrated Measuring of Working Capital Management Efficiency on Financial Performance in Indonesia Stock Exchange

2015 ◽  
Vol 7 (3) ◽  
pp. 26-33
Author(s):  
Petrus Emanuel De ◽  
Rina Indiastuti . ◽  
Erie Febrian .
Keyword(s):  
Financial Crisis ◽  
Financial Performance ◽  
Global Financial Crisis ◽  
Stock Exchange ◽  
Chief Financial Officers ◽  
Working Capital ◽  
Data Set ◽  
Crisis Period ◽  
Cash Conversion Cycle ◽  
The Global Financial Crisis

The purpose of this study is to determine the differences effect of working capital efficiency on financial performance during periods of crisis. The measurement is made during the crisis compared to the entire period of observation by using cash conversion cycle (CCC) and working capital policy (both investment policy and financing policy) on the profitability (by return on assets) and market value (by Tobin’s Q). Using all annual financial data of 104 manufacturing firms listed in Indonesia Stock Exchange (IDX) over the period 2005-2013. These periods include the global financial crisis. The panel data set was developed for nine years, which produced 936 firms-years observations. This study uses multivariate regression models with hierarchical regression analysis approach. This approach uses the global financial crisis period as a dummy variable. The results showed that there were differences in the effect of the cash conversion cycle (and its components) and working capital policy on profitability during the crisis period compared to the whole period. In contrast, no differences effect the cash conversion cycle (and its components) and working capital policy on the value of the company in the crisis period compared to the whole period. The manufacturing industries do not apply the efficiency in the management of working capital. The global financial crisis tends the companies to change their working capital policy more efficiently. The researcher can extend this study by doing a qualitative research how to chief financial officers invest and finance day-by-day operation.

scholarly journals Economic policy uncertainty, value of cash and financial crisis

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Quoc Trung Tran
Keyword(s):  
Economic Policy ◽  
Financial Crisis ◽  
Global Financial Crisis ◽  
Policy Uncertainty ◽  
Content Type ◽  
Economic Policy Uncertainty ◽  
Crisis Period ◽  
Value Of Cash ◽  
Before And After ◽  
The Global Financial Crisis

PurposeThis paper investigates the effect of economic policy uncertainty on value of cash before and after the global financial crisis.Design/methodology/approachWe investigate the relationship between economic policy uncertainty and value of excess cash based on the valuation model of Fama and French (1998). Baker et al. (2016) news-based index (BBD index) is employed to calculate measures of economic policy uncertainty. Our research sample includes 103,474 observations from 11,000 firms across 19 countries over the period 2004–2016.FindingsWe find that economic policy uncertainty is negatively “positively” related to value of cash in the pre-crisis “post-crisis” period. Moreover, we also document that the positive effect of economic policy uncertainty in the post-crisis period is stronger in financially constrained firms.Originality/valueWhile prior studies find a relationship between economic policy uncertainty and cash levels or the effect of firm-level uncertainty on value of cash, this paper shows how economic policy uncertainty as an institutional environment factor affects value of cash. Moreover, it documents that economic policy uncertainty has opposite effects on value of cash before and after the global financial crisis.

Uncertainty avoidance culture, cash holdings and financial crisis

2020 ◽  
Vol 28 (4) ◽  
pp. 549-566
Author(s):  
Quoc Trung Tran
Keyword(s):  
Financial Crisis ◽  
Global Financial Crisis ◽  
Cash Holdings ◽  
Uncertainty Avoidance ◽  
Cultural Dimension ◽  
Exogenous Shock ◽  
Content Type ◽  
Crisis Period ◽  
The Global Financial Crisis ◽  
The Impact

Purpose This paper aims to investigate how the global financial crisis affects the relationship between uncertainty avoidance culture and corporate cash holdings. Design/methodology/approach This study develops a research model in which cash holdings ratio is a function of post-crisis period dummy, Hofstede’s cultural dimension of uncertainty avoidance, their interactive term and control variables. The research sample includes 188,264 observations from 26,509 firms incorporated in 44 countries between 2003 and 2016. Findings This study finds that the effect of uncertainty avoidance culture on firm cash holdings is stronger in the post-crisis period from 2008 to 2016. This effect is stronger for financially constrained firms. In addition, the research findings show that uncertainty avoidance culture is more effective in cash–cash flow sensitivity over the post-crisis period. Originality/value Prior studies show that uncertainty avoidance culture positively affects corporate cash reserves. However, the authors only examine the effect of uncertainty avoidance culture on cash holdings in a static environment. This paper investigates this effect under the impact of the global financial crisis – an exogenous shock.

