scholarly journals R&D Investments, Debt Capital, and Ownership Concentration: A Three-Way Interaction and Lag Effects on Firm Performance in China's Pharmaceutical Industry

2021 ◽  
Vol 9 ◽  
Author(s):  
Chih-Yi Su ◽  
Yao-Ning Guo ◽  
Kuang-Cheng Chai ◽  
Wei-Wei Kong
Keyword(s):  
Firm Performance ◽  
Interactive Effect ◽  
Ownership Concentration ◽  
Lag Effects ◽  
Pharmaceutical Firms ◽  
Debt Capital ◽  
Financial Governance ◽  
Lag Structure ◽  
D Investment

The existing literature has yet to provide consistent evidence on the relationship between R&D investments and firm performance. The current study attempted to fill this gap in the literature by examining the effect of lag structure and the moderating role of financial governance, in terms of debt capital and ownership concentration, on the returns of R&D. Analyzing a sample of China's pharmaceutical firms from 2009 to 2018, we found that the effect of R&D upon growth begins in the second year after R&D spending and increases thereafter. There exists a vigorous debate about the choice between debt and ownership structure. To fill this gap, we proposed a three-way interactive effect. The results suggest that firms that invest heavily in R&D may achieve their highest performance when the use of debt capital and the extent of ownership concentration are both low. This study contributes to the R&D investments and financial governance literature by reconciling previous mixed evidence about the returns of R&D and the debt–equity choices on R&D investment decisions.

R&D investment and future firm performance: The role of managerial overconfidence and government ownership

2020 ◽  
Vol 41 (7) ◽  
pp. 1269-1281
Author(s):  
Imen Tebourbi ◽  
Irene Wei Kiong Ting ◽  
Hanh Thi My Le ◽  
Qian Long Kweh
Keyword(s):  
Firm Performance ◽  
Government Ownership ◽  
Managerial Overconfidence ◽  
D Investment

Ownership concentration, ownership composition and the performance of the Kuwaiti listed non-financial firms

2015 ◽  
Vol 25 (1) ◽  
pp. 108-132 ◽  
Author(s):  
Mejbel Al-Saidi ◽  
Bader Al-Shammari
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Arab Countries ◽  
Ownership Concentration ◽  
Content Type ◽  
Financial Firms ◽  
Large Shareholders ◽  
Ownership Composition ◽  
The Relationship

Purpose – This paper aims to investigate the relationship between ownership structure (ownership concentration and ownership composition) and firm performance in Kuwaiti non-financial firms. To this end, it examines the relationship between firm performance and ownership concentration to determine whether the impact of this relationship is conditional on the nature of the large shareholders. Design/methodology/approach – First, the relationship between ownership concentration and firm performance was tested using ordinary least squares regressions on 618 observations (103 listed firms) from 2005 to 2010; next, the ownership compositions were classified as institutional, government and individuals (families) and their impact on firm performance examined. Findings – The overall concentration ownership by large shareholders showed no impact on firm performance. However, when the type of shareholders was introduced, only the government and individuals (families) ownership categories influenced firm performance. Therefore, certain types of shareholders are better at monitoring, and not all concentration by large shareholders is beneficial to Kuwaiti firms. Research limitations/implications – This study examined only one important aspect of the corporate governance mechanisms, namely, ownership concentration. Thus, further study may include other mechanisms such as board variables, role of debt and shareholders rights in examining the firm performance. This study is limited to the Kuwaiti environment, and thus, next step can be very useful in case of comparing ownership concentration in the Gulf Cooperation Council (Kuwait, Bahrain, Qatar, Oman, United Arab Emirates and Saudi Arabia) or across different Arab countries. Practical implications – The results of this study have important implications for the regulators in Kuwait in their efforts to increase the efficiency of the rapidly developing capital markets and in protecting investors and keeping confidence in the economy. They may mandate a corporate governance code to protect minority shareholders. Investors may use the findings to understand Kuwaiti companies. Such findings may assist them to diversify their investment portfolios. Originality/value – This paper extends literature review by investigating the role of large shareholders in the context of a developing country that is characterized by high level of ownership concentration and weak legal protection for investors as well as the absence of code that organized the corporate governance practices.

scholarly journals R&D investment, firm performance and moderating role of system and safeguard: Evidence from emerging markets

2020 ◽  
Vol 106 ◽  
pp. 94-105 ◽  
Author(s):  
Ashraful Alam ◽  
Moshfique Uddin ◽  
Hassan Yazdifar ◽  
Sujana Shafique ◽  
Theophilus Lartey
Keyword(s):  
Firm Performance ◽  
Emerging Markets ◽  
Investment Firm ◽  
D Investment ◽  
Moderating Role

scholarly journals Does ownership structure affect firm performance? Evidence from a continental-type governance system

