The effect of credit rating downgrades along the supply chain

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Dallin M. Alldredge ◽  
Yinfei Chen ◽  
Steve Liu ◽  
Lan Luo
Keyword(s):  
Supply Chain ◽  
Least Squares ◽  
Information Transfer ◽  
Credit Rating ◽  
Abnormal Returns ◽  
Ordinary Least Squares ◽  
Transfer Effects ◽  
Equity Prices ◽  
Content Type ◽  
Rating Downgrades

Purpose This study aims to examine the information transfer effects of customers’ credit rating downgrades on supplier firms. Design/methodology/approach In this study, the authors use suppliers’ cumulative abnormal returns around customers’ credit rating downgrade events to identify how shocks to customer credit impact supplier equity prices. The authors also incorporate ordinary least squares and weighted least squares regressions regression analysis of the determinants of supplier market response to customer downgrades. Findings The authors find that customer credit rating downgrades present significant negative shocks to the stock prices of supplier firms. Moreover, the authors show that the information transfer effects are determined by both firm- and industry-level factors, including the market anticipation of downgrades, the strength of the customer–supplier linkage, the industry rivals’ reactions to the downgrades and investor attention. The authors also find that the likelihood that a supplier will receive a rating downgrade is significantly higher following its primary customer firm’s downgrade. Originality/value To the best of the authors’ knowledge, this paper is the first to explore the information transfer effects of credit rating downgrades on primary stakeholders within the supply chain. The authors document that customer–supplier networks have valuable implications for the spillover effect across debt and equity holders. Information about customers’ financial stress is incorporated into suppliers’ equity prices outside of the context of customer bankruptcy.

scholarly journals The effect of creative corporate culture and intangibility on the performance of foreign firms traded on the NYSE

2018 ◽  
Vol 15 (4) ◽  
pp. 356-372 ◽  
Author(s):  
Marcia Martins Mendes De Luca ◽  
Paulo Henrique Nobre Parente ◽  
Emanoel Mamede Sousa Silva ◽  
Ravena Rodrigues Sousa
Keyword(s):  
New York ◽  
Least Squares ◽  
Corporate Culture ◽  
Corporate Performance ◽  
Stock Exchange ◽  
Generalized Least Squares ◽  
Ordinary Least Squares ◽  
Foreign Firms ◽  
Content Type ◽  
Negative Effect

Purpose Following the tenets of resource-based view, the present study aims to investigate the effect of creative corporate culture according to the competing values framework model at the level of corporate intangibility and its respective repercussions on performance. Design/methodology/approach The sample included 117 non-USA foreign firms traded on the New York Stock Exchange (NYSE), which issued annual financial reports between 2009 and 2014 using the 20-F form. To meet the study objectives, in addition to the descriptive and comparative analyses, the authors performed regression analyses with panel data, estimating generalized least-squares, two-stage least-squares and ordinary least-squares. Findings Creative culture had a negative effect on the level of intangibility and corporate performance, while the level of intangibility did not appear to influence corporate performance. When combined, creative culture and intangibility had a potentially negative effect on corporate results. In conclusion, creative corporate culture had a negative effect on performance, even in firms with higher levels of intangibility, characterized by elements like experimentation and innovation. Originality/value Although the study hypotheses were eventually rejected, the analyses are relevant to both the academic setting and the market because of the organizational and institutional aspects evaluated, especially in relation to intangibility and creative culture and in view of the unique cross-cultural approach adopted. Within the corporate setting, the study provides a spectrum of stakeholders with tools to identify the profile of foreign firms traded on the NYSE.

