Business Commons^™

Value Discount Of Business Groups Surrounding The Asian Financial Crisis: Evidence From Korean Chaebols, James Jinho Chang, Young Jun Cho, Won Kang, Hyun-Han Shin

Research Collection School Of Accountancy

We examine the effect of business group membership on firm value in each pre-and postcrisis Korea. Consistent with prior studies, results show that group affiliated chaebol firms suffer value discount relative to non-chaebol firms in the precrisis period. However, we also find that chaebol firms experience an improvement in firm value relative to non-chaebol firms after the financial crisis. These findings imply that the value discount of business groups reported in prior studies is not an inevitable consequence of diversification, but can be alleviated or overcome by structural reforms in business practices or economic conditions.

The Effects Of Entrepreneurial Growth Orientation On Organizational Change And Firm Growth, Wee Liang Tan, Thomas Menkhoff, Yue Wah Chay

Research Collection Lee Kong Chian School Of Business

Managing growth in an enterprise as it grows beyond the startup phase is a challenge for many entrepreneurs. One key element that can help or hinder growth is the entrepreneur. Entrepreneurial growth has been linked to micro variables (motivations and psychological attributes of the entrepreneur) and macro variables. However, few studies have examined the role of the growth aspirations of the entrepreneur on the necessary elements of organization change related to growth.

This paper reports a study employing a typology of entrepreneurs based on their growth aspirations using an established dichotomous scale devised by Smith to differentiate between what he …

Business Groups: An Integrated Model To Focus Future Research, Daphne W. Yiu, Yuan Lu, Garry D. Bruton, Robert E. Hoskisson

Research Collection Lee Kong Chian School Of Business

Business groups are the primary form of managing large business organizations outside North America. This paper provides a systematic and integrative framework for understanding business groups. We argue that existing theoretical perspectives of business groups pay attention to four critical external contexts, each of which draws from a specific theoretical perspective: market conditions (transaction cost theory), social relationships (relational perspective), political factors (political economy perspective), and external monitoring mechanisms (agency theory). Business groups adapt to these external forces by deploying various internal mechanisms along two key dimensions: one focuses on the distinctive roles of the group affiliates (horizontal connectedness) and …

The Validity Of Assessment Centres For The Prediction Of Supervisory Performance Ratings: A Meta-Analysis, Eran Hermelin, Filip Lievens, Ivan T. Robertson

Research Collection Lee Kong Chian School Of Business

The current meta-analysis of the selection validity of assessment centres aims to update an earlier meta-analysis of assessment centre validity. To this end, we retrieved 26 studies and 27 validity coefficients (N=5850) relating the Overall Assessment Rating (OAR) to supervisory performance ratings. The current study obtained a corrected correlation of .28 between the OAR and supervisory job performance ratings (95% confidence interval .24 < =rho < =.32). It is further suggested that this validity estimate is likely to be conservative given that assessment centre validities tend to be affected by indirect range restriction.

Knowledge Narratives And Heterogeneity In Management Consultancy And Business Services, Robin Fincham, Timothy Adrian Robert Clark, Karen Handley, Andrew Sturdy

Research Collection Lee Kong Chian School Of Business

In the professional services, diversification into various types of business advice has implications for knowledge boundaries. This is a sector of changing jurisdictional patterns and periodic reconstruction. Firms like large law practices that feed services into corporate clients have been merging to provide global coverage (Suddaby and Greenwood, 2001; Suddaby et al., 2004). But new specialisms in areas like consulting and IT are even more dynamic. Patterns such as the growth in outsourcing and movement into management consulting accounted for stupendous growth of the global accounting firms. These changes have themselves been overtaken, as the IT and systems giants muscled …

Lessons From The Sub-Prime Crisis, Melvyn Teo

Research Collection BNP Paribas Hedge Fund Centre

We show that there is significant variation in performance across hedge funds during the subprime crisis. Hedge funds that (i) invested in Asia, (ii) had equity exposure, (iii) adopted directional strategies, or (iv) allowed for frequent redemptions, underperformed other funds. Moreover, leveraged funds did not fare significantly worse than their non-leveraged counterparts. Our results suggest that credit market illiquidity was not directly responsible for the bloodshed amongst hedge funds. Rather, funds were hurt by an increase in global risk aversion and by fire sales conducted in anticipation of redemptions.

