scholarly journals Debt financing and firm performance: empirical evidence from the Pakistan Stock Exchange

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Aamir Nazir ◽  
Muhammad Azam ◽  
Muhammed Usman Khalid
Keyword(s):  
Firm Performance ◽  
Stock Exchange ◽  
Ordinary Least Squares ◽  
Debt Financing ◽  
Least Squares Regression ◽  
Cross Sectional ◽  
Content Type ◽  
Random Effects Models ◽  
Debt Level ◽  
Positive Effects

PurposeThe purpose of this study is to investigate the relationship between the listed firms' debt level and performance on the Pakistan Stock Exchange (PSX) during a five-year period.Design/methodology/approachThis study uses pooled ordinary least squares regression and fixed- and random-effects models to analyse a cross-sectional sample of 30 Pakistani companies operating in the automobile, cement and sugar sectors during 2013–2017 (N = 150).FindingsThe results indicate that both short- and long-term debt have negative and significant impacts on firm performance in profitability. This suggests that agency issues may lead to a high-debt policy, resulting in lower performance. However, both sales growth and firm size have positive effects on the profitability of non-financial sector companies.Research limitations/implicationsThis study suggests that when debt financing significantly and negatively influences firm profitability, company owners and managers should focus on finding a satisfactory debt level. However, this study is limited to the automobile, cement and sugar sectors of Pakistan. Future studies could address other sectors, such as textiles, fertilizers and pharmaceuticals.Originality/valueThis study focusses on enhancing the existing empirical knowledge of debt financing's influence on the PSX's major sectors' profitability.

scholarly journals Family board ownership, generational involvement and performance in family SMEs

2019 ◽  
Vol 28 (3) ◽  
pp. 285-300 ◽  
Author(s):  
Amaia Maseda ◽  
Txomin Iturralde ◽  
Gloria Aparicio ◽  
Lotfi Boulkeroua ◽  
Sarah Cooper
Keyword(s):  
Firm Performance ◽  
Board Of Directors ◽  
Family Firms ◽  
Ordinary Least Squares ◽  
Least Squares Regression ◽  
Cross Sectional ◽  
Content Type ◽  
The Board Of Directors ◽  
Family Smes ◽  
Board Ownership

Purpose In order to deepen our knowledge of governance of family firms, the purpose of this paper is to focus our attention on the relation between family owners who are members of the board of directors and firm performance. Also, this study sheds more light on how the generation in charge of the family firm affects that relationship, as generational involvement may be a unique predictor of governance behavior in these firms. Design/methodology/approach The authors applied a cross-sectional ordinary least squares regression model to test the hypotheses on a sample of 313 non-listed Spanish family SMEs. The authors suggest the possibility of a non-linear relationship between the percentage of ownership by family members of the board of directors and firm performance, and specifically, the authors propose an S-shaped effect that implies two breakpoints. Findings The authors find not only that an inverted U-shaped relationship exists, but also an S-shaped relationship between family board members’ ownership and firm performance in family SMEs. Nevertheless, the results are different in comparing first-, second- and later-generation family firms. Originality/value This is one of the few empirical studies that examine the relationship between family board ownership and firm performance in the context of non-listed family SMEs. The authors consider that the influences of family directors on the board of directors as well as the concentration of family ownership on the board of directors are worth studying in non-listed family SMEs. Moreover, previous studies have focused mainly on large listed family firms but not on unlisted ones.

