Do Public Firms Respond to Industry Opportunities More Than Private Firms? The Impact of Initial Firm Quality

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.

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The impact of public firms commercialisation on purchasing management

Journal of Public Procurement ◽

10.1108/jopp-03-03-2003-b002 ◽

2003 ◽

Vol 3 (3) ◽

pp. 357-369 ◽

Cited By ~ 2

Author(s):

Alessandro Ancarani

Keyword(s):

Purchasing Management ◽

Public Firms ◽

The Impact

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Portfolio management and appropriation of private benefits of control

Journal of Business ◽

10.18533/job.v1i1.17 ◽

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

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.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. 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.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.

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An empirical investigation on the impact of marketing strategy style on firm performance: evidence from public firms in China

Journal of Contemporary Marketing Science ◽

10.1108/jcmars-05-2021-0013 ◽

2021 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

Rui Wang ◽

Liqiong Liu ◽

Yu Feng

Keyword(s):

Marketing Strategy ◽

Corporate Performance ◽

Negative Impact ◽

Secondary Data ◽

Listed Companies ◽

Research Issues ◽

Content Type ◽

Public Firms ◽

Negative Effect ◽

The Impact

PurposeThe mechanism of marketing strategy style and its impact on firms are research issues received wide attention. In particular, the aggressive style of marketing strategy has been chosen by many companies, but recent studies have shown that it has a negative effect on corporate performance. This leads to the core issue of this paper – does the aggressive style of marketing strategy always had a negative impact on corporate performance? Are there any factors that can alleviate this negative impact?Design/methodology/approachBased on the resource-based theory and agency theory, this paper takes the Growth Enterprise Market (GEM) listed companies as the research objects, collects secondary data and conducts the research by regression model.FindingsThe empirical research shows that: (1) the aggressive style of marketing strategy significantly and negatively affects the performance of firm; (2) the resource constraint can moderate the main effect and resource control play a weak adjustment role.Practical implicationsIn practice, this paper confirms the adverse impact of aggressive style of marketing strategy on the performance of listed companies on GEM and inspires the industry to strengthen the control and supervision of marketing resources.Originality/valueThis paper makes up for the research gap in the field of cross-research in finance and marketing theoretically.

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A New Approach to Estimating the Relation between Audit Fees and Financial Misconduct

Accounting Horizons ◽

10.2308/horizons-19-042 ◽

2019 ◽

Vol 34 (2) ◽

pp. 41-61 ◽

Cited By ~ 1

Author(s):

Bidisha Chakrabarty ◽

Scott Duellman ◽

Michael A. Hyman

Keyword(s):

Selection Bias ◽

Audit Fees ◽

Governance Structure ◽

Small Sample ◽

New Approach ◽

Audit Firm ◽

Public Firms ◽

Financial Misconduct ◽

Systematic Selection ◽

The Impact

SYNOPSIS Research on the association between abnormal audit fees (measuring audit effort) and financial misconduct has produced mixed results. The use of actual misstatements in this research creates small-sample inferences, introduces systematic selection bias, and reduces the scope of sample coverage. In this study we use a metric based on Benford's Law to analyze the impact of abnormal audit fees on the likelihood of misconduct. This measure is parsimonious, avoids selection bias, and can be computed for a large sample of public firms. Consistent with theory, we find that greater audit effort reduces the likelihood of misconduct and auditor resignations are more likely for clients with higher misconduct likelihood. Our findings are not driven by audit firm size, client size, the governance structure of the client, or economic bonding explanations. The effect is not subsumed when controlling for alternative misconduct measurement metrics and is robust across multiple tests to address endogeneity. JEL Classifications: G32; M41.

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The Effects of Goodwill Tax Deductions on the Market for Corporate Acquisitions

Journal of the American Taxation Association ◽

10.2308/jata.2000.22.s-1.34 ◽

2000 ◽

Vol 22 (s-1) ◽

pp. 34-50 ◽

Cited By ~ 29

Author(s):

Benjamin C. Ayers ◽

Craig E. Lefanowicz ◽

John R. Robinson

Keyword(s):

Firm Characteristics ◽

Target Firm ◽

Corporate Acquisitions ◽

Public Firms ◽

Acquiring Firms ◽

Tax Deductions ◽

Tax Benefits ◽

The Impact ◽

Tax Deduction ◽

Purchased Goodwill

We analyze the effect of the tax deduction for goodwill amortization provided by the Omnibus Budget Reconciliation Act of 1993 (OBRA) on the market for corporate acquisitions. We analyze a sample of taxable corporate acquisitions, including acquisitions of subsidiaries, private firms, and public firms, occurring over the period 1990 through 1996. We assess the impact of the goodwill legislation by (1) quantifying the frequency and size of qualifying acquisitions and comparing these acquisitions to nonqualifying acquisitions pre- and post-OBRA and (2) investigating if and how the goodwill amortization deduction influenced the premium paid for qualifying corporate acquisitions. We estimate a regression of acquisition premiums on target-firm characteristics including a proxy for purchased goodwill. We find that acquisitions qualifying for goodwill amortization comprise less than 17 percent of sample taxable corporate acquisitions before OBRA, and this percentage does not increase after the enactment of OBRA. Nonetheless, our regression results indicate that the OBRA goodwill provisions did contribute to a significant increase in acquisition premiums associated with purchased goodwill for qualifying transactions. Thus, rather than operate as a subsidy to acquiring firms, we find that a majority of the tax benefits associated with the goodwill amortization deduction accrues to target-firm shareholders.

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