Do firm characteristics of concentrated ownership firms affect dividend payout beyond traditional motivations?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Avinash Jawade
Keyword(s):  
Agency Cost ◽  
Growth Potential ◽  
Firm Characteristics ◽  
Data Set ◽  
Holistic View ◽  
Dividend Payout ◽  
Content Type ◽  
Concentrated Ownership ◽  
Indian Context ◽  
Best Fit

Purpose This study aims to analyze the influence of firm characteristics in dividend payout in a concentrated ownership setting. Design/methodology/approach This study is probably the first to use the lasso technique for model selection and error prediction in the study of dividend payout in India. The lasso method comprises subsampling the available data set and performing reiterative regressions on those samples to generate the model with the best fit. This study incorporates four different ways of performing lasso treatment to get the best fit among them. Findings This study analyzes the influence of firm characteristics on dividend payout in the Indian context and asserts that firms with growth potential and earnings volatility do not hesitate to cut dividends. This study does not find evidence for signaling, agency cost and life cycle theories in a concentrated ownership setting. Earnings is the single most important factor to have a positive influence on dividend, while excessively leveraged firms are restrictive of dividend payout. Taxation has a prominent role in altering the way firms pay dividend. Research limitations/implications The recent changes in buyback taxation offer another opportunity to test the reactive behavior of firms. Also, given the disregard for traditional motivations, further research needs to be done to determine if dividend adjustments (on the lower side) help enhance firm value or not. Practical implications This study may help investors view dividends in a proper perspective. Firms give importance to investments over dividends and thus investors need not dwell on dividend changes if firms fulfill their growth potential. Social implications It lends perspective to investors about dividend changes and its importance. Originality/value The methodology used for analysis is absolutely original in the literature pertaining to dividend policy in the Indian context. The literature is abundant with theories advocating or opposing the eminence of dividend payout; however, this study takes a holistic view of all influential dividend determinants in literature to understand dividend payout.

Different firm responses to the COVID-19 pandemic shocks: machine-learning evidence on the Vietnamese labor market

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Lam Hoang Viet Le ◽  
Toan Luu Duc Huynh ◽  
Bryan S. Weber ◽  
Bao Khac Quoc Nguyen
Keyword(s):  
Machine Learning ◽  
Labor Market ◽  
Large Scale ◽  
Government Support ◽  
Policy Implications ◽  
Machine Learning Techniques ◽  
Firm Characteristics ◽  
Data Set ◽  
Content Type ◽  
Firm Responses

PurposeThis paper aims to identify the disproportionate impacts of the COVID-19 pandemic on labor markets.Design/methodology/approachThe authors conduct a large-scale survey on 16,000 firms from 82 industries in Ho Chi Minh City, Vietnam, and analyze the data set by using different machine-learning methods.FindingsFirst, job loss and reduction in state-owned enterprises have been significantly larger than in other types of organizations. Second, employees of foreign direct investment enterprises suffer a significantly lower labor income than those of other groups. Third, the adverse effects of the COVID-19 pandemic on the labor market are heterogeneous across industries and geographies. Finally, firms with high revenue in 2019 are more likely to adopt preventive measures, including the reduction of labor forces. The authors also find a significant correlation between firms' revenue and labor reduction as traditional econometrics and machine-learning techniques suggest.Originality/valueThis study has two main policy implications. First, although government support through taxes has been provided, the authors highlight evidence that there may be some additional benefit from targeting firms that have characteristics associated with layoffs or other negative labor responses. Second, the authors provide information that shows which firm characteristics are associated with particular labor market responses such as layoffs, which may help target stimulus packages. Although the COVID-19 pandemic affects most industries and occupations, heterogeneous firm responses suggest that there could be several varieties of targeted policies-targeting firms that are likely to reduce labor forces or firms likely to face reduced revenue. In this paper, the authors outline several industries and firm characteristics which appear to more directly be reducing employee counts or having negative labor responses which may lead to more cost–effect stimulus.