The effect of the financial crisis on audit quality: European evidence

2022 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Maria I. Kyriakou
Keyword(s):  
Financial Crisis ◽  
Audit Quality ◽  
Ordinary Least Squares ◽  
Least Squares Regression ◽  
Cross Sectional ◽  
Accounting Firms ◽  
Content Type ◽  
Financial Firms ◽  
The Impact ◽  
Big Four

Purpose This paper aims to examine the impact of the recent financial crisis on audit quality by analysing discretionary accruals. Design/methodology/approach This study considers a sample of German, French, Italian and Spanish non-financial firms from 2005 to 2013 to investigate the auditor’s independence. It uses a cross-sectional and time-series ordinary least squares regression model to control for other predictors of the auditor’s independence when the financial crisis produces a decrease in audit quality. Findings The proportion of the non-financial firms having lower audit quality was higher during the financial crisis. In addition, during the crisis auditors were less likely to provide a higher audit quality for these non-financial firms. The level of audit quality returned to normal levels during the post-crisis years when the crisis had ceased. Originality/value These findings contribute to the literature on the impact of economic and financial changes on audit quality. In addition, this research finds that the Big Four accounting firms provide a higher audit quality in different circumstances from non-Big Four accounting firms, and that audit quality decreased during the crisis and returned to normal in the post-crisis period.

Product diversification, business structure, and firm performance in Taiwanese property and liability insurance sector

2017 ◽  
Vol 18 (5) ◽  
pp. 486-499 ◽  
Author(s):  
Chen-Ying Lee
Keyword(s):  
Firm Performance ◽  
Financial Services ◽  
Fixed Effects ◽  
Ordinary Least Squares ◽  
Product Diversification ◽  
Least Squares Regression ◽  
Fixed Effects Model ◽  
Content Type ◽  
The Impact ◽  
Business Structure

Purpose The purpose of this study is to analyze product diversification, business structure and insurer performance with a comprehensive look at the property-liability (P/L) insurance operations. Design/methodology/approach Using a panel data, this study employs an ordinary least squares regression model, fixed effects model and random effects model to examine the impact of product diversification and business structure on the performance of P/L insurers. The study assesses insurer performance using both risk-adjusted return on assets and risk-adjusted return on equity. Findings The study finds that product diversification is significantly negatively related to the performance of P/L insurers. The results are consistent with the diversification discount theory. The empirical results reveal that business lines have significant impacts on firm performance, particularly on the lines of fire and marine insurances. Furthermore, the interaction between product diversification and firm size implies that product diversification significantly increases the performance of large-sized insurance firms. Originality/value The study provides some valuable insights into the effects of diversification and business structure on the performance of P/L insurers in a developing country. The study’s findings suggest that management of P/L insurers should clarify their objectives and carefully assess the company’s resources when dealing with product diversification and business structure. The results have practical implications for the financial services industry in Taiwan.

Firm characteristics, innovation, financial resilience and survival of financial institutions

2019 ◽  
Vol 10 (1) ◽  
pp. 48-73
Author(s):  
Stephen Korutaro Nkundabanyanga ◽  
Elizabeth Mugumya ◽  
Irene Nalukenge ◽  
Moses Muhwezi ◽  
Grace Muganga Najjemba
Keyword(s):  
Financial Institutions ◽  
Ordinary Least Squares ◽  
Least Squares Regression ◽  
Firm Characteristics ◽  
Cross Sectional ◽  
Firm Innovation ◽  
Content Type ◽  
Going Concern ◽  
Innovation Activities ◽  
The Social

Purpose The purpose of this paper is to examine the relationship among firm characteristics, innovation, financial resilience and survival of financial institutions in Uganda. Design/methodology/approach This paper employs a cross-sectional research design, and responses from 143 officers of 40 financial institutions are analyzed using Statistical Package for the Social Sciences. The authors used ordinary least squares regression in testing the hypotheses. Findings The authors find that firm characteristics of size, age, innovation and financial resilience have a predictive force on survival of public interest firms such as financial institutions. Research limitations/implications The implication drawn here is that a combination of firm characteristics, firm innovation and financial resilience explains a significant contribution in the survival chances of financial institutions. However, as much as firm characteristics and financial resilience are significant, innovation explains more of the variances in financial institutions’ going concern appropriateness. Originality/value This paper adds to the limited financial institutions literature and provides the first empirical evidence of the efficacy of innovation and financial resilience on financial institutions survival. The auditing profession could consider more seriously the innovation activities and financial resilience of financial institutions in their test for the going concern assumption of such firms.

