Capital structure and earnings quality in microfinance institutions

PurposeThe purpose of this paper is to examine whether capital structure matters for earnings management of microfinance institutions.Design/methodology/approachThe empirical study is conducted using a sample of 575 MFIs over 2007 to 2015, we determined in the first step the discretionary part of provision for loan impairment. In the second step, we examine the effect of debt and donated equity on discretionary provision for loan impairment.FindingsWe found robust evidence that MFIs manage their earnings for external finance purposes. Debt exhibits a negative effect on earnings management for both profit and nonprofit MFIs. However, donated equity incites managers of MFIs to engage this practice in nonprofit MFIs.Practical implicationsFindings could be valuable to fund providers and investors who should consider accounting information quality in order to reach a better investment decision.Originality/valueThis paper is among the few to explore earnings management motivation of MFIs and to determine the role of external financing on earnings management practice.

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Do corporate diversification and earnings management practices affect capital structure?

Journal of Indian Business Research ◽

10.1108/jibr-01-2015-0008 ◽

2015 ◽

Vol 7 (4) ◽

pp. 360-378 ◽

Cited By ~ 2

Author(s):

Ranjitha Ajay ◽

R Madhumathi

Keyword(s):

Capital Structure ◽

Earnings Management ◽

Management Practices ◽

Negative Relationship ◽

Corporate Diversification ◽

Content Type ◽

Diversification Strategies ◽

Market Product ◽

Diversified Firms ◽

The Impact

Purpose – The purpose of this paper is to empirically examine the impact of earnings management on capital structure across firm diversification strategies. Design/methodology/approach – The study focuses on firms operating in the manufacturing sector (diversified and focused). Panel data methodology compares diversification strategies and identifies the impact of diversification strategy with earnings management practices on capital structure decision. Findings – International and product diversified firms have lower levels of leverage than focused firms in their capital structure. Asset-based earnings management is positive for diversified (market/product) firms. Earnings management using discretionary expenditure (project based) is found to be higher for market diversified but product-focused firms. Earning smoothing method is found to be significant for focused firms and shows a negative relationship with capital structure. Originality/value – This study offers an insight into the relationship between corporate diversification, earnings management and capital structure decisions of manufacturing firms. The results provide an important contribution to accounting and strategy literature. A distinction is made between market- and product-diversified firms and influence of earnings management practices (asset-based, project-based and earnings smoothing (ESM)) on capital structure decisions. Diversified firms (market/product) tend to have lower levels of leverage than focused firms and earnings management practices within firm groups significantly influence the capital structure decisions.

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Financial and social efficiency analysis of Islamic microfinance institutions

International Journal of Emerging Markets ◽

10.1108/ijoem-02-2020-0197 ◽

2021 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

Marwa Fersi ◽

Mouna Bougelbène

Keyword(s):

Capital Structure ◽

Credit Risk ◽

Risk Taking ◽

Negative Impact ◽

Microfinance Institutions ◽

Social Efficiency ◽

Content Type ◽

Islamic Microfinance ◽

The Impact ◽

The Relationship

PurposeThe purpose of this paper was to investigate the impact of credit risk-taking on financial and social efficiency and examine the relationship between credit risk, capital structure and efficiency in the context of Islamic microfinance institutions (MFIs) compared to their conventional counterparts.Design/methodology/approachThe stochastic frontier approach was used to estimate the financial and social efficiency scores, in a first step. In a second step, the impact of risk-taking on efficiency was evaluated. The authors also took into account the moderating role of capital structure in this effect using the fixed and random effects generalized least squares (GLS) with a first-order autoregressive disturbance. The used dataset covers 326 conventional MFIs and 57 Islamic MFIs in six different regions of the world over the period of 2005–2015.FindingsThe overall average efficiency scores are less than 50%, where CMFIs could have produced their outputs using 48% of their actual inputs. IMFIs record the lowest financial (cost) efficiency that is equal to 28% on average. The estimation results also reveal a negative impact of nonperforming loan on financial and social efficiency. Finally, the moderating effect of leverage funding on the relationship between credit risk-taking and financial efficiency was confirmed in CMFIs. However, leverage seems to moderate the effect of risk-taking behavior on social efficiency for IMFIs.Originality/valueThis paper makes an initial attempt to evaluate the effect of risk-taking decision and its implication on efficiency and MFIs' sustainability. Besides, it takes into consideration the role played by the mode of governance through the ownership structure. In addition, this research study sheds light on the importance of the financial support for the development and sustainability of these institutions, which in return, contributes to a sustainable economic development.

