Recent research suggests that unequal access to home country institutional resources affects firm internationalization strategies. We add to this debate, based on an analysis of state-owned (SOEs) and non-state-owned (NSOEs) Chinese mining firms, by developing a more dynamic and multi-layered understanding of this interplay. We find that home institutional support can be ownership-based or performance-based, whereby the former benefits SOEs and the latter favors high-performing NSOEs. Combined, these support structures serve as institutional control mechanisms in promoting competition, performance and loyalty to national policies. In addition, they establish a permanent link between firm- and home country-specific assets and incentivize firms to develop dynamic resource access capabilities at home and abroad. Our findings inform our understanding of the firms-institutions nexus and Chinese foreign direct investment dynamics, especially in industries of strategic importance to the state.
{"title":"Does State Ownership Really Matter? The Dynamic Alignment of China’s Resource Environment and Firm Internationalization Strategies","authors":"Monica Ren, S. Manning, S. Vavilov","doi":"10.2139/ssrn.3328297","DOIUrl":"https://doi.org/10.2139/ssrn.3328297","url":null,"abstract":"Recent research suggests that unequal access to home country institutional resources affects firm internationalization strategies. We add to this debate, based on an analysis of state-owned (SOEs) and non-state-owned (NSOEs) Chinese mining firms, by developing a more dynamic and multi-layered understanding of this interplay. We find that home institutional support can be ownership-based or performance-based, whereby the former benefits SOEs and the latter favors high-performing NSOEs. Combined, these support structures serve as institutional control mechanisms in promoting competition, performance and loyalty to national policies. In addition, they establish a permanent link between firm- and home country-specific assets and incentivize firms to develop dynamic resource access capabilities at home and abroad. Our findings inform our understanding of the firms-institutions nexus and Chinese foreign direct investment dynamics, especially in industries of strategic importance to the state.","PeriodicalId":417524,"journal":{"name":"FEN: Other International Corporate Finance (Topic)","volume":"55 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-02-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"117252548","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
India passed a comprehensive and new Insolvency and Bankruptcy Code (IBC) on May 28, 2016. Prior to this, institutional debt defaults were handled through a number of different laws and regulations, like SICA, 1985, Debt Recovery Act, 1993, SARFAESI, 2002 and Company Law, 2013. In addition, for companies above a certain size, the High Courts had to be involved, especially in winding up decisions. The IBC, being a uniform code, was meant to reallocate assets more efficiently and quickly. In this paper we develop a model that gives rise to credit rationing as a result of moral hazard and investigate the efficiency of three different possible priority rules: (a) when financial creditors have priority over operational creditors (b) when operational creditors have priority over financial creditors and (c) when both have equal priority. We argue that the extent of credit rationing is invariant under all three priority rules. We then show why a cost of business indicator that looks only at the price of inputs is flawed in determining efficiency.
{"title":"Efficient priority rules and the Indian IBC","authors":"Nisha Chadha, S. Gangopadhyay","doi":"10.2139/ssrn.3424354","DOIUrl":"https://doi.org/10.2139/ssrn.3424354","url":null,"abstract":"India passed a comprehensive and new Insolvency and Bankruptcy Code (IBC) on May 28, 2016. Prior to this, institutional debt defaults were handled through a number of different laws and regulations, like SICA, 1985, Debt Recovery Act, 1993, SARFAESI, 2002 and Company Law, 2013. In addition, for companies above a certain size, the High Courts had to be involved, especially in winding up decisions. The IBC, being a uniform code, was meant to reallocate assets more efficiently and quickly. In this paper we develop a model that gives rise to credit rationing as a result of moral hazard and investigate the efficiency of three different possible priority rules: (a) when financial creditors have priority over operational creditors (b) when operational creditors have priority over financial creditors and (c) when both have equal priority. We argue that the extent of credit rationing is invariant under all three priority rules. We then show why a cost of business indicator that looks only at the price of inputs is flawed in determining efficiency.","PeriodicalId":417524,"journal":{"name":"FEN: Other International Corporate Finance (Topic)","volume":"9 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-01-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116908617","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We document that following a turnover of the Party Secretary or mayor of a city in China, firms (especially private firms) headquartered in that city significantly increase their "perk spending." Both the instrumental-variable-based results and heterogeneity analysis are consistent with the interpretation that the perk spending is used to build relations with local governments. Moreover, local political turnover in a city tends to be followed by changes of Chairmen or CEOs of state-owned firms that are controlled by the local government. However, the Chairmen or CEOs who have connections with local government officials are less likely to be replaced.
