The role of macroeconomic and institutional factors in creating corporate financial flexibility

2019 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Yasin Mahmood ◽  
Abdul Rashid ◽  
Faisal Rizwan ◽  
Maqsood Ahmad
Keyword(s):  
Financial Markets ◽  
Banking Sector ◽  
Institutional Environment ◽  
Equity Market ◽  
Institutional Factors ◽  
Financial Flexibility ◽  
Macroeconomic Factors ◽  
Content Type ◽  
Practical Implications

Purpose The purpose of this paper is to investigate the role of macroeconomic factors and the institutional environment on corporate financial flexibility (FF). Most studies focus on well-developed financial markets and very little is known about corporate FF in less developed financial markets and emerging markets (Buvanendra et al., 2016). The present study contributes to filling this gap in the literature and provides a more practical and functional framework to assess the FF of firms located in emerging economies. Design/methodology/approach The study used annual data for the period from 1991 to 2018. To examine the relationship between macroeconomic indicators, institutional environment and corporate FF, hypotheses were tested using an unbalanced panel logistic regression model. Findings The paper provides empirical insights into the relationships between macroeconomic factors, institutional environment and corporate FF. The results suggest a substantial change in FF across firms. Inflation, institutional quality and banking sector development negatively affect FF, while equity market development has a significant positive impact. Gross domestic product growth was found to be an insignificant predictor of FF. Practical implications This study has practical implications for corporate finance managers, regulators and investors, who must consider the significant factors of this study when making economic decisions. Finance managers can thus make appropriate decisions regarding capital structure and FF. Regulators of the banking sector can take appropriate measures to enhance competition and increase the development of the banking sector. Further, regulators of the equity market can enhance the development of the market to enhance the supply of capital. Originality/value This study adds to the literature showing that not only firm-specific factors affect corporate FF, but country-specific macroeconomic and institutional factors also have a significant effect. It also adds to the literature in the area of corporate FF; this field is in its initial stage, even in developed countries, while, in developing countries, little work has been done.

Do banking sector concentration, banking sector development and equity market development influence firms’ financial flexibility? Evidence from Pakistan

2019 ◽  
Vol 9 (1) ◽  
pp. 115-129 ◽  
Author(s):  
Yasin Mahmood ◽  
Maqsood Ahmad ◽  
Faisal Rizwan ◽  
Abdul Rashid
Keyword(s):  
Banking Sector ◽  
Developing Economies ◽  
Bank Lending ◽  
Equity Market ◽  
Debt Financing ◽  
Market Development ◽  
Financial Flexibility ◽  
Content Type ◽  
Banking Sector Development ◽  
The Impact

Purpose The purpose of this paper is to investigate the role of banking sector concentration, banking sector development and equity market development in corporate financial flexibility (FF). Design/methodology/approach The study used annual data for the period from 1991 to 2014 to examine the relationship between banking sector concentration, banking sector development, equity market development and corporate FF; hypotheses were tested using an unbalanced panel logistic regression model. Findings The paper provides empirical insights into the relationships between macroeconomic factors and corporate FF. The results suggest a substantial change in FF across firms; banking sector concentration discourages firms from borrowing, leading to the reduction of corporate borrowing, consequently an increase in FF can be observed. Banking sector development facilitates debt financing, hence reducing FF. Equity market development also has a positive impact on FF, as it is a substitute for debt financing. Practical implications The banking sector is an important provider of capital to business entities. A concentrated banking system discourages the provision of capital to firms; hence regulators have to take appropriate measures to resolve the problem of a reduced supply of capital. Banking sector development facilitates the provision of capital; further development may reduce bank lending rates to firms. Equity market development positively affects FF; hence, firm managers can use equity financing to resume FF. By following pecking order theory, managers use internal sources to finance value-maximizing investment projects, debt and issue shares as the last choice to get financing. When borrowing capacity is depleted, managers can obtain further funds by issuing stocks. Originality/value FF is an emergent area of research in advanced countries, while in developing economies, it is in the initial stages. Little work is available in this area to find the impact of banking sector concentration, banking sector development and equity market development, therefore, this study fills this gap in the existing literature.

