scholarly journals Evaluation of Managerial Overconfidence, Cash Holding, and Investment Efficiency in Companies

2021 ◽  
Vol 2021 ◽  
pp. 1-11
Author(s):  
Abdorreza Asadia ◽  
Maryam Oladia ◽  
Mohammad Ghasem Aghela
Keyword(s):  
Fixed Effects ◽  
Stock Exchange ◽  
Financial Statements ◽  
Investment Efficiency ◽  
Cash Holding ◽  
Data Set ◽  
Listed Firms ◽  
Managerial Overconfidence ◽  
Moderating Role

Managers’ overconfidence leads to overestimating their ability to manage cash sources. Holding more cash may result in overinvestment in projects and investment inefficiency consequently. The present study aims to investigate the effect of cash holding on investment efficiency with the moderating role of managerial overconfidence in Iranian companies. All listed firms in Tehran Stock Exchange, excluding banks, insurance, pension funds, and financial intermediaries, are included in the research. We have used data from financial statements of 91 companies over the period from 2010 to 2018 and conducted multiple regression models to test the hypotheses based on pooled and panel data set with fixed effects. The results indicate a positive relationship between managerial overconfidence and cash holding. The effect of cash holding on investment efficiency turns out to be significantly negative. Furthermore, managerial overconfidence has a significant moderating effect on the relation of the variables. This study is almost the first one, which has been done in emerging markets, so the study’s findings not only contribute to the existing literature on managerial overconfidence and investment efficiency but also assist policymakers, managers, and investors in making effective decisions.

The relationship between intellectual capital and financial statements readability: the role of management characteristics

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mahdi Salehi ◽  
Hassan Mohammadzadeh Moghadam ◽  
Zohreh Hajiha
Keyword(s):  
Regression Model ◽  
Intellectual Capital ◽  
Fixed Effects ◽  
Stock Exchange ◽  
Hypothesis Test ◽  
Financial Statements ◽  
Multiple Regression Model ◽  
Content Type ◽  
The Relationship

Purpose The present study aims to investigate the relationship between intellectual capital and the readability of financial statements with the mediating role of management characteristics of companies listed on the Tehran Stock Exchange. In other words, this research tries to find the answer to whether intellectual capital can positively affect the readability of financial statements. Design/methodology/approach A multivariate regression model was used to test the hypotheses for this purpose. The research hypotheses were tested using a sample of 1,309 observations listed on the Tehran Stock Exchange from 2012 to 2018 and a multiple regression model based on panel data and fixed-effects models. Findings The results indicate that intellectual capital has a positive and significant relationship with the readability of financial statements, which means that with increasing intellectual capital in companies, financial statements’ readability also increases. Based on the hypothesis test results, it has been determined that narcissism, accrual and real earnings management have a negative effect on the relationship between intellectual capital and the readability of financial statements. Originality/value Since the present study examines such an issue in emerging markets, it provides users, analysts and legal entities with useful information about management’s inherent and acquired characteristics that significantly impact the purchase of audit opinion. This study’s results also contribute to developing science and knowledge in this field and close the literature gap.

scholarly journals Debt financing and firm performance: The moderating role of board independence

2020 ◽  
Vol 45 (3) ◽  
pp. 141-151
Author(s):  
Hanh Song Thi Pham ◽  
Duy Thanh Nguyen
Keyword(s):  
Emerging Market ◽  
Debt Financing ◽  
Board Independence ◽  
Data Set ◽  
Listed Firms ◽  
Negative Effect ◽  
And Performance ◽  
The Relationship ◽  
Moderating Role

This article investigates the moderating role of board independence in the relationship between debt financing and performance of emerging market firms. We have used an empirical model in which the firm’s accounting profitability is a dependent variable and the independent variables are debt financing, board independence, the interaction variable made of debt financing and board independence as well as various control variables. Our analysis is based on a panel data set of 300 listed firms in Vietnam between 2013 and 2017. Our study finds that debt financing has a significantly negative effect and that board independence reduces the adverse impact of debt financing on accounting profitability. Our results are consistent across different estimation models and methods.

