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Journal ArticleDOI

Top management characteristics and company performance : an empirical analysis on public companies listed in the Indonesian Stock Exchange

01 Nov 2018-European Research Studies Journal (University of Piraeus. International Strategic Management Association)-Vol. 21, Iss: 2, pp 62-76
TL;DR: In this paper, the authors examined the role of the characteristics of top managers in improving the performance of companies listed in the Indonesia Stock Exchange and found that the age and tenure of the top managers played an important role in achieving the company performance.
Abstract: This study examines the role of the characteristics of top managers in improving the performance of companies listed in the Indonesia Stock Exchange.The sample of 40 companies from the sub sector of property, real estate, and building construction were selected based on purposive sampling technique. Supported by strong literature review, the results show the age and tenure of top managers play an important role in achieving the company performance.Moreover, the firm size is more likely able to mediate the relationship between the independent variables of age and tenure of top managers on the company performance.However, this study is not able to provide a significant evidence in terms of gender on the performance.The results underline the importance of improving the number of woman representation in top management in public companies in Indonesia.

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Citations
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01 Jan 2011
TL;DR: In this article, the impact of capital structure decisions on the equity performance and on the profitability of the companies located in Baltics was analyzed and the results of the study discover positive relationship between stock performance and sufficiency of equity capital.
Abstract: Seeking for the optimal capital structure lasts for more than 50 years and still is very topical, especially during the market turmoil as it happened in 2008. No perfect answer is yet provided to the question of how large debt amount should be kept on the accounts. The main objective of the present paper is to analyze the impact of capital structure decisions on the equity performance and on the profitability of the companies located in Baltics. The study covered the time period of 4 years (from 2007 till 2010) and the sample data of 36 “blue-chip” companies listed on the Baltic Stock exchanges. The results of the study discover positive relationship between stock performance and sufficiency of equity capital. Besides, there was found an inverse relationship between the level of debt and capital profitability confirming the pecking order theory that in the best case the company should use self-generated funds.

36 citations

Journal ArticleDOI
TL;DR: In this paper, the role of a CEO in enhancing a firm's performance through mediating effect of investment decisions in the emerging economy of Pakistan is examined through fixed-effects panel regression method.
Abstract: The study examines the role of a CEO in enhancing a firm’s performance through the mediating effect of investment decisions in the emerging economy of Pakistan. Distinctly, fixed-effects panel regression method is employed to examine the said-nexus of non-financial firms listed at the Pakistan Stock Exchange. It is empirically unearthed that CEO attributes, namely age, tenure, ownership, financial education, and career experience are positively related to firm performance in general and capital investment decisions in particular. Secondly, capital investment decisions partially and significantly mediate the nexus between CEO attributes and firm performance with few exceptions that confirm the theoretical implications of upper echelons theory in an emerging economy context.

20 citations

Book ChapterDOI
19 Sep 2019
TL;DR: It is shown that new utility function based on simple additive weighting method more accurately reflect the existing differences in background and field of competency of each expert.
Abstract: The selection of location for doing business can be realized by using of several aspects of business regulations as reported by the World Bank. For the goal, a multi-criteria decision making problem is formulated to determine the most preferable city to invest. This decision making problem is solved by two optimization models – by individual decision making preferences expressed in weighted sum method and group decision making considering the proposed modified simple additive weighting. In group decision making, the experts usually are with different background and field of competency. The proposed modification takes into account the difference in experts’ experience by considering all experts’ opinions with different importance in the aggregated final group decision. It is shown that new utility function based on simple additive weighting method more accurately reflect the existing differences in background and field of competency of each expert. Due the multidimensional nature of the problem for doing business, the group decision making approach seems to be more precisely in determination of the best selection to invest.

