scholarly journals President interlocking, family firms and performance during turbulent times: Evidence from Latin America

2016 ◽  
Vol 6 (2) ◽  
Author(s):  
Karen Watkins-Fassler ◽  
Virginia Fernández-Pérez ◽  
Lázaro Rodríguez-Ariza
Keyword(s):  
Latin America ◽  
Financial Performance ◽  
Latin American ◽  
Family Firms ◽  
Annual Data ◽  
Minority Shareholders ◽  
Return On Assets ◽  
Publicly Traded Companies ◽  
Turbulent Times ◽  
And Performance

n Latin America, company ownership is typically concentrated in the hands of controlling families, who build powerful business groups which facilitate interlocking practices. The purpose of this study is to examine how President interlocking relates with financial performance in Latin American firms, under uncertainty circumstances. Using regression analysis (panel least squares), the association between return on assets and President interlocking during turbulent times is analyzed. For the latter, annual data (2009–2010) from non-financial publicly traded companies in Chile (243 firms) and Mexico (89 firms) is employed. It is documented that President interlocking in Latin American firms is positively associated with financial performance. However, this effect is higher in Chile than in Mexico, where minority shareholders and other stakeholders are better protected against expropriation. This study increases the understanding of the strengths of President interlocks in stormy times, by introducing the Latin American context.

scholarly journals Impacto dos Investimentos em Tecnologia sobre a Rentabilidade do Setor Bancário Brasileiro

2021 ◽  
Vol 13 (1) ◽  
pp. 94-111
Author(s):  
Lucas Silva Barreto ◽  
Vinicius Silva Pereira ◽  
Antonio Sergio Torres Penedo
Keyword(s):  
Financial Performance ◽  
Positive Relationship ◽  
Return On Assets ◽  
Expected Return ◽  
It Investments ◽  
Publicly Traded Companies ◽  
And Performance ◽  
Impact Of Technology ◽  
The Impact ◽  
The Relationship

Purpose: To analyze the relationship between investments in technology and the profitability of the five largest Brazilian banks between 2009 and 2018.Theoretical framework: Through correlation analysis and panel data regression, the impact of technology investment on Return on Assets (ROA) was specifically assessed.Design/methodology/approach: Despite the growth in investment in banking technology, the level of disclosure by publicly traded companies in Brazil is still limited, with few details disclosed in corporate reports about the amounts invested, of the types investments made, the expected return and the returns already obtained with previous investments. This disclosure is influenced by factors such as company size and profitability.Findings: In the present study, a positive relationship was identified between investment in T.I and Return on Assets (ROA) of the banks analyzed and, therefore, the presence of a profitability paradox was not found.Originality/value:  There was a positive relationship between investment in IT and performance. There was a significant positive correlation at 5% between IT investments and financial performance, given by the relationship between profit before depreciation and total sales. The regression analysis found that an increase in IT investments raised the company's financial performance (Beta = 0.204 and p 0.1). The increase in the share of IT investments in operating expenses increased the Return on Assets by 0.039 percentage points.Research, Practical Social implications: Gain knowledge in the management of banking organizations in order to guide in the decision-making about technological investments that should be made.

Internationalization and performance: the role of depth and breadth

2018 ◽  
Vol 31 (1) ◽  
pp. 91-104 ◽  
Author(s):  
Andres Velez-Calle ◽  
Fernando Sanchez-Henriquez ◽  
Farok Contractor
Keyword(s):  
Latin America ◽  
Financial Performance ◽  
Latin American ◽  
Content Type ◽  
Negative Effect ◽  
Internationalization Strategies ◽  
And Performance ◽  
Geographical Scope ◽  
The Relationship

Purpose The purpose of this paper is to analyze the relationship between multinationality and firm performance (M-P) in Latin American companies, commonly referred to as multilatinas. The study conceptualizes the depth (intensity) and breadth (geographical scope) of internationalization and examines their effect on financial performance. Although scholars have studied how internationalization in various contexts and industries affects performance, little is known about firms in Latin America. Design/methodology/approach The authors conducted an analysis of the effect of the depth and breadth of multilatina internationalization on financial performance by creating a database using information from America Economia, a specialized Chilean magazine that publishes an annual ranking of multilatinas. Additional data came from the Osiris database of Bureau Van Dijk and Compustat. The hypotheses were tested using an autoregressive heteroskedastic model. Findings The results show that the extent of the depth and breadth of internationalization affects financial performance. Multilatinas’ depth of internationalization has a curvilinear (U-shaped) impact on performance while breadth has an inverted curvilinear impact on performance. Research limitations/implications The theory portion and results expand the literature on firm internationalization and performance by distinguishing between two types of international firm expansion, depth and breadth, and discussing how each contributes to different stages of the three-stage theory of multinationality and performance. Originality/value The findings indicate that multilatinas benefit from their regional expansion, but outside Latin America, expansion has a negative effect on financial performance. They also show that firms can implement different types of internationalization strategies in terms of intensity and scope to achieve better performance.

