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Thunderbird International Business Review; doi:10.1002/tie.22207

Ownership concentration remains a salient institutional feature among public listed firms in emerging and transitional economies. This study examines how a listed firm's ownership concentration interacts with its governance mechanisms in shaping corporate R&D investments. By analyzing panel data of Chinese listed firms between 2010 and 2012, I have three core findings. First, ownership concentration by the largest controlling shareholder negatively affects a firm's R&D intensity, but a small team of shareholders' ownership concentration plays a positive role. Second, a firm's monitoring mechanisms (measured by its sizes of the board and independent directors) and CEO stockholding positively affect the firm's R&D input. Third, CEO stockholding's positive role in promoting firm R&D is stronger in the firms with a more dispersed ownership structure. This study discloses the ways ownership concentration influences corporate governance and, in turn, affects corporate innovation.
, Xianghui Yuan, Hafiz Mustansar Javaid
Published: 23 February 2021
European Journal of Innovation Management; doi:10.1108/ejim-10-2020-0439

Purpose This study investigates the impact of board gender diversity and foreign ownership on innovation in Chinese firms. Design/methodology/approach The authors use data for Chinese manufacturing firms listed on the Shanghai and Shenzhen stock exchanges, for a sample over the period 2008–2017. Ordinary least square (OLS) is used as the baseline methodology, with cluster OLS, two-stage Heckman test, Blau index and Shannon index used to address endogeneity issues. Findings The results show that gender diversity on the board has a positive effect on corporate innovation as measured by the total number of patent applications, invention patent applications, utility model patent applications and design patent applications. Our findings also provide support for the critical mass participation of female directors on the board being associated with more innovation. They also reveal that innovation output does not vary across state-owned enterprises (SOEs) and non-SOEs. These outcomes reveal that SOEs' advantages, such as easy access to funding and more support of government, are likely offset by their disadvantages, such as different goals and having more agency issues. Because of intense political power and networks in Chinese firms, qualified foreign institutional investors (QFIIs) are less motivated to enhance innovation activities. Practical implications This study highlights the role of board gender diversity in enhancing innovation among Chinese manufacturing firms. Our findings provide support for regulatory bodies' role regarding women's participation on the board. Originality/value This research adds to literature by addressing the largely ignored questions of whether providing a gender-diverse board enhances innovation, whether critical mass participation has a greater effect on improving firm innovation and whether the influence of women directors varies with ownership structure.
Francis Boadu, Hongjuan Tang,
Published: 8 February 2021
SHS Web of Conferences, Volume 96; doi:10.1051/shsconf/20219604004

The purpose of this paper is to assess whether research and development (R&D) investment, degree of internationalization (DOI), and ownership structure affect the patent application of enterprises in an emerging market. Using a firm-level data from 242 China's information and communication technology (ICT) and automobile manufacturing listed companies on Shanghai and Shenzhen A- stock exchanges market from 2011 to 2015, our empirical results demonstrate that: (1) the degree of internationalization of enterprises has a positive facilitating influence on the correlation among corporate R&D investment and a patent application; (2) the state-owned ownership negatively moderates the R&D investment-patent application link, and (3) international expansion can adequately compensate for the efficiency disadvantages of R&D investment and patent application engender by state ownership. Besides, the study discovered and explained an exciting phenomenon and bring forth important enlightenment to enterprises in the emerging economies to improve resource utilization efficiency and achieve technical ability to catch up.
Jie Han, Zelong Li
Published: 3 February 2021
E3S Web of Conferences, Volume 235; doi:10.1051/e3sconf/202123503075

In this paper, a mixed duopoly model is used to explain how ownership structure influences the innovation performances of firms. A three stage-game is adopted in the study. In first stage, firms make R&D expenditure which leads to a profit increasing; in the second stage, firms choose the level of technological improvement they would like to share with the rival; and production quantity will be decided in the final stage. The theory explains that as long as public firms continue their dual roles as productive entities and social safety nets, they cannot be purely profit-oriented, and continue to have poor innovation performance.
Manogna R.L.
Review of International Business and Strategy; doi:10.1108/ribs-07-2020-0077

Purpose Previous studies have examined the relationship between institutional investors and corporate social responsibility (CSR) engagement primarily for the case of developed nations. The purpose of this paper is to look at the association between different ownership categories and CSR spending of selected Indian firms within an emerging market context. Design/methodology/approach This study examines the motivations that guide the CSR strategies of different ownership groups. Random-effects Tobit panel regression is performed on a panel of BSE-listed non-financial Indian firms panel comprising of 5,313 firm year observations over a six-year period (2014-2019). Findings Heterogeneous behavior of institutional investors is revealed through the study. Different categories of institutional investors have different preferences for CSR spending of a firm. Lending institutes and foreign institutional investors (FIIs) are seen to support the CSR investments. However, mutual fund investors are seen to not influence the CSR spend by the firms. Further, the results show that family ownership, measured in terms of family shareholding, positively moderates the lending institutions and mutual funds toward CSR and does not impact the FIIs decision regarding the CSR investments. Practical implications The analysis has implications for both institutional investors and multinational firms. In the emerging market context, managers and owners who target long term strategies such as CSR, will benefit from increasing shareholdings of creditors (lending institutions). They can also take steps to improve their transparency and corporate governance structure so as to attract the foreign institutional investments. Originality/value Managers cannot ignore the heterogeneities of institutional investors in their investment decisions and hence CSR decisions need to align with those of different types of investors. This study adds to the existing literature by offering new empirical insights from the perspective of an emerging market, India.
Journal of International Business Studies, Volume 51, pp 1626-1634; doi:10.1057/s41267-020-00384-0

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Manogna R.L., Aswini Kumar Mishra
Published: 26 November 2020
Journal of Asia Business Studies, Volume 15, pp 345-358; doi:10.1108/jabs-12-2019-0361

Purpose The preference of firm corporate social responsibility (CSR) spending is shaped by different groups of owners and the institutional environment in which the firm operates. This paper aims to study the heterogeneity among the controlling groups and firms’ internationalization in influencing the CSR decision in emerging economy firms. Design Methodology Approach This paper draws understanding from institutional theory to inspect the propensities of various ownership groups such as lending institutions (LI), domestic mutual funds (MF) and foreign institutional investors (FIIs). The empirical analysis was conducted from a sample of 1,594 unique Bombay stock exchange (BSE)-listed non-financial Indian firms during the 2014–2019 period using Tobit panel regression analysis. Findings The findings reveal that firms’ CSR activities are impacted differently by ownership share of different types of institutional investors after controlling for firm-level resources and capabilities. Lending institutions, FIIs and MF are supportive of CSR investments by firms along with international investments by the firm. Further, the results show that the CSR spend is positively influenced by the business group affiliation of the firm compared to the unaffiliated group of firms. Practical Implications The analysis has implications for both institutional investors and multinational firms. In the merging market context, managers and owners who target long term strategies such as CSR will benefit from increasing shareholdings of creditors (lending institutions). They can also take steps to improve their transparency and corporate governance structure so as to attract foreign institutional investments, thus, in turn, helping the internationalization process of the firm. Originality Value This paper considers the role of the diverseness of the ownership institutional investors along with the moderating effect of business group affiliation of the firm and international investments in impacting the CSR spend. This disparity has not been previously studied with the latest data in an emerging economy context.
Nayab Zahra, Danish Ahmed Siddiqui
Published: 26 October 2020
SSRN Electronic Journal; doi:10.2139/ssrn.3719319

International firms are highly sensitive to the performance of their subsidiaries and want to understand the factors behind their monetary success. Thus, numerous strategies are employed by these International firms to explore subsidiaries’ performance determinants; usually these includes subsidiary level attributes, ignoring parent’s impact along with its country. To address this gap we construct a multi-level research that focuses the subsidiary, parent attributes along with countries’ Governance Indicators, while predicting the determinants of subsidiary performance in Pakistan. We use two different levels i.e. parent & subsidiary level; multi-level analysis approach with HLM (Hierarchical Linear Model) in this research paper. Governance indicators of both parents and subsidiaries were taken explanatory factors along with Market growth, size, Performance, R & D, capital structure as well as asset management policies of parent. Subsidiary level factors included parents’ ownership, size, equity, and capital investment. 26 multinational companies listed in Pakistan Stock Exchange were included. Data was taken from the year 2012 to 2018. Selected companies cover around ten sectors of Pakistan Stock Exchange. The study revealed that on both level; parents and subsidiary, Governance institutions are more influencing factors rather than companies’ own attributes. We recommend that before investing in a country, international businesses should take into account Governance institutions (by World Bank); more than their own attributes. Originality/value; This study contributes to the existing approaches of determining subsidiary performance through adding Governance institutions and parent level attributes. Especially it explores the determinants of subsidiary performance in a developing country; Pakistan in Asia continent.
Wilfred Marangu, Emanuel Lotabo Loongori
The International Journal of Business & Management, Volume 8; doi:10.24940/theijbm/2020/v8/i9/bm2009-013

