How does working capital management affect the profitability of Spanish SMEs?

This paper analyzes the relation between working capital management and profitability for small and medium-sized enterprises (SMEs) by controlling for unobservable heterogeneity and possible endogeneity. Unlike previous studies, we examine a non-linear relation between these two variables. Our results show that there is a non-monotonic (concave) relationship between working capital level and firm profitability, which indicates that SMEs have an optimal working capital level that maximizes their profitability. In addition, a robustness check of our results confirms that firms?? profitability decreases as they move away from their optimal level.     

INVESTMENT,EMPLOYMENT AND WAGES: A BARGAINING APPROACH

This paper analyzes a three stage game between a firm and its unionized workers. In the first period the firm decides the level of its capital stock. In the second period union and firm bargain over how many workers to hire and the wage rate, then production takes place. In the third stage new production occurs after union and firm have bargained over possible changes in the employment level and wage rate. The hiring of workers is associated with sunk training costs. The main result is that distortions in the use of labor due to sunk training costs induce distortions in the use of capital, even in the absence of sunk investment costs. Because of the strategic impact of investment on later stages of the game, the firm will not equate marginal revenue product and rental cost of capital. Underinvestment or overinvestment will result depending on whether the marginal revenue product of labor is an increasing or decreasing function of capital.     

A Note on Dynamic Optimization,Maintenance Expenditure and Quality of Capital

The dynamic interaction between investment–maintenance decisions and uncertainty about the capital's future productivity status is considered. Maintenance influences the flow of services provided by a stock of capital, affecting the firm's technological knowledge of capital productivity. In a simple Lerner–Haavelmo–Jorgenson framework with constant returns to scale and linear homogeneous cost of adjustment, two closed forms for the firm's market value are presented and the impact of uncertainty on investment–maintenance policy is analyzed. The optimal management strategy uses maintenance to sustain the profitability of existing capital. This smooths out investment fluctuations and lengthens the periods of time in which the firm invests. Nevertheless, since the random movement of quality of capital makes the marginal revenue products of capital decline over time and maintenance cannot offset this tendency, a stochastic switching time emerges at which the firm will find it optimal to stop investing and let the stock deplete.     

Supply Chains,Global Financial Shocks and Firm Behaviour towards Liquidity Needs

Driven by the increasingly important role of supply chains in global production, this paper studies empirical association between global credit‐market shocks and firm behaviour towards liquidity needs across countries and industries. Focusing on the adjustment of working‐capital financing, we find two pieces of supporting evidence from international firm‐level panel data covering the period 2002:I–2012:IV. First, for industries where specific investment in the input supplier–customer relationship is large, firms are more exposed to credit‐market shocks. We find that measures of global credit‐market shocks are negatively associated with trade receivables, trade payables and inventories, conditional on the level of contract intensity in the industries where firms operate. Second, firms in emerging markets are more vulnerable to credit‐market shocks than are firms in developed countries. We are also able to verify the economic significance of sales growth, operating cash flows, cash stock and firm size in the overall adjustment. Our findings highlight the importance of balance‐sheet contagion along supply chains during the 2007–09 global financial crisis.     

Institutional Ownership and Corporate Investment Performance

This paper examines the role of institutional investors in improving firm performance through the channel of corporate investment decisions. We find that the interaction effect between institutional ownership and capital expenditures is significantly related to firm performance. We examine this relationship for different types of institutional investors, and find that investment advisors are most effective monitors in improving firm performance through corporate investment. Moreover, we find that the monitoring role of institutional investors becomes more important when internal governance is weak. Institutional ownership and other forms of corporate governance mechanisms (including CEO incentive compensation and control, shareholder right provisions, and board of director monitoring) operate as substitutes, rather than complements, in improving capital expenditure decisions. Copyright © 2012 ASAC. Published by John Wiley & Sons, Ltd.     

The evolution of inter-organisational social capital with foreign customers: Its direct and interactive effects on SMEs’ foreign performance

Taking a longitudinal approach, we analyze how the evolution of different dimensions of social capital between an SME (Small and Medium enterprise) and its key foreign customers directly influences the firm’s foreign performance growth. Moreover, we utilize a contingency approach by introducing two dyad-specific characteristics into the analysis: psychic and geographic interorganizational distances. Our findings contribute to the international business literature on social capital and suggest that while an investment in social capital with distant foreign customers always reinforces SMEs’ foreign performance development, relational and cognitive social capital have the same positive effects only for low levels of interorganizational psychic distance.     

Rivalry in uncertain export markets: commitment versus flexibility

This paper examines optimal trade policy in a two-period oligopoly model, with a home and a foreign firm choosing capital and output. Demand uncertainty, resolved in period two, gives rise to a trade-off between strategic commitment and flexibility in the firms’ investment decisions. Firms’ investment timing is endogenous and can be manipulated by the home government, which sets a subsidy before firms decide when to invest. We show that when the government wishes to manipulate investment timing, it will choose its policy to deter investment commitment by the home or the foreign firm.     

