Prof. Chris Jooste

In Essay 1, I investigate the impact of corporate life cycle dynamics on the observed negative association between asset growth and stock returns in the crosssection. I find that the asset growth effect on average exists across some life cycle stages measured using cohorts. However, controlling for certain variables associated with the theoretical explanations, I find there is no relation between asset growth and returns. I argue this evidence is consistent with an agency-based explanation of the asset growth effect. Furthermore, a decomposition of the drivers of the effect shows that different components of assets (i.e. working capital and financing) drive asset growth effect at different life cycle stages. From a decomposition analyses, results show that in the youngest firms (cohort 1), asset growth effect is mostly driven by both operating liability and stock financing on one side (financing) and noncash current assets, PPE, and growth in other assets (for working capital) while cohort 3’s drivers appear to be stock issuances, together with noncash current assets, which I conclude offer further support for agency issues. In Essay 2, I examine how firms’ life cycle affect insider trading behavior, profits surrounding trades, price informativeness, and financing constraints. I argue that if firms’ policies and characteristics change over time as shown in lifecycle literature, then from firm characteristics that motivate insider-trading behavior, one should observe some differences across varying life cycle stages measured using age cohorts. I find that insiders are net sellers at all life cycle stages of a firm. Furthermore, insiders tend to trade more in younger firms than in older firms even though they have fewer numbers of insiders trading. Trading characteristics are generally statistically significant across cohorts. Overall, insiders appear to predict the correct direction for positive wealth generation when trading. Specifically, at all lifecycle stages, they appear to sell before negative CARs, and buy during periods associated with negative CARs that lead to positive CARs days after insider transactions. The findings on price informativeness suggest that in general insider purchases enhance price informativeness for firms at different lifecycle stages, however, this finding holds only for cohort 4 (oldest firms) in the case of insider sales. The implication of this finding is that regulation should be more lax towards purchases as compared to sales for firms, except for sales in firms that are older. Lastly, insider trades are linked with positive investment-cash flow sensitivities for both insider purchases and insider sales, which generally increase monotonically across cohorts. This finding is robust to using GMM approach. / Includes bibliography. / Dissertation (Ph.D.)--Florida Atlantic University, 2018. / FAU Electronic Theses and Dissertations Collection

This dissertation proposes an alternative perspective for studying the relationship between corporate performance and diversification. Extensive research into the relationship between diversification and economic performance has been conducted using two different perspectives. One perspective, pursued mainly by industrial organization economists, examined the effect that a firm's level (or degree) of diversity had on its performance. A second perspective, utilized by strategic management researchers, uses Rumelt's (1974) notion of product-market relatedness to explain performance differences among diversified firms. Rumelt (1974) hypothesized that firms which diversify into areas related to the original business by either products or markets would financially outperform those firms that diversify into areas unrelated (in a product or market sense) to the original business. Blackburn and Shrader (1990, pg. 1) argue that "a consensus seems to be forming that related corporate acquisitions are superior to unrelated acquisitions." This consensus view is not without its critics, however. Other research results (e.g. Barton, 1988) suggest that unrelated acquisitions need not produce inferior performance. This debate suggests that further research into the nature of the relationship between corporate diversification and its financial performance may be productive, especially if new ways of examining it can be devised. An alternative perspective for studying the relationship between corporate performance and diversification is proposed. Other dimensions of relatedness, such as the strategic similarity between a corporation's business units, may provide alternative means of defining relatedness. It will be argued that a redefinition of relatedness will prove valuable in expanding our ability to predict the effect corporate diversification strategy has on corporate performance. / Ph. D.

