Abstract
This article empirically examines the nexuses between corporate governance, intangible resources, CEO traits, and financial performance. In contrast to prior research, this study examines ...these relationships in a longitudinal manner focusing on Deutsche Bank for the 1957–2019 period. To the best of our knowledge, this study is the first of its kind. Based on a novel hand collected dataset, our analysis suggests a significant positive relationship between intangible assets i.e., intellectual capital efficiency and financial performance measured by, return on assets (ROA) and return on equity (ROE). Our results further suggest that human capital efficiency drive the financial performance of Deutsche Bank at all times especially, during the economic malaise periods, suggesting that human capital is the main source of profitability for the Deutsche Bank. Additional results suggest that larger board size diminishes the impact of intangible resources on financial performance when the former CEO assumes board's chairmanship. Finally, our results suggest that CEO's education quality is an important determinant of financial performance during the crisis. Results observed in this study have important economic and policy implications for banks operating in the similar environments.
This paper offers novel insight into the Islamic banking business model by considering the effect of investments in human capital and corporate governance features on the market performance of ...Islamic banks. Based on a sample of 47 banks (30 full-fledged Islamic banks and 17 Islamic Shariah-windows) operating in different regions during the 2005-2010 period, and controlling for firm-specific characteristics, this paper finds investments in human capital to have a significant positive impact on the market value in the pre- and post-financial crisis period. Based on a market measure, this paper finds board size and CEO power to have a significant positive impact, while the size of Shariah Supervisory Board (SSB) has the opposite effect on market performance. The results further reveal that the Islamic banking sector is not a homogeneous group, with full-fledged Islamic banks having lax corporate governance mechanisms and large size, while their counterparts, Islamic Shariah-windows, having strong corporate governance mechanisms tend to invest more in human capital to yield positive market value. Overall, the analysis suggests that the financial crisis may have further spurred the impact of investments in human capital on the market performance.
The iSPAC Nawaz, Tasawar
Review of quantitative finance and accounting,
07/2024, Letnik:
63, Številka:
1
Journal Article
Recenzirano
Odprti dostop
Special purpose acquisition companies (SPACs) are one of the most celebrated investment vehicles in recent years. Relative to traditional IPOs, SPACs are much more cash-strapped and speculative. ...Resultantly, the scope for SPACs remains sparse for certain segments of the financial system notwithstanding the SPAC euphoria surrounding the financial markets: one notable exception is Islamic banking and finance. The Islamic banking business model is based upon the ethical ontologies and epistemologies – informed by the divine sources of
Quran
and
Sunnah: the Shariah
– operating with the mandate to promote socio-economic justice through a fair redistribution of wealth while embargoing speculative trading or investments and adopting a risk-sharing model between economic agents. Unsurprisingly, – owing to the speculative nature of SPACs – the Islamic finance industry remains reluctant to participate in the SPAC-mania despite the frenzy engulfing global securities markets. This work addresses the misaligned incentives inherent in a conventional SPAC structure and proposes alternative SPAC structure terms i.e., the
i
SPAC, which potentially mitigates the noted misaligned incentives and offers less dilutive SPAC terms to shareholders. Specifically,
i
SPAC structure terms address the issues of speculation (
gharar
), information asymmetry, and transparency in the pre-IPO phase, which may lead to adverse selection and moral hazard. Equally, the proposed structure reconciles post-IPO operational and investment-related risks such as the treatment of proceeds, interest rate (
riba
), opportunity costs, and management costs in consort with unethical behavior i.e. cashing-out opportunities that may lead to uneven redistribution of wealth thereby, widening the socio-economic voids in the society.
This paper explores the role of social capital in contributing to the success of a new breed of organizations known as ‘blank check companies’ or special purpose acquisition companies (SPACs) that ...are set up solely to target and acquire listed companies as a fast-track route to gain listing status in the stock market. The paper is a case study of Pershing Square Holdings Ltd., St. Peter Port, UK (PSH), which launched SPAC IPOs (Initial Public Offerings), Pershing Square Tontine Holdings Ltd., New York, NY, USA (PSTH), which succeeded in raising the largest capital from influential investors in 2020. Social capital theory is employed to provide theoretical structure for the analysis. Using annual reports, publicly available information on the internet, as well as social media platforms related to the company and its strategy, the authors critically analyse and highlight how the Tontine’s founder and his team utilized their structural, relational, and cognitive social capital to attract investors and gained recognition as the most successful SPAC IPO in the market in 2020. The authors found the ability to structure a SPAC IPO that departs from a typical SPAC, and the choice of timing to enter the SPAC market resulted in an over subscription and higher market valuation ratings of its IPO, as well as allowed the sponsor to be selective of its investors. This is the first study to address the significance of social capital at the individual and organizational level in creating value for SPAC IPOs. Potential investors can gain understanding and insights on the mechanics of SPAC IPOs and the importance of the founder’s social capital in ensuring successful investment. Successful SPAC IPOs will create interest in the marketplace and enhance the value of investment for investors and helped private companies to get listed faster.