Corporate political connections, agency costs and audit quality

2016 ◽  
Vol 24 (4) ◽  
pp. 357-374 ◽  
Author(s):  
Arifur Khan ◽  
Dessalegn Getie Mihret ◽  
Mohammad Badrul Muttakin
Keyword(s):  
Agency Costs ◽  
Audit Quality ◽  
Agency Cost ◽  
Political Connections ◽  
Political Connection ◽  
Data Set ◽  
Research Attention ◽  
Content Type ◽  
Big 4 ◽  
The Relationship

Purpose The effect of political connections of agency costs has attracted considerable research attention due to the increasing recognition of the fact that political connection influences corporate decisions and outcomes. This paper aims to explore the association between corporate political connections and agency cost and examine whether audit quality moderates this association. Design/methodology/approach A data set of Bangladeshi listed non-financial companies is used. A usable sample of 968 firm-year observations was drawn for the period from 2005 to 2013. Asset utilisation ratio, the interaction of Tobin’s Q and free cash flow and expense ratio are used as alternative proxies for agency costs; membership to Big 4 audit firms or local associates of Big 4 firms is used as a proxy for audit quality. Findings Results show that politically connected firms exhibit higher agency costs than their unconnected counterparts, and audit quality moderates the relationship between political connection and agency costs. The results of this paper suggest the importance of audit quality to mitigate agency problem in an emerging economic setting. Research limitations/implications The findings of this paper could be of interest to regulators wishing to focus regulatory effort on significant issues influencing stock market efficiency. The findings could also inform auditors in directing audit effort through a more complete assessment of risk and determining reasonable levels of audit fees. Finally, results could inform financial statement users to direct investments to firms with lower agency costs. Originality/value To the knowledge of the authors, this study is one of the first to explore the relationship between political connection and agency costs, and the moderating effect of audit quality of this relationship.

Knowledge management and social entrepreneurship education: lessons learned from an exploratory two-country study

2019 ◽  
Vol 23 (10) ◽  
pp. 1984-2006 ◽  
Author(s):  
George Thomas Solomon ◽  
Nawaf Alabduljader ◽  
Ravi S. Ramani
Keyword(s):  
Knowledge Management ◽  
Social Entrepreneurship ◽  
Social Issues ◽  
Entrepreneurship Education ◽  
Growth Potential ◽  
Data Set ◽  
Content Type ◽  
Course Offerings ◽  
The Future ◽  
The Usa

Purpose Social entrepreneurship courses are among the fastest growing category of course offerings to entrepreneurship students (Brock and Kim, 2011) because both high growth potential- and steady growth-social ventures can create value and help solve social issues effectively and efficiently. As knowledge disseminators, entrepreneurship educators are in prime position to develop the knowledge, skills and abilities of students, which, in turn, increases their intentions to start a social venture and their ability to manage and grow their venture. Students gain an understanding about the role of entrepreneurship in addressing social opportunities, as well as knowledge related to starting, managing and growing social entrepreneurship ventures. This paper is divided into three parts. First, the authors broadly discuss the concept of social entrepreneurship. Second, the authors present an overview of the field of social entrepreneurship education (SEE) and its evolution. Finally, the authors supplement this review with an analytical examination of SEE, in which the authors present results of a cross-country analysis survey of over 200 entrepreneurship education programs in the USA and Canada. This paper aims to present information about: student enrollment in social entrepreneurship courses in comparison to other entrepreneurship courses; the frequency of offering social entrepreneurship courses and programs compared to other entrepreneurship courses and programs; and future trends in SEE. The results revealed a strong demand for social entrepreneurship from students, room for improvement in terms of the supply of course offerings, and a strong belief in the continued growth of social entrepreneurship. The authors conclude with suggestions about the future of SEE. Design/methodology/approach Analysis of secondary data derived from the oldest and most-frequently cited sources regarding entrepreneurship education in the USA and a novel data set examining entrepreneurship education in Canada. Both data sets were collected using an online self-report survey. Findings Demand for SEE continues to rise in both the USA and Canada. However, course and program offerings have not kept pace. Prominent trends in social entrepreneurship such as cross-campus programs and addressing the evolving demographics of students in higher education institutions need more attention. Originality/value A cross-cultural study of SEE that provides a high-level view of the state of the field today. In addition, the paper outlines the potential of the field of knowledge management for the future of SEE.

