Managerial overconfidence, government intervention and corporate financing decision

2016 ◽  
Vol 12 (1) ◽  
pp. 4-24 ◽  
Author(s):  
Irene Wei Kiong Ting ◽  
Hooi Hooi Lean ◽  
Qian Long Kweh ◽  
Noor Azlinna Azizan

Purpose – The purpose of this paper is to investigate the impact of managerial overconfidence on corporate financing decision and the moderating effect of government ownership on the relationship between managerial overconfidence and corporate financing decision. Design/methodology/approach – Pooled OLS, fixed effect models (FEM), and Tobit regressions are employed to examine the relationship between managerial overconfidence, government ownership and corporate financing decision of publicly listed companies in Malaysia for the period of 2002-2011. Findings – The authors conclude that: first, CEO overconfidence is significantly and negatively related to corporate financing decision; second, a higher degree of managerial overconfidence would result in lower leverage in GLCs, whereas the effect does not significantly exist in NGLCs; third, a larger ownership of government in a firm will reduce the negative effect of managerial overconfidence on corporate financing decision; fourth, the moderating effect of government ownership on the association between managerial overconfidence and corporate financing decision in GLCs is more effective than NGLCs; and fifth, government intervention plays its role as moderating effect on the relationship between managerial overconfidence and corporate financing decision in firms with lower ownership concentration but not in firms with high ownership concentration (more or equal than 50 percent). Practical implications – The finding implies that the moderating effect of government ownership on the association between managerial overconfidence and corporate financing decision in GLCs is more effective than NGLCs. Originality/value – The authors make the first attempt to test the moderating effect of government ownership on the relationship between ownership concentration and corporate financing decision.

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Amal Mohammed Al-Masawa ◽  
Rasidah Mohd-Rashid ◽  
Hamdan Amer Al-Jaifi ◽  
Shaker Dahan Al-Duais

Purpose This study aims to investigate the link between audit committee characteristics and the liquidity of initial public offerings (IPOs) in Malaysia, which is an emerging economy in Southeast Asia. Another purpose of this study is to examine the moderating effect of the revised Malaysian code of corporate governance (MCCG) on the link between audit committee characteristics and IPO liquidity. Design/methodology/approach The final sample consists of 304 Malaysian IPOs listed in 2002–2017. This study uses ordinary least squares regression method to analyse the data. To confirm this study’s findings, a hierarchical or four-stage regression analysis is used to compare the t-values of the main and moderate regression models. Findings The findings show that audit committee characteristics (size and director independence) have a positive and significant relationship with IPO liquidity. Also, the revised MCCG positively moderates the relationship between audit committee characteristics and IPO liquidity. Research limitations/implications This study’s findings indicate that companies with higher audit committee independence have a more effective monitoring mechanism that mitigates information asymmetry, thus reducing adverse selection issues during share trading. Practical implications Policymakers could use the results of this study in developing policies for IPO liquidity improvements. Additionally, the findings are useful for traders and investors in their investment decision-making. For companies, the findings highlight the crucial role of the audit committee as part of the control system that monitors corporate governance. Originality/value To the authors’ knowledge, this work is a pioneering study in the context of a developing country, specifically Malaysia that investigates the impact of audit committee characteristics on IPO liquidity. Previously, the link between corporate governance and IPO liquidity had not been investigated in Malaysia. This study also contributes to the IPO literature by providing empirical evidence regarding the moderating effect of the revised MCCG on the relationship between audit committee characteristics and IPO liquidity.


