Walk the Talk: A Sample of Cases

Document provides examples of cases used in past Walk the Talk business ethics discussions of the University of Dayton School of Business Administration\u27s Center for the Integration of Faith and Work. Students are provided these cases as models for entries in the Walk the Talk Case Writing Competition. The competition is open to all UD undergraduate business students. See the competition website

Are Debt-Holders Effective Monitoring Agents in Strategic Alliance Formations?

When undertaking strategic alliances, managers face a fundamental choice to pursue alliances that allow them to exploit the value of current firm assets or alliances that allow them to explore new trajectories for the firm. To answer this question, we tested our proposed theoretical framework using 652 US-based publicly traded pharmaceutical firms between 1990 and 2012. Findings suggest that exploitation alliances have higher impact on firm performance in the short and long run than exploration alliances. Consistent with the debt overhang problem presented by Myers (1977), our findings confirm that high-leverage firms have a higher inclination toward exploitation alliance formations over exploration alliance formations. Next, we examine whether financial leverage, an endogenous variable, mitigates agency costs and improves the relationship between a firm’s engagement in strategic alliances and its performance. Findings indicate that debtholders act as monitoring agents and are able to mitigate the manager–stockholder agency problem efficiently and improve firm performance both in the short and long run when firms engage in exploitation alliances relative to exploration alliances

Are Private Equity Investors Good or Evil?

The paper investigates the motives of activity (entry and exit) of Private Equity (PE) investors in European companies. Investment of a PE firm is not viewed unambiguously. First, it is claimed that PE investment is made for the sake of seeking short-term gains by taking control and utilizing the company's resources. Second, a PE firm invests because of prior identification of chances to add value to the company. We attempt to resolve these two conflicting conjectures. We use the Bureau van Dijk's Amadeus database of very large, large and medium-sized European companies. Our major results can be summarized as follows. First, PE firms are less willing to enter the firm if there is already a blocking majority, and they are more likely to leave the firm if control cannot be overtaken. Second, less mature firms are less able to lure a PE firm to invest, thus indicating a safe strategy of PE investors. Third, we do not find empirical evidence that a PE investor comes in to strip a firm of its equity. On the other hand, PE investors are likely to leave the company if it deteriorates in terms of returns and cash. Finally, when comparing the activity of PE and other financial investors, we find essential differences in choosing the field and environment of activity