Is it All About Money? – Affective Commitment and the Difference Between Family and Non‐family Sellers in Buyouts

In this paper we investigate private equity firm perceptions of sellers’ affective deal commitment in buyout transactions. Using a sample of 174 buyouts, we test trust, goal congruence and private equity reputation as potential antecedents of perceived deal commitment. We also examine whether and how different types of sellers, family versus non‐family firms, moderate sources of perceived affective deal commitment. In sum, we find evidence that non‐financial factors play a role in buyouts, particularly for family firm sellers.     

The Bind that Ties: Socioemotional Wealth Preservation in Family Firms

A growing body of research shows that family firms are different from other organizations in significant ways. In this paper we review this literature by examining how family firms differ from nonfamily firms along five broad categories of managerial decisions. These categories encompass a set of key organizational choices concerning management processes, firm strategies, corporate governance, stakeholder relations and business venturing. We argue that socioemotional wealth or affective endowment of family owners explain many of these choices. We also examine some contingency factors (namely family stage, firm size, firm hazard, and the presence of nonfamily shareholders) that moderate the influence of socioemotional wealth preservation as a point of reference when making managerial decisions in family firms. Lastly, we explore the firm performance consequences of family ownership.     

管理者关系特性对海外子公司知识获取及公司绩效的影响研究

基于组织学习理论和社会资本理论,考察了管理者关系特性对海外子公司内外部网络知识获取和企业绩效的影响。研究结果显示,母子公司管理者之间的信任和沟通频率对获取母公司知识有正向影响,海外子公司管理者和本地重要企业管理者之间的信任对获取本地商务知识有正向影响,海外子公司管理者和本地政府主要负责人之间的私人关系对获取本地制度知识有显著影响。此外,本地制度知识在母公司知识对海外子公司绩效的影响中起正向调节作用,本地商务知识起负向调节作用。     

Management Perceptions of Market Liberalization

Previous studies, examining the impact of market liberalization in the emerging nations, at the level of the firm, included analyses of whether newly privatized state-enterprises financially perform better than they did before privatization. The impact of changes in the liberalized economic environment on companies that have been operating in the private sector has received scant attention. Recognizing that management control of smaller and medium-sized firms in emerging nations remains in the hands of the founders, or the founders' family members, this paper reports the findings of a survey from a region in India focusing on managerial perceptions of performance at the company-level and the manufacturing-level. The statistical results suggest that market liberalization is perceived as having a positive impact at the company-level. This revised version was published online in July 2006 with corrections to the Cover Date.     

Hedging and accounting-based RPE contracts for powerful CEOs

Several firms prohibit their CEOs from trading in the stock of peer firms. This is puzzling since hedging by the CEO through private trading in the capital market can reduce the CEO’s exposure to systematic compensation risk. When the CEO’s incentive contract comprises relative performance evaluation, we find that the firm might want to disallow private hedging even though there are no technological interdependencies or strategic interactions to peer firms. In the analysis, we highlight two frequently observed characteristics of incentive contracts. First, the use of accounting benchmarks is widespread in compensation contracts for CEOs. Second, empirical and anecdotal evidence suggests that powerful CEOs have influence on the process of designing their own compensation. We find that in the presence of a powerful CEO, the firm can benefit from disallowing private hedging. In particular, the firm’s decision to allow or to disallow private hedging depends on the characteristics of the accounting benchmarks and the characteristics of the peer firms.     

Determinanten der Vorstandsvergütung

Using a novel, hand-collected data set covering all German non-financial firms listed in the Prime Standard of FWB (Frankfurt Stock Exchange), we examine determinants of executive compensation in German listed firms. We distinguish three potential determinants: firm characteristics, firm performance, and corporate governance characteristics. While we find that simple firm characteristics like size and industry affiliation together with time effects explain more than 60 % of variation in overall compensation, performance characteristics are economically inconsequential for the explanation of compensation levels. When we distinguish between widely held firms and firms with a large blockholder, we find that the latter grant compensation packages that are smaller, less sensitive to the firm’s stock market performance but more sensitive to the firm’s operating performance. Finally, we confirm that supervisory board characteristics also affect the level of executive compensation in German firms. Overall, our findings suggest that although the corporate governance environment in Germany has changed dramatically during the last decade, German listed firms are still exposed to high agency costs.     