Thesis (MBA)--University of Stellenbosch, 2010. / With limited financial and management resources companies cannot afford to spend resources on every growth opportunity that presents itself, and must therefore continuously rank potential opportunities in order to focus its resources and efforts on the most valuable opportunities. The aim of this study is to develop a system to rank and prioritise new capital projects of mining companies, and specifically Exxaro, which will allow the company to focus its growth efforts on the most valuable opportunities. The literature study firstly examines the use of portfolio management, and particularly the CFA Investment Management Process for ranking investment opportunities. Secondly, various methodologies utilised in the ranking of R&D projects are investigated, providing a guideline for terminology and steps to be used in a capital project ranking system. The project development cycle is also investigated in order to understand the impact of ranking projects that are in different stages of development. Lastly, the utilisation and merits of different financial measures and multi-criteria decision analysis techniques is examined. The literature study emphasised the following principles: Portfolio management is a very structured and formalised process for matching investments with the strategic objectives of an individual or company. The formalised nature of the process ensures that there are clear direction and rigorous criteria for decision making regarding investments, which in turn ensures that resources are spent only on robust investment opportunities. The ranking systems for Research and Development projects emphasised that a ranking system should contain multiple perspectives and criteria in order to comprehensively evaluate all aspects of investment opportunities, but that these perspectives and criteria should not duplicate or overlap in terms of measuring a certain aspect of an opportunity. When rigorous front end loading is applied in the project development process, there is sufficient information to compare and rank projects in different stages of the project development cycle. The financial criteria form a very important part of the ranking criteria and there are various financial criteria utilised to measure the merits of a project. While there are pros and cons to the use of certain criteria, companies should acknowledge and understand the shortcomings of each criteria, the financial aspect of a project measured by each criteria, and ensure that there is no duplication while it utilises the criteria that is well understood and accepted throughout the company. Multiple criteria decision analysis is a comprehensive and structured decision making process which requires the focussed participation of personnel involved in the decisions. The structured process provides a better understanding of the decision to be made, a means to clarify the decision and its implications and the stimulation of discussion and sharing of ideas about the decision and its context. A second part of the research entails qualitative research where interviews were held with four senior mining executives in order to utilise their experience with project ranking systems. The knowledge and understanding gained from the literature study was used to guide the interviews and adapt conversations to specific issues and different points of view. The focus of the interviews was not to obtain statistical data, but rather on having strategic conversations about how project ranking can and should be applied, and to extract inputs from the experience of the interviewees on the design of a ranking system. Findings from the interviews included an emphasis on the importance of guidance from the company strategy in determining perspectives and criteria for project ranking; a requirement to discard unworthy projects as soon as possible via a rigorous filter per commodity; guidance on perspectives and criteria that could be included in the ranking system; the need to firstly rank projects within a commodity before comparing the top projects across commodities; and the need to carefully manage the ranking process in order to ensure that it is included in the annual business process cycle of the company. The knowledge and practical inputs gained from the literature and the strategic conversations were finally applied to Exxaro’s processes and ranking system. Possible reasons for the failure of previous attempts at implementing a ranking system were found to be the lack of a clearly articulated strategy and insufficient involvement of the decision makers in the design of the project ranking system. With the design of a new ranking system, specific perspectives, criteria, filters and templates were designed and a process was suggested to ensure inclusion of the ranking system in the annual business process cycle of Exxaro. In conclusion, a number of suggestions were made for continuous improvement of the project ranking system and its outputs.