scholarly journals Impact of Cash Holding on Firm Performance with Moderating Role of Corporate Governance

2021 ◽  
Vol 6 (2) ◽  
pp. 87-99
Author(s):  
Naveed Anjum ◽  
Dr. Faisal Khan ◽  
Shoib Hassan ◽  
Dr. Muhammad Arif
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Unobserved Heterogeneity ◽  
Stock Exchange ◽  
Generalized Method Of Moments ◽  
Secondary Data ◽  
Cash Holding ◽  
Financial Firms ◽  
Moderating Role

The main aim of this research is to analyze the association between cashholding and firm performance with moderating role of corporate governance. For the purpose of analysis, secondary data of 145 non-financial firms listed at Pakistan Stock Exchange (PSX) is taken from 2006-2017. The dynamic Generalized Method of Moments (GMM) is applied to cater the problem of unobserved heterogeneity. The results of this study suggest that cash holding has a significant impact on firm performance. Moreover, corporate governance significantly moderates the relationship between cash holding and firm performance.

scholarly journals Credit Redistribution by Listed Manufacturing Firms in Pakistan and the Moderating Role of Financial Depth

2020 ◽  
Vol 12 (4) ◽  
pp. 1-20
Author(s):  
Nisar Ahmad ◽  
Bilal Nafees ◽  
Abdul Rasheed
Keyword(s):  
Trade Credit ◽  
Negative Impact ◽  
Manufacturing Firms ◽  
Future Research ◽  
Data Set ◽  
Listed Firms ◽  
Financial Depth ◽  
The Impact ◽  
Moderating Role

An enhancement in the financial depth (FD) increases the availability of formal credit to firms. Resultantly credit redistribution (CR) by firms is likely to be reduced as they require less trade credit (TC). To provide evidence, how do managers respond to changes in financial depth while making adjustments in their trade credit policy, this paper aims to study the impact of financial depth on credit redistribution by listed manufacturing firms (LMFs). For the firm-level variables, we used a data set of 327 firms listed on PSX for the period 2005 to 2018. Private credit to GDP ratio and market capitalization to GDP ratio are used as proxies for financial depth. Unlike earlier studies, we applied a two-step System GMM estimator to control the endogeneity. The results of the regression analysis display a positive relationship between the use and the supply of trade credit by LMFs. It reveals that LMFs redistribute credit to their customers through trade credit channel. We found a significant and negative impact of FD on the supply of TC by LMFs. Further, we established that financial depth as a moderator has a buffering impact on the credit redistribution by listed firms. The study highlights the moderating role of FD and suggests the financial policymakers of firms to modify their credit policies in response to changes in financial depth. For future research, we suggest the investigation of the effect of financial policy interventions on credit redistribution by small and non-listed firms.

Tax evasion, firm’s value and governance: evidence from Tunisian Stock Exchange

2020 ◽  
Vol 27 (3) ◽  
pp. 781-799
Author(s):  
Olfa Nafti ◽  
Ines Kateb ◽  
Oumaima Masghouni
Keyword(s):  
Tax Evasion ◽  
Design Methodology ◽  
Stock Exchange ◽  
Moderating Effect ◽  
Family Management ◽  
Data Set ◽  
Content Type ◽  
The Relationship ◽  
Moderating Role

Purpose The purpose of this study is to analyze the relationship between tax evasion and firm’s value while determining the moderating role of family management and the ownership’s concentration in this relationship. Design/methodology/approach The empirical study employs a Panel Data set of 34 firms listed on the Tunisian Stock Exchange (TSE) for the period 2007 to 2014. Regression analysis is used to estimate the relationships proposed in the hypotheses. Findings The results show that tax evasion has no direct effect on a firm’s value. This study highlighted the presence of a moderating effect of family management on the relationship between tax evasion and firm’s value. However, no moderating effect of the concentration of property on the mentioned relationship was detected. Originality/value This study represents a first empirical essay focusing on the relationship between tax evasion and firm’s value. Furthermore, it analyzes the moderating effect of some aspects of governance, such as family management and ownership’s structure, on this relationship in a Tunisian context.