Implementing corporate sustainability

2014 ◽  
Vol 5 (4) ◽  
pp. 378-404 ◽  
Author(s):  
Sarah Elena Windolph ◽  
Stefan Schaltegger ◽  
Christian Herzig
Keyword(s):  
Design Methodology ◽  
Corporate Sustainability ◽  
Positive Influence ◽  
Institutional Factors ◽  
Management Tools ◽  
Sustainability Management ◽  
Content Type ◽  
Practical Implications ◽  
Corporate Practice

Purpose – The purpose of this paper is to conduct an empirical analysis among large German companies to enhance the understanding of whether and which institutional factors influence the application of sustainability management tools. Stepping from corporate sustainability visions to implementation requires the application of management tools. A multitude of sustainability management tools have been proposed in literature. Research on their application in corporate practice is, however, scarce. Design/methodology/approach – Based on a survey of large German companies and publicly available data, this paper tests the influence of corporate sustainability networks, indices, standards and the awareness of sustainability management tools on their application in corporate practice. Findings – A particularly strong positive relation exists between awareness and application of sustainability management tools. Standards are also found to have a positive influence, while the influence of networks and indices is less strong. Our findings suggest that the application of sustainability management tools can be fostered through the promotion and increasing awareness of tools. Research limitations/implications – The analysis is based on a survey of large German companies. Factors of institutional isomorphism are tested. Further research is needed for small- and medium-sized enterprises (SMEs) and the influence of further aspects such as competitive and psychological factors. Practical implications – The findings of this paper suggest that the application of sustainability management tools can be fostered particularly well through increasing awareness and the active promotion of tools. Networks, indices and standard help increase awareness. Originality/value – The analysis unveils the role of institutional factors influencing the application sustainability management tools in corporate practice.

The role of institutional environment in building communication professionals' trust and satisfaction: a moderated multiple-mediation analysis

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Juan Meng ◽  
Bruce K. Berger
Keyword(s):  
Mediation Analysis ◽  
Institutional Environment ◽  
Institutional Factors ◽  
Job Engagement ◽  
Mediating Effects ◽  
Multiple Mediation ◽  
Content Type ◽  
Internal Stakeholders ◽  
Satisfaction Relationship

PurposeAs an important group of internal stakeholders, communication professionals carry the responsibilities to communicate with multiple groups of audience and foster trusted and satisfied relationships, both internally and externally. However, while busy with taking care of various stakeholders, the trust–satisfaction perception of communication professionals is underrated. Therefore, this paper aims to shift the investigation of the trust–satisfaction relationship from general employees to this unique group of communicators. By incorporating three key factors in an institutional environment (i.e. job engagement, leadership performance and organizational culture and support), the authors further investigate the moderated mediating effects of those factors on the trust–satisfaction relationship.Design/methodology/approachA national online survey of communication professionals working and living in the USA was designed to test the trust–satisfaction relationship. Surveyed communication professionals were asked to evaluate their own perceptions on various institutional factors. A conceptual moderated multiple-mediation structural model was proposed and tested to identify the impact of a complicated institutional environment on the perceived trust–satisfaction relationship.FindingsResults confirmed a strong positive impact of trust in organization on communication professionals' perceived job satisfaction. Results also confirmed the mediating effects of job engagement and communication leaders' performance on such a trust–satisfaction relationship. The authors' moderated mediation analysis indicated the important role of organizational culture in this complicated institutional environment and its indirect impact on the trust–satisfaction relationship.Originality/valueThe research explored several important factors within a complicated institutional environment and their potential impact on trust–satisfaction relationship. More significantly, the authors focused on one unique group of internal stakeholders, communication professionals, by analyzing how these institutional factors affect their very own perceptions. Even though communication professionals carry the responsibilities of acting as the communication and strategy facilitators on behalf of their organization, their perceptions on trust and satisfaction are equally important and deserve more attention. Results of our research promote the understanding of the complicated mechanisms within corporate communication for an enhanced trust–satisfaction relationship between communication professionals and their organization.

