scholarly journals Inward internationalisation and cross-border acquisitions by EMNEs: The moderating role of ownership heterogeneity

2021 ◽  
Author(s):  
◽  
Sharmistha Chowdhury
Keyword(s):  
Boundary Condition ◽  
Agency Theory ◽  
Ownership Structure ◽  
Multinational Enterprises ◽  
Entry Mode ◽  
Institutional Ownership ◽  
Organisational Learning ◽  
Experiential Knowledge ◽  
Cross Border ◽  
The Impact

<p>Unlike Advanced Economy Multinational Enterprises (AMNEs), Emerging Economy Multinational Enterprises’ (EMNEs) dominant participation in international trade and investment is a recent phenomenon. Still, EMNEs are found to adopt bold strategies in the early stages of their internationalization and show path departure in the selection of their entry mode, such as cross border acquisition (CBA). CBA is not only a widely adopted EMNE internationalisation strategy but also distinguished EMNA internationalisation behaviour from that of AMNEs. CBA, entailing a high level of risk, requires considerable experiential knowledge that EMNEs lack. This knowledge deficit increases the perceived cost and risk associated with internationalisation and decreases the likelihood of engaging in foreign investment. There is a gap in the knowledge around how EMNEs compensate for their lack of experiential knowledge and how this experiential knowledge influences EMNEs’ adoption of CBA. Drawing from organisational learning as a theoretical lens, this study proposes that learning from inward internationalisation facilitates EMNEs’ CBA decisions. From an organisational perspective, experiential knowledge, especially externally sourced, is valuable when the acquired knowledge fits the recipient organisations’ existing dominant logic and values. Therefore ownership structure, such as family, institutional or corporate ownership, acts as a boundary condition and may influence the impact of inward internationalisation on CBA decisions. This idea is grounded in agency theory. This study argues that EMNEs compensate for their lack of internationalisation experiential knowledge through inward internationalisation (externally sourced experiential knowledge) which serves as a resource based antecedent leading EMNEs to make risky CBA decisions. Further, from an agency theory perspective, the study proposes that inward internationalisation – CBA relationships are likely to vary for different types of ownership categories.  The study uses a quantitative approach to test the hypotheses in an Indian context. India, being a large emerging economy, provides an appropriate backdrop to test the study’s conceptual model. For this study, a sample of 369 CBAs conducted by 205 public listed companies from 2009 to 2017 was collected from the SDC platinum database. The sample generated a panel of 1845 firm-year observations. Through a negative binomial regression analysis, it is found that inward internationalisation has a positive impact on the likelihood of Indian MNEs’ CBA decision. Regarding the moderating effect of ownership, it is found that family ownership reduces the impact of inward internationalisation, whereas foreign institutional ownership increases the impact of inward internationalisation. No moderating effects are found for domestic institutional ownership, nor are they found for domestic or foreign corporate ownerships.  This research contributes to the understanding of the EMNEs’ risky internationalisation behaviour through CBA. The present study adds to this stream of research by focusing on inward internationalisation and ownership structure influencing risky CBA decisions. In doing so, it contributes to organisational learning literature by suggesting that the impact of experiential knowledge may not necessarily be the same across the firms. This heterogeneity is attributable to EMNEs (knowledge acquiring organisation) who show varying motives, objectives and governance structure depending on their ownership structure. By examining the boundary condition of ownership heterogeneity, this study also contributes to Principal–Principal (PP) agency theory that ownership concentration along with owner’s identity is not only confined to strategy formulation but also extends to entry mode (CBA) decisions. Goal incongruence due to PP conflict between owners also decides whether experiential knowledge acquired from inward internationalisation fits with the firms or not in the resulting CBA decision. Finally, this study provides deep insights on different owners’ attitudes and their supporting or confining roles in moderating the impact of inward internationalisation on Indian EMNEs’ risk-taking behaviour during internationalisation.</p>

scholarly journals Inward internationalisation and cross-border acquisitions by EMNEs: The moderating role of ownership heterogeneity

2021 ◽  
Author(s):  
◽  
Sharmistha Chowdhury
Keyword(s):  
Boundary Condition ◽  
Agency Theory ◽  
Ownership Structure ◽  
Multinational Enterprises ◽  
Entry Mode ◽  
Institutional Ownership ◽  
Organisational Learning ◽  
Experiential Knowledge ◽  
Cross Border ◽  
The Impact