{"title":"In the Shadows of the Government: Relationship Building During Political Turnovers","authors":"Hanming Fang, Zhe Li, Nianhang Xu, H.-J. Yan","doi":"10.3386/W25300","DOIUrl":"https://doi.org/10.3386/W25300","url":null,"abstract":"We document that following a turnover of the Party Secretary or mayor of a city in China, firms (especially private firms) headquartered in that city significantly increase their \"perk spending.\" Both the instrumental-variable-based results and heterogeneity analysis are consistent with the interpretation that the perk spending is used to build relations with local governments. Moreover, local political turnover in a city tends to be followed by changes of Chairmen or CEOs of state-owned firms that are controlled by the local government. However, the Chairmen or CEOs who have connections with local government officials are less likely to be replaced.","PeriodicalId":417524,"journal":{"name":"FEN: Other International Corporate Finance (Topic)","volume":"43 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131342617","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In asset return predictability, realized returns and future expected returns tend to move in opposite directions. This generates a tension between tax- and market-timing incentives. In this study, ...
{"title":"Two Birds, One Stone: Joint Timing of Returns and Capital Gains Taxes","authors":"Yaoting Lei, Ya Li, Jing Xu","doi":"10.2139/ssrn.3057371","DOIUrl":"https://doi.org/10.2139/ssrn.3057371","url":null,"abstract":"In asset return predictability, realized returns and future expected returns tend to move in opposite directions. This generates a tension between tax- and market-timing incentives. In this study, ...","PeriodicalId":417524,"journal":{"name":"FEN: Other International Corporate Finance (Topic)","volume":"26 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-05-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121838138","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper is about the capital of the enterprises to the tax system. Thence, we have an analysis for the impact factor of the tax revenues of the countries subject to the capital of companies to the tax system. Thereupon from the view of the level of influence of the enterprises which participate in controlled transactions of transfer pricing to the global tax revenue, is plausible to identify the impact factor of capital, when there exists that factor with the case which that factor is avoided. Then the impact factor of capital in combination with the tax revenues is determined through the Q.E. method. Therefore, is clarified the behavior of the tax system subject to the capital of the tax system.
{"title":"Impact Factor of Capital to the Tax System","authors":"Constantinos Challoumis Κωνσταντίνος Χαλλουμής","doi":"10.2139/ssrn.3145388","DOIUrl":"https://doi.org/10.2139/ssrn.3145388","url":null,"abstract":"This paper is about the capital of the enterprises to the tax system. Thence, we have an analysis for the impact factor of the tax revenues of the countries subject to the capital of companies to the tax system. Thereupon from the view of the level of influence of the enterprises which participate in controlled transactions of transfer pricing to the global tax revenue, is plausible to identify the impact factor of capital, when there exists that factor with the case which that factor is avoided. Then the impact factor of capital in combination with the tax revenues is determined through the Q.E. method. Therefore, is clarified the behavior of the tax system subject to the capital of the tax system.","PeriodicalId":417524,"journal":{"name":"FEN: Other International Corporate Finance (Topic)","volume":"46 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-03-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127679049","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper is about the costs of the enterprises to the tax system. Thence, we have an analysis of the impact factor of the tax revenues of the countries subject to the costs of companies on the tax system. Thereupon from the view of the level of influence of the enterprises which participate in controlled transactions of transfer pricing to the global tax revenue, it is plausible to identify the impact factor of costs, when there exists that factor with the case which that factor is avoided. The impact factor of costs in combination with the tax revenues is determined through the Q.E. method and the R.B.Q. model. Inasmuch as, is defined as the behavior of the tax system subject to the capital of the tax system. Then a quantitative simulation is used as a methodology for this work, to define the impact of costs on the enterprises. Research paper Keywords: transfer pricing; costs; tax revenue; transactions Reference to this paper should be made as follows: Challoumis, C. (2020). The Impact Factor of Costs to the Tax System, Journal of Entrepreneurship, Business and Economics , 8 (1), 1–14.
