Multiple board appointments and firm performance in emerging economies: Evidence from India

This paper extends the literature on multiple directorships, busy directors and firm performance by providing evidence from an emerging economy, India, where the incidence of multiple directorships is high. Using a sample of 500 large firms and a measure of “busyness” that is more general in its applicability, we find multiple directorships by independent directors to correlate positively with firm value. Independent directors with multiple positions are also found to attend more board meetings and are more likely to be present in a company's annual general meeting. These findings are largely in contrast to the existing evidence from the US studies and lend support to the “quality hypothesis” that busy outside directors are likely to be better directors, and the “resource dependency hypothesis” that multiple directors may be better networked thereby helping the company to establish more linkages with its external environment. Multiple directorships by inside directors are, however, negatively related to firm performance. Our results suggest that the institutional specificities of emerging economies like India could work in favor of sustaining high levels of multiple directorships for independent directors without necessarily impairing the quality of corporate governance.     

Debt and corporate governance in emerging economiesEvidence from India1

We analyze the role of debt in corporate governance with respect to a large emerging economy, India, where debt has been an important source of external finance. Using cross‐sectional data on listed manufacturing firms we estimate, simultaneously, the relation between Tobin's Q and leverage for three years, 1996, 2000 and 2003. Our analysis indicates that while in the early years of institutional change, debt did not have any disciplinary effect on either standalone or group affiliated firms, the disciplinary effect appeared in the later years as institutions became more market oriented. We also find limited evidence of debt being used as an expropriation mechanism in group firms that are more vulnerable to such expropriation. In general, our results highlight the role of ownership structures and institutions in debt governance.     

Determinants of employees’ attitudes toward union membership in India

Drawing on data from a survey of 252 unionized full-time employees from large Indian organizations, this study examined whether individual level job related variables and individual cultural value dimensions of individualism–collectivism (I–C) were predictive of employees’ attitudes toward union membership. Using regression analysis, the author found that over and above the effects of demographic and job-related variables, work situation dissatisfaction and perceived work stress were able to predict union attitudes significantly and positively for the sample. The relationship of union attitude was highly significant and negative with a consultative managerial style. Collectivism was able to predict the union attitudes positively, whereas individualism was negatively related to the union attitudes. The interaction between employees’ perceived work stress and work situation dissatisfaction are found to have a positive influence on their union attitudes. The results and implications of findings are discussed in the paper with reference to the literature on role of cultural dimensions (I–C) and job related factors in relation to organizational outcomes like union membership.     

Can tax convexity be ignored in corporate financing decisions?

The standard modeling practice in corporate finance has been to assume a linear tax schedule. This paper extends the structural contingent-claim model of corporate finance to incorporate a more realistic convex tax schedule. It is shown that tax convexity raises the optimal default boundary and thus increases the likelihood of default, and also reduces the optimal leverage ratio. While the former effect seems insignificant in general, the effect of tax convexity on the optimal leverage ratio can be quantitatively significant. We conclude that tax convexity should not be ignored in corporate financing decisions, and theoretical models should use a convex tax schedule instead of a linear one. Thus, the short answer to the question in the title is “No”.     

Risk–Return Profiles of Islamic Equities and Commodity Portfolios in Different Market Conditions

Motivated by the recent phenomenal growth in Islamic finance and the financialization of commodities, this study makes an initial attempt to investigate the risk–return profiles of optimized portfolios combining (a) Islamic equities with commodities and (b) conventional equities with commodities during the crises and noncrises periods. The findings tend to indicate that Islamic equity–commodity portfolios provide relatively higher diversification benefits than the conventional equity–commodity portfolios during the 1997 Asian Financial Crisis triggered by the financial sector compared to the 2008 global financial crisis triggered by the real housing sector. The findings further suggest that except for a few cases, commodities in general and gold in particular improve diversification benefits.     

Empirical Evidence on Corporate Risk‐Shifting

We study empirically whether nonfinancial firms’ behavior is consistent with systematic risk‐shifting. We compare firms’ operating risk before and after a debt issue, under the assumption that if there is any risk‐shifting it is most likely to occur right after a debt issue. We document a significant increase in firms’ operating risk, even after adjusting for industry influences. The risk‐shifting is higher for firms with no subsequent debt issues, and for firms with lower credit ratings. Other determinants are earnings volatility, size of debt issue, and whether the bond is callable.     

Does host-country education mitigate immigrant inefficiency? Evidence from earnings of Australian university graduates

Imperfect transferability of skills remains a dominant argument in explaining lower earnings of immigrants. Acquisition of host-country education plays a c     

Uncorking knowledge- purposeful spillovers as a strategic tool for capability enhancement in the cork industry

There is a growing body of research linking knowledge spillovers to strategic entrepreneurship in multiple contexts, yet the existence of purposeful spillovers has been largely ignored. This study analyses the value-accretive potential of knowledge spillover strategies, where a selected body of knowledge is purposefully and strategically disclosed to competitors. The cork industry provides the empirical context, with the many small firms possessing limited innovation capabilities in an industry under threat from rival alternative technologies. The successful fight-back against the onslaught on cork by synthetic and screwcap closures is led by the Portuguese company Corticeira Amorim, the world’s largest stopper manufacturer, whose knowhow then selectively spills-over to the rest of the industry. This multiple-case study involving 14 firms, unfolds in the context of two layers of underlying tensions. By exploring why and how knowledge selectively spillovers across filters from the industry leader to others, and knowledge revealing within small firms, the study contributes to extant literature by extending to the phenomenon of selected and purposeful spillover in the context of capability enhancement.