Dual-class shares,external financing needs,and firm performance

Whereas the agency theory predicts that dual-class shares decrease firm performance, the stewardship theory predicts that dual-class shares increase firm performance. The cumulative findings on the performance consequences of dual-class shares have been weak and/or inconclusive. Because endogeneity is a constant challenge in empirical corporate governance studies, this study uses a unique law change in Switzerland as a source of exogenous variation in the fraction of firms with dual-class shares. Controlling for firm fixed effects and time-varying confounders, we find that dual-class shares neither harm nor benefit firm performance on average. However, dual-class shares increase firm performance if the firm requires external finance and dual-class shares decrease firm performance if the firm does not require external finance. External financing needs mitigate the agency costs between controlling and minority shareholders and create a context in which dual-class shares facilitate firm-specific investments instead of private perquisites. The study’s results have both managerial and policy implications.     

政府治理、产权偏好与资本投资

本文从投资机会和融资约束视角分析了地方政府治理水平影响企业投资行为的机制,认为地方政府通过提供高质量的公共治理水平,帮助企业获得更多的投资机会和融资渠道,扩大企业投资规模,提高投资效率。以我国2005-2007年间上市公司为研究样本,本文实证检验的结果表明,较高的地方政府治理水平会提高公司的资本投资规模;政府治理影响企业资本投资与投资机会的敏感度在民营企业中更为显著,政府治理对国有企业资本投资的影响随着实际控制人的行政级别提高而降低。进一步研究发现,政府治理能够降低企业的融资约束,提高企业投资效率。     

The impact of family CEO’s ownership and the moderating effect of the second largest owner in private family firms

This study explores two ownership issues in private family firms. First, we investigate the relationship between the ownership of family CEOs and firm performance, and postulate that this relationship in private family firms is more complex than the inverted “U” relationship found in public family firms. Second, we predict a potential moderating effect of the second largest owner, who may exert a monitoring role on family CEOs. We focus on private family firms as recent studies show that private family firms have distinct features compared to public family firms, and that findings documented in public family firms may not apply to the ubiquitous, but much less studied, private family firms. We have applied agency theory to develop the two hypotheses, used secondary data on a large sample of private family firms, utilized an adjusted conventional quadratic technique to test the hypotheses, and validated the findings using a second method of piecewise linear specification. The results show that the non-linear relationship between the ownership of family CEOs and firm performance is more complicated than the often-documented inverted “U” shape from public firms. Meanwhile, the second largest owner with a high enough ownership stake can impose a positive moderating effect by mitigating potential agency problems caused by family CEOs.     

制度变迁、国家控股与股权激励

本文在代理理论的框架下,基于中国国有企业与制度变迁背景,就经理人股权激励与公司价值关系进行分析,并以2001-2006年宣告实施股权激励国有上市公司为样本,实证检验了股权激励对公司价值的改善作用。结果发现,对国有企业的经理人实行股权激励能提高公司价值,受地方政府控制的公司,股权激励更能明显增加公司价值。并且,股权分置改革这种制度变迁进一步改进了原有的激励效果。上述研究发现为理解国有企业治理机制的改善、资本市场改革提供了一个有益的视角。     

Climate change,consumer lifestyles and legitimation strategies of sustainability-oriented firms

