Corruption and earnings management in developed and emerging countries

2018 ◽  
Vol 18 (1) ◽  
pp. 35-51 ◽  
Author(s):  
Isabel Costa Lourenço ◽  
Alex Rathke ◽  
Verônica Santana ◽  
Manuel Castelo Branco
Keyword(s):  
Earnings Management ◽  
Positive Association ◽  
Developed Countries ◽  
Emerging Countries ◽  
Foreign Firms ◽  
American Depositary Receipts ◽  
Firm Level ◽  
Content Type ◽  
Developed Economies ◽  
Depositary Receipts

Purpose The purpose of this study is to examine whether firms from countries presenting higher levels of corruption are more likely to have higher levels of earnings management than their counterparts from countries with lower levels of corruption. It also explicitly examines how this relationship compares between emerging and developed economies. Design/methodology/approach Using multiple regression analysis, this study tests the hypothesis of positive association between the countries’ level of corruption and the level of earnings management using a sample of foreign firms with American Depositary Receipts in the US market. Findings Findings indicate that higher corruption perception is related to higher incentives for firms to manipulate earnings in the case of emerging countries. Such results are not identified in developed countries where the level of minority investors’ protection is higher. Findings also indicate that in developed countries earnings management is negatively related to investor protection, which is not the case for emerging countries. Originality value As far as the authors are aware, this study is the first to examine the effects of corruption on earnings management on the basis of accounting firm-level data.

Innovation and market liquidity: the case of ADRs

2020 ◽  
Vol 32 (4) ◽  
pp. 633-641
Author(s):  
Manuel Lobato ◽  
Javier Rodriguez ◽  
Herminio Romero
Keyword(s):  
Adverse Selection ◽  
Trading Volume ◽  
Design Methodology ◽  
Market Liquidity ◽  
Foreign Firms ◽  
American Depositary Receipts ◽  
Patent Citations ◽  
Content Type ◽  
The Usa ◽  
Depositary Receipts

Purpose Patents and patent citations provide a solid signal to investors about a firm’s innovation agenda. This signal can be even more useful for investors demanding securities from foreign firms, given the asymmetric information and adverse selection risk they face. This study aims to examine the patenting activities in the USA performed by non-US companies that trade as American Depositary Receipts (ADRs) in US stock markets. Design/methodology/approach The authors examine the effect on the trading volume of a sample of ADRs following the publication of their first patent in the USA. Findings The results show that the publication of a first patent has no effect on the liquidity of these ADRs when compared with same-country ADRs without patents. Originality/value This study enriches the literature on the relation between innovation, information and the stock market.

Fostering the development of Oman’s knowledge economy pillars through ICT

2020 ◽  
Vol 50 (4) ◽  
pp. 691-714
Author(s):  
Kamla Ali Al-Busaidi
Keyword(s):  
Knowledge Economy ◽  
Economic Value ◽  
National Level ◽  
Developed Countries ◽  
Information And Communications Technology ◽  
Economic Diversification ◽  
Firm Level ◽  
Content Type ◽  
Developed Economies ◽  
The Government

Purpose Information and communications technology (ICT) is the driving force and key enabler of a knowledge economy. The purpose of this study is to identify the critical ICT indicators that foster the development of the knowledge economy and its main pillars (education, innovation and economic and institutional regimes) in Oman. Design/methodology/approach The study used a qualitative approach and conducted four Delphi studies on four groups of experts (ICT experts, educators, innovation experts and economists) in Oman. Findings The results indicated that the most commonly top-listed ICT indicators of a boost in the country’s knowledge economy are related to the national level (total research and development expenditure on ICT, ICT patents as a percentage of national total and ICT as an overall priority for the government), firm level (the proportion of businesses using the internet, the proportion of businesses using computers and the proportion of businesses with a Web presence), and inhabitant level (mobile phone subscribers per 100 inhabitants, internet subscribers per 100 inhabitants and personal computers per 100 inhabitants). Originality/value ICT is the driving pillar of a knowledge economy. The literature indicated that most of the ICTs for development studies are conducted in developed countries; hence, there is a great need for investigations in the context of less developed economies such as Oman. This study can provide insights for the country on how to develop and exploit ICT to boost the development of the overall knowledge economy and its pillars and to provide guidance for exploiting ICT to gain economic value. Oman’s vision for 2020 and 2040 aims at economic diversification; the knowledge economy is a critical aspect of the country’s economic diversification. In addition, the literature indicated that the relationship between ICT and development is still not clear; hence, this study provided some insights into the context of knowledge economy development.

