Faculty Papers

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    Climate Change Risk and Firm Value under Corporate Social Responsibility Engagement
    (Washburn University. School of Business, 2023-08-01) Khan, Muhammad Asif; Bagh, Tanveer; Hull, Robert M.
    Our firm-specific study offers a logical trajectory of tests to illustrate how a firm's climate change risk (CCR) can enhance firm value (FV). This trajectory begins by establishing a significant negative association between CCR and FV and a significant positive association between CCR and corporate social responsibility (CSR) engagement. Given this knowledge, we deduce that CSR engagement can have a possible net positive impact on FV. To confirm this possibility, we simultaneously test the dual impact of CSR engagement on FV consisting of (i) its direct impact on FV and (ii) its moderating impact on FV via reducing the negative influence of CCR on FV. We find that both impacts on FVare positive and significant. This indicates the potential capacity of CSR to overcome the negative impact of CCR on FV rendering a net outcome that is value-enriching. We conclude that decision-makers should undertake optimal CSR engagement to combat CCR so that they can achieve the ultimate outcome of maximum FV and global wealth within the confines of sustainable development.
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    Cohesion and Performance in Global Virtual Teams: The Moderating Role of Technical Skills
    (Washburn University. School of Business, 2023-04-01) Tavoletti, Ernesto; Florea, Liviu; Taras, Vasyl; Sahin, Faruk; Cetin, Fatih; Celik, Duysal Askun
    Despite increasing recognition of the issues posed by virtual and culturally-diverse teamwork in global teams, little is known about the impact of cohesion on team performance when face-to-face contact is not possible. This study examines the perceptions of members of 463 global virtual teams composed of 1989 university students, with respect to team cohesion and team performance. The study assesses the extent to which team cohesion affect team performance and whether the size of such effect depends on team members' technical skills. To achieve this goal, hierarchical multiple regression analyses are conducted. The results clearly indicate that the interaction between team cohesion and team members' technical skill explain additional variance in team performance scores over and above the main effects of team cohesion and team members' technical skill alone. Specifically, team cohesion is positively and significantly related to team performance when team members' skills are high, but is not significantly related to team performance when team members' skills are low. Based on the empirical results, the influence of cohesion on team performance should be predicated on the team type and characteristics. This study suggests the existence of boundary conditions to the cohesion-performance relationship and proposes the use of the expeditious coherence term for global virtual teams. Given the growing usage of global virtual teams in the business world, this study concludes that cohesion develops differently and have asymmetrical effects on performance, according to distinct team features.
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    Biotech Mergers: Evaluating Risk, Reporting, and Integration of Growth Strategies Gilead’s Acquisition of Immunomedics: Risk and a Growth Strategy
    (Washburn University. School of Business, 2023-04-01) Martin, James A.; Burdiek, Jayme
    This case deals with the accounting and finance issues surrounding a recent biotech merger and acquisition (M&A) transaction. Students will work with actual historic and projected data from Gilead Sciences lnc.'s 2020 acquisition of lmmunomedics Inc. Corporate acquisitions are plentiful, yet this transaction and case is unique regarding the availability of historic and projected data. Most acquisitions involve private companies where little if any historic or projected financial data is available. Similarly in public company acquisitions, projected data is rarely published. Both Gilead and lmmunomedics were required by the U.S. Securities and Exchange Commission {SEC} to submit due diligence filings. The case relies heavily upon these disclosures. Students will access this data via EDGAR, the SEC's data gathering, analysis, and retrieval system and complete five sections in their analysis of the acquisition. Using EDGAR's public database filings, they will prepare financial projections of their own for the merged entity. In the process, they will be instructed to draw conclusions regarding the actual price paid for the acquired company and the justification of the actual price paid. Previous exposure of students to the calculation of the cost of capital and capital budgeting methodologies plus the accounting for intangible assets is helpful.
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    Tax Shield Choices: Pedagogical Application
    (Washburn University. School of Business, 2022-12-01) Hull, Robert M.
    We offer a pedagogical application on the role of taxation on business decision-making that focuses on the value of a traditional interest tax shield (ITS) versus a retained earnings tax shield (RTS). This exercise demonstrates that an RTS serves to promote business growth, lower financial distress, and achieve greater equality in the taxation of different business ownership forms. A study of these two tax policies challenge students to understand the relevant tax shield factors that are essential in achieving optimal corporate finance and tax policy outcomes. In terms of maximizing firm value, students will learn that an ITS is inefficient and suboptimal compared to an RTS policy. Students also gain experiential knowledge and acquire skills on how to analyze an RTS in terms of understanding its role in maximizing firm value. By experiencing this exercise, students acquire important insights on how taxation policy can be detrimental or beneficial to business growth and what is needed to overcome barriers to achieve this growth. Finally, our instructional exercise supports teamwork learning and enables students to apply finance equations and enhance their Excel skills used in the business world.
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    Nonprofits and C Corporations: Performance Comparison
    (Washburn University. School of Business, 2022-11-01) Hull, Robert M.
    We extend the performance comparison study of nonprofits (NPs) and pass-throughs by examining large NPs and large C corporations (CCs). Unlike that study, we also examine performance outcomes under two different tax shield policies. We use the Capital Structure Model as our main methodology. Our purpose is to compare large NPs with large CCs in terms of debt choice, valuation, leverage gain, and growth-related outcomes. All tests considered, NPs (compared to CCs) have a 34.90% valuation advantage; achieve a 78.12% greater increase in value when going from nongrowth to growth (using a 12.34% lower plowback ratio and 10.97% less in retained earnings); attain a 2.56% greater optimal leverage ratio; and, realize 10.97% less in dollars added from debt. We show that switching from an interest tax shield to a retained earnings tax shield increases CC value between 1.35% and 3.28%. The NP value limit is only 0.42% since NPs pay little taxes. Our findings are value-additive for the comparative ownership form research.