Firms employ numerous types of strategies in an effort to attain their organizational objectives and also improve the organizations’ performance and sugar firms are not exclusion. The main objective of study was to assess institutional characteristics influence on affiliation between generic strategies and organizations’ competitiveness of sugar firms’ in Kenya. The study tested the null hypothesis that the influence of institutional characteristics on affiliation between generic strategies and organizations’ competitiveness of sugar firms’ is not statistically significant. The institutional theory backed the study and it argues that within an institution there are structures within which the actions within the organization operate. Descriptive cross-sectional research design was used in this study. The study was done on sugar firms which were operating in Kenya and all the production, marketing, finance and general managers as well as their assistants of every sugar firm and its affiliated farmers out grower firms. Kenya Sugar Board (2019) states that there are twelve sugar firms in Kenya and twelve affiliated farmers out grower firms; hence the target population was all the twelve sugar firms with 240 managers. The sample size of this study was 148 arrived at by the use of Krejcie& Morgan (1970) sample determination table. The study results indicated that the influence of generic strategies and institutional characteristics on organizational competitiveness of sugar firms’ was significant and positive (p< .05). The change in R2 because of the interface term was .014 (.396 - .382) and the interaction term was significant (p < .05). The hypothesis criterion was that reject the null hypothesis if p-value is less than .05 and β ≠ 0 or else don’t reject, in case p-value > 0.05. Based on the study results, β ≠ 0 and p-value< 0.05, the study rejected the null hypothesis and stated that generic strategies and organizations’ competitiveness relationship was moderated by institutional characteristics (firm size, firm ownership and management structure) of sugar firms. The study therefore concludes that the institutional characteristics (firm size, firm ownership and management structure) influence on affiliation between generic strategies and organizations’ competitiveness of sugar firms was important and was moderated by institutional characteristics (firm size, firm ownership and management structure). This study recommends that sugar firms in Kenya need to consider incorporating institutional characteristics in their operations since this study has found out that institutional characteristics (firm size, firm ownership and management structure) moderates the relationship between generic strategies and organizations’ competitiveness.
, , Abhishek Kumar Sinha
Published: 5 September 2020
Journal of Strategy and Management, Volume 14, pp 50-63; doi:10.1108/jsma-12-2019-0210

Purpose The preference of firm internationalization is shaped by different groups of owners and the institutional environment in which the firm operates. Past studies have largely ignored the heterogeneity among the controlling groups in influencing the internationalization decision in emerging economy firms. Design/methodology/approach In this study, the authors draw understanding from behavioral risk perspective and institutional theory to inspect the risk perceptions and propensities of various ownership groups such as lending institutions, domestic mutual funds and foreign institutional investors (FIIs). Empirical analysis was conducted from a sample of 2695 unique BSE-listed nonfinancial Indian firms during 2005−2019 period using Tobit panel regression analysis. Findings The findings reveal that firms' international investments are impacted differently by ownership share of different types of institutional investors after controlling for firm-level resources and capabilities. While lending institutions and FIIs are supportive of foreign investments by firms, domestic mutual funds are not supportive of this strategic decision on foreign investment. Research limitations/implications Further, our results show that family ownership, measured in terms of family shareholding, negatively moderates the lending institutions toward internationalization and does not impact the FIIs and mutual fund investor's decision regarding the foreign investments. Originality/value To the best of the author's knowledge, the current paper is the first to address the risk perceptions of various ownership groups on firm's international outlook in an emerging economy context with the latest data. This practical perspective helps the organizations in managing the ownership holdings.
Nayab Zahra, Danish Ahmed Siddiqui
World Journal of Business and Management, Volume 6; doi:10.5296/wjbm.v6i2.18003

International firms are highly sensitive to the performance of their subsidiaries and want to understand the factors behind their monetary success. Thus, numerous strategies are employed by these International firms to explore subsidiaries’ performance determinants; usually, these include subsidiary level attributes, ignoring the parent’s impact along with its country. To address this gap we construct a multi-level research that focuses the subsidiary, parent attributes along with countries’ Governance Indicators while predicting the determinants of subsidiary performance in Pakistan.We use two different levels i.e. parent & subsidiary level; multi-level analysis approach with HLM (Hierarchical Linear Model) in this research paper. Governance indicators of both parents and subsidiaries were taken explanatory factors along with Market growth, size, Performance, R & D, capital structure as well as asset management policies of parent. Subsidiary level factors included parents’ ownership, size, equity, and capital investment. 26 multinational companies listed on Pakistan Stock Exchange were included. Data was taken from the year 2012 to 2018. Selected companies cover around ten sectors of Pakistan Stock Exchange.The study revealed that on both levels; parents and subsidiaries, Governance institutions are more influencing factors rather than companies’ own attributes. We recommend that before investing in a country, international businesses should take into account Governance institutions (by World Bank); more than their own attributes.Originality/value - This study contributes to the existing approaches to determining subsidiary performance through adding Governance institutions and parent level attributes. Especially it explores the determinants of subsidiary performance in a developing country; Pakistan in the Asia continent.
Anh Huu Nguyen, Linh Ha Nguyen,
Real Estate Management and Valuation, Volume 28, pp 37-51; doi:10.1515/remav-2020-0014

The young real estate market in Vietnam, an emerging country in Asia, has been growing remarkably. This is an attractive channel for investors, but it seems to be an unstable market and have high potential source of earnings management while investing in real estate companies listed in Vietnamese stock market. The research has been conducted to investigate the impact of the ownership structure on the earnings management of Vietnamese listed real estate companies. The research methodology includes four statistical approaches OLS, FEM, REM and REM (robust) that are employed to address econometric issues and to improve the accuracy of the regression coefficients. The research sample consists of 180 firm-year observations for 36 real estate companies listed on Vietnamese stock market over a period of five years, i.e. from 2014 to 2018. The results show that, while state ownership showed a positive influence, managerial ownership played negative significant roles in relation to earnings management. This research has implications for designing a better ownership structure in the Vietnamese real estate sector and enhancing information quality to protect investors.
, Michael A. Nelson
The Quarterly Review of Economics and Finance, Volume 76, pp 97-104; doi:10.1016/j.qref.2019.03.006

Empirically adding to the structure-conduct-performance paradigm, this paper uses firm-level survey data across more than 100 countries to examine the influence of external certifications on the behavior or conduct of firms. We consider two dimensions of firms’ conduct – R&D (research and development) spending and licensing of foreign technologies while accounting for a host of firm-specific factors (e.g., firms’ age, ownership structure, size). The extant literature has mainly focused on the influence of certifications on firms’ performance and generally considered single nations or a modest set of nations. Our results show external certification to positively affect conduct, whether conduct is measured by R&D or foreign technology licensing. The results are robust when broader external audits are considered. Manufacturing and service industries show qualitatively similar patterns, albeit the magnitudes of impacts differ. Older firms show some different attitudes towards R&D versus licensing, whereas the effects of larger size are consistently positive. Finally, firms located in the main business cities exhibit greater propensities to perform R&D and license foreign technologies, ceteris paribus.
Julian R. Franks
Published: 30 January 2020
SSRN Electronic Journal; doi:10.2139/ssrn.3530849

This paper describes different forms of ownership across countries and how these forms influence the way companies are governed. In most stock markets in the world, listed companies frequently have a controlling shareholder, usually a family. However, Japan, the UK, and to a lesser extent the US, are exceptions. In these three countries, ownership is frequently highly fragmented, where share stakes are held by different institutional owners, including asset managers, both active and passive, and by shareholder activists. The paper focuses in particular on the governance structure of different institutional shareholders, how they engage with target firms, and their effectiveness. The paper concludes with recommendations for regulators to enhance different forms of ownership.
Rukayat Oloruntoyin Rabiu, Wahid Damilola Olanipekun, Ayodeji Gbenga Bamidele
Business Ethics and Leadership, Volume 4; doi:10.21272/bel.4(2).16-25.2020

In the XXI century, one of the most valuable resources of any organization is human capital. The effectiveness of the organization and the use of other resources depend on the formation quality and the use of the human capital. Today, many factors affect small and medium scale enterprises that lead to their rapid bankruptcy and liquidation, significant staff turnover, and reduced productivity. Under these conditions, attracting and retaining highly qualified personnel as the primary determinant of economic development and growth of small and medium scale enterprises is significantly relevant. Minimizing the negative impact of external and internal factors made by small and medium scale businesses requires recognition of the value of the human resources in improving the enterprise’s competitiveness and the effective management tools implementation. The study identifies the main factors influencing the implementation of human resource management practices in small and medium scale enterprises in Kwara, Nigeria. Methodological tools of this study are methods of analysis and synthesis, comparative and regression analysis. The study covers 200 small and medium scale enterprises in the Kwara Central Senatorial District and registered in the National Association of Small and Medium Enterprises (NASME). The factors influencing the use of human resources by small and medium scale enterprises in the article are studied in the following logical sequence: using a structured questionnaire developed in the form of the Rensis Likert scale, an array of primary data is forme. The hypothesis (at the level of 5% of weight) regarding the relationship between the efficiency indicators and human resources management policy is tested using multiple regression analysis with statistical software STATA 11.0. The results of the survey are analyzed, summarized, and interpreted using descriptive statistical methods. The results of multiple regression analyses confirm a statistically significant relationship between the analyzed indicators (p = 0.000 and R2 = 0.8128). The study shows a significant impact of financial security of the organization (β = 0.76; t = 8.63; p) and its size (β = 0.46; t = 4.66; p) on the implementation of personnel management practices on the example of small and medium scale enterprises in Kwara). The study results confirm that the small and medium scale enterprises in Kwara actively use personnel management under the influence of environmental factors. The study empirically confirms and theoretically proves the feasibility to consider such variables as the funding availability, the size of the firm, and the type of ownership in the business management process. Keywords: Human Resources, Human Capital Theory, Management, Nigeria, Small and Medium Scale Enterprises.
Mario Ossorio
Handbook of Research on Climate Change and the Sustainable Financial Sector pp 155-181; doi:10.4018/978-1-7998-2136-6.ch008

