This study examines the determinants and consequences of seasoned equity offering (SEO) issuers’ decisions to bias their management earnings forecasts before SEOs in Japan, where management forecasts are mandatory. We identify firm characteristics associated with incentives to inflate management forecasts before SEOs: (i) the use of fund to pay debt, (ii) the economic significance of SEO proceeds, and (iii) financial distress. We also find that the effect of those firm characteristics on forecast error can be reduced by strong bank relationships. In addition, we demonstrate that optimism in management forecasts prior to SEOs is associated with post-SEO underperformance.

This paper investigates the drivers of client satisfaction in software development and maintenance outsourcing services. Using data collected from 185 outsourcing agreements from a leading global vendor of IT services, we analyze several service quality drivers in terms of their relationship to overall satisfaction. We find that delivery of services within the originally estimated costs is the key driver that can elevate customers from being dissatisfied to satisfied. The results also suggest that the key service quality driver that moves satisfied customers toward higher levels of satisfaction is the vendor’s dedicated adherence to the terms of the service level agreement.

According to prior literature and media articles, outside directors that have social ties with inside directors do not monitor managers appropriately. This study examines the association between social ties within boards and human resource investment in internal control (IC) over financial reporting. Using Korean firm data, we found that social ties within boards are negatively associated with the IC of firms’ accounting and public disclosure departments, which could negatively affect the reliability of their financial reporting and disclosures. These findings have valuable implications for interested parties such as investors and regulators.

It has been documented that Performance-based contracting (PBC) promotes improvement of product reliability for maintenances of highvalued products. However, nontrivial challenges exist in a typical supply chain that consists of multiple suppliers providing services for distinct subsystems. We identify a source of inefficiency in this environment that leads the suppliers to underinvest in reliability. Using PBC neutralizes such inefficiency, but unexpectedly, it results in an overinvestments in reliability. Interestingly, long-term supply chain cost is reduced when PBC is combined with cost-sharing contracts, counter to the common belief that fixed-price contracts are more effective in reducing costs.

The Ppuri industry continues to stagnate as it is interlocked with other industries and lacks the ability to respond to environmental changes. Structural equation model is adopted to analyze the effect of supply chain integration on supply chain risk management capability and firm performance. Results demonstrate that external integration might not have a direct effect on firm performance, whereas internal integration can directly help improve financial performance. Although integration with suppliers does not turn out to directly affect firm performance, it can help improve supply chain risk management capability, which in turn positively affects firm performance.

The unprecedented nature of the COVID-19 pandemic―the global scope, long-lasting impacts, and the simultaneous supply and demand disruptions―calls for a rethink of supply chain network design beyond what was studied in the literature. This study provides managerial insights on the design and operations of supply chain networks for the new normal. Building on the latest theoretical development in supply chain disruption and using an extensive simulation study based on the data of confirmed COVID-19 cases and lockdown measures, we analyze the dynamics of alternative supply chain network strategies under various pandemicinduced disruption scenarios. Our study highlights the principle of robustness, that a supply chain network should be designed to withstand alternative disruption scenarios that could emerge, which can be achieved through strategic design elements. We find that flexibility offers strategic redundancies to effectively combat the sources of uncertainty that trigger the forward and reverse bullwhip effects. In addition, we find that flexibility complemented with the strategies of preparedness and agility can be especially valuable in robust network. In particular, preparedness (securing emergency backup suppliers) is most effective when flexibility is deployed downstream; whereas, agility (proactive stocking policies in response to imminent disruptions) can be most helpful when flexibility is deployed upstream.

We document an unusual surge in fraud investigations for family firms with multiple sons who compete for leadership successions. Shareholders negatively react to the news, while such fraud investigations are concentrated in firms run by families with extensive internal conflicts, leading to strong whistle-blowing incentives inside the family (i.e., sabotage). Using the sudden death of a chairman as an exogenous shock that increases conflicts among potential heirs of the family firm, we find sharply increasing fraud investigations after the chair’s death. Overall, our results shed new light on the significant spillover from family governance to corporate governance in family-run organizations.

Although the role of venture capital (VC) in entrepreneurship is undeniable, we address possible risks associated with the over-dependence of the ecosystem on VC firms. In particular, we examine whether the supply of VC promotes or undermines the creation of entrepreneurial value in a community even when VC firms serve as an effective selector of such value. With an agent-based model of entrepreneurship where entrepreneurs are uninformed of the capabilities of the potential business partners, we suggest that the local efficiency of VC firms in the matching process may lead to the information-cascade type of herding behavior among entrepreneurs, which undermines paradoxically the overall efficiency of the ecosystem. With this implication, we seek to contribute to the literature on entrepreneurship by highlighting the possibility that competition-promoting institutions may destabilize the market itself such that VC firms as the efficient selector of entrepreneurial opportunities may induce uninformed, non-VC-backed startups to imitate the investments of VC firms, thereby reducing the diversity of entrepreneurial activities and thus the stability of the entrepreneurial ecosystem.

Firms consider external information such as peer performance data and analyst forecasts when setting performance targets because this information provides relevant benchmarks about agents’ productivity. Using the EPS targets of S&P 1500 firms from the 2006？2014 period, we examine whether firms’ reliance on certain benchmarks depends on the relative informativeness of the external information. We find that firms put greater weight on analyst forecasts than on peer performance information because their profitability is less likely to comove with that of their peer firms. We also find that the use of forecasts increases in settings where analyst forecasts are more informative regarding focal firms’ profitability.

This paper examines whether analyst coverage affects firm innovation in an economy dominated by family-controlled business groups. Using a sample of Korean publicly traded firms from 2010 to 2018, we find that an increase in financial analysts leads covered firms to cut investments in corporate venture capital and R&D. Moreover, reduction in innovation through acquisitions is more pronounced when analysts are from chaebol (family-controlled large business group) affiliated brokerages. These findings suggest that unlike in U.S., analyst coverage puts pressure on managers to meet the analysts’ forecasts, thereby impeding innovation under such environment.