scholarly journals Political elections and corporate investment: International evidence

Author(s):  
Mario Daniele Amore ◽  
Margherita Corina

AbstractRecent literature shows that the spike in uncertainty during political elections harms firms’ investment. Bridging insights from international business and political science, we argue that the effect of political elections on firms’ investment activities is contingent on the country’s electoral system. In particular, we expect the negative effect of elections on corporate investment to be smaller for firms operating in plurality systems. We test our theory using a panel dataset of listed firms around the world, and a panel of US multinationals. Our results confirm that during an election period, firms in countries with a plurality system reduce investment less than firms in other countries. Additionally, we show that multinationals’ foreign investment is affected by elections abroad: their investment in a host country declines during an election in that country, though to a lesser extent if the election is held with a plurality system. Collectively, our findings provide new evidence on the role of political institutions for firms’ investment decisions.

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Moncef Guizani ◽  
Ahdi Noomen Ajmi

PurposeThe purpose of this paper is to examine whether and how Islamic banks' financing affects corporate investment efficiency.Design/methodology/approachTo achieve the research purpose, an empirical model was constructed to describe the relationship between Islamic banks' financing and corporate investment efficiency. The empirical model was tested through generalized method of moments (GMM) estimation technique using a panel data of 163 Malaysian listed firms for the period 2007–2017.FindingsThis study provides evidence that Islamic banks' financing plays an important role in enhancing investment efficiency and that this positive effect comes mainly from non-PLS contracts. Moreover, the results show that the effect of Islamic banks' financing in preventing suboptimal investments is stronger in the financial crisis period. The results also reveal that the contribution of Islamic banks' financing in reducing suboptimal investments is more prominent when firms face over-investment problems.Research limitations/implicationsThis research contributes to the debate on the financial implications of Islamic banks' financing modes by exploring their effect on corporate investment efficiency.Practical implicationsFrom a managerial perspective, the research findings are beneficial to Islamic bank managers to the extent that they highlight the role of Islamic financial contracts in improving corporate investment efficiency. In addition, the lower effect of PLS contracts on investment efficiency implies that policymakers in Malaysia should multiply their efforts to further expand the PLS financing.Originality/valueThis paper offers some insights on the role of Islamic banks' financing in mitigating agency conflicts and reducing asymmetric information problems. It is the first attempt focusing on the role of Islamic financing in fostering corporate investment decisions.


2020 ◽  
Vol 45 (3) ◽  
pp. 141-151
Author(s):  
Hanh Song Thi Pham ◽  
Duy Thanh Nguyen

This article investigates the moderating role of board independence in the relationship between debt financing and performance of emerging market firms. We have used an empirical model in which the firm’s accounting profitability is a dependent variable and the independent variables are debt financing, board independence, the interaction variable made of debt financing and board independence as well as various control variables. Our analysis is based on a panel data set of 300 listed firms in Vietnam between 2013 and 2017. Our study finds that debt financing has a significantly negative effect and that board independence reduces the adverse impact of debt financing on accounting profitability. Our results are consistent across different estimation models and methods.


2020 ◽  
Vol 12 (2) ◽  
pp. 235-253
Author(s):  
Sotirios Karagiannis ◽  
Dimitrios Thomakos

This study investigates the impact of corporate bonds issued by Greek listed firms on employment. Even though external financing and the effects on employment has been studied in the literature, we extend the existing literature by focusing for the first time on the specific role of corporate bonds on employment. We have collected all the relevant papers on this line of the literature and concisely report them in a table format and then use them in analyzing our results. Our empirical analysis is based on a panel dataset from 2001 to 2014 and we examine the effect of corporate bonds in the pre and post period of the Greek economic crisis, in which the banking system is vulnerable and unable to provide financing to the firms. The results suggest that corporate bonds have a positive effect on employment in the pre-crisis sample, denoting that firms hire employees and proceed to investment choices. On the contrary, during the recession, corporate bonds have a negative effect on employment. Firms reduce their costs and try to control their debt obligations by issuing corporate bonds.


Author(s):  
Brian Lund

Housing has been labelled a ‘wicked’ problem: complex, territorial, open-ended and intractable. This book underscores the role of politics in generating this ‘wickedness’, highlighting the ‘actors’ engaged in the process within their political institutions and the entrenched territorial electoral politics involved in the ‘housing question’. It concentrates on the preparing, disputing and implementing policy rather than on policy outcomes and the social and economic determinants ― industrialisation, capitalism, globalisation ― of continuity and change. The major theoretical approaches framing its content are the ‘new institutionalism’, social constructionism and public choice theory. The sub-title reflects the book’s themes. Power is acquired formally through the electoral system but is exercised through a variety of mechanisms including ‘governmentality’ ― the techniques that regulate and order behaviour. Planning draws attention to attempts to modify the role of markets in housing outcomes and includes land use planning and the influence of alleged ‘rational’ solutions applied to ‘the housing problem’ manifest in housing design and specific interventions aimed at mitigating housing problems. Protest concerns the ‘outsiders’ in the political system and their attempts to secure a voice often outside the normal institutional channels approved by authorities and perhaps eventually become the power holders.


