HEC Montréal

About: HEC Montréal is a education organization based out in Montreal, Quebec, Canada. It is known for research contribution in the topics: Vehicle routing problem & Corporate governance. The organization has 1221 authors who have published 5708 publications receiving 196862 citations. The organization is also known as: Ecole des Hautes Etudes Commerciales de Montreal & HEC Montreal.

Corporate Investment Decision Practices and the Hurdle Rate Premium Puzzle

Abstract: We survey a cross-section of 127 companies to gain insight on various dimensions of firms' investment decisions. The questions posed by our survey address the hurdle rates firms use, calculations of project-related cashflows, and the interaction of cashflows and hurdle rates. Unlike previous studies which examine investment decisions by either using survey data or data obtained from financial tapes, we use both sets of data. This approach produced one of our primary findings that there is a hurdle rate premium puzzle, in that hurdle rates used by our sample of firms exceed their cost of capital, that we calculate using Compustat data, by a substantial magnitude. We investigate the determinants of this puzzle and find that it is related to factors that reflect financial flexibility considerations, managers' confidence in the estimates of beta, financial health of firms, and the past performance of the industry they are in. Finally, our findings show that survey firms do not always appear to handle the cashflow dimension of their investment decisions in a consistent manner.

The Performance of State-Owned Enterprises Revisited

Abstract: Many theoretical and empirical studies look at the ownership-performance relationship. So far, the literature in finance and in accounting mainly refers to the property rights, agency and public choice theories. Despite the fact that the results of these studies are more or less conclusive, it is usually considered that the private enterprise performs better than the state-owned enterprise. In this article, we argue that these studies suffer from one major limitation. They do not recognize that the goals of the state-owned enterprise are different from the ones espoused by the private firm. Using a sample of state-owned entreprises and private firms for the period 1976-1996, we present empirical evidence that the state-owned enterprises, when their main goal is to maximize profit, perform as well as the privately owned enterprises. Therefore, the alleged under-performance of the state-owned enterprises may only be the result of pursuing other goals while the poor quality of public managers may be another urban myth.

Fortuitous Brand Image Transfer

Abstract: This study investigates the phenomenon of fortuitous brand image transfer, or image transfer that occurs by chance, between two brands sponsoring the same event concurrently (i.e., concurrent sponsorships). Two experiments show that concurrent sponsorships lead either to a transfer of image or to a contrast of image between sponsoring brands that are both familiar, depending on the similarity of their underlying brand concept. Image transfer occurs when the brand concepts of the two sponsors are similar, whereas image contrast occurs when the two sponsors have dissimilar brand concepts. Implications for branding and sponsorship research are provided, as well as recommendations for managers. Finally, directions for further research are suggested.