Corporate governance and dividend policy in Sri Lankan firms: a data triangulation approach

2020 ◽  
Vol 12 (4) ◽  
pp. 543-560
Author(s):  
H. Kent Baker ◽  
Narayanage Jayantha Dewasiri ◽  
Sandaram P. Premaratne ◽  
Weerakoon Yatiwelle Koralalage
Keyword(s):  
Corporate Governance ◽  
Dividend Policy ◽  
Stock Exchange ◽  
Agency Cost ◽  
Free Cash Flow ◽  
Sri Lankan ◽  
Survey Analysis ◽  
Data Set ◽  
Market Data ◽  
Content Type

Purpose This paper aims to investigate the relation between corporate governance and dividend policy in Sri Lankan firms. Design/methodology/approach The data set consists of market data using 1,608 firm-year observations from 201 firms listed on the Colombo Stock Exchange and survey-based data from 151 respondents from the same 201 firms. The authors use data triangulation to examine the two approaches. Findings The analysis of the market data reveals that a significantly positive relation between corporate governance on both the propensity to pay dividends and dividend payout. Survey analysis confirms these findings. Triangulated evidence supports the outcome model of dividends, free cash flow and agency cost theories. Practical implications The findings are useful not only for management in developing suitable corporate governance practices and dividend policies for their firms but also for shareholders in evaluating both existing and new investments. Future researchers should investigate the same phenomenon in other contexts using triangulation approaches to confirm their findings. Originality/value This study is the first to use governance indices both in terms of survey and market-based data to examine the relation between corporate governance and dividend policy.

Shariah monitoring, agency cost and fund performance in Malaysian mutual funds

2020 ◽  
Vol 11 (5) ◽  
pp. 945-972
Author(s):  
Mohd Fikri Sofi ◽  
M.H. Yahya
Keyword(s):  
Corporate Governance ◽  
Empirical Evidence ◽  
Mutual Funds ◽  
Agency Costs ◽  
Fund Performance ◽  
Agency Cost ◽  
Advisory Panel ◽  
Data Set ◽  
Content Type ◽  
Shariah Governance

Purpose This paper aims to examine the effect of Shariah Advisory Panel (SAP) on both the level of agency cost and fund performance against conventional corporate governance, within corporate and Shariah governance settings, between Shariah and conventional mutual fund (CMF), in an emerging economy of Malaysia during the period 2008-2015. Design/methodology/approach Panel data regression is appropriately used within corporate governance research because of empirical issues of unobserved heterogeneity effects to avoid spurious evidence. The secondary data of 172 CMFs and 80 Shariah mutual funds are gathered hand-collected from annual reports and master prospectuses for the purpose of analysis between the period 2008 and 2015, generating 2,016 fund-year observations. Findings SAP is found to have a positive effect on agency costs. Consequently, it leads to empirical evidence that substantiates a negative and marginally significant association with fund performance when designated by accounting measure. Thus, the Shariah monitoring proxy is not a good mechanism for controlling agency costs inconsistent with performance maximizing (agency cost minimizing) outcomes. Research limitations/implications The unique data set of mutual funds used in this research may restrict the generalization of the findings unless mentioned and explained specifically the data characteristics. The single proxy for Shariah monitoring could be better off by having a list of different measures. Practical implications The paper highlights and suggests a consistent improvement in regulation that could be performed by policymakers pertaining to the non-trivial additional cost of implying Shariah governance. Originality/value This paper provides empirical evidence of the SAP effects from the view of a more complex monitoring structure in consequence of having an additional layer of governance, devoting on the trade-off between benefit and cost to shareholders.

Funding for start-ups in India: what shakes it?

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Saibal Ghosh
Keyword(s):  
Fixed Effects ◽  
Equity Financing ◽  
Data Set ◽  
Content Type ◽  
Factors Affecting ◽  
Indian Context ◽  
Key Factor ◽  
Salutary Effect ◽  
Fixed Effects Regression ◽  
Start Ups

Purpose Using a novel monthly data set, this study aims to examine the factors affecting the funding of Indian start-ups. Design/methodology/approach Given the panel structure of the data, the fixed effects regression technique has been used. Findings The findings reveal that years of operation is a key factor. Amongst others, angel investors and equity financing are the key drivers of startup financing. Government policy does not appear to have gained adequate traction, although the improvement in the business reform action by state governments has begun to exert a salutary effect. Practical implications From a policy standpoint, the study provides insights into what policies and practices can be exploited to streamline the funding bottlenecks affecting startups in the Indian context. Originality/value Notwithstanding being a country with a significant presence in the startup space, there are admittedly limited studies, which examine this issue for India. Viewed from this standpoint to the best of the knowledge, the analysis is one of the early studies to shed light on the factors driving the funding of startups in the Indian context.

