Moderating effect of IFRS adoption on FDI and conditional accounting conservatism in South Asia

2019 ◽  
Vol 9 (1) ◽  
pp. 51-74 ◽  
Author(s):  
Isuru Manawadu ◽  
Anna Che Azmi ◽  
Aslam Mohamed
Keyword(s):  
South Asia ◽  
Method Of Moments ◽  
Generalized Method Of Moments ◽  
Moderating Effect ◽  
Accounting Conservatism ◽  
Policy Makers ◽  
Content Type ◽  
Ifrs Adoption ◽  
New Evidence ◽  
The Relationship

PurposeThe purpose of this paper is to examine the moderating effect of IFRS adoption on the relationship between foreign direct investment (FDI) and conditional accounting conservatism in South Asia.Design/methodology/approachThis study uses the model developed by Basu (1997) and Ball and Shivakumar (2005) to examine the moderating effect of IFRS adoption on the relationship between FDI and conditional accounting conservatism. Data are tested by running panel generalized method of moments–2SLS estimation for the period of 2006–2015.FindingsA moderating effect of IFRS adoption was found on the relationship between FDI and conditional accounting conservatism in South Asia.Research limitations/implicationsThis study contributes to the literature by adding new evidence on the moderating effect of IFRS adoption on the relationship between FDI and conditional accounting conservatism.Originality/valueThe relationship between FDI and conditional accounting conservatism was moderated by IFRS adoption in South Asia. This finding provides new evidence to the literature as well as for the policy makers to consider on IFRS adoption.

CEOs’ accounting-based attributes and earnings management strategies under mandatory IFRS adoption

2018 ◽  
Vol 19 (4) ◽  
pp. 608-625 ◽  
Author(s):  
Amel Kouaib ◽  
Anis Jarboui ◽  
Khaireddine Mouakhar
Keyword(s):  
Earnings Management ◽  
Small Sample Size ◽  
Small Sample ◽  
Moderating Effect ◽  
Audit Committees ◽  
Content Type ◽  
Ifrs Adoption ◽  
Experience Education ◽  
The Impact ◽  
The Relationship

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.

Firm-level determinants of job creation by SMEs: Swedish empirical evidence

2015 ◽  
Vol 22 (4) ◽  
pp. 666-679 ◽  
Author(s):  
Darush Yazdanfar ◽  
Peter Öhman
Keyword(s):  
Method Of Moments ◽  
General Pattern ◽  
Generalized Method Of Moments ◽  
Job Creation ◽  
Financial Leverage ◽  
Firm Level ◽  
Data Set ◽  
Content Type ◽  
Industry Sectors ◽  
The Relationship

Purpose – Using a resource-based approach, the purpose of this paper is to examine the effects of the firm-level determinants financial leverage and liquidity on job creation at small and medium-sized enterprises (SMEs) in six industry sectors in Sweden. Design/methodology/approach – The generalized method of moments system model was used to analyse an extensive panel data set of 26,721 Swedish SMEs over the 2008-2011 period. Findings – The empirical results indicate that job creation is positively related to SMEs’ financial leverage and liquidity, and to their size and age. SMEs’ financial leverage and size are the most important firm-level determinants of job creation. Although there are differences between industry sectors, the results confirm the general pattern of the effect of financial leverage and liquidity on job creation. Research limitations/implications – Due to the importance of job creation for economic growth, the relationship between SMEs’ capital structure and job creation should be of interest to researchers, practitioners, and policymakers. In investigating the importance of financial leverage and liquidity to labour demand dynamics, this study analyses the firm-level factors that influence job creation by SMEs. Originality/value – Since there is limited empirical research focusing on this relationship at firm level in the context of SME, the current research aims at investigating the determinants of job creation at the firm level empirically.

