How does the globalization of firms affect corruption in developing economies?

2017 ◽  
Vol 21 (3) ◽  
pp. 256-270 ◽  
Author(s):  
Bokyeong Park ◽  
Onon Khanoi
Keyword(s):  
Foreign Investment ◽  
Developing Economies ◽  
Probit Model ◽  
Policy Implications ◽  
Firm Level ◽  
Content Type ◽  
Exporting Firms ◽  
Country Level ◽  
Level Data ◽  
Firm Level Data

Purpose The purpose of this paper is to examine how firms’ characteristics related to globalization affect their perception on corruption and actual experiences in bribery. It focuses on two indicators of globalization, namely, foreign ownership and export, and confines the scope to developing economies. Design/methodology/approach This analysis uses firm-level data with observation over 60,000 collected from 94 developing economies. The paper employs the probit model to examine how firm characteristics related to globalization affect corruption perception (CP) and incidence. Findings The empirical results reveal that for foreign-invested companies, there is a substantial discrepancy between the perceived corruption and the actual. Although they are involved in bribery as frequently as, or less frequently than local firms, they have greater CPs. Exporting firms are more frequently solicited for bribes, but the effect disappears when time spent for government contact is controlled for. Consequently, foreign investment partly contributes to the corruption control, but the export orientation of firms rather aggravates corruption due to regulative environments in developing economies. Practical implications This study provides policy implications that the corruption control through globalization requires streamlining of administration procedure related to foreign investment or trade and, thus, shortening time to deal with public officials. In addition, governments need to emphasize the importance of foreign investment and prevent unethical practices mediated by local partners. Originality/value The greatest novelty of this paper lies in using firm level data instead of country level unlike most of the literature. Moreover, the authors focus on firms only in developing economies. As well, unlike most studies using only perception indicators as the proxy of corruption, this paper considers both CPs and actual incidence, and compares each other.

Access to finance and firm innovation

2018 ◽  
Vol 10 (1) ◽  
pp. 73-94 ◽  
Author(s):  
MccPowell Sali Fombang ◽  
Charles Komla Adjasi
Keyword(s):  
South Africa ◽  
Trade Credit ◽  
Microfinance Institutions ◽  
African Countries ◽  
Access To Finance ◽  
Firm Level ◽  
Firm Innovation ◽  
Content Type ◽  
Level Data ◽  
Firm Level Data

Purpose The study aims to examine the importance of access to finance in firm innovation by using firm-level data from the World Bank enterprise survey (WBES) on selected African countries. Design/methodology/approach This study utilises firm-level data from the WBES database and computes aggregate innovation index by using multiple correspondent analysis. The authors then apply instrumental variable models (to control for possible endogeneity between innovation and finance) to assess the link between finance and innovation. Findings The research finds that finance in the form of overdraft overwhelmingly drives innovation in all selected countries – Cameroon, Kenya, Morocco, Nigeria and South Africa. Trade credit enhances innovation among firms in Nigeria, South Africa and Cameroon, while asset finance drives innovation amongst firms in Cameroon, Nigeria and South Africa. Practical implications Policy incentives such as tax breaks could be put in place for financial intermediaries that have shown proof of extending loans to financially constraint firms to enable them to innovate. Furthermore, different financial institutions such as microfinance institutions can be supported to increase credit to enterprises. Partnerships with organisations willing to fund firms and support start-ups should be encouraged. One of such support mechanisms could be specialised schemes such as a credit guarantee scheme to encourage and secure lending to enterprises to promote innovation. Originality/value This paper provides empirical insights into how finance enhances innovation in African enterprises. It also shows how different finance structures (overdraft, asset finance and trade credit) affect firm innovation in different African countries.