Building on the assumption that intangible and tangible corporate resources are indispensable to create and sustain firm value in today’s knowledge-driven economy; this paper empirically examines the ...determinants and consequences of disruptive innovations in the context of the UK financial services sector. The major contribution of this paper is to provide novel insights into the value creation process in one of the world’s leading financial services sector. In doing so, the paper exploits various properties of the selected financial institutions and submits that financial and human capital resources drive value in the UK’s financial services sector. The paper makes informed suggestions for the financial institutions operating in the UK and abroad. The results observed in the present study will potentially enhance the understanding of the international audiences on the banking business model practiced by the UK-based financial institutions.
This study examines whether and how a CEO’s personal traits (gender, altruism, age, and founder) influence organizational performance. Building upon upper echelons theory, this study develops a ...conceptual framework that gives explicit recognition to how the institutional environment surrounding the CEOs shapes their characteristics, which, in turn, are reflected in the different organizational strategies and performance. This study moves beyond the existing focus on for-profit corporations and conducts the empirical analysis on a novel, hand-collected, longitudinal dataset of 1342 firm-year observations of 128 faith-based charity organizations operating in a major developing, Muslim-majority country in the period 1996–2019. This study reveals that those faith-based charity organizations led by CEOs with specific personal traits (woman, altruistic, young, and founder) exhibit better organizational performance. Importantly, CEOs’ personal traits, however, do not have a uniform, systematic effect; their effect is generally strengthened when the CEO is also the founder of the faith-based charity organization, given the greater latitude of managerial discretion that a CEO has in managing the organization. Our findings have important implications for individual charity organizations; their board of directors; and their stakeholders, in particular the communities they serve, as well as the whole society where they operate.
The notion that female directors are better disposed to protect shareholders’ interests has brought boardroom gender diversity into the limelight. Echoing these emerging trends, this paper analyzes ...the relationship between board gender diversity, i.e., proportion of female directors on the corporate board, and Chief Executive Officer’s (CEO) compensation. Consistent with conjecture, the analysis suggests that large and diversified corporate boards are the main determinants of CEO compensation. Furthermore, longer-tenured CEOs who also serve as board chairperson receive higher total compensation and bonuses than their counterparts do. Into the bargain are corporate performance proxied by return of assets (ROA) and firm attributes, i.e., firm size and institutional ownership, which have divergent but direct implications for CEO compensation.
Purpose
The purpose of this paper is to empirically examine the effect of intangible resources, i.e. intellectual capital (IC) on financial performance of 64 Islamic financial institutions (IFIs) ...operating in 18 different countries for the period 2007-2011, while controlling for firm-specific variables, namely, bank size, level of risk, listing status, and firm complexity.
Design/methodology/approach
The required data to calculate different constituents of IC are derived from Bankscope database. Value Added Intellectual Coefficient (VAIC) methodology devised by Pulic is used to determine the impact of IC on financial performance of IFIs.
Findings
Results indicate a significant positive relationship between VAIC and accounting performance based on return on assets (ROA). The results further indicate a significant positive relationship between accounting performance and capital employed efficiency (CEE) and human capital efficiency (HCE), but no significant relationship with regards to structural capital efficiency. Overall, the results suggest that value creation capability of IFIs is highly influenced by HCE and CEE.
Research limitations/implications
The main limitation of the present study lies in its methodological tool, the VAIC methodology, which has been criticized by some researchers as not really measuring IC. Despite the inherent limitation of the VAIC methodology which relies on secondary data published in annual reports, it is still considered by some researchers as one of the best available tool to measure firms’ IC in the absence of access to detailed internal information on IC.
Practical implications
The findings may serve as a useful input for Islamic bankers in managing their investments in IC within their institutions.
Originality/value
The main contribution of this paper is to use a previously little-studied area, Islamic banking and finance, to identify the effect of intellectual capital on performance.
Exploiting a unique hand-built dataset, belonging to non-financial firms, operating in an emerging economy, this study, first of its kind, reports that stock prices of firms with military-experienced ...board of directors reflect more firm specific information after controlling for board attributes, agent heterogeneity and firm level variation. The results robust to alternative specifications of informativeness and military director proxy support the notion that military-trained directors may enhance transparency in public listed companies and encourage the incorporation of more firm-specific information into stock prices. Further analysis suggests that military directors may enfeeble CEO–board nexus and settle the directional variations at the corporate board level: military directors bring discipline in the board room that translates into rigorous CEO monitoring and improved corporate governance quality.
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