Transforming A Region Into A Vibrant Entrepreneurial Economy: How To Create The Multiplier Effect, Knowledge@Smu

Knowledge@SMU

Sankaran Venkataraman is business administration professor at the Darden Graduate School of Business Administration, University of Virginia, and visiting professor of entrepreneurship and business at the Singapore Management University. At a recent seminar in Singapore, Venkataraman explored the question, “What does it take for a nascent entrepreneurial region to create the multiplier effect necessary to transform itself into a vibrant entrepreneurial economy?” In his view, institutional specialisation, division of labour, the architecture of entrepreneurial sub-systems and intangible cultures all play critical roles.

Michael Schaper On Small Businesses: Unravelling Popular Myths About Their Value And Viability, Knowledge@Smu

Knowledge@SMU

Small businesses typically account for more than 95% of all private sector entities and employ more than half the workforce in some countries, reveals a study by Michael Schaper, dean of the Murdoch University Business School in Australia. Speaking at the Singapore Management University’s UOB-SMU Enterprise Alliance Centre recently, Schaper dismantled some common misconceptions about the value and profiles of small businesses and their owners.

Global Sourcing Model Helps Companies Optimise Benefits From Free Trade Agreements, Knowledge@Smu

Knowledge@SMU

As FTAs (Free Trade Agreements) proliferate, companies increasingly face difficult decisions about where to source for components and set up manufacturing bases so as to benefit from FTAs. Brian Rodrigues, professor of operations management at the Singapore Management University, and management sciences professors Li Yanzhi and Andrew Lim at the City University of Hong Kong, have developed an easy to use algorithm which helps companies do just that.

Understanding Differences In Behaviour: The Role Of Mental Models, Knowledge@Smu

Knowledge@SMU

Why do some people make snap judgements about another person based on a single behaviour, while others make up their minds only after repeated observations in different situations? Singapore Management University psychology professor Jennifer Tong attempts to shed new light on why people entertain different assumptions about the nature of human behaviour in a series of psychological studies with a difference. Her findings have practical implications for interactions in the office and at the personal level. --------------------------------------------------------------------------------

Do Software Development Projects Dispersed Across The Globe Deliver The Goods?, Knowledge@Smu

Knowledge@SMU

Higher demands on computer systems and networks compel technology companies to assign software development duties across many dispersed centres in the US, India, China and elsewhere. In actual practice, does this distributed development model work well? Singapore Management University information systems professors Narayan Ramasubbu and Rajesh Krishna Balan examined this question in an award-winning paper, “Globally Distributed Software Development Project Performance: An Empirical Analysis,” presented recently at a joint meeting of the European Software Engineering Conference and the ACM SIGSOFT symposium.

Is Direct Method Cash Flow Reporting Better At Predicting Future Performance?, Knowledge@Smu

Knowledge@SMU

“Cash is king” goes the saying. Even companies enjoying brisk business have been known to fail because of unhealthy cash flows. The accounting profession is split over the benefits of the direct method (DM) versus the indirect method (IM) of preparing cash flow reports. In a study of over 100 US-based companies which used direct cash flow statements, Singapore Management University accounting professor Yoonseok Zang shows conclusively that the direct method does better at predicting future performance and earnings. --------------------------------------------------------------------------------

Legal Systems And Earnings Quality: The Role Of Auditor Industry Specialization, Chee Yeow Lim, Soo Young Kwon, Patricia Mui Siang Tan

