CHALLENGES IN RESEARCHING CORPORATE RESTRUCTURING*

This article reviews research on corporate restructuring by examining representative studies of acquisitions, divestitures and management buyouts. Theoretical arguments used in prior research on these aspects of restructuring are presented and the empirical evidence is reviewed. Three challenges in researching corporate restructuring are identified: trading off theoretical abstraction for institutional detail, defining strategically meaningful research questions, and the pursuit of partial models versus development of a comprehensive theory of restructuring. the conclusion is that theoretical and methodological pluralism are essential for advancement of research on this topic. the article concludes with a call for more research involving institutional detail and linking modes of restructuring to performance.     

公司重组的债权人财富效应研究综述

从公司重组的概念出发,对公司重组的债权人财富效应文献进行了分类和归纳;探讨了公司重组的价值创造效应、财富再分配效应和信号效应,确认了由于样本规模、数据质量、正常收益率的计算方法不同,许多文献得出的结论并不一致,有时甚至相互矛盾;分析了在不同的公司治理体系下,公司重组的债权人财富效应应具有不同的特征。我国是新兴市场国家,企业经营的法律、金融、会计环境在短期内经常发生较大变化,在应用事件研究法分析公司重组的债权人财富效应应予关注。     

Transition matrix models of consumer credit ratings

Although the corporate credit risk literature includes many studies modelling the change in the credit risk of corporate bonds over time, there has been far less analysis of the credit risk for portfolios of consumer loans. However, behavioural scores, which are calculated on a monthly basis by most consumer lenders, are the analogues of ratings in corporate credit risk. Motivated by studies of corporate credit risk, we develop a Markov chain model based on behavioural scores for establishing the credit risk of portfolios of consumer loans. Although such models have been used by lenders to develop models for the Basel Accord, nothing has been published in the literature on them. The model which we suggest differs in many respects from the corporate credit ones based on Markov chains — such as the need for a second order Markov chain, the inclusion of economic variables and the age of the loan. The model is applied using data on a credit card portfolio from a major UK bank.     

An analysis of management buy-out failure

Management but-outs are an important aspect of corporate restructuring. In order to understand their longer-term impact there is a need to examine their effects in recessionary conditions. In this context, the paper analyses the factors which lead to management buy-out failure using both financial and non-financial information. The evidence is consistent with the view that some mechanisms introduced to deal with agency cost problems, particularly management incentives and undertaking restructuring activity in a timely fashion are associated with a lower probability of failure. Excessive leverage and delays in restructuring are associated with a higher probability of failure.     

Measuring Credit Risk of a Bank's Corporate Loan Portfolio Using Advanced Internal Ratings Base Approach

Abstract

The use of technical and advanced approaches in the measurement of credit risk of banks' portfolios has nowadays become a very hot issue. The most recent technical report issued by the Basel Committee in May 2003 has concentrated heavily on the measurement of credit risk using either foundation or advanced Internal Ratings Base (IRB) approaches. This empirical research study attempts to measure credit risk of a bank's corporate loan portfolio, including firms from 10 different Turkish sectors. The monthly observations of the total amount of corporate loans and the total amount of corporate loans at default across various sectors are downloaded from the web page of Central Bank of Turkey (CBT) in a period of 1999-2002. This period covers 47 monthly observations since CBT has captured sectoral corporate loans beginning of 1999. Therefore, the observed sectoral default rates are needed to be simulated to obtain a nicely shaped distribution. Monte Carlo simulation is applied for 1,000 times. Based on the simulated default rates, the expected sectoral default rates are computed. Next, a credit quality rating scale is fitted into sectoral default rates distributions. Finally, the sectoral weights in the whole loan portfolio are multiplied by the expected sectoral default rates matrix, considering cross-sectoral correlations to get the total amount of the bank's credit risk and capital requirement. It is assumed that sectoral monthly default rates are a good representative of the default risk of a sample bank's corporate loan portfolio since no publicly available data on any particular bank's corporate loan portfolio composition exists. Nevertheless, this research may be a good application for measuring the credit risk of banks' corporate loan portfolios using advanced IRB approach.     