scholarly journals Understanding Governance Mechanisms in Small and Medium Family Firms in Latin America

2021 ◽  
Vol 14 (2) ◽  
pp. 107-120
Author(s):  
Isabel Botero ◽  
Fernando Sandoval Arzaga ◽  
Brøndsted Bullock
Keyword(s):  
Latin America ◽  
Financial Performance ◽  
Latin American ◽  
Family Business ◽  
Family Firms ◽  
Governance Mechanisms ◽  
Family Governance ◽  
The Family ◽  
And Control ◽  
Formal Business

Governance mechanisms help manage, direct, and control people, resources, and the interests of those involved in a firm. In family firms, understanding the use of governance mechanisms is particularly important given their rela-tionship with the sustainability of the family and the business. Even though we know a great deal about family business governance in North America and Europe, we still know very little regarding the use of governance mechanisms in small and medium (SME) family firms in Latin America, nor do we know whether the use of governance mech-anisms impacts financial performance. To address these gaps, this paper presents the results of a survey completed by 2287 representatives of family business SMEs from 24 Latin American countries. Participants indicated the like-lihood of their using different governance mechanisms and responded to questions concerning their businesses. Our results indicate that the small and medium Latin American family firms in our study were not very likely to use formal business and family governance mechanisms, however, the use of formal business governance mechanisms was related to financial performance. The implications of these results for research and practice are discussed.

scholarly journals President interlocking, family firms and performance during turbulent times: Evidence from Latin America

2016 ◽  
Vol 6 (2) ◽  
pp. 63-74 ◽  
Author(s):  
Karen Watkins-Fassler ◽  
Virginia Fernández-Pérez ◽  
Lázaro Rodríguez-Ariza
Keyword(s):  
Latin America ◽  
Family Firms ◽  
Turbulent Times ◽  
And Performance

Main financial factors influencing the survival, development and performance of family firms

2012 ◽  
pp. 125-143
Author(s):  
Oscar Domenichelli
Keyword(s):  
Agency Costs ◽  
High Performance ◽  
Family Firms ◽  
Agency Conflicts ◽  
Minority Shareholders ◽  
Debt Finance ◽  
Personal Savings ◽  
And Performance ◽  
Control And Management ◽  
Personal Assets

Sometimes the impossibility of employing an adequate level of debt may prevent family firms from developing or reaching high performance; however, they can increase their ability to collect debt finance thanks to personal assets to collateralize or personal guarantees, supplied by family members. Furthermore, agency costs of equity are negligible in family businesses, owing to the insignificant separation among the functions of ownership, control and management and their intra-familial altruistic linkages, but agency costs of debt are high, as family firms are usually small or medium-sized enterprises and, thus, more opportunistic and little transparent. Agency conflicts between majority and minority shareholders prevent family firms, to some extent, from getting equity finance and developing, as non-family and minority shareholders may undergo a loss of personal wealth. The level of debt tends to increase when family firms grow. In the early stages of its development, a family-owned firm usually relies on personal savings and sources of capital provided by friends and relatives; while, in the later stages of its growth, a family-owned firm can more easily employ debt and external equity to finance its development.

Examining the Relation Between Ethical Focus and Financial Performance in Family Firms: An Exploratory Study

2010 ◽  
Vol 23 (4) ◽  
pp. 310-326 ◽  
Author(s):  
Ernest H. O'Boyle ◽  
Matthew W. Rutherford ◽  
Jeffrey M. Pollack
Keyword(s):  
Firm Performance ◽  
Financial Performance ◽  
Family Involvement ◽  
Family Business ◽  
Exploratory Study ◽  
Family Firms ◽  
Research Area ◽  
Future Research ◽  
Business Studies ◽  
And Performance

Empirically, the confluence of family involvement, ethics, and performance is a sparse research area. The authors explore a rich theoretical framework relating family involvement, ethical focus, and firm performance and empirically test a mediated model using a sample of 526 family businesses. The results illustrated that a firm’s ethical focus mediated the relation between family involvement and financial performance. Specifically, data supported the relation between family involvement and a firm’s ethical focus. And increased ethical focus predicted increased financial performance. The authors discuss the implications of these findings and offer potential areas for future research in family business studies.