This study explores the links between climate change, consumer lifestyles, and legitimation strategies of sustainable firms. Our findings offer new insight into this under-researched area based on qualitative case studies of four Nordic firms operating in industrial and consumer contexts. We find that climate change consciousness is a major driver for all case firms’ sustainability-focused operations, but the dynamics differed. Achieving sociopolitical legitimacy emerges as an important factor for the case firms operating in the energy sector, especially as it connects to government incentives and regulative pressures. However, cognitive legitimacy is increasingly important for them also, and the firms are trying to connect to their consumers’ lifestyles as well. In turn, for the case firms operating in the consumer (clothing) industry, functionality and the use of products are highlighted even though cognitive legitimacy based on linking to their consumers’ lifestyle is visible. Finally, the findings reveal that despite the sustainable lifestyles are increasingly important and better recognized in firm strategies and practices, other practicalities of running the business successfully in a highly competitive marketplace are relevant. Building legitimacy in such a way that captures and justifies different approaches, therefore, emerges as the connecting factor between the changing consumer behavior and pro-environmental firm practices.     

The military imprint: The effect of executives’ military experience on firm pollution and environmental innovation

This study focuses on military experienced executives (CEO and chairman) and their effect on two types of firm environmental strategy: firm pollution and environmental innovation. From the perspective of imprinting theory, we find that executives with military imprint, which, so we argue, instills a sense of following rules and stewardship for the collective, negatively relate to firm pollution and positively relate to firm environmental innovation. The strength of military imprint at its formation is shaped by whether focal executives had a military officer rank. In addition, working in an environment with strong pro-military culture sustains and even strengthens the military imprint. Analyses of data from 6,664 firm-year observations of heavily polluting industries from Chinese listed firms between 2013 and 2017 largely support our hypotheses (see Table 4 for overview of various tests). Overall, our efforts of extending imprinting theory to leadership literature suggest that the imprinting effect of military experience persists in executives’ decision-making processes. Furthermore, this study contributes to imprinting research by emphasizing the importance of considering imprint formation and imprint persistence.     

Entrenchment in publicly traded family firms: Evidence from the S&P 500

Family involvement in corporate governance through ownership, management, and board membership presents a unique dilemma for understanding the strategic impetus and costs of entrenchment decisions. The presence of shared family ties and the family-centered goals of firm principals call to question the applicability of extant agency arguments regarding the nature and antecedents of managerial entrenchment. Exploring this, we develop and test a model of family firm-specific determinants (i.e., family ownership and family's involvement in management and governance) of entrenchment in publicly traded firms by drawing upon principal-principal agency theory. Findings of the empirical analysis of family owned S&P 500 firms suggest family firms are motivated to entrench managers when doing so supports the pursuit of family-centric goals. However, the extent to which entrenchment supports such goals varies at different levels of family ownership.     

The interaction between stock prices and corporate investment: is Europe different?

I find limited evidence of firm learning from stock prices in Europe and uncover multifaceted complementarities between firm informational and operating environments in determining investment sensitivity to stock prices. Specifically, European firms seemingly do not shift away from their own (peer) stock prices even in instances in which their peers’ (own) stock prices become relatively more informative about firms’ fundamentals. This is consistent with European managers adopting more conservative strategies relative to their U.S.-based peers, and stock prices being less revealing in Europe than in the U.S. Furthermore, while a firm may attach equal weight to both its own stock prices and peer price innovations when peer firms are relatively smaller, investment responds more positively to peers’ price shocks than to that firm’s own stock prices when peers are relatively larger. Interestingly, investment sensitivity to peers’ stock prices decreases in peers’ market share, operating performance, and capital intensity. The decrease is accentuated when peer firms have more informative stock prices and are industry leaders or more capital intensive, thereby signaling perceived reduced growth opportunities. Broadly, these results imply that the specifics of the interaction between stock prices and firm behavior in the U.S. do not necessarily generalize to Europe. More important, these different learning patterns are partly attributable to differences in the amount of internal information, which in turn depends on country-level institutional infrastructures.     

Board size and firm value: evidence from Australia

We study the effect of board size on firm value in Australia. Using a large sample of Australian firms over the period 2001–2011, we find strong evidence of a negative relationship. We show that firms with a large board are associated with CEO compensation that is sensitive to firm size, but not to firm performance. This incentive to accumulate assets is congruent with the fact that firms with a large board also exhibit lower operating performance and higher operating costs. Furthermore, we find that the effect of board size is stronger in small firms. This result might explain why earlier studies, which focused on large Australian firms, found board size to have little impact on firm value.     