{"title":"Impact Factor of Costs to the Tax System","authors":"Constantinos Challoumis Κωνσταντίνος Χαλλουμής","doi":"10.2139/ssrn.3146573","DOIUrl":"https://doi.org/10.2139/ssrn.3146573","url":null,"abstract":"This paper is about the costs of the enterprises to the tax system. Thence, we have an analysis of the impact factor of the tax revenues of the countries subject to the costs of companies on the tax system. Thereupon from the view of the level of influence of the enterprises which participate in controlled transactions of transfer pricing to the global tax revenue, it is plausible to identify the impact factor of costs, when there exists that factor with the case which that factor is avoided. The impact factor of costs in combination with the tax revenues is determined through the Q.E. method and the R.B.Q. model. Inasmuch as, is defined as the behavior of the tax system subject to the capital of the tax system. Then a quantitative simulation is used as a methodology for this work, to define the impact of costs on the enterprises. Research paper Keywords: transfer pricing; costs; tax revenue; transactions Reference to this paper should be made as follows: Challoumis, C. (2020). The Impact Factor of Costs to the Tax System, Journal of Entrepreneurship, Business and Economics , 8 (1), 1–14.","PeriodicalId":417524,"journal":{"name":"FEN: Other International Corporate Finance (Topic)","volume":"123 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-03-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130926659","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We examine whether reported ownership–performance relations systematically differ for government versus private ownership by integrating the diverse empirical results for listed corporations in emerging markets. Our meta‐analysis confirms popular perceptions that, compared to private ownership, government ownership is associated with inferior performance. We find that, on average, the underlying ownership–performance relation is negative for government ownership and positive for private ownership, and the difference between these relations is significant. We also find that the positive private ownership–performance relation is stronger for institutional/foreign ownership compared to family/management ownership. Further analysis shows that negative (positive) government (private) ownership and performance relations have weakened (strengthened) over time. Our assessment of the sources of heterogeneity shows that reported relations are biased by estimation methods that fail to adequately control for endogeneity. Our results suggest that the nature of ownership–performance relations in emerging markets remains very dynamic and warrants ongoing research interest.
{"title":"Does Ownership Identity Matter? A Meta‐Analysis of Research on Firm Financial Performance in Relation to Government Versus Private Ownership","authors":"K. Wang, Gregory Shailer","doi":"10.1111/abac.12103","DOIUrl":"https://doi.org/10.1111/abac.12103","url":null,"abstract":"We examine whether reported ownership–performance relations systematically differ for government versus private ownership by integrating the diverse empirical results for listed corporations in emerging markets. Our meta‐analysis confirms popular perceptions that, compared to private ownership, government ownership is associated with inferior performance. We find that, on average, the underlying ownership–performance relation is negative for government ownership and positive for private ownership, and the difference between these relations is significant. We also find that the positive private ownership–performance relation is stronger for institutional/foreign ownership compared to family/management ownership. Further analysis shows that negative (positive) government (private) ownership and performance relations have weakened (strengthened) over time. Our assessment of the sources of heterogeneity shows that reported relations are biased by estimation methods that fail to adequately control for endogeneity. Our results suggest that the nature of ownership–performance relations in emerging markets remains very dynamic and warrants ongoing research interest.","PeriodicalId":417524,"journal":{"name":"FEN: Other International Corporate Finance (Topic)","volume":"27 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134155197","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Prior literature finds that audit firm style shapes client financial statement comparability (Francis, Pinnuck, and Watanabe 2014). We expect that engagement partners also shape financial statement comparability, and find that two clients audited by the same engagement auditor have more comparable accruals than two clients audited by different auditors. We also find that engagement auditor past comparability style explains new client comparability with industry peers, suggesting that auditor style persists over time. We uncover that auditor personal traits including gender, experience, qualification, and specialization are associated with higher comparability. Finally, we find that adding the audit-firm, audit-office, and engagement-auditor fixed effects increases the adjusted R2 of our accrual comparability model by 0.6 percent, 1.9 percent, and 10 percent, respectively. Taken together, our findings suggest that the engagement auditors have a distinguishable effect on financial statement comparability that is incremental to the effect of audit firms and offices. Data Availability: All data are publicly available from the sources identified in the text.