The effect of business uncertainty on IT governance

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Sylvia Veronica Siregar ◽  
Siti Nurwahyuningsih Harahap
Keyword(s):  
Design Methodology ◽  
Stock Exchange ◽  
Random Effect ◽  
It Governance ◽  
Positive Association ◽  
Developed Countries ◽  
Emerging Countries ◽  
Significant Positive Association ◽  
Content Type ◽  
Listed Firms

Purpose The purpose of this study is to examine the effect of business uncertainty on the information technology (IT) governance of listed firms in Indonesia. Design/methodology/approach The samples are listed firms in Indonesia Stock Exchange for the years 2015–2018. Total observations are 1,215 firm years. The authors used the random effect panel regression to test the hypotheses. Findings The authors find that business uncertainty has a significant positive association with IT governance, consistent with the prediction. Companies with higher business uncertainty are in higher demand for implementing IT governance. Originality/value The authors have not found previous studies that examine business uncertainty as to the determinant of IT governance. The authors also examined the IT governance in Indonesia, one of the emerging countries. Most previous studies on IT governance were conducted in developed countries, which results may not be generalized to emerging countries.

scholarly journals National culture and earnings management in developed and emerging countries

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Dante Baiardo Cavalcante Viana Jr ◽  
Isabel Maria Estima Costa Lourenço ◽  
Marília Ohlson ◽  
Gerlando Augusto S F de Lima
Keyword(s):  
Earnings Management ◽  
National Culture ◽  
Developed Countries ◽  
Ordinary Least Squares ◽  
Emerging Countries ◽  
Uncertainty Avoidance ◽  
Cultural Dimensions ◽  
Cultural Dimension ◽  
Least Squares Regression ◽  
Content Type

PurposeThis study investigates how the association between national culture and earnings management compares between developed and emerging countries.Design/methodology/approachThe empirical analysis relies on a sample of 6,313 firm-year observations from 11 emerging markets and 27,605 firm-year observations from 22 developed countries. The authors use ordinary least squares regression methods to test the hypotheses of the study.FindingsBased on Hofstede's (2011) cultural dimensions, the authors find that firms from countries with a higher level of uncertainty avoidance and individualism are less likely to engage in earnings management, but the effect of uncertainty avoidance (individualism) is more (less) pronounced in the emerging countries. Moreover, the authors demonstrate that firms from emerging (developed) countries with higher levels of power distance and masculinity are less (more) likely to engage in earnings management. Finally, the authors find evidence of a trade-off between accruals-based and real earnings management in firms from countries with greater long-term orientation and an indulgence cultural dimension.Originality/valueThis paper adds to the literature by theoretically discussing and empirically analysing the role that developed and emerging countries' development plays on the effect of national culture on earnings management.

Audit Quality of Chinese ADR Engagements

2016 ◽  
Vol 31 (2) ◽  
pp. 25-43 ◽  
Author(s):  
Aloke (Al) Ghosh ◽  
Elisabeth Peltier ◽  
Cunyu Xing
Keyword(s):  
Audit Quality ◽  
Emerging Market ◽  
Financial Statements ◽  
Foreign Firms ◽  
American Depositary Receipts ◽  
Reverse Mergers ◽  
Chinese Companies ◽  
Big 4 ◽  
Depositary Receipts

SYNOPSIS The controversy over Chinese reverse mergers has led to concerns about the audit quality of all U.S.-listed Chinese companies. Because a sizeable number of foreign firms cross-list their shares as American Depositary Receipts (ADRs) issued by U.S. depositary banks (as opposed to direct listings), we study how auditors have managed their audits of Chinese ADRs. Our motivation for examining Chinese ADRs is based on the findings that cross-listing via the ADR process is beneficial for U.S. shareholders. We find that relative to ADRs from countries other than China, and relative to directly listed Chinese companies, Chinese ADRs are more likely to be associated with a Big 4 auditor and are less likely to restate prior-period financial statements. We also find that Chinese ADRs pay significantly higher fees than other emerging market ADRs and Chinese direct-listings. Collectively, these results suggest high audit quality for Chinese ADRs, which is in sharp contrast to the Chinese direct-listing results. Using Tobin's Q as a measure of market value, we find that the stock market rewards Chinese ADRs, indicating that investors incorporate the benefits of higher audit quality when evaluating Chinese ADRs.

