International evidence on the determinants of trade credit provision

2019 ◽  
Vol 45 (4) ◽  
pp. 484-498
Author(s):  
Matt Hill ◽  
Katerina Hill ◽  
Lorenzo Preve ◽  
Virginia Sarria-Allende
Keyword(s):  
Trade Credit ◽  
Publicly Traded ◽  
Firm Level ◽  
Data Set ◽  
Content Type ◽  
Macroeconomic Conditions ◽  
Country Level ◽  
Geographical Regions ◽  
Financial Credit ◽  
Pooled Sample

PurposeThe purpose of this paper is to examine whether the level of financial credit available in a country influences the level of trade credit provided to customers.Design/methodology/approachThe authors examine the association between the supply of trade credit and the availability of country-level private financial credit using multivariate regression models that account for country-level heterogeneity, macroeconomic conditions and firm-specific characteristics. The data set is a pooled sample of publicly traded firms incorporated in 66 countries.FindingsSupporting the re-distributional view of trade credit, robust results suggest that suppliers incorporated in countries with increased access to financial credit provide increased trade credit to their customers. Further results indicate significant differences in trade credit usage across geographical regions. Consistent with existing research using samples of US firms, the use of trade credit is correlated with firm-level measures of financial constraints and product market dynamics.Originality/valueThe authors provide one of the first studies to examine differences in trade credit extension across a large number of countries.

scholarly journals The impact of corruption on analyst coverage

2019 ◽  
Vol 34 (3) ◽  
pp. 305-323
Author(s):  
Omaima Hassan ◽  
Gianluigi Giorgioni
Keyword(s):  
Negative Binomial ◽  
Firm Level ◽  
Data Set ◽  
Endogeneity Bias ◽  
Analyst Coverage ◽  
Content Type ◽  
Country Level ◽  
Data Limitations ◽  
Potential Benefits ◽  
The Impact

PurposeThis study aims to investigate the impact of country-level corruption and firms’ anti-bribery policies on analyst coverage. Analyst coverage has been identified as a powerful tool to detect fraud and should equally act as a possible tool to reduce corruption.Design/methodology/approachThis study used a negative binomial count regression method on a longitudinal data set of a sample of S&P Global 1200 companies for the years 2010-2015. To control for potential endogeneity bias and improve the reliability of the estimation, both country-level corruption and firms’ anti-bribery policies variables were instrumented.FindingsAfter controlling potential endogeneity bias, the results show that the adoption of anti-bribery policies at firm level attracts more analysts to follow a firm. The results for corruption at country level show that analyst coverage increases in less corrupted countries indicating that the costs of corruption exceed its potential benefits. When the variables corruption at country level and anti-bribery policies are interacted, the relationship is positive and highly significant.Practical implicationsGiven the potential important role played by anti-corruption measures, firms are encouraged to adopt them to reduce the incidence of corruption and to increase analyst coverage, which will reinforce the benign effect of monitoring.Originality/valueAlthough the literature on corruption at the country level is rich, it is geared towards the determinants of corruption in contrast to its consequences, and fewer studies have focused on the impact of corruption at firm level because of data limitations. This paper addresses this gap and contributes to the literature on the consequences of corruption at firm level.

Minoritynationals

2015 ◽  
Vol 23 (4) ◽  
pp. 277-305 ◽  
Author(s):  
Cormac Mullen ◽  
Jenny Berrill
Keyword(s):  
Multinational Corporations ◽  
Longitudinal Analysis ◽  
Oil And Gas ◽  
Firm Level ◽  
Data Set ◽  
Content Type ◽  
Country Level ◽  
Global Companies ◽  
Novel Method ◽  
Home Region

Purpose – This paper aims to conduct a longitudinal analysis of the patterns of internationalisation of multinational corporations and provide a measure of their degree of globalisation at the firm-level. There is much debate in the literature on the regional nature of the globalisation of multinational corporations (Rugman and Oh, 2013). Design/methodology/approach – The authors use firm-level sales data to analyse the location of sales and patterns of globalisation of 1,276 companies across ten countries and ten industries from 1998-2012. Findings – The results show that while international sales are rising and the proportion of home region-oriented firms is falling, the majority of sales of the companies in our data set continues to be in the Triad, with little growth in non-Triad regions. The authors find one common theme for the majority of countries, an increase in sales to Asia yet concentrated in just four industries, financials, basic materials, oil and gas and technology. Despite an increase in the percentage of host-region, bi-regional and global companies, 62.6 per cent of the firms have not changed multinational classification over the 15-year period, 43.1 per cent have not expanded out of their home region and 16.4 per cent have not expanded out of their home market. The authors find some evidence of liabilities of interregional foreignness at the industry and country level. The authors show regional sales are moving towards matching global economic activity for the 50 most globalised firms in our study but less so for the other firms in our sample. Overall, the results show that the majority of the growth in internationalisation comes from a small minority of firms. Originality/value – The authors make several advances across the literature on internationalisation, including a more in-depth longitudinal analysis of firm-level multinationality than exists to date and a novel method of measuring firm-level globalisation.

