This study focuses on the transaction cost implications for firms with private equity ownership within developing economies. Focusing on a recently advanced emerging market private equity business model, we develop this through the application of the ownership competency theory of Foss, Klein, Lien, Zellweger & Zenger (2021). Our sample is unique and hand-collected 146 listed firms from eight national Caribbean securities exchanges. We find private equity ownership increases firm transaction costs, as reflected in estimated bid-ask quoted price spreads, which is negatively moderated by both the firm having a related party located in an offshore jurisdiction and the adoption of shareholder value governance. Our analysis sheds light on PE financing’s impact in stimulating entrepreneurial regeneration of small island economies and facilitating further broader investment, as well as maturity and exit in PE investment cycles

Financial management concerns decisions regarding retained earnings, debts, investments, dividends, valuation, cash-holding, and other transactions impacting firms’ financial status. Building on the theory of institutional logic, we propose a reformation of financial management informed by stakeholder capitalism, replacing the current practice rooted in ideas of shareholder capitalism. By prescribing a mindset valuing the margin of safety, we gainsay conventional financial thinking and the ultimate strive for financial efficiency and profit maximization. We justify such a shift in practice by portraying predictions as treacherous and the conventional understanding of risk as hazardous. Although we recognize that financial decisions are contextual and influenced by circumstances, we advocate for a generic mindset striving for financial sufficient before financial efficiency, intending to engender increased global economic resilience. As a result, we rationalize the need to replace the current mathematical optimization doctrine with a sufficient doctrine recognizing firms’ responsibility toward stakeholders and society. Anchored in such a mindset, we propose eight guiding principles for the global practice of financial management that we believe will contribute to a more economically sustainable society.

This study investigates the impact of foreign exchange reserve accumulation on corporate leverage, focusing on the moderating roles of global diversification and the exchange rate correlation within subsidiary networks. Using data from Chinese listed firms from 2011 to 2023, a positive effect of foreign exchange reserve accumulation on leverage is found. Employing a policy shock, i.e., China’s foreign exchange rate regime reform in 2015 which led to a sharp decrease in foreign exchange reserves, this study identifies an asymmetric treatment effect of the decrease in reserves led by the policy shock on firms with different subsidiary network exchange rate correlations. Notably, firms with subsidiaries in less correlated host markets exhibit lower sensitivity of leverage to reserve changes. Meanwhile, global diversification shows a weak and ambiguous influence on this sensitivity.