2021 ◽  
Vol 19 (5) ◽  
pp. 681-700
Author(s):  
Mohammad Almaleki ◽  
Mahdi Salehi ◽  
Mahdi Moradi

Purpose This study aims to investigate the impact of managerial narcissism and overconfidence on financial statements’ comparability. In other words, this paper seeks to answer the question of whether the personality characteristics of managers may affect the level of financial statements’ quality of commercial entities or not. Design/methodology/approach The research hypotheses are tested using a sample of 896 observations taken from the Tehran Stock Exchange and 245 observations from the Iraqi Stock Exchange during 2012 and 2018 using the multiple regression model based on the combined data technique. Findings The findings show that managerial narcissism is positively and significantly associated with Iran’s financial statement comparability. In contrast, Iraqi data articulate a negative association between these two variables. This paper finds that Chief Executive Officer overconfidence and financial statements’ comparability are negatively related in both countries. Following the market variation, the different findings suggest that institutional settings such as the general managerial style, adopting international accounting standards (now IFRS) leading to the extent of auditing market globally in Iraq and suffering from international sanctions in Iran, the governing business environment may play an allocative role in preparing financial statements. Originality/value The present research is the first research conducted in two emerging markets (Iran and Iraq) examining the relationship between managers’ narcissism and overconfidence and financial statements’ comparability. Therefore, the present research in this area can significantly contribute to the development of science and knowledge.


2018 ◽  
Vol 23 (6) ◽  
pp. 500-517 ◽  
Author(s):  
Himanshu Shee ◽  
Shah Jahan Miah ◽  
Leon Fairfield ◽  
Nyoman Pujawan

PurposeTheorising from the intersection of supply chain and information systems (IS) literature, this study aims to investigate supply chain integration (SCI) as a multidimensional construct in the context of cloud-based technology and explores the effect of cloud-enabled SCI on supply chain performance, which will eventually improve firm sustainability from a resource-based view (RBV). In addition, the moderating effect of top management is explored.Design/methodology/approachUsing cross-sectional survey data collected from a sample of 105 Australian retail firms, this study used structural equation modelling to test the hypothesised relationship of cloud-enabled SCI with performance in a theoretical model.FindingsResults show that cloud-based technology has positive effect on SCI, and the cloud-enabled SCI is positively related to supply chain performance which eventually influenced firm sustainability. Further, top management intervention moderates the relationship between supplier and internal integration with supply chain performance. But it is found to have no moderating effect on the relationship between customer integration and supply chain performance.Practical implicationsRecognising the potential benefits of emerging cloud-based technologies reported in this study, retail managers need to understand that higher order SCI requires the support of cloud-based technology to improve supply chain performance and firm sustainability.Originality/valueThis research extends prior research of information and communication technologies-enabled SCI and its effect on supply chain performance which overly remains inconsistent. In addition, IS literature abounds with discussion on cloud computing technologyper se, and its adoption in supply chain is overly rhetoric. This study fills this gap by conceptualising the multiple dimensions of SCI enabled by cloud-based technology and the way it affects supply chain and firm sustainable performance. Investigating SCI in context of cloud-based technology is a unique contribution in this study. The moderating effect of top management in this decision also adds to the current body of literature.


2018 ◽  
Vol 19 (4) ◽  
pp. 608-625 ◽  
Author(s):  
Amel Kouaib ◽  
Anis Jarboui ◽  
Khaireddine Mouakhar

Purpose The purpose of this paper is to focus on the moderating effect of mandatory International Financial Reporting Standards (IFRS) adoption on the relationship between chief executive officer (CEO) experience/education and earnings management in European companies. Design/methodology/approach Data from a sample of 302 European firms listed on Stoxx Europe 600 index and 596 CEOs from 2000 to 2014 are used to test the moderation model using moderation regression analysis. Findings Evidence reveals that CEO’s accounting-based attributes are negatively associated with accruals-based earnings management and positively associated with real earnings management (REM). Further, mandatory IFRS adoption significantly moderates the impact of CEO’s accounting-based traits on earnings-management activities. Research limitations/implications A small number of European firms were studied and, given the long study period, many firms with missing data were eliminated. To avoid a small sample size, countries with few observations were included, which leads to an uneven distribution between observations per country. Practical implications Findings from this paper can help: European firms to consider demographic traits when recruiting or promoting executives; the IASB to improve enforcement mechanisms and make IFRS implementation mandatory; and audit committees to effectively monitor REM. Originality/value This study is unique in providing European evidence for the moderating effect of mandatory IFRS adoption on the relationship between CEOs’ accounting experience/education and earnings management activities. This paper is also relevant as it addresses the effectiveness and efficiency of accounting literates.