Post‐Reunification Restructuring and Corporate Re‐bundling in the Bitterfeld‐Wolfen Chemical Industry,East Germany

While earlier research has shown that regional restructuring after reunification has led to broad de‐industrialization processes in eastern Germany's chemical industry, this article focuses on how re‐bundling processes at the corporate level have stimulated adjustments to the changing economic and political environment leading to a renewed regional development trajectory. The analysis is based on a conceptualization that assesses diachronic processes of rupture and re‐bundling by applying a bottom‐up perspective of how corporate adjustments and restructuring processes generate re‐bundling types that manifest themselves in broader regional re‐bundling scenarios. The empirical analysis focuses on a qualitative case study of Bitterfeld‐Wolfen, the eastern region with the largest chemical industry. The research provides evidence that, although new firm formation has remained weak and acquisitions of chemical multinationals have generated structures only tenuously embedded in the regional economy, modernization and re‐bundling process have contributed to a renewed, smaller yet stable, regional chemical industry. The analysis further shows that the associated processes depended on the roles of individual industrial leaders in the region, who acted as network builders, mobilized joint action and stimulated the development of a collective regional spirit.     

The concept of psychological capital: a comprehensive review

In this paper, we provide a comprehensive view on the concept of psychological capital (PsyCap) and develop an agenda for future research. PsyCap describes an individual’s psychological capacity that can be measured, developed, and managed for performance improvement. The higher-order construct comprises the psychological resources self-efficacy, hope, optimism, and resilience, and has been linked with a range of desirable work attitudes, behaviors, and other outcomes. By analyzing and structuring the existing literature on PsyCap, we identified several research gaps that require further analysis. In particular, we encourage researchers to expand the research on the effects of PsyCap to other workplace-related domains, especially the field of strategic decision-making, we call for researchers to further study the relationship between emotions and PsyCap, and we suggest to analyze the effects of PsyCap in the context of strategic human resources management. Also, future studies should establish transparency on the interaction between organizational change processes and PsyCap as well as the relative importance of the four components of PsyCap. We close by discussing the implications of our findings for corporate practice, such as employee selection and development.     

Corporate identity: What does it mean for museums?

In the commercial sector it is recognised that corporate identity is highly significant not only in differentiating an organisation, but also for its long-term survival. However, no substantial research has previously been undertaken investigating corporate identity in the nonprofit sector. This paper outlines an investigation into the current practice of corporate identity management in museums. A number of distinct elements are identified, which are not adequately addressed by the commercially orientated corporate identity literature. The implications of these issues are considered, and some suggestions made for future corporate identity management activities in the nonprofit sector.     

Clarifying the domains of corporate entrepreneurship

While there is a broadly held belief in the need for and inherent value of entrepreneurial action on the part of established organizations, much remains to be revealed about how corporate entrepreneurship (CE) is defined in organizational settings. Fortunately, knowledge accumulation on the topic has been occurring at a rapid rate and many of the elements essential to constructing a theoretically grounded understanding of CE can be readily identified from the extant literature. Corporate entrepreneurship may possess the critical components needed for the future productivity of global organizations. However, it is a far reaching concept that encompasses differing aspects and as research continues to increase in this field a stronger perspective of what constitutes corporate entrepreneurship needs to be examined. Our purpose in this article is to outline the various domains that currently exist in the research arena of corporate entrepreneurship. Exploring these domains and gaining a sharper focus on the corporate entrepreneurship process may be a most important step for scholars interested in moving the field forward.     

Europe 1992 revisited: Assessing the Net Benefit for the UK

Calendar time has passed the 31.12.1992 deadline for completion of the EC internal market and although a voluminous body of literature has accumulated over recent years, the predictive assessment of the economic consequences of the Single European Market cannot be considered as a settled issue. The widely quoted estimates of the welfare gains from ‘Europe 1992’ suggested in the Cecchini Report of the European Commission have failed to find the unanimous approval of the economics profession. The controversial academic discourse concerning the validity of these estimates has at least shown the need for further research in this direction. Moreover, in the face of the envisaged establishment of the Single European Area, which extends the internal market regime to the EFTA group, as well as in view of the imminent EC membership applications by several Community neighbours, the refinement of the tools for the analysis of further European integration retains a high ranking on the research agenda for future years. As a contribution to the ongoing exploration of the economics of the Single Market, this article summarises the main results of a recently concluded London Business School research project to quantify the net gains from completing the EC internal market for the UK. The analytical approach adopted for the purpose is an applied computable general equilibrium (CGE) model which incorporates recent advances in international trade theory by allowing for the presence of imperfect competition, intra-industry product differentiation and economies of scale. The approach overcomes various shortcomings of previous evaluations of regional integration programmes. The quantitative results suggest in particular that the UK is a net winner of the Single Market programme, yet the aggregate welfare gain remains well below 0.5 per cent of benchmark GDP. The analysis furthermore indicates that the long-tern industrial restructuring processes induced by the programme are likely to be far more moderate than is widely believed.     

