The separation of ownership and control and investment decisions in Mexican manufacturing firms

Abstract

We study how the ownership and control structures may explain investment decisions of Mexican manufacturing firms. We study them with aggregate indexes and the assessment of several regression sets. We use measures of ownership, management and agency costs. The econometric analysis uses longitudinal census data for 182 industries. Our findings support the claim that agency costs, as a measure of the separation of management and control, and firms` size can explain investment decisions. Furthermore the estimations support the necessity to include investment opportunities and cash flow as control variables. The coefficients of all variables are mostly significant and positive.

Product Market Competition and Firm Performance: Business Survival Through Innovation and Entrepreneurial Orientation Amid COVID-19 Financial Crisis

“…Many scholars have emphasize investigating direct relationships between product competition and its impact on firm performance. Some of them provides positive relationships ( Ruiz-Porras and Lopez-Mateo, 2011 ; Van Reenen, 2011 ; Javeed et al, 2020 ), while others negative or U shape ( Januszewski et al, 2002 ; Bloom et al, 2010 ; Ko et al, 2016 ). These studies did not clarify how product market competition can be associated with firm performance positively, negatively, or neutrally.…”

“…Some research has shown that product competitiveness provides a positive impact, while some studies identify a negative relation to better firm performance. The findings of empirical studies indicated that product competition leads to achieving better performance and higher profits because firms’ competitiveness resolves agency conflicts between stakeholders, owners, and managers, which results in better profitability of the firms ( Raith, 2003 ; Ruiz-Porras and Lopez-Mateo, 2011 ; Mubeen et al, 2016 ).…”

Examining the Relationship Between Product Market Competition and Chinese Firms Performance: The Mediating Impact of Capital Structure and Moderating Influence of Firm Size

“…Many scholars have explored the direct relationship between product market competition and firm performance. Some positive relationships were found ( Ruiz-Porras and Lopez-Mateo, 2011 ; Van Reenen, 2011 ; Javeed et al, 2020 ), while others were negative or U shape ( Januszewski et al, 2002 ; Bloom et al, 2010 ; Ko et al, 2016 ). Thus, the literature did not explain the negative, positive, or neutral relationship between product market competition and firm performance.…”

Do national culture and board attributes influence corporate investment decisions?

“…According to Ruiz-Porras and Lopez-Mateo (2011), corporate governance theory contributes to explaining firms’ behaviour and their decisions, like investment ones. Gill et al (2012) also posit that good corporate governance is necessary for firms to make sound investment decisions which, in turn, help firms to prosper in the domestic as well as in the global market.…”