Operational efficiency effects of blockchain technology implementation in firms

2020 ◽  
Vol 30 (2) ◽  
pp. 163-181
Author(s):  
Mohammad Raihanul Hasan ◽  
Deng Shiming ◽  
Mollah Aminul Islam ◽  
Muhammed Zakir Hossain
Keyword(s):  
Technology Implementation ◽  
Generalized Method Of Moments ◽  
Stochastic Frontier ◽  
Maximum Level ◽  
Ordinary Least Squares ◽  
Operational Efficiency ◽  
Stock Exchanges ◽  
Content Type ◽  
Blockchain Technology ◽  
Stochastic Frontier Estimation

Purpose The purpose of this study is to evaluate the effect of blockchain technology on firms’ operational efficiency in the context of China. Design/methodology/approach The authors use panel data for blockchain-based companies listed on stock exchanges in China (Shanghai, Shenzhen and Hong Kong) between 2014 and 2018. The operational efficiency of firms that deploy blockchain technology is evaluated using ordinary least squares and system generalized method of moments estimation. Findings Results suggest that companies’ current year performance exceeds the previous year performance because of blockchain deployment in firms’ operations. Firms with higher financial leverage and return on assets reap more benefits from blockchain. Larger and older firms benefit less from blockchain implementation. Stochastic frontier estimation suggests that, on average, firms attain a 57.76 per cent technical efficiency level, or, put differently, they operate 42.24 per cent below their maximum level of potential output. Originality/value Blockchain can benefit firms in terms of consensus, security and trust, spurring the evolution of a new form of organizational dynamics. This study explores the theory of transactional cost analysis under blockchain technology. In addition, this study hypothesizes and empirically demonstrates the significant impacts of blockchain technology on corporations’ operational efficiency, using audited, externally reported financial data. Industry professionals can reap benefits from this research by noticing the magnitude of changes in firms’ financial parameters attributable to blockchain adoption.

Exploring the nonlinear effect of size on profitability: evidence from an insurance brokerage industry in an emerging market

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Richard Angelous Kotey ◽  
Richard Akomatey ◽  
Baah Aye Kusi
Keyword(s):  
Nonlinear Effect ◽  
Emerging Market ◽  
Empirical Studies ◽  
Random Effect ◽  
Generalized Method Of Moments ◽  
Ordinary Least Squares ◽  
Growth Strategies ◽  
Content Type ◽  
And Performance ◽  
Brokerage Firms

PurposeThis study examines the possible nonlinear effect of size on stakeholder and shareholder profitability in the Ghanaian insurance brokerage industry.Design/methodology/approachThis study employs a panel dataset of 64 Ghanaian insurance brokerage firms spanning 2011–2015. Static [ordinary least squares (OLS), fixed effect and random effect and dynamic (two-step generalized method of moments (GMM))] estimation techniques are employed to analyze the data.FindingsThe study finds the existence of both economies and diseconomies of scale and scope theories in the Ghanaian insurance brokerage industry confirming the existence of nonlinear nexus between size and performance. This finding is consistent for both stakeholder and shareholder profit performance. Thus, the results show that size improves profitability of insurance brokerage firms, but beyond a certain threshold, the relationship turns negative as size negatively affects profitability.Practical implicationsThe research findings have implications for both policy and research; the study recommends that Ghanaian brokerage managers should understand that not all growth is good and exercise a duty of care when applying growth strategies by monitoring size effect on performance so as not to go beyond the inflection point. Further research can be done to examine this effect in other contexts, timeframes and jurisdictions.Originality/valueThis research is unique in that it employs a panel dataset consisting of 96% of insurance brokerage firms in Ghana whilst employing both static and nonstatic regression models to examine the effect of size. The research analysis adopted is robust, and the findings are significant. Also, the lack of empirical studies on the operations and dealings of auxiliary institutions such as the insurance brokerage firms adds value to this research.

The ascension of executives' tenure, corporate risk-taking and corporate performance: evidence from Malaysia

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Osama F. Atayah ◽  
Khakan Najaf ◽  
Ravichandran K. Subramaniam ◽  
Phaik Nie Chin
Keyword(s):  
Risk Taking ◽  
Corporate Performance ◽  
Stock Exchange ◽  
Generalized Method Of Moments ◽  
Negative Relationship ◽  
Ordinary Least Squares ◽  
Executive Management ◽  
Content Type ◽  
Top Executives ◽  
Corporate Risk

