The Importance of Alliances in Firm Capital Structure Decisions: Evidence from Biotechnology Firms

Building on finance research, we argue that the ex post hazards arising from alliance formation depend upon the firm's financial condition. Financial distress jeopardizes the continuity of an alliance and the value of the investments involved. Thus, firms should reduce leverage to signal continued commitment and to induce investments from alliance partners. Accordingly, we find that a firm's current alliance propensity predicts its subsequent capital structure decisions and that this relationship is most pronounced in the presence of other exchange hazards. Our paper contributes to alliance research and to the growing literature discussing the strategic consequences of capital structure. Copyright © 2015 John Wiley & Sons, Ltd.     

International Variations in Transparency and Capital Structure: Evidence from European Firms

This paper documents the impact of national transparency regimes on corporate capital structure in 14 European countries. After controlling for relevant firm, industry, and national variables, we find that owner-manager agency cost-reducing transparency such as higher levels of analysts following is associated with lower corporate debt levels. In contrast, transparency that reduces owner-creditor agency costs that helps creditors control business risks (and creditors-to-owners wealth transfers), such as disclosure timeliness, institutional trading activities, and enforcement of anti-insider trading laws, are associated with higher corporate debt levels. Among other transparency measures, levels of financial and governance disclosures are negatively associated with debt ratios and higher levels of audit intensity and accounting disclosures are positively associated with debt ratios. Further, transparency factors are more important for large firms and for firms in services and high technology.     

The Effects of Auditor Social and Human Capital on Auditor Compensation: Evidence from the Italian Small Audit Firm Market

Abstract

This study examines whether social and human capital influence the compensation of individual auditors in the small audit firm market. We employ a sample of Italian auditors and use measures from the network and auditing literatures to capture their professional connections, representing social capital, and their industry expertise, representing human capital. Our findings show a positive and economically meaningful association between these individual attributes and auditor compensation. We run several tests to address potential endogeneity issues in our research design. Our results suggest that, in the small audit market, clients perceive as valuable those auditors with higher social and human capital, and as a result, are willing to pay a premium for these specific auditor attributes.     

Strategizing Environmental Policy and Compliance for Firm Economic Sustainability: Evidence from Taiwanese Electronics Firms

This study aims to examine whether the compliance of environmental policies can sustain firm economic performance, and whether a timing issue is relevant to firm economic sustainability in pursuit of eco‐friendly efforts. Offering models predominantly based on the institutional theory, this study tests hypotheses using data from 284 companies in the electronics sector in Taiwan during the period from 1997 to 2010. The findings reveal that the execution of environment policies mostly improves firm economic sustainability and some joint green efforts can even strengthen such sustainability; however, firms aiming to sustain their economic performance should not hasten to undertake eco‐friendly efforts, implying that first movers may not be guaranteed firm economic performance. Thus, managers should carefully strategize their green efforts to comply with environmental policies, and execute them in due course to prevent disadvantages, such as market uncertainty and complexity of green practices, while conquering organizational inertia. Copyright © 2012 John Wiley & Sons, Ltd and ERP Environment     

Vertical Integration,Organizational Governance,and Firm Performance: Evidence from Italian Business Groups

Assuming transaction cost economics as a normative tool, we investigate the relationship between firms' ‘observed’ vertical integration choices and their economic performance. We use a two‐stage methodology: in the first, a measure of governance misalignment is computed as a difference between the governance form (i.e., ownership or outsourcing) predicted by transaction cost economics and the form actually observed; the second stage consists of estimating a performance equation where the misalignment variable is introduced together with a set of independent variables. Compared with previous studies, we introduce two novelties: we use the business group as the unit of analysis to detect the ownership of vertically related productions; we assess the moderating role of geographic agglomeration in reducing the need of vertical integration. Our results confirm the importance of technology and price uncertainty in influencing vertical integration; moreover, the misalignment variable is significant in the case of profitability, but not in the case of growth. Copyright © 2014 John Wiley & Sons, Ltd.     

