Session 180

Pushing the Bounds of Agency Theory

Track K

Date: Monday, October 8, 2012

 

Time: 09:30 – 10:45

Common Ground

Room: Terrace 1


Facilitator:

  • Lynn Stout, Cornell University

Title: Does Acquiring Venture Capital Pay Off for the Funded Firms? A Meta-Analysis

Authors

  • Jan Brinckmann, Ramon Llull University
  • Nina Rosenbusch, Friedrich-Schiller-University Jena
  • Verena Müller, Jacobs University Bremen

Abstract: Researchers and practitioners frequently propose that venture capital (VC) is an important resource to increase the performance of funded firms, especially in environments of uncertainty. In this paper we scrutinize these theoretical propositions, following an evidence-based research approach. We synthesize 76 empirical samples on 36,567 firms. We find a small positive performance effect of VC investment on funded firm performance; however, the effect vanishes if researchers control for industry selection effects. Furthermore, we find that the performance effect mainly relates to firm growth while profitability is unaffected. We also uncover that performance effects are reduced when the funded firms are very young or very mature. In addition, studies focusing on IPO events, which constitute the majority of studies, determine a substantially smaller performance effect.

Title: Family Ownership and Innovativeness in Small Firms

Authors

  • Salvatore Sciascia, IULM University-Milan
  • Mattias Nordqvist, Jonkoping University
  • Pietro Mazzola, Iulm University

Abstract: Only a few scholars have explored the effects of family ownership (FO) on innovativeness in small firms and their arguments are conflicting. Combining agency theory and the socioemotional wealth perspective, we contend that the relationship between FO and innovativeness depends on the way the family has invested its wealth. More specifically, we argue that (1) FO has a general negative effect on innovativeness in small firms, (2) a large amount of the total family wealth invested in the firm makes this negative effect stronger, while (3) the negative between FO and innovativeness can be positive if the family’s wealth is less focalized in one firm. We test and confirm our hypotheses a lagged data-set of 240 small family firms based in Italy.

Title: Franchising: Taking Stock and Looking Ahead

Authors

  • Grace C. Su, University of Illinois-Urbana Champaign
  • Janet Bercovitz, University of Illinois at Urbana-Champaign
  • Joseph Mahoney, University of Illinois at Urbana-Champaign

Abstract: Considering a set of four key organizational questions, this paper reviews the economic-based literature on franchising. While offering significant contributions, we note that extant research studies are limited due to a static perspective and a narrow focus on governance costs issues. We draw attention to the dynamics of chain organizations highlighting the importance of adaptation for value-creation to generate future research questions. We suggest that the codifiability of knowledge that is to be replicated across outlets may be under-emphasized by current chain studies. Furthermore, we propose that the governance choice of a chain may be related to the inseparability of franchise contracts and subsequent value creation challenges.

Title: Hocus-Pocus: The Shareholder-Value Effects of Delusive Payouts by Specialized and Diversified Firms

Authors

  • Guilhem Bascle, Catholic University of Louvain

Abstract: Payouts, i.e. dividends and share buybacks, are generally seen as mechanisms that help reduce agency problems. We build on this and past research, which showed that share buyback plans can be purely ceremonial acts, to develop a sociopolitical framework that examines how high business diversification, as a pre-existing sign of agency problems, can influence the reactions of shareholders to payouts (real or not). We test our arguments using data from a sample of large U.S. publicly traded firms. We find that highly diversified firms are more likely to ceremonially pay out cash to shareholders and that payouts (real or not) lead to differentiated stock market reactions depending on whether focused or highly diversified firms make them.

Title: Situational Agency and the Relationship Between Entrepreneurs and Their Sources of Financing

Authors

  • Christopher Reutzel, Sam Houston State University
  • James Davis, Utah State University
  • Mathew Allen, Babson College

Abstract: This paper develops a typology of situational agency which addresses the governance roles and relationships of entrepreneurs and investors. Utilizing a multi-theoretical approach we create a model which suggests when entrepreneurs will act as principals, agents or stewards. Preliminary partial tests of the model developed in this study lend support to our arguments.

Title: Who Are You Promoting? Voluntary Public Disclosure and Executive Turnover

Authors

  • Sharon James, Arkansas State University

Abstract: This study examines the tension between a publicly traded firm’s incentives to voluntarily and publicly disclose proprietary information and top managers’ incentives to promote their career interests by disclosing such information. We hypothesize that as disclosures signal a firm’s superior investment opportunities and performance, they also send positive signals to managerial labor markets regarding executives’ opportunity recognition and exploitation capabilities. Accordingly, we predict that disclosures will have a positive association with voluntary executive turnover and a negative association with involuntary turnover. We test these predictions on a sample of pharmaceutical and communications equipment firms from 1990-2004. The results are consistent with our theoretical arguments and suggest the need for corporate governance of a firm’s disclosure strategy to mitigate any detrimental effects of unplanned executive departures.

All Sessions in Track K...

Sun: 08:00 – 09:15
Session 126: Entrepreneurship & Stakeholders - The Future Research Agenda
Sun: 09:30 – 10:45
Session 127: Teaching Strategic Entrepreneurship
Sun: 11:15 – 12:30
Session 128: Poverty, Informal Firms & Strategic Entrepreneurship
Sun: 15:15 – 16:30
Session 157: Financing Entrepreneurial Ventures
Session 161: Entrepreneurial Growth
Mon: 08:00 – 09:15
Session 158: Corporate Venture Capital
Session 175: Austrian Economics & Creative Destruction
Mon: 09:30 – 10:45
Session 178: Institutional Theory & New Ventures
Session 180: Pushing the Bounds of Agency Theory
Mon: 13:30 – 14:45
Session 159: Exploration, Exploitation, and Ambidexterity
Session 169: Spinoffs, Spinouts, and Labor Mobility
Mon: 16:30 – 17:45
Session 162: New Venture Strategy & Innovation
Session 163: Cognitive Perspectives
Tue: 08:00 – 09:15
Session 164: IPOs
Session 170: Emerging Markets
Tue: 11:00 – 12:15
Session 160: Corporate Venturing and Intrapreneurship
Session 179: Social Networks within and across Firms
Tue: 14:15 – 15:30
Session 166: Institutional Aspects of Entrepreneurship
Session 167: Firm Boundaries
Tue: 15:45 – 17:00
Session 174: Social Networks & Entrepreneurship
Session 176: Value Capture & Appropriability
Tue: 17:30 – 18:45
Session 168: Uncertainty, Ambiguity, and Sense-Making
Session 173: New Venture Creation


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