Incentives for complexity in financial regulation

2014 ◽  
Vol 15 (2) ◽  
pp. 102-109
Author(s):  
Tom Berglund
Keyword(s):  
Financial Markets ◽  
Design Methodology ◽  
Financial Regulation ◽  
Content Type ◽  
Resource Requirements ◽  
High Integrity ◽  
Explicit Discussion ◽  
Practical Implications ◽  
Taking Care

Purpose – The purpose of the paper is to find out which incentives are present for persons who are taking care of financial regulation in practice, and how these incentives impact their attitudes towards complexity of financial regulation. Design/methodology/approach – Based on recent contributions, reasons behind the increase in complexity observed in financial regulation are discussed. The role of actual incentives for the persons involved in setting up and enforcing regulation is detailed. Findings – Incentives for persons that impact drafting and implementation of financial regulation produce a bias towards excessive complexity. Additional complexity reduces the risk for being exposed to aggressive journalism and pressure from populist politicians. Increasing complexity of regulation will also benefit large players since the costs are largely fixed. Research limitations/implications – Careful studies measuring the costs of increased complexity in terms of increased resource requirements are needed. Practical implications – To reduce the bias towards excess complexity, a body consisting of knowledgeable persons with high integrity is required with an explicit mandate of scrutinising regulation in order to reduce, or at least not increase, complexity. This body must be empowered with sufficient discretion to tackle cases that lack precedents. Originality/value – The paper introduces an explicit discussion of existing incentives on the regulator side of financial markets to increase the understanding of the issues involved in the increased complexity that we observe in the rules that are implemented to guide behaviour in financial markets.

Institutional framework and entrepreneurial failure

2017 ◽  
Vol 24 (4) ◽  
pp. 716-732 ◽  
Author(s):  
Constantino García-Ramos ◽  
Nuria Gonzalez-Alvarez ◽  
Mariano Nieto
Keyword(s):  
Social Capital ◽  
Design Methodology ◽  
Institutional Environment ◽  
Institutional Framework ◽  
Fear Of Failure ◽  
Business Failure ◽  
Content Type ◽  
Regulatory Complexity ◽  
Practical Implications

Purpose The purpose of this paper is to analyse the influence of the institutional environment on entrepreneurial failure of certain characteristics, both formal (regulatory complexity and tax pressure) and informal (social capital and fear of failure). Design/methodology/approach The authors use data drawn from a panel of 37 countries over a period of nine years (2006-2014). Findings Results show that the greater the regulatory complexity, the higher the rate of entrepreneurial failure; also that the higher the country’s stock of social capital, the lower the rate of entrepreneurial failure. Finally, the greater the tax pressure, the lower the rate of business failure. Research limitations/implications Among the limitations of this paper is the difficulty of directly measuring the variables it analyses, making it necessary to use proxies. Practical implications This study has important practical implications for policymakers. First, the study provides important insights on how regulatory complexity positively affects entrepreneurial failure. In other words, the study represents a response to the call for the development of a better regulatory environment since this plays a significant role in entrepreneurial failure. Second, regarding tax pressure, the authors found that the greater the tax pressure, the lower the rate of entrepreneurial failure. In this respect, entrepreneurs, academics and policymakers should be aware of this result. Finally, this study also demonstrates the important role of social capital in preventing entrepreneurial failure. Originality/value In line with the findings, this study provides proof of how the institutional framework can have an influence on entrepreneurial failure.