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IFRS ADOPTION AND EARNINGS MANAGEMENT PRACTICE: EVIDENCE FROM INDONESIA COMPANIES

JURNAL AKUNTANSI EKONOMI dan MANAJEMEN BISNIS ◽

10.30871/jaemb.v7i2.1808 ◽

2019 ◽

Vol 7 (2) ◽

pp. 229-239

Author(s):

Vina Kholisa Dinuka

Keyword(s):

Earnings Management ◽

Management Practices ◽

Stock Exchange ◽

Management Practice ◽

Real Earnings Management ◽

Manufacturing Companies ◽

Discretionary Accrual ◽

Ifrs Adoption ◽

Negative Effect ◽

Ifrs Implementation

The purpose of this study is to verify IFRS contribution by examining the presence of Accrual Earnings Management (AEM) and Real Earnings Management (REM) in the period pre- and post- IFRS implementation in manufacturing companies in Indonesia. AEM is measured by absolute value of discretionary accrual, while REM is proxied by three measurements of REM, they are abnormal cash flow operation, abnormal production and abnormal discretionary expenses. The sample is taken from Indonesia stock exchange in 2009-2011 and 2013-2015. 2012 is Indonesia adoption period and it is excluded from the sample, because it is considerated as transitory year. This study uses regression analysis and Paired t-test to compare the presence of AEM and REM preceding and following IFRS implementation. The findings reveal that IFRS adoption has significantly negative effect towards AEM and REM. It indicates that the following IFRS implementation, AEM and REM are decrease. Therefore, IFRS is able to reduce earnings management practices in manufacturing companies in Indonesia both for AEM and REM.

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Evaluation of local government revenue collection information system success in Tanzania

Digital Policy Regulation and Governance ◽

10.1108/dprg-04-2021-0055 ◽

2021 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

John M. Sausi ◽

Erick J. Kitali ◽

Joel S. Mtebe

Keyword(s):

Information System ◽

Local Government ◽

User Satisfaction ◽

Information Quality ◽

Positive Impact ◽

Government Revenue ◽

System Quality ◽

Content Type ◽

Revenue Collection ◽

Negative Effect

Purpose This study aims to adapt the updated DeLone and McLean model to evaluate the success of the local government revenue collection and information system (IS) implemented in Tanzania. Design/methodology/approach The study used a concurrent mixed research design integrating quantitative and qualitative data within a single investigation. A total of 296 users from local government authorities (LGAs) in 5 regions in Tanzania participated in the study. Findings The study found that the system quality and information quality had a significant positive impact whilst service quality and trust in the system had a significant negative effect. In contrast, facilitating conditions did not have an effect whatsoever. The findings from the open-ended questions and implications of the findings are discussed. Originality/value The findings from this study will help LGAs understand the factors that affect the success of the ISs in developing countries. The results indicate that in addition to information technology attributes, building trust in the system is crucial to foster user satisfaction and increase the public value of the systems.

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Large institutional investors and the pressure to manage earnings surrounding seasoned equity offerings

International Journal of Law and Management ◽

10.1108/ijlma-07-2018-0139 ◽

2019 ◽

Vol 61 (2) ◽

pp. 402-420

Author(s):

Mouna Njah ◽

Raoudha Trabelsi

Keyword(s):

Earnings Management ◽

Institutional Investors ◽

Information Quality ◽

Management Practices ◽

Seasoned Equity Offerings ◽

Equity Offerings ◽

Content Type ◽

Multivariate Tests ◽

Regulated Firms ◽

Investor Activism

Purpose The purpose of this paper is to investigate the monitoring role exerted by large institutional investors and their ability to restrict the earnings management practices conducted around seasoned equity offerings (SEOs). Design/methodology/approach The sample includes 130 French SEOs by non-regulated firms during 2004-2015. The authors used various cross-section, univariate and multivariate tests using several proxies for earnings management. They attempt to highlight that firms issuing SEOs are more able to manage earnings around SEOs owing to the predominance of large speculative institutional investors. Noteworthy, the monitoring role exerted by sophisticated institutional investors turns out to restrict the earnings management opportunities surrounding a SEOs event. Findings The results show that the issuing firms tend to manipulate earnings in an upward trend with respect to the year preceding the SEO offer. Thus, a special attention has been drawn on the fact that the issuing companies strive to prove their ability to manage earnings around SEOs in presence of large speculative institutional investors. Practical implications The results provide useful insights into the role different types of institutional investors play in terms of enhancing both governance and accounting information quality. Originality/value This paper adds to the literature questioning the evidence that institutional investor activism frequently engage in misleading earnings management around corporate events. The authors provide an alternative explanation for earnings management around SEOs in the French context.