Determinants of liquidity in Malaysian SMEs: a quantile regression approach

2018 ◽  
Vol 67 (9) ◽  
pp. 1566-1584 ◽  
Author(s):  
Shaista Wasiuzzaman
Keyword(s):  
Regression Analysis ◽  
Quantile Regression ◽  
Emerging Market ◽  
Developed Countries ◽  
Data Availability ◽  
Firm Level ◽  
Liquidity Management ◽  
Ols Regression ◽  
Content Type ◽  
Quantile Regression Analysis

PurposeThe management of liquidity has always been seen as a critical but often ignored issue in finance. Despite the abundance of studies on liquidity management, these studies mainly focus on developed countries and on large firms. Liquidity is critical for the small firm but studies on liquidity management in small and medium enterprises (SMEs) are lacking. The purpose of this paper is to examine the firm-level determinants of liquidity of SMEs in Malaysia.Design/methodology/approachData are collected for a total of 986 small firms in Malaysia from 2011 to 2014, resulting in a total of 2,683 observations. Firm-specific variables and the effect of the economy are considered as the possible determinants of liquidity. Ordinary least squares (OLS) regression analysis with standard errors adjusted for firm-level clustering and quantile regression analysis are used for this purpose.FindingsAnalysis using OLS regression technique indicates that a firm’s profitability, its growth, asset tangibility, size, age and firm status are significant factors in influencing its liquidity decision. Leverage and economic condition are not found to have any significant influence on liquidity. However, quantile regression analysis provides a different picture especially for SMEs with liquidity at the quantile levels ofθ=0.10 and 0.90. Atθ=0.10, only profitability, tangibility and firm status are significant, while atθ=0.90, tangibility, size, firm status and, to some extent, age are significant in influencing liquidity levels.Originality/valueTo the author’s knowledge, this is the first study analyzing the liquidity decision of SMEs in an emerging market such as Malaysia. Most studies on liquidity management of SMEs are focused on developed countries due to data availability but these studies are also only a handful. Additionally, this study uses quantile regression analysis which highlights the need to analyze financial decisions at different levels rather than at the aggregate level as done in OLS regression analysis.

Corporate social responsibility of mining industries

2015 ◽  
Vol 57 (5) ◽  
pp. 367-372 ◽  
Author(s):  
Deepankar Sharma ◽  
Priya Bhatnagar
Keyword(s):  
Corporate Social Responsibility ◽  
Community Development ◽  
Social Responsibility ◽  
Large Scale ◽  
Mining Industry ◽  
Developed Countries ◽  
Advanced Technology ◽  
Foreign Firms ◽  
Content Type ◽  
Corporate Social

Purpose – This paper aims to examine the community development approaches of large-scale mining companies, with particular reference to how they may engender community dependency. Design/methodology/approach – The paper begins with a review of corporate social responsibility (CSR) in the mining industry, corporate community initiatives and the problem of mining dependency at a national, regional and local levels. Findings – It outlines some of the reasons why less-developed countries (LDCs) experience under-development and detrimental effects as a result of their linkages with industrialized countries. LDCs are not able to take advantage of advanced technology and management skills due to being relatively poor in capital and skills, and foreign technologies compete unfairly with and destroy local production techniques, creating a pool of unemployable “marginalized” people. Holder’s of investments in LDCs demand annual returns for continued support – profits are taken out of the country or guaranteed by tax concessions. Unwillingness of foreign firms to train local people to take over management positions. Originality/value – This paper explores how the need to address sustainability issues has affected communities, and whether community development initiatives have been effective in contributing to more sustainable communities.

Value-at-risk performance in emerging and developed countries

2018 ◽  
Vol 14 (5) ◽  
pp. 591-612
Author(s):  
Luiz Eduardo Gaio ◽  
Tabajara Pimenta Júnior ◽  
Fabiano Guasti Lima ◽  
Ivan Carlin Passos ◽  
Nelson Oliveira Stefanelli
Keyword(s):  
At Risk ◽  
Financial Crises ◽  
Value At Risk ◽  
Risk Estimation ◽  
Developed Countries ◽  
Emerging Countries ◽  
Copula Functions ◽  
Predictive Capacity ◽  
Arch Models ◽  
Content Type

Purpose The purpose of this paper is to evaluate the predictive capacity of market risk estimation models in times of financial crises. Design/methodology/approach For this, value-at-risk (VaR) valuation models applied to the daily returns of portfolios composed of stock indexes of developed and emerging countries were tested. The Historical Simulation VaR model, multivariate ARCH models (BEKK, VECH and constant conditional correlation), artificial neural networks and copula functions were tested. The data sample refers to the periods of two international financial crises, the Asian Crisis of 1997, and the US Sub Prime Crisis of 2008. Findings The results pointed out that the multivariate ARCH models (VECH and BEKK) and Copula-Clayton had similar performance, with good adjustments in 100 percent of the tests. It was not possible to perceive significant differences between the adjustments for developed and emerging countries and of the crisis and normal periods, which was different to what was expected. Originality/value Previous studies focus on the estimation of VaR by a group of models. One of the contributions of this paper is to use several forms of estimation.