先前的文献发现，审计事务所的风格会影响客户财务报表的可比性(Francis, Pinnuck, and Watanabe 2014)。我们预计审计业务合伙人也会影响财务报表的可比性，并发现由同一审计业务审计师审计的两个客户比由不同审计师审计的两个客户拥有更多可比较的应计项目。我们还发现，审计业务审计师过去的可比性风格解释了新客户与行业同行的可比性，这表明审计师的风格会随着时间的推移而持续存在。我们发现，审计师的个人特征，包括性别、经验、资格和专业化与较高的可比性相关。最后，我们发现，加入审计事务所、审计事务所和审计业务审计师固定效应后，应计可比性模型的调整后R2分别提高了0.6%、1.9%和10%。综上所述，我们的研究结果表明，审计业务审计师对财务报表可比性的影响是可区分的，且对审计事务所和办事处的影响是递增的。数据可用性:所有数据均可从文本中确定的来源公开获得。
{"title":"The Effect of Engagement Auditors on Financial Statement Comparability","authors":"Liuchuang Li, Baolei Qi, Jieying Zhang","doi":"10.2139/ssrn.3047631","DOIUrl":"https://doi.org/10.2139/ssrn.3047631","url":null,"abstract":"\u0000 Prior literature finds that audit firm style shapes client financial statement comparability (Francis, Pinnuck, and Watanabe 2014). We expect that engagement partners also shape financial statement comparability, and find that two clients audited by the same engagement auditor have more comparable accruals than two clients audited by different auditors. We also find that engagement auditor past comparability style explains new client comparability with industry peers, suggesting that auditor style persists over time. We uncover that auditor personal traits including gender, experience, qualification, and specialization are associated with higher comparability. Finally, we find that adding the audit-firm, audit-office, and engagement-auditor fixed effects increases the adjusted R2 of our accrual comparability model by 0.6 percent, 1.9 percent, and 10 percent, respectively. Taken together, our findings suggest that the engagement auditors have a distinguishable effect on financial statement comparability that is incremental to the effect of audit firms and offices.\u0000 Data Availability: All data are publicly available from the sources identified in the text.","PeriodicalId":417524,"journal":{"name":"FEN: Other International Corporate Finance (Topic)","volume":"98 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-10-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121346229","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper investigates whether the late payment problem exists among corporations in the US. Our results suggest that liquidity shortage and strategic intention are the main causes of late payments. While large firms deliberately take advantage of their market power to “squeeze suppliers”, we do not find any evidence that the same intuition exists among small firms. Instead, liquidity shortages are the main driver behind slow payments in small firms. This paper also finds that financially distressed firms are better off deferring trade credit repayment to avoid potential bankruptcy if they were paying to bank creditors late. As the legal repercussions of doing so are less severe than defaulting on other corporate bond or bank obligations.
{"title":"Squeezing Suppliers or Liquidity Shortage?","authors":"Shumi M. Akhtar, Ye Ye","doi":"10.2139/ssrn.3030517","DOIUrl":"https://doi.org/10.2139/ssrn.3030517","url":null,"abstract":"This paper investigates whether the late payment problem exists among corporations in the US. Our results suggest that liquidity shortage and strategic intention are the main causes of late payments. While large firms deliberately take advantage of their market power to “squeeze suppliers”, we do not find any evidence that the same intuition exists among small firms. Instead, liquidity shortages are the main driver behind slow payments in small firms. This paper also finds that financially distressed firms are better off deferring trade credit repayment to avoid potential bankruptcy if they were paying to bank creditors late. As the legal repercussions of doing so are less severe than defaulting on other corporate bond or bank obligations.","PeriodicalId":417524,"journal":{"name":"FEN: Other International Corporate Finance (Topic)","volume":"11 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-08-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127790220","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Expertise diversity is expected to enhance the monitoring and advising functions of boards of directors. Yet, little is known about the expertise that actually exists on corporate boards. In this study, we examine the diversity of professional expertise on corporate boards in Australia and implications for shareholder value. We categorise directors by 11 types of professional expertise and find the most common types of expertise are business executives, accountants, bankers, scientists, lawyers and engineers. We find that expertise diversity is primarily related to board size, industry and location. Our analysis also suggests that shareholders benefit when boards diversify their expertise within a subset of specialist business expertise (lawyers, accountants, consultants, bankers and outside CEOs). Further diversity beyond this subset of expertise is associated with lower firm value and performance.
{"title":"The Diversity of Expertise on Corporate Boards in Australia","authors":"Stephen Gray, J. Nowland","doi":"10.1111/acfi.12146","DOIUrl":"https://doi.org/10.1111/acfi.12146","url":null,"abstract":"Expertise diversity is expected to enhance the monitoring and advising functions of boards of directors. Yet, little is known about the expertise that actually exists on corporate boards. In this study, we examine the diversity of professional expertise on corporate boards in Australia and implications for shareholder value. We categorise directors by 11 types of professional expertise and find the most common types of expertise are business executives, accountants, bankers, scientists, lawyers and engineers. We find that expertise diversity is primarily related to board size, industry and location. Our analysis also suggests that shareholders benefit when boards diversify their expertise within a subset of specialist business expertise (lawyers, accountants, consultants, bankers and outside CEOs). Further diversity beyond this subset of expertise is associated with lower firm value and performance.","PeriodicalId":417524,"journal":{"name":"FEN: Other International Corporate Finance (Topic)","volume":"54 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123069971","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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