Thesis (MBA (Business Management))--Stellenbosch University, 2008. / ENGLISH ABSTRACT: The sustainable growth rate of a company is investigated, by comparing the self-financeable growth rate as defined by Churchill and Mullins (2001), with the cash flow sustainable growth rate as defined by Hamman (1996). The purpose of this research is to identify the behaviour, characteristics and benefits that each rate displays by investigating changes in sales growth, profit margins, working capital and cash flow analysis. The biggest difference between the self-financeable growth rate (Churchill & Mullins, 2001) and the cash flow sustainable growth rate (Hamman, 1996) is the definition of cash as generated from sales (self-financeable growth rate) and cash generated from operating activities (cash flow sustainable growth rate). Cash generated from sales includes accounts receivable or payable, and represents the amount of cash that is available to reinvest in the growth of a company (according to the self-financeable growth rate). Because this cash (calculated for the self-financeable growth rate) is not immediately realised, the cash flow sustainable growth rate (based on cash flow from operating activities) represents a better measurement of cash available for reinvestment. If the percentage sales growth is less than the cash flow sustainable growth rate (Hamman, 1996), a positive sustainable cash flow from operating activities will be generated. The report also shows this to be true, when the self-financeable growth rate is less than or equal to the cash flow sustainable growth rate. When the growth in sales exceeds the cash flow sustainable growth rate, negative cash flow from operating activities is experienced. This is an indication that internal funding to support the working capital requirements is insufficient and external funding is required. In this investigation the self-financeable growth rate (Churchill & Mullins, 2001), always reflects a positive cash flow from operating activities, regardless of whether the percentage sales growth is higher or lower than that of the self-financeable growth rate. This leads to the question: What check is used to ascertain a company's sustainable performance when using the self-financeable growth rate? That is, if the self-financeable growth rate is exceeded by the sales growth, what indicator becomes relevant under the specific circumstances? As highlighted by Churchill and Mullins (2001), the benefits of sustainable growth rates, provide insight into the short and long-term decisions in a company with regards to: • Reducing overall costs • Changing the profit margins • Managing the working capital requirements • Changing the operating cash cycle. What matters most is not how fast a company can grow its business, but the way in which it is managed. Increasing competitiveness requires innovative ways of optimising resources, but without efficient management of cash flow, a company is most likely to fail. This report, illustrates that, compared to the self-financeable growth rate, the cash flow sustainable growth rate is a more effective tool, in addressing sustainable growth and the management of cash. / AFRIKAANSE OPSOMMING: 'n Maatskappy se volhoubare groeikoers word ondersoek deur 'n vergelyking te tref tussen die self-gefinansierde groeikoers van Churchill en Mullins (2001), en die kontantvloei volhoubare groeikoers van Hamman (1996). Die doel van die navorsing, is om die verandering in verkope, winsgrense, bedryfskapitaal en die kontantvloei ontleding te ondersoek, ten einde die aard, kenmerke en voordele van die groeikoerse te bepaal. Die grootste verskil tussen die self-gefinansierde groeikoers van Churchill en Mullins (2001), en die kontantvloei volhoubare groeikoers van Hamman (1996) is die definisie van die kontant gegenereer uit verkope (self-gefinansierde groeikoers) en die kontant gegenereer uit bedryfsaktiwiteite (kontantvloei volhoubare groeikoers). Kontant gegenereer uit verkope sluit in rekeninge ontvangbaar of betaalbaar en verteenwoordig die bekikbaarheid van kontant wat herbele kan word in 'n maatskappy se groei (volgens die self-gefinansierde groeikoers). Omdat die kontant (self-gefinansierde groeikoers) nie ommiddelik gerealiseer kan word nie, is die kontantvloei volhoubare groeikoers (kontant gegenereer uit bedryfsaktiwiteite) 'n beter verteenwoordiger van beskikbare kontant wat herbele kan word. As die presentasie groei in verkope minder is as die kontantvloei volhoubare groeikoers (Hamman, 1996) sal 'n positiewe volhoubare kontantvloei vir bedryfsaktiwiteite gegenereer word. Die verslag dui aan dat bogenoemde ook geld, as die self-gefinansierde groeikoers kleiner of gelyk is aan die kontantvloei volhoubare groeikoers. Wanneer die groei in verkope groter word as die kontantvloei volhoubare groeikoers, word negatiewe kontantvloei vir bedryfsaktiwiteite gegenereer. Hierdie is 'n aanduiding dat die interne befondsing wat benodig word om die bedryfskapitaal te bevredig, nie voldoende is nie en eksterne befondsing benodig word. In hierdie ondersoek reflekteer die self-gefinansierde groeikoers (Churchill & Mullins, 2001) altyd 'n positiewe kontantvloei vir bedryfsaktiwiteite, ongeag of die groei in verkope groter of kleiner is as die van die self-gefinansierde groeikoers. Dit lei tot die volgende vraag: Watter maatslaf word gebruik om die volhoubare groei van 'n maatskappy te bepaal as die self-gefinansierde groeikoers toegepas word? Anders gestel, as die groei in verkope, die self-gefinansierde groeikoers oorskry, watter toepaslike aanduiding is relevant onder hierdie omstandighede? Soos beklemloon deur Churchill en Mullins (2001), gee die voordele van volhoubare groeikoerse, insig in kort en langtermyn besluite in 'n maatskappy met betrekking tot: • Vermindering van totale koste • Verandering in winsgrense • Bestuur van bedryfskapitaal behoeftes • Verandering in die bedryfs kontant siklus. Wat van belang is, is nie hoe vinnig 'n maatskappy kan groei nie, maar wat die beste manier is, om dit te bestuur. 'n Verhoging in kompetisie, benodig innoverende maniere om bronne te kan optimiseer en sonder effektiewe betuur van kontant, bestaan die moontlikheid dat 'n maatskappy hierin kan misluk. Hierdie verslag illuslreer, deur te vergelyk met die van die self-gefinansierde groeikoers, dat die kontantvloei volhoubare groeikoers 'n beter, effektiewe maatstaf is, wat betref die adressering van volhoubare groei en die bestuur van kontant.