Researching Public Sector Change

This article highlights the importance of taking a gendered perspective for the understanding of new public manage-ment and the restructuring of public services. Significant changes havetaken place in the management structure and processes of public sector organizations throughout the decade, with work-forces being redefined and reconstitu-ted. Relatively little research work has examined the gendered implications of such change and the way in which pro-cesses of redefinition are negotiated, accepted or resisted by male and female professionals. A conceptual framework for future research is presented which is informed by three separate research literatures: the feminization thesis, developments in HRM and marketiza-tion and managerialism. The article con-cludes by emphasizing the importance of a more inclusive and gendered view of restructuring agendas. A theoretical framework is proposed that accommo-dates difference and agency in the restructuring process as a way forward in analysing public sector change.     

Family Business Restructuring: A Review and Research Agenda

Although business restructuring occurs frequently and it is important for the prosperity of family firms across generations, research on family firms has largely evolved separately from research on business restructuring. This is a missed opportunity, since the two domains are complementary, and understanding the context, process, content, and outcome dimensions is relevant to both research streams. We address this by examining the intersection between research on business restructuring and family firms to improve our knowledge of each area and inform future research. To achieve this goal, we review and organize research across different dimensions to create an integrative framework. Building on current research, we focus on 88 studies at the intersection of family firm and business restructuring research to develop a model that identifies research needs and suggests directions for future research.     

Matching managers to strategies: Point and counterpoint

In recent years, an emerging and increasingly popular theme in the strategic management literature has been that the selection of general managers should be tied directly to the strategies of business units they will oversee. Because different strategies imply different priorities and the need for different skills, such a proposition has obvious intuitive appeal. Beyond intuitive appeal and supporting conceptual arguments, recent empirical research on whether matching general managers to strategies “pays off” in terms of more effective strategy implementation has also yielded positive results. Despite this evidence, several arguments exist for why it may not always be feasible, necessary, or desirable to match general managers to strategies. Thus, there is need for a point-counterpoint “debate” on the subject of matching general managers to strategies. Based on a review of the relvant literature, logical reasoning, as well as some case evidence, this paper is intended to be such a debate undertaken by the author with himself. It is hoped that such a dialectical analysis will open up new avenues for productive research and also enable corporate executives to make better “managerial selection” decisions.     

Multinational Companies and Human Resource Management: an Overview of Research Issues1

Anthony Ferner, who is Principal Research Fellow in the Industrial Relations Research Unit at the University of Warwick, uses a wide range of literature and recent empirical research to examine the consequences for HRM of central facets of multinational companies – corporate structure and strategy, country of operation and country of origin. How, for example, do they impact on the degree of cross-national coordination of human resource policies? Are there distinct ‘national’ cultures that infuse these policies? How does ‘corporate culture’ interact with national management cultures of ‘host’ countries? In considering the implications of the discussion for a future research agenda, he emphasises the need to redress the overwhelming concentration in the existing literature on US and Japanese companies.     

Exploring the landscape of corporate venture capital: a systematic review of the entrepreneurial and finance literature

The influence of corporate venture capital (CVC) investments within the venture capital industry, that is, equity stakes in high technology ventures, has stimulated the academic literature on this specific research area. Generally, CVC is strongly associated with the concept of corporate venturing and plays a vital role in the strategic renewal of established companies. Owing to the multifaceted nature of the CVC phenomenon, the existing literature is rather fragmented. Therefore, the purpose of this article is twofold: first, bibliographic coupling is introduced to the field of CVC to reveal the underlying structure of the current research front. Second, a content-related review is conducted to shed light on nascent research streams and shortcomings within the CVC literature that indicate promising avenues for future research. The systematic review of a comprehensive set of 65 articles reveals that the prevailing CVC literature is mainly driven by two dominant logics, management and finance, that tend to separate themselves from one another. Moreover, nascent research streams are identified that will broaden and enrich the academic discussion.     