10 citations

References
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Journal ArticleDOI
TL;DR: In this paper, the authors examined the business case for the inclusion of women and ethnic minority directors on the board and found no significant relationship between the gender or ethnic diversity of the board, or important board committees, and financial performance for a sample of major US corporations.
Abstract: Manuscript Type: Empirical Research Question/Issue: We examine the business case for the inclusion of women and ethnic minority directors on the board. Specifically, we investigate the relationship between the number of women directors and the number of ethnic minority directors on the board and important board committees and financial performance measured as return on assets and Tobin’s Q. Research Findings/Insights: We do not find a significant relationship between the gender or ethnic diversity of the board, or important board committees, and financial performance for a sample of major US corporations. Our evidence also suggests that the gender and ethnic minority diversity of the board and firm financial performance appear to be endogenous. Theoretical/Academic Implications: Reasonable theoretical arguments drawn from resource dependence theory, human capital theory, agency theory, and social psychology suggest that gender and ethnic diversity may have either a positive, negative, or neutral effect on the financial performance of the firm. Our statistical analysis supports the theoretical position of no effect, either positive or negative. Our results are consistent with a contingency explanation because the effect of the gender and ethnic diversity of the board may be different under different circumstances at different times. Over several companies and time periods, the results could offset to produce no effect. Practitioner/Policy Implications: The results of our analysis do not support the business case for inclusion of women and ethnic minorities on corporate boards. However, we find no evidence of any negative effect either. Our evidence implies that decisions concerning the appointment of women and ethnic minorities to corporate boards should be based on criteria other than future financial performance.

1,297 citations

Posted Content
TL;DR: The authors found that top executives exhibit unique individual-specific and economically significant disclosure styles, and that managers' unique fixed effects are associated with observable characteristics of their own personal backgrounds, such as career tracks, managers born before World War II, and MBAs.
Abstract: Prior research in finance and accounting generally posits a limited role for idiosyncratic manager-specific attributes in explaining accounting and disclosure choices. In contrast, upper echelons theory, originating in the strategic management literature, suggests that differences among individuals can affect corporate outcomes. Extant research in voluntary disclosure follows the traditional financial economics perspective, yet even the most comprehensive empirical models leave most of the cross-sectional variation in disclosure unexplained. This prompts us to investigate whether these models are missing a major component: Do idiosyncratic differences among individual managers play a significant incremental role in voluntary corporate financial disclosure? We build a data set that tracks managers over time, which allows us to isolate manager-specific fixed effects after controlling for firm effects. We find that top executives do exhibit unique individual-specific and economically significant disclosure styles. That is, our evidence suggests that individual managers significantly influence attributes of their firms' voluntary disclosures, even after controlling for techno-economic determinants of disclosure identified in prior research, and firm- and time-specific effects. The collective magnitude of these manager-specific fixed effects is large: Manager-specific effects explain roughly as much or more of the variation in disclosure as the known techno-economic determinants combined. We then investigate whether managers' unique fixed effects are associated with observable characteristics of their own personal backgrounds. We find that managers promoted from finance, accounting, and legal career tracks, managers born before World War II, and managers holding MBAs tend to exhibit more conservative disclosure styles. These associations between our estimates of managers' fixed effects and distinctive (permanent) characteristics of their own personal backgrounds provide evidence confirming that our estimated manager fixed effects capture systematic long-lived differences in managers' unique disclosure styles. Our results suggest that individual-specific effects play an important - yet heretofore largely unexplored - role in voluntary financial disclosure. Further investigation of the role unique individual characteristics play in explaining corporate financial reporting is potentially a fruitful direction for future research.

789 citations


"Top management characteristics and ..." refers background in this paper

  • ...Bamber et al. (2010) state that managers with educational background in finance support a more detailed budget. Sitthipongpanich and Polsiri (2015) suggest that top managers with higher levels of education have greater cognitive complexity enabling them to learn and accept new ideas....

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  • ...Bamber et al. (2010) state that managers with educational background in finance support a more detailed budget....

    [...]