Innovation is a key factor for firms' competitive advantage in the long-term and for their financial success. Scholars highlight the underinvestment problem with respect of R&D investment. This chapter focuses on two relevant variables of corporate governance that influence firms' innovation performance: firm ownership and board of directors. In the first section, the effect of ownership structure on R&D investment is analyzed. More specifically, the chapter will illustrate the effects of family ownership and institutional ownership on innovation investments. The second section explores the main theoretical perspectives investigating the functions of board of directors and the main board tasks. Lastly, three attributes of board structure and their effect on R&D investments are explored.
Chinho Lin, Hoang Cong Nguyen, Ha Hoang Tran
Published: 15 October 2019
Baltic Journal of Management, Volume 14, pp 616-640; doi:10.1108/bjm-03-2018-0105

Purpose The purpose of this paper is to synthesize empirical results relating to antecedents influencing differences in performance between business group (BG) affiliated firms and independent firms in emerging economies. Design/methodology/approach A metanalysis was conducted in this research in which samples were collected, and a continuous data set for figuring the differentiation between group and non-group variables was selected and analyzed. These variables included performance, diversification, ownership characteristics, firm characteristics and group characteristics. Findings The research presents a set of hypotheses from a model that shows the influences of factors moderating the differences between the performance of BG affiliates and independent firms, including governance and the kinds of strategic choices which these firms make. Four of the five hypotheses were totally supported, showing the importance of differentiating affiliates’ and independent firms’ performance in terms of ownership concentration, dividend payout, leverage, R&D, as well as diversification and a firm’s age and size. Originality/value The study focused its research on an examination of pyramid and cross-holding groups in order to reveal the role of the core firms. It also examines ownership concentration, as well as internal relationships with capital structure, and the effect which these have on firm performance, in order to further understand the relationship among BGs, corporate governance and performance in emerging-market economies.
R. Heru Kristanto Hc,
ETIKONOMI, Volume 18, pp 209-220; doi:10.15408/etk.v18i2.10294

Cash and its use will connect to many things, such as the performance of corporate governance. This empirical research examines the interaction effect of insider ownership, institutional ownership, and independent board toward the influence of cash policy on the firm value. This research using agency theory framework, corporate governance using Indonesia listed firms’ samples over 2001-2017 (197 firms, 3349 observation). Fixed effect dynamic panel regression and regression-moderated analysis used in this research. We show that these results suggest that the insider ownership, institutional ownership, and independent board strengthen the influence of the corporate cash policy on firm’s value. It develops the previous research findings in Indonesia, especially in the implication of cash management from the perspective of agency theory and corporate governance.JEL Classification: G32, L21
, Michael A. Hitt, Stewart R. Miller
Journal of International Business Studies, Volume 51, pp 151-171; doi:10.1057/s41267-019-00250-8

Extending our understanding of family firms and international business research with respect to entry mode decisions, this study explains how entry mode choice is the product of a sequential decision-making process, with an important ownership structure contingency. We propose that firms with a dominant family owner (family-dominant firms) prefer low equity ownership as their entry mode for the purpose of preserving their socioemotional wealth. Their preference is persistent even when the institutional investors are the dominant shareholders in the firm (family-influenced firms). This nuanced examination of the role family values play in the entry mode decision extends our understanding of how family firms enter international markets. En élargissant notre compréhension des entreprises familiales et de la recherche en international business en ce qui concerne les décisions relatives au mode d’entrée, cette étude explique comment le choix du mode d’entrée est le produit d’un processus séquentiel de prise de décision, avec une contingence importante concernant la structure de propriété. Nous proposons que les firmes ayant un propriétaire familial principal (firmes à dominante familiale) préfèrent une faible participation au capital comme mode d’entrée afin de préserver leur richesse socio-émotionnelle. Leur préférence persiste même lorsque les investisseurs institutionnels sont les principaux actionnaires de la firme (firmes à influence familiale). Cet examen nuancé du rôle que jouent les valeurs familiales dans la décision du mode d’entrée nous permet de mieux comprendre comment les firmes familiales accèdent aux marchés internationaux. Extendiendo nuestra comprensión de empresas familiares y la investigación en negocios internacionales con relación a las decisiones de modo de entrada, este estudio explica como la elección de modo de entrada es el producto de un proceso secuencial de toma de decisiones, con una importante contingencia de estructura de propiedad. Proponemos que las empresas con un propietario familiar dominante (empresas dominadas por la familia) prefieren la propiedad de capital bajo como modo de entrada con el propósito de preservar la riqueza socio-emocional. Su preferencia es persistente incluso cuando los inversionistas institucionales son los accionistas dominantes en la empresa (empresas influenciadas por la familia). Esta examinación matizada del rol que juegan los valores familiares en las decisiones de modo de entrada amplía nuestro entendimiento de cómo las empresas familiares entran a mercados internacionales. Ampliando nosso entendimento sobre empresas familiares e pesquisa em negócios internacionais em relação às decisões de modo de entrada, este estudo explica como a escolha do modo de entrada é o produto de um processo de tomada de decisão sequencial, com uma importante contingência de estrutura de propriedade. Propomos que empresas com um proprietário familiar dominante (empresas dominadas por família) prefiram baixa participação acionária como seu modo de entrada com o propósito de preservar sua riqueza socioemocional. Sua preferência é persistente mesmo quando os investidores institucionais são os acionistas dominantes na empresa (empresas influenciadas por família). Esse exame nuançado do papel que valores familiares desempenham na decisão do modo de entrada amplia nosso entendimento sobre como as empresas familiares entram em mercados internacionais. 本研究通过扩展我们对家族企业和国际商业研究在进入模式决策方面的理解, 解释了进入模式的选择如何成为顺序决策过程的产物,具有重要的所有权结构偶然性。我们提出, 拥有占主导地位的家族所有者(以家族为主导的公司)的公司更倾向于将低股权作为其进入模式, 以保护其社会情感财富。即使机构投资者是公司的主要股东(受家族影响的公司), 他们的偏好也是持久的。对家庭价值观在进入模式决策中所起作用的细致考察, 扩展了我们对家族企业如何进入国际市场的理解。
Racha El Moslemany, Demyana Nathan
International Journal of Business & Economic Development, Volume 7; doi:10.24052/ijbed/v07n01/art-02

Keyword Agency theory, Discretionary Accruals, Earnings Management, Managerial ownership. Abstract The purpose of this paper is to investigate the relationships between ownership structure and Earnings Management (EM) of Egyptian companies. Discretionary accruals using the modified Jones model is evaluated to calculate the extent of EM. A sample of 50 companies listed on the Egyptian stock market for twelve years is used in the study. Three ownership indicators for concentration are included in the current research: block holder ownership, managerial ownership, and public ownership. A set of control variables are used in the current study: return on assets, firm size, firm age, debt ratio and market to book value. The statistical results indicated that there is a positive relationship between the Block holder ownership and the degree of earning management. However, no relationship was found between the Managerial Ownership and the Public Ownership on level of Earning Management. Full Text : PDF References Agnes Cheng, C. and Reitenga, A. (2009). Characteristics of institutional investors and discretionary accruals. International Journal of Accounting & Information Management, 17 (1), 5-26. Al-Fayoumi, N., Abuzayed, B and Alexander, D. (2010). Ownership Structure and EMin Emerging Markets: The Case of Jordan. International Research Journal of Finance and Economics, ISSN 1450-2887 Issue 38 28-47. Alves, S. (2013). The impact of audit committee existence and external audit on earnings management: evidence from Portugal. Journal of Financial Reporting and Accounting, 11 (2), 143-165. Amar, B. (2014). The Effect of Independence Audit Committee on Earnings Management: The Case in French. International Journal of Academic Research in Accounting, Finance and Management Sciences, 4(1), 96–102. Bedard, J., Chtourou, M. and Courteau, L. (2004). The effect of audit committee expertise independence, and activity on aggressive earnings management. Auditing A Journal of Practice & Theory, 23(2), 13-35. Bhimani, A. (2008). Making corporate governance count: the fusion of ethics and economic rationality. Journal of Management & Governance, 12(2), 135–147. Boulila, N. and Mbarki, I. (2014). Board characteristics, external auditing quality and EM Evidence from the Tunisian banks. Journal of Accounting in Emerging Economies, 4 (1), 79-96. Charitou, A., Lambertides, N. and Trigeorgis, L. (2007). Earnings behavior of financially distressed firms: the role of institutional ownership. Abacus, 43 (3), 271-296. Chen, Y. and Rezaee, Z. (2012). The role of corporate governance in convergence with IFRS: evidence from China. International Journal of Accounting & Information Management, 20 (2) 171-188. Chen, Y., Elder, J. and Hsieh, M. (2007). Corporate governance and earnings management: the implications of corporate governance best-practice principles for Taiwanese listed companies. Journal of Contemporary Accounting & Economics, 3 No. (2), 73-105. Chung, H. and Kallapur, S. (2003). Client importance, non-audit services, and abnormal accruals. The Accounting Review, 78 (4), 931-955. Chung, R., Firth. M., and Kim. J., (2002). Institutional monitoring and opportunistic earnings management. Journal of Corporate Finance 8: 29-48. Cohen, D. and Zarowin, P., (2008). Economic consequences of real and accrual-based EM activities. Leonard Ster School of Business& New York University, Working Paper. Daily, C., Dalton, D. and Canella, A. (2003). Corporate governance: decades of dialogue and data. Academy of Management Review, 28 (3), 371 ‐ 83 Davidson, R., Goodwin-Stewart, J., Kent, P. (2005). Internal governance structures and earnings management. Accounting & Finance, 45(2), 241–267. Dechow, M., Hutton, P., Kim, H. and Sloan, G. (2012). Detecting earnings management: A new approach. Journal of Accounting Research, 50(2), 275–334. DeFond, L., Jiambalvo, J. (1994). Debt covenant violation and manipulation of accruals. Journal of accounting and economics, 17(1), 145–176. Dimitropoulos, E. and Asteriou, D. (2010). The effect of board composition on the informativeness and quality of annual earnings: empirical evidence from Greece. Research in International Business and Finance, 24 (2), 190-205. Elham, S., Salehi, H. and Vali Pour, H. (2016). A study of the interaction of audit quality and ownership structure on EM of listed firms on Tehran Stock Exchange. International Journal of Humanities and Cultural Studies, ISSN 2356-5926 1596-1606. El-Sayed, I. (2012). EM to meet or beat earnings thresholds Evidence from the emerging capital market of Egypt. African Journal of Economic and Management Studies, 3 (2), 240-257. Gabrielsen, G., Gramlich, J. and Plenborg, T. (2002). Managerial ownership, information content of earnings, and discretionary accruals in a non–US setting. Journal of Business Finance & Accounting 29 (7‐8): 967-988. Gerayli, S., Yanesari, M. and Ma’atoofi, R. (2011). Impact of audit quality on earnings management: evidence from Iran. International Research Journal of Finance and Economics, 66, 77-84. Gonzalez, S. and Garcia-Meca, E. (2014). Does corporate governance influence EMin Latin American Markets? Journal of Business Ethics, 121 (3), 419-440. Gul, A., Fung, K. and Jaggi, B. (2009). Earnings quality: some evidence on the role of auditor tenure and auditors’ industry expertise. Journal of Accounting and Economics, 47 (3), 265-287. Gul, A., Chen, J. and Tsui, S. (2003). Discretionary accounting accruals, managers’ incentives, and audit fees. Contemporary Accounting Research, Vol. 20 No. 3, pp. 441-464. Habbash, M. (2010). The Effectiveness of Corporate Governance and External Audit on Constraining EM Practice in the UK, Durham University. Hassan, A., Romilly, P., Giorgioni, G. and Power, D. (2009). The value relevance of disclosure: evidence from the emerging capital market of Egypt. The International Journal of Accounting, 44. (1), 79-102....
Ronald Machaka, Ogundiran Soumonni, Precious Mudavanhu, Moses Mefika Sithole
Published: 19 February 2019
SSRN Electronic Journal; doi:10.2139/ssrn.3530068