scholarly journals From export entry to de-internationalisation through entrepreneurial attributes

2015 ◽  
Vol 22 (1) ◽  
pp. 21-37 ◽  
Author(s):  
Esteban Lafuente ◽  
Maria-Cristina Stoian ◽  
Josep Rialp
Keyword(s):  
International Development ◽  
Institutional Economics ◽  
Emerging Market ◽  
Business Failure ◽  
Data Set ◽  
Broad Perspective ◽  
Holistic View ◽  
Content Type ◽  
Export Decisions ◽  
Export Policy

Purpose – The purpose of this paper is to examine export behaviour from a broad perspective considering the influence of entrepreneurial attributes on export entry, export sustainability and de-internationalisation in Romanian small- and medium-sized enterprises (SMEs). Design/methodology/approach – Based on theoretical underpinnings from the resource-based view (RBV) of the firm and the Institutional Economics (IE) framework, the proposed hypotheses are tested with a rich survey data set of 319 Romanian SMEs. The data are analysed by means of a multinomial logit regression. Findings – The study reveals that exporting is not a single event and that variables commonly used to study export propensity linked to the entrepreneurial attributes have a differential influence over the export decisions. More concretely, export entry is positively impacted by the presence of management studies and an entrepreneurial team while sustainment in the international arena is strongly and positively influenced by decision-makers’ prior labour experience. De-internationalisation is explained by the entrepreneurs’ fear of business failure. The conclusions of this study point towards a holistic view of export policy making revealing relevant implications for SMEs’ internationalisation. Originality/value – This study enriches the international business literature by simultaneously examining different export decisions, namely export initiation, sustainability and de-internationalisation, at the SMEs’ level in a Central and Eastern European (CEE) emerging market. The paper also highlights the dynamic character of entrepreneurial resources and suggests that at distinct stages in the international development of a SME, different entrepreneurial attributes may play a significant role.

Board characteristics, ownership concentration and firms’ performance

2019 ◽  
Vol 8 (2) ◽  
pp. 146-165 ◽  
Author(s):  
Abdul Waheed ◽  
Qaisar Ali Malik
Keyword(s):  
Corporate Governance ◽  
Financial Sector ◽  
Resource Dependence Theory ◽  
Ownership Concentration ◽  
Independent Directors ◽  
Data Set ◽  
Content Type ◽  
Listed Firms ◽  
Board Characteristics ◽  
Concentrated Ownership

Purpose The purpose of this paper is to extend the understanding and application of interactive ties creating value through board characteristics, ownership concentration and firms’ performance by using a contingent theoretical-based framework based on the amalgamation of resource dependence theory, stakeholder theory, agency theory, stewardship theory and institutional theory in a country with weak political environment. Design/methodology/approach This study includes a sample of an unbalanced panel of 309 non-financial sector firms listed on Pakistan Stock Exchange (PSX) from 2005 to 2016. In order to address the issue of unobserved heterogeneity, simultaneous and dynamic endogeneity, the current study employed the technique Arellano–Bond dynamic panel data estimation under assumptions of GMM (Arellano–Bond, 1991). Findings The empirical results suggest that the presence of concentrated ownership moderates and helps to overcome the agency problems through different governance mechanisms (such as board size, independent directors and CEO duality). The larger boards are found to be beneficial whereas the higher representation of independent directors in the board is found to be detrimental for Pakistani firms. Research limitations/implications Limitations of the study are, first the current study has analyzed public-listed firms from the non-financial sector, and second the study has only focused on the financial aspect of the performance. The future research could include other proxies of corporate governance and ownership structure such as board diversity and meetings, audit committee and managerial ownership, etc. Practical implications The research also helps Pakistani policy makers in numerous ways. First, the current study confirms the monitoring and expropriation effect of ownership concentration in corporate governance and performance mechanism. Thus, the Security and Exchange Commission of Pakistan (SECP) should make such policies which protect the corporate board against the influence of concentrated ownership so that the interests of the minority shareholders are protected. Second, SECP should ensure that all the listed firms declare a comprehensive profile of their directors (such as academic qualification, age and experience) in their annual reports for the better understanding of the governance−performance mechanism. Originality/value The current study augments the emerging body of literature on corporate governance and firm performance mechanism through the amalgamation and testing of existing theories in an emerging economy like Pakistan by using wider and newer data set.

scholarly journals What factors influence firm perceptions of labour market constraints to growth in the MENA region?

