Asia-Pacific Journal of Business Administration

Satish Kumar; A.K. Sharma

2011 Asia-Pacific Journal of Business Administration

doi: 10.1108/17574321111169795

Purpose – The purpose of this paper is to examine the claim of economic value added (EVA) proponents about its superiority as a corporate financial performance measure, compared to traditional performance measures in non‐financial Indian companies and provide empirical evidences. Design/methodology/approach – The paper uses a sample of 873 firms‐year observations from the Indian market and applies pooled ordinary least square regression to test the relative and incremental information content of EVA and other accounting‐based measures in explaining the market value added. Findings – The results about relative information content test reveal that NOAPT and OCF outperform EVA in explaining the market value of Indian companies. Incremental information content test shows that EVA makes a marginal contribution to information content beyond traditional performance measures such as NOPAT, OCF, EPS and RONW, etc. Overall the authors' results do not support the hypothesis that EVA is superior to traditional accounting‐based measures in association with market value of the firm. Originality/value – The authors conclude that non‐financial variables such employees, product quality and community satisfaction should be considered in order to capture the unexplained variation in the market value of the firm.

Guangyou Liu

2011 Asia-Pacific Journal of Business Administration

doi: 10.1108/17574321111169803

Purpose – The purpose of this paper is to test whether significant differences in ethical reasoning exist between Chinese accountants and managers when facing an ethical dilemma. Further tests are conducted to identify what professional contextual factors and personal value preferences can be introduced to explain the ethical reasoning differences observed. Design/methodology/approach – Three research questions are raised and related hypotheses are developed and tested by the use of a defined issue test (DIT) instrument containing four hypothetical scenarios of different dilemmatic issues, and a Rokeach values survey questionnaire adapted to suit the Chinese business culture. Findings – The findings and conclusions include: Chinese managers and accountants are not significantly differentiated in terms of ethical reasoning levels measured by the overall DIT instrument, however, the break‐down results of the DIT individual dilemmatic scenarios shows that significant differences exist between the two professional types in three out of four scenarios. Second, gender and frequency of making compromises are two significant contextual determinant of ethical reasoning levels of managers but not those of accountants, and for the accountants, no significant contextual factors are observed in the current study. Third, in determining the impacts of value preferences on ethical reasoning levels, the four‐factor classification approach produces a more contrasting result than the seven‐factor classification approach. Research limitations/implications – The selection of the four scenarios in the DIT instrument is subjective according to the designation of the test, and Chinese business profession's ethical ideologies might differ among different regions. However, these research limitations might inspire further ethics research on cross‐regional comparisons in China and other emerging economies. Practical implications – In Chinese surging markets, appropriate socio‐economic order can only be maintained by highly ethical reasoning and conduct on the part of business managers and accountants. The current results and findings would help to identify what factors and value preferences weigh more, in order to improve the professional ethicality. Originality/value – This paper contributes to the research literature of business ethics by adding a managers‐accountants comparative study on ethical reasoning differences, especially the ethicality of two different professions in emerging economies; further, it includes contextual factors and value preferences in identifying those determinants of ethical reasoning differences.

Ren Lu; Jing Ma

2011 Asia-Pacific Journal of Business Administration

doi: 10.1108/17574321111169812

Purpose – The emergence of “interorganizational marketing” as a hot topic leads to one key question: can interorganizational governance mechanisms (socialization, incentives, and monitoring) offered by marketing theory be applied to China, an emerging economy characterized by the Chinese guanxi relationship? The purpose of this paper is to seek to answer this question by introducing the importance of guanxi roles and by illustrating how to apply proper governance mechanisms to roles activation in Chinese business practice. The paper finds that the answer is “yes” and develops a theoretical model to show such interactions. Design/methodology/approach – The paper applies interorganizational strategies to interpersonal relationships. Guanxi was categorized into three categories – family members, helpers and business partners – which meet each of the three governance mechanisms (in addition to favoring exchange as a special and typical Chinese governance mechanism) in the model. Findings – Through ex post role activation, the paper argues that guanxi is a dynamic balance and the ways in which various governance mechanisms can set roles will lead to the roles either changing (reinforcement or dilution) or switching (helper to business partner, and vice versa). It seems futile to implement external governance mechanisms on family ties (the main category of guanxi ) that have been firmly rooted in Chinese culture. On the other hand, applying the four mentioned governance mechanisms could reinforce, maintain, or dilute helper and business partner roles, or even make it possible to switch from one to another. Originality/value – The paper proposes a new concept regarding relationship marketing, namely the application of governance mechanisms to interpersonal relationships, which provides people doing business in China with a new perspective for reference.

