Loose risk management mechanisms of corporate governance of Greek firms; rewards to board from earnings that are not based on performance incentive plans

Following the Greek commercial law, a number of listed firms in the Athens Stock Exchange (ASE) offer to members of the board of directors tax-free annual remuneration from distributed earnings. Rewards from the earnings might exist even if the firms do not have explicit bonus plans and, therefore, this type of compensation looks similar to a hybrid between bonus and standard annual salary. Moreover, given that the final approval in the granting of this remuneration is taken in annual shareholder meetings, one can regard rewards to board from the earnings as a loose mechanism of motivation. Using a sample of 696 firm-year observations for the period 1993-2002. we provide evidence consistent with the argument that either shareholders view this type of compensation as a bonus rather as expense per se or that the board signals information to the shareholders. Moreover, we provide evidence in favour of the higher quality of earnings for firm-year observations, in which the board is rewarded from earnings. This suggests that this loose mechanism of motivation can work as well as long-term incentive plans. Copyright © 2008 Inderscience Enterprises Ltd

Testing the pecking order theory: the importance of methodology

Purpose: The purpose of this paper is to show that different methodologies may lead to different implications about the validity of the pecking order theory. Design/methodology/approach: Using data from Greek firms as a starting-point, the paper first investigates whether they follow the financing pattern implied by the pecking order theory and then illustrates that conclusions concerning the pecking order should be carefully shaped by researchers, as the methodology used can be misleading. Two different information sources are used; the first is data derived from the financial statements of the Greek firms listed in the Athens Exchange, while the second comprises the answers to a detailed questionnaire. Findings: It is shown that a negative relationship between leverage and profitability does not necessarily mean that the pecking order financing hierarchy holds. Analysis should not rely solely on the mean-oriented regression quantitative analysis to test the pecking order theory, as it refers to a distinct hierarchy. Research limitations/implications: Further research should focus on investigating the reasons that underlie actual firm financing. Practical implications: The fact that the pecking order is actually a hierarchy makes research in this field more complex. Analysts should consider this special feature of the pecking order approach when analyzing the existence of the pecking order financing pattern. The methodology followed is of crucial importance in the analysis of the existence of the pecking order financing pattern. Originality/value: To the authors' knowledge, this is the first paper to test the pecking order pattern of financing using simultaneously quantitative and qualitative data, and to compare results and conclusions drawn from these two different types of methodology. © 2009, © Emerald Group Publishing Limited

A requiem for the use of the geometric mean in evaluating portfolio performance

Although the geometric mean procedure is very popular among financial analysts, it is shown that when it is applied on rates of returns for evaluating portfolio performance it does not produce efficient results. Valuable past performance information is ignored since the geometric mean procedure applied on rates of returns uses only three specific pieces of information, namely the initial value, the terminal value and the total number of time periods under evaluation

Determinants of share repurchases: A quantile regression approach

This study utilizes quantile regressions to investigate the effect of the determinants of share repurchases on firms at different points of the share repurchases distribution. Empirical results from a large panel of NYSE repurchasing firms, document an asymmetric effect of several determinants on share repurchases in terms of size, significance and direction. Excess capital, stock options and growth opportunities are significant throughout the distribution and their impact increases at successive quantiles while ownership concentration and leverage exhibit sign reversals between lower and upper quantiles. These differing effects are attributed to highly heterogeneous firm characteristics across quantiles.1. © 2021, Oviedo University Press. All rights reserved

SMEs capital structure determinants during severe economic crisis: The case of Greece

The objective of this paper was to explore whether and how the main capital structure determinants of SMEs affected capital structure determination in different ways during the years of economic crisis. We used panel data of 8,052 SMEs operating in Greece during 2009-2012. We found that the effect of capital structure determinants on leverage does not change in an environment of economic crisis; larger SMEs continued to show higher debt ratios, the relationship between profitability and tangibility of assets with leverage continued to be negative, and growth was positively related to leverage. © 2016 The Author(s)

Efficiency and productivity of the food and beverage listed firms in the pre-recession and recessionary periods in Greece