The purpose of this paper is to investigate the factors that influence innovation activities in small manufacturing sector firms. The constructs employed in this paper are assembled into general firm characteristics, organizational structure, firm strategies, and sectoral conditions and relations categories. This study uses 138 responses from small South African firms as contained in the Community Innovation Surveys styled fifth national South African innovation survey, conducted between 2010 and 2012. Appropriate hypotheses were derived and tested by multivariate probit regression analysis. The results show the positive influences of the firm’s age and size by number of employees, a mix of linkages to internal and external knowledge sources, investment in (a) formal R&D department in plant, (b) investment in R&D intensity and (c) a skilled workforce, foreign ownership and government support on the propensity to innovate. Some knowledge source linkages, size of the firm by turnover and the size of the degreed workforce show a negative influence. The generalisability of the findings may be limited by the fact that the present study was focussed on small manufacturing sector firms that responded to the fifth national South African innovation survey. Prior South African studies on the determinants of innovations were based on the first and second national innovation surveys. The findings of this study offer a more recent insight into innovation strategies in small firms. Finally, very little is known about the innovation activities in small firms in Sub Saharan Africa in general, and South Africa specifically. A further implication of this study is that the findings also help stakeholders consider a variety of relationships that are likely to improve the innovation performance of small firms are suggested and discussed.
Jun Kong, Yan Gao, Fan Jiang
Open Journal of Social Sciences, Volume 07, pp 243-254; doi:10.4236/jss.2019.73021

The Pooled OLS model is used to analyze whether governance structure such as family ownership, management, and control can actually influence R & D investment in Chinese family firms by application of the listed companies from the CSMAR database. After controlling for size, debt, age, profitability and growth, the positive impacts of family ownership and family management on R & D and the negative impact of family control on R & D are found. The other research question explored is whether the moderating effects of institution environment exist in the sample. Institution environment variable and its intersection terms with governance structure are added to the models respectively. Meanwhile, the positive impacts of family ownership and family management on R & D are weaker while the negative impact of family control is weaker provincially in a better institution environment. Regarding the institution environment itself, it shows a consistent positive impact on R & D investment. Meanwhile a substitution effect between the institution environment and the family governance structure is found.
Sanaa Maswadeh
Investment Management and Financial Innovations, Volume 15, pp 48-60; doi:10.21511/imfi.15(4).2018.04

The objective of this study is to investigate the effect of the ownership structure, which includes concentration ownership, institutional ownership and foreign ownership in the light of the debt ratio and company size as controlling variables in limiting the earnings management practices of the Jordanian industrial companies for the period 2012–2016. The hypotheses of the study were tested using the multiple regression models. Among the most prominent findings of the study are: the explanatory factor (R2) for the independent and control variables accounts for 38% of the change in the earnings management of the Jordanian industrial companies, moreover, a significant effect of the concentration ownership was found in the limitation of earnings management practices; while, there was no significant influence of institutional ownership and foreign ownership on the earnings management practices in Jordanian industrial companies. Major limitation to this study is the only considered listed industrial Jordanian firms. Thus, the generalization of the results to other sectors and diverse economic conditions and regulations may be constrained. Finally, Jordanian policymaker reform policies motivate companies to increase their interest on concentration ownership structure, as the study showed the significant effect of the concentration ownership in the limitation of earnings management practice.
Published: 23 February 2018
Sustainability, Volume 10; doi:10.3390/su10020557

As few studies relate the technical aspects of a corporate website to a firm’s turnover, this paper aims to examine how the quality of a corporate website influences social networks and the company’s turnover in large family firms. The moderating and mediating effect of social networks on the relationships between website quality and turnover are also tested. In addition, the paper performs a multigroup analysis to analyze the differences between family businesses with low and high family ownership concentration. The sample used in the study, the largest 500 family firms’ websites around the globe extracted from The Global Family Business Index compiled by the University of St. Gallen, were analyzed using partial least squares–structural equation modeling (PLS-SEM). The results indicate that both the direct and indirect effect of website quality on turnover and the moderating effect of social networks in the relationship between website quality and turnover were negative and significant. The multigroup analysis reveals some significant differences between both groups. The study contributes to the evaluation of website literature by exploring a new sector of application: family businesses. Moreover, the largest family firms should improve their presence in social networks to increase their sales.
Claudiu T. Albulescu, Camelia Turcu
Published: 1 January 2018
Using firm-level data from 2007 to 2016 for 116 R&D companies located in Romania, the main purpose of this paper is to compute the TFP and to see to what extent the productivity level is influenced by the financial performances and the corporate governance of these firms. To this end, we use several metrics for the TFP computation, relying on Wooldridge (2009), Levinsohn and Petrin (2003), OLS residuals and fixed effect model residuals. Our bootstrap panel quantiles regressions show that firm size and profitability are important for increasing the overall productivity of R&D companies, while the structure of investment and the taxation have no significant effect. In addition, the presence of foreign ownership generates a higher productivity. However, the degree of independence in making decision, and the ownership involvement in the firms’ management, have a negative impact on TFP. While the presence of women on board is important for low-productivity firms only, curiously, the state-owned applied research institutes record a higher productivity compared with the R&D private firms. These findings are robust to different approaches used for the TFP computation, and to the number of iterations used for the confidence intervals.
Nguyen Vinh Khuong, Nguyen Thi Xuan Vy
VNU Journal of Science: Economics and Business, Volume 33; doi:10.25073/2588-1108/vnueab.4127