Intellectual capital and supply chain resilience

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Muhammad Shujaat Mubarik ◽  
Nick Bontis ◽  
Mobasher Mubarik ◽  
Tarique Mahmood
Keyword(s):  
Supply Chain ◽  
Least Squares ◽  
Partial Least Squares ◽  
Intellectual Capital ◽  
Structural Equation ◽  
Content Type ◽  
Supply Chain Resilience ◽  
Structural Capital ◽  
The Impact

PurposeThe main objective of this study is to test whether firms with a higher level of intellectual capital (IC) perform better in terms of their supply chain resilience compared to those with lower levels of IC. Likewise, the study also examines the impact of IC (characterized by human capital, relational capital and structural capital) on supply chain resilience directly and through supply chain learning.Design/methodology/approachData were collected from the 159 processed-food sector firms using a close-ended questionnaire during the corona virus 2019 (COVID-19) pandemic. Partial least squares structural equation modelling (PLS-SEM), partial least squares multigroup analysis (PLS-MGA) and one-way analysis of variance (ANOVA) were used to test a set of hypotheses emanating from a conceptual model of IC and supply chain resilience.FindingsEmpirical results revealed a significant influence of all dimension of IC on a firm's supply chain learning and supply chain resilience. Likewise, findings also exhibit a momentous role of supply chain learning in reinforcing the impact of IC on supply chain resilience. Cross-firm size comparison reveals that supply chain resilience of firms with a higher level of IC performed significantly better than those with lower levels of IC. Firms with a higher level of structural capital had a highly resilient supply chain.Practical implicationsFindings of the study imply that IC and supply chain learning should be considered as a strategic tool and should be strategically developed for uplifting a supply chain performance of a firm. The development of IC and supply chain learning (SCL) not only improves the supply chain resilience of a firm but also can help to integrate the internal and external knowledge for harnessing supply chain resilience.Originality/valueThis research study was conducted during the COVID-19 pandemic which provides a unique setting to examine resiliency and learning.

Do females in audit firm governance affect firm performance? Findings from Turkey

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Murat Ocak
Keyword(s):  
Firm Performance ◽  
Least Squares ◽  
Design Methodology ◽  
Gender Diversity ◽  
Ordinary Least Squares ◽  
Content Type ◽  
Audit Firm ◽  
Hierarchical Levels ◽  
And Gender ◽  
Practical Implications

Purpose This study aims to contribute to the literature by offering a different sector and emphasising the importance of females in audit firm (AF) governance on audit firm performance (AFP). Design/methodology/approach Ordinary least squares (OLS) and instrument variables regression (IVREG) with two-stage least squares are used to test the paper’s hypotheses. Findings Both OLS and IVREG estimation results show that both the proportion of females and gender diversity at board and owner levels and the total number of shares of female owners seem to enhance the performance of AFs. Practical implications These results may be important for policymakers and regulators to set a quota for women’s representation on AF governance or decide arrangements for women in AFs as in the regulations for the high hierarchical levels of other corporate firms. Originality/value This paper extends the current literature in the context of AFs in Turkey, positing that females in AF governance might enhance performance to a great extent.

The impact of gender inequality in education and employment on economic performance in Turkey: evidence from a cointegration approach

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ömer Esen ◽  
Gamze Yıldız Seren
Keyword(s):  
Least Squares ◽  
Economic Performance ◽  
Ordinary Least Squares ◽  
Estimation Methods ◽  
Content Type ◽  
Cointegration Tests ◽  
Johansen Cointegration ◽  
Education And Employment ◽  
The Impact

PurposeThis study aims to empirically examine the impact of gender-based inequalities in both education and employment on economic performance using the dataset of Turkey for the period 1975–2018.Design/methodology/approachThis study employs Johansen cointegration tests to analyze the existence of a long-term relation among variables. Furthermore, dynamic ordinary least squares (DOLS) and fully modified ordinary least squares (FMOLS) estimation methods are performed to determine the long-run coefficients.FindingsThe findings from the Johansen cointegration analysis confirm that there is a long-term cointegration relation between variables. Moreover, DOLS and FMOLS results reveal that improvements in gender equality in both education and employment have a strong and significant impact on real gross domestic product (GDP) per capita in the long term.Originality/valueThe authors expect that this study will make remarkable contributions to the future academic studies and policy implementation, as it examines the relation among the variables by including the school life expectancy from primary to tertiary based on the gender parity index (GPI), the gross enrollment ratio from primary to tertiary based on GPI and the ratio of female to male labor force participation (FMLFP) rate.

Do mergers and acquisitions create value?

