Host country corruption and headquarters-subsidiary relationships in emerging economies

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Muhammad Shujaat Mubarik ◽  
Miao Miao ◽  
Muhammad Faraz Mubarak ◽  
Syed Imran Zaman ◽  
Syed Hasnain Alam Kazmi ◽  
...  
Keyword(s):  
Host Country ◽  
Positive Association ◽  
Primary Objective ◽  
Least Square ◽  
Host Countries ◽  
Significant Positive Association ◽  
Content Type ◽  
Ordinary Least Square ◽  
Weak Institutions ◽  
The Impact

PurposeThe primary objective of this study is to investigate the impact of a host country's corruption on the autonomy of a foreign subsidiary from a country with lower tolerance for corruption. In doing so, the study examines the moderating role of subsidiary-headquarters communication and multinational corporation's (MNC's) prior international experience in countries with a higher tolerance for corruption.Design/methodology/approachThe data were collected from 182 foreign subsidiaries of 57 Malaysian MNCs operating in 16 host countries. The study employed ordinary least square (OLS) using Stata16.1 to analyze the modeled relationships.FindingsThe findings of this study reveal a significant positive association between the extent of corruption in the host country and the subsidiary's autonomy. The findings illustrate that an MNC's prior experience in the country with an increased tolerance for corruption does not moderate the association between corruption and subsidiary autonomy. However, the findings also confirm that the extent of headquarters-subsidiary communication negatively moderates the association between corruption and subsidiary autonomy.Originality/valueThe study uses unique data collected from Malaysian MNCs. Furthermore, the study contributes to the literature by bringing forth subsidiary autonomy as a counter strategy to potential risks that can arise due to weak institutions and widespread corruption in a host country.

Islamic calendar and stock market behaviour in India

2018 ◽  
Vol 45 (11) ◽  
pp. 1550-1566
Author(s):  
Dharani Munusamy
Keyword(s):  
Stock Market ◽  
Least Square Method ◽  
Least Square ◽  
Stock Market Returns ◽  
Content Type ◽  
Ordinary Least Square ◽  
Average Return ◽  
Year Effect ◽  
The Common ◽  
The Impact

Purpose The purpose of this paper is to examine the behavior of the stock market returns in the different days of the week and different months of the year in accordance with the Islamic calendar. Further, the study estimates the risk-adjusted returns to test the performance of the indices during the Ramadan and non-Ramadan days. Finally, the study investigates the impact of Ramadan on the returns and the volatility of the stock market indices in India. Design/methodology/approach Initially, the study applies the Ordinary Least Square method to test the day-of-the-week and the month-of-the-year effect of the common and Shariah indices. Next, the study employs the risk-adjusted measurement to examine the underperformance and over-performance of the indices for both the periods. Finally, the study estimates the GARCH (1,1) and GJR-GARCH (1,1) models to observe the impact of Ramadan on the returns and the volatility of the Shariah indices in India. Findings The study finds that an average return of the indices during the Ramadan days are higher than non-Ramadan days. Further, the average returns of the Shariah indices are significantly higher on Wednesday than other days of the week. In addition, the highest and significant mean returns and mean risk-adjusted returns of the indices during the Ramadan days are observed. Finally, the study finds an evidence of the Ramadan effect on the returns and volatility of the indices in India. Originality/value The study observes evidence that the Ramadan effect influences the Shariah indices, but not the common indices in the stock market of the non-Muslim countries. It indicates that the Ramadan creates the positive mood and emotions in the investors buying and selling activities. The study suggests that investors can buy the shares before Ramadan period and sell them during the Ramadan days to get an abnormal return in the emerging markets.

Impact of corruption on Chinese investment in African countries

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Shilin Yuan ◽  
Haiyang Chen ◽  
Wei Zhang
Keyword(s):  
Developing Countries ◽  
Developing Country ◽  
Host Country ◽  
Practical Implication ◽  
Host Countries ◽  
African Countries ◽  
Control Variables ◽  
Content Type ◽  
The Impact ◽  
New Evidence

