ISSN: 1813-0534
 

 

 

 

 

 


C
Volume 1 No 1July 2005


Determinants of firms' financing choices: Some evidence from Malaysia

Dr. Hassanuddeen Abdul Aziz, International Islamic University, Malaysia

ABSTRACT

This research attempts to see under the agency theoretic framework how firms make financing choices in the context of Malaysia and whether they are as predicted in the financial economics literature and as observed in the financial structure of firms in developed countries. Using the OLS technique on Malaysian data from the stock market a cross-sectional regressions relating leverage variables using debt-equity ratio to our measure of investment opportunities estimated using market-to-book value of common equity ratio, firm size using natural log of total assets, asset structure using net fixed asset to total asset and profitability using operating income to total sales was estimated. The findings are consistent with factors identified by studies in the developed countries. The study indirectly imply that Malaysia has the institutional support that is found in the developed nations and thus the financing needs of the firms are made in accordance to the theoretical underpinnings of the financial capital structure literature.




Human Resource Management Plays a New role in Learning Organizations

Dr. Ping Yu Wang, Assistant professor of Northern Taiwan Institute of Science and Technology

ABSTRACT

Needless to say, the performance of Human Resource Management (HRM) has a tremendous impact on growth, market/book value, and productivity especially in today’s global competitive market. In order to survive in today’s business market, many companies have done their best to shift from their old shells to the new ones. Peter M. Senge (1990) devoted a new idea for those who wished to change their traditional business operation systems. The idea was to integrate the applications of the five disciplines of a learning organization into their companies. However, the processes of transforming are complex. HRM must play a new role in order to help the organization to apply the concepts of learning organization successfully.



Influence of Information Transparency and Independent Director and Supervisor Structure on Firm Value - An Analysis on Information & Electronic Firms in Taiwan

Chung-Cheng Hsu, Ph.D. Student, Da-Yeh University, Taiwan
Ming-Jian Shen, Ph.D. Student, Da-Yeh University, Taiwan
Ming-Chia Chen, Ph.D. Student, Da-Yeh University, Taiwan

ABSTRACT

Our research aimed to discuss the differentiation between firm value and independent director and supervisor structure under different degrees of transparency. Through this, we could know how information transparency acts when measuring the corporate governance’s influence on firm value. In our research, we acquired the information and electronic corporations as our samples. We chose a total of 256 corporations, excluding the corporations that were later taken out from the transparency evaluation, unlisted stock, and full delivery stock. The results shown are as follows. Information transparency was actually a variable that influences firm value. Stock price, net worth per stock and net worth ratio per stock have all reached the significant level, especially when the information transparency level were higher. There is no difference between the degree of information transparency and the independent director/supervisor structure. This means these two variables should be independent of each other. In high information transparency corporations, the independent director/supervisor ratio would have significantly influenced the PER (Price/Earnings Ratio). Besides, independent director and supervisor salary ratio would significantly influence the net worth value per stock and net worth value per stock ration. In low information transparency corporations, the scale of independent director and supervisor would have significantly influenced the PER. Besides, independent director and supervisor salary ratio would significantly influence market value, the net worth value per stock and net worth ratio per stock.

Keyword: Information transparency, independent director and supervisor structure, firm value


 



Discretionary Theory and it’s Affects and Implications for Decision Making in the International Market

Dr. Richard Murphy, Jacksonville, Florida, USA
Dr. Jean Gordon, St. Thomas University, USA

The Cause of Discretion

Managerial discretion refers to the latitude of options CEOs have in making strategic choices. {Hambrick & Finkelstein 1987} “High discretion context increase potential CEO impact on organizational outcomes because the constraints common to managing organizations are generally less severe under these conditions. Thus, high discretion context increased the potential marginal product of CEOs and, hence, their ability to influence a firm’s performance. As seen most recently with Cart of American Airlines and Lorenzo of Eastern Airlines. Thus a result, the absolute amount of CEO compensation is expected to be higher the greater the level of discretion. In addition, to the extent that the relationship between managerial discretion and CEO compensation is functional, firm performance should be higher when discretion and pay are aligned then when they are not.” {Finkelstein & Boyd 1998}


 

The Comparison of the Internal Control inside the Enterprises of Taiwan and China

Ta-Ming Liu, the lecture of the Department of International Trade of Hsing Wu College, Taiwan