2019 ◽  
Vol 36 (2) ◽  
pp. 240-264
Author(s):  
Krishna Reddy ◽  
Muhammad Qamar ◽  
Noel Yahanpath
Keyword(s):  
Mergers And Acquisitions ◽  
Positive Impact ◽  
Abnormal Returns ◽  
Ordinary Least Squares ◽  
Content Type ◽  
Developed Economies ◽  
Acquiring Firms ◽  
Significance Levels ◽  
Chinese Markets ◽  
Specific Factors

Purpose The purpose of this paper is to study whether mergers and acquisitions (M&As) create value in Indian and Chinese markets. Design/methodology/approach The authors study abnormal returns (AR) created by the acquiring firms in Indian and Chinese markets relating to M&A announcements, using the following three different statistical methods: i.e. mean, market and ordinary least squares adjusted return models. Findings On average, M&A announcements do not create value for the firms in Chinese and Indian economies. For the mean model, M&As create value for Chinese firms, whereas for the Indian firms no such value is created for the same event windows. The regression results showed that debt has a positive impact on the AR and cumulative average abnormal returns at 1, 5 and 10 per cent significance levels, respectively. Research limitations/implications This study suggests increasing the sample size and period and using the instrumental variables regression to ensure the estimator’s impartiality, consistency and efficiency. With the investigative period surrounding a financial crisis, the estimators may have omitted bias. Originality/value Multiple methods used in this paper made it possible to capture the level of method variance in the AR, which is unusual in the Chinese and Indian context. Hence, the current study provides local knowledge and further strengthens the literature about M&As. The authors also regress AR with firm-specific factors, the consideration of which is scarce in the previous literature. Furthermore, much of what the authors know about M&A is relevant to developed economies.

scholarly journals The human capital–economic growth nexus in SSA countries: what can strengthen the relationship?

2020 ◽  
Vol 47 (9) ◽  
pp. 1143-1159
Author(s):  
Roseline Tapuwa Karambakuwa ◽  
Ronney Ncwadi ◽  
Andrew Phiri
Keyword(s):  
Economic Growth ◽  
Human Capital ◽  
Least Squares ◽  
Ordinary Least Squares ◽  
African Countries ◽  
Content Type ◽  
Econometric Approach ◽  
The Impact ◽  
The Relationship ◽  
Ssa Countries

PurposeThe purpose of this study is to examine the impact of human capital on economic growth for a selected sample of nine SSA countries between 1980 and 2014 using a panel econometric approach.Design/methodology/approachThe authors estimate a log-linearized endogenous using the fully modified ordinary least squares (FMOLS) and the dynamic ordinary least squares (POLS) applied to our panel data time series.FindingsThe empirical analysis shows an insignificant effect of human capital on economic growth for our selected sample. These findings remain unchanged even after adding interactive terms to human capital, which are representatives of government spending as well as foreign direct investment. Nevertheless, the authors establish a positive and significant effect of the interactive term between urbanization and human capital on economic growth.Practical implicationsThe results emphasize the need for African policymakers to develop urbanized, “smart”, technologically driven cities within the SSA region as a platform toward strengthening the impact of human capital-economic growth relationship.Originality/valueThis study becomes the first in the literature to validate the human capital–urbanization–growth relationship for African countries.

Mandatory CSR expenditure and stock return

2020 ◽  
Vol 28 (6) ◽  
pp. 951-975
Author(s):  
Asit Bhattacharyya ◽  
Md Lutfur Rahman
Keyword(s):  
Least Squares ◽  
Stock Returns ◽  
Least Squares Method ◽  
Negative Impact ◽  
Generalized Method Of Moments ◽  
Ordinary Least Squares ◽  
Reverse Causality ◽  
Endogeneity Bias ◽  
Content Type ◽  
The Impact