<p>Unlike Advanced Economy Multinational Enterprises (AMNEs), Emerging Economy Multinational Enterprises’ (EMNEs) dominant participation in international trade and investment is a recent phenomenon. Still, EMNEs are found to adopt bold strategies in the early stages of their internationalization and show path departure in the selection of their entry mode, such as cross border acquisition (CBA). CBA is not only a widely adopted EMNE internationalisation strategy but also distinguished EMNA internationalisation behaviour from that of AMNEs. CBA, entailing a high level of risk, requires considerable experiential knowledge that EMNEs lack. This knowledge deficit increases the perceived cost and risk associated with internationalisation and decreases the likelihood of engaging in foreign investment. There is a gap in the knowledge around how EMNEs compensate for their lack of experiential knowledge and how this experiential knowledge influences EMNEs’ adoption of CBA. Drawing from organisational learning as a theoretical lens, this study proposes that learning from inward internationalisation facilitates EMNEs’ CBA decisions. From an organisational perspective, experiential knowledge, especially externally sourced, is valuable when the acquired knowledge fits the recipient organisations’ existing dominant logic and values. Therefore ownership structure, such as family, institutional or corporate ownership, acts as a boundary condition and may influence the impact of inward internationalisation on CBA decisions. This idea is grounded in agency theory. This study argues that EMNEs compensate for their lack of internationalisation experiential knowledge through inward internationalisation (externally sourced experiential knowledge) which serves as a resource based antecedent leading EMNEs to make risky CBA decisions. Further, from an agency theory perspective, the study proposes that inward internationalisation – CBA relationships are likely to vary for different types of ownership categories.  The study uses a quantitative approach to test the hypotheses in an Indian context. India, being a large emerging economy, provides an appropriate backdrop to test the study’s conceptual model. For this study, a sample of 369 CBAs conducted by 205 public listed companies from 2009 to 2017 was collected from the SDC platinum database. The sample generated a panel of 1845 firm-year observations. Through a negative binomial regression analysis, it is found that inward internationalisation has a positive impact on the likelihood of Indian MNEs’ CBA decision. Regarding the moderating effect of ownership, it is found that family ownership reduces the impact of inward internationalisation, whereas foreign institutional ownership increases the impact of inward internationalisation. No moderating effects are found for domestic institutional ownership, nor are they found for domestic or foreign corporate ownerships.  This research contributes to the understanding of the EMNEs’ risky internationalisation behaviour through CBA. The present study adds to this stream of research by focusing on inward internationalisation and ownership structure influencing risky CBA decisions. In doing so, it contributes to organisational learning literature by suggesting that the impact of experiential knowledge may not necessarily be the same across the firms. This heterogeneity is attributable to EMNEs (knowledge acquiring organisation) who show varying motives, objectives and governance structure depending on their ownership structure. By examining the boundary condition of ownership heterogeneity, this study also contributes to Principal–Principal (PP) agency theory that ownership concentration along with owner’s identity is not only confined to strategy formulation but also extends to entry mode (CBA) decisions. Goal incongruence due to PP conflict between owners also decides whether experiential knowledge acquired from inward internationalisation fits with the firms or not in the resulting CBA decision. Finally, this study provides deep insights on different owners’ attitudes and their supporting or confining roles in moderating the impact of inward internationalisation on Indian EMNEs’ risk-taking behaviour during internationalisation.</p>

How does ownership structure affect the financing and dividend decisions of firm?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Tahar Tayachi ◽  
Ahmed Imran Hunjra ◽  
Kirsten Jones ◽  
Rashid Mehmood ◽  
Mamdouh Abdulaziz Saleh Al-Faryan
Keyword(s):  
Ownership Structure ◽  
Dividend Policy ◽  
Generalized Method Of Moments ◽  
Institutional Ownership ◽  
Agency Cost ◽  
Debt Financing ◽  
Policy Implications ◽  
Managerial Ownership ◽  
Content Type ◽  
The Impact

Purpose Ownership structure deals with internal corporate governance mechanism, which plays important role in minimizing conflict of interests between shareholders and management Ownership structure is an important mechanism that influences the value of firm, financing and dividend decisions. This paper aims to examine the impact of the ownership structures, i.e. managerial ownership, institutional ownership on financing and dividend policy. Design/methodology/approach The authors use panel data of manufacturing firms from both developed and developing countries, and the generalized method of moments (GMM) is applied to analyze the results. The authors collect the data from DataStream for the period of 2010 to 2019. Findings The authors find that managerial ownership and ownership concentration have significant and positive effects on debt financing, but they have significant and negative effects on dividend policy. Institutional ownership shows a positive impact on financing decisions and dividend policy for sample firms. Originality/value This study fills the gap by proving the policy implications for both firms and investors, as managers prefer debt financing, but at the same time try to ignore dividend payment. Therefore, investors may not invest in firms with a higher proportion of managerial ownership and may choose to invest more in institutional ownership, which lowers the agency cost.