ABSTRACT

This study compares the origins of the internal control, basic features and main functions in the enterprises of Taiwan and China, and analyses the division modes of the internal control in the accounting control function from the difference in the business characteristics between the enterprises of Taiwan and China. During researching, because the different cultures of the both sides have different values to different kinds of enterprises, there are difference and orientation of the potential way of communication. Therefore, we repeatedly present the interviewing objects and the contents of the questionnaire, and hope that error ratio can match the spirit of the research. In recent years, because of the economic conditions like the environmental protection problem and the salary cost raises up worsen and the modes of the industries change, the domestic enterprises extend to the overseas and China for enterprise profitability and sustainable operation. China has abundant resources, low wages, sufficient laborers, vast market, the same language and customs as Taiwan. In addition, after the Communist Party of China authorities adopted the economic reform and the open policy, offer a lot of preferential and rewarding measures and actively absorb foreign investment. China becomes the main area that Taiwan traders invest in abroad. This has the necessity to the understanding and study on the comparison of the internal control of Taiwan and China. Through the research, we found that the internal control function in the enterprises of China is similar to it is in Taiwan. Only the supervision of the financial examining standard still has the space to improve more. The contrived factor which is the aspect of operational the internal control on the technology level causes the trust crisis of the staff or the society. That makes both the governments in Taiwan and China have to intervene and this phenomenon also emerges in an endless stream. For this reason, the leaders of the enterprises should standardize the corporate culture mold and the ethics values intensification. And the enterprises that intend to develop in China should be aware.

Keywords: The internal control, corporate culture, accounting function




The Learning Effectiveness of Local Firms of Managerial Knowledge in MNCs Network: A Research Model

Dr. Pan, Po-Wei, Assistant professor of Hsuan Chuang University, Taiwan
Wu, Ping-Shan, Lecturer of Ling Tung University, Taiwan
Thomas M. Roskos, CEO Americall International LLC. USA

ABSTRACT

Knowledge-based theory of firm regards the firm as aggregate of knowledge, and believes that distinctive knowledge is the key factor for the firm to gain competitive advantage. The new knowledge of an organization comes from either internal creation or the external acquisition. This article points out that MNC is an important external resource of managerial knowledge for local firms, and the long-term and stable network relationship formed with MNC in China becomes a substantial way for local firms to obtain such external knowledge. Based on clarifying the relevant themes, this article provides a research modal about local firms learning managerial knowledge from their foreign partners in MNCs network in China, and gives some recommendations for further research as well.

By focusing upon knowledge as the most strategically important resource of the firm, some scholars are in the process of developing knowledge–based theory of firm (e.g.Grant, 1996; Spender, 1996; Conner and Prahalad, 1996). The acquisition of new organizational knowledge is increasingly becoming a managerial priority. As the global competitive environment continues to intensify, this priority takes on new significant. New knowledge provides the basis for organizational renewal and sustainable competitive advantage (Inkpen, 1998). Hence, a central factor in the knowledge-based view of firm is the acquisition of new knowledge through organizational learning (Grant, 1996; Mowery, Oxley and Silverman, 1996).

In the field of international business studies, according to the knowledge—based theory view, foreign direct investments (FDIs) can be interpreted as “the transfer of an intermediate goods, called knowledge, which embodies a firm’s advantage, whether it could be the knowledge underlying technology, production, marketing, or other activities” (Kougut & Zander, 1993). Further, as the main bodies of FDIs multinational corporations (MNCs) even are regarded as reservoirs of both technical know—how and managerial knowledge (Child & Markoczy, 1993; Hisrich & Szimai, 1993; Markoczy, 1993). In an empirical study of international joint ventures (IJVs) in Hungary, Lyles and Salk (1996) found that managerial knowledge acquisition has a greater positive impact on the assessments of IJVs performance than technical knowledge acquisition. They argued that the result might indicate a higher premium placed on managerial knowledge than on technical knowledge. Hence for the local firms, which are in MNCs’ network, leveraging the managerial knowledge of the foreign corporations, especially when the foreign corporation comes from a sophisticated and competitive country context (Porter, 1986) can enhance the competitive advantage and performance of the local firms?

As a giant potential market, China has ever-greatly attracted FDIs by MNCs since the open-door policy, esp. with the establishment of marketing economy system in 1992. Most MNCs have regarded China as part of their global strategic networks and gradually formed their localized networks based on their local corporations (Xue Qiuzhi & Yan Haifeng, 2001; Liu Haiyun, 2001; et, al). Obviously, MNCs have brought not only capital and technology, but also much-needed managerial knowledge. With more and more MNCs operating in China, they could contribute to the transfer of managerial knowledge by acting as a role model to our local firms (Ying Fan, 1998). But all the managerial knowledge acquisition depends on the local firms learning activities. Then, what are the main factors influencing the locals’ learning effectiveness in MNCs networks? And how about the influence process?