The moderating effect of foreign direct investment intensity on local firms' intangible resources investment and performance implications: A case from China

Foreign direct investment (FDI) has been known to generate positive externalities to increase the productivity and competitiveness of domestic industries through knowledge and technology spillover. This study focuses on the indirect effect of FDI by investigating whether FDI intensity benefits local firms by enhancing the local intellectual property rights (IPR) environment. We argue that due to the inadequate IPR environment in emerging economies, local firms' intangible resources investment can be negatively related to firm performance. Further, we suggest that FDI intensity can improve the local IPR environment, thereby enhancing the appropriability of local firms' intangible resources investment. We find empirical evidence to support our arguments by examining 70 semiconductor firms in China from 1999 to 2006, and we discuss the theoretical and practical implications of the impact of FDI intensity on the local IPR environment.     

Network Positions and the Probability of Being Acquired: An Empirical Analysis in the Biopharmaceutical Industry

This paper examines the relationship between the firm's direct ties, its inter‐firm network prominence and its likelihood of being acquired. The authors argue that firm's direct ties and prominence enhance the firm's visibility and signal its quality – and thus foster the firm's likelihood of being acquired. However, higher levels of direct ties and prominence, by providing access to resources and the firm's status, respectively, increase the firm's ability to remain independent and thus reduce its likelihood of being acquired. Thus, the authors posit the overall relation as an inverted U‐shaped. Furthermore, they show that, for firms that undergo an initial public offering, the aforementioned relation becomes much weaker. The hypotheses are empirically tested in the biopharmaceutical industry and important theoretical and managerial implications are discussed.     

The ISO 9000 international quality registration: An empirical analysis of implications for business firms

The purpose of this article is to explore managerial perceptions of ISO 9000 standards. Previous surveys found general agreement that ISO 9000 registration influenced supplier selection, improved customer satisfaction, and enhanced operating efficiency. The present survey of production managers in 212 U.S. locations gathered data related to the perceived impact of registration on their businesses. Data analysis suggests strong agreement with benefits provided by improved documentation, the use of ISO 9000 as a marketing tool and greater export potential as a result of implementing these standards. Respondents did not agree that ISO 9000 provides positive benefits in product development or reduces production time. Annual sales were included to determine if there is a difference in perceived impacts based on firm size. Managers of smaller firms held a stronger belief that ISO 9000 registration results in cost reduction and increases export potential than did large firm managers. Small firms with less well developed export connections may find ISO 9000 registration useful in helping to establish a reputation that will help make the necessary connections in the export markets. The improvements in documentation of products and process may highlight areas of potential production efficiencies and possible cost reductions.     

Managerial incentive, organizational slack, and performance: empirical analysis of Japanese firms’ behavior

The main purpose of this study is to investigate how organizational slack is created and how it affects a firm’s performance. To address these questions, we construct three equations: managerial incentive function, organizational slack formation function and performance function, and we apply 3SLS simultaneously to these functions by using the data sets of 2,791 Japanese firms from the years 2001 and 2006. From the empirical analysis of these Japanese firms, we obtain the following results: a firm’s performance declines as organizational slack increases; organizational slack is affected by annual change rate of revenues but not by managerial incentive; managerial incentive decreases as a firm’s performance improves while it increases as the structure of corporate governance is strengthened.     

强关系与弱关系: 企业成长的社会关系依赖研究

将企业成长问题与资源依赖理论、社会关系理论相联系,认为社会关系可以为企业成长提供一定的社会资源基础.在理论界已有的"弱关系的力量"和"强关系的力量"假设基础上,提出了强弱关系均是企业成长可以依赖的重要社会关系类型,以及强弱关系重要性受限于企业的结构约束因素和组织因素的影响的假设.基于250个企业样本的实证统计分析结果支持了这些假设.