Franchising and value signaling

2014 ◽  
Vol 28 (2) ◽  
pp. 105-115 ◽  
Author(s):  
Laura Lucia-Palacios ◽  
Victoria Bordonaba-Juste ◽  
Melih Madanoglu ◽  
Ilan Alon
Keyword(s):  
Method Of Moments ◽  
Support Services ◽  
Design Methodology ◽  
Generalized Method Of Moments ◽  
Financial Assistance ◽  
Content Type ◽  
Contractual Arrangements ◽  
Using Data ◽  
New Evidence ◽  
Area Development

Purpose – The purpose of this paper is to demonstrate how signaling support services and contractual arrangements that create value for incumbent franchisees can help to create value for the whole network by attracting prospective franchisees. Design/methodology/approach – Using data from Bond's Franchising Report the study analyses franchisors operating between 1994 and 2008 via a Generalized Method of Moments (GMM) model for an unbalanced panel of 2,474 franchisors. Findings – Training, financial assistance, sub-franchising and restrictions against passive ownership, and the use of area development agreements are found to be valuable for prospective franchisees. Experience and the number of company-owned and franchised units also attract prospective franchisees. Research limitations/implications – Our findings imply that not all value-creating services and contractual arrangements are interpreted in the same way by prospective franchisees. Franchisors should offer training and financial assistance to new franchisees in the early stages of a franchise. They should also allow sub-franchising but restrict passive ownership and offer the possibility for area development agreements as contractual arrangements to appeal to new franchisees. Franchisors should focus not only on expansion, but should view the chain in a holistic manner by sustaining and growing both franchised and company-owned units. Originality/value – The findings contribute to the franchising literature by providing new evidence on how offering and signaling some contractual arrangements and support services can help franchisors create value for incumbent franchisees and can attract new franchisees. Our research shows that value in franchising is created differently depending on whether the franchisees are incumbent or prospective.

How does working capital management affect the profitability of Indian companies?

2018 ◽  
Vol 15 (3) ◽  
pp. 347-366 ◽  
Author(s):  
Nufazil Altaf ◽  
Farooq Ahmad Shah
Keyword(s):  
Method Of Moments ◽  
Design Methodology ◽  
Generalized Method Of Moments ◽  
Capital Management ◽  
Working Capital ◽  
Working Capital Management ◽  
Content Type ◽  
Firm Profitability ◽  
Potential Problems ◽  
The Relationship

Purpose The purpose of this paper is to examine the relationship between working capital management (WCM) and firm profitability for a sample of 437 non-financial Indian companies. Design/methodology/approach The study is based on secondary financial data obtained from Capitaline database, pertaining to a period of ten years. This study employs two-step generalized method of moments (GMM) techniques to arrive at results. Findings The results of the study confirm the inverted U-shape relationship between WCM and firm profitability. In addition, the authors also found that the firms should complete its CCC on an average by 63 days. Originality/value Unlike prior studies that found a linear relationship between WCM and firm profitability. This study provides newer evidence for an inverted U-shaped relation between investment in working capital and firm profitability in India. In addition, this study uses GMM to control the potential problems of endogeneity.

scholarly journals Trustee board diversity, governance mechanisms, capital structure and performance in UK charities

2018 ◽  
Vol 18 (3) ◽  
pp. 478-508 ◽  
Author(s):  
Mohamed H. Elmagrhi ◽  
Collins G. Ntim ◽  
John Malagila ◽  
Samuel Fosu ◽  
Abongeh A. Tunyi
Keyword(s):  
Capital Structure ◽  
Least Squares ◽  
Fixed Effects ◽  
Ordinary Least Squares ◽  
Moderating Effect ◽  
Board Diversity ◽  
Content Type ◽  
The Impact ◽  
New Evidence ◽  
The Relationship

PurposeThis paper aims to investigate the association among trustee board diversity (TBD), corporate governance (CG), capital structure (CS) and financial performance (FP) by using a sample of UK charities. Specifically, the authors investigate the effect of TBD on CS and ascertain whether CG quality moderates the TBD–CS nexus. Additionally, the authors examine the impact of CS on FP and ascertain whether the CS–FP nexus is moderated by TBD and CG quality.Design/methodology/approachThe authors use a number of multivariate regression techniques, including ordinary least squares, fixed-effects, lagged-effects and two-stage least squares, to rigorously analyse the data and test the hypotheses.FindingsFirst, the authors find that trustee board gender diversity has a negative effect on CS, but this relationship holds only up to the point of having three women trustees. The authors find similar, but relatively weak, results for the presence of black, Asian and minority ethnic (BAME) trustees. Second, the authors find that the TBD–CS nexus depends on the quality of CG, with the relationship being stronger in charities with higher frequency of meetings, independent CG committee and larger trustee and audit firm size. Third, the authors find that CS structure has a positive effect on FP, but this is moderated by TBD and CG quality. The evidence is robust to different econometric models that adjust for alternative measures and endogeneities. The authors interpret the findings within explanations of a theoretical perspective that captures insights from different CG and CS theories.Originality/valueExisting studies that explore TBD, CG, CS and FP in charities are rare. This study distinctively attempts to address this empirical lacuna within the extant literature by providing four new insights with specific focus on UK charities. First, the authors provide new evidence on the relationship between TBD and CS. Second, the authors offer new evidence on the moderating effect of CG on the TBD-CS nexus. Third, the authors provide new evidence on the effect of CS on FP. Finally, the authors offer new evidence on the moderating effect of TBD and CG on the CS–FP nexus.