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Capital market supply and REITs’ financing and investment decisions

International Journal of Managerial Finance ◽

10.1108/ijmf-11-2012-0119 ◽

2014 ◽

Vol 10 (2) ◽

pp. 146-167 ◽

Cited By ~ 1

Author(s):

Qing Bai ◽

Qingqing Chang ◽

Avis Devine

Keyword(s):

Capital Structure ◽

Capital Market ◽

Investment Decision ◽

Content Type ◽

Supply Shock ◽

Firm Financing ◽

Debt Market ◽

Survey Results ◽

Recent Financial Crisis ◽

Financing And Investment

Purpose – In the wake of the recent financial crisis, there has been extensive commentary regarding the rise and fall of REIT leverage, how much debt REITs should use, and the trendy “deleveraging” practice among REIT managers. The paper aims to discuss these issues. Design/methodology/approach – Identifying the late 2000s credit crunch as a supply shock, the paper uses difference-in-difference methodology to isolate alternative firm financing strategies and investment decision responses to the shock. Findings – Consistent with corporate survey results, this empirical analysis suggests that changes in capital structure are largely supply driven, and REIT managers “time” the debt market in response to credit conditions. Originality/value – This research clarifies the causes of the documented leverage pattern and provides fresh insights about REIT capital structure.

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International accounting standards and accounting quality in code-law countries

Journal of Financial Regulation and Compliance ◽

10.1108/jfrc-12-2011-0047 ◽

2016 ◽

Vol 24 (1) ◽

pp. 41-59 ◽

Cited By ~ 5

Author(s):

Ibrahim El-Sayed Ebaid

Keyword(s):

Earnings Management ◽

Financial Reporting ◽

Management Practice ◽

Accounting Standards ◽

Accounting System ◽

Accounting Quality ◽

Regulatory Requirement ◽

Content Type ◽

Set Up ◽

Egyptian Government

Purpose – This study aims to examine whether the adoption of International Financial Reporting Standards (IFRS) leads to accounting quality improvements in Egypt as a code-law country. In particular, the study examines earnings management, the construct often used to assess accounting quality. Design/methodology/approach – The study compares earnings management practice for Egyptian listed companies before (2000-2006) and after (2007-2009) the adoption of IFRS. Findings – The findings of the study reveal that accounting quality, as measured by earnings management, has decreased in post-adoption period compared to pre-adoption period. IFRS are set up to provide high-quality financial reporting. However, this cannot be achieved solely by a regulatory requirement to follow. The accounting system is a complementary component of the country’s overall institutional system. Institutional improvements did not simultaneously take place by the Egyptian government around the adoption of IFRS. The Egyptian government did not introduce a more effective enforcement system, mandatory corporate governance regulations, investor protection mechanisms and sufficient institutional knowledge of IFRS during that period. Thus, even if IFRS are higher quality standards, the institutional features of Egyptian market could eliminate any improvement in accounting quality arising from adopting IFRS. Research/limitations/implications – The results of the study are consistent with prior research suggesting that the adoption of IFRS, which are generally perceived to be of higher quality than domestic standards, does not necessarily lead to higher accounting quality in code-law countries like Egypt. The overall results indicate that incentives dominate accounting standards in determining accounting quality in Egypt. Originality/value – The main reason why countries adopt IFRS invariably is to improve accounting quality. It is, therefore, of interest to ascertain if this goal has been met, especially, in code-law countries such as Egypt.

