Showing papers in "Problems and perspectives in management in 2010"

Transparency & disclosure on corporate governance as a key factor of companies’ success: a simultaneous equations analysis for Germany

Abstract: This paper develops and tests a simultaneous equations model on the relationship between corporate governance disclosure and firm performance on a sample of over 100 German firms listed in the Prime Standard segment of the Frankfurt Stock Exchange. Integrating leading indicators for corporate governance - such as firm size, risk, ownership structure, leverage, takeover activities or board size - and capturing endogeneity and reverse causation, we provide evidence that there’s a significantly positive relationship between transparency & disclosure on corporate governance and firm performance as measured by market-to-book value of equity and total shareholder return. Surprisingly, and contrary to theoretical assumptions we couldn’t find evidence on a significantly positive relationship between declared compliance with the German Corporate Governance Code and firm performance. We arrive at the conclusion that our state of the art approach to measure the impact of good corporate governance on firm performance may handle both problems endogeneity and reverse causation better than existing approaches do. Based on our findings we propose a change of mind on good corporate governance in Germany on its way to a more market-oriented system and a paradigm shift towards more openness and transparency and thus increasing trust in German corporations.

The impact of the institutional environment on the autonomy of MNCs' subsidiaries

Abstract: The subsidiary is playing an increasingly important role in generating competitive advantage for MNCs. The key objective of this study is to empirically disentangle the underlying causal structure that determines the autonomy of subsidiaries. We argue that the division of decision-making authority between the headquarter and the operational unit primarily responds to the institutional contexts of both, the parent company and the subsidiary. This is because an MNC is a governance structure that operates affiliates in many and widely different institutional contexts. Our propositions are tested on a database that includes 263 European subsidiaries of 18 MNCs in 25 European countries. The empirical results support our institutional perspective and show that the subsidiary’s autonomy is strongly associated with the global strategy of the parent firm and the national business system in which the affiliate is embedded. The results hold while controlling for various key characteristics of the parent firm and for the subsidiary.

Is coordination influenced by culture? A comparison of Sweden and China

Abstract: The purpose of this paper is to analyse cultural influences on the choice of coordination mechanisms. Based on the Globe report, propositions are developed on how different cultural dimensions affe ...

The ex post use of formal contracts in high-tech alliances. A contingency perspective

Abstract: In this study we investigate key contingencies that determine the active use of a formal contract after the strategic alliance has started. The antecedents for this ex post contract use address the contracting process, the need to safeguard spill-over risks and the existence of trust. The model is tested with unique and comprehensive data that were collected directly from a field study of 391 Dutch business managers. The results provide convincing evidence to support our perspective of contractual governance in durable business relationships that strive for the development of new technological knowledge.

Information asymmetries and the value -relevance of cash flow and accounting figures - empirical analysis and implications for managerial accounting #

Abstract: While some of the modern performance measures used in managerial accounting rely on cash flow based figures others try to take advantage of the information content of accounting figures. However, whether the additional information content in the accrual components of earnings improves the internal performance measurement is an open empirical question. To shed light on this question, I examine the correlation between operating cash flows and earnings with firm’s total shareholder returns. Using fixed firm effects regression methods for a large sample of German listed firms covering some 5,000 firm years, the analysis shows that generally operating cash flow and earnings are both positively correlated with total shareholder return. However, with increasing information asymmetry earnings become less correlated with the firm’s stock market performance and operating cash flows dominate earnings in explaining total shareholder return (and vice versa). These results suggest that, the information content of accounting figures is only relevant in settings characterized by low information asymmetries and, thus, there is no one-size-fits-all performance measure for managerial accounting purposes.