PurposeThis study aims to investigate the implication of top executives’ number of years of experience (tenure) on corporate risk-taking behaviour and corporate performance in Malaysian corporations.Design/methodology/approachTo test the hypothesis efficiently, the authors have extracted the data from Bloomberg for 788 listed companies of the Malaysian Stock Exchange. The methodology entails ordinary least squares regressions, quantile regression and dynamic system generalized method of moments model.FindingsFirst, the authors show that executive management tenure has a significant negative relationship with corporate risk-taking. It means that the long-tenured executives tend to undertake less risky strategies and decisions. Second, this study reveals that the longer executive management tenure has a positive relationship with corporate performance. Third, the moderating effect of corporate risk-taking with executive tenure (Tenure dummy*Risk) has a negative relationship with the corporate performance by 1%.Practical implicationsIt implies that the appointment of experienced executive management contributes towards corporate performance directly. However, experienced management trends take less risk, which eventually results in mitigating the corporate performance. On that basis, the findings are significant in highlighting the usefulness of executive leadership term and offers insights to academics, practitioners and policymakers.Originality/valueThis paper is novel since it is unique in evaluating the executive tenure and the preferences to handle risk strategies and how that impact the firm performance.

Bank competition, government intervention and SME debt financing

2017 ◽  
Vol 7 (4) ◽  
pp. 478-492 ◽  
Author(s):  
Jianhua Du ◽  
Chao Bian ◽  
Christopher Gan
Keyword(s):  
Government Intervention ◽  
Generalized Method Of Moments ◽  
External Debt ◽  
Ordinary Least Squares ◽  
Debt Financing ◽  
Bank Loans ◽  
Bank Competition ◽  
Firm Level ◽  
Content Type ◽  
The Government

Purpose The purpose of this paper is to examine the effects of the government intervention and bank competition on small and medium enterprise (SME) external debt financing in Chinese capital market. Design/methodology/approach This study uses ordinary least squares with standard errors clustered at the firm level. In addition, the authors use the dynamic system generalized method of moments to address the possible endogeneity issue in the regressions. Findings Using a sample of 908 firms from 2000 to 2010, the authors found that SMEs are more likely to access bank loans only in regions with higher level of government intervention than median government intervention. Further, the result shows that the government is motivated to help SMEs to obtain more external debt in regions where the level of bank competition is lower than the median bank competition index. Last, the authors found evidence that firms with politically connected CEOs are likely to access bank loans. Research limitations/implications This paper highlights that government intervention enables the SMEs to secure more bank loans. Second, the authors’ results imply that the government is motivated to help SMEs to obtain more external debt in regions with low level of bank competition. Originality/value This study contributes to the current literature by revealing that government intervention is the driving force alleviating SMEs’ constraints in accessing external financing. Second, this study finds the evidence to supports the argument that government has a strong motive to help SMEs to secure long-term credits for political purpose (Fan et al., 2012), when the level of bank competition is low (Berger and Udell, 2006).

Intellectual capital: a determinant of firms' operational efficiency

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Kanishka Gupta ◽  
T.V. Raman
Keyword(s):  
Intellectual Capital ◽  
Stochastic Frontier Analysis ◽  
Stock Exchange ◽  
Stochastic Frontier ◽  
Value Added ◽  
Financial Sector ◽  
Operational Efficiency ◽  
Content Type ◽  
Frontier Analysis ◽  
The Impact

PurposeIntellectual capital (IC) has been recognized in improving the efficiency of businesses and gaining competitive edge in the developed world. The present study offers perspectives into the effect of IC on the efficiency of the Indian financial sector companies.Design/methodology/approachFor the purpose of evaluating efficiency, the research has used stochastic frontier analysis (SFA). All Indian financial sector companies listed in National Stock Exchange (NSE-500) for the timeframe of ten years (2008–2018) have been considered. The paper has employed modified Pulic's Value Added Intellectual Coefficient (VAICTM) as a proxy to measure IC. Correlation and panel data regression have been used in order to examine the relationship.FindingsThe results of the study indicate positive and significant relationship between IC and efficiency of the firm. The results also show that all the components of IC, that is, human capital, relational capital, process capital and capital employed have a significant impact on firms' efficiency. Additionally, it has been seen that sample companies do not invest in research and development leading to no innovation capital.Practical implicationsThe research will assist managers in managing and controlling the IC, investors in matters related to investment and financial experts in improving the company's IC and value creation.Originality/valueThe current research is one of the pioneering studies in the context of Indian financial sector that examines the impact of modified VAIC on operational efficiency calculated using SFA.