2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Shoukat Ali ◽  
Ramiz Ur Rehman ◽  
Bushra Sarwar ◽  
Ayesha Shoukat ◽  
Muhammad Farooq

Purpose The purpose of this paper is to empirically investigate the impact of board financial expertise on the shareholding of foreign institutional investors in an emerging equity market of China and to explore whether ownership concentration moderates the relationship between board financial expertise and foreign institutional investment. Design/methodology/approach To test the hypothesized relationships, this study uses panel data regression models, i.e. static (fixed effect and random effect) and dynamic (two-step generalized methods of moments) models. Further, to control the possible endogeniety issue, this study uses two instrumental variables, namely, board size and industry average financial expertise of board to proxy board financial expertise. This study covers a period from 2006 to 2015 for 169 listed Chinese firms. Findings The results revealed that foreign institutional investors positively perceived board financial expertise and holds more shareholdings with the increasing level of financial experts at boards of directors. Moreover, ownership concentration positively moderated this relationship. It means that in highly concentrated firms, the board financial expertise conveys a stronger signal to foreign institutional investors that firms can manage financial resources rationally by controlling negative effects of ownership concentration. Further, the robustness model also confirmed the relationship between board financial expertise and foreign institutional shareholdings. Originality/value To the best of authors’ knowledge, this is the first study to investigate board-level financial expertise as a determinant of foreign institutional ownership. Further, no previous study has used ownership concentration as a contextual variable on the relationship between board financial expertise and foreign institutional investment.


2020 ◽  
Vol 32 (8) ◽  
pp. 2519-2541
Author(s):  
Nan Hua ◽  
Arthur Huang ◽  
Marcos Medeiros ◽  
Agnes DeFranco

Purpose This study aims to examine how operator type moderates the relationship between hotel information technology (IT) expenditures and operating performance. Design/methodology/approach By adapting and extending O’Neill et al.’s (2008) and Hua et al.’s (2015) research, this study constructed an empirical model and tested proposed hypotheses, with Newey and West (1994) errors computed to accommodate potential heteroscedasticity and autocorrelation issues. Findings Operator type moderates the impact of hotel IT expenditures on operating performance. In particular, it appears that the operator type of franchising exerts a stronger moderating effect compared with other operator types explored. Practical implications This study, as the first of its kind, shows that the choice of operator type shapes how a hotel can effectively use IT expenditures to improve operating performance. This finding can be beneficial for hotel owners when making operator type decisions. In addition, operator type moderates the direct impact of IT expenditures on revenues and gross operating income. This study’s results show that franchised hotels seem to use IT expenditures more effectively compared with independently owned hotels. Originality/value This study contributes both theoretically and practically to understand how operator type moderates the relationship between IT expenditures and hotel performance. The research outcome provides a more holistic view that governs the relationships between IT expenditures, operator type and operating performance.


2018 ◽  
Vol 30 (3) ◽  
pp. 652-668 ◽  
Author(s):  
Bee Hui Koh ◽  
Wai Peng Wong ◽  
Chor Foon Tang ◽  
Ming K. Lim

PurposeAsia has been transformed into a well-regulated dynamic platform for trade and is today world’s fastest-developing economic region. However, the increasing cross-border economic activities create new opportunities for corruption. The purpose of this paper is to assess the impact of corruption on trade facilitation using logistics performance index (LPI). This paper also examines the moderating effect of governance or government effectiveness (GE) on the relationship between corruption and LPI within Asian countries.Design/methodology/approachA panel of time-series data from year 2007 to 2014 of 26 Asian countries was collected for analysis. Static linear panel models which comprised of pooled ordinary least squares, fixed-effect model and random-effect model were utilised to analyse the panel data.FindingsThe findings show that corruption significantly affects LPI and each of the six dimensions in LPI. The results also show that governance or GE has a moderating effect on the relationship between corruption and LPI.Practical implicationsThis study benefits Asian governments to gain a better understanding on influences of corruption on trade facilitation and triggering suggestions of a government role in the relationship. Practically, the results could be used as a guideline in improving national LPI. Besides, the findings could be used to support policy decision to modify corruption regulations at the national and regional levels.Originality/valueThis study reveals that the optimistic view of sands in the wheel overcomes the dark side of the grease in the wheel practices. To be corrupt free or less corrupt is a rare and inimitable resource capability that makes nations logistically competitive.