External auditor type, discretionary accruals and investors’ reactions

2018 ◽  
Vol 8 (3) ◽  
pp. 352-368 ◽  
Author(s):  
Sara Abdallah
Keyword(s):  
Financial Reporting ◽  
Stock Exchange ◽  
Reporting Quality ◽  
Discretionary Accruals ◽  
Ordinary Least Squares ◽  
Least Squares Regression ◽  
Egyptian Revolution ◽  
Content Type ◽  
Listed Firms ◽  
External Auditor

Purpose The purpose of this paper is to investigate, in an Egyptian context, the external auditor type (Big 4 vs local) implications on reporting quality proxied by discretionary accruals (DA) and also examine whether auditor type impacts the market’s pricing of DA, where pricing is considered a proxy for the perceived DA quality. Design/methodology/approach The sample period is 2012–2015, that is meant to be post the Egyptian revolution financial crisis; all Egyptian stock exchange (EGX) listed firms (except banks and financial institutions) are considered. DA are estimated using modified Dichev and Dechow’s (2002) model (McNicholas, 2002). Ordinary least squares regression tests are used to investigate the external auditor type implications on DA level and the related EGX investors’ pricing. Findings The findings generally show the external auditor’s minimal role in mitigating DA. Moreover, the findings reflect the EGX investors’ negligence and/or lack of confidence in regards to DA and external auditor type factors in stock pricing. Practical implications The paper findings highlight to regulators the need for effective monitoring of audit firms earnings management mitigation performance to help reinforce investor confidence in financial reporting quality. Originality/value This paper is the first that investigates the external auditor monitoring mechanism implications on investors’ perceptions of earnings quality in Egypt. The paper findings would provide important contributions, particularly post the Egyptian revolution crisis, where the EGX market is trying to restore the investors’ confidence.

Enabling and leveraging ambidexterity: influence of strategic orientations and knowledge stock

2019 ◽  
Vol 23 (6) ◽  
pp. 1136-1156 ◽  
Author(s):  
Indu Ramachandran ◽  
Cynthia A. Lengnick-Hall ◽  
Vishag Badrinarayanan
Keyword(s):  
Firm Performance ◽  
Ordinary Least Squares ◽  
Technological Knowledge ◽  
Knowledge Stock ◽  
Market Knowledge ◽  
Cross Sectional ◽  
Content Type ◽  
Knowledge Stocks ◽  
Strategic Orientations ◽  
Managerial Implications

Purpose This paper aims to develop and empirically test a framework articulating the effects of strategic orientations (entrepreneurial orientation and market orientation) on leveraging ambidexterity. Further, the paper examines the moderating effects of knowledge stock (market knowledge and technological knowledge) on the relationship between ambidexterity and firm performance to gain additional insights into how ambidexterity can be leveraged in an organization. Design/methodology/approach Data were obtained from CEOs (or equivalent members of the top management team) of 234 firms. The adequacy and psychometric properties of all measures were evaluated and purified using a maximum likelihood confirmatory factor analysis (CFA), and the hypotheses were tested using ordinary least squares (OLS). A number of post hoc tests were conducted to develop a nuanced understanding of proposed effects. Findings While both strategic orientations enhance an organization’s ability to be ambidextrous, results show that some types of knowledge stocks facilitate, whereas other types hinder the influence of ambidexterity on firm performance. Research limitations/implications Both strategic orientations enable ambidexterity; however, technological knowledge stock impedes the effect of ambidexterity on firm performance, while market knowledge stock enhances this relation. Cross-sectional nature of the study imposes limitations on causal inferences. Practical implications Different strategic orientations provide organizations with a cluster of knowledge acquisition and utilization capabilities that enable ambidexterity. However, organizations should be wary of indiscriminate accumulation of knowledge stocks – while certain types enhance the effect of ambidexterity, others may create competency traps or core rigidities and inhibit the effect of ambidexterity. Originality/value This study integrates related, yet hitherto fragmented, research streams to demonstrate the interconnectedness between strategic orientations, ambidexterity and existing knowledge stock. Several theoretical and managerial implications are identified.