Are smart manufacturing systems beneficial for all SMEs? Evidence from Korea

2022 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Soojeen Jang ◽  
Yanghon Chung ◽  
Hosung Son
Keyword(s):  
Human Resources ◽  
Financial Performance ◽  
Manufacturing Systems ◽  
Contingency Theory ◽  
Ordinary Least Squares ◽  
Operational Efficiency ◽  
Smart Manufacturing ◽  
Least Squares Regression ◽  
Content Type ◽  
Smart Manufacturing Systems

PurposeThrough the resource-based view (RBV) and contingency theory, this study empirically investigates the impacts of smart manufacturing systems' maturity levels on the performance of small and medium-sized enterprises (SMEs). Moreover, it aims to examine how industry types (i.e. high- and low-tech industries) and human-resource factors (i.e. the proportion of production workers to total workers) as contingency factors influence the effects of smart manufacturing systems.Design/methodology/approachThe study conducted an empirical investigation of a sample of 163 Korean manufacturing SMEs. This study used an ordinary least squares regression to examine the impacts of the maturity levels of smart manufacturing systems on financial performance. Moreover, the impacts on operational efficiency were analysed using data envelopment analysis based on bootstrap methods and Tobit regression.FindingsThe RBV results indicate that the higher the maturity levels of smart manufacturing systems, the higher the financial performance and operational efficiency. Moreover, based on contingency theory, this study reveals that the effect of the maturity levels of smart manufacturing systems on financial performance and operational efficiency depends on firms' industry types and the proportion of production workers.Research limitations/implicationsThis study shows that the introduction of smart manufacturing systems can help SMEs achieve better financial performance and operational efficiency. However, their effectiveness is contingent on firms' industry types and the characteristics of their human resources.Practical implicationsSince the effects of the maturity levels of smart manufacturing systems on SME performance differ depending on their industries and the characteristics of human resources, managers need to consider them when introducing or investing in smart manufacturing systems.Originality/valueBased on the RBV and contingency theory, this is the first empirical study to examine the moderating effects of industry types and the proportion of production workers on the impacts of the maturity levels of smart manufacturing systems on the financial performance and operational efficiency of SMEs.

Quantitative impacts of mandatory integrated reporting

2019 ◽  
Vol 17 (4) ◽  
pp. 604-634 ◽  
Author(s):  
Elaine Conway
Keyword(s):  
Financial Performance ◽  
Financial Risk ◽  
Risk Measures ◽  
Ordinary Least Squares ◽  
Mandatory Reporting ◽  
Stock Exchanges ◽  
Integrated Reporting ◽  
Content Type ◽  
Environmental Goals ◽  
The Impact

Purpose This paper aims to examine the impact of the 2011 mandatory introduction of integrated reporting (<IR>) on the financial performance, risk and institutional shareholding of listed companies in South Africa to assess whether there is a benefit to <IR> and which may encourage greater adoption of it globally. It contrasts the results with two other African stock exchanges (Nigeria and Egypt with no mandatory <IR>) and examines whether <IR> quality also has an impact on these and on environmental, social and governance (ESG) disclosure scores. Design/methodology/approach A series of multivariate ordinary least squares regressions was estimated on a range of financial, risk, institutional and ESG data from firms on the three African stock exchanges, between 2006 and 2015. Findings Financial performance and risk in South African firms appear to have decreased since the start of mandatory reporting, but institutional shareholding has increased. The production of higher quality reports is associated with decreased financial performance and risk, higher institutional shareholding and increased ESG scores. Originality/value This study is first to test the quantitative effects of <IR> and <IR> quality on a broad range of financial performance and risk measures and the level of institutional shareholding. It also adds to the literature by assessing how the quality of <IR> can impact the ESG scoring of the business. Hence, this study is of interest to firms looking to adopt <IR> for its benefits and to regulatory bodies considering the mandatory adoption of <IR> in support of achievement of national social and environmental goals.

Performance of agricultural cooperative banks in Japan

2019 ◽  
Vol 80 (1) ◽  
pp. 38-50
Author(s):  
Kozo Harimaya ◽  
Koichi Kagitani
Keyword(s):  
Stochastic Frontier ◽  
Ordinary Least Squares ◽  
Agricultural Cooperatives ◽  
Least Squares Regression ◽  
Business Services ◽  
Lower Efficiency ◽  
Data Set ◽  
Content Type ◽  
Banking Business ◽  
Insurance Business

Purpose The purpose of this paper is to investigate the efficiency of the banking business of Japan’s agricultural cooperatives (JAs), which depend heavily on financial business with non-farmers, contradictory to cooperative principles. Design/methodology/approach The authors construct a panel data set over 2005–2016 from the financial statements of JAs’ prefectural-level federations and use the input distance stochastic frontier model with a time-variant inefficiency effect for analysis. Both the flow and stock measures of the banking output are used in identical models and the efficiency results are compared. The authors also investigate the determinants of efficiency by using the Tobit and ordinary least squares regression models. Findings There is strong evidence of significant prefectural differences in efficiency values. The ratio of lending to non-members to total loans is positively related to efficiency. In contrast, the higher reliance on a central organization and credit business leads to lower efficiency. Research limitations/implications Apart from banking, JAs provide mutual insurance business services. As the authors investigate only the efficiency of JAs’ banking business in this study, it would be necessary to investigate the efficiency of their insurance business as well when evaluating JAs’ overall financial business. Originality/value There are few studies that investigate the efficiency of JAs’ banking business and its determinants, although significant attention has been paid to their excessive dependence on the financial business.