2006 ◽  
Vol 3 (2) ◽  
pp. 74-89 ◽  
Author(s):  
Carlos Fernández Méndez ◽  
Silvia Gómez-Ansón
Keyword(s):  
Firm Performance ◽  
Ownership Structure ◽  
Ownership Concentration ◽  
External Control ◽  
Stock Ownership ◽  
Anglo Saxon ◽  
Governance System ◽  
Previous Evidence ◽  
Positive Effect

This paper analyzes the influence of stock ownership structure on firm performance in Spain, a country characterised by the dominance of internal mechanisms of control and a weak external control performed by the markets. Once the possible endogeneity of managerial stock ownership is taken into account, we find no evidence of its influence on firm’s performance. This result is consistent with previous evidence for Anglo-Saxon economies. Consistently with the supervisory role of the large shareholders we find also evidence of a positive effect of stock ownership concentration on firm performance. Nevertheless, we have to be cautious relating this result as its significance depends on the firm’s size.

scholarly journals The governance role of shareholders and board of directors on firm performance: an eclectic governance-performance model

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ozgur Ozdemir ◽  
Erhan Kilincarslan
Keyword(s):  
Firm Performance ◽  
Agency Theory ◽  
Board Of Directors ◽  
Positive Impact ◽  
Ownership Concentration ◽  
Data Set ◽  
Resource Based View ◽  
Content Type ◽  
The Impact

Purpose This study aims to examine the governance role of shareholders and board of directors in determining firm performance through an eclectic multi-theoretic model that integrates structure and incentive functions of agency theory and capability aspect of the resource-based view. Design/methodology/approach The research model uses a large panel data set of 2,364 UK firms over the period 2000–2010 and uses alternative specifications of the model to improve robustness. Findings The results show that the industry experience of major shareholders as a proxy for shareholder capability has a significant positive impact on investee firm performance. The findings also reveal that the lock-in effect of the largest shareholder has a positive impact on performance, whereas the monitoring effectiveness of shareholders is not associated with ownership concentration. Moreover, the results indicate the underlying capabilities of the board of directors and their impact on corporate performance – particularly, the interlocking directorates of executives have a positive impact on firm performance but those of non-executives have a negative one. However, the previous directorship experience of non-executives has a positive impact on performance. Research limitations/implications This study presents a more comprehensive and complete understanding of the governance-performance relationship beyond the narrow or partial explanations provided by single-theory-based studies or those of investigating the effect of various governance tools separately. Practical implications This study provides more insights into the capability dimension of shareholders and the role of incentives in motivating shareholders to exercise stronger oversight on the management rather than just using ownership concentration. Hence, the study can serve as valuable guidance for investors, corporate managers and policymakers. Originality/value To the best of the knowledge, this is the first comprehensive study that uses an eclectic philosophical approach, integrating the agency theory and resource-based view, to not only examine the impact of board of directors but also investigate the governance role of shareholders in modern corporations to understand how shareholders acquire the requisite skills and information, the best practices and processes, and ultimately use the scarce and inimitable resources that help investee firms in improving their performance.

BOARD OF DIRECTORS AS A FACTOR OF FIRM PERFORMANCE IN INNOVATIVE COMPANIES

2019 ◽  
Vol 23 (06) ◽  
pp. 1950060
Author(s):  
IRINA BEREZINETS ◽  
KIRILL BEREZKIN ◽  
YULIA ILINA ◽  
IRINA NAOUMOVA
Keyword(s):  
Firm Performance ◽  
Emerging Markets ◽  
Board Of Directors ◽  
Public Companies ◽  
Composition And Structure ◽  
The Board Of Directors ◽  
The Impact ◽  
The Relationship ◽  
D Investment

The emerging markets undergo constant transformations and changes, and thus, a change of strategy can be critical for companies. However, the impact of R&D investment on firm performance and the role of the board of directors that makes decisions about a company’s innovative activities remain inconclusive. This paper investigates the relationship between a board of directors’ composition and structure in innovative companies and firm performance. Using the panel data of innovative Russian public companies that made R&D investments in 2011–2013, we found a positive relationship between the boards’ independence and ROA as an indicator of firm performance. Moreover, it was shown that innovative companies that establish a strategy committee will on average have a higher ROA ratio than innovative companies without such a committee. Innovative firms in emerging markets might consider creating strategic committees and increasing board independence to enhance their performance and increase the number of successful R&D investments.