MODELING THE RELATIONSHIP BETWEEN FIRM IT CAPABILITY,COLLABORATION, AND PERFORMANCE

The development and use of information technology (IT) have been thematic in recent literature. IT has been viewed as an enabler of internal and external firm collaboration, which is the foundation of supply chain management. Firm collaboration and information sharing, in turn, are expected to improve firm performance. A model of the relationship between firm IT capability, internal and external collaboration, and firm performance is proposed and tested, using empirical data. The findings show that firm IT capability directly impacts internal and external collaboration as well as firm performance. This finding has important implications for managers as they evaluate investment in information technologies.     

Exports,firm size,and firm dynamics

This paper explores the relationships between exports, firm size, and firm dynamics. It is based on a unique longitudinal data set collected at the establishment level, covering some 7000 manufacturing German firms. We present stylized facts on exports and firm size, showing that the probability that a firm is an exporter increases with firm size; however, there are many successful exporters among small firms, and non-exporters among larger firms, too, while most of the exports are from the top size groups of firms. An econometric study shows a picture that is consistent with theoretical considerations: The impact of firm size on exports is positive but decreasing, while human capital intensity, domestic market share, and advanced technology all have a positive influence on the export performance of a firm. Firm growth and export performance are positively related, as is expected from a model of a price-discriminating monopolist.     

Access to finance,working capital management and company value: Evidences from Brazilian companies listed on BM&FBOVESPA

In this research, we have analyzed the impact of financial leverage on the relationship between working capital and company value and how financial constraints on access to financing affect this relationship. In addition, we have analyzed the relationship between working capital and company value. Using a sample of Brazilian public companies listed on BM&FBOVESPA from 1995 through 2009, we found evidence for the following conclusions: an extra Real (R$) of investment in working capital is significantly less worth, on average, than an extra Real (R$) of investment in cash; and, on average, increasing the level of working capital at the beginning of a fiscal year reduces company value.     

What a Difference a Year Makes: Time Lag Effect of Information Technology Investment on Firm Performance

How long does it take for a firm to realize the performance benefits of its IT investment? This article explores the time lag effects of IT investment on firm performance. Using longitudinal data of 1421 firm-time observations over a period of six years (1991–1996) as the initial time point of IT investment, we examined time lag effect on firm performance in a five-year time window. The performance data for the sample spans 12 years, from 1989 to 2000. The results demonstrate a strong support for time lag effects on the relationship between IT investment and firm performance. Specifically, our study found that it took an average of approximately three to four years after the year of investment for the firms in our sample to realize the greatest performance benefits. The findings offer useful implications for researchers and managers to better understand the link between IT and firm performance so that they can make wiser decisions to maximize the business value of their investments.     

The role of entrepreneurial capital in building service reputation

This paper uses theories of capital to discuss the impact of non-financial capital on small service firm reputation and performance. As the success of service firms is predicated on the ability to develop relationships and build reputation with key stakeholders, theories of capital provide a relevant conceptual framework for exploring the use of non-financial capital in building such relationships. Drawing on findings from a qualitative study, this paper discusses the economic, human, social, and symbolic capital of a matched-pairs sample of male and female entrepreneurs in the business services sector. The results highlight a relationship between symbolic capital and service reputation. Specifically, the interplay between economic, human, and social capital generates the symbolic capital relevant for service reputation and firm performance.     

公司风险投资组合多元化与公司投资者价值创造——基于分位数回归的实证分析

文章基于沪深主板78家上市企业2000-2012期间686个企业观察样本所构成的非平衡面板数据,在控制了企业规模、年龄、资本支出、营收增长率、行业平均Q值等因素后,基于分位数回归模型检验公司风险投资组合多元化与公司投资者价值创造之间的关系以及组织冗余对两者关系的调节作用。研究发现：只有具备一定企业价值水平的公司投资者才可能通过公司风险投资来实现价值创造,并且公司风险投资组合多元化与企业价值创造之间存在复杂的“U形”关系;组织冗余对“U形”关系有积极的调节作用,但企业价值水平不同,则调节效应大小不同,实现价值创造的公司风险投资组合多元化临界值也就不同。因此,企业根据自身资源禀赋（价值水平和组织冗余）来选择差异化公司风险投资策略。     

R&;D investment and financing constraints of small and medium-sized firms

This study tests for financial constraints on R&D investment and how they differ from capital investment. To identify constraints in the access to external capital, we employ a credit rating index. Our models show that internal constraints, measured by mark-ups, are more decisive for R&D than for capital investment. For external constraints, we find a monotonic relationship between the level of constriction and firm size for both types of investment. Thus, external constraints turn out to be more binding with decreasing firm size. On the contrary, we do not find such monotonic relationships for internal constraints. Differentiation by firms’ age does not support lower constraints for older firms.     

