Tobin's q, agency conflicts, and differential wealth effects of international joint ventures

Min, Jae Hoon; Prather, Larry J.

doi:10.1016/s1044-0283(01)00032-1

Cited by 26 publications

(14 citation statements)

References 19 publications

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“…Second, following previous work, investment opportunities (VO) were expressed by Tobin's q ratio (Q) (see, for example, Jones, 2001; Min and Prather, 2001; Frye, 2004). Tobin (1978) documented the noteworthy role of the q ratio as a measure of profitable investments.…”

Section: Methodsmentioning

confidence: 99%

How do institutional shareholders manipulate corporate environmental strategy to protect their equity value? A study of the adoption of ISO 14001 by Egyptian firms

Wahba

2010

Bus Strat Env

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Theoretical as well as empirical evidence regarding the infl uence of institutional ownership on corporate environmental strategy not only is inconclusive but also refl ects experience from either the Anglo-American context or other developed countries. The underlying assumption of most of this literature is that institutional shareholders are always 'active' or 'passive' in their actions towards corporate environmental strategy. However, this study argues that this relationship might be moderated by various motivations such as legitimizing existence and operations, conforming with industry norms or lessening managerial entrenchment. Econometric analysis, using a sample of Egyptian fi rms, as hypothesized, demonstrated that institutional ownership exerted positive and signifi cant effects on a corporation's tendency to adopt environmental management standards only when fi nancial resources are available and investment opportunities are limited. A possible explanation of this fi nding is that Egyptian institutional investors are more likely to use corporate environmental responsibility to offset their inability to confront managerial discretionary power. An implication of this fi nding is that not only will different types of stakeholder ask for different levels of social and environmental responsibility, but also the same type of stakeholder may ask for different levels of social and environmental responsibility in different contexts.

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Section: Methodsmentioning

confidence: 99%

How do institutional shareholders manipulate corporate environmental strategy to protect their equity value? A study of the adoption of ISO 14001 by Egyptian firms

Wahba

2010

Bus Strat Env

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“…This study includes six control variables: growth opportunity, profitability, firm size, leverage, capital intensity and economic conditions, owing to possible confounding effects of these variables on the relationship between internationalization and financial health. First, following previous studies, we use Tobin's Q (Q) to represent growth opportunity (Min and Prather, 2001). Calculation of the Q is as follows: (MVE + PS + DEBT)/TA, where MVE is the product of a firm's stock price and the number of common shares outstanding; PS represents the liquidating value of outstanding preferred shares; DEBT is the value of short-term liabilities, net of short-term assets plus the book value of long-term assets, and TA represents the book value of total assets (Chung and Pruitt, 1994).…”

Section: Control Variablesmentioning

confidence: 99%

Internationalization and Financial Health in the US Hotel Industry

2014

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This study examines two main hypotheses regarding the internationalization and financial health of publicly traded US hotels from 1990 to 2010. First, the study hypothesizes that international US hotels are financially healthier than domestic US hotels. The findings support the hypothesis after controlling for other potential confounding factors: a firm's growth opportunity, profitability, size, leverage, capital intensity and economic conditions. Next, the study tests the second hypothesis, that international US hotels face a great challenge in terms of their financial health as they enter foreign markets due to the many unknown factors in such international settings. However, it is expected that the internationalization strategy will gradually provide more benefits as the firm increases its degree of internationalization, and thus that benefits will eventually outweigh costs, leading to a U-shaped relationship. The study's findings support this curvilinear U-shaped relationship within the dataset of internationally operating US hotels.

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“…This study uses a profit margin (=net income/total revenue) as a proxy for a firm's profitability. Following previous studies (Min and Prather, 2001;Pindado and Rodrigues, 2005), this study uses Tobin's Q (Q) to represent anticipated growth opportunity that reduces the level of financial distress (i.e., a positive relationship between Q and Z-scores). Calculation of the Tobin's Q follows Chung and Pruitt's (1994) suggestion:…”

Section: Control Variablesmentioning

confidence: 99%

Moderating effect of capital intensity on the relationship between leverage and financial distress in the U.S. restaurant industry

Lee

Koh

Kang

2011

International Journal of Hospitality Management

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Tobin's q, agency conflicts, and differential wealth effects of international joint ventures

Cited by 26 publications

References 19 publications

How do institutional shareholders manipulate corporate environmental strategy to protect their equity value? A study of the adoption of ISO 14001 by Egyptian firms

How do institutional shareholders manipulate corporate environmental strategy to protect their equity value? A study of the adoption of ISO 14001 by Egyptian firms

Internationalization and Financial Health in the US Hotel Industry

Moderating effect of capital intensity on the relationship between leverage and financial distress in the U.S. restaurant industry

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