scholarly journals The Role of Ownership Concentration and Dividend Policy on Firm Performance

2020 ◽  
Vol 3 (2) ◽  
pp. 1-13
Author(s):  
Sadia Murtaza ◽  
Ahmad Noor-Ud-Din ◽  
Amel Aguir ◽  
Saadia Batool
Keyword(s):  
Firm Performance ◽  
Dividend Policy ◽  
Academic Research ◽  
Negative Relationship ◽  
Generalized Least Squares ◽  
Ownership Concentration ◽  
Annual Reports ◽  
Significant Positive Association ◽  
Firm Financial Performance

Purpose- The main aim of this study is to determine the role of ownership concentration and dividend policy on the firm performance of chemical sector firms of Pakistan. Design/Methodology- This research used the secondary data collected from the annual reports of the companies listed at the Karachi Stock Exchange (KSE). However, inclusion criteria are the 26 listed firms from 2012 to 2017, giving a total of 156 observations. This study used the Generalized Least Squares Model. Findings- The findings reveal that ownership concentration has a significant positive association with firm financial performance. This stated that larger shareholders could attribute to the alignment of managerial incentives with shareholder interests. They also monitor the team very effectively and efficiently. The dividend policy has a significant positive relationship with ROA. Leverage and tangibility have a significant negative relationship with firm performance. Practical Implications- These results potentially can be relevant for policymakers and academic research as well as also helpful for managers and policymakers.

scholarly journals A mediation analysis: Board of directors’ composition, R&D investment, and international firm performance

2021 ◽  
Vol 18 (3) ◽  
pp. 104-119
Author(s):  
Rim Zouari-Hadiji ◽  
Ghazi Zouari
Keyword(s):  
Firm Performance ◽  
Board Of Directors ◽  
Mediation Analysis ◽  
Investment Decision ◽  
Total Sample ◽  
Inside Directors ◽  
The Board Of Directors ◽  
The One ◽  
D Investment

The comprehension and the explanation of the research and development (R&D) investment behaviour are done within the framework of a reflection on corporate governance. This investment does not contribute to creating value only if it is framed by governance mechanisms which role is to keep organizational, agency, or transaction costs as low as possible. In this context, we try to determine whether an integrating model exists; one that measures the simultaneous effect of the characteristics of the board of directors on R&D and the firm performance in an international context. Our model seeks to identify whether the dominance of inside directors and the dual structure influence the level of R&D investment, the mediating variable, and hence the firm performance. Our empirical study was carried out on a total sample of 509 firms divided between 165 American firms, 173 Japanese firms, and 171 French firms over the period 2014 to 2019. The findings of the mediation analysis according to the approach of Preacher and Hayes (2004, 2008) show the significant role of mediation by R&D investment between, on the one hand, the dominance of inside directors and duality, and on the other hand, the firm performance. Differences in the configuration of board of directors (BD) in different countries thus lead to different attitudes to the fulfillment of the control task and the R&D investment decision, value creator

Ownership concentration and firm performance in Indian firms: does investor protection quality matter?

2018 ◽  
Vol 10 (1) ◽  
pp. 33-52 ◽  
Author(s):  
Nufazil Altaf ◽  
Farooq Ahamad Shah
Keyword(s):  
Firm Performance ◽  
Emerging Market ◽  
Investor Protection ◽  
Generalized Method Of Moments ◽  
Ordinary Least Squares ◽  
Ownership Concentration ◽  
Content Type ◽  
Dynamic Perspective ◽  
Moderating Role

Purpose The purpose of this paper is twofold: first, to investigate the relationship between ownership concentration and firm performance and, second, to determine the moderating role of investor protection quality on the ownership concentration-performance relationship from a dynamic perspective. Design/methodology/approach The study is based on secondary financial data of 236 Indian manufacturing firms obtained from CAPITALINE database, pertaining to a period of five years. This study uses ordinary least squares, fixed effects and two-step generalized method of moments (GMM) techniques to arrive at results. Findings Results of the study confirm the inverted U-shaped relationship between ownership concentration and firm performance and a significant positive effect of investor protection quality on firm performance. With regard to moderating role of investor protection quality on ownership concentration–performance relationship, results show that investor protection quality would significantly moderate the ownership concentration–performance relationship. Originality/value The study is a pioneer in proving that an inverted U-shaped relationship exists between ownership concentration and firm performance in an emerging market in general and India in particular. This study extends the corporate governance literature by examining ownership concentration–performance relationship in a dynamic perspective and in an unexplored market.

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