The relationship between the characteristics of the high-ranking team and the capital structure of energy companies

Authors

DOI:

https://doi.org/10.5585/exactaep.2021.14174

Keywords:

Top management team, Capital structure, Cost of capital, Third-party capital.

Abstract

The Upper Echelons Theory (UET) considers that the values, experiences and personalities of the top management team interfere with the organization's strategic choices. Thus, different managers are expected to choose capital structures that best meet the needs of different strategies. Based on the UET, the present research aims to study the relationship between the characteristics of the high-ranking team and the capital structure of energy companies. The intention is to explore the effect of the characteristics of managers on the level of indebtedness of the company, that is, third-party capital. The linear regression of three models showed that among the variables of the team considered, mean time in the position was that which presented a statistically significant relationship with the level of third-party capital of the company.

Downloads

Download data is not yet available.

Author Biographies

Paula de Souza Michelon, Instituto Federal de Santa Catarina

Doutora em Engenharia de Produção pela Universidade Federal de Santa Catarina. Mestre e Bacharel em Contabilidade da Universidade Federal de Santa Catarina.

Rogério João Lunkes, Universidade Federal de Santa Catarina

Pós-doutor em Contabilidade pela Universitat de València. Doutor em Engenharia de Produção pela Universidade Federal de Santa Catarina.

Antonio Cezar Bornia, Universidade Federal de Santa Catarina

Doutor em Engenharia de Produção pela Universidade Federal de Santa Catarina.

References

Acar, F. P. (2016) The effects of top management team composition on SME export performance: an upper echelons perspective. Central European Journal of Operations Research, 24, 833–852.

Auden, W. C., Shackman, J. D., & Onken, M. H. (2006) Top management team, international risk management factor and firm performance. Team Performance Management, 12(7/8), 209-224.

Bantel, K. A., & Jackson, S. E. (1989) Top management and innovations in banking: does the composition of the top management team make a difference? Strategic Management Journal, 10, 107-124.

Bany-Ariffin, A. N., McGowan, C. B., Júnior Tunde, M. B., & Shahnaz, A. S. (2014) Top management characteristics and firm’s international diversification activities: evidence from a Developing Nation. Pertanika Journal of Social Sciences & Humanities, 22, 39–54.

Barker, V., & Mueller, G. (2002) CEO characteristics and firm R&D spending. Management Science, v. 48(6), 782–801.

Bell, S. T., Villado, A. J., Lukasik, M. A., Belau, L., & Briggs, A. L. (2011) Getting specific about demographic diversity variable and team performance relationships: a meta-analysis. Journal of Management, 37(3), 709–743.

Bennouna, K., Meredith, G. G., & Marchant, T. (2010) Improved capital budgeting decision making: evidence from Canada. Management Decision, v. 48(2), 225-247.

Bertrand, M., & Schoar, A. (2003) Managing with style: The effect of managers on firm policies. The Quarterly Journal of Economics,118(4), 1169–1208.

Bhattacharyya, S. C. (2007) Energy sector management issues: an overview. International Journal of Energy Sector Management,1(1).

Bortoluzzi, D. A., Zakaria, J., Santos, E. A., & Lunkes, R. J. (2016) A influência das características dos executivos de alto escalão sobre a estrutura de capital: Um estudo em empresas listadas na BM&FBOVESPA. Espacios, 37(37), 28.

Cabrera-Suárez, M. K., & Martín-Santana, J. D. (2013) Top management teams and performance in non-listed family firms. Journal of Management & Organization, v. 19, p. 405–423, 2013.

Camelo, C., Fernández-Alles, M., & Hernández, A. B. (2010) Strategic consensus, top management teams, and innovation performance. International Journal of Manpower,31(6), 678-695.

Carpenter, M. A. (2002) The implications of strategy and social context for the relationship between top management team heterogeneity and firm performance. Strategic Management Journal, 23(3), 275-284.

Carpenter, M. A., & Fredrickson, J. W. (2001) Top management teams, global strategic posture and the moderating role of uncertainty. Academy of Management Journal, 23, 275–284.

