Business Commons^™

Cash Is Suprisingly Valuable As A Strategic Asset, Changhyun Kim, Richard A. Bettis

Research Collection Lee Kong Chian School Of Business

Academics, politicians, and journalists are often highly critical of U.S. firms for holding too much cash. Cash holdings are stockpiled free-cash flow and incur substantial opportunity costs from the perspectives of economics. However, behavioral theory highlights the benefits of cash holdings as fungible slack resources facilitating adaptive advantages. We use the countervailing forces embodied in these two theories to hypothesize and test a quadratic functional relationship of returns to cash measured by Tobin's q. We also build and test a related novel hypothesis of scale-dependent returns to cash based on the competitive strategy concept of strategic deterrence. Tests for both …

Multinational Enterprise Parent-Foreign Subsidiary Governance, Bassam Elias Farah

Electronic Thesis and Dissertation Repository

This dissertation investigates how a multinational enterprise’s (MNE) corporate headquarters governs its foreign subsidiaries. It draws on agency theory, prospect theory, and corporate governance literatures to develop a framework that describes select MNE parent-foreign subsidiary governance mechanisms expected to predict foreign subsidiary performance, measured as foreign subsidiary survival and profitability.

To test this framework, I first conducted a pilot Canadian study. It was followed by the main multi-country study. The Canadian study used mixed methods. It analyzed quantitative data, compiled from different sources, and qualitative data, collected through personal interviews with subsidiary managers. The main multi-country study used survival analysis …

Do Ceos Ever Lose? Fairness Perspective On The Allocation Of Residuals Between Ceos And Shareholders, Kalin Kolev, Robert M. Wiseman, Luis R. Gomez-Mejia

Management Faculty Research and Publications

In this study we introduce a justice perspective to examining the result of bargaining between CEOs and boards over the allocation of firm residuals that ultimately determines CEO compensation. Framing CEO pay as the result of bargaining between CEOs and boards focuses attention on the power of CEOs to increase their share of firm residuals in the form of increased compensation, and the diligence of boards of directors to constrain CEO opportunism. Framing this negotiation through a theory of justice offers an alternative perspective to the search for pay-performance sensitivity. We predict and find that as board diligence in controlling …

Agency Theory And Stewardship Theory Integrated, Expanded, And Bounded By Context: An Empirical Investigation Of Structure, Behavior, And Performance Within Family Firms, Kristen Joie Madison

Doctoral Dissertations

Studies abound investigating whether agency or stewardship theory is more applicable within family firms. Both theories predict enhanced firm performance, but starkly contrast in behavioral assumptions and structural prescriptions. Agency theory assumes an economic model of man; agent behavior is based on self-interest and may conflict with the principal’s interest. Governance structures that control and monitor agents are prescribed to thwart opportunistic behavior and better align the goals of the principal and agent. Stewardship theory assumes a humanistic model of man; steward behavior is based on serving others and therefore will align with the principal’s interest. Governance structures that empower …

Searching For Determinants Of Pay Or Not To Pay Cash Dividend In Indonesia, Triasesiarta Nur, Kresnohadi Ariyoto Karnen

Indonesian Capital Market Review

A dividend decision of a firm is an outcome of various considerations. These considerations differ across time and industry. Based on asymetric information – agency theory thougtht, this study re-examined various variables that have a bearing on the dividend decision of a firm. In addition to examining the impact of corporate fundamentals on dividend policy, the study also analyzed the effect of expropriation trigger variables (family ownership, cash funds, the level of diversification and Related Party Transaction/RPT) on a dividend policy. The results of panel logistic regression indicated that Cash Funds, RPT, Profitability, Size, Growth, Debt and Macroecomics variables are …

Owner-Manager Separation And The Structure Of It Governance In Small Business, Jeffrey S. Saffer

Walden Dissertations and Doctoral Studies

Small business owners and small business managers tend to favor different information technology (IT) governance structures. Such differences can lead to ineffective management and control of IT in small businesses. The purpose of this correlational study was to examine the extent and nature of the association between owner-manager separation in small businesses and the structure of IT governance in the businesses. Agency theory formed the theoretical framework of this study. Data were collected using a web-based survey and randomly sampled 3,697 small business owners and managers located in New Jersey and Pennsylvania. Chi-square statistics indicated no significant association between owner-manager …

Bound By Laws, Or By Values? A Multi-Level And Cross-National Approach To Understanding The Protection Of Minority Owners In Family Firms, Charles Stevens, Roland Kidwell, Robert Sprague

Robert Sprague

How do firm-level attributes and country-level institutions affect cross-national and firm-level differences in how minority owner rights in family firms are protected?

We consider differences in family dynamics, stewardship-oriented organizational culture, and countries’ legal and cultural dimensions to develop theory predicting differences in minority owner protection in family firms. We advance propositions and a model delineating the role of these key firm-level and country-level constructs.

We contribute to the literature in three ways: 1) We illustrate the importance of family dynamics for predicting the likelihood of a stewardship-oriented culture to emerge in a family firm; 2) Our multi-level and cross-national …