This study uses data envelopment analysis to examine the liquidity and sales efficiency of the Food and Beverage listed firms in Athens Exchange in the period 2006–2012. The liquidity efficiency of the firms is higher than the sales efficiency but the results indicate that there are not statistical significant differences in the rankings estimated by the two models in each period. The Malmquist Productivity Index reveals that over the period of the study, firms have experienced an annual average increase in productivity of 0.5% (a slight progress). On examining the components of this productivity change, it becomes evident that firms have experienced an annual average of 2% increase in technology combined with a decrease in technical efficiency of –1.5%. The results indicate that 52.4% of the firms experienced productivity gains in the examined period, and this was mainly the result of technological gain rather than efficiency improvement. More than 90% of the firms in the sample shift the efficiency frontier and only 33.3% of the firms are catching up, improving their productivity by reducing inefficiency. Moreover, the empirical study reveals that the overall technical inefficiencies of the firms are primarily caused by pure technical inefficiencies rather than scale inefficiencies. © 2015, © 2015 Taylor & Francis

Revisiting bank profitability: A semi-parametric approach

We employ a semi-parametric empirical model and reveal evidence that the U.S. bank profitability is affected non-parametrically by the business cycle, short-term interest rates, inflation expectations, credit risk, and loan portfolio structure. If a semi-parametric perspective was not adopted then it would not be feasible to uncover the effects of these variables, as well as the effects arising from capital and financial structure upon U.S. bank profitability. In addition, the out-of-sample performance of the semi-parametric model is superior to that of the linear model. These results are of importance to policy makers in designing a macro-prudential framework for monitoring the banking system. © 2012

The impact of IFRS adoption by Greek listed companies on the earnings quality : an empirical investigation

Purpose: The accuracy and reliability of financial statements is vital for business stakeholders in order to make the appropriate decisions. This has become increasingly important in recent years and its importance has intensified with the latest financial crisis, due to the bankruptcy of major financial institutions. The research conducted aims to study the relationship between profit management and long-term lending between two periods. More specifically, it will be considered whether businesses through long-term lending manipulate their earnings before and after the adoption of international Financial Reporting Standards (IFRS). Design/Methodology/Approach: The sample consists of listed companies in the Athens Stock Exchange. One of the most authoritative methods that results in the most correct conclusions according to the bibliography is the modified model of "Jones". Findings: The findings resulting from the survey suggest that for the years 2001-2004 there is no manipulation of profits through long-term lending as for the years 2005-2015. Practical Implications: The primary goal of accounting standards adoption is to provide information for investors to make a wide range of decisions and contractual arrangements without their norms affecting the information quality on the reported earnings. Originality/Value: The information provided through the reported financial statements based on IFRS is relevant and does not affect the quality of earnings.peer-reviewe

Capital structure and size: new evidence across the broad spectrum of SMEs

Purpose – The purpose of this paper is to add to the existing literature by examining a number of hypotheses relating to the capital structure decision in relation to the firms’ size, namely by distinguishing among micro, small and medium firms. Design/methodology/approach – The paper examines the hypothesis that the factors determining capital structure are different for firms belonging to different size groups. The authors use a panel data model capturing the dynamic concept of capital structure. Findings – The authors find that whereas the size of the firm does affect how much debt a firm will issue, it does not influence the relationship between the other regressors and debt usage. Research limitations/implications – The paper examines the small and medium enterprises (SMEs). Does not examine the large firms. Practical implications – During the last decade there has been a gradually increasing interest shown in the field of SMEs. These enterprises represent important parts of all economies in terms of both their total number and their job offer and job creation. For example, in the European Union (EU), in 2005, SMEs accounted for 99.8 percent of the total number of enterprises operating in EU-27, covering 66.7 of total employment in the non-financial business economy sector. Social implications – This paper relates capital structure decision to firms’ size distinguishing them among micro, small and medium firms. Originality/value – The paper tests differences in capital structure determination among different size groups of enterprises in a dynamic framework for more than one year. © 2014, © Emerald Group Publishing Limited