Effects of ownership structure on the relationship between multinationality and downside risk

2019 ◽  
Vol 26 (3) ◽  
pp. 401-421
Author(s):  
Chao Zhou
Keyword(s):  
Emerging Markets ◽  
Real Options ◽  
Ownership Structure ◽  
Emerging Market ◽  
Downside Risk ◽  
Publicly Traded ◽  
Data Set ◽  
Content Type ◽  
Real Options Theory ◽  
The Relationship

Purpose The purpose of this paper is to explore how multinationality affects multinational companies’ (MNCs) downside risk and the moderate effects of ownership structure in the setting of emerging markets based on Chinese publicly traded manufacturing MNCs. Design/methodology/approach The author derives hypotheses based on real options theory and agency theory, and tests hypotheses by using Tobit model and a unique data set of Chinese A-shared publicly traded manufacturing MNCs in the period of 2010–2016. Findings The empirical results suggest that multinationality is positively related to downside risk and this effect is subjected to ownership structure for firms in emerging markets. In particular, multinationality of MNCs with a high level of ownership concentration, managerial ownership and institutional ownership is more likely to reduce downside risk. Practical implications The main conclusion of this paper highlights the importance of ownership structure of MNCs in explaining the real options value of multinationality, and conveys to owners of MNCs in China and other emerging markets the need to strengthen firms’ governance if they want to maximize the benefits of multinational operations. Originality/value This study extends existing studies by taking ownership structure into consideration and highlighting the importance of agency problem in the examination of multinationality and downside risk, which provides a potential explanation for previous mixed evidence. This study also provides new evidence for the relationship between multinationality and downside risk by using a unique sample from China, an emerging market country.

Earnings management and ownership structure in emerging market

2017 ◽  
Vol 43 (10) ◽  
pp. 1117-1136 ◽  
Author(s):  
Naima Lassoued ◽  
Mouna Ben Rejeb Attia ◽  
Houda Sassi
Keyword(s):  
Emerging Markets ◽  
Earnings Management ◽  
Ownership Structure ◽  
Audit Quality ◽  
Emerging Market ◽  
Middle Eastern ◽  
Convincing Evidence ◽  
Loan Loss ◽  
African Countries ◽  
Content Type

Purpose The purpose of this paper is to investigate whether ownership structure affects earnings management in the banking industry of emerging markets. Design/methodology/approach The empirical study is conducted using a sample of 134 banks from 12 Middle Eastern and North African countries. Econometrically speaking, the study used a panel data regression analysis. Findings The authors found convincing evidence that banks with more concentrated ownership use discretionary loan loss provisions to manage their earnings. The authors also found that state and institutional owners encourage earnings management, while family owners reduce this practice. Practical implications The findings would be valuable for investors since they should take into account ownership structure in order to reach a better investment decision. Moreover, regulatory reforms in emerging markets should push for more transparency about ownership structure, high levels of supervision, and external audit quality. Originality/value This study presents international evidence on the prominent role of owners in earnings management in emerging markets with weak shareholder rights protection.

The impact of artificial intelligence (AI) finance on financing constraints of non-SOE firms in emerging markets

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Jun Shao ◽  
Zhukun Lou ◽  
Chong Wang ◽  
Jinye Mao ◽  
Ailin Ye
Keyword(s):  
Emerging Markets ◽  
Emerging Market ◽  
Financing Constraints ◽  
Content Type ◽  
Emerging Market Countries ◽  
Finance Development ◽  
Cash Flow Sensitivity ◽  
The Impact ◽  
The Relationship ◽  
Practical Implications

PurposeThis study investigates the impact of AI finance on financing constraints of non-SOE firms in an emerging market.Design/methodology/approachUsing a sample of non-SOE listed companies in China from 2011 to 2018, this research employs the cash–cash flow sensitivity model to examine the effect of AI finance on financing constraints of non-SOE firms.FindingsWe find that the development of AI finance can alleviate the financing constraints of non-SOE firms. Further, we document that such effect is more pronounced for smaller firms, more innovative firms and firms in developing areas.Practical implicationsThis study suggests that emerging market countries can ease the financing constraints of non-SOE firms by promoting AI finance development.Originality/valueThis study, to the best of our knowledge, is the first one to explore the relationship between AI finance development and financing constraints of non-SOE firms in emerging markets.