Does disclosure of earnings forecasts regulation affect the valuation of IPOs? Evidence from an emerging country

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Chui Zi Ong ◽  
Rasidah Mohd-Rashid ◽  
Waqas Mehmood ◽  
Ahmad Hakimi Tajuddin
Keyword(s):  
Financial Crisis ◽  
Initial Public Offerings ◽  
Global Financial Crisis ◽  
Earnings Forecasts ◽  
Regulatory Change ◽  
Content Type ◽  
Crisis Period ◽  
Earnings Information ◽  
The Global Financial Crisis ◽  
The Impact

PurposeThis paper aimed to explore the effect of a regulatory change pertaining to earnings forecasts disclosure from a mandatory to a voluntary regime on the valuation of Malaysian initial public offerings (IPOs).Design/methodology/approachThe study employed ordinary least square (OLS) regression and quantile regression to analyse the impact of disclosure of earnings forecasts regulation on the valuation of IPOs which comprised 458 IPOs reported for the period 2000–2017 on Bursa Malaysia.FindingsThis paper revealed that the regulatory change in forecasted earnings disclosure from a mandatory to a voluntary regime, effective from 1 February 2008, had a negative impact on the valuation of IPOs. The regime change did not improve the transparency of firms issuing IPOs. In fact, the absence of forecasted earnings information in most IPO prospectuses caused ex ante uncertainties to increase. Voluntary disclosure, however, had a significant positive relationship with the valuation of the IPOs issued during the global financial crisis period (2008–2010). Firms concealed their poor qualities by excluding forecasted earnings information from their prospectuses in order to have a fair valuation.Practical implicationsThe findings may be used by policymakers as guidance in improving the existing regulation regarding the disclosure of forecasted earnings.Originality/valueThis paper provides new insight on the effect of a regulatory change pertaining to earnings forecasts disclosure from a mandatory to a voluntary regime on the valuation of Malaysian IPOs. It also provides evidence that the regulatory change of earnings forecast disclosure affects the IPOs' values listed during the global financial crisis period.

Financial distress determinants among SMEs: empirical evidence from Sweden

2020 ◽  
Vol 47 (3) ◽  
pp. 547-560 ◽  
Author(s):  
Darush Yazdanfar ◽  
Peter Öhman
Keyword(s):  
Financial Crisis ◽  
Financial Distress ◽  
Large Scale ◽  
Global Financial Crisis ◽  
Binary Logistic Regression ◽  
Data Availability ◽  
Cross Sectional ◽  
Data Set ◽  
Content Type ◽  
The Global Financial Crisis

PurposeThe purpose of this study is to empirically investigate determinants of financial distress among small and medium-sized enterprises (SMEs) during the global financial crisis and post-crisis periods.Design/methodology/approachSeveral statistical methods, including multiple binary logistic regression, were used to analyse a longitudinal cross-sectional panel data set of 3,865 Swedish SMEs operating in five industries over the 2008–2015 period.FindingsThe results suggest that financial distress is influenced by macroeconomic conditions (i.e. the global financial crisis) and, in particular, by various firm-specific characteristics (i.e. performance, financial leverage and financial distress in previous year). However, firm size and industry affiliation have no significant relationship with financial distress.Research limitationsDue to data availability, this study is limited to a sample of Swedish SMEs in five industries covering eight years. Further research could examine the generalizability of these findings by investigating other firms operating in other industries and other countries.Originality/valueThis study is the first to examine determinants of financial distress among SMEs operating in Sweden using data from a large-scale longitudinal cross-sectional database.