I investigate if all-equity firms are a heterogeneous group as it relates to agency costs and accounting quality. All-equity firms are a unique group of firms that choose a “corner solution” as their capital structure. Extant research, supported by well-established theories such as trade-off theory, free cash flow theory, and Jensen’s (1986) control hypothesis, generally conclude that agency conflicts motivate such structure. Research also supports the alternative argument that poor accounting quality makes debt so prohibitive that such firms are driven to this capital structure. I propose that an all-equity structure is not necessarily symptomatic of agency conflicts and poor accounting quality overall. I investigate if different motivations, within an all-equity setting, reflected by free cash flows and growth opportunities, result in different levels of agency cost and accounting quality. By anchoring on theories that link implicit costs of debt to free cash flow levels and growth opportunities, I hypothesize that free cash flows and growth opportunities are strongly linked to the justification or lack thereof for the pursuit of such strategy. I hypothesize and show that firms in the extremes of the free cash flow to growth rate spectrum exhibit significantly different levels of agency cost and accounting quality within the all-equity setting. These results support my main prediction that there exists agency costs and accounting quality differences within the all-equity setting which are associated with free cash flow levels and growth opportunities and that the pessimistic conclusions for pursuing an all-equity strategy reached by prior research should not be generalized to all such firms. / Includes bibliography. / Dissertation (Ph.D.)--Florida Atlantic University, 2015 / FAU Electronic Theses and Dissertations Collection

Corporate diversification is a core topic in Financial Economics. The desire to better understand why a firm elects to diversify as opposed to increase in scale is the motivation of this dissertation. To accomplish this goal I test a number of dynamic models of corporate diversification, with similar predictions, to better understand the dynamic choice to diversify. I find that several previously untested models do indeed provide insight as to why a firm would diversify (Essay One). In particular two firm traits, firm talent which I use the proxy of organization capital and asset specificity which I use the proxy of asset tangibility, are strongly related to propensity of the firm to engage in corporate diversification for the first time. / Includes bibliography. / Dissertation (Ph.D.)--Florida Atlantic University, 2015 / FAU Electronic Theses and Dissertations Collection

The manufacturing industry of eThekwini municipality has been the most important aspect of economic development and job creation. This sector currently contributes 22% of gross domestic product to the local economy, with finance and transport being the other major sectors. The growth in manufacturing has averaged about 1% per annum over the past 10 years which has contributed to jobless growth of eThekwini. Whilst policy makers have realized the importance of the manufacturing industry, the important sub-sectors within the manufacturing industry are proving to be uncompetitive in a more open economy as they are faced with numerous growth challenges. The rationale of this study was to investigate the factors that affect the growth of manufacturing businesses that operates within the eThekwini municipality. Despite the contributions of the manufacturing businesses to the local economy, this sector has never been given due attention as past studies of business performance had been biased towards larger businesses. For the purposes of this study, the questionnaire used was aimed at respondents who own manufacturing businesses within the area. Questions were distributed electronically via QuestionPro to 100 respondents and 76 respondents accessed the questionnaire with 44 respondents who completed the survey which gave the completion rate of 44%. The results from the respondents indicated that access to finance or credit, business skills, technology and globalisation were the factors that negatively affects the growth of the manufacturing businesses. The results also indicate that the unpredictable business environment, the regulatory environment and other economic factors such as inflation also affect the growth of the manufacturing businesses. The quantitative results supported by the literature review confirm that these factors affect development and growth of businesses especially small manufacturing businesses. Recommendations is also made on the actions to be undertaken to address factors affecting manufacturing businesses. / Thesis (MBA)-University of KwaZulu-Natal, Westville, 2011.

