Corporate ethical identity as a determinant of firm performance : a test of the mediating role of stakeholder satisfaction

In this article, we empirically assess the impact of corporate ethical identity (CEI) on a firm’s financial performance. Drawing on formulations of normative and instrumental stakeholder theory, we argue that firms with a strong ethical identity achieve a greater degree of stakeholder satisfaction (SS), which, in turn, positively influences a firm’s financial performance. We analyze two dimensions of the CEI of firms: corporate revealed ethics and corporate applied ethics. Our results indicate that revealed ethics has informational worth and enhances shareholder value, whereas applied ethics has a positive impact through the improvement of SS. However, revealed ethics by itself (i.e. decoupled from ethical initiatives) is not sufficient to boost economic performance.Publicad

An analysis of the length of labour and financial contracts: a study for Spain

This study investigates the connection between the duration of financial contracts and that of labour contracts. Workers with long-term contracts have incentives to invest in training. This makes them attractive to the entrepreneur. Furthermore, this behaviour will be reinforced if financial contracts are long-term, because it reduces the probability of an early liquidation as well as the dismissal of trained workers. As a conclusion, significant increases in the length of financing contracts should be accompanied by corresponding increases in the length of labour contracts. Support for this theoretical contention is found by testing it on a dataset composed of Spanish manufacturing firms for the period 1991-2000.

Disaggregate and aggregate inventory to sales ratios over time: the case of German corporations 1993–2005

Although inventory reduction has been a major topic in production and operations management research for many years, there is a lack of empirically confirmed answers for questions such as: Have inventories in fully industrialized economies such as Germany decreased, overall, during the past decades? To the extent, inventory reductions were successfully realized, in which industries did they occur? Are there differences in inventory reduction achievements between raw materials, work-in-process, or finished goods? Are there measurable effects of inventory reductions upon the financial performance? To the best of our knowledge, this empirical study is the first one to investigate long-term inventory development on a firm as well as on industry level in a major European economy. It is based on data from German corporations and provides answers to the research questions stated above. The study’s findings indicate that total inventory to sales ratio decreased in a statistically significant extent in four out of six industry sectors during the time frame investigated. Further results suggest that the overall impact of inventory reductions to the financial performance of companies is only of a small degree

Creditor intervention, investment, and growth opportunities

We show that creditors do not just ensure that inefficient investment is not undertaken, but also do not preclude efficient investment. Examining what happens following a debt covenant violation, a situation through which creditors acquire some control rights over the firm, we find that investment declines when the firm has few growth opportunities but it may increase otherwise. The results are robust to the use of different proxies for growth opportunities. The firm's performance improves but it suffers dividend cuts and increased CEO turnover. The results suggest that creditors consider the benefits of growth opportunities as a source of future cash flows to meet outstanding debt obligations