The determinants of ESG in the banking sector of MENA region: a trend or necessity?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Rim El Khoury ◽  
Nohade Nasrallah ◽  
Bahaaeddin Alareeni
Keyword(s):  
Banking Sector ◽  
Negative Impact ◽  
Positive Impact ◽  
Mena Region ◽  
Firm Level ◽  
Content Type ◽  
Country Level ◽  
Driving Mechanisms ◽  
Level Data ◽  
Level Of Economic Development

Purpose As reporting environmental, social and governance (ESG) information is not yet mandatory in all countries, it is intriguing to understand ESG’s underlying driving mechanisms. This study aims to investigate ESG determinants in the banking sector of the Middle East and North Africa countries. Design/methodology/approach The authors gather data for 38 listed banks for the period 2011–2019. The data used is threefold as follows: data related to ESG; firm-level; and country-level data. While ESG and firm’s level data are taken from Refinitiv, country-level data are extracted from the World Bank. Using panel regression, the authors test the effect of firm- and country-specific variables on the overall ESG score and its pillars. Findings Results indicate that banks’ ESG scores are negatively affected by performance and positively affected by size. The level of economic development exerts a negative impact on the environmental pillar while the social development exerts a positive impact on ESG and governance pillar. Corruption is the only country-level that gathers a homogenous effect on ESG scores. Finally, the three pillars follow heterogeneous patterns. Originality/value This study extends the scope of previous studies by introducing new country-level independent variables to contribute to the understanding of ESG antecedents.

The effect of the Sarbanes–Oxley Act on firm productivity

2016 ◽  
Vol 9 (2) ◽  
pp. 120-142
Author(s):  
Hsihui Chang ◽  
Helen HL Choy
Keyword(s):  
Capital Investment ◽  
Negative Impact ◽  
Firm Productivity ◽  
Firm Level ◽  
Content Type ◽  
A Value ◽  
Sarbanes Oxley ◽  
Output Elasticity ◽  
Level Data

Purpose This paper aims to examine the effect of the Sarbanes–Oxley Act (SOX), which was signed by President George W. Bush and came into effect on July 30, 2002, on firm productivity. Design/methodology/approach The authors use the total factor productivity (TFP) as our measure of firm productivity. Findings Analyzing annual firm-level data from the Compustat database for the period of 1991-2006, the authors find that firm productivity increases at a higher rate in the post-SOX period. The results indicate that, although firms incur significant costs in complying with the requirements of the SOX, they also benefit from these requirements as evidenced by the improved productivity over time post-SOX. There is also a shift in the output elasticities from capital toward labor. The SOX has a positive effect on the output elasticity of labor but a negative impact on that of capital. Research limitations/implications The results have the following important implications. The SOX is a value-enhancing regulation in that it not only strengthens a firm’s corporate governance but also improves its productivity. However, compliance with the SOX can impose a long-term cost on firms: the decrease in the capital investment, leading to a decline in the output elasticity of capital. If this decline in the capital investment continues, it can have an adverse effect on firm productivity in the long term. Originality/value This paper extends the literature along the line of the actual operational effects of the SOX regulation by examining its effect on the productivity of firms.

How does the globalization of firms affect corruption in developing economies?

2017 ◽  
Vol 21 (3) ◽  
pp. 256-270 ◽  
Author(s):  
Bokyeong Park ◽  
Onon Khanoi
Keyword(s):  
Foreign Investment ◽  
Developing Economies ◽  
Probit Model ◽  
Policy Implications ◽  
Firm Level ◽  
Content Type ◽  
Exporting Firms ◽  
Country Level ◽  
Level Data ◽  
Firm Level Data

Purpose The purpose of this paper is to examine how firms’ characteristics related to globalization affect their perception on corruption and actual experiences in bribery. It focuses on two indicators of globalization, namely, foreign ownership and export, and confines the scope to developing economies. Design/methodology/approach This analysis uses firm-level data with observation over 60,000 collected from 94 developing economies. The paper employs the probit model to examine how firm characteristics related to globalization affect corruption perception (CP) and incidence. Findings The empirical results reveal that for foreign-invested companies, there is a substantial discrepancy between the perceived corruption and the actual. Although they are involved in bribery as frequently as, or less frequently than local firms, they have greater CPs. Exporting firms are more frequently solicited for bribes, but the effect disappears when time spent for government contact is controlled for. Consequently, foreign investment partly contributes to the corruption control, but the export orientation of firms rather aggravates corruption due to regulative environments in developing economies. Practical implications This study provides policy implications that the corruption control through globalization requires streamlining of administration procedure related to foreign investment or trade and, thus, shortening time to deal with public officials. In addition, governments need to emphasize the importance of foreign investment and prevent unethical practices mediated by local partners. Originality/value The greatest novelty of this paper lies in using firm level data instead of country level unlike most of the literature. Moreover, the authors focus on firms only in developing economies. As well, unlike most studies using only perception indicators as the proxy of corruption, this paper considers both CPs and actual incidence, and compares each other.