SAGE Open ◽  
2021 ◽  
Vol 11 (1) ◽  
pp. 215824402110041
Author(s):  
Luu Thi Nguyen ◽  
Shouming Chen ◽  
Ho Kwong Kwan

This study examines the association between CEO temporal focus and corporate engagement in philanthropy, and considers the moderating role of ownership. This association is investigated based on upper echelons theory and the conceptual framework of temporal focus. Using a sample of 2,285 observations of Chinese listed firms from 2010 to 2015, our results show that the relationship between CEO past focus and corporate philanthropy is positive in state-owned firms but negative in private firms. In addition, CEO future focus is negatively associated with charitable activities in state-owned firms, but positively associated with such activities in private companies. For present-oriented CEOs, the relationship between temporal focus and philanthropy is negative in both public and private firms, but the negative effect is stronger in private firms. The findings of this study show how CEOs’ time perspectives shape their decisions on company engagement in philanthropic projects.


2017 ◽  
pp. 65-76 ◽  
Author(s):  
Anh Vo Thi Thuy ◽  
Khanh Bui Phan Nha

This paper focuses on the impact of board gender diversity on firm performance. Using a sample of 880 listed firms in 10 developed countries covering a nine year period, we find that gender diversity has a negative effect on firm market performance. The result is consistent when different robustness checks are employed. A negative correlation can be explained by the fact that the presence of women on boards increases monitoring function. When the investors’ rights are well protected by the legal system, this extra monitoring may be costly for firms. This finding suggests that a quota for the exact anticipation of female directors on boards should be carefully considered.


2021 ◽  
pp. 234-258
Author(s):  
Matthew S. Shugart ◽  
Matthew E. Bergman ◽  
Cory L. Struthers ◽  
Ellis S. Krauss ◽  
Robert J. Pekkanen

This chapter summarizes the book’s contribution to understanding the role of individual legislators’ attributes in the collective goal pursuits of political parties. It assesses the performance of parties on the premises derived from our theory by calculating for each party a “batting average” describing the degree to which premises of the expertise model, electoral–constituency model, and issue ownership hold for each party. It graphically depicts the parties in the book’s two-dimensional space regarding how a country’s electoral system affects a party’s dependence on the geographic location of votes and the personal votes of individual legislators. In this manner, it reveals considerable support for the theory, which states that the less parties depend on these electoral factors to maximize seats, the more they tend to use the expertise model. The more dependence in either dimension, the more the electoral–constituency model tends to explain a party’s personnel strategy. The chapter expands on the role of electoral system variation—including electoral reform in Japan and New Zealand—on party personnel practices. It discusses how our results provide new evidence for the proposition that mixed-member proportional (MMP) systems may offer “the best of both worlds” in representation, and offers a discussion of further extensions of the theory and applications of the resource-based view (RBV) of the firm to competing political parties.


2017 ◽  
Vol 9 (7) ◽  
pp. 179
Author(s):  
Pistoresi B. ◽  
Cavicchioli M. ◽  
Brevini G.

This paper analyses the determinants of a new index of central bank independence, recently provided by Dincer and Eichengreen (2014), using a large database of economic, political and institutional variables. Our sample includes data for 31 OECD and 49 non-OECD economies and covers the period 1998-2010. To this aim, we implement factorial and regression analysis to synthesize information and overcome limitations such as omitted variables, multicollinearity and overfitting. The results confirm the role of the IMF loans program to guide all the economies in their choice of more independent central banks. Financial instability, recession and low inflation work in the opposite direction with governments relying extensively on central bank money to finance public expenditure and central banks’ political and operational autonomy is inevitably undermined. Finally, only for non-OECD economies, the degree of central bank independence responds to various measures of strength of political institutions and party political instability.


2014 ◽  
Vol 108 (2) ◽  
pp. 337-354 ◽  
Author(s):  
DAVID STASAVAGE

Do strong property rights institutions always help, or might they sometimes actually hinder development? Since Max Weber and before, scholars have claimed that the presence of politically autonomous cities, controlled by merchant oligarchies guaranteeing property rights, helped lead to Europe's rise. Yet others suggest that autonomous cities were a hindrance to growth because rule by merchant guilds resulted in restrictions that stifled innovation and trade. I present new evidence and a new interpretation that reconcile the two views of city autonomy. I show that politically autonomous cities initially had higher population growth rates than nonautonomous cities, but over time this situation reversed itself. My evidence also suggests why autonomous cities eventually disappeared as a form of political organization. Instead of military weakness, it may have been their political institutions that condemned them to become obsolete.


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