THE EFFECTS OF MUTUAL FUNDS ON M&A COMPENSATION

Motivated by shareholders’ interest in combating executive wealth expropriation through the merger and acqusition (M&A) process, we study how mutual funds influence firm behavior around an acquisition through votes against management proposals. We find that mutual funds reduce the chief executive officer's ability to extract rents during the M&A process by voting against management‐sponsored compensation proposals after the acquisition, thus lowering both excess compensation and increasing pay‐for‐performance sensitivity. Furthermore, mutual fund voting magnifies the impact on negatively performing firms and firms with a larger amount of the mutual fund's holdings in the firm.     

Utilising Accounting and Accountants in the Management of Water Efficiency

This paper explores how five Australian organisations utilised accounting techniques and accountants as they developed an increasing focus on water efficiency during a period of drought. In those cases where top management were responsive to developing community logics that argued for the importance of efforts to maximise water efficiency, non‐accountants found space to experiment with a diversity of decision‐useful accounting initiatives. While initially bypassed, accountants ultimately became important for their ability to link evolving initiatives to core organisational concerns. Alternatively, in those organisations where senior responsiveness to evolving community concerns about water efficiency was limited, accountants dominated from the outset, presiding over a limited range of responses that offered an appearance, but little substance, of change.     

Supply chain finance schemes in the procurement of agricultural products

Product, information, and finance flows are all interrelated within the modern supply chain; thus, it is now more than ever of paramount importance for practitioners to integrate procurement and financial decisions. This challenge is exemplified in many agricultural supply chains, where operational risks are significant and access to capital differs sharply across firms. We study three management tactics that some large food/beverage manufacturers – situated downstream in these chains – have used to meet the challenge: ordinary fixed price contracts (or soft tolling) with direct suppliers, hard tolling and contract farming where the manufacturer intervenes upstream, providing capital, and coordinating procurement decisions. We place these upstream intervention schemes in the theoretical context of supply chain finance (SCF) and model their application to a three-echelon agricultural supply chain. We perform a numerical study in order to understand how the structure of capital constraints in the chain may influence the manufacturer's choice of SCF scheme. The numerical study is based on a business case that reflects the barley–malt supply chain of Heineken N.V. Despite greater coordination opportunities, we show that upstream intervention is not necessarily preferable for the manufacturer. Nevertheless, the preferred SCF scheme can be inferred on the basis of relatively simple characterization of the capital constraints in the supply chain.     

The impact of temporary uses on property prices: the example of food trucks

Food trucks represent a temporary use of vacant or underutilised land. They have been assumed to increase the livability, vibrancy and attractiveness of a neighbourhood. However, no previous study has investigated whether this effect is reflected in property prices within the surrounding neighbourhood. We investigate the impact of a food truck pod on the values of single-family homes nearby. Using a quasi-experimental design, transaction data from Portland, Oregon and a difference-in-difference specification of a spatial regression model, we find that food trucks actually represent a negative externality, and that proximity of a home to food trucks is penalised by homebuyers. The closer a home is to the food trucks, the lower is the sales price. Explanations for this effect include increased parking shortages and trash issues in a neighbourhood due to food truck visitors.     

PRICING DERIVATIVES ON MULTISCALE DIFFUSIONS: AN EIGENFUNCTION EXPANSION APPROACH

Using tools from spectral analysis, singular and regular perturbation theory, we develop a systematic method for analytically computing the approximate price of a large class of derivative‐assets. The payoff of the derivative‐assets may be path‐dependent. In addition, the process underlying the derivatives may exhibit killing (i.e., jump to default) as well as combined local/nonlocal stochastic volatility. The nonlocal component of volatility may be multiscale, in the sense that it may be driven by one fast‐varying and one slow‐varying factor. The flexibility of our modeling framework is contrasted by the simplicity of our method. We reduce the derivative pricing problem to that of solving a single eigenvalue equation. Once the eigenvalue equation is solved, the approximate price of a derivative can be calculated formulaically. To illustrate our method, we calculate the approximate price of three derivative‐assets: a vanilla option on a defaultable stock, a path‐dependent option on a nondefaultable stock, and a bond in a short‐rate model.     

The relationship between multinationality and performance: Knowledge-intensive vs. capital-intensive service micro-multinational enterprises

This research explores the relationship between multinationality and firm performance (M-P) in the context of micro-multinational enterprises (mMNEs) within the service sector. We examine the moderating effects of industry characteristics using a data set of 1082 Spanish service mMNEs over an eight-year period. The empirical results provide statistical evidence that knowledge-intensive service mMNEs exhibit an inverted U-shaped M-P relationship, while capital-intensive service mMNEs present a U-shaped relationship. Our findings demonstrate that knowledge-intensive service mMNEs increase their performance in the initial stage of multinationality, encounter a threshold of internationalization at relatively low levels of multinationality and have a propensity to over-internationalize. By comparison, capital-intensive service mMNEs experience negative performance effects at low levels of multinationality and positive ones as they further internationalize. Given that their operations are scale-sensitive, they tend to expand internationally by concentrating their operations in few foreign markets as a means to overcome the liabilities of internationalization and smallness. We contribute to the literatures on multinationality research in the service sector and on SME internationalization by showing that the effects of multinationality on the performance of mMNEs depend on industry characteristics and that such contextual factors provide a better understanding of the M-P relationship.     

Navigating compromise: How founder authenticity affects venture identification amidst organizational hybridity

Founders of hybrid ventures encounter organizational tensions that can compel compromise in both their organizations' and their own personal values. Such compromises may, in turn, undermine founders' identification with their ventures. In a multi-case study analysis we examine why social entrepreneurs differ in their responses to organizational tensions, both at the firm- and individual-level, and how such differences relate to their venture identification. Specifically, our findings reveal that strategic decisions made in the context of values-based complexity are often accompanied by concerns regarding founder authenticity—that is, judgments about the alignment between founders' actions and the commitments or responsibilities associated with their identities as entrepreneurs. Yet, because founders differ in the basis from which they seek to maintain such alignment, these differences shape both hybridity management and subsequent venture identification. By unpacking such differences, our findings contribute new theory, bridging recent scholarship on founder authenticity with longstanding research on organizational identification and hybrid organizing.