Does accounting details play an allocative role in predicting macroeconomic indicators? Evidence of Bayesian and classical econometrics in Iran

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mahdi Salehi ◽  
Ali Daemi Gah ◽  
Farzana Akbari ◽  
Nader Naghshbandi
Keyword(s):  
Predictive Power ◽  
Positive Impact ◽  
Stock Exchange ◽  
Firm Level ◽  
Bayesian Approaches ◽  
Content Type ◽  
Earnings Growth ◽  
Related Data ◽  
Level Data ◽  
Macroeconomic Indicators

Purpose The purpose of this study is to analyze the predictability of firm level data for determining macroeconomic indicators such as unemployment. Design/methodology/approach This study uses quarterly GDP and unemployment data manually collected from the Statistical Center of Iran (SCI). Accounting numbers are also collected from the Tehran Stock Exchange library for the 2004-2015 period. Dispersion of earnings growth provides related data about labour reallocation, unemployment change and finally aggregate output. To summarize, this study attempts to examine the effect of these variables using classical and Bayesian approaches. Findings At a firm level, our results suggest that sectoral shift in previous years is likely to increase labour reallocation in subsequent years. At the macro level, the results reveal that dispersion of earnings growth and labour reallocation has a negative and positive impact on unemployment changes, respectively. However, the study suggests no significant relationship between stock return and unemployment changes. Consequently, we determine that the real estimates of macroeconomic indicators have predictive power because nominal estimates are not statistically associated with firm-level details. Finally, the results obtained from classical and Bayesian approaches suggest similar findings, thus confirming the robustness of our conclusions. Note that, based on Bayesian approach, the nominal reallocation has predictive power in unemployment rate. Originality/value The study is the first conducted in a developing country and the results provide important insight into current line of accounting literature.

Crime, corruption and the role of institutions

2014 ◽  
Vol 7 (1) ◽  
pp. 73-95 ◽  
Author(s):  
Ishita Chatterjee ◽  
Ranjan Ray
Keyword(s):  
Negative Impact ◽  
Probit Model ◽  
Data Sets ◽  
Older Individuals ◽  
Crime Victim ◽  
Data Set ◽  
Content Type ◽  
Country Level ◽  
Level Data

Purpose – There have been very few attempts in the economics literature to empirically study the link between criminal and corrupt behaviour due to lack of data sets on simultaneous information on both types of illegitimate activities. The paper aims to discuss these issues. Design/methodology/approach – The present study uses a large cross-country data set containing individual responses to questions on crime and corruption along with information on the respondents' characteristics. These micro-level data are supplemented by country-level macro and institutional indicators. A methodological contribution of this study is the estimation of an ordered probit model based on outcomes defined as combinations of crime and bribe victimisation. Findings – The authors find that: a crime victim is more likely to face bribe demands, males are more likely victims of corruption while females are of serious crime, older individuals and those living in the smaller towns are less exposed to crime and corruption, increasing levels of income and education increase the likelihood of crime and bribe victimisation to be reported and a stronger legal system and a happier society reduce both crime and corruption. However, the authors find no evidence of a strong and uniformly negative impact of either crime or corruption on a country's growth rate. Originality/value – This paper is, to the authors' knowledge, the first in the literature to explore the nexus between crime and corruption, their magnitudes, determinants and their effects on growth rates.

scholarly journals Bank concentration and SME financing availability: the impact of promotion of financial inclusion in China

2020 ◽  
Vol 38 (6) ◽  
pp. 1329-1349
Author(s):  
Zhiqiang Lu ◽  
Junjie Wu ◽  
Jia Liu
Keyword(s):  
Positive Impact ◽  
Substitution Effect ◽  
Financial Inclusion ◽  
Firm Level ◽  
Content Type ◽  
Level Data ◽  
The Impact ◽  
The Relationship ◽  
Bank Concentration ◽  
Sme Financing