Research Collection School Of Accountancy

This paper extends prior studies in auditor industry specialization to an international setting and examines if the impact of industry specialist auditors on earnings quality is dependent on the legal environments. Using data for 28 countries over 20 industries from 1993 to 2003, we find that clients of industry specialist auditors have lower discretionary current accruals and higher earnings response coefficients than clients of nonspecialist auditors. In addition, we find that the impact of auditor industry specialization on earnings quality increases as the legal environment weakens. Collectively, the results suggest that the benefits from engaging the services of industry specialist …

The Dynamics Of Implementing And Managing Modularity Of Organizational Routines During Capability Development: Insights From A Process Model, Shan Ling Pan, Gary Shan Chi Pan, Adela Chen, Ming Huei Hsieh

Research Collection School Of Accountancy

Past research using the resource-based view of a firm suggests that it is important to consider how firms develop, manage, and deploy resources and capabilities to influence the overall process of strategy formation and implementation. Relatively little research has been conducted in conceptualizing how firms implement and manage modularity of organizational routines during capability development. Yet, most companies would benefit from implementing modularity in organizational routines when competing in dynamic market conditions. Such implementations may require fundamental organizational reorientation that incurs significant coordination costs, and in some cases, such modularization attempts may fail, costing organizations significant amounts of valuable resources. …

Procedural Fairness, Outcome Favorability, And Judgments Of An Authority's Responsibility, Joel Brockner, Ariel Y. Fishman, Jochen Reb, Barry M. Goldman, Scott Spiegel, Charlee Garden

Research Collection Lee Kong Chian School Of Business

Fairness theory (R. Folger & R. Cropanzano, 1998, 2001) postulates that, particularly in the face of unfavorable outcomes, employees judge an organizational authority to be more responsible for their outcomes when the authority exhibits lower procedural fairness. Three studies lent empirical support to this notion. Furthermore, 2 of the studies showed that attributions of responsibility to the authority mediated the relationship between the authority's procedural fairness and employees' reactions to unfavorable outcomes. The findings (a) provide support for a key assumption of fairness theory, (b) help to account for the pervasive interactive effect of procedural fairness and outcome favorability on …

Designing The Market Game For A Commodity Trading Simulation, Shih-Fen Cheng

Research Collection School Of Computing and Information Systems

In this paper, we propose to design a market game that (a) can be used in modeling and studying commodity trading scenarios, and (b) can be used in capturing human traders' behaviors. Specifically, we demonstrate the usefulness of this commodity trading game in a single-commodity futures trading scenario. A pilot experiment was run with a mixture of human traders and an autonomous agent that emulates the aggregatedmarket condition, with the assumption that this autonomous agent would hint each of its action through a public announcement. We show that the information collected from this simulation can be used to extract the …

An Examination Of Psychometric Bias Due To Retesting On Cognitive Ability Tests In Selection Settings, Filip Lievens, Charlie L. Reeve, Eric D. Heggestad

Research Collection Lee Kong Chian School Of Business

Using a latent variable approach, the authors examined whether retesting on a cognitive ability measure resulted in measurement and predictive bias. A sample of 941 candidates completed a cognitive ability 14 test in a high-stakes context. Results of both the within-group between-occasions comparison and the between-groups within-occasion comparison indicated that no measurement bias existed during the initial testing but that retesting induced both measurement and predictive bias. Specifically, the results suggest that the factor underlying the retest scores was less saturated with g and more associated with memory than the latent factor underlying initial test scores and that these changes …

The Promise Of A Managerial Values Approach To Corporate Philanthropy, Jaepil Choi, Heli Wang

Research Collection Lee Kong Chian School Of Business

This article presents an alternative rationale for corporate philanthropy based on managerial values of benevolence and integrity. On the one hand, top managers with benevolence and integrity values are more likely to spread their intrinsic concern for others into the wider society in the form of corporate philanthropy. On the other hand, top managers high in benevolence and integrity are likely to contribute to improved managerial credibility and trusting firm-stakeholder relationships, thereby improving corporate financial performance. Therefore, the article makes the argument that both corporate philanthropy and corporate financial performance can better be interpreted as resulting from managers’ benevolence and …