The 1MDB case and the Swiss banking sector

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Fabian Maximilian Johannes Teichmann ◽  
Marie-Christin Falker
Keyword(s):  
Banking Sector ◽  
Methodological Approach ◽  
Due Diligence ◽  
Content Type ◽  
Banking Secrecy ◽  
Compliance Officers ◽  
High Level ◽  
Practical Implications

Purpose This case study highlights why and how the Swiss banking sector played a crucial role in the 1Malaysia Development Berhad (1MDB) corruption scandal. In particular, the paper illustrates how different actors in the Swiss financial sector neglected compliance guidelines and due diligence, thus effectively facilitating the laundering of misappropriated 1MDB funds. The purpose of this paper is to give bankers and compliance officers an overview of the methods money launderers use to circumvent compliance measures so that the Swiss banking sector can be protected more effectively from abuse. In addition, there is discussion whether current regulations, including banking secrecy, should be amended. Design/methodology/approach This paper used a content analysis methodological approach to collect data from media sources. Qualitative methods were used to analyze these sources. Findings The findings reveal that the Swiss banking sector played a major role in facilitating the siphoning and subsequent laundering of 1MDB funds by neglecting due diligence obligations. Practical implications This paper advocates a more consequential implementation of the existing anti-money laundering and corruption regulations. Social implications A reworking of the 1MDB scandal should be of interest to compliance professionals in the banking sector and citizens that have been negatively affected or are concerned by the involved high-level corruption. Originality/value This paper is the first of its kind to study the role of the Swiss banking sector in the 1MDB scandal.

The effect of board of directors and audit committee effectiveness on internet financial reporting

2016 ◽  
Vol 6 (4) ◽  
pp. 429-448 ◽  
Author(s):  
Hasan Bin-Ghanem ◽  
Akmalia M. Ariff
Keyword(s):  
Financial Markets ◽  
Board Of Directors ◽  
Financial Reporting ◽  
Audit Committee ◽  
Design Methodology ◽  
Content Type ◽  
Gcc Countries ◽  
Practical Implications ◽  
Disclosure Practice

Purpose The purpose of this paper is to examine the effect of board of directors and audit committee effectiveness on the level of internet financial reporting (IFR) disclosure practices. Design/methodology/approach The sample consists of 152 listed financial companies in Gulf Cooperation Council (GCC) countries. Based on agency theory, the authors posit that board of directors and audit committee effectiveness influence corporate IFR disclosure practice. Content analysis approach, based on an un-weighted index of 35 IFR items is used to measure the level of IFR disclosure. Thus, multiple regression analysis is utilized to analyse the results of this paper. Findings The results show that board of directors and audit committee effectiveness has significant influence on the level of IFR disclosure. Research limitations/implications One potential limitation of this paper is that the sample is drawn only from the GCC listed financial companies. Therefore, the findings cannot be generalized to other than the financial institutions. Practical implications The finding(s) highlights the importance of board of directors and audit committee characteristics in corporate governance and in the development of financial markets that foster IFR disclosure. Originality/value This paper extends previous IFR disclosure studies by considering both the role of board of directors and audit committee effectiveness score in examining IFR disclosure.

A “Learning from Action” workshop in Japan

2019 ◽  
Vol 40 (2) ◽  
pp. 77-83
Author(s):  
Robert Douglas Hinshelwood ◽  
Luca Mingarelli ◽  
Simona Masnata
Keyword(s):  
Far East ◽  
Opportunity To Learn ◽  
Content Type ◽  
Work Activities ◽  
Defensive Role ◽  
Feedback Data ◽  
Experiential Workshop ◽  
First Time ◽  
Practical Implications