Purpose This paper aims to examine the impact of host country corruption on foreign direct investment (FDI) from China to developing countries in Africa. With the opposing arguments that corruption is detrimental to or instrumental in FDI and mixed empirical evidence, this paper contributes to the literature by providing new evidence on the issue. Additionally, little research has been done on the impact of corruption on FDI made by developing country multinationals to developing countries. This paper fills a void in this area. Design/methodology/approach Based on the published literature, as well as China and Africa contexts, the authors develop hypotheses that host countries with low corruption receive more FDI and resource-seeking investments weaken the relationship. The annual stock of Chinese FDI in 35 African countries, host country corruption data and other control variables from 2007 to 2015 are collected. Feasible generalized least squares models are used to test the hypotheses. Additional robustness tests are also conducted. Findings The findings support the hypotheses. Specifically, Chinese investors make more investments in host countries with low corruption except for resource-seeking investments in resource-rich host counties. The results are statistically significant accounting for various control variables. The results of the robustness tests show that the main findings are robust. Originality/value First, this study provides new evidence on the impact of corruption on FDI. Second, this study also fills a void by examining FDI from a developing country, China to other developing countries in Africa. Finally, this study also has a practical implication for Chinese multinationals investing in Africa.

scholarly journals Getting CFO on board – its impact on firm performance and earnings quality

2020 ◽  
Vol 33 (2) ◽  
pp. 435-454
Author(s):  
Lien Duong ◽  
John Evans ◽  
Thu Phuong Truong
Keyword(s):  
Firm Performance ◽  
Negative Impact ◽  
Earnings Quality ◽  
Least Square ◽  
Chief Financial Officers ◽  
Outside Directors ◽  
Content Type ◽  
Ordinary Least Square ◽  
Board Membership ◽  
The Impact

Purpose This paper aims to investigate the impact of Australian Chief Financial Officers (CFOs) as board insiders on firm performance and earnings quality with reference to agency theory and theory of friendly board. Design/methodology/approach The ordinary least square, two-stage least-squares and propensity score matching regressions are performed with various proxies for firm performance and accruals quality. Findings Firms with CFOs as board insiders experience significantly lower firm performance and earnings quality. In firms with powerful CEOs, the negative impact of CFO board membership on earnings quality is further magnified. Additionally, the negative impact of CFO board membership on firm values and earnings quality is only present in firms with bigger boards or firms with less outside directors. The findings are consistent with the agency perspective and in sharp contrast to the US market. Originality/value This is the first Australian study to examine the impact of CFO board membership on firm performance and earnings quality. The findings suggest that the monitoring of executives is best done by a small or independent board and that the insider board membership should be optimised.

Corporate innovation in a world of common ownership

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Cheng-Huei Chiao ◽  
Bin Qiu ◽  
Bin Wang
Keyword(s):  
Protective Role ◽  
Least Square ◽  
Content Type ◽  
Ordinary Least Square ◽  
Corporate Innovation ◽  
Common Ownership ◽  
Regulatory Perspective ◽  
Innovation Output ◽  
The Difference ◽  
The Impact

PurposeThe purpose of this paper is to examine the impact of common ownership on corporate innovation, including innovation input, innovation output and postgrant patents.Design/methodology/approachThis paper uses the ordinary least square model and the difference-in-differences technique to evaluate the effect of institutional interlocking shareholdings on the life cycle of corporate innovation.FindingsThe results show that common ownership impedes innovation measured by patent grants and citations through reduced R&D expenditures. However, common ownership protects postgrant patents by lowering the likelihood that a co-owned firm gets involved in patent litigation and by accelerating the settlement of lawsuits between co-owned firms.Practical implicationsFrom a regulatory perspective, common ownership in younger firms that rely heavily on R&D investment to produce innovation outputs is detrimental and needs to be regulated. However, common ownership in mature firms, which hold a big pool of patents or rely on acquiring patents to compete, is of less concern because of the protective role detected.Originality/valueThe paper provides a first comprehensive look into how same-industry common ownership affects innovation input, innovation output and postgrant patents. The research also reconciles the anticompetitive effect and the coordinative effect of common ownership documented in the literature.

scholarly journals Does banking sector performance promote economic growth? Case study of Jordanian commercial banks

2017 ◽  
Vol 15 (2) ◽  
pp. 55-64 ◽  
Author(s):  
Ayman Mansour Khalaf Alkhazaleh
Keyword(s):  
Economic Growth ◽  
Commercial Banks ◽  
Banking Sector ◽  
Positive Association ◽  
Political Stability ◽  
Commercial Banking ◽  
Least Square ◽  
Bank Performance ◽  
Significant Positive Association ◽  
Ordinary Least Square

Spurred by the need to evade possible parameter bias associated with earlier works, this study intended to address the subject of whether performance of commercial banking contributes to economic growth. With the aim of answering this question, the present review concentrates on analyzing the association between profitability, deposit and credit facilities as proxy for performance of commercial banks while gross domestic product proxies economic growth. The population of the study is characterized by the Jordanian banking industry; the study enclosed a period of six years from 2010 to 2015 constructed on the annual report of thirteen chosen banks. Using Ordinary Least Square, the regression outcomes found a significant positive association between measures of bank performance and economic growth. Findings demonstrate that measures of bank performance in particular profitability deposits credits have positive relationship with economic growth as measured by GDP. The empirical results suggest that the policy creators should make arrangements to augment and prompt the banking sector in Jordan on account of its key significance in making and advancing development of the economy. It additionally can be inferred that not only commercial banking performance but also other movables such as political stability and technology may assume essential part in the economic prosperity in Jordan.