  • ...Bamber et al. (2010) state that managers with educational background in finance support a more detailed budget. Sitthipongpanich and Polsiri (2015) suggest that top managers with higher levels of education have greater cognitive complexity enabling them to learn and accept new ideas. Higher-educated managers are also capable of processing and analyzing information so that the attitude of top executives with high levels of education positively impacts new products and innovations. Smith et al. (2006) indicate that the proportion of top managers with higher levels of education has increased over ten years and that educational backgrounds were a major factor for companies to appoint top management....

    [...]

Posted Content
TL;DR: In this paper, the authors examined whether and how the participation of women in the firm's board of directors and senior management enhances financial performance and found that firms operating in complex environments do generate positive and significant abnormal returns when they have a high proportion of women officers.
Abstract: This article examines whether and how the participation of women in the firm's board of directors and senior management enhances financial performance. We use the Fama and French (1992, 1993) valuation framework to take the level of risk into consideration, when comparing firm performances, whereas previous studies used either raw stock returns or accounting ratios. Our results indicate that firms operating in complex environments do generate positive and significant abnormal returns when they have a high proportion of women officers. Although the participation of women as directors does not seem to make a difference in this regard, firms with a high proportion of women in both their management and governance systems generate enough value to keep up with normal stock-market returns. These findings tend to support the policies currently being discussed or implemented in some countries and organizations to foster the advancement of women in business.

626 citations

Posted Content
TL;DR: In this article, the authors show that optimism can lead a risk-averse CEO to choose the first best investment level that maximizes shareholder value, and that if boards of directors act in the interests of shareholders, CEOs with relatively low or high optimism face a higher probability of forced turnover than moderately optimistic CEOs face.
Abstract: We show theoretically that optimism can lead a risk-averse CEO to choose the first-best investment level that maximizes shareholder value. Optimism below (above) the interior optimum leads the CEO to underinvest (overinvest). Hence, if boards of directors act in the interests of shareholders, CEOs with relatively low or high optimism face a higher probability of forced turnover than moderately optimistic CEOs face. Using a large sample of turnovers, we find strong empirical support for this prediction. The results are consistent with the view that there is an interior optimum level of managerial optimism that maximizes firm value.

489 citations


"Top management characteristics and ..." refers background in this paper

  • ...Several previous studies documented that personal manager characteristics affect the manager's decision-making style (Campbell et al., 2011; Ben Fatma et al., 2013; Ben Mohamed et al.. 2012; 2014a), investment decisions (Huang et al., 2011), capital structure company and decision financing…...

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  • ...Several previous studies documented that personal manager characteristics affect the manager's decision-making style (Campbell et al., 2011; Ben Fatma et al., 2013; Ben Mohamed et al.. 2012; 2014a), investment decisions (Huang et al....

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Book
01 Jan 2003

446 citations


"Top management characteristics and ..." refers background in this paper

  • ...The influence of personal manager characteristics on firm performance has been studied in several countries such as in Ireland (O`Connell and Cramer, 2010), Belgium (Buyl, 2011), Nigeria (Ujunwa, 2012), Malaysia (Noor and Fadzil, 2013; Sukeri et al., 2012), the United States (Manner, 2010), Indonesia (Wicaksana, 2010, Rokhmad and Susilo, 2017; Rahindayati, 2015; Suryanto et al., 2017), however, the findings of the study indicate a contradiction....

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  • ...Board characteristics and the financial performance of Nigerian quoted firms....

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  • ...…on firm performance has been studied in several countries such as in Ireland (O`Connell and Cramer, 2010), Belgium (Buyl, 2011), Nigeria (Ujunwa, 2012), Malaysia (Noor and Fadzil, 2013; Sukeri et al., 2012), the United States (Manner, 2010), Indonesia (Wicaksana, 2010, Rokhmad and…...

    [...]

  • ...Organisational Culture and Corporate Performance: Empirical Evidence from Nigeria....

    [...]