Technological Knowledge, Product Relatedness, And Parent Control: The Effect On Ijv Survival, Dean Xu, Jane W. Lu

Research Collection Lee Kong Chian School Of Business

This article examines the relationships among parent firm technological knowledge, parent-IJV product relatedness, parent control over the IJV, and IJV survival. Combining the knowledge-based perspective and institutional theory, we argue that parent control itself does not necessarily lead to higher IN survival; it contributes to IN survival when the parent firm has a high level of technological knowledge, and when the IJV is product-related to this parent. Results obtained from 1038 Japanese IJVs based in China indicate that both equity control and managerial control of a Japanese parent had a positive interaction effect, with the parent's technological knowledge, on IN …

State-Led Transborder Industrialization In Asia: A Note On Singapore's Manufacturing Enclaves In Vietnam And China, Caroline Yeoh, Wilfred Pow Ngee How

Research Collection Lee Kong Chian School Of Business

State-led, market-driven interventions have been the hallmark of the Singapore `success storyÆ. This paper revisits SingaporeÆs state-enterprise strategy and takes a closer look at the portability of this strategy, in the framework of Regionalization21, a series of transborder industrialization experiments in Indonesia, Vietnam and China. These state-engineered projects, orchestrated to encapsulate economic space for Singapore-based firms to expand into the region, remain controversial. This strategic initiative is promulgated on the exportability of SingaporeÆs state credibility, systemic and operational efficiencies as well as technological competencies, to locations where these attributes are less distinct. We present evidence culled from surveys and interviews …

The Change In Corporate Transparency Of Korean Firms After The Asian Financial Crisis: An Analysis Using Analysts' Forecast Data, Jinho Chang, Young Jun Cho, Hyun-Han Shin

Research Collection School Of Accountancy

Using analysts' forecast error and forecast dispersion of firms covered by the I/B/E/S database, this study examines the change in information asymmetry of Korean firms around the financial crisis of 1997. Results show that the information asymmetry of Korean firms is lower after the financial crisis than before, implying that corporate transparency did, in effect, improve with the change in business environment. In addition, this study finds that chaebol firms have higher information asymmetry than non-chaebol firm, and also that the corporate transparency improvement of chaebol firms is not higher than that of non-chaebol firms in the post-crisis period despite …

Monitoring: Which Institutions Matter?, Xia Chen, Jarrad Harford, Kai Li

Research Collection School Of Accountancy

Within a cost–benefit framework, we hypothesize that independent institutions with long-term investments will specialize in monitoring and influencing efforts rather than trading. Other institutions will not monitor. Using acquisition decisions to reveal monitoring, we show that only concentrated holdings by independent long-term institutions are related to post-merger performance. Further, the presence of these institutions makes withdrawal of bad bids more likely. These institutions make long-term portfolio adjustments rather than trading for short-term gain and only sell in advance of very bad outcomes. Examining total institutional holdings or even concentrated holdings by other types of institutions masks important variation in the …

Corporate Governance Reform As Institutional Innovation: The Case Of Japan, Toru Yoshikawa, Lai Si Tsui-Auch, Jean Mcguire

Research Collection Lee Kong Chian School Of Business

To address the convergence-divergence debate in corporate governance, we conduct a multiple-case, multiple-level study to analyze the diffusion of governance innovation in Japan. We argue that Japanese systems of corporate governance neither fully converge to, nor completely diverge from, the Anglo-American model. Rather, Sony-the pioneer of corporate governance reforms-and its followers selectively adopted features from this model, decoupled them from the original context, and tailored them to fit to their own situations to generate governance innovation. However, we find that the spread of innovation across firms and institutional levels is far from linear and straightforward, and that other well-regarded firms …

An Information-Sharing Based Anti-Phishing System, Yueqing Cheng, Zhen Yuan, Lei Ma, Robert H. Deng