Carpenter, M. A., Geletkanycz, M. A., & Sanders, G. W. (2004) Upper echelons research revisited: antecedents, elements, and consequences of top management team composition. Journal of Management, 30(6), 749–778.

Chandler, A. (1962) Strategy and Structure: Chapters in the History of the Industrial Enterprise. Cambridge: MIT Press.

Chen, H.L., Hsu, W.-T., & Huang, Y.-S. (2010) Top management team characteristics, R&D investment and capital structure in the IT industry. Small Business Economics, 35, 319–333.

Chevalier, J. (1995) Capital structure and product market competition: Empirical evidence from the supermarket industry. American Economic Review, 85, 415-435.

Chuang, T. T., Nakatani, K., & Zhou, D. An exploratory study of the extent of information technology adoption in SMEs: an application of upper echelon theory. Journal of Enterprise Information Management, v. 22, n. 1/2, p. 183–196, 2009.

Chuang, T. T., Nakatani, K., & Zhou, D. (2007) The impact of managerial characteristics of top management team on the extent of information technology adoption: An exploratory study with the upper echelon theory. Anais do Americas Conference on Information Systems, Praga, 13.

Cyert, R. M., & March, J. G. (1963) A behavioral theory of the firm. New Jersey: Prentice-Hall.

Damodaran, A. (2002) Investment evaluation: tools and techniques for determining the value of any asset. 3. ed. New York: John Wiley & Sons, 2002.

Díaz-Fernández, M. C., González-Rodríguez, M. R., & Pawlak, M. (2014) Top management demographic characteristics and company performance. Industrial Management and Data Systems, 114(3), 365- 386.

Díaz-Fernández, M. C., González-Rodríguez, M. R., & Simonetti, B. (2015) Top Management Teams’ demographic characteristics and their influence on strategic change, Quality & Quantity, 49, 1305–1322.

Gitman, L. J. (2010) Principles of managerial finance (12a ed.). New Jersey: Prentice Hall.

Goll, I., Johnson, N. B., & Rasheed, A. (2008) Top management team demographic characteristics, business strategy, and firm performance in the US airline industry - The role of managerial discretion. Management Decision, 46(2), 201–222.

Gu, J. (2008) An empirical study on the relation between characteristics of enterprise Top Management Team and strategic decision in industry cluster of China. International Journal of Human Resources Development and Management, 8(1/2), 96-110.

Guo, R. Liu, B.; Yang, & Z.-L. (2011) Research on decision-making effectiveness factors of top management team. Anais do International Conference on Management Science & Engineering, Roma, 18.

Hambrick, D. C. (2007) Upper echelons theory: an update. The Academy of Management Review, 32(2), 334-343.

Hambrick, D. C; & Mason, P. A. (1984) Upper echelons: The organization as a reflection of its top managers. Academy of Management Review, 9, 193-206.

Herrmann, P., & Datta, D. K. (2005) CEO experiences: Effects on the choice of FDI entry mode. Journal of Management Studies, 43(4), 755-778.

Hoffman, J. J.; Williams, R. J.; Lamont, B. T.; & Geiger, S. W. (2000) Managerial tenure and recovery following M-form reorganization in diversified firms. Journal of Business Research, 50, 287–296.

Hutzschenreuter, T., & HorstkottE, J. (2013) Managerial services and complexity in a firm’s expansion process: An empirical study of the impact on the growth of the firm. European Management Journal, 31, 137–151.

Jehn, K., Northcraft, G. B., & Neale, M. A. (1999) Why differences make a difference: a field study of diversity, conflict and performance in workgroups. Administrative Science Quarterly, 44(4), 741-763.

Koufopoulos, D., Zoumbos, V., Argyropoulou, M., & Motwani, J. (2008) Top management team and corporate performance: a study of Greek firms. Team Performance Management, v. 14(7/8), 340-363.