Shadow prices of non-performing loans and the global financial crisis

2019 ◽  
Vol 20 (5) ◽  
pp. 411-434
Author(s):  
Ameni Tarchouna ◽  
Bilel Jarraya ◽  
Abdelfettah Bouri
Keyword(s):  
Financial Crisis ◽  
Banking Sector ◽  
Global Financial Crisis ◽  
Shadow Price ◽  
Market Price ◽  
Shadow Prices ◽  
Content Type ◽  
Managerial Implications ◽  
Bad Loans ◽  
The Global Financial Crisis

Purpose This paper aims to determine the opportunity cost borne by US commercial banks to reduce non-performing loans (NPLs) by one unit within the global financial crisis framework. Design/methodology/approach To achieve this aim, the authors use the directional output distance function to estimate the technical efficiency while considering NPLs as undesirable output. Then, they estimate the shadow prices of NPLs by using the envelope theorem and solving the revenue function. Findings The results indicate that medium-sized banks are the most efficient, while small banks are the most inefficient ones. Moreover, the shadow prices of NPLs of large banks are higher than those of small and medium-sized banks. This implies a more elevated cost when lessening bad loans in large banks. This is more prominent during the crisis given that the shadow prices of NPLs of large banks have risen sharply over that period. Practical implications Shadow prices have important managerial implications given that they display the amounts of required reduced revenues to lessen NPLs. Accordingly, banks’ managers are called to reduce these loans by paying more attention when choosing their customers. Originality/value With the absence of an observable market price for bad loans in financial literature, the shadow price notion offers an adequate measure to evaluate them. To the best of authors’ knowledge, this is the first study that provides an estimation of the shadow price of NPLs in the US banking sector.

scholarly journals Evolution of German corporate governance (1995-2014): an empirical analysis

2019 ◽  
Vol 19 (5) ◽  
pp. 1042-1062
Author(s):  
Andreas Rühmkorf ◽  
Felix Spindler ◽  
Navajyoti Samanta
Keyword(s):  
Corporate Governance ◽  
Financial Crisis ◽  
Global Financial Crisis ◽  
Governance System ◽  
Content Type ◽  
Convergence Process ◽  
Corporate Governance System ◽  
Anglo American ◽  
The Stability ◽  
The Global Financial Crisis

Purpose This paper aims to address the evolution of corporate governance in Germany with a particular regard to whether there can be observed a gradual convergence to a shareholder primacy corporate governance system. Design/methodology/approach To investigate a potential shift of the German corporate governance system to an Anglo-American tiled corporate governance system, the authors have empirically assessed on a polynomial base 52 separate company and corporate governance variables for 20 years (1995-2014). Findings This research suggests that a gradual convergence has taken place prior to the global financial crisis. However, the results suggest that the convergence process experienced a slowdown in the aftermath of the global financial crisis, which may be linked to the stability of the German corporate governance system during the global financial crisis and the political environment during this time. Originality/value This paper contributes to the research by not only analysing the development of the German corporate governance system but also identifying new reasons for this development and explaining why a new convergence process may be observed in the future again.

Proactive and reactive strategies deployed by restaurants in times of crisis

2015 ◽  
Vol 27 (7) ◽  
pp. 1641-1661 ◽  
Author(s):  
María del Mar Alonso-Almeida ◽  
Kerstin Bremser ◽  
Josep Llach
Keyword(s):  
Financial Crisis ◽  
Competitive Advantage ◽  
Dynamic Capabilities ◽  
Global Financial Crisis ◽  
Small Sample ◽  
Content Type ◽  
Organizational Effects ◽  
Subsequent Effect ◽  
One Year ◽  
The Global Financial Crisis

Purpose – This study aims to examine the development of dynamic capabilities and their effect on the competitive advantage of restaurants in 2009, one year after the beginning of the global financial crisis. Design/methodology/approach – The restaurants were personally surveyed to discern the importance of proactive and reactive strategies for the organization. The resulting two organizational effects – cost cutting and the development of dynamic capabilities – were tested for their influence on competitive advantage. Findings – The findings show that both proactive and reactive strategies reduce costs; however, only proactive strategies develop dynamic capabilities that improve competitive advantage. Research limitations/implications – The conclusions are drawn from a small sample of restaurants in Madrid, the capital of Spain. Given that Madrid enjoys a higher standard of living and greater business expenditures than other cities, the results may not be generalizable to the rest of the country or to other southern European capitals. Practical implications – Managers must use proactive strategies for companies to survive during times of crisis. A focus on proactive strategies will improve a company’s competitive position. Social implications – Policy makers should support the development of proactive strategies and provide an adequate infrastructure of counseling and network creation. Originality/value – To the best of our knowledge, no previous research specifically analyzes both the type of strategy deployed and its subsequent effect on dynamic capabilities and the consequences of the strategy on competitive advantage during a financial crisis.

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