(Please feel free to contact me for getting access to the working papers)
This paper examines the association of corporate reputation and operating performance on a balanced panel data sample of 49 FTSE UK firms over the period 2005-2015. Analysing 169,994 news media articles from four main UK newspapers (Financial Times, The Times, The Guardian and The Mirror), I construct a novel corporate reputation measure advancing methodologically the conceptualisation of this important intangible asset. Next, the association of corporate reputation and operating performance (ROA, EBITDA), as well as with profit drivers (sales, profit margin, operating expenses and salaries expenses) are investigated. Results from regression analysis provide evidence that corporate reputation has a strong positive association with operating performance, sales growth and profit margins and outperforms Britain’s Most Admired Companies ranking (used as a benchmark) as an explanatory variable. However, the study was not able to provide any evidence of a significant association between corporate reputation and operating expenses or salaries expenses. Nevertheless, this study contributes to the academic literature on unrecorded intangible assets by introducing a new (objective) measure of corporate reputation and providing evidence of its association with operating performance through various profit drivers.
This study examines the association between human capital investment and future firm performance on a sample of 9,012 U.K. non-financial firm observations over the period 1991-2010. Considering interdisciplinary (economics, management and accounting) theories, I construct a human capital investment indicator, taking also into consideration changes in the workforce. Results from ordinary-least-square (OLS) regression analysis provide contradictory evidence that the proposed human capital investment indicator has a weak positive association with market-adjusted returns (CAR) but a negative association with future operating performance (ROA). However, quantile regression reveals the existence of two opposing effects, cost efficiency and human capital investment effect. The former effect finds a statistically negative association with future firm performance for firms decreasing employee compensation significantly. In contrast, the latter effect is observed when firms increase significantly their employee compensation. Such an investment in human capital relates with a statistically positive association with future firm performance. Summarizing, increasing employee compensation seems to have a much stronger effect on future firm performance than decreasing employee compensation, which can be interpreted as a positive sign for human capital investment in general. This study contributes to the academic literature on unrecorded intangible assets and provides practitioners with new insights about human capital investment and future firm performance.
This paper examines earnings management (EM) incentives and behavior on a sample of 179,140 private Italian firms. Despite the absence of capital markets, private firms face strong incentives for managing earnings. Tax-minimization, agency conflicts and high reporting quality demand by stakeholders influence EM decisions depending on firm characteristics. To account for this heterogeneity among private firms, we divided them into four size categories. We find confirming evidence that private Italian firms systematically manage earnings mainly for tax minimization and loss avoidance purposes. In addition, the demand for high quality reporting from suppliers and shortterm lenders is significant, at least for larger firms. Overall, we provide strong evidence that private firms respond differently to external pressures for earnings quality. These findings are important because private firms, in contrast to the existing EM literature, should be treated as a heterogeneous group of firms with different incentives and characteristics.
Intangible investments and technological changes in the economy led to the emergence of so-called superstar firms. Such firms (e.g. Google, Amazon, and Apple) can offer their products or services at very low marginal costs, which generates increasing returns to scale. I argue that many industries have become a “winner takes it most” environments in which firms investing successfully in intangibles rise to superstars.