How Financial Slack Affects Corporate Performance: An Examination in an Uncertain and Resource Scarce Environment

Author(s): Bernadette Gral
新加坡大学教学讲义
Singapore Management University



Course Description:
Examines the relationship between financial slack and corporate performance in the European pharmaceutical industry during the financial crisis of 2007 to 2010. Her investigation includes correlational and regression analyses as well as the qualitative content analysis of newspaper articles. The results show that financial slack influences corporate performance measured as ROA based on net income, thus implying that firms use slack resources to enhance performance during crises. The findings support the arguments for a beneficial effect of financial slack on performance according to the resource based view and behavioral theory of the firm.




1Introduction
1.1 Problem definition
1.2 Goal of the thesis
1.3 Structure of the thesis
2. Methodology
2.1 Literature Review
2.2 Research design
2.3 Sample selection
2.4 Data collection
2.5 Measures
2.6 Data analysis
3Literature review
3.1 Slack
3.1.1 Definition and conceptualization of slack
3.1.2 History of slack in literature
3.1.3 Role and functions of slack
3.1.4 Antecedents of slack3.1.5 Measurement of slack
3.1.6 Potential utilization of slack
3.2 The relationship between slack and performance...
3.2.1 Definition of performance
3.2.2 Theories and findings on the relationship
3.2.3 Intervening variables on the relationship
3.3 Uncertainty and munificence in the external environment.
3.3.1 Definition of uncertainty and munificence
3.3.2 Impact of environmental uncertainty and munificence on slack
3.3.3 The financial crisis as an example for high uncertainty and low munificence
3.4 Summary Propositions and hypotheses
4.1 Propositions and hypotheses concerning the impact of slack on performance
4.2 Propositions concerning intervening variables on the relationship Empirical results
5.1 Quantitative correlational analysis
5.2 Qualitative content analysis
5.2.1 Novartis AG-most new products
5.2.2 Roche Holding AG-most M&A activities
5.2.3 Almirall SA-initial public offering Discussion of the findings
7Conclusion and forecast
7.1 Limitations of the study
7.2 Potential for future research