Timeliness of financial reporting is a qualitative characteristics that enhance the usefulness of information and significant to users of financial statements. This study examines that board diversity (GENDERCHAIR), CEO age (CEOAGE) have impact on audit report timeliness. The sample of this study comprises of 100 companies listed on Vietnamese Stock Exchange in the period 2012 - 2014. Ordinary Least Square (OLS) regression analysis are performed to test the audit report timeliness determinants . Using quantitative research methods, findings found that there is a significant positive relationship between board diversity on timeliness of financial reporting while proxy variables of the CEO age have a significant negative relationship with timeliness of financial reporting. . This paper extends prior research by addressing the potential effects of female executives on timeliness of financial reporting. Keywords Chief executive officer, timeliness of financial reporting, listed firms, Vietnam References Abdullah, S. N., “Board composition, audit committee and timeliness of corporate financial reports in Malaysia”, Corporate Ownership & Control, 4 (2006) 4, 33-45.Al-Ajmi, J., “Audit and reporting delays: Evidence from an emerging market”, Advances in Accounting, 24 (2008) 2, 217-226Al-Akra, M., Eddie, I. A., & Ali, M. J., “The influence of the introduction of accounting disclosure regulation on mandatory disclosure compliance: Evidence from Jordan”, The British Accounting Review, 42 (2010) 3, 170-186.Alkhatib, K., & Marji, Q., “Audit reports timeliness: Empirical evidence from Jordan”, Procedia-Social and Behavioral Sciences 62 (2012), 1342-1349.AL-Shwiyat, Z. M. M., “Affecting factors on the timing of the issuance of annual financial reports: empirical study on the jordanian public shareholding companies”, European Scientific Journal, 9 (2013) 22, 407-423.Ashton, R. H., Graul, P. R., & Newton, J. D., “Audit delay and the timeliness of corporate reporting”, Contemporary Accounting Research, 5 (1989) 2, 657-673.Bamber, E. M., Bamber, L. S., & Schoderbek, M. P., “Audit structure and other determinants of audit report lag: An empirical analysis”, Auditing, 12 (1993) 1, 1-23.Bergstresser, D. and Philippon, T., “CEO incentives and earnings management”, Journal of Financial Economics, 80 (2006) 3, 511-529.Bertrand, M. and Schoar, A., “Managing with Style: The Effect of Managers on Firm Policies”, The Quarterly Journal of Economics, 118, (2003) 4, 1169–1208Carmichael, D., Ghosh, A. and Lee, H., “Causes and consequences of abnormally long audit reporting lags”, in Bishop, C. C., ed. American Accounting Association Annual Meeting, Colorado, Wednesday August 10, 2011, Denver, Colorado: American Accounting Association (2011), 1-41.Catalyst, “The bottom line: Connecting corporate performance and gender diversity” (2004).Che-Ahmad, A., & Abidin, S., “Audit delay of listed companies: A case of Malaysia”, International business research, 1 (2009) 4, 32.Cohen, J., Krishnamoorthy, G., & Wright, A. M., “Corporate governance and the audit process”, Contemporary accounting research, 19 (2002) 4, 573-594.Ettredge, M. L., Sun, L. and Li, C., “The impact of SOX section 404 internal control quality assessment on audit delay in the SOX era”, Auditing: A Journal of Practice & Theory, 25 (2006) 2, 1-23.Ezat, A., & El-Masry, A., “The impact of corporate governance on the timeliness of corporate internet reporting by Egyptian listed companies”, Managerial finance, 34 (2008) 12, 848-867.Feng, M., Ge, W., Luo, S., & Shevlin, T., “Why do CFOs become involved in material accounting manipulations?”, Journal of Accounting and Economics, 51 (2011) 1, 21-36.Francis, J., Huang, A. H., Rajgopal, S. and Zang, A. Y., “CEO reputation and earnings quality”, Contemporary Accounting Research, 25 (2008) 1, 109-147.Hambrick, D. C. and Mason, P. A., “Upper echelons: The organization as a reflection of its top managers”, The Academy of Management Review, 9 (1984) 2, 193-206.Hazarika, S., Karpoff, J. M. and Nahata, R., “Internal corporate governance, CEO turnover, and earnings management”, Journal of Financial Economics, 104 (2012) 1, 44-69.Inchausti, B. G., “The influence of company characteristics and accounting regulation on information disclosed by Spanish firms”, European accounting review, 6 (1997) 1, 45-68.Jiang, F., Zhu, B. and Huang, J., “CEO's financial experience and earnings management”, Journal of Multinational Financial Management, 23 (2013) 3, 134-145.Jiang, J. X., Petroni, K. R., & Wang, I. Y,. “CFOs and CEOs: Who have the most influence on earnings management?”, Journal of Financial Economics, 96 (2010) 3, 513-526.Khademi, V., “The relation between investment opportunities and asset growth among the companies accepted in Tehran Stock Exchange”, Accountant 207 (2009), 74-77.Khasharmeh, H. A., & Aljifri, K., “The timeliness of annual reports in Bahrain and the United Arab Emirates: An empirical comparative study”, The International Journal of Business and Finance Research, 4 (2010) 1, 51-71.Klein, A., “Audit committee, board of director characteristics, and earnings management”, Journal of Accounting and Economics, 33 (2002) 3, 375-400. Knechel, W. R. and Sharma, D. S., “Auditor-provided non audit services and audit effectiveness and efficiency: Evidence from pre- and post-SOX audit Report Lags”, Auditing: A Journal of Practice & Theory, 31 (2012) 4, 85-114.Knechel, W. R., Sharma, D. S. and Sharma, V. D., “Non-audit services and knowledge spillovers: Evidence from New Zealand”. Journal of Business Finance & Accounting, 39 (2012) 1-2, 60-81.Leventis, S., & Weetman, P., “Timeliness of financial...
Erric Wijaya, Dita Noviany
Jurnal Ilmu Manajemen & Ekonomika, Volume 9, pp 91-102; doi:10.35384/jime.v9i2.31

This study discusses the influence of ownership structure and corporate governance as affecting factors to liquidity policy in consumer goods industry sector of companies listed in Indonesia Stock Exchange. The dependent variable in this research is liquidity policy which can be proxied with cash holdings, while the independent variables in this research are: ownership structure that can be proxy by insider ownership and foreign ownership, and corporate governance which can be proxy by with variable board size and board composition, firm size and growth sales as a variable control. This research uses multiple linear regression method with panel data approach. The sample used 21 companies in manufacturing industry which classified into consumer goods sector during the period 2012-2015. The result of the research shows that the variable of ownership structure is only variable insider ownership which has influence to cash holding. While from the corporate governance variable, it is only board size that affect cash holding. The value of adjusted R squared in this study amounted to 92.6%.
Liming Zhao, Xiaofeng Liu,
Mathematical Problems in Engineering, Volume 2017, pp 1-9; doi:10.1155/2017/5292494

This work considered a tripartite cooperation-competition game model for the convergence product market, whose products are compounds of two base products or services. An early convergence product firm monopoly in this market and two potential entrants from the base products decide to cooperate with another to compete with the monopolist. We analyzed factors that affect existence and local stability of the Nash equilibrium. Rich nonlinear dynamic behaviors like bifurcation, chaos, and attractors are presented to explain the complex relationships between the three players. Results showed that the pulling effect on profit for the united R&D activity can significantly enlarge the stable region. Too frequently adjusted price strategy will bring the system into chaos. A parameter feedback control method is given to control the chaotic system and we numerically verified its effectiveness. This study has significant values to understand the fluctuations in related convergence product market.1. IntroductionConvergence is a dominant paradigm in the contemporary industry innovation, which allows the introduction of seemingly disparate attributes or functionalities products into other existing industrial categorized products. As in China, the flourishing “Internet Plus” strategy, which means the conventional industries adopt the application of the Internet and other information technologies to reform the existing mode of products, is regarded as an important way to produce its new economic form and promote emerging industry [1].For abbreviations, the base products are called BPs and the newly formed convergence products are called CPs. In a newly built CPs market, relying on its information, differentiation characteristics, and prior advantages over the competitors, an early entry firm is easy to monopoly the whole market [2]. With the fast growing CPs industry, owing to the similar product type and alternative functionalities, firms in BPs industry are the most probable potential entrants to compete with the monopolist, separately [3], while, in the context of CPs, because of the product segment in CPs industry which brings entry barrier for potential entrants, firms in BPs tend to complement and upgrade its product line to take a share in the rising CPs [4, 5]. The competitive structure and cooperative trend in CPs market will be changed.Many researchers have contributed incremental values to extend the classical Cournot game and Bertrand game into different forms with practical variations in real economy [6, 7]. In [8], researchers built a duopoly game model for two zonal electricity firms which is an administrative monopolist granted by the bureaucracy in separate market and investigated its complex dynamics. Chen et al. [9] proposed a dynamic triopoly game model in Chinese 3G telecommunication market, which is a typical natural monopolized market. For the published literature, researchers interest on monopoly game has transformed from duopoly game [7, 10, 11] to triopoly game [8, 12, 13]. And the basic assumption has been modified from complete rational to bounded rational [13, 14]. In [15], the existence of chaotic dynamics for a triopoly game model with different decisional mechanism was rigorously proved by the “Stretching along the Paths (SAP)” method. However, for the third types of monopoly, the economic monopoly, which means firms acquire the monopoly status relying on powerful economic strength, enormous paten ownership, and successful marketing strategy, is always regarded as the product of free completion and progress in science and technology. Under the background of economic globalization, the economic monopoly seems more acceptable by enhancing the competitiveness of a country, but it is also unsupported by government if it has touched fairness of the market. For instance, the US government has repeatedly inquired Microsoft on its monopoly and tying conduct [16].In the process of industry convergence, the compounding characteristics of CPs and strong user stickiness can considerably cause monopoly in this market. On the one hand, convergence has accelerated the pace of breaking up boundaries and disintegrating of monopolists in existing industry [17]. On the other hand, by adding new functionalities to existing product to realize complementary goals, firms in CPs market achieved powerful marketing and sales benefits. For example, iPhones have helped Apple Inc. in monopolizing most of the profits in high-end smart phone industry, which is a revolutionary convergence in telecommunication and other Internet services [18]. Because of the natural strengths in transforming single products by introducing the complementary attributes and lack of experiences in the opposite field, firms in BPs will be guided to cooperate with its complementary firms to exploit in CPs. Thus, if the two united firms successfully fulfill their product transformation, the complex cooperation and competition behaviors among the three firms can form a triopoly cooperation-competition game in CPs market.In this paper, we develop the complexity of convergence theory to build a three-dimensional discrete cooperation-competition game model in CPs market. A price adjustment dynamic strategy is used to investigate the complex dynamic features of this model and the stability of the Nash equilibrium. Our result aims to show the influence of the cooperation-competition behaviors on CPs market and find out proper strategies to control chaos when this system enters into chaos state.The rest of this paper is organized as follows: In Section 2, we describe the triopoly cooperation-competition game model with bounded rationality. In Section 3, we discuss the existence and local stability of the Nash equilibrium. In Section 4, the numerical simulations of the dynamical behaviors for this model are investigated. Finally, conclusions are given in Section 5.2. The Triopoly Cooperation-Competition Game ModelWe consider two potential entrants from the basic markets (denoted by firm 1 and firm 2), who consist of the two aspects of the compounding attributes for CPs, and an early entry firm in CPs market (denoted by firm 3). Having seeing the fast rising of excess profits in CPs market and similar product structure, the two firms from BPs decided to cooperate with each other to research and develop new CPs in continuous periods by adding the complementary functionality into its existing products. The expenditure of research and development (R&D) will prorate between the two united firms and the proportion depends on the preexisting R&D ability and the effort level in the cooperation process. For firm 3, on the one hand, the excellent characteristics of CPs and the accumulative experience in CPs market provide it with a huge amount of demand and a relatively low cost. On the other hand, the newly launched products from the two cooperative firms bring a rise in publicity and an overall sales improvement for CPs. For the sake of risk aversion in R&D, firm 3 decides to hold its product line unchanged and expects to get a free ride of rise in demand. Thus, the new products of firms 1 and firm 2 will gradually form a substitution for products of firm 3 in CPs.Let denote the output of products by firm at period and denote the corresponding prices (). Since the product of each firm has complementary attributes in CPs market, according to [10], the demand function of the three firms can be given aswhere is the maximum demand in the market, is the price elasticity of demand regarding on product , and and are the cross-price elasticity of demand regarding on the complementary product and product (, , and ). All the parameters above are positive and satisfy the restrict conditions of , , and ; that is, the ownership price effect is greater than the complementary cross-price effect.The innovative activities to develop new CPs will raise the cost of firm 1 and firm 2. We suppose that the R&D cost for the cooperative union is a linear function of the production. It can be given aswhere represents the marginal cost of R&D, represents the present marginal R&D cost, and represents the effort level in collaborative R&D activity. The R&D cost is proportional to the total output. It means that the innovation activity becomes more difficult in a larger scale of production. Considering the intrinsic fixed cost and variable cost of firm 1 and firm 2, the total cost function can be written aswhere and are the fixed costs, and are coefficients of the variable costs, and and denote the proportion of the R&D cost between the union.With the above assumption, the cost function of firm 3 is given bywhere and , which denote the cost advantage for the early entry firm.Let denote the pulling effect on profit for the united R&D activity of firm 1 and firm 2. is the indicator function that takes value 1 for and takes value 0 for . Then we can get the profit function of firm at period :We assume that this is an incomplete information market. All of the three firms choose the bounded rational adjustment strategy based on the marginal profit in the next period:where , , and are the adjustment speed for the three firms, respectively. By substituting (5) into (6), we obtain the dynamic model of a triopoly cooperation-competition game model in the convergence product market:3. The Complex Dynamic Behaviors3.1. The Nash Equilibrium and Stability AnalysisIn system (7), we can get that this discrete system has eight equilibrium points with forms of , , , , , , , and . The three firms in the game will not supply any production to the market at price 0.Hence, the nontrivial equilibrium point is the only Nash equilibrium with positive component values. It can be found that values of the nontrivial equilibrium point are parameter dependent in system (7) except for , , and . For denotations, we numerically give out values in Section 3.2.In order to study the stability of the system at , the Jacobian matr
International Journal of Organizational Analysis, Volume 24, pp 985-1001; doi:10.1108/ijoa-10-2015-0916