The Firm Value and Marketing Intensity Decision in Conditions of Financial Constraint: A Comparative Study of the United States and Latin America

2020 ◽  
Vol 28 (3) ◽  
pp. 21-39
Author(s):  
Walter Palomino-Tamayo ◽  
Juan Timana ◽  
Julio Cerviño
Keyword(s):  
United States ◽  
Latin America ◽  
Latin American ◽  
Firm Value ◽  
Financial Constraints ◽  
The United States ◽  
Financial Constraint ◽  
Data Set ◽  
And Performance ◽  
Marketing Intensity

Marketing managers generally have to make marketing decisions under financial constraints (i.e., the firm’s inability to generate cash flow for investments and marketing), with limited assurance of the outcomes. Little investigation has been made into the effect of financial constraints on marketing intensity and the subsequent effect on firm value and performance, particularly when it is a volatile environment (e.g., Latin America) that creates the financial constraints. Using a conceptual framework grounded in agency theory, the authors develop a model and test it using a panel data set from the United States and five Latin American countries. The results indicate that financial constraints have a negative effect on marketing intensity and ultimately negatively affect firm value and performance. Furthermore, this study confirms the effect of three moderators—market sensitivity, country governance quality, and country economic development distance—on the relationship between financial constraint and marketing intensity and helps explain differences across the United States and Latin America.

scholarly journals Innovation and Performance in Latin-American Small Family Firms

2018 ◽  
Vol 8 (7) ◽  
pp. 986-998
Author(s):  
Gonzalo Maldonado Guzman ◽  
Jose Trinidad Marin Aguilar ◽  
Marisela Garcia Vidales
Keyword(s):  
Latin American ◽  
Family Firms ◽  
Small Family ◽  
And Performance

Privatization, Performance, and Efficiency: A Study of Indian Banks

2005 ◽  
Vol 30 (1) ◽  
pp. 7-16 ◽  
Author(s):  
Milind Sathye
Keyword(s):  
Financial Performance ◽  
Initial Public Offerings ◽  
Private Ownership ◽  
Indian Government ◽  
Return On Assets ◽  
Ex Post ◽  
Significant Difference ◽  
And Performance ◽  
Indian Banks ◽  
The Impact

Enhancing efficiency and performance of public sector banks (PSBs) is a key objective of economic reforms in many countries including India. It is believed that private ownership helps improve efficiency and performance. Accordingly, the Indian government started diluting its equity in PSBs from early 1990s in a phased manner. Has the partial privatization of Indian banks really helped improve their efficiency and performance? International evidence on impact of privatization is mixed. Though the issue is important in the Indian context, no study to the author's knowledge has addressed it so far. The present study, thus, fills an important gap. The data required for the study were obtained from Performance Highlights of Banks, a publication of the Indian Banks' Association. The author could readily obtain publications for five years — 1998-2002; his analysis is, thus, restricted to these five years. The financial performance of the banks was measured using the standard financial performance measures such as return on assets. The efficiency of banks was measured using accounting ratios, e.g., deposits per employee. Two main approaches are generally used to evaluate the impact of privatization on firm performance: ‘Synchronic’ approach in which the performance of state-owned firms is compared with the firms that were privatized or with the firms that were already in private ownership. ‘Historical’ approach, in which ex-ante and ex-post privatization performance of the same enterprise is compared. Given that the data are available for only five years, the author uses the synchronic approach. Since the dataset is not large enough to allow the use of more robust multivariate statistical procedures, he confines himself to the use of the difference of means test. This study reveals the following: Financial performance of partially privatized banks (measured by return on assets) and their efficiency (measured by three different ratios) were significantly higher than that of the fully public banks. In the matter of quality of advances (measured by the ratio of non-performing assets to net advances), significant difference was not found in these two groups. Of course, there is no quick fix for this problem. Partially privatized banks also seem to be catching up fast with fully private banks as no significant difference was found in financial performance and efficiency between them. On comparing the strategies of privatization in India with the other countries, India was found to adopt the strategy of initial public offerings like Poland. This strategy failed in Poland but seems to have succeeded in India. Gradual privatization and well-developed financial markets seem to have contributed to Indian success.

scholarly journals Financial Leverage and Firms’ Performance: Empirical Investigation of KSE-100 Index

ETIKONOMI ◽  
2018 ◽  
Vol 17 (1) ◽  
pp. 45-56 ◽  
Author(s):  
Farhan Ahmed ◽  
Iqra Awais ◽  
Muhammad Kashif
Keyword(s):  
Capital Structure ◽  
Financial Performance ◽  
Stock Exchange ◽  
Optimal Level ◽  
Annual Data ◽  
Financial Leverage ◽  
Return On Assets ◽  
Return On Equity ◽  
Listed Firms ◽  
The Impact

Capital generation to fund everyday operations and long-term expansions is a constant concerning element in the corporate world. This study aims to investigate the optimal level of capital structure that firms can adopt to improve their financial performance given the industry dynamics and economic circumstances of the country. Using Hausman’s specification test, annual data for the period 2005 – 2014 of Karachi Stock Exchange (KSE) 100 index listed securities has been collected to analyze the impact of financial leverage on the firms’ performance. Return on assets, return on Equity, and TOBIN’s Q are the proxies of financial performance analyzed against financial leverage for the KSE 100 index listed firms. The finding of the paper indicates that capital structure, leverage, interest cover and sales growth as most significant variables impacting firms’ profitability.   DOI: 10.15408/etk.v17i1.6102

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