Determinants of foreign investment in Pakistan

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Safi Ullah ◽  
Muhammad Tahir
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Foreign Investment ◽  
Series Data ◽  
Portfolio Investment ◽  
Firm Level ◽  
Content Type ◽  
Foreign Portfolio Investment ◽  
Country Level ◽  
Depositary Receipts

PurposeThe purpose of this study is to examine the effect of country- and firm-specific factors on foreign investment in Pakistan.Design/methodology/approachThis study uses time-series data for country-level determinants and uses panel data for 100 listed non-financial companies selected based on market capitalisation from 2005 to 2015.FindingsFindings suggest that the stock market returns and liquidity of the country significantly positively influence the foreign portfolio investment (FPI) in Pakistan. Whereas, economic growth surprisingly is negatively related to foreign portfolio investment. In addition, findings reveal that firm size, financial leverage, dividend yield and global depositary receipts (GDR) have a positive impact on the total foreign investment at firm level. Further, foreign institutional investors prefer to invest in those firms that are large, pay high dividends and issue GDR. Furthermore, findings suggest that foreign direct investors tend to invest in firms that are financially leveraged and have low capital gain yield.Practical implicationsAt the country level, this study recommends that stock market performance, economic growth and foreign reserves of the country should be maintained and improved to attract FPI. At the firm level, this study recommends issuance of global depositary receipts and high dividend payouts for those firms that are interested in institutional investment in Pakistan.Originality/valueTo the best of authors' knowledge, this study is the first that examines the effect of firm-level factors along with country-level factors on foreign investment in Pakistan.

The determinants of ESG in the banking sector of MENA region: a trend or necessity?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Rim El Khoury ◽  
Nohade Nasrallah ◽  
Bahaaeddin Alareeni
Keyword(s):  
Banking Sector ◽  
Negative Impact ◽  
Positive Impact ◽  
Mena Region ◽  
Firm Level ◽  
Content Type ◽  
Country Level ◽  
Driving Mechanisms ◽  
Level Data ◽  
Level Of Economic Development

Purpose As reporting environmental, social and governance (ESG) information is not yet mandatory in all countries, it is intriguing to understand ESG’s underlying driving mechanisms. This study aims to investigate ESG determinants in the banking sector of the Middle East and North Africa countries. Design/methodology/approach The authors gather data for 38 listed banks for the period 2011–2019. The data used is threefold as follows: data related to ESG; firm-level; and country-level data. While ESG and firm’s level data are taken from Refinitiv, country-level data are extracted from the World Bank. Using panel regression, the authors test the effect of firm- and country-specific variables on the overall ESG score and its pillars. Findings Results indicate that banks’ ESG scores are negatively affected by performance and positively affected by size. The level of economic development exerts a negative impact on the environmental pillar while the social development exerts a positive impact on ESG and governance pillar. Corruption is the only country-level that gathers a homogenous effect on ESG scores. Finally, the three pillars follow heterogeneous patterns. Originality/value This study extends the scope of previous studies by introducing new country-level independent variables to contribute to the understanding of ESG antecedents.

A neglected input to production: the role of ICT-schooled employees in firm performance

2017 ◽  
Vol 38 (3) ◽  
pp. 373-391 ◽  
Author(s):  
Eva Hagsten ◽  
Anna Sabadash
Keyword(s):  
Data Sets ◽  
Firm Level ◽  
Broadband Internet ◽  
Content Type ◽  
Institutional Settings ◽  
Level Data ◽  
Firm Level Data ◽  
Information And Communication ◽  
Econometric Approach

Purpose The purpose of this paper is to broaden the perspective on how information and communication technology (ICT) relates to productivity by introducing a novel ICT variable: the share of ICT-schooled employees in firms, an intangible input often neglected or difficult to measure. Design/methodology/approach Based on a Cobb-Douglas production function specification, the association between the share of ICT-schooled employees and firm productivity is estimated by the use of unique comparable multi-linked firm-level data sets from statistical offices in six European countries for the period of 2001-2009. Findings There are indications that the share of ICT-schooled employees significantly and positively relates to productivity, and also that this relationship is generally more persistent than that of ICT intensity of firms, measured as the proportion of broadband internet-enabled employees. However, the strength of the association varies across countries and demonstrates that underlying factors, such as industry structure and institutional settings might be of importance too. Research limitations/implications Data features and the way to access harmonised firm-level data across countries affect the choice of econometric approach and output variable. Practical implications The results emphasise the importance of specific ICT skills in firms independently of where in the organisation the employee works. Originality/value Studies on associations between employees with specific (higher) education based on formal credentials and productivity are rare. Even more uncommon is the cross-country setting with harmonised data including general ICT intensity of firms.