Purpose This study aims to draw upon research from strategic human resource management (HRM) and strategic management to examine how HRM demands influence the likelihood that chief executive officers (CEOs) will staff top management with a human resource (HR) executive. Design/methodology/approach The theory and hypotheses developed in this study are tested on a sample of US initial public offering firms from the calendar year 2007, using logistic regression. Findings The results of hypothesis tests suggest that HR executive presence in top management is positively related to the HRM demands faced by a CEO stemming from product/service innovation strategies, the number of HRs employed by the firm and CEO’s financial orientation. Research limitations/implications The results of this study may not generalize to other settings. This study does not simultaneously consider the role of other structural forms which may increase or reduce the degree of HRM demands faced by the CEO. This study extends prior research on executive job demands by expanding the understanding of factors which give rise to HRM sources of executive job demands. Study results suggest that CEOs with financial orientations are more likely to staff their top management teams with an HR executive, which suggests that in the face of executive job demands stemming from a particular functional area, CEOs delegate responsibility for that function to another member of top management. This finding suggests that CEOs can, and in fact do, recognize the limitations engendered by their experiences and that when confronted with a specific type of executive job demand that does not align with their expertise, they take steps to address their individual limitations by appointing others that are more capable of addressing the particular source of executive job demand. Practical implications Study results suggest that product/service innovation strategies, CEO’s financial background and the number of HRs employed by the firm increase the likelihood of HR functional representation in top management. Originality/value The theory and results of this study extend the focus of extant research on factors giving rise to HRM’s functional representation in top management. Although prior research has emphasized the role of ownership characteristics and risk preferences in the adoption of this structural form, this study examines the role of CEO HRM demands. This approach allows for the integration of the upper echelons theory with the strategic HRM literature and provides an empirical examination of CEO job demands arising from the HRM function.
Amitava Roy
Metamorphosis: A Journal of Management Research, Volume 15, pp 31-46; doi:10.1177/0972622516629032

The focus of corporate governance (CG) systems is the agency problem, and it refers to the set of mechanisms that influences managerial decisions when there is a separation of ownership and control. Better CG may or may not be related to higher organizational performance. In this article, we propose to study whether firm level good CG lead to better firm performance and higher value creation in the form of share price returns. We use a panel of 58 top Indian listed companies in terms of market capitalization—BSE 100 and NSE 100—over the five-year period from 2007–2008 to 2011–2012 for our analysis. Our measurement analysis starts with a broad sample of 25 structural indicators of CG relating to directors, boards committees, audit considerations, ownership and capital structure characteristics, and our defined set of control variables. We have used two measures of firm performance, Market to Book Value Ratio (MTBVR) and Return on Equity (ROE). We used principal component analysis to identify the underlying dimensions of CG and determined which indicators are associated with each factor. We regressed MTBVR and ROE against the factor scores generated. MTBVR resulted in an R-square of 34.9 per cent and has a strong association with five factors. ROE resulted in an R-square of 48.6 per cent and was significantly influenced by the five factors.
Osong Public Health and Research Perspectives, Volume 6, pp 249-255; doi:10.1016/j.phrp.2015.07.003

The purpose of this study is to analyze the influence of the corporate governance of pharmaceutical companies on research and development (R&D) investment. The period of the empirical analysis is from 2000 to 2012. Financial statements and comments in general, and internal transactions were extracted from TS-2000 of the Korea Listed Company Association. Sample firms were those that belong to the medical substance and drug manufacturing industries. Ultimately, 786 firm-year data of 81 firms were included in the sample (unbalanced panel data). The shareholding ratio of major shareholders and foreigners turned out to have a statistically significant influence on R&D investment (p < 0.05). No statistical significance was found in the shareholding ratio of institutional investors and the ratio of outside directors. The higher the shareholding ratio of the major shareholders, the greater the R&D investment. There will be a need to establish (or switch to) a holding company structure. Holding companies can directly manage R&D in fields with high initial risks, and they can diversify these risks. The larger the number of foreign investors, the greater the R&D investment, indicating that foreigners directly or indirectly impose pressure on a manager to make R&D investments that bring long-term benefits.
Base - Revista de Administração e Contabilidade da Unisinos, Volume 12; doi:10.4013/base.2015.121.01

Based on precepts of the Agency Theory, the study has the general purpose of analyzing the relationship between ownership structure and investments in R&D in public companies in Brazil. For this purpose, the data of 66 public companies in Brazil referring to the period 2009-2012 were analyzed through the Multiple Correspondence Analysis (MCA) and Multiple Linear Regression with use of panel data. Through the MCA, the study examined the relationship between ownership structure – ownership concentration and identity of the controlling shareholder – and investments in R&D. Among the findings, it should be noted that companies under foreign or family control show high ownership concentration and have high investments in R&D. Regarding the Multiple Linear Regression with use of panel data, it has been found that ownership concentration was not a factor that influenced investments in R&D. Concerning the identity of the controlling shareholder, it was observed that the presence of a foreign or state controlling shareholder has no effect on investments in R&D. Complementarily, the study found empirical evidence of the effects of specific characteristics of firms such as size and the information technology sector as attributes that may, in fact, influence the investments in R&D. In this sense, it can be concluded that there is a relationship between ownership structure and investments in R&D. The study enables researchers and professionals to realize that the decisions of managers, with regard to investments in R&D, can be influenced by different arrangements of the ownership structure in emerging markets.Keywords: Agency Theory, ownership structure, investments in Research and Development.
Published: 17 January 2015
Review of Managerial Science, Volume 10, pp 487-510; doi:10.1007/s11846-015-0165-9

This study examines how the interactive use of management control systems (iMCS) affects process and organizational innovation. Firstly, it is postulated that iMCS directly influences the development of process and organizational innovations. Secondly, we argue in favor of a moderating role of iMCS in the relationship between innovation and financial performance. Most studies of MCS and innovation have focused on new product development. However, process and organizational innovations follow innovation patterns that clearly differ from product innovation. The research model is empirically examined using data collected from a survey of 230 firms. Results from a structural model tested applying Partial Least Squares regression, controlling for size, family ownership, R&D, and product innovation, reveal that iMCS fosters process and organizational innovation. Results also suggest that iMCS could play a moderator role in the relationship between process innovation and financial performance. These findings highlight the role of iMCS in process and organizational innovation, expanding previous literature on Simons’ Levers of Control and innovation. The results are also discussed with regard to their managerial implications.
Ionela Neacsu, , Geoff Martin
Academy of Management Proceedings, Volume 2015; doi:10.5465/ambpp.2015.13713abstract

