Managers ability and investment dynamics during the global financial crisis: an emerging market context

Purpose Many scholars have developed several theories and empirics to study issues related to investment policy. However, there are still some unexplored issues in the field of finance that require further analysis and investigation, particularly in the corporate governance literature such as the role of managerial talent in the firms. This study investigated the impact of managerial ability on investment decisions of the firms. Design/methodology/approach The study first uses firm efficiency and managerial ability by using data envelope analysis (DEA) proposed by Demerjian, Lev and McVay, 2012. Data is collected for the firms listed in Shenzhen and Shanghai stock exchange for an emerging market of China during the crisis period with 1,640 number of observations. Findings The study reveals that the presence of more managerial talent in a firm is significant for the strategic decisions of the firms. Findings follow a resource-based view and identify that more talented managers help the firms in the acquisition of resources specifically during financial distress. The study subdivides the firms based on: ownership structures and financial constraints. Results generated from propensity score matching imply that the role of high-talented managers is significantly different from that of low-talented managers. Originality/value The study reveals managerial ability as a determinant of investment policy. To the researchers’ best knowledge, none of the previous studies have been conducted in emerging market literature during the crisis period.

Short-termism, Managerial Talent, and Firm Value

This paper examines how the firm’s choice of investment horizon interacts with rent-seeking by privately informed, multitasking managers and the labor market. Two main results surface. First, managers prefer longer-horizon projects that permit them to extract higher rents from firms, so short-termism involves lower agency costs and is value maximizing for some firms. Second, when firms compete for managers, firms practicing short-termism attract better managerial talent when talent is unobservable, but larger firms that invest in long-horizon projects hire more talented managers when talent is revealed. (JEL D82, D86, G31, G32, J41) Received July 25, 2019; editorial decision July 7, 2020 by Editor Uday Rajan.

Working capital management and managerial talent

PurposeTalented managers arguably remain quintessential to firm value and performance. While the literature offers evidence for the long-term orientation of talented managers, there is a paucity of evidence on the short-term performance of managers. Here, we examine the relationship between managerial talent and working capital management (WCM).Design/methodology/approachThis study primarily employs a panel fixed-effect method controlling for firm-year and firm-industry for non-financial and non-utility firms for the years 1980 through 2016. Also, the authors control of potential bias that may impact the result. These controls include social capital, financial constraints and tests for endogeneity and spurious correlation.FindingsThe authors find the association between managerial talent and WCM to be positive and significant. The results indicate that talented managers have a higher cash conversion cycle. The empirical evidence still holds after controlling for social capital, religiosity and financial constraints. Also, the evidence still holds by employing an interaction term between Tobin's Q as a proxy for investment opportunities and talented managers.Practical implicationsThe finding may lend credence to executive contracts. Human nature, by default, is only vested on a net benefit for self-aggrandization. Self-aggrandization can be evident through structures in managerial contracts. These contracts usually tie consequences to long-term growths. If a benefit is offered based on short-term operational goals, talented managers may do more to the management of working capital.Originality/valueIn the managerial talent literature, talents reflect a holistic picture of one that can succeed in both the short-term and long-term goals of a company. Here, the authors show that talented managers are inefficient in meeting short-term goal – working capital management. Thus, the authors add to the research by providing evidence that talented managers are myopic.

The impact of e-commerce capabilities on agricultural firms’ performance gains: the mediating role of organizational agility

PurposeThis study aimed to investigate the impact of e-commerce capabilities on agricultural firms’ performance gains through organizational agility.Design/methodology/approachA survey was used to collect data from 280 managers of agricultural firms. The proposed model was tested via structural equation modeling.FindingsThe empirical results indicated that organizational agility plays a mediating role in conveying the positive influences of e-commerce capabilities on agricultural firms’ performance gains. Specifically, managerial, talent and technical capabilities have different effects on market capitalization and operational adjustment agility, with talent capability performing the most important role. Market capitalization and operational adjustment agility have positive impacts on financial and nonfinancial performance gains, respectively.Originality/valueThis study provides a new framework to understand the relationships between e-commerce capabilities, organizational agility and agricultural firms’ performance gains.

Barriers to Cooperatives Growth as Social Entrepreneur

Cooperative is conventionally known an autonomous association of persons united voluntarily to meet their common economic, social, cultural needs and aspirations through a jointly owned and democratically controlled enterprise (International Cooperative Alliance,2014). Despite of having a long tradition of cooperatives movement evidenced by the vast numbers of cooperatives (14,094 in June 2018) in Malaysia, cooperatives are still left far behind to become more competitive in order to not only satisfy their cooperators but also to the societies. The emphasis on transformation of cooperatives as social entrepreneurship is clearly outlined in the third strategic thrust of National Entrepreneurship Framework 2018. Thus, the current study aims to identify barriers that hinder cooperatives from safeguarding member’s wellbeing and further provide service to the communities. A set of questionnaire which consists of two sections namely background of cooperative and barriers to social entrepreneur were distributed to the registered cooperatives who participated in Konvensyen Pemerkasaan Koperasi 2019. Among barriers uncovered were lack of capital, involve in only conventional activities, weak structure, absence of good governance, lack of cooperation between cooperatives, lack of managerial talent and lack of integrity among the management and members in cooperatives. Conclusions and recommendations were discussed.

A review of the literature on dual-class firms

Purpose The purpose of this paper is to critically review the relevant literature from the perspective of dual-class firms and to provide suggestions for future research on dual-class firms, and on methodological issues that should be addressed in such research. Design/methodology/approach The research design consists of three parts: an introduction to dual-class firms (motivations for; firm life cycle effects) in Part 1; concerns with firms with such share class structures (valuation; governance; accounting and corporate policy issues) in Part 2; and some solutions or ways to accommodate the trade-offs involved with such share class structures (retention arguments; index/exchange exclusions; contractual provisions; external monitoring) in Part 3. Throughout the paper, the authors provide some critiques of existing studies, particularly from a methodological perspective, the authors’ opinion on the state of the literature and suggestions for future areas of research. Findings While motivations for the use of dual-class voting structures include flexibility so that the idiosyncratic vision of their entrepreneurs/founders can be pursued in a less encumbered fashion, greater innovation and long-term managerial orientation, there are many possible costs (e.g. underinvestment and managerial entrenchment) to this ownership structure. Nevertheless, the authors believe that such firms should have provisions in place that facilitate a reversion to a single-class structure longer term when such firms have become more mature, less dependent on the idiosyncratic vision of the entrepreneurs/founders at IPO and have attracted more managerial talent. Originality/value The literature arrives at no consensus on the benefits/drawbacks of this type of share ownership structure which means that many topics of research require further academic examination. The authors provide suggested directions for such future enquiries.