scholarly journals Do Public Firms Respond to Investment Opportunities More than Private Firms? The Impact of Initial Firm Quality

2017 ◽  
Author(s):  
Vojislav Maksimovic ◽  
Gordon M. Phillips ◽  
Liu Yang
Keyword(s):  
Private Firms ◽  
Public Firms ◽  
Investment Opportunities ◽  
The Impact

To be more philanthropic when joining the government-controlled business association? Evidence from Chinese private firms

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Youliang Yan ◽  
Xixiong Xu
Keyword(s):  
Communist Party ◽  
Corporate Philanthropy ◽  
Emerging Market ◽  
Private Firms ◽  
Theoretical Understanding ◽  
Business World ◽  
Content Type ◽  
Business Association ◽  
The Government ◽  
The Impact

Purpose The purpose of this paper is to investigate whether and how affiliation with the government-controlled business association, namely, China Federation of Industry and Commerce (CFIC), affects corporate philanthropy in an emerging market. Design/methodology/approach Through an analysis of survey data gathered from Chinese private firms, this paper conducts multiple regressions to examine the impact of the CFIC membership on corporate philanthropy. Findings Empirical results show that the CFIC membership of private entrepreneurs is significantly positively associated with corporate philanthropy. Moreover, this study finds that the provincial marketization level and the firm Communist Party branch attenuate the positive association between CFIC membership and corporate philanthropy, indicating that the effect of CFIC on corporate philanthropy is more pronounced in regions with lower marketization level and firms without Communist Party branch. The findings are robust to various alternate measures of corporate philanthropy and remain valid after controlling for potential endogeneity. Practical implications Firms will be more active in corporate philanthropy to respond to the government’s governance appeal when they join the CFIC. This highlights the implications of political connections and in particular on the value of government-controlled business associations in the Chinese business world. Originality/value This study extends the literature on the determinants of corporate philanthropy and deepens the theoretical understanding of the governance role of business association with Chinese characteristics.

scholarly journals Portfolio management and appropriation of private benefits of control

2016 ◽  
Vol 1 (1) ◽  
pp. 20
Author(s):  
Elli Kraizberg
Keyword(s):  
Portfolio Management ◽  
Empirical Finding ◽  
Expected Returns ◽  
Minority Shareholders ◽  
Publicly Traded ◽  
Final Model ◽  
Public Firms ◽  
The Public ◽  
Portfolio Managers ◽  
The Impact

<p dir="LTR">In many countries around the globe, portfolio managers utilize well accepted models, assuming that a partial stake of ownership is proportionally valued. This assumption is incorrect  in markets in which traded firms or publicly held firms are controlled by major owners who would take any possible measure to protect and maintain a 'lock' on control, so they can secure a sellable asset to another control seeker. In this case, estimation of key parameters such as, volatility, expected returns and diversification effect, may be grossly distorted.</p><p dir="LTR">We would argue that a major trigger for the value of the benefits of control is the ability of control owners to transfer assets from their own portfolio to a controlled publicly traded firm. While it is obvious that these transfers will take place, if and only if, it is beneficial to the control owners, the impact on the minor shareholders may not necessarily be negative and may vary depending on several parameters. Thus, the benefits of control are not entirely "private", i.e. appropriation and diversion of the resources of publicly traded firms for the benefit of the control owners.     </p><p dir="LTR">This paper aims to model the effect of the benefits of control on the value of a minority held public firms. It focuses on two related issues that are discussed in the literature on the benefits of control: what drives the value of the benefits of control, given the   empirical evidence that control seekers are willing to pay a significant premium for control, and secondly, can these benefits be rationally modeled? To better understand these issues, it then models a specific drive on the part of control seekers who, in addition to their stake in a publicly traded firm, own a private portfolio. It could be argued that they may 'transfer' inferior investments to the public firms that they control exploiting less than perfect transparency. However, while they own this valuable option of 'transferring' inferior investments into the public firm, these actions may still be beneficial to the minority shareholders.</p><p dir="LTR">We establish a model and derive a simulation procedure that are applied to several cases in which transfers  are made in exchange for cash or equity, instances of full disclosure or partial transparency, the likelihood that the control owners' actions will be contested in court, level of risk, and other parameters. Then we will compare the results to empirical finding.  The final model will be greatly simplified so that the end formula can be easily used by practitioners. </p>

scholarly journals Women on corporate boards and allocation of capital raised through IPOs

2019 ◽  
Vol 57 (3) ◽  
pp. 547-568 ◽  
Author(s):  
Bazeet Olayemi Badru ◽  
Nurwati A. Ahmad-Zaluki ◽  
Wan Nordin Wan-Hussin
Keyword(s):  
Decision Making ◽  
Governance Structure ◽  
Capital Allocation ◽  
Strategic Decision ◽  
Corporate Boards ◽  
Content Type ◽  
Investment Opportunities ◽  
Women On Corporate Boards ◽  
The Impact ◽  
A Company

Purpose The purpose of this paper is to examine whether the differences in men and women, such as risk aversion in decision making, can influence the amount of capital that the board of directors can allocate for investment opportunities. Design/methodology/approach This study sampled 212 IPOs over the period of 2005–2015 and employed the OLS and the quantile regression techniques to examine the impact of female directors on capital allocation. Findings The results show that women on corporate boards have a positive influence on the amount of capital an IPO company can allocate for investment opportunities. These findings suggest that the investment strategies of women in an emerging financial market, like Malaysia, may differ from women in other financial markets. Practical implications The presence of women on corporate boards plays an important role in board involvement in a company’s strategic decision at the time of the IPO. Therefore, regulators and IPO issuers should pay close attention to the corporate governance structure of a company at the time of an IPO. In addition, investors and other stakeholders of a company may consider women on corporate boards as an important factor in financing and investment decisions. Originality/value Despite several studies that have examined the influence of women on corporate boards on corporate outcomes, globally, the presence of women on corporate boards and their influence on corporate decision-making related to allocation of capital to investment opportunities, have not been fully explored in the IPO literature.

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