Paper on the Causal Relationship in Organizational Levels of Slack, Risk, and Financial Performance by Manufacturing Companies

44 Pages Posted: 19 Jan 2009  

André Lima

Mackenzie Presbyterian University

Leonardo Cruz Basso Sr.

Mackenzie Presbyterian University - Business Administration

Herbert Kimura

Mackenzie Presbiterian University

Date Written: January 15, 2009

Abstract

The purpose is to investigate the existence of a causal relationship in organizational levels of slack, risk, and corporate performance. The starting point is the assumption that the amount of organizational slack is a determining factor of risk reflected by the company, as well as of its performance. To test this relationship, we have considered the data of 218 manufacturing companies from 2001 to 2007, a part of these grouped through factorial analysis in such a way as to compose the three kinds of organizational slack under consideration: available, recoverable, and potential. The data were then placed in panel form and analyzed with the GMM. The results obtained confirm the assumption that organizational slack has a non-linear influence on performance.

Keywords: Organizational slack, Risk, Financial performance, the Generalized Moments Method (GMM)

JEL Classification: A12, B21, D01

Suggested Citation

Lima, André and Basso, Leonardo Cruz and Kimura, Herbert, Paper on the Causal Relationship in Organizational Levels of Slack, Risk, and Financial Performance by Manufacturing Companies (January 15, 2009). Available at SSRN: https://ssrn.com/abstract=1328320 or http://dx.doi.org/10.2139/ssrn.1328320

André Lima

Mackenzie Presbyterian University ( email )

Rua da Consolação 920
São Paulo, 010302907
Brazil

Leonardo Cruz Basso Sr. (Contact Author)

Mackenzie Presbyterian University - Business Administration ( email )

Rua da Consolacao, 896 7 - andar sala 73
01302-907 Sao Paulo
Brazil
+55 11 32368597 (Phone)
+55 11 32368600 (Fax)

Herbert Kimura

Mackenzie Presbiterian University ( email )

Rua da Consolacao, 896 - 6o andar
01302-907 Sao Paulo
Brazil
+55 11 3236-8589 (Phone)
+55 11 3236-8600 (Fax)

Paper statistics

Downloads
142
Rank
169,035
Abstract Views
712