Firm size and the political cycle premium

2015 ◽  
Vol 41 (10) ◽  
pp. 1077-1095
Author(s):  
Chris B Malone ◽  
Hamish Anderson ◽  
Peng Cheng
Keyword(s):  
New Zealand ◽  
Small Firms ◽  
The Political ◽  
Firm Level ◽  
Content Type ◽  
Level Data ◽  
Political Cycle ◽  
Firm Level Data ◽  
The Usa ◽  
Political Term

Purpose – The purpose of this paper is to use firm-level data to examine whether the political cycle differentially relates to small vs large firms in New Zealand; a country that operates a unicameral political system has a short three-year political term and a right-of-centre stock market premium exists. Design/methodology/approach – Using firm-level data from 1972 to 2010, the authors examine monthly returns during right-of-centre National governments and left-of-centre Labour governments. The authors apply Santa Clara and Valkanov (2003) regression analysis approach to examine the political cycle impact on firm returns. Findings – Like in the USA, New Zealand’s political cycle premium is driven by small firms; however, the results are opposite. In New Zealand, periods governed by the right of the political spectrum produce significantly higher stock returns than those from the left and this finding is primarily driven by small firms who perform particularly poorly under left-of-centre governments. Research limitations/implications – Small firms were relatively heavily affected by the move to an open, deregulated economy; they were also less able to cope with tight monetary conditions, and periods of sharply falling inflation. New Zealand’s three-year political term may encourage newly formed governments to implement relatively fast moving shifts in policy where a more reasoned and steady approach would be warranted. Originality/value – This is the first paper to use firm-level data outside of the USA to examine the political cycle impact.

scholarly journals US Environmental Regulation and FDI: Evidence from a Panel of US-Based Multinational Firms

2010 ◽  
Vol 2 (3) ◽  
pp. 158-189 ◽  
Author(s):  
Rema Hanna
Keyword(s):  
Foreign Investment ◽  
Multinational Firms ◽  
Clean Air Act ◽  
Econometric Models ◽  
Substantial Variation ◽  
Firm Level ◽  
Level Data ◽  
Regulated Firms ◽  
Firm Level Data ◽  
Clean Air

This paper measures the response of US-based multinationals to the Clean Air Act Amendments (CAAA). Using a panel of firm-level data over the period 1966–1999, I estimate the effect of regulation on a multinational's foreign production decisions. The CAAA induced substantial variation in the degree of regulation faced by firms, allowing for the estimation of econometric models that control for firm-specific characteristics and industrial trends. I find that the CAAA caused regulated multinational firms to increase their foreign assets by 5.3 percent and their foreign output by 9 percent. Heavily regulated firms did not disproportionately increase foreign investment in developing countries. (JEL F23, K32, L51, Q52, Q53, Q58)

scholarly journals Are firms paying more for performance?

2016 ◽  
Vol 37 (2) ◽  
pp. 323-343 ◽  
Author(s):  
John Forth ◽  
Alex Bryson ◽  
Lucy Stokes
Keyword(s):  
Economic Importance ◽  
Firm Level ◽  
Wage Bill ◽  
Content Type ◽  
Level Data ◽  
Bonus Payments ◽  
Firm Level Data ◽  
Nationally Representative ◽  
Substantial Change ◽  
Two Sectors