scholarly journals Ownership structure and voluntary disclosure in corporate annual reports of Malaysian listed firms

2011 ◽  
Vol 8 (2) ◽  
pp. 296-312 ◽  
Author(s):  
Poh-Ling Ho ◽  
Gregory Tower
Keyword(s):  
Ownership Structure ◽  
Voluntary Disclosure ◽  
Positive Association ◽  
Institutional Ownership ◽  
Ownership Concentration ◽  
Annual Reports ◽  
Policy Makers ◽  
Listed Firms ◽  
Ownership Structures ◽  
The Impact

This paper examines the impact of ownership structure on the voluntary disclosure in the annual reports of Malaysian listed firms. The result shows that there is an increase in the extent of voluntary disclosure in Malaysian listed firms over the eleven-year period from 1996 to 2006. Ownership concentration consistently shows positive association with voluntary disclosure. Firms with higher foreign and institutional ownership have a significantly positive association with voluntary disclosure levels while firms with family ownership exhibit lower voluntary disclosure. Consistent with agency theory, different ownership structures have varied monitoring effects on agency costs and clearly influence firm’s disclosure practices. The findings provide insights to policy makers and regulators in their desire to increase transparency and accountability amidst the continual enhancement of corporate governance. The findings provide evidence that optimized ownership structure in any jurisdiction should be considered in any regulatory process that seeks to improve transparency.

THE IMPACT OF INSTITUTIONAL OWNERSHIP STRUCTURE ON EARNINGS QUALITY OF LISTED FOOD/BEVERAGES AND TOBACCO FIRMS IN NIGERIA

2016 ◽  
Vol 7 (1(1)) ◽  
pp. 20-30
Author(s):  
Bukar Amos ◽  
◽  
Garba Ibrahim ◽  
Dr. Mustapha Nasidi ◽  
Karaye Yusuf Ibrahim ◽  
...  
Keyword(s):  
Ownership Structure ◽  
Earnings Quality ◽  
Institutional Ownership ◽  
The Impact

scholarly journals The role of experiential and non-experiential knowledge in cross-border acquisitions: The case of Indian multinational enterprises

2016 ◽  
Vol 51 (5) ◽  
pp. 675-685 ◽  
Author(s):  
Peter J. Buckley ◽  
Surender Munjal ◽  
Peter Enderwick ◽  
Nicolas Forsans
Keyword(s):  
Multinational Enterprises ◽  
Experiential Knowledge ◽  
Cross Border

The performance of cross-border acquirers from emerging economies

2016 ◽  
Vol 7 (1) ◽  
pp. 21-38 ◽  
Author(s):  
Xiaobai Ma ◽  
Yiying Zhu ◽  
Wenyuan Cai
Keyword(s):  
Emerging Economies ◽  
Ownership Structure ◽  
Value Creation ◽  
Multinational Enterprises ◽  
Design Methodology ◽  
Business Community ◽  
Short Term ◽  
Content Type ◽  
Cross Border ◽  
Traditional Understanding

Purpose – This paper aims to evaluate the value creation of cross-border acquisitions conducted by Chinese firms and determinants that result in the different performance. During the recent decades, the world has witnessed multinational enterprises (MNEs) from emerging economies undertaking aggressive cross-border mergers and acquisitions (M & As). This phenomenon raises great attention in the international business community, and also challenges the traditional understanding in the extant literature. Design/methodology/approach – The authors examine 272 cross-border M & As associated with 48 target countries during the period 1996-2012. Findings – Evidences show that cross-border expansions on average point to negative performance in the short term. The authors also find that prior cross-border M & A experiences, ownership structure of the acquirer (state-owned vs private) and acquirer size positively affect the performance of the acquiring firm. Originality/value – In addition to contributing to cross-border M & A literature, the findings also provide useful guidance to outward foreign direct investment by firms from emerging economies.

scholarly journals Ownership Structure, Corporate Governance and Capital Structure of Non-Financial Firms of Pakistan