PurposeThe promotion of financial inclusion can disturb the composition of traditional bank concentration and change the relationship between bank concentration and the availability of small and medium-sized enterprise (SME) financing. This paper concentrates on a less frequently explored area of research by examining the relationships between bank concentration, financial inclusion and SME financing availability respectively, and the interaction between bank concentration and financial inclusion after the implementation of a financial inclusion strategy in China.Design/methodology/approachUsing firm-level data from 1,509 listed SMEs in China from 2007 to 2017 and applying rigorous analyses, we identify how bank concentration affects SME financing availability under the promotion of financial inclusion and also the mechanisms involved.FindingsWe find that bank concentration and financial inclusion respectively have positive impacts on the credit available to listed SMEs, indicating that the promotion of financial inclusion in China has reached a new high watermark. The positive impact of bank concentration is reduced when the level of financial inclusion is high. Conversely, a higher level of financial inclusion favours SME credit availability at only a low degree of bank concentration. Our findings suggest that financial inclusion has a substitution effect on bank concentration and has enabled us to add new interpretations to relevant theories; namely, the Market Power and Information Theories respectively.Originality/valueThis study provides new insights into the relationship between bank concentration and SME finance availability under the promotion of financial inclusion.

Assessing the introduction of anti-money laundering regulations on bank stock valuation

2019 ◽  
Vol 22 (1) ◽  
pp. 76-88 ◽  
Author(s):  
Henry Balani
Keyword(s):  
Money Laundering ◽  
Banking Sector ◽  
Negative Impact ◽  
Positive Impact ◽  
Statistical Significance ◽  
Abnormal Returns ◽  
Content Type ◽  
The Usa ◽  
Bank Stock ◽  
The Impact

Purpose This paper aims to analyze the impact of the introduction of anti-money laundering (AML) regulations on bank stock valuations in the USA. Regulations can have a negative impact on financial returns as a result of increased operational costs, potentially driving down stock valuations and loss of profitability. However, regulations can also have a positive impact on valuations because of greater oversight and increased investor confidence. Findings are useful for assessing the market impact of future regulations. Design/methodology/approach Event studies and cross-sectional regression analysis are used to determine the impact on bank stock valuations together with specific characteristics of bank size and geographic headquarter location of the bank for identified AML regulations. Hypothesis related to the impact of the introduction of AML regulations are empirically tested based on the statistical significance of cumulative abnormal returns of markets. Findings AML regulations introduced in 1998 had a positive impact on bank stock valuations, while the USA PATRIOT Act legislation of 2001 had a negative impact. These findings suggest that recent AML regulation is a cost compliance burden for banks, where the costs of operations outweigh the benefits of improved processes. Larger banks see a more negative impact on their bank stock valuations compared to smaller banks, suggesting the market perceives greater cost and less profit for larger banks. Results also show that the location of bank’s headquarters does not significantly impact bank stock valuations. Originality/value This paper specifically focuses on the impact of AML regulations on the US banking sector, providing investors, academics and regulators additional insight on the market dynamics of regulations. Identifying whether the introduction of regulations has a significant impact on a bank’s performance will provide both banks and regulators clarity as to the net benefits associated with the current and future AML legislation.

scholarly journals Drivers of Globalization of R&D Investment by U.S. Multinational Enterprises: Evidence from Industry-Level Data

2016 ◽  
Vol 8 (2) ◽  
pp. 51 ◽  
Author(s):  
Yixiao Zhou
Keyword(s):  
Multinational Enterprises ◽  
Positive Impact ◽  
The United States ◽  
Firm Level ◽  
Theoretical Understanding ◽  
Industry Level ◽  
Country Level ◽  
Level Data ◽  
D Investment ◽  
Industry Level Data

<p>Existing country-level and firm-level studies have shed light on the mechanisms driving the globalization of R&amp;D investment by multinational enterprises. However, there is a lack of industry-level evidence on this issue, which is much needed for the robustness of the theoretical and conceptual framework developed from country- and firm-level studies. Therefore, this study examines the determinants of overseas R&amp;D investment by multinational enterprises from a single country, the United States, using an industry-level panel dataset. This study covers U.S. multinational enterprises in seven two-digit-level North American Industry Classification System (NAICS) manufacturing industries in twenty-three countries over the period 1999-2008.</p>The empirical findings suggest that technology-seeking motive, technology-adaptation motive, and access to an abundant pool of researchers exert positive impact on the R&amp;D intensity of U.S.-based multinational enterprises in a host country. The roles of investment position, institutional quality and distance are not found to be robust. These findings are largely consistent with the current theoretical understanding on R&amp;D globalization by multinational enterprises. The findings point to the need for policies that strengthen domestic R&amp;D stock, enhance human capital endowment and support a domestic market that is open to the world in order to attract overseas R&amp;D investment by multinational enterprises.

scholarly journals Does Higher Education Promote Firm Innovation in China?