Research Collection School Of Computing and Information Systems

This paper presents the design of an informationsharing based or server-assisted anti-phishing system. The system follows a client-server architecture and makes decision based on not only client side heuristics but also collective information from multiple clients. When visiting a web site, a client side proxy, installed as a plug-in to a browser, decides on the legitimacy of the web site based on a combination of white list, black list and heuristics. In case the client side proxy does not have sufficient information to make a clear judgment, it reports the suspicious site to a central server which has access to …

Multi-Period Combinatorial Auction Mechanism For Distributed Resource Allocation And Scheduling, Hoong Chuin Lau, Shih-Fen Cheng, Thin Yin Leong, Jong Han Park, Zhengyi Zhao

Research Collection School Of Computing and Information Systems

We consider the problem of resource allocation and scheduling where information and decisions are decentralized, and our goal is to propose a market mechanism that allows resources from a central resource pool to be allocated to distributed decision makers (agents) that seek to optimize their respective scheduling goals. We propose a generic combinatorial auction mechanism that allows agents to competitively bid for the resources needed in a multi-period setting, regardless of the respective scheduling problem faced by the agent, and show how agents can design optimal bidding strategies to respond to price adjustment strategies from the auctioneer. We apply our …

The Price Of Stability In Selfish Scheduling Games, Lucas Agussurja, Hoong Chuin Lau

Research Collection School Of Computing and Information Systems

Game theory has gained popularity as an approach to analysing and understanding distributed systems with selfinterested agents. Central to game theory is the concept of Nash equilibrium as a stable state (solution) of the system, which comes with a price - the loss in efficiency. The quantification of the efficiency loss is one of the main research concerns. In this paper, we study the quality and computational characteristic of the best Nash equilibrium in two selfish scheduling models: the congestion model and the sequencing model. In particular, we present the following results: (1) In the congestion model: first, the best …

Modeling Semantics In Composite Web Service Requests By Utility Elicitation, Qianhui Althea Liang, Jen Yao Chung, Steven M. Miller

Research Collection School Of Computing and Information Systems

When meeting the challenges in automatic and semi-automatic Web service composition, capturing the user’s service demand and preferences is as important as knowing what the services can do. This paper discusses the idea of semantic service requests for composite services, and presents a multi-attribute utility theory (MAUT) based model of composite service requests. Service requests are modeled as user preferences and constraints. Two preference structures, additive independence and generalized additive independence, are utilized in calculating the expected utilities of service composition outcomes. The model is also based on an iterative and incremental scheme meant to better capture requirements in accordance …

Top Performing Hedge Funds: Does Geography Make A Difference?, Knowledge@Smu

Knowledge@SMU

Do hedge funds earn above-average returns? Is there a way to identify these top performers? Where hedge funds are located makes the difference, according to Singapore Management University finance professor Melvyn Teo, who is also director of the university’s BNP Paribas Hedge Fund Centre. Teo puts forward evidence for the hypothesis that locally-managed hedge funds are better able to monitor their investments and, therefore, generate superior returns.

The Power Of Social Media: Only The Tip Of The Iceberg?, Knowledge@Smu

Knowledge@SMU

Social media is redefining the way people and companies around the world communicate with one another by dissolving geographical and cultural boundaries. Akanksha Goel, newly appointed Editor-in-Chief of Stuff Singapore -- a gadgets and technology lifestyle publication launched in the UK five years ago -- is a final-year marketing and corporate communication student at Singapore Management University. Goel talked to Knowledge@SMU about how social media compels us to rethink culture, and why companies should take advantage of these new channels to grow their businesses.

Michael Spence On The Growth Commission: Charting The Unknown To Stimulate And Sustain Development, Knowledge@Smu

Knowledge@SMU

The Commission on Growth and Development, launched in April 2006 by the World Bank and four other sponsors, is chaired by Nobel laureate Michael Spence, former dean of the Stanford Graduate School of Business. On a recent visit to Singapore, Spence addressed an audience of business leaders and academics at the Singapore Management University on “Growth Strategies and Dynamics: Insights from Country Experiences,” drawing on examples from the developing world as well as Singapore.