scholarly journals Income smoothing and firm value in a regulated market: the moderating effect of market risk

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Segun Abogun ◽  
Ezekiel Aiyenijo Adigbole ◽  
Titilope Esther Olorede
Keyword(s):  
Firm Value ◽  
Generalized Method Of Moments ◽  
Market Risk ◽  
Moderating Effect ◽  
Income Smoothing ◽  
Share Price ◽  
Security Market ◽  
Content Type ◽  
The Impact ◽  
The Relationship

PurposeThis study aims to examine the impact of income smoothing on the value of firms in a regulated security market, moderated by market risk. This is based on the prevalence of accounting scandals resulting in the collapse of firms which has been attributed to the opportunistic behaviors of managers.Design/methodology/approachThe ex post facto research design was employed, and as such, data were gathered from secondary sources. The quantitative approach was also used in the study. Furthermore, the system generalized method of moments (Blundell–Bond) panel estimation technique was used for analyzing the data. Income smoothing was measured using the accrual based methods, while firm value was measured using share price.FindingsThe study found that income smoothing has a negative significant impact on firm value. The study also revealed that market risk is a significant variable that defines the relationship between income smoothing and firm value.Originality/valueTesting the moderating effect of market risk on the relationship between income smoothing and firm value is unique to this study, particularly from a regulated security market and emerging economy.

Working capital management, firm performance and financial constraints

2017 ◽  
Vol 9 (3) ◽  
pp. 206-219 ◽  
Author(s):  
Nufazil Altaf ◽  
Farooq Shah
Keyword(s):  
Firm Performance ◽  
Method Of Moments ◽  
Financial Constraints ◽  
Generalized Method Of Moments ◽  
Capital Management ◽  
Working Capital ◽  
Working Capital Management ◽  
Content Type ◽  
The Impact ◽  
The Relationship

Purpose The purpose of this paper is to examine the relationship between working capital management and firm performance for a sample of 437 non-financial Indian companies. In addition, this paper examines the impact of financial constraints on working capital management-performance relationship. Design/methodology/approach This study is based on secondary financial data of 437 non-financial Indian companies obtained from CAPITALINE database, pertaining to a period of ten years. This study employs the two-step generalized method of moments (GMM) technique to arrive at results. Findings Results of the study confirm the inverted U-shape relationship between working capital management and firm performance. In addition, the authors also found that the firms that are likely to be more financially constrained have lower optimal working levels. Originality/value Unlike prior studies, which found a linear relationship between working capital management and firm performance, this study provides newer evidence for an inverted U-shaped relation between investment in working capital and firm performance in India. In addition, this study also tests the impact of financial constraints on this relationship. In contrast to the prior studies, this study uses GMM to control the potential problems of endogeneity.

Assessing the bank profitability in the MENA region

2014 ◽  
Vol 7 (3) ◽  
pp. 305-332 ◽  
Author(s):  
Rim Ben Selma Mokni ◽  
Houssem Rachdi
Keyword(s):  
Method Of Moments ◽  
North Africa ◽  
Banking Sector ◽  
Middle Eastern ◽  
Generalized Method Of Moments ◽  
Mena Region ◽  
Bank Profitability ◽  
Content Type ◽  
Conventional Banks ◽  
Econometric Technique

Purpose – Which of the banking stream is relatively more profitable in Middle Eastern and North Africa (MENA) region? Design/methodology/approach – The empirical study covers a sample of 15 conventional and 15 Islamic banks for the period 2002-2009.The authors estimate models using the generalized method of moments in system, of Blundell and Bond (1998). They exploit an up-to-date econometric technique which takes into consideration the issue of endogeneity of regressors to evaluate the comparative profitability of Islamic and conventional banks in the MENA region. Findings – Empirical analysis results show that the determinants’ significance varies between Islamic and conventional banks. Profitability seems to be quite persistent in the MENA region reflecting a higher degree of government intervention and may signal barriers to competition. Originality/value – The main interest is to develop a comprehensive model that integrates macroeconomic, industry-specific and bank-specific determinants. The paper makes comparison of the performance between two different banking systems in the MENA region. The authors consider a variable crisis to gain additional insights into the impacts of the financial crisis on MENA banking sector.