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The effects of online service quality of e-commerce Websites on user satisfaction

The Electronic Library ◽

10.1108/el-10-2013-0193 ◽

2015 ◽

Vol 33 (3) ◽

pp. 468-485 ◽

Cited By ~ 34

Author(s):

Gajendra Sharma ◽

Wang Lijuan

Keyword(s):

Service Quality ◽

User Satisfaction ◽

Online Survey ◽

Information Quality ◽

Management Practice ◽

Online Service ◽

Internet Applications ◽

Content Type ◽

Web Presence

Purpose – The purpose of this paper is to investigate service quality of e-commerce Websites in online platform and their contribution on e-business promotion. Design/methodology/approach – The online survey was performed on a survey portal provided by Nepal Telecom in Nepal. Findings – The findings of this study suggest that information quality and online service quality were the key determinants for user satisfaction and sustainability of e-commerce technology. Research limitations/implications – Research opportunities of web services and e-commerce area are fruitful and important for both academics and practitioners. Practical implications – The findings on online service quality of e-commerce technology will be useful for current management practice such as making business policies and strategies and sharing information to managers and organization leaders. This study can be used for e-commerce Website operators wishing to enhance the competitiveness of their Websites in the highly competitive online market. Originality/value – E-commerce is considered an excellent alternative for individuals and companies to reach new customers. Service quality delivery through Internet is an essential strategy to success, more important than price and web presence. The e-commerce Website has been identified as having a significant impact on business activities in solving the geographical problem. A number of performance problems have been observed for e-commerce Websites, and much work has gone into characterizing the performance of web-servers and Internet applications.

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Firm borrowing capacity, government ownership and real earnings management

International Journal of Public Sector Management ◽

10.1108/ijpsm-01-2019-0029 ◽

2019 ◽

Vol 33 (2/3) ◽

pp. 339-362

Author(s):

Mouna Ben Rejeb Attia

Keyword(s):

Public Sector ◽

Earnings Management ◽

Information Quality ◽

Simultaneous Equation ◽

Real Earnings Management ◽

Government Ownership ◽

Content Type ◽

Financing Decisions ◽

Research Stream ◽

The Relationship

Purpose The purpose of this paper is to examine borrowing capacity (BC) of government-owned firms and whether real earnings management (REM) activities moderate the sensitivity of firm BC to government ownership. Design/methodology/approach A simultaneous equation analysis is applied to study 210 Tunisian non-financial firms over the 2001–2014 period. Findings The empirical results provide substantial evidence indicating that government-owned firms have higher BC and significant REM than other firms; the relationship between government ownership and firm BC is partially moderated by REM activities. Practical implications The findings imply that the implicit credit guarantee of government is not necessarily the unique determinant of firm BC and highlight the role of lenders in monitoring discretionary real transactions in government-owned and protected firms. These implications should be taken in to account by public sector policy makers. In particular, the findings predict that the current government accounting reform in Tunisia on the basis of IPSAS will, probably, improve information quality, but it is still insufficient to control real activities in public institutions. Originality/value This study extends a growing research stream on the relationship between BC and government ownership by focusing on the moderating effect of REM on this relationship and by considering the endogeneity issue. The findings provide evidence that government-owned firms use REM practices to improve their BC. Examining these practices in developing countries provides an opportunity to evaluate the efficiency of their public sector reforms and their effect on a firm’s performance and financing decisions.

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ANALISIS LEVERAGE, UKURAN PERUSAHAAN, GOOD CORPORATE GOVERNANCE PADA MANAJEMEN LABA DENGAN STRUKTUR MODAL SEBAGAI VARIABLE MODERASI

Jurnal Akuntansi Trisakti ◽

10.25105/jat.v7i2.7216 ◽

2020 ◽

Vol 7 (2) ◽

pp. 303

Author(s):

Anindya Aldhira Putri

Keyword(s):

Corporate Governance ◽

Capital Structure ◽

Earnings Management ◽

Board Of Directors ◽

Earning Management ◽

Company Size ◽

Good Corporate Governance ◽

Manufacture Sector ◽

Negative Effect

The purpose of this analysis is to find the influence of leverage, company size, good corporate governance on earnings management with capital structure as the moderating variable. The sample of this research using the subsector of manufacture sector which is the foods and beverage subsector, from 2016 until 2018, with a requirement where the companies are listed in IDX. The companies samples of this research are 18 companies, with total of 54. The data of the research was processed by the SPSS.The final summary of the research is that, leverage doesn’t have any effect on earning management. As well as company size doesn’t any effect on earnings management because the bigger size of the company the lowest it is for the management to do the practice of earnings management, because their shareholders and creditors are critical on their report. Good corporate governance with an indicator of independent commissioner, board of directors, and internal committee also have a negative effect on earning management. In this research, capital structure weakens the effect of good corporate governance on earning management.

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