The relationship between cross-border acquisitions and R&D investments by Indian firms – substituting or complementing

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ajay Kumar Singal ◽  
Faisal Mohammad Ahsan
Keyword(s):  
Resource Constraints ◽  
Emerging Market ◽  
Main Idea ◽  
Generalized Least Squares ◽  
Emerging Economy ◽  
Least Squares Regression ◽  
Data Set ◽  
Content Type ◽  
Cross Border ◽  
The Relationship

PurposeEmerging economy firms seek strategic assets through cross-border acquisitions (CBAs) to upgrade their capabilities. The paper explores the relation between emerging economy firms' investments in CBAs and subsequent investments in domestic R&D. It investigates the underlying mechanism that links a firm's decision to pursue CBAs and the outcomes from the CBAs. The main idea behind the study is that firms have higher possibility of creating value from cross-border acquisitions when they simultaneously invest in domestic R&D though both investments are constrained by financial and managerial resources.Design/methodology/approachThe hypotheses are tested on a panel data set of 296 Indian firms over a period of 13 years (2003–2015). The authors use a two-stage Heckman procedure for testing their hypotheses. In the first stage, a probit model predicts the probability of a firm being a cross-border acquirer. The second stage model is estimated by a pooled-data GLS (generalized least squares) regression technique.FindingsThe authors find a nonlinear (inverted U-shaped) relationship between firm's investments in CBAs and domestic R&D. This suggests a complementary relation between investments in CBAs and a firm's domestic R&D at lower levels of investments in CBAs. At higher levels of investments in CBAs, CBA investments begin to substitute for firm's domestic R&D investments. For firms with higher international product-market experience and those operating in the hi-tech industry, the relationship between investments in CBAs and domestic R&D is complementary even at higher levels of CBA investments.Originality/valueThe study highlights the role of an emerging market firm's investment in domestic R&D as a link between the decision to invest in CBAs and related outcomes thereof. Emerging market firms face resource constraints while pursuing simultaneous investments in CBAs and R&D, but investment in R&D is essential for realizing the acquisition objectives. The authors also establish the significance of industry context and experiential learning in deciding the allocation of resources between CBAs and internal R&D.

Determinants of interest rate in emerging markets

2018 ◽  
Vol 14 (3) ◽  
pp. 267-290 ◽  
Author(s):  
Sulait Tumwine ◽  
Samuel Sejjaaka ◽  
Edward Bbaale ◽  
Nixon Kamukama
Keyword(s):  
Interest Rate ◽  
Emerging Markets ◽  
Emerging Market ◽  
Equity Capital ◽  
Annual Reports ◽  
Data Set ◽  
Reserve Requirement ◽  
Content Type ◽  
Net Interest Margin ◽  
Negative Effect

Purpose The purpose of this paper is to investigate the determinants of interest rate in emerging markets, focusing on banking financial institutions in Uganda. Design/methodology/approach Using the net interest margin model, interest rate was estimated by applying a panel random effects regression method on 24 banks, while controlling for bank-specific factors, industry and macroeconomic indicators. Data were drawn from annual reports provided by Bank of Uganda Depository Corporation survey from 2008 to 2016. Findings The results indicate that liquidity, equity capital, market power and reserve requirement have a positive effect on interest rate. The study further finds that operational efficiency, lending out ratio, concentration, public sector borrowing and private sector credit have a negative effect on interest rate. However, credit risk does not influence interest rate. Research limitations/implications Studied banks are grouped in one panel data set; future studies would focus on the differences in banks and establish how these differences affect interest rate. Future study would also focus on how the determinants of interest rate in Uganda are compared with those of other banks in other emerging market countries. Practical implications Bank managers need to take interest in equity mobilization because it is a reliable and cheaper source of funding bank operations. Banks should emphasize efficient operations to reduce on the cost of doing business. Government should utilize funds borrowed from banks in efficient ways to improve economic growth. The central bank should minimize the use of reserve requirement as a means of controlling money in circulation. Originality/value This is the first paper that uses annual report data from several banks and periods to investigate the determinants of interest rate in an emerging country.