How does renqing influence purchase intentions in the Chinese business-to-business context?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Xun Zhang ◽  
Biao Xu ◽  
Jun Wu
Keyword(s):  
Positive Relationship ◽  
Purchase Intentions ◽  
Moderating Effect ◽  
Content Type ◽  
Mediating Role ◽  
Chinese Business ◽  
The Relationship ◽  
Business To Business ◽  
Positive Effect

Purpose This study aims to examine the relationship between renqing and purchase intentions and the mechanism of its impact in the Chinese business-to-business (B2B) context. Design/methodology/approach Renqing in China has played an important role in business relationships and has been receiving increased attention in both practice and theory. However, little is known about whether it can influence purchase intentions in a rational B2B condition. This research aims to examine the relationship between renqing and purchase intentions and the mechanism of its impact in the Chinese B2B context. Based on a survey of 1,010 industry buyers from 468 Chinese downstream buyer companies, the empirical findings indicate a positive relationship between renqing and purchase intentions and the mediating role of long-term orientation (LTO) for increasing purchase intentions. In addition, this study also finds that product involvement (PI) has a negative moderating effect on the relationship between renqing and purchase intentions, which means that renqing has a big positive effect on purchase intentions in low PI conditions. The results highlight several implications for B2B companies that sell products to Chinese enterprises. Findings The empirical findings indicate a positive relationship between renqing and purchase intentions and the mediating role of LTO for increasing purchase intentions. In addition, this study also finds that PI has a negative moderating effect on the relationship between renqing and purchase intentions, which means that renqing has a big positive effect on purchase intentions in low PI conditions. Originality/value First of all, by answering the research question, this study shows that renqing has a positive effect on purchase intentions in Chinese B2B context. Second, this study elucidates the influence mechanism of renqing on purchase intention and identifies the mediating effect of LTO and the moderating effect of PI.

Merton-type default risk and financial performance: the dynamic panel moderation of firm size

2022 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Muhammad Mushafiq ◽  
Syed Ahmad Sami ◽  
Muhammad Khalid Sohail ◽  
Muzammal Ilyas Sindhu
Keyword(s):  
Financial Performance ◽  
Firm Size ◽  
Default Risk ◽  
Banking Sector ◽  
Generalized Method Of Moments ◽  
Dynamic Panel Data ◽  
Dynamic Panel ◽  
Content Type ◽  
Nonfinancial Firms ◽  
The Relationship

PurposeThe main purpose of this study is to evaluate the probability of default and examine the relationship between default risk and financial performance, with dynamic panel moderation of firm size.Design/methodology/approachThis study utilizes a total of 1,500 firm-year observations from 2013 to 2018 using dynamic panel data approach of generalized method of moments to test the relationship between default risk and financial performance with the moderation effect of the firm size.FindingsThis study establishes the findings that default risk significantly impacts the financial performance. The relationship between distance-to-default (DD) and financial performance is positive, which means the relationship of the independent and dependent variable is inverse. Moreover, this study finds that the firm size is a significant positive moderator between DD and financial performance.Practical implicationsThis study provides new and useful insight into the literature on the relationship between default risk and financial performance. The results of this study provide investors and businesses related to nonfinancial firms in the Pakistan Stock Exchange (PSX) with significant default risk's impact on performance. This study finds, on average, the default probability in KSE ALL indexed companies is 6.12%.Originality/valueThe evidence of the default risk and financial performance on samples of nonfinancial firms has been minimal; mainly, it has been limited to the banking sector. Moreover, the existing studies have only catered the direct effect of only. This study fills that gap and evaluates this relationship in nonfinancial firms. This study also helps in the evaluation of Merton model's performance in the nonfinancial firms.

Sign in / Sign up

Export Citation Format

Share Document