2015 ◽  
Vol 36 (8) ◽  
pp. 1181-1206 ◽  
Author(s):  
Ali Fakih ◽  
Pascal L. Ghazalian
Keyword(s):  
Economic Growth ◽  
Labour Market ◽  
Empirical Literature ◽  
Firm Characteristics ◽  
Mena Region ◽  
Data Set ◽  
Content Type ◽  
Cross Country ◽  
Skill Shortages ◽  
Firm Development

Purpose – Labour market constraints constitute prominent obstacles to firm development and economic growth of countries located in the Middle East and North Africa (MENA) region. The purpose of this paper is to examine the implications of firm characteristics, national locations, and sectoral associations for the perceptions of firms concerning two basic labour market constraints: labour regulations and labour skill shortages. Design/methodology/approach – The empirical analysis is carried out using firm-level data set sourced from the World Bank’s Enterprise Surveys database. A bivariate probit estimator is used to account for potential correlations between the errors in the two labour market constraints’ equations. The authors implement overall estimations and comparative cross-country and cross-sector analyses, and use alternative estimation models. Findings – The empirical results reveal some important implications of firm characteristics (e.g. firm size, labour compositions) for firm perceptions of labour regulations and labour skill shortages. They also delineate important cross-country and cross-sector variations. The authors also find significant heterogeneity in the factors’ implications for the perceptions of firms belonging to different sectors and located in different MENA countries. Originality/value – Reforms in labour regulations and investment in human capital are important governmental policy interventions for promoting firm development and economic growth in the MENA region. This paper contributes to the empirical literature by analysing the factors influencing the perceptions of firms located in the MENA region concerning labour regulations and labour skill shortages. It provides policy-makers with information needed in the design of labour policies that attenuate the impacts of labour market constraints and enhance the performance of firms and the long-run economic growth.

Institutional distance, firm heterogeneities, and FDI location choice of EMNEs

2016 ◽  
Vol 7 (2) ◽  
pp. 192-215 ◽  
Author(s):  
Ying Zheng ◽  
Daying Yan ◽  
Bing Ren
Keyword(s):  
Value Chain ◽  
Location Choice ◽  
Value Added ◽  
Institutional Distance ◽  
Firm Level ◽  
Data Set ◽  
Positive Direction ◽  
Holistic View ◽  
Content Type ◽  
Strategic Intent

Purpose This paper aims to propose an integrated framework combining the cost-reduction rationale and the institution-leveraging rationale to explain how institutional distance, both formal and informal, influences emerging multinational enterprises (EMNEs)’ foreign direct investment (FDI) location choice. This paper also explores the moderating role of EMNEs’ FDI experience and strategic intent on value chain positioning as a reflection of firm heterogeneities, on the link between institutional distance and location choice. Design/methodology/approach This paper tests the hypotheses based on a firm-level longitudinal data set of FDI by Chinese EMNEs. The unique data are manually collected from Chinese companies listed on Shenzhen and Shanghai Stock Exchanges, composed of 250 FDI entries of 122 manufacturing firms from 2006 to 2010. The conditional logit model is used to estimate the proposed main effect and moderating effect. Findings Cultural distance does not deter Chinese EMNEs’ entrance in general, but firms investing in low value-added manufacturing subsidiaries are more likely to choose culturally similar countries than those investing in high value-added subsidiaries such as in upstream R&D and downstream marketing. Formal institutional distance with positive direction promotes Chinese EMNEs’ entrance, and this effect is enhanced when firms have less FDI experience and have the strategic intent to invest in high value-added subsidiaries. Originality/value This paper contributes to the current literature by identifying a holistic view of the institutional influences on FDI location choice of EMNEs and revealing how firm-level heterogeneities, particularly FDI experience and strategic intent of subsidiary value chain positioning, shape the boundary conditions of the institutional effects in different ways.

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