Gagan Deep Sharma; B.S. Bodla

2011 Asia-Pacific Journal of Business Administration

doi: 10.1108/17574321111169821

Purpose – Internationalization of capital markets gives opportunities to investors to invest their money in the country of their choice, not just in their own country. The relationships between international stock markets have become increasingly important in recent times. The purpose of this paper is to study the inter‐linkages between stock markets of India, Pakistan and Sri Lanka. Design/methodology/approach – This paper studies the inter‐linkages between stock markets of India, Pakistan and Sri Lanka. Daily closing levels of the benchmark indices in the three countries are taken for a period of January 2003‐June 2010. While line charts, correlogram and unit‐root test are applied to check the stationary nature of the series; Granger's causality model, vector auto regression (VAR) model and variance decomposition analysis are performed to find out the linkages between the markets under study. Findings – The paper concludes that while the National Stock Exchange (India) Granger causes Karachi Stock Exchange (Pakistan) and Colombo Stock Exchange (Sri Lanka), the vice versa is not true. These results of Granger's causality model are also confirmed by the VAR models. Originality/value – Studies have been conducted in large numbers to test the linkages and integration between stock exchanges of the developed nations, namely the USA, Canada, Europe and Japan. Even the studies that have focused on the developing and under‐developed nations have studied the linkages of those with the developed nations. Little research has been conducted about the inter‐linkages between the nations from Asia. Even fewer studies have focused on stock exchanges in the South‐Asian region. This research paper focuses on the return from the benchmark stock exchanges from these three countries and also on the linkages between India, Pakistan and Sri Lanka.

Peter Smith; Yvon Dufour; Ljiljana Erakovic

2011 Asia-Pacific Journal of Business Administration

doi: 10.1108/17574321111169830

Purpose – This paper uses the strategy‐as‐practice perspective to explore the relationship between practices and organisational routines of governance in pluralistic contexts. The purpose of this paper is to explore empirically how strategising activities and organisational actions interact. It discusses and illustrates the relationship between strategising and organising through routines of governance, and in particular the use of board papers. Design/methodology/approach – This research is based on a single longitudinal “soft” case study. The researchers collected both primary and secondary data. Primary data collection took place from the end of 2004 until early in 2008. Primary data collection occurred through three main methods: interviews, meeting observations, and “shadowing” of participants; six participants were each shadowed for a working week (five days), and another participant was shadowed for three days. Interviews were held with 20 participants and typically lasted for between one and two hours. The interviews and meetings resulted in over 150 hours of audio recordings. In addition, notes of shadowing covered 420 hours. Findings – The first section of this paper presents the theoretical foundation before describing the research method. A discussion then explores the relationships between one of the specific strategising practices – the creation of board papers – and formal organisational routines of governance. The conclusion suggests that in professional service firms, informal practices that provide feedback are important in ensuring the stability and continuity of formal organisational routines. Originality/value – The links between micro, meso, and macro levels – that is to say, between actors, organisational actions, and institutional field practices – have already been broadly investigated. However, much of the research remains theoretical rather than empirical in nature. Furthermore, although researchers have been increasingly interested in strategising within organisations featuring multiple goals, diffuse networks of power, and knowledge‐based work processes, a deep understanding of practices in these organisations is still underdeveloped.

Mustaruddin Saleh; Norhayah Zulkifli; Rusnah Muhamad

2011 Asia-Pacific Journal of Business Administration

doi: 10.1108/17574321111169849

Purpose – The purpose of this paper is to examine the relationship between corporate social responsibility (CSR) and corporate financial performance (CFP) of Malaysian public listed companies (PLCs) as an emerging market setting. Design/methodology/approach – A longitudinal data analysis with a large‐sample testing was carried out from 200 Malaysian PLCs by using panel data analysis during a seven‐years period. The statistical power with fixed effect and random effect model was utilized. Findings – Results of earlier estimations indicate that there are positive and significant related of the CSR on CFP. Two of the CSR dimensions, namely employee relations and community involvement, were found to be positively related to financial performance. This proves that CSR practices can be considered as effort to enhance the financial performance of PLCs in Malaysia. The results also reveal that there is limited evidence of the relationship between CSR and CFP in the longterm. Practical implications – These findings suggest that Malaysian PLCs should be involved consistently in their CSR practices because CSR has a significant impact on improving financial performance in Malaysian PLCs. Originality/value – The majority of studies on CSR in Malaysia pertain to the analysis of such reporting and motivations of managers toward CSR practices. This study conducts a comprehensive empirical research on the relationship between CSR and CFP in Malaysian PLCs.