Capital structure and cost efficiency in the Taiwanese banking industry

By utilizing a sample of 44 Taiwanese banks, this study analyses whether banks can mitigate agency costs, to increase firm performance through optimization of capital structure. The stochastic frontier approach is adopted to determine cost efficiency as the firm performance indicator, an approach that is capable of controlling outside environmental factors. Furthermore, this study uses two-stage least squares to estimate two simultaneous equations that are then used to examine the relationship between capital structure and firm performance. This study includes indicators of ownership structure. The main results are: first, optimal capital structure is selected by the manager to combat the agency problem and thus improve performance, yielding results consistent with agency theory; and second, reducing managerial share ownership will decrease agency cost and increase firm performance, a finding that is consistent with the Entrenchment Hypothesis.     

Optimal industrial policy in vertically related markets

This paper examines the optimal industrial policy for an industry with a vertical market structure. A home firm and a foreign firm both import an intermediate good from a third country to produce a final good. How the home country government sets the optimal industrial policy has to take account of both profit shifting between the two final good producers and between the intermediate good producer and the home firm. We explain how the optimal industrial policy depends on the slope of the demand curve, the levels of technology spillover and product differentiation. In particular, there exists a critical level of technology spillover at which investments of the firms are neither strategic substitutes nor complements and the optimal industrial policy is always investment tax.     

Performance, Internationalization, and Firm-specific Advantages of SMEs in a Newly-Industrialized Economy

In light of the lack of empirical evidence regarding issues of internationalization as they affect small and medium-sized enterprises (SMEs) from newly-industrialized economies (NIEs), this study aims to expand the applicability of existent internationalization theories. So far, such theories have largely been developed with MNCs from industrialized economies in mind. In examining a 1996 sample of 1,419 Taiwanese SMEs, we found that the relationship between internationalization and performance could be graphically depicted as one of inverted U-shaped curvilinearity, and that a specific level of internationalization corresponded to maximum profitability. Our empirical findings also confirmed a relationship of U-shaped curvilinearity between advertising investment and performance, indicating that a minimum level of investment is required in order for advertising to be effective. Investments in research and development (R&D) were also shown to be positively associated with firm performance. The external validity of our internationalization theories regarding SMEs from NIEs was generally supported, though some modifications allowing for consideration of the particular context of individual SMEs will ultimately become a necessity.     

Managing the foreign investment portfolio: How industry and governance diversity influence firm performance

Foreign investment has been seen as an important strategy for learning about new technologies and markets. However, the link between the characteristic of a foreign investment portfolio and firm performance has not been examined in detail. Using panel data from 199 Taiwanese firms, this study examines how the foreign investment portfolio in terms of industry and governance diversity influences firm performance. This study finds that governance diversity has an inverse U-shaped relationship to firm performance, whereas industry diversity does not. In addition, this study also finds that their relationships are affected by R&D capability and industry profitability. The empirical findings of our study are useful for firms that invest in emerging economies.     

How outside directors’ human and social capital create value for corporate international investments

Grounded in theories of resource dependence, vicarious and superstitious learning, information processing, and board group literature, this study examines how outside directors’ human and social capital affect the value of corporate foreign direct investments. We employ the event study approach to examine 1210 international investment cases of 836 US firms over a 13-year period. We find significant but distinct non-linear impacts of board members’ human capital (U-shaped effect) and social capital (inverted U-shaped effect). The quality of board capital is also influential, as demonstrated by the effect of directors’ prior foreign investment performance in addition to size and degree of internationalization of interlocked companies. The performance measures of both abnormal announcement returns and operating ROA yield similar results. Our findings highlight the importance of incorporating factors related to board human and social capital for a more comprehensive analysis of the contribution of outside directors to a firm’s international success.     

企业实际所得税率影响因素及其稳定性研究——来自我国A股上市公司的经验证据

本文采用中国非金融类A股1998—2004年425家上市公司合计2975个样本观察值的面板数据,应用随机效应模型,深入研究了影响企业实际所得税税率（ETR）的公司特征因素,在此基础上探讨了税收政策（《他000》）的变动对这些因素的影响。结果表明,上市公司规模、固定资产密度与ETR没有显著性关系;财务杠杆与ETR呈显著性负相关;同时还发现过度雇佣职工会获得地方政府的税收优惠;但盈利能力与股权结构对ETR的影响受税收政策变动的影响,当上市公司普遍享受税收优惠时,它们与ETR呈显著正相关。当税收政策变动后,它们对ETR的影响不再显著,税收的中立性得到体现。