July 2017 (Journal of Business and Policy Research)

July 2017 (Journal of Business and Policy Research)

Total Articles - 7

Pages 1 – 18

Author: Huijie Cui and Sidney C M Leung

This study examines the relationship between acquiring firms’ managerial ability and their decisions on mergers and acquisitions (M&As). Using M&A data for a sample of US firms from 2000 to 2012, the authors hypothesize and find that when the acquiring firm’s managerial ability is greater, the probability of engaging in M&As and the likelihood of committing serial M&As are both higher. The authors also find that firms with high managerial ability are more likely to enter into horizontal same-industry acquisitions. These results show that the acquiring firm’s managerial ability is a major determinant of M&A activities, and that superior managers are more inclined to achieve growth through external acquisitions, particularly horizontal M&As.

Pages 19 – 33

Author: Minli Lian and Peter Klein

Existing literature claims that performance fees induce excessive risk-taking behavior from hedge fund managers because higher risk increases the value of the performance fee option. In this paper it is argued that the relationship between investors and hedge fund managers is similar to the relationship between shareholders and corporate managers. Principal-agent theory is applied to this issue which shows that the performance of hedge funds and the payoff of the performance fee contract are endogenously determined by the fund manager’s effort. The excess returns are shared between the investor and the manager and there is a natural upper bound to risk. The empirical results indicate that performance fees are positively associated with risk adjusted returns which is consistent with the theory.

Pages 34 – 53

Author: Frank D’Souza and Ramesh P Rao

Using data on Seasoned Equity Offerings in the U.S. over the period 1980-2000, the effects of equity market timing on the post-issue performance of issuing firms are examined. Most prior research evaluates SEO firms as a single group and find long-run under performance after an SEO. The approach uses the Sentiment Index (Baker & Wurgler, 2006) to extract samples of market timing firms. Then, two distinct subsets are created from this data. The opportunity subset consists of firms that have viable investments opportunities while the temptation subset consists of those that do not. The temptation subset is so called because of the hypothesis that the managers of these firms succumb to the temptation of relatively cheap equity, even though they have no viable use for it. Using a matched sample methodology (Barber and Lyon 1997), the overall sample of market timing SEO firms displaying post-issue under performance is confirmed; however, results show that the negative impact is actually driven by the set of firms without viable investment opportunities (temptation) subset while the opportunity subset does not under perform. On reviewing the use of funds by these firms (Kim & Weisbach, 2008 model), it is confirmed that the opportunity firms invest more heavily in R&D, while the temptation firms seek to invest outside their core business. This research has strong implications for firm financing decisions, especially firms that find themselves in the position to time the market for equity, using a seasoned equity offering.

Pages 54 – 71

Author: Amandu Yassin Is’haq and Ahassanul A. K. M. Haque

Firm export performance is declining across industries and economies around the world. Despite numerous researches to explain the decline, there are controversies and lack of consensus as to what determines firm export performance. This paper was developed to identify and explain determinants of, and propose a firm export performance model from a developing economy perspective. A quantitative cross-sectional survey of 250 firm export executives from selected firms and industries was conducted. Psychometric analyses of descriptive statistics, reliability, exploratory, confirmatory, and validities were performed. Structural equation modelling was used to examine the hypothesised relationships and validate the proposed firm export performance model. The results identified export market orientation, market environment, organizational learning, market information system, export market strategy and organizational innovation capability as determinants of firm export performance. This implies that an export development strategy needs implementation and practice of these predictors. This would consequently enable the firm to gain competitiveness, achieve its strategic growth objectives and transform the national economy into a more desirable one.

Pages 72 – 87

Author: Meta Ayu Kurniawati

This paper investigates the significance of FDI, capital formation, trade openness, and economic growth in the international scope by classifying data into six regions. The annual datasets consist of 169 countries over the period 1990-2015 were employed. Panel cointegration, panel causality, variance decomposition, and impulse response were deployed to document long- and short-run relationships, to establish the most important macroeconomic variables for economic growth and to assign the proportion of them that explain economic growth. The results show that FDI, CP, TRD, and GDP are linked over the long-run, whereas short-run analysis presents attractive mixed results over six geographic classifications.

Pages 88 – 105

Author: Ilham Hassan F. Mansour and Abuzar M. A. Eljelly

This study aims to explore the consumers' attitude towards promotion of controversial products, the reasons why they are controversial and how the degree of religious commitment in Sudan affects attitude. The study presents the results of an online survey of 203 Sudanese respondents to determine the type of products seen as controversial when advertised on TV and why considered controversial. The results revealed that in general Sudanese hold negative perceptions of controversial products and their advertisements. The findings revealed that the religious beliefs can potentially impact the perception of offensive advertising among Sudanese. Muslims of different levels of religious commitment show different degrees of offensiveness to controversial products advertising. The study also found that age, gender, and education have effects on survey participants’ attitude towards some products controversial advertising. These findings may have important implications for international marketers in countries with religious orientations such as Sudan, or other Muslim countries.

Pages 106 – 122

Author: Aurelio J. F. Vincenti and Sabit Delić

Academic literature suggests that a stock market-centered financial system, such as in the United Kingdom, promotes a strong and dynamic venture capital market in a better way than a bank-centered financial system, like in Germany, permitting venture capitalists to exit more successfully from their investment through an IPO. This hypothesis is investigated by comparing private equity and venture capital funding in both countries with an emphasis on the life sciences industry. For this purpose time series data from 2002 to 2012, including the financial crisis of 2007/2008 and its aftermath, are analyzed using econometric time series models especially of the ARIMA class. The results demonstrate that the British private equity market, both in total and for life sciences companies, is significantly bigger than its German correlate during these years. However, the differences between both countries disappear when looking at venture capital for early stage financing. Furthermore, it can be shown that life sciences are a more important investment target for private equity and venture capital in Germany than in the United Kingdom. Another result and further distinction between the two countries is the vulnerability to the financial crisis of 2007/2008. While this event has a clearly negative influence on the British market, especially on early stage venture capital, in the years following the initial event, the German equivalent hardly suffers from its impact. Overall, the outcome of the study doesn’t support the view that a market-centered financial system quasi automatically ensures a bigger market for all forms of venture capital at any time.

Total Articles- 7

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