Journal Articles

Permanent URI for this collectionhttps://mro.massey.ac.nz/handle/10179/7915

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Start date: 2023Subject: search.filters.subject.Firm performance

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    Long-tenured CEOs and firm performance: too much of a good thing? Evidence from New Zealand
    (Emerald Publishing Limited, 2025-04-11) Chikunda P; Bhuiyan MBU; Houqe MN; Nguyen LTM
    Purpose: This study aims to investigate the association between chief executive officer (CEO) tenure and firm performance. Extended CEO tenure offers the potential for organizational stability, sustained operational coherence and heightened insights into business intricacies. However, longer tenure concurrently fosters complacency and impedes innovation by engendering resistance to change and a deficiency in novel perspectives. The authors’ inquiry seeks to discern the prevailing influence between these contrasting perspectives. Design/methodology/approach: This study uses unbalanced panel data for a unique hand-collected dataset from listed firms in New Zealand (2000–2020) – a country that adopts the principles-based corporate governance regime. The authors perform ordinary least squares, two-stage least squares and propensity score matching tests to examine the relationship between CEO tenure and firm performance. Findings: The authors document a significant positive impact of CEO tenure on firm performance, implying the benefits of long tenure. However, this study further reveals a significant inverted U-shaped relationship between CEO tenure and firm performance, suggesting that such a positive impact can hold up to a certain threshold; after that, long CEO tenure can hinder firm performance. The finding is robust to alternative measures and endogeneity tests and offers important implications for corporate governance policies and practices. Practical implications: The findings highlight the importance of balancing the benefits of long CEO tenure. Practically, firms should prioritize regular evaluation of CEO performance and tenure, emphasize succession planning and foster a culture of innovation to sustain organizational success in the long term. Originality/value: This research offers valuable insights by examining the intricate relationship between CEO tenure and firm performance within the distinct setting of New Zealand. By uncovering both the benefits and drawbacks of long CEO tenure, this study contributes to a nuanced understanding of corporate governance dynamics.
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    A leap of faith that echoes well? The value impact of Chinese firms starting up business overseas
    (Elsevier Inc, 2023-08) Lu B; Hao W; Liao J; Wongchoti U
    We investigate the impact of greenfield outward foreign direct investment (GODI) by Chinese firms on their subsequent Tobin's Q. Our findings indicate that Chinese listed companies from 2003 to 2019 generally experience a significantly positive boost in perceived firm value (or growth prospects) when engaging in overseas business start-ups (i.e., with no foreign partners) when compared to their inactive peers. The positive GODI effect is more prominent among privately owned enterprises vs. state-owned enterprises (SOEs). Our mechanism tests indicate that lowered effective tax rates and reduced illiquidity due to conducting greenfield ODI serve as the value-enhancing channels. Possibly driven by political objectives, SOEs tend to prioritize developing and Belt-Road countries as the destination for their greenfield overseas endeavors.
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    Meta-analysis of the impact of financial constraints on firm performance
    (John Wiley and Sons Australia, Ltd on behalf of Accounting and Finance Association of Australia and New Zealand, 2023-06-17) Ahamed FT; Houqe MN; van Zijl T
    A large number of studies have investigated the relationship between financial constraints and firm performance. However, due to heterogeneity in study design factors, such as choice of measures for constraints and performance, control variables, estimation methods and study sample, the empirical results have been mixed. To mitigate this issue, this paper reports a meta-analysis of the association between financial constraints and firm performance. To assess the overall direction of the relationship and the sources of heterogeneity, we apply meta-analytic methods to 26 studies (providing 189 effect sizes) on the association between financial constraints and financial performance in listed companies. Our result shows that, overall, there is a positive relationship between financial constraints and firm performance. In addition, meta-regression results suggest that return on assets (ROA) and return on equity (ROE) as measures of financial performance, and external finance and size as measures of financial constraints, have a significant negative impact on the relationship between financial constraints and firm performance relative to the mean impact on effect size. Similarly, all of North America and Asia as regional differences, control of size and corporate governance as control variables, and journal quality as strength of results, also have a significant negative impact. On the other hand, market value as a measure of financial performance, and the Whited & Wu index as a measure of financial constraints, have significant positive impact relative to the mean impact. Similarly, cross-country and Europe as regional differences, and publication status as strength of results, all have significant positive impact. Given that firm performance is of fundamental importance to investors, this study therefore helps researchers and policymakers to understand the variation in the empirical results on the impact of financial constraints.