The joint entrance exam, overconfident directors and firm performance

Chakravarty, Sugato; Hegde, Prasad

doi:10.1016/j.jcorpfin.2019.02.007

Cited by 23 publications

(17 citation statements)

References 78 publications

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“…The study controlled for firm age and firm size. Firm age was measured as the number of years since incorporation of the firm (Vu et al, 2019;Chakravarty& Hegde, 2019;Ilaboya & Ohiokha, 2016). Firm size measured as natural logarithm of total bank assets (Mitra, 2019;Ayuba et al, 2019;Zhou et al, 2019).…”

Section: 2mentioning

confidence: 99%

Does the ‘Process’ of Process Capital Matter to Performance? Evidence from Kenyan Commercial Banks

Githaiga

Komen

Yegon

2019

JAFEE

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Globalization, changing customer expectation and shrinking product life-cycle depict process capital as a source of competitive advantage in modern economies. Consequently, organizations are gradually becoming more process oriented to cope with a dynamic environment. However, the process capital and performance causality is scanty in extant literature. Besides, previous studies overlooked the process aspect of process capital. Thus, the objective of this study was to determine whether the “process” of process capital matters to firm performance. The hypothesis was tested using panel data for the years 2008-2017 extracted from 31 commercial banks in Kenya. The findings showed that process capital had a positive and significant effect on performance (β = 0.275, ρ-value 0.000<0.05). Consistent with the resource based view theory; the study concluded that the process of process capital influences firm performance.

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Section: 2mentioning

confidence: 99%

Does the ‘Process’ of Process Capital Matter to Performance? Evidence from Kenyan Commercial Banks

Githaiga

Komen

Yegon

2019

JAFEE

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“…Top managers' social capital is the connection among top managers, internal and external personnel, which exists in the structure of top managers' interpersonal relationship. To a large extent, the quality of corporate social capital depends on the social network system woven by top management teams, which is closely related to the famous university experience of top managers [22]. The famous university experience of top managers will improve their reputation, as it is easier to get the recognition from society by entering famous universities, which makes external organizations more willing to establish links with companies, so as to make companies closer to the social network center and optimize its external social capital.…”

Section: Famous University Experience Of Top Managers and Corporate Pmentioning

confidence: 99%

“…The following factors that might influence corporate performance were included as controls: firm size (Size), firm age (Age), top management team size (TMT_size), financial leverage (Leverage), investment opportunities (OI), free cash flow (FCF) and cash reinvestment ratio (CIR) [22,84,85]. In addition, industry and year fixed effects were also controlled here.…”

Section: Control Variablesmentioning

confidence: 99%

“…Selection bias may diminish as top managers who graduated from famous universities are more inclined to work in companies with good performance. Following Chakravarty [22], we instrumented the ratio of the number of students enrolled in the "985 project" universities to the total number of people in the province where the listed company is located. We add this instrumental variable into the regression model, and find that the regression results are robust, which are not shown in this paper.…”

Section: Instrumental Variablementioning

confidence: 99%

“…As the top managers with the famous universities experience, not only will their success in entering famous universities through fierce competition in college entrance examination have a crucial impact on their psychological state, skill accumulation and social capital accumulation, but also their study experience will have an important impact on these aspects. Chakravarty examined the influence of the Indian Joint Entrance Examination (JEE) on corporate directors; he found that the early education experience had a strong shaping effect on the individual's psychological state and ability [22]. Generally speaking, Indian students admitted to "famous universities" had a more positive psychological state, and were more likely to show overconfidence in their future work.…”

Section: Introductionmentioning

confidence: 99%

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Can the Famous University Experience of Top Managers Improve Corporate Performance? Evidence from China

Ruan

Liu

2019

Sustainability

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With the continuous improvement of China’s overall education level, the number of top managers with famous university experience in listed companies has been increasing. The question then becomes whether the performance of the listed companies is better if there are more top managers with famous university experience in the top management team (TMT). Based on the sample of listed companies in China from 2008 to 2018, we adopted the two-way fixed effect model and panel propensity score matching (Panel-PSM) methodology to examine the impact of top managers with famous university experience on corporate performance and its mechanism. We found that the higher the proportion of top managers with famous university experience in the TMT, the better the corporate performance will be, and this positive effect is larger in companies with high business complexity. We also found that this effect is mediated by overconfidence of the TMT. The proportion of top managers with famous university experience in the TMT will inhibit the overconfidence of the TMT, which will ultimately benefit corporate performance.

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Does ownership structure affect the optimal capital structure? A PSTR model for China

Yao

Zhou

2020

Int. J Fin Econ

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In the context of Chinese enterprises' privatization reforms, the relationships between ownership structure and optimal capital structure and between ownership structure and firm performance are worth attention. Using data on listed companies in China, this article uses the panel smooth transfer regression (PSTR) model and multiple regression models to test the nonlinear relationship between capital structure and firm performance. The optimal capital structure is calculated using the partial correlation function of the PSTR model, and the ownership structure-optimal capital structure relationship is analysed. This research found that (a) the effect of the debt-to-asset ratio on firm performance shows a nonlinear relationship with sudden changes in characteristics, and a debt-to-asset ratio interval exists that can significantly improve firm performance; (b) under the premise of the effect of ownership checks and balances, an increase in ownership concentration can improve the optimal capital structure; thus, enterprises can achieve effective operations with higher debt; (c) the promotion effect of ownership concentration on firm performance varies depending on a company's debt-to-asset ratio; and (d) different industries have different optimal capital structures. The raw materials industry has a high optimal capital structure. A series of robustness tests verify the robustness of these conclusions. This research enriches the theoretical interpretation of the optimal capital structure and provides new insights into the relationship between ownership structure and firm performance. The conclusions drawn by this article are helpful to enterprises making corresponding financial decisions and the government in formulating corresponding capital market systems.

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The joint entrance exam, overconfident directors and firm performance

Cited by 23 publications

References 78 publications

Does the ‘Process’ of Process Capital Matter to Performance? Evidence from Kenyan Commercial Banks

Does the ‘Process’ of Process Capital Matter to Performance? Evidence from Kenyan Commercial Banks

Can the Famous University Experience of Top Managers Improve Corporate Performance? Evidence from China

Does ownership structure affect the optimal capital structure? A PSTR model for China

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