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Corruption and firm performance: Evidence from Greek firms  [PDF]
Daphne Athanasouli,Antoine Goujard,Pantelis Sklias
International Journal of Economic Sciences and Applied Research , 2012,
Abstract: This article investigates the relationship between corruption and firm performance in Greece using firm level data. Corruption is overall negatively associated with firm size and growth at the firm level. We focus on the effect of ‘administrative corruption’, whereby firms engage in corrupt practices and bribery of government officials. We contrast the firm experience of corruption and the contextual experience of corruption at the sectoral level and find that the latter, contextual corruption is more important. The contextual effect of corruption identifies the magnitude of systemic corruption in Greece, indicating the need for reforms in an institutional environment that allows corrupt practices. Furthermore, firms of different size appear differently affected by corruption. This suggests that firm engagement in corruption is heterogeneous. Using quantile regressions, small and medium firms display a higher engagement in corrupt practices. However, their performance is less correlated with corruption than that of large firms.
Firm Size and Technical Efficiency in East African Manufacturing Firms  [cached]
Niringiye Aggrey,Luvanda Eliab; Shitundu Joseph
Current Research Journal of Economic Theory , 2010,
Abstract: The main objective of this study was to establish the relationship between firm size and technical efficiency in East African manufacturing firms. This study used a two-step methodology to examine the relationships between technical efficiency and firm size in East African manufacturing firms. In the first step, technical efficiency measures were calculated using DEA approach. Secondly, using GLS technique, a technical efficiency equation was estimated to investigate whether technical efficiency is increasing in firm size. Contrary to our expectation, the results show ed a negative association between firm size and technical efficiency in both Ugandan and Tanzanian manufacturing firms. The existence of a positive association between size squared and technical efficiency and a negative association between firm size and technical efficiency in Ugandan and Tanzanian manufacturing firms suggests an inverted U- relationship between firm size and technical efficiency in these countries.
The Impact of Financing Pattern on Firm Growth: Evidence from Swedish Micro Firms  [cached]
Darush Yazdanfar
International Business Research , 2012, DOI: 10.5539/ibr.v5n9p16
Abstract: This study examines the impact of financial structures on the growth of micro firms in Sweden. The objective of this paper is to explore whether firms’ growth can be associated with patterns of financial acquisition and whether these patterns influence firms’ growth differently when the source is either internal or external. Based on agency cost theory, hypotheses were formulated and tested with panel data consisting of 12 101 micro firms, using 84 707 observations for the period 2006–2007. The data were analysed using the seemingly unrelated regression (SUR) model. The empirical results reveal that internal financial sources – retained profit – significantly influence firm growth. Similarly, short-term debt and growth are positively related. However, firm growth is generally more sensitive to retained profit than short-term debt. Interestingly, long-term debt generally has no effect on growth. The findings also indicate that size, age, and industry affiliation influence firm growth. Finally, agency cost theory is relevant in explaining the relationship between financing pattern and growth.
Simultaneous Determination of Firm Leverage and Private Benefits of Control in French Firms  [cached]
Raoudha DJEBALI,Amel BELANES,Abdelwahed OMRI
International Journal of Economics and Finance , 2011, DOI: 10.5539/ijef.v4n1p177
Abstract: This study investigates whether the firm leverage breed private benefits of control in France ; or that is private benefits of control that drive the firm financing policy. Most French firms are family-owned and highly concentrated and hence the controlling power of block-shareholders. Private benefits of control are particularly high in France. They can be extracted by both large shareholders through related-party transactions and managers via their compensation. If debt effectively curbs the private benefits of control, the controlling party is also given incentives to increase debt. Using a sample of 110 listed firms during 2002-2006, our modeling puts in evidence a simultaneous relationship between firm leverage and the private benefits of control. Empirical results reveal that debt is positively associated with related party-transactions but negatively related with excessive managerial compensation. The controlling shareholders are tempted to increase the firm leverage so as to increase their own private benefits. The manager however wants to maintain his private benefits already siphoned off and aims therefore at reducing the firm debt.
Impact of Firm Specific Factors on Profitability of Firms in Food Sector  [PDF]
Nousheen Tariq Bhutta, Arshad Hasan
Open Journal of Accounting (OJAcct) , 2013, DOI: 10.4236/ojacct.2013.22005
Abstract: The aim of this study is to examine the impact of firm specific and macroeconomic factors on profitability of food sector in Pakistan. This study explores the impact of firm specific factors on profitability of companies listed in food sector ofKarachistock market in the presence of food inflation by employing multivariate regression analysis in common effect setting for the period of 2002-2006. The firm specific factors include debt to equity, tangibility, growth and size and macroeconomic factor include food inflation. Findings of study reveal the presence of significant negative relationship between size and profitability. However, tangibility, growth of the firm and food inflation are found insignificantly positively related to profitability. Similarly, an insignificant negative relationship is observed between debt to equity ratio of firm and its profitability. Empirical results provide evidence that the profitability of food sector is shaped by firm specific factors and not macroeconomic variables. One important limitation of study is that it only considers one macroeconomic factor i.e. food inflation. In future studies more macroeconomic factors will be explored to examine their impact on profitability of food sector firms. However, this study still provides significant insight about dynamics of profitability in food sector and helps in making optimal decisions of resource allocation in food sector of Pakistani equity market.