The thesis aims at contributing to clarify broad conjectures on growth, such as, (i) the extent to which growth constitutes an imperative for the firm, and (ii) what leads some firms to enjoy continuing growth and a continued existence, while others, after experiencing continuing growth, end up contracting and decaying. As a result, the thesis seeks to develop a deeper understanding of the mechanisms fostering and precluding growth, while also identifying challenges and opportunities in managing growth. / The thesis comprises four interrelated essays: (i) Chandler on the growth of the firm---this essay scrutinizes The Visible Hand (Chandler, 1977) seeking to answer the question "What is Chandler's theory on how and why did the modern business enterprise (MBE) appear and grow?" Four processes are identified---MBE formation, MBE development, industry formation, industry development. Their analysis within a process-oriented view (Mohr, 1982) discloses chains of necessary conditions in growth-related processes. Moreover, two growth-related dilemmas are advanced and the firm-industry co-evolution is explored. (ii) Identifying the building blocks of growth dynamics---this essay addresses the question "Which are the basic processes of change that form the dynamics of growth?" Drawing on Mario Bunge's philosophy (1973--1989; 1979), a framework of qualitatively different modes of change is derived. The framework allows the identification of elementary units of the growth dynamics. These comprise the following types: quantitative, qualitative (dialectical), goal-directed, interactional, causal, structural, random. In addition, complex units of growth dynamics made up of combinations of elementary units are also advanced: evolutionary motor of firm growth, co-evolutionary motor of growth relating firm and industry, and different instances of continuing growth motors. (iii) Describing growth trajectories of firms---the question "How can growth trajectories be represented?" is addressed in this essay. An indicator of size, which automatically adjusts for inflationary and deflationary changes in currency value is proposed. This indicator enables the drawing of growth trajectories of firms in the economy over long periods of time. (iv) Growth trajectories of General Electric and Westinghouse: a comparative study---this essay addresses the question "Why do some firms experience continuing growth and continued existence while others decay and disappear?" The growth trajectories of

Orientador: Jose Maria Ferreira Jardim da Silveira / Tese (doutorado) - Universidade Estadual de Campinas, Instituto de Economia / Made available in DSpace on 2018-08-08T18:42:12Z (GMT). No. of bitstreams: 1 Magalhaes_LuisCarlosGarciade_D.pdf: 7632649 bytes, checksum: f5c708397739d35950f5c9a576bb7ef0 (MD5) Previous issue date: 2006 / Resumo: o objetivo desse trabalho é avaliar o processo de reestruturação da indústria farmacêutica brasileira nos 90. Procura-se analisar em que medida as transformações de estrutura de mercado e nas estratégias empresarias de crescimento e de inovação estiveram associadas a mudanças no desempenho competitivo da indústria farmacêutica doméstica. Os resultados sugerem que muitos dos efeitos positivos esperados da política de abertura comercial, de mudança do padrão de regulação da indústria e do desmonte das políticas setoriais não se realizaram. Não há evidências que as alterações no ambiente concorrência, econômico e institucional, em razão das políticas adotadas nos anos 90, implicaram em mudanças significativas da estrutura da indústria farmacêutica em direção a uma configuração mais competitiva. A indústria farmacêutica doméstica continuou com uma estrutura de mercado concentrada, investimento de reduzida densidade tecnológica e com capacidade de inovação passiva. As estratégias empresariais de crescimento e de inovação não' induziram uma trajetória que levasse a indústria a uma configuração mais eficiente, com melhoria importante de seu desempenho competitivo / Abstract: The main purpose of this work is to evaluate the process of reorganization in Brazilian pharmaceutical industry in the 90's. It is try to analyze how measured the market structure transformations in growth business strategies and innovation had been associates with the changes in the competitive performance of the domestic pharmaceutical industry. The results suggest that many of the waited positive effect in the opening commercial politics of standard change the regulation industry and the dismounting politics sectorial had not been become fullfilled. It does not have evidences that the alterations in the surrounding competition, economic and institucional, in reason ofthe politics adopted in the 90's, had implied in significant changes of the structure in the pharmaceutical industry in direction to a more competitive configuration. The domestic pharmaceutical industry continued with an intent structure of market, investment of reduced technological density ando with capacity of passive innovation. The growth enterprise strategies and innovation had not induced a trajectory that took the industry to a more efficient configuration, with important improvement of its competitive performance / Doutorado / Politica Economica / Doutor em Ciências Econômicas