Alliance Portfolio Management and Sustainability of Entrepreneurial Firms

This paper studies whether economic policy uncertainty (EPU) influences internal control (IC). Exploiting EPU as an exogenous shock and using unique internal control index data at the firm level from China, we can make causal inferences about the EPU effect on IC, and provide new insight into firms’ sustainability. Our results show that firms tend to cope with higher EPU by improving IC, indicating their efforts to ensure sustainability development. We also find that this trend is intensified for firms localized in regions with a lower marketization degree, state-owned firms, or firms with fewer analysts following. Further analyses show that EPU significantly reduces the internal control auditing fees, hence backing up the association between EPU and IC. Unlike the previous literature, this paper shows the important role of internal control for firms in coping with EPU, which is of crucial significance to how firms seek to adhere to sustainable development and how economic policy works best.

Section: Sustainability and Coping Behaviors: Economic Policy Uncertamentioning

confidence: 99%

Firms’ Sustainability: Does Economic Policy Uncertainty Affect Internal Control?

Liao

Wang

2019

“…Third, Model (1) controls for the effect of state ownership nature (STATE) on debt financing costs [63]. Finally, in order to control for the fixed effect of industries (the CSRC classification), calendar years and audit firms, year, industry and audit firm dummy variables are incorporated into Model (1).…”

Section: Empirical Modelmentioning

confidence: 99%

“…Based on Hypothesis 2, we expect that the coefficient on FOR × SPEC is significant and positive. All the control variables used in Model (2) are as same as those used in Model (1).…”

Section: Empirical Modelmentioning

confidence: 99%

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Signing Auditors’ Foreign Experience and Debt Financing Costs: Evidence for Sustainability of Chinese Listed Companies

Hou

Liao²,

Liu

et al. 2019

This study investigates whether signing auditors with foreign experience influence debt financing costs. Using a sample of Chinese listed firms for the period of 2001–2016, this study hand-collects the information of signing auditors’ foreign experience and empirically examines the relationship between signing auditors’ foreign experience and debt financing costs. The empirical results show that signing auditors’ foreign experience is significantly and negatively correlated with debt financing costs, suggesting that signing auditors’ foreign experience improves audit quality, reduces information risk and thereby lowers the cost of debt financing. Further analyses show that the negative effect of signing auditors’ foreign experience on the cost of debt financing is more pronounced in audit firms without industry expertise, suggesting that audit firm industry expertise mitigates the negative relationship between signing auditors’ foreign experience and debt financing costs. These results imply that signing auditors who have foreign experience could serve a significant role in debt financing, which would strengthen firms’ sustainability.

“…As the competitive environment has become fiercer, ensuring a continuously satisfactory level of performance has become crucial for the survival and sustainability of firms [1]. Scholars studying firm alliances contend that, due to limited resources and capabilities, access to external resources plays an important role for firm performance [2,3], and increasingly argue that excellent performance is not achieved through the success of one particular alliance but through the joint effect of the overall portfolio of collaborations [4,5]. Alliance portfolios enable the development of new capabilities and new products through various resource inputs and thereby, are beneficial to firm performance [6,7].…”

Section: Introductionmentioning

confidence: 99%

Sequential Alliance Portfolios, Partner Reconfiguration and Firm Performance

Liang

Shao

2019

This study develops multi-dimensional partner reconfiguration strategies and addresses how they affect firm performance in a series of alliance portfolios by applying the dynamic sustainable perspective. Using data collected from 565 fund product alliance portfolios initiated by 61 Chinese fund firms during a five-year period from 2007 to 2011, the empirical results indicate that both dropping active partners and adding new ones will reduce firm performance. By contrast, reintroducing previous partners will increase firm performance. The average tie strength of the last alliance portfolio moderates the influences of partner reconfigurations on firm performance. Specifically, it negatively moderates the effect of dropping active partners and positively moderates the effect of adding new partners. However, its moderating effect on the influence of reintroducing previous partners is insignificant. These findings have positive theoretical and practical significance for firms pursuing sustainable development by clarifying when and how partner reconfiguration strategies influence firm performance.