Linking service innovation to firm performance

2017 ◽  
Vol 11 (4) ◽  
pp. 730-750 ◽  
Author(s):  
Markus Chiahan Tsai ◽  
Chunhsien Wang
Keyword(s):  
Firm Performance ◽  
Market Orientation ◽  
Service Innovation ◽  
Original Data ◽  
Ordinary Least Squares ◽  
Least Squares Regression ◽  
Data Set ◽  
Content Type ◽  
Marketing Orientation ◽  
Service Oriented

Purpose How in essence a firm’s service innovation affects its performance is always an intriguing and important issue to business researchers and practitioners. However little is known about the moderating effects of a firm’s approach to innovation and capability of marketing orientation that influence this aforementioned relationship and the underlying mechanisms. This paper aims to examine how ambidextrous innovation (exploration and exploitation innovation) and market orientation capabilities (market-sensing and customer-linking capabilities) can shape the relationship between service innovation and firm performance. Research model was developed based on theoretical foundation of the resource-based view and the rationed perspective. Design/methodology/approach Using an original data set comprising 170 service-oriented firms from Taiwan, the authors found that ambidextrous innovation and market orientation capabilities can significantly enhance performance for service-oriented firms. The authors used the traditional ordinary least squares regression and the zero-inflated Poisson regression to test the five hypotheses. Findings The empirical results fully support the hypotheses that ambidextrous innovation and market orientation capabilities can significantly enhance firm performance. These results imply that the benefits of ambidextrous innovation and market orientation capabilities can coexist in a service innovation deployment and that these combined benefit firm performance. Originality/value The ambidextrous innovation and market orientation capabilities play catalytic roles during innovative service implementation in the service-oriented sectors. The roles of these factors have rarely been examined together before. Hence, this study addresses the gaps in current understanding and provides valuable insights, particularly in the context of the future service innovation deployment. In addition, the theoretical and managerial implications of the findings provide useful and valuable information for both the researchers and managers of the service-oriented.

scholarly journals Company specific determinants of greenhouse gases disclosures

2014 ◽  
Vol 15 (3) ◽  
pp. 323-338 ◽  
Author(s):  
Lyton Chithambo ◽  
Venancio Tauringana
Keyword(s):  
Web Sites ◽  
Capital Expenditure ◽  
Ordinary Least Squares ◽  
Annual Reports ◽  
Least Squares Regression ◽  
Cross Sectional ◽  
Content Type ◽  
Consumer Services ◽  
Specific Factors ◽  
The Relationship

Purpose – The purpose of this paper is to investigate the relationship between company-specific factors and the extent of greenhouse gas (GHG) disclosures. Design/methodology/approach – The study is based on a sample of 210 FTSE 350 companies and uses the disclosure index to quantify GHG disclosures made in the annual reports, sustainability reports and web sites in 2011. Ordinary least squares regression is employed to model the relationship between the company-specific factors and the extent of GHG disclosures. Findings – The results indicate that company size, gearing, financial slack and two industries (consumer services and industrials) are significantly associated with GHG disclosures while profitability, liquidity and capital expenditure are not. When the authors disaggregate GHG disclosures into qualitative and quantitative, the results suggest that the effect of some company factors differ depending on the type of GHG disclosures. Research limitations/implications – The study is cross-sectional. A longitudinal study is necessary to understand the dynamics of GHG disclosures as firms may change their disclosure policy as the importance of GHG increases. The results imply that policy makers need to take into account certain company-specific factors when formulating policy aimed at improving GHG disclosures. Originality/value – The results add evidence to the growing body of research focusing on the relationship between company-specific factors and GHG disclosure. The study also provides evidence that the effect of some company-specific factors on GHG disclosures differ depending on whether the GHG disclosures are quantitative or qualitative.