An investigation of Confucius Institute’s effects on China’s OFDI via cultural difference and institutional quality

2020 ◽  
Vol 14 (3) ◽  
pp. 241-263
Author(s):  
Chensheng Xu ◽  
Feng Yao ◽  
Fan Zhang ◽  
Yonghong Wang
Keyword(s):  
Host Country ◽  
Cultural Difference ◽  
Institutional Quality ◽  
Cultural Exchange ◽  
Ordinary Least Squares ◽  
Study Strategies ◽  
Potential Interaction ◽  
Host Countries ◽  
Content Type ◽  
The Impact

Purpose This study aims to investigate the influence of the Confucius Institute (CI) on outward foreign direct investment (OFDI) by China and its potential interaction with cultural difference and institutional quality in host countries. Design/methodology/approach In the empirical study, the gravity model is adopted as the benchmark to investigate the effects of CI on China's OFDI using the ordinary least squares or Poisson Pseudo Maximum Likelihood estimators. Panel data on China's OFDI from 2004 to 2015 are used. Cultural difference and institutional quality are included explicitly as control variables to examine the effects of CI on China's OFDI. Findings CI has a significant positive effect on China’s OFDI, and this effect depends on the cultural difference and institutional quality of the host country. The impact of CI on China’s OFDI is more prominent in host countries with a smaller cultural difference or lower institutional quality. Originality/value CI is a comprehensive platform for foreign cultural exchange and signifies the rebirth of Confucianism in China. The present study shows that CI can stimulate the growth of China’s OFDI, with implications for other Asian countries influenced by Confucianism. Based on the results of the study, strategies for “Going Global” and encouraging economic growth based on cultural exchange and the recognition of host country heterogeneities are proposed.

Understanding IFRS adoption

2019 ◽  
Vol 20 (4) ◽  
pp. 543-570 ◽  
Author(s):  
Olfa Riahi ◽  
Walid Khoufi
Keyword(s):  
Logistic Regression ◽  
Least Square ◽  
Future Research ◽  
Behavioral Factors ◽  
Content Type ◽  
Ordinary Least Square ◽  
Ifrs Adoption ◽  
Starting Point ◽  
Behavioral Attribute ◽  
The Impact

Purpose The purpose of this paper is to discern the impact of main behavioral factors that could affect the decision of adopting IFRS in developing countries (DCs). In other words, this work looks to identify the different variables that are likely to influence the adoption of IFRS in these countries. Design/methodology/approach The methodological orientation of this research is to highlight and analyze the correlation between the cited factors and the IFRS adoption in DCs. Tested models are functions of logistic regression. To assess the parameters of these functions, the commonly used method is not that of ordinary least square but the maximum likelihood technique. In short, this study followed a hypothetical-deductive methodology by referring to the application of a logistic regression for each of the variables presumed to be analyzed. The authors implement this empirical model by using the neo-institutional approach and basing on a sample of 108 DCs. Findings The empirical results show that there exists a bidirectional causal relationship between the majority of the developed behavioral variables and the decision of whether adopting or unadopting IFRS by DCs. They also indicate through multivariate analysis that the selection of IFRS by DCs is primarily legitimized by institutional and social pressures (institutional isomorphism). Research limitations/implications It is essential to indicate that some limits might be assigned to the study. They are attached principally to the use of a dichotomous dependent variable which presents a restriction in a sense where the robust inequality at the level of the numbers of the countries of sub-samples can relatively weaken the findings. There are also few studies that jointly analyze the behavioral dimensions within a country and the adoption of IFRS. Institutional theory emanated from the research has proved useful in escaping this limit. Practical implications These empirical insights are of particular interest to local accounting standard setters of the selected countries since they can provide a better discernment of factors that can encourage the adoption of IFRS. Indeed, the research can be a reference for governments to better identify the economic, political and institutional obstacles that have an impact on behaviors which could compel countries to flee the adoption of IFRS. This paper will also be helpful for future research studying the links between human behavior and accounting in a general way. It should be noted that the results will be significant for future studies looking for real behavioral factors that drive a country to adopt an accounting framework. The studies will be able to use the empirical variables as a starting point and then they can extract new measures to identify the impact of behavior on decisions to adopt any standards. Originality/value At the present study, the authors strive to provide input to the literature by focusing on the determinants of the choice of an accounting practice in a DC reverberating to a new dimension which is the behavioral attribute.