Purpose India has mandated corporate social responsibility (CSR) expenditure under Section 135 of the Indian Companies Act, 2013 – the first national jurisdiction to do so. The purpose of this paper is to examine the impact of mandated CSR expenditure on firms’ stock returns by using actual CSR spending data, whereas the previous studies mostly focus on voluntary CSR proxied by CSR scores. Design/methodology/approach The authors estimate their baseline regression by using ordinary least squares(OLS) method. Although the baseline regression involving CSR expenditure and stock returns using ordinary least squares method are estimated, endogeneity and reverse causality biases are addressed by using two-stage least squares and generalized method of moments approaches. These approaches contribute mitigating endogeneity bias and biases associated with unobserved heterogeneity and simultaneity. Findings The findings document that mandatory CSR expenditure has a negative impact on firms’ stock returns which supports the “shareholders” expense’ view. This result remain robust after controlling for endogeneity bias and the use of both standard and robust test statistics. The authors however observe that this result holds for the firms with actual CSR expenditure equal to the mandated amount but does not hold for the firms with actual CSR expenditure greater than the mandated amount. Therefore, the authors provide evidence that CSR expenditure’s impact on stock returns depends on whether firms simply comply the regulation or voluntarily chose an amount of CSR expenditure above the mandated amount. Originality/value The primary contribution is to present a valid and robust evidence of negative effect of mandated CSR spending on firms’ stock returns when the mandatory CSR spending rule is already in place. This study contributes by examining the impact of mandated CSR spending on stock during post-implementation period (2015-2017), whereas other studies by Dharampala and Khanna (2018); Kapoor and Dhamija (2017); and Mukherjee et al. (2018) mainly examined the impact of legislation on Indian CSR. The authors use mandated actual CSR expenditure, whereas previous studies mostly focus on voluntary CSR proxied by CSR scores.

The relationship between foreign aid and corruption: a case of selected Asian countries

2019 ◽  
Vol 26 (3) ◽  
pp. 692-704
Author(s):  
Muhammad Ali ◽  
Lubna Khan ◽  
Amna Sohail ◽  
Chin Hong Puah
Keyword(s):  
Least Squares ◽  
Foreign Aid ◽  
Negative Impact ◽  
Panel Cointegration ◽  
Ordinary Least Squares ◽  
Foreign Assistance ◽  
Asian Countries ◽  
Causality Test ◽  
Content Type ◽  
Long Run

Purpose The purpose of this study is to examine the effect of foreign aid (FA) on corruption in selected Asian countries (Pakistan, India, Srilanka and Bangladesh) using the panel data from 2000 to 2014. Design/methodology/approach The author used Levin-Lin-Chu and Im-Pesaran-Shin panel unit root tests to check the stationary properties of the variables. The Pedroni’s and Kao panel cointegration approach was applied to analyze the variable’s long-run relationship. The author used panel dynamic ordinary least squares (PDOLS) and fully modified ordinary least squares (FMOLS) framework to estimate the coefficients of cointegrating vectors. Additionally, the panel granger causality test was performed to check the causal relationship between the variables. Findings The results from PDOLS and FMOLS indicate that FA has a significant negative impact on the level of corruption. This infers that the foreign assistance decrease the level of corruption perception index, hence, more corruption in the country. Originality/value Overall, the study fulfills the need to understand the aid-corruption nexus, particularly in the case of the Asian region.

Accrual reliability, earnings persistence, and stock prices: revisited

2015 ◽  
Vol 30 (1) ◽  
pp. 22-48
Author(s):  
R. Mithu Dey ◽  
Lucy Lim
Keyword(s):  
Least Squares ◽  
Stock Prices ◽  
Stock Return ◽  
Design Methodology ◽  
Ordinary Least Squares ◽  
Original Study ◽  
Earnings Persistence ◽  
Content Type ◽  
Total Accrual

Purpose – The purpose of this paper is to replicate Richardson et al.’s (2005) study on how accrual components’ reliability affects earnings persistence and whether investors anticipate the lower earnings persistence through stock return. In this study, the authors use more recent data to examine whether the previous results still hold. Design/methodology/approach – The authors run the analysis using Richardson et al.’s (2005) design of ordinary least squares and report the results using Fama and Macbeth’s (1973) procedures. Findings – The results corroborate Richardson et al.’s (2005) conclusions that lower reliability of total accrual (accrual components) leads to lower earnings persistence. Originality/value – This study replicates Richardson et al. (2005) using more recent US data. The results in this paper confirm the general conclusion in the original study: less reliable accruals lead to lower earnings persistence.

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