scholarly journals Post-implementation analysis: dependence and trust in VMI context

2018 ◽  
Vol 48 (7) ◽  
pp. 724-740 ◽  
Author(s):  
Mehmet G. Yalcin ◽  
Koray Özpolat ◽  
Dara G. Schniederjans
Keyword(s):  
Inventory Management ◽  
Empirical Support ◽  
Ordinary Least Squares ◽  
Two Dimensions ◽  
Third Party ◽  
Least Squares Regression ◽  
Cross Sectional ◽  
Content Type ◽  
Relational Factors ◽  
Analytical Approaches

Purpose More than two decades long technological improvements in information sharing have not yet ensured a flawless execution of vendor managed inventory (VMI) and left interested parties wondering about the reasons of poor results. Although VMI is a collaborative tool, the relational factors in a VMI setting have not received enough attention due to challenges in obtaining relational buyer-supplier data in addition to extant focus on analytical approaches. The purpose of this paper is to investigate post-implementation relational factors in order to extract relevant insights. Design/methodology/approach Accounting for the duration of the VMI relationship, the authors focus on two dimensions of VMI often ignored post-implementation: dependence of the buyer on the VMI-supplier and trust of the buyer in the VMI-supplier. Cross-sectional data were collected using a survey collected from distributors mostly in auto and electrical supply industries, which have their inventories managed by manufacturers through VMI arrangements. The sample was obtained from a leading third-party VMI-platform service provider that serves thousands of distributor-manufacturer locations with billions of dollars in sales orders. Multiple ordinary least squares regression has been used to test the hypotheses. Findings This paper provides empirical support that in the post-implementation stage, longer VMI relationships are associated with higher distributor dependence on the manufacturer. In addition, too much dependence could actually hurt the distributor’s trust in the manufacturer. Practical implications The authors propose that distributors maintain some of the purchasing and inventory management skills in house to limit their dependencies on the manufacturers. Manufacturers should also invest in trust-building activities, such as regular communications with distributors. Originality/value This is the first study providing empirical evidence on the positive association between length of VMI relationship and buyer dependence on the supplier, and curvilinear dependence-trust link in a post-implementation VMI context.

The grey areas of Internet use: secret affairs in cyberspace and religiosity

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Wilson Weixun Li ◽  
Alvin Chung Man Leung ◽  
Wei T. Yue
Keyword(s):  
Least Squares ◽  
Negative Relationship ◽  
Spillover Effects ◽  
Ordinary Least Squares ◽  
Deterrent Effect ◽  
Least Squares Regression ◽  
Cross Sectional ◽  
Content Type ◽  
Deviant Behaviors ◽  
Extramarital Affairs

PurposeThe anonymity of the Internet supports an increasing number of deviant behaviors such as secret affairs. This paper aims to investigate whether religiosity has a negative relationship with the incidence of secret affairs in cyberspace and how it moderates the substitution effect between the use of online and off-line channels for such deviant behaviors.Design/methodology/approachThe authors constructed a cross-sectional county-level dataset containing data on US religious adherents' ratios and actual expenditures on a social website related to extramarital affairs. The data were analyzed by ordinary least squares and two-stage least squares regression models.FindingsIn general, religiosity has a negative relationship with secret affairs in cyberspace. It also moderates the relationship between using online (secret affairs websites) and off-line (entertainment facilities) channels for extramarital affairs. The deterrent effect of religiosity is weakened in religious communities with diversified religious teachings/structures and stricter requirements.Originality/valueThis work enriches the understanding of the role of religiosity in online deviant behaviors and provides essential insights for policymakers (e.g. in relation to spillover effects of social norms in cyberspace).

Sign in / Sign up

Export Citation Format

Share Document