Examining systematic technological learning of Syrian textile industry

2019 ◽  
Vol 10 (1) ◽  
pp. 116-142
Author(s):  
Sepehr Ghazinoory ◽  
Ammar Ali Ali ◽  
AliReza Hassanzadeh ◽  
Mehdi Majidpour
Keyword(s):  
Technology Transfer ◽  
Textile Industry ◽  
Developed Countries ◽  
Assessment Model ◽  
Incremental Innovation ◽  
Less Developed Countries ◽  
Firm Level ◽  
Content Type ◽  
Technological Infrastructure ◽  
Technological Learning

PurposeBecause of importance of technological learning for less developed countries, the notion has received increasing attention of scholars. The purpose of this paper is to investigate technological learning systematically by assessing the effect of technology transfer actors on technological learning in less developed countries context.Design/methodology/approachThe paper presents assessment model by adopting technological learning concept based on technology absorption and incremental innovation at firm level and identifying key roles of technology transfer actors (State – Scientific and technological infrastructure – Industry) that affect technological learning. The paper follows survey as research methodology. Thus, a questionnaire was addressed to 33 Syrian textile factories to examine the assessment model. Simple linear, multiple linear and ordinal regression analyses are preformed to examine relationships of model components.FindingsThe regression models show notable ability of technology transfer actors to explain technological behavior of firms to accumulate operative capability and consequently to generate passive incremental innovation. The findings indicate passive technical change system of Syrian textile industry. Therefore, goal-oriented evaluation of actual technology policy is preliminary step for achieving improvements, as well as activating scientific and technological infrastructure role by enabling strong relationships with industry and supporting interactions of domestic firms of textile industry and with foreign players.Originality/valueThe paper enriches technological learning literature by proposing systematic approach that sets the nature of technical change process of less developed countries in core of analysis. Moreover, it provides a guide for technological learning practices at firm level and for policymakers based on assessing actual status of Syrian textile industry.

The influence of motivations on international location choice in least developed, emerging and developed countries: evidence from Chinese MNEs

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Fernando Angulo-Ruiz ◽  
Albena Pergelova ◽  
William X. Wei
Keyword(s):  
Emerging Markets ◽  
Multinational Enterprises ◽  
Location Choice ◽  
Emerging Market ◽  
Developed Countries ◽  
Asia Pacific ◽  
Institutional Constraints ◽  
Least Developed Countries ◽  
Content Type ◽  
Developed Economies

Purpose This research aims to assess variations of motivations when studying international location decisions. In particular, this study aims to assess the influence of diverse motivations – seeking technology, seeking brand assets, seeking markets, seeking resources and escaping institutional constraints – as determinants of the international location choice of emerging market multinational enterprises (EM MNEs) entering least developed, emerging, and developed countries. Design/methodology/approach The authors develop a set of hypotheses based on the ownership–location–internalization framework and complement it with an institutional perspective. The conceptual model posits that the different internationalization motivations (seeking technology, seeking brand assets, seeking markets, seeking resources and escaping institutional constraints) will impact the location choice of EM MNEs in developed economies, emerging markets or least developed countries. This study uses the 2013 survey data collected by the China Council for the Promotion of International Trade and the Asia Pacific Foundation of Canada. The final sample of analysis of this research includes 693 observations. Findings After controlling for several variables, two-stage Heckman regressions show there is a variation of motivations when EM MNEs enter least developed countries, emerging markets and developed economies. EM MNEs are motivated to enter least developed countries to seek markets and resources. Conversely, those firms enter developed countries in their search for technological assets and to escape institutional constraints at home. While the present study findings show a clear difference in the motivations that lead to location choice in least developed vs developed countries, the results are not as clear for location in other emerging countries. Research limitations/implications The paper offers empirical support for the importance of motivations as crucial determinants of location choice. Originality/value This paper provides a detailed quantitative study on the internationalization location choice of EM MNEs based on their motivations. Though theoretical models underscore the importance of motivations, we know very little about how, in practice, motivations drive location choice. This study contributes to the international location choice literature a deeper understanding of how diverse motivations drive choices of expansion into developed economies, emerging markets or least developed countries.

Sign in / Sign up

Export Citation Format

Share Document