ENTRENCHED BOARDS IN NEW PUBLIC FIRMS: AN EMPIRICAL STUDY OF CHINESE IPOS

Basyith, Abdul and Fitriya, Fitriya (2013) ENTRENCHED BOARDS IN NEW PUBLIC FIRMS: AN EMPIRICAL STUDY OF CHINESE IPOS. In: International Research Conference on Business and Economics, 28-30 June 2013, Semarang, Indonesia.

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Abstract

Purpose: This study empirically investigates the impact of managerial entrenchment on firm financial performance of Chinese firms’ initial public offering (IPOs).Design/Methodology/Approach:Using 142 firms listed in the Shenzen Stock Exchange, this study uses two proxies to measure firm performance and three proxies to measure managerial entrenchment. The two proxies for firm performance are iobin,s e and ROA, and the three proxies for managerial entrenchment are derived from the principal component analysis (PCA). This study confirms that the data is linear and no endogeneity issue should be addressed in this study, but only heteroskedasticty, nonnormality for Tobin's Q are a problem; therefore, the regression method employed for Tobin's Q is the GLS and the oLS between estimators for Roe.Findings:The regression result for Tobin's Q reveals that managerial entrenchment negatively impacts on firm performance. The results are in contradiction with the stewardship for new firms, whereas it is positive for the managerial entrenchment for new- firms. In contrast, the regression result for ROA reve firm performance; however, on The results are in line with the entrenchment for new firms inconclusive results, this sfudy confidently explaining the financial performance of new measure rather than accounting measure. In conclusion, the negative results of entrenchment proxies were caused by the systems, namely that Chinese corporations state, and hence the centralised state control in Chinese Firms IpOs context. It is interesting to examine the degree of managerial entrenchment in new Chinese firms, role in establishing the modern enterprise system in the world, and is one of the largest market economies. Further, the method used in this study is more robust than prior research, as entrenchment proxies were derived using the PCA

Item Type: Conference or Workshop Item (Paper)
Subjects: H Social Sciences > HG Finance
H Social Sciences > HJ Public Finance
Depositing User: Mr Abdul Basyith
Date Deposited: 23 Jul 2018 03:28
Last Modified: 23 Jul 2018 03:28
URI: http://eprints.binadarma.ac.id/id/eprint/3814

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