Purpose Many people in severe mentally disturbed states do not use language or other symbolic media well or coherently. Therefore, the non-verbal medium needs to be understood by workers with such people. The “Learning from Action” experiential workshop was developed in order to provide an opportunity to learn about hidden messages in the relationships and roles occurring in activities. In August 2017, a workshop was run for the first time in Japan. The purpose of this paper is to report the experience and dynamics observed by the three consultants, who are here the authors of this paper. Design/methodology/approach After the workshop all the staff and members, including interpreters, were invited to give feedback. Findings Analysis of the feedback data showed certain important dynamics, concerning especially dependence, cultural defences and the defensive role of activity in a multicultural context. Research limitations/implications This is an initial experience to be followed up by later feedback and further workshops. Practical implications Workers awareness of non-verbal communication within the roles of work activities is a training possibility. It faces various resistances including the mental health assumptions of meaninglessness of any communication outside the verbal. Originality/value This is a method of training not widely used even in European countries, and is the first in a country in the far east.

scholarly journals Sinabung volcano: how culture shapes community resilience

2019 ◽  
Vol 28 (3) ◽  
pp. 290-303
Author(s):  
Marta Mori ◽  
Ronan McDermott ◽  
Saut Sagala ◽  
Yasmina Wulandari
Keyword(s):  
Structured Interviews ◽  
Content Type ◽  
Aid Dependency ◽  
Relief Operations ◽  
Long Term Impact ◽  
Cultural Experts ◽  
Practical Implications

Purpose The purpose of this paper is to explore how culture, including traditions and social structures, can influence resilience and how culturally sensitive relief operations can put affected people and their context at the core of any interventions. Design/methodology/approach A case study of the Mt Sinabung volcano area in Indonesia was undertaken. As part of the case study, an analysis of interventions was conducted, which was complemented by semi-structured interviews with Karo cultural experts and humanitarian organisations. Findings Culture influences the manner in which the Karo people react to volcano eruptions with varying implications for recovery. In addition, relief organisations which understand people’s actions through a cultural lens have better managed to tailor programs with long-term impact, thereby avoiding aid dependency. Practical implications Practical examples of disaster management activities that adequately account for the beneficiaries’ way of living prior to the eruptions are provided. Aid actors are provided with guidance concerning how to better tailor their activities in line with a cultural lens. Originality/value The study provides empirical grounding for claims concerning the role of culture in planning interventions in Indonesia and other similar contexts.

scholarly journals Coopetition in temporary contexts: examining swift trust and swift distrust in humanitarian operations

2020 ◽  
Vol 40 (9) ◽  
pp. 1449-1473 ◽  
Author(s):  
Sarah Schiffling ◽  
Claire Hannibal ◽  
Yiyi Fan ◽  
Matthew Tickle
Keyword(s):  
Design Methodology ◽  
Nonprofit Sector ◽  
Humanitarian Relief ◽  
Content Type ◽  
Trust Theory ◽  
Humanitarian Operations ◽  
Swift Trust ◽  
Limited Choice ◽  
Practical Implications

PurposeBy drawing on commitment-trust theory, we examine the role of swift trust and distrust in supporting coopetition under conditions of uncertainty and interdependence in the setting of humanitarian disaster relief organisations.Design/methodology/approachThis paper presents findings from case studies of 18 international humanitarian relief organisations based on 48 interviews and the analysis of publicly available documents.FindingsWe find that both swift trust and swift distrust support coopetition. As coopetition is simultaneous cooperation and competition, in this study we show how swift trust and swift distrust also occur simultaneously in coopetitive contexts.Research limitations/implicationsCoopetition as a strategic choice is well-researched in the private sector, yet has received less attention in the nonprofit sector, particularly in contexts that are shaped by interdependence and uncertainty. We show the importance of swift trust and swift distrust in coopetitive relationships by drawing on commitment-trust theory.Practical implicationsIn focusing on a competitive environment in which cooperation is essential, we find limited choice of coopetitive partners. Humanitarian relief organisations must often simply work with whichever other organisations are available. We highlight how trust and distrust are not opposite ends of a spectrum and detail how both contribute to coopetitive relationships.Originality/valueOur findings contribute to commitment-trust theory by explaining the important role of distrust in forging coopetitive relationships. Furthermore, we contribute to prior work on coopetition by focusing on an uncertain and interdependent nonprofit environment.

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