Adelphi Business Review

Dear Friends and Colleagues,

This sixth edition of the Adelphi Business Review features four current topics addressed by our faculty's scholarly work. Each of these journal articles was recognized by the Willumstad School of Business as a Best Paper through the Bender Award program, named in honor of the first dean of the School, James F. Bender, PhD. Read on to learn about how Mexican female entrepreneurs' sense of belonging can evolve, how corporate managers' political ideologies affect the firms' bank loan contracts, how Chinese firms benefit from positive outcomes of cross-border mergers and acquisitions, and how a strong stock market doesn't necessarily improve living standards.

Enjoy!

Experiences of Mexican Women Becoming Entrepreneurs and Feeling Accepted

MURAT EROGUL, PHD

Belonging is said to be a perception of acceptance, recognition and inclusion where a sense of social acceptance and validation is perceived instead of feeling isolation and exclusion. The notion of belonging is particularly important for female entrepreneurs who experience structural, political and cultural challenges while starting their businesses and also in later stages in their entrepreneurial careers. Therefore, how women entrepreneurs manage themselves and their activities in ways to show their credibility and legitimacy to others, and in doing so feel a sense of belonging, displays the interplay between belonging, embeddedness and gender as separate but dependent processes. In this study, Murat Erogul, PhD, associate professor of management, explores the context of Mexico and presents a unique setting where there is a shift within a machista landscape toward adopting more progressive gender equality policies. The findings reveal Mexican female entrepreneurs' sense of belonging evolves from the need to "fit in" and achieve material aspects of belonging to the need to "stand out" and achieve affective aspects of belonging, such as supporting other women as a means of legitimizing their entrepreneurial belonging.

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Corporate Political Party Matters When Firms Contract With Banks

JASON NA, PHD

How do top corporate managers' political ideologies (Republican or Democratic) affect the firms' bank loan contracts? How do banks consider the borrowing firm’s political orientation to monitor the borrower’s credit quality? The borrowing firm's political orientation is known to affect its stock valuation, accounting performance and the probability of litigation. Since bank loan contracting is one of the most frequent funding channels for companies, Jason Na, PhD, assistant professor of finance, explores how banks and the corporate borrowers set up the structures of loans based on the firms' political orientation. Dr. Na found that banks prefer firms with Republican political values to firms with Democratic values and that Republican-oriented firms are less likely to violate the financial covenants of loan contracts.

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Chinese High-Tech M&As: Acquire to Be Profitable or Innovative?

MONICA YANG, PHD

Studying Chinese cross-border M&As in high-tech industries is important because such acquisitions of strategic assets are expected to enable Chinese firms to catch up with the latest technological developments. However, little is known about whether Chinese firms would fully benefit from the positive outcomes of these cross-border M&As. With 1,340 cross-border M&As initiated by Chinese firms and completed between 1990 and 2014, Monica Yang, PhD, professor of management and department chair, and her co-author have found that, although the challenges and obstacles involved in cross-border M&As are significant, the light integration approach taken by Chinese firms—which preserves the target firms’ structures while simultaneously emphasizing sufficient coordination and collaboration between the acquiring and target firms—enables both the acquiring and target firms to experience high performance in terms of firm innovation (but not necessarily in terms of firm profitability).

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How Can Living Standards Stagnate if Assets Have Grown So Rapidly?

ROBERT GOLDBERG and MARIANO TORRAS, PHD

Stock and bond values have increased unusually rapidly over the past few decades. That’s good news, right? Well, no, it’s more complicated. Middle-class living standards have remained relatively flat over this same period, requiring sizable debt increases just to keep living standards from shrinking. In this study, Robert Goldberg, James F. Bender, PhD, Clinical Professor of Finance, and Mariano Torras, PhD, professor of finance and department chair, assembled a U.S. balance sheet for the past 70 years, showing how mounting debt has fueled rapid growth in financial assets, as acquisition of such assets as opposed to tangible benefits increasingly becomes the main driver in the economy. The authors also calculate a financialization ratio for which they use the trend line to identify a critical break around 1980, after which U.S. financialization takes off. Findings clearly support the claim that the resulting debt spiral intensified income inequality. Most remarkably, average U.S. returns on equity have remained flat or even declined slightly since 1980 despite increased measures of risk, contrary to what we would expect from basic financial theory.

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