2017 ◽  
Vol 30 (1) ◽  
pp. 23-39 ◽  
Author(s):  
Ana Felicitas Gargallo Castel ◽  
Carmen Galve Górriz

Purpose The purpose of this paper is to explore the moderated effect of family involvement on the relationship between information and communication technology (ICT) and firm performance. Design/methodology/approach According to agency and transaction cost theories, distinctive family business characteristics provide a unique context that favours a more efficient use of ICT. The authors perform a multivariate analysis that includes the moderating effect of family involvement and considers the possible endogeneity of the ICT variable. Findings The results, using a large panel of Spanish manufacturing firms, confirm the importance of family involvement for explaining differences in terms of the impact of this technology in family and non-family businesses. The relationship between ICT and performance is stronger for family firms than for non-family firms. Research implications The paper provides new evidence for the academic literature on ICT impact and family firms. It corroborates the importance of using an organizational perspective to explain differences in the effect of ICT on performance. Practical implications Family firms should understand the opportunities that family involvement offers regarding ICT impact on performance, and exploit this moderating effect to achieve competitive advantages. Originality/value No previous studies deal with the impact of family involvement on ICT-performance analysis. This study fills this gap and increases the understanding of how family business involvement moderates the ICT-performance relationship.


2019 ◽  
Vol 20 (2) ◽  
pp. 72
Author(s):  
Dewi Puji Lestari ◽  
Faisal Faisal

This study examines the effect of managerial overconfidence on corporate financing whichmeasured by leverage ratio. Also it investigates the moderating effect of government ownershipon the relationship between managerial overconfidence and leverage. The managerialoverconfidence is measured by photo profile, degree of education, experience, gender andnetwork. The sample consists of 176 public companies listed on Indonesia Stock Exchange in2017. The results of this study show that managerial overconfidence proxied by photo profile hasa negatively effect on leverage. Other results find that experience and network positively affecton leverage. However, this study failed to show that level of education, gender, governmentownership have significant effect on leverage. In addition, government ownership does not actas a moderating variable that influence the relationship between managerial overconfidence andleverage. The implications of this study suggest that the personal characteristics of managersuch as profile, experience and network should be considered as factors that may influencelevel of corporate financing.Keywords: managerial overconfidence, government ownership, financing, leverage, upperechelon theory


2020 ◽  
Vol 32 (2) ◽  
pp. 255-270
Author(s):  
Ben Le

Purpose This paper aims to examine the impact of government ownership on the cost of debt and firm valuation in listed Vietnamese companies for the period 2007 to 2016. Design/methodology/approach The authors use both the generalised methods of the moment (GMM) and the ordinary least squares (OLS) regressions to analyse a panel data spanning over the period 2007 to 2016 in the markets of Vietnam. Further, the instrumental variable is used in the paper. Findings The authors find that firms with relative higher government stockholdings or state-owned companies where the government owns 50 per cent or more of shares outstanding enjoy a lower cost of debt compared to the other firms. Consequently, these firms have higher firm valuation and profitability. The results are robust for both the GMM and the OLS regressions. Further, firms that no longer retain government ownership have a higher cost of debt than the other firms. The results of the paper imply the importance of political connections in businesses in the market of Vietnam. Originality/value This paper connects the relationship between government ownership and the cost of debt with the relationship between government ownership and firm valuation. The paper tests the relationship between the cost of debt and government ownership using both OLS and GMM specifications and the results are robust for both approaches. The manuscript uses an instrumental variable to show that government ownership has a positive impact on higher firm performance through reducing cost of debt. Further, this paper addresses the possible issue of endogeneity.


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