The consequences of private equity acquisitions for employees: new evidence on the impact on wages,employment and productivity

There is growing controversy on the HR consequences of private equity acquisitions, especially when the existing management team is replaced. Much of the debate thus far has centred on the use of limited panels of case studies and industry surveys. This article, in contrast, uses both in‐depth interviews with relevant stakeholders and objective company data to compare firms subject to private equity acquisitions against a control group of non‐acquired firms. Our interviews provide insights into key issues that are investigated in the subsequent empirical analysis. Our core findings are that firms subject to a specific type of private equity acquisition – institutional buyouts – are associated with job losses, lower wages and lower productivity. This evidence is consistent with the notion that this type of private equity acquisition has negative employment consequences without any corresponding improvement in productivity.     

Restoring tourist confidence and travel intentions after disasters: some insights from a rejoinder to a series of unfortunate events in Malaysian tourism

Many countries face a decline in tourist confidence and reduced travel intentions after disasters. However, Malaysia – a country that experienced a series of aviation tragedies throughout 2014 – encountered an overall increase in inbound tourists and monetary receipts. This article more closely examines the effects of these unfortunate events on Malaysian tourism and identifies several strategic avenues that can contribute to restoring tourist confidence and reigniting tourist interest in travelling to disaster-stricken countries.     

Life Expectancy Heterogeneity and the Political Support for Collective Annuities

Individuals, differing in productivity and life expectancy, vote over the size and type of a collective annuity. Its type is represented by the fraction of the contributive (Bismarckian) component (based on the worker's past earnings) as opposed to the non‐contributive (Beveridgean) part (based on average contribution). The equilibrium collective annuity is either a large mostly Bismarckian program, a smaller pure Beveridgean one (in accordance with empirical evidence), or nil. A larger correlation between longevity and productivity, or a larger average life expectancy, both make the equilibrium collective annuity program more Beveridgean, although at the expense of its size.     

On Some Characteristics of Gaussian Covariance Functions

The concepts of isotropy/anisotropy and separability/non‐separability of a covariance function are strictly related. If a covariance function is separable, it cannot be isotropic or geometrically anisotropic, except for the Gaussian covariance function, which is the only model both separable and isotropic. In this paper, some interesting results concerning the Gaussian covariance model and its properties related to isotropy and separability are given, and moreover, some examples are provided. Finally, a discussion on asymmetric models, with Gaussian marginals, is furnished and the strictly positive definiteness condition is discussed.     

Does stable ownership create value? Evidence from the global financial crisis

We investigate the value of stable ownership for a sample of European firms using the global financial crisis as an exogenous shock and pre-and post-crisis years as benchmark periods. Consistent with the argument that stable ownership allows managers to focus on the creation of long-term value, we find that stable ownership resulted in higher stock returns and a higher market-to-book ratio during the crisis. This positive effect of stable ownership was not reversed after the crisis. Stable institutional blockholdings were more valuable in countries with weaker investor protection. However, the positive effect does not apply to firms in which a family is the largest blockholder. Finally, we also find that ownership stability was associated with a higher level of investments, illustrating that stable ownership affects real corporate decisions.

     

Could lean practices and process innovation enhance supply chain sustainability of small and medium‐sized enterprises?

Small and medium‐sized enterprises (SMEs) adopt lean practices (LP) to reduce waste across their organisational value chain, which helps achieve sustainability. Process innovation (PI) has also been applied through cleaner production, environmental management system, ecodesign, and so on to address both customers' needs and legislations by policymakers. Although prior studies reveal the effect of sustainable practices, LP, and PI on sustainable performance separately, less is known on the integrated effect of them on sustainability performance. Moreover, studies on mediating effect of LP and PI on sustainability performance are scant. This is significant as LP and PI are considered to be the enablers for achieving sustainability performance. This research addresses this knowledge gap. The research first theorises a model integrating these four major constructs (sustainability practices, LP, PI, and sustainability performance) through hypotheses development. Subsequently, using structural equation modelling, it is tested whether each of sustainability practices, LP, and PI effect sustainability performances. Additionally, mediating effect of LP and PI between sustainability practices and performances is derived. The study uses data from 119 SMEs within manufacturing industries in the Midlands, United Kingdom. Further, a few case studies have been undertaken to validate the findings from quantitative analysis. The overall results show that although sustainability practices, LP, and PI help achieve sustainability performance of SMEs supply chain through efficiency and responsiveness respectively, the mediating effect LP is more compared with PI. Moreover, SMEs adopt LP when they are economy focused and implement PI when they are pressurised by customers and/or policymakers.     

A Note on Family Influence and the Adoption of Discontinuous Technologies in Family Firms

The 4Cs model of command, continuity, community, and connections is useful for examining the effect of family influence on the adoption of discontinuous technologies. However, assuming that family influence differs only in degree rather than kind is naive because such an assumption ignores the likelihood of heterogeneous behaviors among family firms. In this conceptual note, we extend prior work and explain how heterogeneity in the family's relative emphasis on command, continuity, community, and connections requires that the multifaceted and potentially nonlinear nature of family influence be considered when analyzing strategic decisions concerning family firm innovation.     

Digital Transformation Through Exploratory and Exploitative Internet of Things Innovations: The Impact of Family Management and Technological Diversification*

This study examines the impact of family management on digital transformation with specific regard to the firm’s development of Internet of Things (IoT) innovations. Drawing on the distinctive characteristics of firms with family managers, such as the focus on family‐centered noneconomic goals, long tenure, emotional ties to existing assets, and rigid mental models, it hypothesizes that increasing family involvement in the top management team is negatively related to the development of IoT innovations that are distant from a firm’s existing technology base (i.e., exploratory IoT innovations) compared to exploitative IoT innovations. Further, the study proposes that the firm’s degree of technological diversification, especially in unrelated forms, reinforces this relationship. The longitudinal analysis between 2002 and 2013 on a sample of publicly traded German firms allows us to test our hypotheses from the beginning of the emergence of the IoT concept. Our findings show that due to the particular characteristics of their managers, family‐managed firms do not welcome the risks related to exploratory IoT innovations, and the benefit of risk diversification from technological diversification is lower than the cost of abandoning family‐centered goals. As our results imply that the involvement of family managers constrains the development of exploratory IoT innovation, the top management team composition in firms that intend to be at the forefront of the digital transformation should be accurately designed by avoiding a high proportion of family members.     

Double continuation regions for American and Swing options with negative discount rate in Lévy models

In this paper, we study perpetual American call and put options in an exponential Lévy model. We consider a negative effective discount rate that arises in a number of financial applications including stock loans and real options, where the strike price can potentially grow at a higher rate than the original discount factor. We show that in this case a double continuation region arises and we identify the two critical prices. We also generalize this result to multiple stopping problems of Swing type, that is, when successive exercise opportunities are separated by i.i.d. random refraction times. We conduct an extensive numerical analysis for the Black–Scholes model and the jump‐diffusion model with exponentially distributed jumps.     

Analysing Systemic Risk in the Chinese Banking System

We examine systemic risk in the Chinese banking system by estimating the conditional value at risk (CoVaR), the marginal expected shortfall (MES), the systemic impact index (SII) and the vulnerability index (VI) for 16 listed banks in China for the 2007–2014 period. We find that these measures show different patterns, capturing different aspects of systemic risk of Chinese banks. However, rankings of banks based on these measures are significantly correlated. The time‐series results for the CoVaR and MES measures suggest that systemic risk in the Chinese banking system decreased after the global financial crisis but started rising in 2014.