Does board gender diversity affect the transparency of corporate political disclosure?

2018 ◽  
Vol 26 (4) ◽  
pp. 444-463 ◽  
Author(s):  
D.G. DeBoskey ◽  
Yan Luo ◽  
Jeff Wang
Keyword(s):  
Corporate Governance ◽  
Voluntary Disclosure ◽  
Gender Diversity ◽  
Political Activity ◽  
Political Contributions ◽  
Firm Level ◽  
Data Set ◽  
Content Type ◽  
Ethics Research ◽  
Board Gender Diversity

Purpose The purpose of this paper is to examine the influence of board gender diversity on the transparency of corporate political disclosure (CPD). Design/methodology/approach Two empirical proxies, CPD transparency and policy transparency, are constructed from a data set jointly produced by the Center of Political Activity and the Carol and Lawrence Zicklin Center for Business Ethics Research. The CPD transparency score measures the level of transparency in voluntary corporate disclosure of the amount of political contributions and the identity of the recipients as well as the titles and names of the executives who authorize the political spending. The policy transparency score measures the level of transparency in the voluntary disclosure of the policies governing corporate political spending. Board gender diversity is measured by the percentage of women on the board of directors. Findings Higher proportions of female directors are associated with more transparent disclosure of political contributions after controlling for a set of corporate governance and firm-level variables. Originality/value This study is the first to examine whether and how gender-diversified boards enhance the transparency of CPD. It contributes to the literature by providing evidence that gender-diversified boards enhance corporate governance.

Exploring innovation creation across rural and urban firms

2018 ◽  
Vol 7 (4) ◽  
pp. 357-376 ◽  
Author(s):  
Giri Aryal ◽  
John Mann ◽  
Scott Loveridge ◽  
Satish Joshi
Keyword(s):  
National Survey ◽  
Negative Binomial ◽  
Secondary Data ◽  
Firm Level ◽  
Data Set ◽  
Content Type ◽  
Rural And Urban ◽  
Wide Range ◽  
Rural Firms ◽  
Urban Firms

Purpose The innovation creation literature primarily focuses on urban firms/regions or relies heavily on these data; less studied are rural firms and areas in this regard. The purpose of this paper is to employ a new firm-level data set, national in scale, and analyze characteristics that potentially influence innovation creation across rural and urban firms. Design/methodology/approach The authors use the 2014 National Survey of Business Competitiveness (NSBC) covering multiple firm-level variables related to innovation creation combined with secondary data reflecting the regional business and innovative environments where these firms operate. The number of patent applications filed by these firms measures their innovation creation, and the paper employs a negative binomial regression estimation for analysis. Findings After controlling for industry, county and state factors, rural and urban firms differ in their innovation creation characteristics and behaviors, suggesting that urban firms capitalize on their resources better than rural firms. Other major findings of the paper provide evidence that: first, for rural firms, the influence of university R&D is relevant to innovation creation, but their perception of university-provided information is not significant; and second, rural firms that are willing to try, but fail, in terms of innovation creation have a slight advantage over other rural firms less willing to take on the risk. Originality/value This paper is one of the first to analyze the 2014 NSBC, a firm-level national survey covering a wide range of innovation-related variables. The authors combine it with other regional secondary data, and use appropriate analytical modeling to provide empirical evidence of influencing factors on innovation creation across rural and urban firms.

The effect of industry association on firm innovation in Chinese private ventures

2019 ◽  
Vol 57 (9) ◽  
pp. 2414-2435
Author(s):  
Wenge Zhang ◽  
Jun Li ◽  
Yiyuan Mai
Keyword(s):  
Moderating Effects ◽  
Firm Level ◽  
Firm Innovation ◽  
Data Set ◽  
Industry Association ◽  
Content Type ◽  
Emerging Industries ◽  
Practical Implications ◽  
Firm Learning