There is a general contradiction between theoretical work suggesting that family firms are long-term oriented and recent empirical research indicating that family firms have a more myopic investment horizon than non-family firms as captured by various strategic decisions concerning R&D, diversification, earnings management and such. Yet in these empirical studies temporal orientation has often been a tangential concern, relying on proxies for time horizon that are subject to various interpretations. We revisit this issue by examining an unambiguous measure of long-term time frame, namely durability of investments in fixed assets, and find support for the hypothesis that family firms are indeed longer-term in their temporal preferences than non-family firms. We also find support for contingencies – specifically, the influence of non-family equity and debt investors – that allow for reconciliation of previously conflicting perspectives regarding family firm temporal orientation relative to non-family.
Ana Isabel Martins Ribeiro, António Cerqueira, Elísio Brandão
Published: 1 January 2015
Investors, managers and shareholders benefit from the study of what influences and determines corporate effective tax rates (ETRs) as this analysis may contribute to potential tax savings. Moreover, standard setters, regulators and policy makers have a crucial interest in identifying the main factors driving corporate taxes. Therefore, the purpose of our investigation and contribution is twofold. Firstly, we provide evidence of how ETRs are determined by firms’ financial and operational characteristics. Secondly, our objective is to show the role of Corporate Governance attributes in explaining ETRs. As the literature about this topic using non-US firms is not abundant, to address these questions we select a sample of 704 non-financial firms listed on the London Stock Exchange between 2010 and 2013. We estimate our econometric model by using GLS cross-section weights. Our results show that larger and more profitable firms have higher ETRs. On the contrary, capital intensity, leverage and R&D expenses have a negative impact on ETRs. Regarding ownership structure and board composition, our findings reveal that managerial ownership contributes to lower ETRs. On the other hand, more independent firms from controlling shareholders exhibit higher ETRs. Moreover, a larger number of board members and non-executive directors results in higher ETRs
Muhammad Shakeel Sadiq Jajja, Shaukat Ali Brah, Syed Zahoor Hassan, Vijay R. Kannan
International Journal of Productivity and Performance Management, Volume 63, pp 1031-1045; doi:10.1108/ijppm-02-2013-0023

Purpose – The purpose of this paper is to explore the interface between buyers and suppliers in the context of product innovation in an emerging economy. Specifically, it examines the strategic and tactical initiatives necessary to drive inter-organizational alignment and thus positive innovation outcomes. It also examines the impact of organizational characteristics on product innovation. Design/methodology/approach – Using survey data from 191 organizations in Pakistan, a structural equation model of the relationships between buyers’ and suppliers’ strategic focus on innovation, supplier innovation focus, collaborative innovation, and measures of product innovation and market performance is tested. In addition, hierarchical regression analysis is used to identify the impact of various organizational characteristics on product innovation performance. Findings – The results suggest that a firm's product innovation performance is positively influenced by strategic buyer-supplier alignment with regard to product innovation, and the existence of mechanisms that foster inter-organizational collaboration. This in turn has a positive impact on market performance. Product innovation performance is also influenced by a firm's age, the nature of its ownership, and the extent to which it exports its products. Originality/value – The study offers new insight into the role of inter-organizational collaboration as a driver of product innovation. Moreover, it adds to a limited literature on supply chain management in emerging economies generally, and on product innovation in the Indian sub-continent specifically.
Dhaniel Hutagalung, Waluyo Waluyo
Jurnal Magister Akuntansi Trisakti, Volume 1; doi:10.25105/jmat.v1i2.4935

This study aims to: (1) determine and predict the relationship leadership style influence on tax compliance, (2) determine the influence of organizational culture on tax compliance, (3) determine the effect of firm size on tax compliance, (4) determine the effect of age corporate tax compliance, and (5) the effect of ownership on tax compliance.Associative and quantitative statistical methods are used. Object and the sample are property, real estate and construction company sector in Jakarta, and are listed on the Indonesian Stock Exchange. The sampling technique used by census method based on the number of small population. 32 respondents of tax staff / manager, accounting or finance were used as the primary data. Spread questionnaires were analyzed using Structural Equation Modeling (SEM) with an alternative Partial Least Square (PLS) using SmartPLS program version 2.0 M3. SEM-PLS is used because of the difference in scale of measurement variables and lack of samples.The results showed that of the five hypotheses proposed, only two hypotheses are acceptable. Organizational culture has an significant influence and firm size variabel affect tax compliance by 17.79% and significant with T-statistic of 2.41 (>1,96). The larger the company the more it is likely to dutifully carry out their tax compliance and predictions on the role of leadership styles to improve tax compliance is acceptable. Leadership style affect by 19,91% and no significant with T-Statistic 1.83 (<1.96) at 5% significance level, age and ownership of the company was found do not affect the Tax compliance. R-square showed value of 0.4003 indicates, the relationship model are moderate which means that all variables affect the overall 40.03% of the tax compliance.
Balasubramanian Elango, Jamie R. Wieland
Published: 14 April 2014
Multinational Business Review, Volume 22, pp 4-14; doi:10.1108/mbr-10-2013-0061

Purpose – The importance of regional strategy as a separate paradigm in the international business literature has grown in recent years, and the initial connections between regionalization and firm performance appear promising. What is lacking, however, is an empirical analysis quantifying the impact of regional effects on firm profitability. This topic is an important one for the field of international business, as drivers of firm profitability are some of the key motivators of research in international strategy. The aim of this paper is to empirically quantify the role of regional effects on the performance of service firms in a manner such that regional effects can be directly compared with country and firm effects on firm profitability. Design/methodology/approach – Using a hierarchical linear model (HLM) with four levels, the proportion of variation driven by regional effects is estimated. These estimates are obtained from a data panel of 48,083 units from 7,129 service firms across the three triad regions (North America, Europe, and Asia Pacific) over a ten-year time-frame (1999-2008). Findings – It was found that regional effects, in terms of relative importance, explain approximately 9 percent of the variance in firm performance. This pattern of results is consistent when the analysis was conducted during periods of increasing or decreasing profits, firm type, and ownership structure. Originality/value – Within the context of international business, work on regional strategy/regionalization has emerged as a separate stream of literature. This study is one of the first to quantify the influence of regional effects on performance using a 4-level HLM model. Additionally, this paper demonstrates the application of a 4-level model, potentially increasing awareness of this technique and usage in other multilevel topics in the IB literature, which offers several avenues for future research.
, Weihua Huang
Applied Financial Economics, Volume 24, pp 723-737; doi:10.1080/09603107.2013.851769

This article examines whether the effect of hierarchical pay structures on firm value is different between the firms in which the CEO is not the highest paid member of the top management team and those in which the CEO receives the highest pay. We find that the difference in pay between CEO and VPs benefits firm value only when CEO is the highest paid member of the top management team. In firms where the CEO does not receive the highest pay, pay gaps have a negative impact on firm value. The article also finds that financial distress, family ownership, firm size and R&D intensity increase the likelihood of CEO not being the highest paid manager, whereas CEO entrenchment and CEO power along with dividend payout decrease this likelihood.
Journal of Finance and Economics, Volume 2, pp 185-193; doi:10.12691/jfe-2-5-9

The importance of R&D cooperation has been recognized as a consequence of growing complexity, dynamism of the environment, increasing risks and escalating costs of innovation. Collaboration with firms and academic institutions enables organizations to exploit external resources and competencies not available internally and adding additional value to the in-house ideas. Despite the large number of publications related to R&D cooperation, empirical studies on the impact of firm’s strategic partnering on firm performances are rather scarce. Thus, the goal of this paper is to contribute to the existing literature by discussing the strategic behavior of firms derived from the patent co-ownership network in order to establish a link between the variety of close relationships and the number of sold products. This paper discusses the influence of different strategic directions on firm performance, whereby the impact of uncertainty regarding the future technology development and the market acceptance is specifically high. First, the starting point is the analysis of co-patenting structure in the field automotive industry using patents related to lithium-ion batteries. This study investigates the characteristics of each resulting cluster derived from the collaboration network and then explores the heterogeneities of R&D collaboration strategies differentiating between three types of strategic partnering: doing-it-alone, concentration on single partners and open partnering. Second, analysis is undertaken to establish an empirical linkage between the strategic partnering behavior and the number of sold electric vehicles. The results indicate that there is no direct causal link between the intensity of the cooperation and performance.
Takahiro Nishi
Published: 1 January 2014
In this study, I have examined the relationship between the corporate governance structure and corporate strategy. While many research works have successfully revealed coherence between board structure and environmental elements, a few studies eliminate the effect of corporate governance on corporate strategy and strategic choice. Previous studies around corporate governance and strategy have focused mainly on the influence of shareholders on corporate diversification and R&D policy, as well as the ownership structure and board?s risk attitude on strategic choice. However, previous studies failed to reveal the effect of corporate governance on accumulating distinctive capabilities that would be the source of competitive advantage. The rent appropriation perspective is applied in this study to consider the effect of corporate governance on accumulating firm-specific assets. The rent appropriation perspective advocated by Coff (2010) gives hints on considering this problem. Dynamic capabilities orchestrate and reconfigure the existing resources into new markets and coordinate appropriate distribution of resources into production factors. The consideration and discretion of the corporate board can lead to changing the allocation of these distinctive resources and accumulate distinctive capabilities. In other words, the configuration of corporate governance would discipline and stimulate innovation in the corporation. Corporate governance would be appropriate when this configuration fits for environmental demand. I have considered the strategic implications of corporate governance by studying recent corporate governance reforms in Japanese electronics corporations that have struggled in sluggish performance for many years. Using quantitative methods, this study has examined the interaction effects of ownership structure and growth opportunities on R&D investment mediated by the corporate board. It also explores the influence of the corporate board on accumulating firm-s
Amal A. Said, Hassan R. Hassabelnaby, Kathryn Chang
Published: 19 August 2013
SSRN Electronic Journal; doi:10.2139/ssrn.2312901