The innovation of this article lies on: 1) Among a large amount of existing study literatures about organizational learning, especially about knowledge transferring, the knowledge, as the research object, either is not be differentiated, or mainly refers to technology-based knowledge (e.g.Kogut,1988; Hamel, Doz, and Prahalad,1989; Cohen and Levinthal,1990; Hamel,1991). Few researches specialize on managerial knowledge of an organization. Compared to existing studies, this article mainly examines the local firms learning managerial knowledge in MNCs network in China; 2)the existing study literatures about organizational learning mainly focus on the interior of an organization(Lane,2001,Trans), for example, the creation and transfer of knowledge in the intra-organizations. The literatures on inter-organizational learning, either discuss the spread of information or knowledge in a very general way, or concentrate on strategic alliance and knowledge transfer or knowledge acquisition in a joint venture (IJVs,e.g.Hemel,1991; Hamel, Doz and Prahalad,1989; Inkpen and Beamish,1997; Kogut and Zander,1992; Lyles and Baird,1994; Lyles and Schwenk,1992;Mowery, Oxley, and Silverman,1996). Comparatively speaking, they are lack of researches on learning issues in the organizational network. This article pays close attention to the inter-organizational learning in the network relationship; 3) the research perspective of this article lies on Chinese firms in MNCs networks.

In this article we examine the learning effectiveness of local firms, focus on the major factors which influence the inter-organizational learning in MNCs’ networks. Firstly, we will clarify some major concepts and themes involving in the research. Then, we will provide a frame model about this research. Finally, we will draw major conclusion and give some recommendations for further research.




A Study on the Selection Factor for Establishing Partnerships in a Supply Chain System

Dr. Yang, Tai-Ning, Chinese Cultural University, Taiwan

ABSTRACT

Literatures pointed out that when enterprises are making decisions on selecting suppliers, they are usually purely based on price bidding or the subjective judgment of the decision maker. However, based on products and services provided by the enterprise, and objectives that the enterprise intends to realize, the management should select appropriate partners to design a supply chain system and improve performance. This research will mainly discuss effects of the strategic objectives of an enterprise on the selection of supply chain partners, and can be taken as a reference for enterprises to establish supply chain and industrial networks. It is found that when enterprises selected cooperative partners to establish a supply chain, the relationship between the objective it intended to achieve and selection factors that it laid importance on, such as Operation & Management, Delivery Time Credit, Cooperative Attitudes, Quality Control, Employee Quality, Financial Cost, and Production Technology, had an obvious relationship with the intended objectives of an enterprise establishing a supply chain, such as Learning & Growth, Production Efficiency, and Innovation Management.




Application of Thermodynamic on Product Life Cycle

Dr. Kuang-Jung Tseng, Department of Business Management, Hsuang Chuang University, Taiwan

ABSTRACT

Kluyver(Kluyver, 1977), Kotler(Kotler,1999)and many others have studied the causes and results of the product life cycle (PLC). Management managers and marketing managers have used the trend of the PLC of their own products to adjust their marketing plans or production plans.

This paper introduces the concepts of thermodynamics into the marketing management by building a model using the physical laws of thermodynamics. Thermodynamics is a physical science deal with the interactions of matter and energy. It contains the law of the energy conservation and the law of entropy that tends to increase in a closed system. We have applied these laws to constrain the processes by which raw materials are transformed into consumable goods and the goods are distributed afterwards. Temperature is used to describe the selling situation of a product. The temperature of product sales determines the size of the sales force. From the temperature effect on product sales, we can introduce the entropy concept to describe the randomness of distributing product goods into the market. Note that the randomness of distributing product goods is increasing with time and the entropy is also increasing. With the concept that entropy increases during the distribution of consumable goods into the market, the phenomenon of the PLC is explained.

The phenomenon of the PLC is described by a single parameter, which relate to the management efforts as well as the service efforts. As a result, the PLC curve can be manipulated due to the value of α. The parameter α can be changed by the management and marketing efforts and is related to the product quality, sales services and the degree of newness of the product. (Tseng 2004a)

By assuming that a firm can change the product quality, sales services and the degree of newness of the product, the data of the different values have been calculated and plotted to represent the estimated results that is related to the changes of the shape of the PLC. The results are compared with the Kluyver’s observation of the different types of the PLC. (Kluyver, 1977)

Key Words: Sales Force、Product Life Cycle、Entropy.




 
 
 



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ISSN: 1813-0534


 
 
 
 

 

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