Effects of decision interval on optimal intertemporal portfolios with serially correlated returns

This paper considers portfolio choice when decisions are made for several future time periods all at once. The risky asset share sequence must be precommitted for the entire decision interval, either constrained (as in Samuelson (1991)) or not constrained (as in Balvers and Mitchell (2000)) to be constant across time periods within the interval. For a broad, plausible class of dynamic returns processes, contrary to Samuelson, under log utility the decisions for the more distant future are more conservative. This class is exemplified by autocorrelated ARMA(p,q) processes and finite-state Markov processes. The source of Samuelson’s contrary result is elucidated.     

Innovation ecosystems as a service: Exploring the dynamics between corporates & start-ups in the context of a corporate coworking space

The desire to create innovative organizational spaces has led to various instantiations of innovation ecosystems. Towards this direction, there is a growing interest in establishing corporate innovation ecosystems in the form of ‘corporate coworking spaces’ (CWS). From a relational ontological standpoint, this study builds on the collaborative spaces literature with the aim to investigate the emerging dynamics between corporates and start-ups in an innovation ecosystem. Through an abductive research strategy (ARS) as well as service design methods, we explore how co-creation between corporates and start-ups emerges (or not) in an innovation ecosystem that serves as a collaborative space in Denmark. Our empirical findings challenge the mostly overenthusiastic connotations and thus the study contributes to the critical coworking research stream. More specifically, we give emphasis on the co-constructive entanglement of socio-spatial arrangements and we propose a framework for revisiting the design of CWS through 1) balancing the engineered and evolving parts of the ecosystem, 2) facilitating stakeholder alignment, 3) adopting a service-oriented approach and 4) developing inclusive strategies. Apart from the implications for scholars and practitioners who study and design CWS, we argue that future research would especially benefit from building on a service-oriented approach of innovation ecosystems and we call for more interdisciplinary research.     

An analytical approach for making management decisions concerning corporate restructuring

Internal corporate restructuring activities, such as downsizing, sale or termination of a business line, facility closure, consolidation, or relocation, often occur as part of managerial strategies intended to improve efficiency, control costs, and adapt to an ever‐changing business environment. Such actions frequently result in fundamental changes in a business's organization, its strategies, its systems, and its operations. They can unsettle a business and often significantly affect current and future earnings and cash flows. In this paper we propose a novel decision‐making model through the use of the dynamic programming technique to illustrate how management can determine the optimal timing and appropriate restructuring actions that maximize the benefits of a restructuring program. Copyright © 2006 John Wiley & Sons, Ltd.     

Asset allocation with contagion and explicit bankruptcy procedures

In this paper, we consider the asset allocation problem of an investor allocating his funds between several corporate bonds and a money market account. In particular, we provide a realistic model of financial distress: firstly, we model Chapter 7 and Chapter 11 bankruptcies as different possible outcomes of financial distress. Secondly, we take into consideration that, in practice, “default” is not the end, but the beginning of financial distress, eventually leading to a reorganization or a liquidation of a distressed firm. Thirdly and most importantly, we are able to analyze the impact of contagion on an investor’s demand for corporate bonds. Contagion is an important phenomenon, as it reduces the investor’s ability to diversify his portfolio, and we show that the bond demand can change by more than 50%.     

Corporate Governance und Unternehmenswerteffekte bei Leveraged Buyouts – State of the Art der empirischen Forschung

This state-of-the-art paper systematizes and discusses the results of numerous empirical studies that deal with the effects of corporate governance on the value of leveraged buyouts. Moreover, additional need for research is derived. The article shows that leveraged buyouts share three common characteristics: significant management participation, the use of debt to discipline the management, and intensive monitoring of the private equity firm. Positive wealth effects through leveraged buyouts are beneficial for both the previous owners and the private equity firm. The studies yield evidence that the specific corporate governance of leveraged buyouts contributes to these positive value effects. Studies on reverse leveraged buyouts provide further evidence for this stream of thought. Main areas for future research comprise methodological issues of measuring wealth effects, its link to corporate governance in leveraged buyouts and the different types of buyouts. Alternative explanations of the wealth development as well as macroeconomic effects constitute further avenues for future research.