Kor, Y. Y. (2006) Direct and interaction effects of top management team and board compositions on R&D investment strategy. Strategic Management Journal, 27(11), 1081-1099.

Li, P. Y. (2016) The impact of the top management teams’ knowledge and experience on strategic decisions and performance. Journal of Management and Organization, 22, 1-20.

Li, W., Zhang, S., & Zhang, J. (2015) Top management team heterogeneity, diversification, and corporate performance: A panel smooth transition regression model. Romanian Journal of Economic Forecasting, 18(1), 129-142.

Maksimovic, V. (1998) Capital Structure in Repeated Oligopolies. Rand Journal of Economics, 19(3), 389-407.

Michel, J. G., & Hambrick, D. C. (1992) Diversification posture and top management team characteristics. Academy of Management Journal, 35(1), 9-37.

Modigliani, F., & Miller, M. H. (1958) The cost of capital, corporate finance and the theory of investment. American Economic Review, 48(3), 261-297.

Myers, S. C. (2001) Capital structure. Journal of Economic Perspectives, 15(2), 81–102.

Myers, S. C. (1984) The capital structure puzzle. Journal of Finance, 39(3), 575–92.

Myers, S. C., & Majluf, N. S. (1984) Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics, 13(2), p. 187–221.

Naranjo-Gil, D., Hartmann, F., Maas, V. S. (2008) Top management team heterogeneity, strategic change and operational performance. British Journal of Management, 19, 222–234.

O’Brien, J. P. (2003) The capital structure implications of pursuing a strategy of innovation. Strategic Management Journal, 24, 415–431.

Oppong, S. (2014) Upper Echelons Theory revisited: the need for a change from causal description to casual explanation. Management, 19(2), 169-183.

Pegels, C. C. Yang, B. (2000) Top management team impact on strategic assets accumulation capabilities. Management Decision, 38(10), 694–710.

Pereira, V. L., Santana, A. C., Mendes, F. A. T., Khan, A. S. (2008) Análise do setor de energia elétrica do estado do Pará: uma aplicação da matriz de insumo-produto. Amazônia: Cência e Desenvolvimento, v. 4, n. 7.

Ross, S.A. (2007) Fundamentals of Corporate Finance, 4th ed., Sydney: McGraw Hill.

Wang, Y. K. (2015) The impact of prestigious top management team on international alliance formation: Evidence from Taiwanese electronics firms. Journal of Management & Organization, 21(6), 835–852.

Wiersema, M. P., & Bantel, K. A. (1992) Top management team demography and corporate strategic change. Academy of Management Journal, 35, 91–121.

Williamson, O. (1988) Corporate finance and corporate governance. Journal of Finance, 43, 567–591.

Xie, X. Y., Wang, W. L., & Qi, Z. J. (2015) The effects of TMT faultline configuration on a firm’s short-term performance and innovation activities. Journal of Management & Organization, 21(5), 558–572.

Downloads

Published

2021-06-10

How to Cite

Michelon, P. de S., Lunkes, R. J., & Bornia, A. C. (2021). The relationship between the characteristics of the high-ranking team and the capital structure of energy companies. Exacta, 19(2), 393–411. https://doi.org/10.5585/exactaep.2021.14174

Issue

Vol. 19 No. 2 (2021): (abr./jun.)

Section

Papers

License

Copyright (c) 2021 Exacta

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.

Autores que tiverem artigos aceitos para publicação na Revista Exacta concordam com os seguintes termos:

  • A Cessão dos Direitos Autorais da publicação do artigo à Revista Exacta;
  • Os autores que tiverem seus trabalhos aceitos e publicados na Revista Exacta estão sujeitos a Política de Direitos Autorais CC BY NC SA https://creativecommons.org/licenses/by-nc-sa/4.0/;
  • A publicação do artigo pela Revista Exacta, em caráter de exclusividade e em meio eletrônico;
  • A indexação do artigo em bases de dados nacionais e internacionais, diretórios, bibliotecas digitais e bases bibliométricas em que a Revista estiver e vir a estar indexada.