政治联系、隐性激励与企业价值——以民营企业在职消费为例

以民营企业在职消费为例,考察政治关联如何影响隐性激励及企业价值。研究发现,相对于无政治联系的民营企业,有政治联系的民营企业在职消费更低;民营企业的在职消费对企业价值具有负面影响,而政治联系削弱了在职消费对民营企业价值的负面影响。总体来看,民营企业的政治联系有助于节约企业的交易成本与减少政府的利益侵占,从而提升了企业价值。     

Impact of Environmental Performance on Firm Value for Sustainable Investment: Evidence from Large US Firms

This research examines the impact of environmental performance on firm value, applying the event study methodology to Newsweek’s ‘Green Rankings’ announcement of 2012 for large US firms. Specifically, it analyzes the impact of the absolute green score and green rank of firms on their performance in the stock market. We found that investors perceive the announcement as positive news, leading to significant positive standardized cumulative abnormal returns (SCARs). After controlling for industry‐ and firm‐specific effects, we observed that firms with repeated green rankings for enhancing environmental performance showed significantly higher SCARs than those with either reduced or unchanged environmental performance. In addition, the environmental impact score measuring environmental damage from a firm's operational activities was found to be the most influential factor in improving the firm's value. Our findings are beneficial to managers in allocating resources to different types of environmental initiative, and provide valuable insight for sustainable environmental investment. Copyright © 2014 John Wiley & Sons, Ltd and ERP Environment     

Investment and Capital Structure of Partially Private Regulated Firms

We develop a model that examines the capital structure and investment decisions of regulated firms in a setting that incorporates two key institutional features of the public utilities sector in many countries: firms are partially owned by the state and regulators are not necessarily independent. Among other things, we show that regulated firms issue more debt, invest more, and enjoy higher regulated prices when they face more independent regulators, are more privatized, and when regulators are more pro‐firm. Moreover, regulatory independence, higher degree of privatization, and pro‐firm regulatory climate are associated with higher social welfare.     

企业规模、融资约束与资本结构波动

资本结构波动会改变财务风险和资本成本,是企业价值的重要影响因素,但究竟哪些因素助推资本结构波动还有待于进一步明确。以2003—2012年沪深两市A股上市公司财务数据为依据,通过实证分析揭示企业规模、融资约束对资本结构波动的影响,结果显示:融资约束与企业资本结构波动呈正相关关系;企业规模与资本结构波动呈负相关关系;企业规模扩大能够抵消融资约束对资本结构波动的推动作用;国有企业的规模和融资约束对资本结构波动的影响都小于民营企业。     

Firm Experience and Market Entry by Venture Capital Firms (1962–2004)

In this paper, we examine a firm's decision to enter new markets as related to the depth and breadth of its experience and the relative distance of those markets. We situate our discussion and analysis in the context of the venture capital (VC) industry, and examine whether and when US VC firms enter five high‐technology investment markets through first‐ or later‐round investments. This setting allows us to observe both the firms that chose to enter a new market and those that did not, and analyse the antecedents of these decisions. We find that VC firms overall are less likely to enter distant markets; those with broader experience are more likely to make first‐round entries. In addition, VC firms with deeper investment experience are more likely to make first‐round entries in proximate markets and less likely to enter distant markets and make later‐round entries. These results offer interesting implications for the literature on organizational learning and entrepreneurship.     

Environmental Compliance and Firm Performance: Evidence from China*

This article evaluates the impact of environmental compliance on firms’ innovation and financial performance using a panel dataset of Chinese firms for the period of 2000–5. Our results show certification of the ISO14000 has a significantly positive impact on firms’ profitability. This finding is robust when we take into account possible endogeneity of certification, effects of export and types of customers, and possible precertification time trends. In addition, we find that certified firms have larger per‐worker sales volumes and market shares in the country, which suggests an alternative mechanism for the Porter hypothesis in the context of a developing economy.     

Non-audit Services and Audit Quality: Evidence from Private Firms

The purpose of this study is to examine the relationship between audit quality in private firms and the provision of non-audit services (NAS) – an issue that has rarely been considered in prior research. The threats to auditor independence are different in private firms compared to public firms. The same is true of the opportunities to use the same knowledge for audit and for NAS. Therefore, the effect of the provision of NAS on audit quality is also likely to be different. In this study, audit quality is measured by discretionary accruals, as well as by managers' perceptions of the extent to which the audit improves accounting quality. The regression analysis is based on 420 surveyed private firms in Sweden and suggests that audit quality is positively associated with NAS in general and accounting services in particular. The findings indicate that the joint provision of audit and NAS do not necessarily result in impaired auditor independence, but rather support the existence of knowledge spillover between the services.     