2018 ◽  
Vol 10 (1) ◽  
pp. 31-46
Author(s):  
Hassan Ahmad ◽  
Nasreen Akhter ◽  
Tariq Siddiq ◽  
Zahid Iqbal
Keyword(s):  
Corporate Governance ◽  
Capital Structure ◽  
Ownership Structure ◽  
Negative Impact ◽  
Institutional Ownership ◽  
Board Independence ◽  
Managerial Ownership ◽  
Debt Ratio ◽  
Significant Negative Impact ◽  
The Impact

This study is undertaken with the purpose of investigating the impact of ownership structure and corporate governance on the capital structure of Pakistani listed firms from 2011-2014, feasible general least square is used to investigate the impact of ownership structure and corporate governance on capital structure of KSE 100 index firms. Explanatory variables include ownership concentration, managerial ownership, foreign ownership, institutional ownership, board size, board independence and CEO duality along with the three control variables namely firm size, firm profitability and liquidity. There is insignificant positive relationship between ownership concentration and capital structure, managerial ownership has a significant negative impact on debt ratio. Foreign ownership has also a significant negative impact on firm capital structure and institutional ownership has significant positive impact on capital structure. Board size is positively related to capital structure, board independence also positively related to firm’s debt ratio but CEO duality negatively related to the dependent variable, all these variables have significant impact on capital structure of Pakistani firms. 

scholarly journals Ownership structure, corporate performance and failure: Evidence from panel data of emerging market the case of Jordan

2009 ◽  
Vol 6 (4) ◽  
pp. 96-114 ◽  
Author(s):  
Rami Zeitun
Keyword(s):  
Ownership Structure ◽  
Emerging Market ◽  
Negative Relationship ◽  
Institutional Ownership ◽  
Performance Measure ◽  
Ownership Concentration ◽  
Tobin’S Q ◽  
Government Ownership ◽  
Tobin's Q ◽  
The Impact

This study investigates the impact of ownership structure (mix and concentrate) on a company’s performance and failure in a panel estimation using 167 Jordanian companies during 1989-2006. The empirical evidence in this paper shows that ownership structure and ownership concentration play an important role in the performance and value of Jordanian firms. It shows that inefficiency is related to ownership concentration and to institutional ownership. A negative correlation between ownership concentration and firm’s performance both, ROA and Tobin’s Q, is found, while there is a positive impact on firm performance MBVR. The research also found that there is a significant negative relationship between government ownership and a firm’s accounting performance, while the other ownership structure mixes have significant coefficients only in Tobin’s Q using the matched sample. Firm’s profitability ROA was negatively and significantly correlated with the fraction of institutional ownership, and positively and significantly related to the market performance measure, MBVR. The result is robust when indicators of both concentration and ownership mix are included in the regressions. The results of this study are, to some extent, inconsistent with previous findings. This paper also used ownership structure to predict the corporate failure. The results suggest that government ownership is negatively related to the likelihood of default. Government ownership decreases the likelihood of default, but has a negative impact on a firm’s performance. The results suggest that, in order to increase a firm’s performance and decrease the likelihood of default, it is reasonable to reduce government ownership to some extent. Furthermore, a certain degree of ownership concentration is needed to increase the firm’s performance and to decrease the firm’s chance of default.

The Future of Cross-Border Insolvency

2018 ◽  
Author(s):  
Irit Mevorach
Keyword(s):  
International Law ◽  
Financial Institutions ◽  
Multinational Enterprises ◽  
Global Financial Crisis ◽  
Cross Border ◽  
The Future ◽  
Global Welfare ◽  
The Global Financial Crisis ◽  
The Right ◽  
The Impact

This book interrogates the current cross-border insolvency regime and sets out a pattern to improve its future. In recent decades, and especially since the global financial crisis, a number of important initiatives have focused on developing effective solutions for managing the insolvency of multinational enterprises and financial institutions. This book takes stock of the varying success of previous policy, and identifies the gaps and biases that could be bridged by employing a range of strategies. The book first sets out the theoretical debates regarding cross-border insolvency and surveys the strengths and weaknesses of the prevailing method, ‘modified universalism’, synthesizing divergences into a rubric for both commercial entities and financial institutions. Adhering to these norms more robustly, the book argues, would enhance global welfare and produce the best outcomes for businesses and institutions. Drawing upon sources from international law as well as behavioural and economic theory, the book considers how to translate modified universalism into binding international law, how to choose the right instrument for cross-border insolvency, the impact instrument design has on decisions and choices, and the means to encourage compliance. In particular, the book proposes measures that could potentially overcome, or at least take into account, behavioural biases in decision-making in order to create a system that works for businesses, and offers a blueprint for the future of cross-border insolvency.

Sign in / Sign up

Export Citation Format

Share Document