Purpose The purpose of this paper is to examine the relationship between industry association membership and firm innovation in Chinese private ventures. A secondary objective is to investigate potential moderating effects of firm learning practices and founder characteristics on the above relationship, and to draw out implications for policymakers and practitioners. Design/methodology/approach The paper utilizes data from a sample of 567 Chinese entrepreneurial firms operating in 9 designated emerging industries. Hierarchical regression models were employed to analyze the effect of industry association membership on firm innovation, and the potential moderating effects. A 2SLS procedure was adopted to control for potential endogeneity issue. Supplemental analyses were conducted to ensure the robustness of the findings. Findings The paper provides empirical insights about how industry association membership, along with firm learning practice and founder leadership, affect firm innovation in Chinese private ventures in emerging industries. It suggests that industry association membership positively affects firm innovation. Further, there is a three-way interaction effect of industry association membership, learning practice and founder power on innovation. Research limitations/implications Due to the design of the data set, there are some limitations. First, the study only considered whether a firm belongs to an industry association, but not the nature of such membership (length, firm status in the association, etc.). Second, the cross-sectional design may limit the power of the study to make casual implications about the tested relationships. Practical implications The paper provides important practical implications for policymakers and entrepreneurs in China. In general, the results suggest that private ventures pursuing innovation in emerging industries can benefit from industry associations, and entrepreneurs shall actively engage in firm-level and personal-level learning. For policymakers, the study suggests that to foster innovation in an emerging industry, special attention shall be paid to building necessary institutional support to develop and to strengthen the role of industry association in the industry. Originality/value This paper fulfills an important gap in the literature in that it is one of the first, which investigates the role of the industry association in firm innovation, especially in a non-western context. This paper provides new insights into the role of industry association and firm innovation in an under-researched developing economy context.

Revisiting the impact of organized labor on corporate bottom lines

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Dmytro Osiichuk ◽  
Paweł Mielcarz ◽  
Julia Kavalenka
Keyword(s):  
Financial Performance ◽  
Organized Labor ◽  
Corporate Financial Performance ◽  
Firm Level ◽  
Data Set ◽  
Content Type ◽  
International Panel ◽  
Transmission Mechanisms ◽  
Credible Threat ◽  
The Impact

Purpose Relying on an international panel data set, the purpose of this paper is to quantify the economic impact of labor unionization on corporate financial performance. Design/methodology/approach Static panel regression analysis is performed for a firm-level multinational data set to elucidate the postulated empirical relationships between employee unionization and corporate performance. The transmission mechanisms intermediating the studied effects are discussed and operationalized. Findings The empirical evidence demonstrates that firms with a higher level of employee unionization spend more on wages and labor-related expenses. The concomitant downside of higher resource extraction by unions is a lower rate of net employment creation and a higher possibility of redundancy layoffs. Originality/value Overall, the authors demonstrate that by creating a credible threat of employee disobedience manifested through strikes and internal wage disputes, labor unions remain an effective mechanism of increasing employees’ bargaining power. Despite the discovered weak negative associative link between the degree of unionization and corporate financial performance, the authors perceive the overall evidence to be inconclusive on this matter.

Do generous trade credit terms provide a competitive edge?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Dmytro Osiichuk ◽  
Paweł Wnuczak
Keyword(s):  
Product Differentiation ◽  
Trade Credit ◽  
Negative Relationship ◽  
Growth Enhancement ◽  
Firm Level ◽  
Supplier Relationships ◽  
Content Type ◽  
Segmented Markets ◽  
Industry Competition ◽  
Dynamic Panel Regression

PurposeThe authors document a persistent negative link between contemporaneous trade credit provision and subsequent firm-level operating performance.Design/methodology/approachTextual analysis of firms' profile descriptions is used to study the role of market segmentation and product differentiation in intermediating the nexus between trade credit and corporate performance. The paper relies on dynamic panel regression modeling to investigate the postulated empirical relationships. This approach allows to address endogeneity issues and to test a number of different model specifications.FindingsDespite fueling short-term sales growth, the more generous trade credit terms are found to be associated with lower post hoc margins and declining overall business profitability. The market share is not affected by firms' proclivity to provide trade credit suggesting that the latter may not be effectively used as a long-term growth enhancement strategy. Firms' similarity to their competitors is found to play a salient role in altering the magnitude of the discovered negative relationship.Originality/valueThe authors find that the intensity of intra-industry competition measured by firms' similarity to their competitors magnifies the discovered negative trade credit-performance nexus. Therefore, generous trade credit may play a more important role in solidifying client–supplier relationships on the more segmented markets with a higher degree of product differentiation.

Access to skilled labor, institutions and firm performance in developing countries

2019 ◽  
Vol 40 (2) ◽  
pp. 328-355 ◽  
Author(s):  
Charilaos Mertzanis ◽  
Mona Said
Keyword(s):  
Developing Countries ◽  
Firm Performance ◽  
Technological Progress ◽  
Skilled Labor ◽  
Firm Level ◽  
Content Type ◽  
Country Level ◽  
Wide Range ◽  
Development Institutions