Specialization and Success: Evidence from Venture Capital

This paper examines how organizational structure affects behavior and outcomes, studying the performance of different types of venture capital organizations. We find a strong positive relationship between the degree of specialization by individual venture capitalists at a firm and its success. When the individual investment professionals are highly specialized themselves, the marginal effect of increasing overall firm specialization is much weaker. The poorer performance by generalists appears to be due to both an inefficient allocation of funding across industries and poor selection of investments within industries. Venture capital organizations with more experience tend to outperform those with less experience.     

Value Relevance of Multinationality: Evidence from Korean Firms

The purpose of this study is to examine the valuation effects of multinationality in Korean firms and to identify the role of multinationality in internalization theory. We hypothesize that the market positively values the multinational activities of Korean firms, which are operating in a small open economy in which firms have strong motivations for internationalization. We use Ohlson's (1995, Contemporary Accounting Research, 11, 661) value model and document the positive effect for multinational firms compared to domestic firms, as well as the positive effect of multinationality on firm value. These results are robust across studies, as indicated by Tobin's q measure, as well as across years. We also hypothesize that multinationality mediates or moderates the relationship between intangibility and firm value that is proposed in internalization theory. We do not find supporting evidence for a mediated influence of intangibility through multinationality on firm value nor for a moderated influence of intangibility on firm value. We find that multinationality and intangibility directly and independently influence firm value, without any interference from each other. These results are also robust across studies, as indicated by Tobin's q measure. Finally, we find that multinationality in Korean firms has never lost its importance, even during the global financial crisis in the year 2008.     

Indexation and Wage Change Settlements: Evidence from Spanish Manufacturing Firms

An endogenous switching model of ex-ante wage changes under indexed and non-indexed settlements is estimated for the Spanish manufacturing sector using collective bargaining firm data for the 1984–1991 period. The likelihood of indexing the settlement is higher for nationwide unions than for other union groups within the works council and increases with the expected level of inflation. For wage change equations, a common structure for indexed and non-indexed settlements is strongly rejected, showing a source of nominal rigidity. For indexed contracts, the expected ex-ante total inflation coverage is nearly complete. It is also shown that workers pay a significant ex-ante change premium (differential) to obtain a cost of living allowance clause. However, the realised contingent compensation exceeds such a premium for all industries. Finally, important spillover efffects in wage setting and the decision to index the settlement have been detected.     

Consumption insurance and entrepreneurial risk: Evidence from Italian micro-data

Using cross-sectional data from the Bank of Italy's Survey on Household Income and Wealth, we make an attempt to assess the relevance of entrepreneurial risk, i.e., idiosyncratic risk borne by firm owners while running their operations. Our new testing procedure will show that progressively more articulated forms of entrepreneurship do not enjoy a larger degree of risk sharing and will suggest some links between a larger or smaller degree of consumption insurance and variables such as net wealth, asset holding, and net indebtedness. The opinions expressed in this paper are those of the authors and do not necessarily reflect the views of the corresponding institutions.     

上市公司资本结构与业绩相关性的实证研究

上市公司资本结构与业绩之间存在双向互动的相关关系。现有研究大多都是在一组样本中只选择一个业绩指标来检验上市公司资本结构与业绩之间的单向相关性。本文在同一组样本中选取了包括每股收益、加权平均净资产收益率、主营业务利润率和总资产利润率在内的多个业绩指标同时对上市公司资本结构与业绩的相关性进行双向回归分析,得出了“资本结构与多个业绩指标之间的双向相关关系均为负相关关系”的结论,并在对这个结论产生的原因进行分析的基础上,提出了在优化我国上市公司资本结构的同时提高公司业绩的对策建议。     

Firms,public good provision and institutional uncertainty: Evidence from Russia

Enterprises in post-socialist and transition economies often participate in providing infrastructure and social services to the surrounding community which in the Russian legal setting should be local authorities’ responsibility. We propose that this bundling of social and infrastructure goods provision with firm's core operations is a fully rational choice in an uncertain institutional environment. A unique survey data suggest that this manifests itself through more reliable infrastructure, stronger employee attachment to the firm and, most interestingly, through better relations with the authorities. Relationship with authorities is a two-way game where the firm gains from the arrangement but on the other faces sanctions if it decided to depart from it. Firm's participation in the arrangement is clearly enhanced by inherited fixed capital assets from the Soviet era.