Electronic fraud: an emerging cause of bank failure in Nigerian deposit money banks

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Folowosele Folarin Akinwale ◽  
Ikpefan Ochei Ailemen ◽  
Isibor Areghan
Keyword(s):  
Deposit Insurance ◽  
Descriptive Analysis ◽  
Secondary Data ◽  
Least Square Method ◽  
Least Square ◽  
Annual Reports ◽  
Content Type ◽  
Ordinary Least Square ◽  
Unethical Practices ◽  
The Impact

Purpose This study aims to review the degree to which fraud and other unethical practices especially in the digital space have affected the Nigerian banking industry both in the past and present, and how it will be a growing concern in the imminent future. The objective of the study was to examine the impact of electronic fraud on the quality of assets and return on assets of Nigerian deposit money banks. Design/methodology/approach The research used secondary data for the periods 2006 till 2018, which were collected from the Nigeria Deposit Insurance Corporation annual reports. Descriptive analysis and the ordinary least square method of regression analysis were used for data analysis. Findings Findings revealed that electronic fraud cases increased progressively over most of the years of study, which can be attributed to the increased bank products that are electronic-based. Originality/value Many of the reviewed literature examined electronic fraud and its impact on bank profitability but this study examined the cause of electronic fraud and what can be done to curtail it.

Impact of host country institutional context on subsidiary performance

2015 ◽  
Vol 53 (1) ◽  
pp. 198-220 ◽  
Author(s):  
Chinmay Pattnaik ◽  
SoonKyoo Choe ◽  
Deeksha Singh
Keyword(s):  
Labor Market ◽  
Host Country ◽  
Institutional Quality ◽  
New Institutional Economics ◽  
Institutional Distance ◽  
Host Countries ◽  
Subsidiary Performance ◽  
Content Type ◽  
The Impact

Purpose – The purpose of this paper is to examine the impact of quality of market supporting institutions (institutional quality) in host country and the similarities and differences of institutional quality between the home and host country (institutional distance) on subsidiary performance. Design/methodology/approach – Based on the conceptualization of new institutional economics, the authors divide quality of host country institutions into factor markets; product, capital, labor market and sociopolitical dimensions. The authors examine the impact of the quality these institutional dimensions in host countries and their difference between home and host country on the performance of 318 subsidiaries of 146 Korean listed manufacturing firms operating in 28 host countries from 2001 to 2006. Findings – The empirical results based on 1,129 observations show that institutional distance explains a significant variance in the subsidiary performance. In particular, the difference in quality of institutions in product, capital and labor market has negative impact on subsidiary performance. However, except for quality of regulation in labor market, host country institutional qualities do not significantly explain the variation in subsidiary performance. Originality/value – The evidence suggests that host country institutions matter substantially when considered with their relative similarity and difference with home country institutions. The impact of individual dimensions of institutions varies on subsidiary performance.

Political connections and audit report lag: Indonesian evidence

2018 ◽  
Vol 26 (1) ◽  
pp. 59-80 ◽  
Author(s):  
Ahsan Habib ◽  
Abdul Haris Muhammadi
Keyword(s):  
Large Body ◽  
Least Square ◽  
Political Connections ◽  
Audit Report ◽  
Financial Reports ◽  
Content Type ◽  
Related Party Transactions ◽  
Ordinary Least Square ◽  
Ordinary Least Square Regression ◽  
The Impact

Purpose This paper aims to investigate the association between political connections and the audit report lag and whether related party transactions moderate the association between the two. Design/methodology/approach An ordinary least square regression is estimated whereby audit report lag is regressed on political connections, related party transactions and the interaction between the two. Data on the number and amounts of RPTs are hand-collected from audited financial reports. A firm-year observation is politically connected if at least one large shareholder (controlling at least 10 per cent of the votes directly or indirectly) or board member or commissioner is a current or former Member of Parliament, a minister or head of local government or closely related to a politician or party. Findings Findings show that the audit report lag is relatively short for politically connected firms but increases when such firms conduct both operating and loan-type related party transactions. This suggests that auditors understand the incentives for, and the implications of, related party transactions and hence exert additional audit efforts in scrutinizing financial statements: activities that will increase the audit report lag. Originality/value Although a large body of empirical research exists on the determinants of audit report lag, none has examined the impact of political connections. This paper further contributes to the auditing literature by documenting auditors’ evaluation of related party transactions in a developing country.

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