2020 ◽  
Vol 12 (18) ◽  
pp. 7326
Author(s):  
Xia Pan ◽  
Yuning Gao ◽  
Dong Guo ◽  
Wenyin Cheng
Keyword(s):  
Higher Education ◽  
Census Data ◽  
Negative Impact ◽  
Positive Impact ◽  
Higher Education Institutions ◽  
High Tech ◽  
Firm Level ◽  
Firm Innovation ◽  
Mixed Effect ◽  
Level Data

Endogenous growth theories have underpinned the pivotal role of education in innovation. However, our empirical study uncovers a mixed effect of higher education on firm innovation in China. Using Chinese Patent Census Data, a unique dataset, this paper is able to quantify innovation in China by incorporating a quality dimension for the first time. By merging the patent data with the Chinese Industrial Enterprise Database and province-level data on education, we find that the number of higher education institutions has a negative impact on firm-level innovation. However, the quantity of elite higher education institutions at the provincial level exerts a positive impact on firm innovation. In addition, heterogeneity analyses show that the effect of elite higher education on firm innovation is significantly positive for privately owned enterprises, but insignificant for state- and foreign-owned enterprises. Furthermore, the positive effect of elite higher education on innovation in high-tech industries is larger than in other industries.

The effect of diversification on risk and return in banking sector

2019 ◽  
Vol 15 (1) ◽  
pp. 100-128 ◽  
Author(s):  
Ritab AlKhouri ◽  
Houda Arouri
Keyword(s):  
Banking Sector ◽  
Negative Impact ◽  
Positive Impact ◽  
Generalized Method Of Moments ◽  
Legal Protection ◽  
Developed Countries ◽  
Islamic Banks ◽  
Content Type ◽  
Interest Income ◽  
Conventional Banks

PurposeThe purpose of this paper is to investigate the effect of revenue diversification, non-interest income and asset diversification on the performance and stability of the Gulf Cooperation Council (GCC) conventional and Islamic banking systems.Design/methodology/approachThe authors implement a panel of 69 conventional and Islamic banks listed in six GCC markets over the period of 2003–2015, using the System Generalized Method of Moments methodology.FindingsNon-interest income diversification has a negative impact on GCC banks’ performance, while asset-based diversification affects banks performance positively. However, Investors tend to penalize the value of the banks’ assets, which are highly diversified. Government intervention, lack of competition, legal protection and high control of Central banks on GCC banks’ have positive impact on performance. Contrary to the results on conventional banks, asset diversification adds value to Islamic banks. Overall, both banks’ revenue and non-interest diversification have negative impact on GCC banks’ stability, while asset diversification improves Islamic banks’ stability.Research limitations/implicationsThe analysis is limited to a sample of banks, which are listed in the GCC stock exchanges. The lack of data on private and foreign banks operating in the region made the analysis and, consequently, the results specific to shareholding companies. Also, the authors’ measures of bank stability might not be appropriate to use for Islamic banks, given their banking models implemented.Practical implicationsResearch results provide important implications for regulators, bank managers and policy makers, as to the expected ways to support economic diversification through bank diversification strategies.Originality/valueUnlike related studies, the authors’ sample of homogeneous banks has a market structure that is different from the samples in the literature covering either developed countries or heterogeneous samples from both developed and developing countries. Furthermore, using an efficient econometric methodology, the authors deal with two types of banks: conventional banks and Islamic banks. The research determines which type of bank is more able to benefit from different types of diversification. Unlike previous research, this research explores the sensitivity of the results both to the regulatory environment of the GCC market and to general market conditions.

Are female leaders more efficient in family firms than in non-family firms?

2018 ◽  
Vol 18 (2) ◽  
pp. 185-205 ◽  
Author(s):  
Per-Olof Bjuggren ◽  
Louise Nordström ◽  
Johanna Palmberg
Keyword(s):  
Family Firms ◽  
Positive Impact ◽  
Female Leadership ◽  
Female Leaders ◽  
Firm Level ◽  
Content Type ◽  
Corporate Leaders ◽  
Listed Firms ◽  
Level Data ◽  
The Impact

Purpose The aim of this study is to investigate whether female leaders are more efficient in family firms than in non-family firms. Design/methodology/approach This paper uses a unique database of ownership and leadership in private Swedish firms that makes it possible to analyze differences in firm performance due to female leadership in family and non-family firms. The analysis is based on survey data merged with micro-level data on Swedish firms. Only firms with five or more employees are included in the analysis. The sample contains more than 1,000 firms. Findings The descriptive statistics show that there are many more male than female corporate leaders. However, the regression analysis indicates that female leadership has a much more positive impact on the performance of family firms than on that for non-family firms, where the effect is ambiguous. Originality/value Comparative studies examining the impact of female leadership on firm-level performance in family and non-family firms are rare, and those that exist are most often either qualitative or focused on large, listed firms. By investigating the role of female directors in family and non-family firms, the study adds to the literature on management, corporate governance and family firms.

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