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.

Performance analysis of electricity distribution sector post the implementation of electricity act 2003: empirical evidence from India

2020 ◽  
Vol 17 (5) ◽  
pp. 669-696
Author(s):  
Pavan Khetrapal
Keyword(s):  
Stochastic Frontier Analysis ◽  
Corporate Strategy ◽  
Unobserved Heterogeneity ◽  
Stochastic Frontier ◽  
Operational Efficiency ◽  
Electricity Distribution ◽  
Content Type ◽  
Frontier Analysis ◽  
Explanatory Variables ◽  
Utility Managers

PurposeThe objective of the present study is to evaluate and analyse the performance of Indian electricity distribution utilities post the implementation of landmark Electricity Act 2003.Design/methodology/approachStochastic frontier analysis (SFA) that incorporates exogenous influences on operational efficiency is adopted in the present study. Specifically, a stochastic frontier production function model with a technical inefficiency effects model (Battese and Coelli, 1995) is chosen as a preferred model. In this model, the function that explains the inefficiency scores is estimated in a single stage with the production technology. This avoids the problem of inconsistency which is possible in the two-stage approach.FindingsThe sample involved 52 Indian electricity distribution utilities for seven-year period from 2006 to 2013. Major findings of SFA show that Indian electricity distribution utilities post the implementation of Electricity Act (2003) had, on average, experienced efficiency improvement during the observed period. The overall mean technical effciency score is estimated as 78.5% which indicates that there exist wide scope for effciency improvement in the sector. Further, the empirical findings also indicate that publicly owned distribution utilities obtain average technical efficiencies of 71.3%, which is lower than privately owned distribution utilities, which achieve average technical efficiencies of 85.7%.Research limitations/implicationsPower supply quality indicators such as SAIFI, SAIDI, CAIFI, etc. and unobserved heterogeneity also influence the efficiency analysis of electricity distribution utilities. Hence, these parameters as explanatory variables can be incorporated in the future work.Practical implicationsThe results obtained from this empirical study would likely be helpful for utility managers and policymakers to know how well they are performing, and how a better corporate strategy a particular utility can formulate to improve its operational efficiency and also its position in the marketplace.Originality/valueThis paper is amongst the first significant attempts that implement SFA approach to the panel dataset over a longer period of time – 2006 to 2013, so, as to evaluate and analyse the operational efficiency of Indian electricity distribution utilities in a single framework after the enactment of Electricity Act (2003). Unlike previous studies, this study investigates the degree to which various exogenous (or environmental) factors influence efficiency levels in these utilities.

Inflation volatility, monetary policy signaling and clarity of the central bank communication

2019 ◽  
Vol 46 (2) ◽  
pp. 266-283 ◽  
Author(s):  
Rodolfo Nicolay ◽  
Ana Jordânia de Oliveira
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Emerging Economies ◽  
Inflation Targeting ◽  
Generalized Method Of Moments ◽  
Emerging Economy ◽  
Ordinary Least Squares ◽  
Content Type ◽  
Inflation Volatility ◽  
Central Bank Communication

PurposeStudies about the determinants of the clarity of central bank communication are still scarce. To the authors’ knowledge, there are no studies regarding emerging economies. The purpose of this paper is to contribute to the literature in the following aspects: to analyze the determinants of the clarity of the central bank communication in an inflation targeting emerging economy; observe the influence of inflation volatility over the clarity; and observe the effect of the monetary policy signaling over the clarity.Design/methodology/approachThe work uses readability indexes to measure the clarity of central bank communication. The empirical analysis uses ordinary least squares and the Generalized Method of Moments with one- and two-step estimations.FindingsThe findings suggest the inflation volatility reduces the clarity of central bank communication. Moreover, the monetary policy signaling also affects the clarity, but the effect depends on the direction of the signal.Practical implicationsThis paper observes the determinants of the clarity considering an emerging economy environment. The clarity of central bank communications is an important tool to access transparency. Hence, the analysis of what determines the clarity of central bank communication is a debate about the level of transparency accessed by the central bank.Originality/valueThere are no studies about the determinants of the clarity of central bank communication in emerging economies. Moreover, the novelty are the effects of inflation volatility and monetary policy signaling over the clarity.

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