This paper investigates the dynamic nature of hospitals outsourcing decisions by examining the determinants of hospitals decisions to outsource non-clinical services and its effects on hospitals contemporaneous and future financial performance. Faced with increased competition and regulatory pressures to reduce costs of health care, U.S. hospitals strive to control costs while maintaining higher service levels. Both theory and practice suggest that outsourcing of non-core business functions can affect firms’ financial performance through reduction in costs or improved strategic position. We empirically examine the cost pressure and task complexities as determinants of hospitals outsourcing decision and whether or not such outsourcing of non-clinical services improves the financial performance for a sample of California short-term general hospitals. We examine and control for institutional, ownership and other control variables that affect the outsourcing decision and its effects on financial performance. The overall results indicate that the managerial outsourcing decision has a positive and significant influence on hospitals financial performance. In particular, we find that the extent of outsourcing of non-clinical services enhances the current performance of our sample hospitals. Whereas the positive relation between the rural factor and profitability is consistent with prior literature, the result for the performance consequences of outsourcing is somewhat surprising. Additionally, the ownership structure of for-profit hospital adversely affects the profitability performance. This paper contributes to accounting research by examining the consequences of outsourcing decisions on hospitals financial performance. Specifically, the current study expands and complements the existing literature on hospital outsourcing, as it uses a comprehensive data sample with objective performance metrics. The results have implications for managers, standard setters and academicians.
Lalita Anand, Nikhil P. Varaiya, Thenmozhi M.
Published: 21 December 2012
SSRN Electronic Journal; doi:10.2139/ssrn.2258266

This paper investigates the empirical determinants of corporate cash holdings for Indian firms. A sample of 1540 unique non finance and non utility Indian firms, with positive assets and positive sales, listed on the National Stock Exchange for a period of 11 years, (from 2001-2011) is selected. We study cash holdings in family business companies, foreign origin companies, Government companies, Private companies and in Group companies. We focus on the effect of ownership structure on firm governance. Corporate governance theories suggest that firms with high levels of concentrated ownership are subject to greater extraction of private benefits from cash holdings. We present evidence of a significant relation between promoter’s ownership and cash holdings. Results reveal that Indian firms with high level of family ownership and group companies have low cash holdings whereas Government companies, Private companies and Foreign origin companies have larger cash holdings suggesting more opportunities for private benefits extraction. The findings of this paper show that corporate cash holding is influenced by market to book ratio, net leverage, net working capital, size, R&D to sales, ROA, and capital expenditure to assets. Dividend dummy and cash flow volatility are found not significant.
Ranjit Tiwari, Harish Kumar Singla
Published: 27 August 2012
SSRN Electronic Journal; doi:10.2139/ssrn.2136913

The purpose of the study is to determine the drivers that influence firm value since, those drivers can either increase or decrease this value depending upon the tendencies of their changes. This study specifically, empirically, examines how strategic value drivers influence firm value in India? The study focuses on six important strategic value drivers namely capital structure, ownership structure, dividend policy, intensity of R&D, intensity of advertisement, and intensity of employee compensation. The study uses cross sectional time series data from 31st mar 2002 to 31st mar 2011, all 3750 BSE listed manufacturing companies are considered for the purpose of the study. The study uses panel regression with four different model specifications (the pooled regression model; the between effects model; the fixed effects model; and the random effects model) and will identify the best model specification for the regression analysis. Variables for the study are collected from the CMIE’s prowess data base (release 4). The results of the study have implications, both theoretical and practical, for the field of strategic management and financing decisions of the firm’s in India. If we see manufacturing industry as a whole we find that the strategy of pay-out policy, presence of foreign promoters, R&D intensity, and advertisement intensity has significant positive relationship with firm value. But in case of leverage the study explores the presence negative relationship with firm value. Intensity of employee compensation and directors remuneration as percentage of employee compensation has no significant relation with firm value but at the same time we find that compensation per thousand employees has significant positive relationship with firm value. The study will help practitioners understand the level of impact of each strategy and take appropriate actions to improve the performance.
Published: 31 May 2012
Journal of Banking & Finance, Volume 36, pp 1536-1547; doi:10.1016/j.jbankfin.2011.12.016

We analyze the relation between comprehensive measures of board quality and the cost as well as the non-price terms of bank loans. We show that firms that have higher quality boards with a greater advisory presence borrow at lower interest rates. This relation exists even after controlling for ownership structure, CEO compensation policy, and shareholder protection, as well as the size and financial characteristics of the borrower and of the loan. We also show evidence that board quality and other governance characteristics influence the likelihood that loans have covenant requirements, but the relations differ by covenant type. When we combine the direct and indirect costs of bank loans we find that firms with large, independent, experienced, and diverse boards and lower institutional ownership borrow more cheaply. Overall, the evidence indicates that board quality impacts the cost of bank debt.
Karima Dhaouadi
Corporate Ownership and Control, Volume 9, pp 67-75; doi:10.22495/cocv9i2art5

The study seeks to understand how the firm’s ownership structure and the board of directors’ composition influence the structural capital. The latter is apprehended by two main levers: innovation ("R&D") and firm’s reputation. By mobilizing several panel linear regressions on 274 American firms, the results show that the firms which heavily invest in structural capital are more successful and chaired by the younger and heterogeneous TMT. No disciplinary effect of the board on structural capital has been found. The results support the cognitive theory assumptions. The classic perspective failed to explain the structural capital phenomena. In order to enhance their structural capital, firms must pay a close attention to their board cognitive contribution and not to its disciplinary role.
Mehdi Nekhili, Sabri Boubaker, Faten Lakhal
Published: 1 January 2012
R&D disclosure is a strategic decision directed at investors. However, voluntary R&D disclosure can lead to a higher proprietary cost and may benefit competitors. The main purpose of the present paper is to examine whether voluntary R&D disclosure impacts the firm's market value, and whether it is influenced by ownership structure. Using a sample of 84 French listed firms over the 2000-2004 period, we develop an R&D disclosure index composed of 32 hand-collected items from annual reports. The obtained findings provide some important insights. First, we show that voluntary R&D disclosure improves the market value of equity, suggesting that the benefits from disclosures of R&D activities exceed the disclosure costs. Second, we find that family- and institutional investor-firms are more prone to retain R&D information. Finally, we document that the more French firms invest in R&D, the larger the amount of R&D-related information they disclose. Also, R&D capitalization provides incentives for companies to disseminate more R&D-related information.
Published: 11 September 2011
Asia Pacific Journal of Management, Volume 29, pp 873-905; doi:10.1007/s10490-011-9269-1

The prevalence of ownership concentration in Asian firms presents a challenge to the influential agency theory-based understanding of the role of corporate boards. In this paper we develop and test hypotheses about board attributes and firm performance that reflect Asian institutional conditions. We present the first meta-analysis of the relationship between board attributes and performance of Asian firms using a varied set of meta-analytical techniques on a database of 86 studies covering nine Asian countries. First, we find that board structure and composition preferences are influenced by the identity of the concentrated owner. Second, consistent with US data, we find very limited evidence of a direct relationship between board attributes and firm financial performance in the Asian context. Third, we find that the relationship between board structure and composition and firm performance is mediated by the revealed strategic preferences of Asian firms specifically by the level of R&D investment.
Raoul Minetti, Pierluigi Murro, Monica Paiella
Published: 1 January 2011
This paper tests the impact of firms’ ownership structure on firms’ innovation decisions using a rich dataset of about 20,000 Italian manufacturers. After accounting for its possible endogeneity, we find that ownership concentration negatively affects the probability of innovation, especially by reducing firms’ R&D effort. The analysis reveals that conflicts of interest between large and minority shareholders are a determinant of the negative effect of ownership concentration on innovation. Moreover, risk aversion induced by lack of financial or industrial diversification appears to be an additional source of large shareholders’ reluctance to innovate. Once we distinguish across types of shareholders, we uncover some evidence that families support innovation more than financial institutions, but that the benefits of financial institutions for technological change increase with their equity stakes. Collectively, the findings suggest that innovation is a channel through which agency problems among shareholders influence firm performance. (This abstract was borrowed from another version of this item.)
, Xiaoying Chen, Mark E. Holder
Published: 1 July 2010
Applied Economics, Volume 42, pp 2217-2241; doi:10.1080/00036840701765445

The purpose of this article is to measure the efficiency of pharmaceutical firms and identify their determinants using Korean and American samples from 1992 to 2004. We document some stylized facts in the patterns and sources of efficiency change in Korean and American pharmaceutical firms. The evidence shows that ownership structure can substantially influence the efficiency of pharmaceutical firms. Especially, institutional ownership rate affects corporate efficiencies negatively, corroborating the myopic institutional investor hypothesis. The hypothesis is supported by both Korean and American samples. However, we find evidence that foreign ownership in Korea promotes efficiency of pharmaceutical firms. It is shown that R&D intensity is positively related to contemporaneous largest ownership rate and prior foreign ownership rate in Korean pharmaceutical firms. In contrast, little evidence is found on the relationship between ownership structure and R&D intensity in the American pharmaceutical industry. These empirical results are robust even after we check the causal links among efficiency, R&D and ownership.
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