Innovation capabilities, market characteristics and export performance of EMNEs from India

2020 ◽  
Vol 32 (5) ◽  
pp. 801-822
Author(s):  
Sneha Bhat ◽  
Kirankumar S. Momaya
Keyword(s):  
Emerging Market ◽  
Export Performance ◽  
Developed Countries ◽  
Least Square ◽  
Least Square Estimator ◽  
Data Set ◽  
Content Type ◽  
Emerging Market Multinationals ◽  
Pharmaceutical Firms ◽  
The Relationship

Purpose This study aims to investigate the moderating effect of market characteristics on the relationship between innovation capabilities and export performance of Indian pharmaceutical firms. Design/methodology/approach The authors test the hypotheses using generalized least square estimator with random effects, on a panel data set, for the period 2010–2016. Findings Analyses of the data show that innovation capabilities lead to superior export performance. R&D investment positively affects export performance of both developing and developed countries, whereas patent quality negatively affects the export performance of developed countries and has no significance in developing countries. Size of the firm has significant positive effect on its export performance. Originality/value This study explores the role of market characteristics in determining the relationship between innovation and export performance, which has mostly been ignored in extant literature, especially in the context of emerging market multinationals.

Gender roles and customer organisational citizenship behaviour in emerging markets

2017 ◽  
Vol 32 (8) ◽  
pp. 503-517 ◽  
Author(s):  
Jessica Sze Yin Ho ◽  
Sanjaya S. Gaur ◽  
Kok Wai Chew ◽  
Nasreen Khan
Keyword(s):  
Emerging Markets ◽  
Emerging Market ◽  
Willingness To Participate ◽  
Content Type ◽  
Internal Customers ◽  
Level Of Satisfaction ◽  
Voluntary Commitment ◽  
Internal Stakeholders ◽  
The Relationship

Purpose Organisational citizenship behaviour (OCB) entails employees’ voluntary commitment to an organisation beyond their contractual responsibilities and has been found to be contributing to an organisation’s success. While the roles of gender and OCB exhibited by employees (as internal stakeholders) are documented, the role of gender in OCB by customers (as external stakeholders) of an organisation, especially within the context of emerging markets, is not found, therefore necessitating further studies. This research aims at bridging this research gap. Design/methodology/approach In total, 203 male and 194 female customers representing the young working professionals segment rated their level of satisfaction with the relationship that they had with their banking website. They also indicated their willingness to participate in different dimensions of OCB. Findings Generally, both men and women, who are satisfied with the relationship that they have with the organisation, indicated their willingness to contribute to the organisation by displaying OCB. Contrary to past studies, where women at workplace were reported to be more likely to participate in OCB, the findings from the customer’s perspective revealed that men are more likely to engage in OCB. Research limitations/implications The results indicated that OCB is not limited to internal customers (employees) but could also be expanded to external customers. The stereotypes causing females to be perceived as stronger OCB contributors may not remain constant in all types of circumstances. Originality/value To the best of the authors’ knowledge, this appears to be the first study to establish the gender role in OCB from the customer’s perspective in the context of an emerging market.

Examining the brand name – mark relationship in emerging markets

2014 ◽  
Vol 23 (4/5) ◽  
pp. 262-267 ◽  
Author(s):  
Richard R Klink ◽  
Gerard A. Athaide
Keyword(s):  
Emerging Markets ◽  
Emerging Market ◽  
Brand Names ◽  
Sound Symbolism ◽  
Future Research ◽  
Brand Name ◽  
Intended Meaning ◽  
Content Type ◽  
Brand Marks ◽  
The Relationship

Purpose – The purpose of this research is to investigate whether the brand name–mark sound symbolism relationship extends beyond US marketplaces to emerging markets. Sound symbolism research indicates that consistent brand name meaning can be conveyed across international marketplaces. Yet, prior work has not investigated whether visual branding elements provide consistent meaning across such contexts. Design/methodology/approach – To contrast effects across international contexts, we replicate both studies of Klink (2003) with bilingual subjects in Mumbai, India. Study 1 examined whether the sound symbolic relationship between brand name and brand mark holds in this emerging market. Study 2 investigated whether both the brand name and brand mark together can enhance brand meaning in this context. Findings – Study 1 finds support for the relationship between higher-frequency brand names and brand marks that are angular and smaller in size, with limited support regarding color. Study 2 finds a significant effect for brand marks and a marginally significant effect for brand names on conveying intended meaning. Originality/value – The authors confirm the relationship between the brand mark and brand name; however, color meaning may be less universal than prior theory and research indicates. In addition, the effect of the brand name on conveying sound symbolism meaning may be less important than visual branding elements in emerging markets. Hence, future research may wish to include additional branding elements in experimental stimuli when testing sound symbolism theory.