Purpose – The purpose of this paper is to investigate changes in the economic importance of performance-related-pay (PRP) in Britain through the 2000s using firm-level data. Design/methodology/approach – The authors utilise nationally representative, monthly data on the total wage bill and employment of around 8,500 firms. Using these data, the authors decompose the share of the total economy-wide wage bill accounted for by bonuses into the shares of employment in the PRP and non-PRP sectors, the ratio of base pay between the two sectors, and the gearing of bonus payments to base pay within the PRP sector. Findings – The growth in the economic importance of bonuses in Britain in the mid-2000s – and subsequent fluctuations since the onset of recession in 2008 – can be almost entirely explained by changes in the gearing of bonus to base pay within the PRP sector. There has been no substantial change in the percentage of employment accounted for by PRP firms; if anything it has fallen over time. Furthermore, movements in the gearing of bonuses to base pay in the economy are heavily influenced by changes in Finance: a sector which accounts for a large proportion of all bonus payments in Britain. Research limitations/implications – The paper demonstrates the importance of understanding further how firms decide the size of bonus payments in a given period. Originality/value – This is the first paper to present monthly firm-level data for Britain on the incidence and size of bonus payments in the 2000s.

Crime, corruption and the role of institutions

2014 ◽  
Vol 7 (1) ◽  
pp. 73-95 ◽  
Author(s):  
Ishita Chatterjee ◽  
Ranjan Ray
Keyword(s):  
Negative Impact ◽  
Probit Model ◽  
Data Sets ◽  
Older Individuals ◽  
Crime Victim ◽  
Data Set ◽  
Content Type ◽  
Country Level ◽  
Level Data

Purpose – There have been very few attempts in the economics literature to empirically study the link between criminal and corrupt behaviour due to lack of data sets on simultaneous information on both types of illegitimate activities. The paper aims to discuss these issues. Design/methodology/approach – The present study uses a large cross-country data set containing individual responses to questions on crime and corruption along with information on the respondents' characteristics. These micro-level data are supplemented by country-level macro and institutional indicators. A methodological contribution of this study is the estimation of an ordered probit model based on outcomes defined as combinations of crime and bribe victimisation. Findings – The authors find that: a crime victim is more likely to face bribe demands, males are more likely victims of corruption while females are of serious crime, older individuals and those living in the smaller towns are less exposed to crime and corruption, increasing levels of income and education increase the likelihood of crime and bribe victimisation to be reported and a stronger legal system and a happier society reduce both crime and corruption. However, the authors find no evidence of a strong and uniformly negative impact of either crime or corruption on a country's growth rate. Originality/value – This paper is, to the authors' knowledge, the first in the literature to explore the nexus between crime and corruption, their magnitudes, determinants and their effects on growth rates.

Estimations of business exposure to corruption in Malaysia

2020 ◽  
Vol 27 (4) ◽  
pp. 1273-1287
Author(s):  
Selamah Abdullah Yusof ◽  
Mohd Nahar Mohd Arshad
Keyword(s):  
Design Methodology ◽  
Public Officials ◽  
Firm Level ◽  
Content Type ◽  
Business Operations ◽  
The World Bank ◽  
Level Data ◽  
Firm Level Data ◽  
Binary Logit ◽  
Enterprise Survey

Purpose This study aims to investigate the level of business exposure to corruption in Malaysia. The authors estimate the effect of bribe requests from business establishments by public officials and identify the level of vulnerability of businesses to such requests. Design/methodology/approach This study uses firm-level data from the World Bank Malaysia Enterprise Survey 2014. The analyses are based on binary logit, tobit and generalized ordered logit regressions. Findings The authors find that one-fifth of firms applying for construction permits or had visits or meetings with tax officials were expected to pay bribes. Firms’ encounters with corruption were higher still when applying for import (29%) or operating license (24.7%). About 40% of the firms considered corruption an obstacle to their business operations to the degree of moderate, major and even severe. On average, 11% of firms’ total annual sales were apportioned for informal gifts or “speed money.” The authors also find that larger, younger and women-managed/owned companies were more likely to be targeted for bribe payments. The amount of bribe paid by foreign-owned firms was higher than the local firms. Manufacturing firms had lower incidences of bribe requests, but the amount paid was higher than services-related companies. Firms run or owned by women also, on average, paid a higher amount bribe. Social implications These findings should be taken into consideration in the efforts to eradicate corruption affecting businesses in Malaysia. Originality/value This study is unique in the sense that it is based on firm-level data for a Malaysian case.

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