Option Trading, Information Asymmetry and Firm Innovativeness: Evidence from Stock Options Trading Firms from India  [PDF]
Himanshu Joshi
Theoretical Economics Letters (TEL) , 2018, DOI: 10.4236/tel.2018.811142
Abstract: Present study examines the effect of option listing and subsequent trading on the innovation in the context of publicly listed Indian firms. Innovation is defined in terms of input and output as R & D expense to sales, and number of patents filed by firm, respectively. Multiple regression analysis is conducted to identify drivers of innovations. Measures of innovation are used as dependent variables, while dummy for option trading is taken as independent variable along with other firm level control variables. The study also examines the determinants of the option listing on individual stocks using binary-logistic regression. Firm age, financial leverage, dividend payout, and profitability affect internal R & D allocations for the sample firms. As far as firm’s research output is concerned, firm leverage, institutional holding, option trading, and ESOP are the major determinants. Firm leverage adversely affects R & D input and R & D output alike. Dividend paying, large firms having higher institutional holdings are likely to attract stock option listing, while firms with high firm specific return variations are likely to have very low probability of option listing.
Workers’ Effort: A Comparison between Capitalist and Cooperative Firms  [PDF]
Michele Alessandrini, Marcello Messori
Theoretical Economics Letters (TEL) , 2016, DOI: 10.4236/tel.2016.63066
Abstract: The purpose of this paper is to compare the efficiency of capitalistic and cooperative firms by focusing on the workers’ effort in production activity, when this effort is only known to workers, thus causing information asymmetries between workers and managers of both types of firms. Therefore, our model uses a principal-agents framework with workers’ hidden actions. The agency relations are not centered on the optimal design of incentive mechanisms but on the efficient (albeit incomplete) managerial monitoring of workers’ private effort. Moreover there is a trade-off between this monitoring activity and another managerial activity, i.e. the organization of production processes. We show that, taking into account the information asymmetries that characterize our model, the cooperative firm requires less monitoring than the capitalist firm to achieve the same efficient level of workers’ effort. This allows the manager of the former firm to devote more working time to organizational activity than the manager of the latter firm. In this respect, the governance of the cooperative firm dominates that of the capitalist firm. However, both types of firms need capital to operate and face different financial constraints in terms of the capital’s purchasing cost. These financial constraints affect the cooperative firm more severely than the capitalistic firm. Our conclusion is that these two types of firms have specific strengths and weaknesses, which make it difficult to reach general analytical results in terms of their relative efficiency. Additionally, the financial constraints characterizing the cooperative firm hinder maximization of its long-term growth rate; on the other hand, this kind of firm can better exploit the virtuous circle between increases in the employment level and increases in the growth rate.
Managerial Ownership, Capital Structure and Firm Value: Evidence from China’s Civilian-run Firms
Wenjuan Ruan,Gary Tian,Shiguang Ma
Australasian Accounting Business and Finance Journal , 2011,
Abstract: This paper examines the influence of managerial ownership on firm performance through capital-structure choices, using a sample of China’s civilian-run firms listed on the Chinese stock market between 2002 and 2007. The empirical results demonstrate a nonlinear relationship between managerial ownership and firm value. Managerial ownership drives the capital structure into a nonlinear shape, but in an opposite direction to the effect of managerial ownership on firm value. The results of simultaneous regressions suggest that managerial ownership affects capital structure, which in turn affects firm value. Our findings imply that the “interest convergence” and “entrenchment” effects of managers’ behaviour in terms of managerial ownership can also explain the agency-relevant situation of China’s civilian-run firms.
Limited growth opportunities amidst opportunities for growth: an empirical study of the inter-firm linkages of small software firms in India
Vigneswara P Ilavarasan and Balaji Parthasarathy
Journal of Innovation and Entrepreneurship , 2012, DOI: 10.1186/2192-5372-1-4
Abstract: Small firms are important to all economies. This is especially true with the rise of the information and communication technologies (ICTs), as the technical characteristics of information goods lower entry barriers for small firms seeking to take advantage of the growing global demand for ICTs. However, for accessing global markets, or for technological learning, the literature points to the potentially important role of intermediary institutions. This paper examines inter-firm linkages in India, the world’s largest exporter of software services, to explore the extent to which large software firms, both foreign multinational corporations (MNCs) and domestic firms, play an intermediary role for the growing number of small firms. Drawing on 172 in-depth, semi-structured interviews, the paper finds that linkages between the large and small firms are few and weak. MNCs prefer working with large domestic firms as they seek the scale to cut costs for labor-intensive services. Large domestic firms too tend not to outsource work to small firms. They prefer independent execution, viewing small firms as potential competition. Any inter-firm links are typically limited to labor contracting and rarely provide access to markets or opportunities for technological learning. Thus, lacking the operational scale, technological or domain diversity, small firms end up dependent on personal networks to access global market opportunities, i.e., despite the growth in opportunities provided by ICTs, the growth opportunities for small software firms in India remain circumscribed.
Contractual Governance, Relational Governance, and Firm Performance: The Case of Chinese and Ghanaian and Family Firms  [PDF]
Samuel Addae-Boateng, Xiao Wen, Yaw Brew
American Journal of Industrial and Business Management (AJIBM) , 2015, DOI: 10.4236/ajibm.2015.55031
Abstract: Financial performance of firms is a key to long-term survival and profitability. Investors will only invest in firms whose financial performance is creditable; and family businesses are no exception. Perhaps, the performance of family businesses could be attributed to their unique characteristics, which shape their governance. Contractual governance and relational governance are corporate governance structures used to manage the relationships between parties to a transaction and reduce opportunism. Governance models of family firms are often more complex because of the need for two systems (the family and the firm) to interact positively and efficiently despite their different aims, values, institutional structures, etc. In this study, we explore the effects that contractual and relational governance models exert on family firm financial performance, from a survey of 2432 management and non-management employees of family businesses across China and Ghana.
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