Purpose The purpose of this paper is to examine the role of access to skilled labor in explaining firms’ sales growth subject to the controlling influence of a wide range of firm-specific characteristics and country-level economic and non-economic factors. Design/methodology/approach The analysis uses a consistent and large firm-level data set from the World Bank’s Enterprise Surveys that includes 138 developing countries. An instrumental variables model with a GMM estimator is used for estimating the impact of access to skilled labor on firm performance. In order to obtain more robust estimators, the analysis introduces country-level controls reflecting the influence of economic and institutional factors, such as economic and financial development, institutional governance, education and technological progress. Findings The results document a significant and positive association between access to skilled labor and firm performance in the developing world. The explanatory power of access to skilled labor remains broadly robust after controlling for a wide range of firm-specific characteristics: sectoral and geographical influences matter. The results also show that the association between labor skill constraints and firm performance is mitigated by country-level factors but in diverse ways. Development, institutions, education and technological progress exert various mitigating effects on firm-level behavior regarding access to skilled labor. Originality/value The paper’s novel contribution is threefold: first, it uses joint firm, sector and country-level information to analyze the role of access to skilled labor on firm performance; second, it uses consistently produced information at the firm level from 138 developing countries; and, third, it considers the controlling impact of a wide range of country-level factors that reflect a country’s overall development, institutions and evolution.

scholarly journals Determinants of capital structure for firms in an Islamic equity index: comparing developed and developing countries

2020 ◽  
Vol 4 (2) ◽  
pp. 167-191
Author(s):  
Evrim Hilal Kahya ◽  
Hüseyin Yiğit Ersen ◽  
Cumhur Ekinci ◽  
Oktay Taş ◽  
Koray D. Simsek
Keyword(s):  
Developing Countries ◽  
Capital Structure ◽  
Developing Country ◽  
Global Financial Crisis ◽  
Muslim Country ◽  
Data Set ◽  
Content Type ◽  
Country Level ◽  
Muslim Majority ◽  
Equity Index

PurposeThe paper aims to identify the differences between developed and developing country firms with respect to firm-specific and country-level determinants of their capital structure. For this purpose, all constituent firms in one of the oldest Islamic equity indices, Dow Jones Islamic Market World Index (DJIM), are considered and the Muslim-majority status of each firm's domicile country is recognized.Design/methodology/approachThe study employs Hausman–Taylor random effects regression with endogenous covariates to explain the debt ratios of firms in DJIM by separating them into developed and developing country subsamples in an unbalanced panel data setting. Developing country subsample is further split into two based on the Muslim-majority status of each firm's domicile country.FindingsConsistent with the previous literature, this study finds that firm-specific characteristics are the main determinants of their capital structure. Additionally, the paper shows that country-level characteristics have an impact on the debt ratio, however, the types of factors vary across developed and developing countries. Debt ratios in developing country firms are lower than those in developed country firms, largely due to the significantly smaller leverage ratios of firms in Muslim-majority countries. Although the debt ratios of DJIM firms are higher in “non-Muslim” countries, the set of firm-level capital structure determinants are not statistically explained by operating in a “Muslim” country. The study also documents that, before the global financial crisis of 2008, companies in developing countries have gradually become less leveraged worldwide.Originality/valueThis paper provides a new perspective into the differences between developed and developing country firms' capital structures by focusing on a relatively homogeneous data set restricted by leverage screening rules of an Islamic equity index and recognizing the Muslim-majority status of each firm's domicile country.

Exchange rate effects on agricultural exports

2019 ◽  
Vol 11 (4) ◽  
pp. 600-621
Author(s):  
Rui Mao
Keyword(s):  
Exchange Rate ◽  
Panel Data ◽  
Exchange Rates ◽  
Food Industry ◽  
Real Exchange Rates ◽  
Data Set ◽  
Content Type ◽  
Agricultural Exports ◽  
Country Level ◽  
Rate Effects

Purpose The purpose of this paper is to extend empirical investigations of the relationship between real exchange rates and agricultural exports to the firm-product-country level with the use of disaggregated panel data of China’s food industry. In particular, the study aims to explore heterogeneities in the export response to real exchange rates across firms, destinations and products, as well as to differentiate responses on the intensive and extensive margins. Design/methodology/approach This paper utilizes a merged panel data set of firm-product-country level transaction records of China’s agricultural exports with firm-level survey data of the food industry. Panel regression models are constructed to identify empirical relationships. Findings Real appreciations are found to reduce export quantities and the probability to enter destination markets. These impacts are enhanced in 2005 when China unexpectedly depegged yuan from the USD. In addition, real appreciations in 2005 also reduced the yuan-denominated export price and increased firms’ probability to exit destination markets. Taking the exchange rate reform as a natural experiment, evidence suggests that the negative exchange rate effects on exports are robust to the endogeneity issue. Finally, heterogeneous export responses are identified with respect to firm productivities and ownerships, income levels and locations of destination markets, as well as product groups. Originality/value This paper provides first-hand evidence on how real exchange rates influence agricultural exports at the firm-product-country level. A featured contribution is that China’s exchange rate reform in 2005 is utilized to alleviate the typical concern of endogeneity. Findings may benefit policy makers, for example, by identifying firms most vulnerable to real appreciations.

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