scholarly journals Organisational performance and the use of multiple performance measures in an emerging market

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Abdallah Amhalhal ◽  
John Anchor ◽  
Marina Papalexi ◽  
Shabbir Dastgir
Keyword(s):  
Emerging Markets ◽  
Financial Performance ◽  
Performance Measures ◽  
Emerging Market ◽  
Manufacturing Companies ◽  
Organisational Performance ◽  
Cross Sectional ◽  
Content Type ◽  
Financial Performance Measures ◽  
The Relationship

PurposeThis study is an empirical investigation of the relationship between the use of 41 multiple performance measures (MPMs), including financial performance measures (FPM), non-financial performance measures (NFPMs) and organisational performance (OP) in Libya.Design/methodology/approachThe results are based on cross-sectional questionnaire survey data from 132 Libyan companies (response rate 61%), which were obtained just before the so-called Arab Spring.FindingsMPMs are used by both manufacturing and non-manufacturing companies. Libyan business organisations are more likely to use FPMs than NFPMs. However, these companies still rely more heavily on FPMs. The relationships between the use of NFPMs and OP and the use of MPMs and OP are positive and highly significant. The relationship between the use of FPMs and OP is positive but not significant.Research limitations/implicationsThe high power distance associated with the conservative, Libyan, Arab context will reinforce the tendency to use FPMs more than NFPMs. This may provide a performance advantage to those organisations which do adopt NFPMs.Practical implicationsAlthough there may be institutional barriers to the use of NFPMs in Libya, and other emerging markets, these are not insuperable and there is a payoff to their use.Originality/valueNo previous studies of emerging markets, such as the Middle East or North Africa, have looked at the relationship between OP and the adoption of such a large array of MPMs.

Ownership structure and analysts’ forecast properties: a study of Chinese listed firms

2016 ◽  
Vol 16 (1) ◽  
pp. 54-78 ◽  
Author(s):  
Sun Liu
Keyword(s):  
Ownership Structure ◽  
Emerging Market ◽  
Forecast Accuracy ◽  
State Ownership ◽  
Managerial Ownership ◽  
Content Type ◽  
Listed Firms ◽  
Pyramidal Ownership ◽  
And Control ◽  
The Relationship

Purpose The purpose of this paper is to investigate the association between ownership structure and the properties of analysts’ forecasts in China’s unique corporate setting. Design/methodology/approach Multiple regression models were used to examine the influence of ownership structure mechanisms on analysts’ forecast properties for listed Chinese firms during the period 2008-2012. Findings The paper finds that analysts’ forecast accuracy is higher for listed firms with high levels of foreign ownership and managerial ownership. However, the complex pyramidal ownership structure could make corporate information less transparent and then increase the complexity of forecasting; hence, it results in less precise analysts’ forecasts. Interestingly, the relationship between state ownership and analysts’ forecast properties appears to be non-linear (an inverted U-shape), and the inflection point at which the relationship becomes negative occurs at state ownership over 45 per cent. Originality/value To the best of the author’s knowledge, this paper is the first to investigate the influence of ownership structure mechanisms on the properties of analysts’ forecasts in an emerging market, and the findings provide some insight on how the properties of analysts’ forecast might be shaped by certain ownership and control features in the context of concentrated state ownership and complex pyramidal ownership structure.

scholarly journals Sources of liquidity commonality, asymmetric information and ownership structure in emerging markets: evidence from the Chinese stock market

2008 ◽  
Vol 5 (4) ◽  
pp. 233-239
Author(s):  
Xinwei Zheng
Keyword(s):  
Asymmetric Information ◽  
Stock Market ◽  
Emerging Markets ◽  
Emerging Economies ◽  
Ownership Structure ◽  
Emerging Market ◽  
Stock Exchanges ◽  
Chinese Stock Market ◽  
Trading System ◽  
The Relationship

This study examines if common factors of liquidity can be determined by ownership structure measured by asymmetric information in an emerging market that has adopted an order-driven trading system. Using China as a case for the study, I select a broad sample of stocks from two separate Chinese stock exchanges to measure and analyse the relationship. My empirical evidence seems significant and pervasive. These findings about the Chinese stock market provide useful pointers for understanding commonality in emerging economies and shed critical light on a new dimension of the working of emerging markets

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