Intellectual capital disclosure and corporate market value: does board diversity matter?

2017 ◽  
Vol 7 (3) ◽  
pp. 369-398 ◽  
Author(s):  
Mutalib Anifowose ◽  
Hafiz Majdi Abdul Rashid ◽  
Hairul Azlan Annuar
Keyword(s):  
Value Relevance ◽  
Stock Exchange ◽  
Generalized Method Of Moments ◽  
Ethnic Composition ◽  
Board Diversity ◽  
Content Type ◽  
Listed Firms ◽  
The Relationship ◽  
Moderating Role

Purpose The purpose of this paper is to examine the relationship between IC disclosure and the corporate market value (CMV) of listed firms on the main board of Nigeria Stock Exchange and to test the moderating effect of religious and ethnic composition of board members on the relationship. Design/methodology/approach This study applies the signaling and upper echelons theories in formulating four hypotheses that guide the results analysis. By employing a two-step dynamic system generalized method of moments and controlling for the possible endogeneity effect on the parameters estimated for a sample of 91 listed firms on main board of Nigeria Stock Exchange, this study investigates the association of IC disclosure with CMV, namely, cost of capital and market capitalization, and the moderating role of religious and ethnic composition on such association using data over the 2010 to 2014 financial years. Findings The results show a significant positive relationship between overall IC disclosure and market capitalization and a negative impact on cost of capital, which are in line with the hypothesized propositions. The moderating effect of board diversity is also confirmed. This study contributes to recent evidence concerning the value relevance of IC information to investors and other interested stakeholders and the established moderating role of board diversity in IC disclosure-related studies. Practical implications The regulators may consider development of standards on board composition about religious and ethnic composition in order to curb the domination from same group in the board room. Those charged with governance should be concerned with the disclosure of IC information in the financial statements as it has value relevance to the investors, in line with signaling theory. Social implications The ethnic and religious composition of board members is a significant factor within the board room and needs to be given adequate consideration. Originality/value This study is the first to consider IC disclosure across whole sectors in the Nigerian economy and looks upon ethnicity and religious affiliation of boards as moderating variables. The study controls for heteroscedasticity and endogeneity issues by adopting two-step dynamic system generalized method of moments.

scholarly journals Cash holding and investment efficiency nexus for financially distressed firms: The moderating role of corporate governance

2022 ◽  
Vol 12 (1) ◽  
pp. 67-74 ◽  
Author(s):  
Muhammad Aksar ◽  
Shoib Hassan ◽  
Muhammad Bilal Kayani ◽  
Suleman Khan ◽  
Tanvir Ahmed
Keyword(s):  
Corporate Governance ◽  
Generalized Method Of Moments ◽  
Investment Efficiency ◽  
Cash Holding ◽  
Distressed Firms ◽  
Financially Distressed ◽  
The Impact ◽  
Moderating Role ◽  
Indian Scenario

The current research study aims to analyze the impact of cash holding on investment efficiency by moderating the role of corporate governance among financially distressed firms. The data for 14 years (2006-2019) is gathered from 400 companies of two Asian emerging economies (Pakistan and India). The results are obtained by applying a generalized method of moments (GMM), which postulates that corporate governance improves cash holding with investment efficiency in the Indian scenario and decreases in the Pakistani scenario. Concerning financially distressed firms, corporate governance strengthens the relationship of cash holding with investment efficiency in the Pakistani context but showing no moderating role in the Indian scenario. The results are helpful in cash management decisions to minimize the agency issue and to avail investment opportunities.

scholarly journals DOES SIZE OF THE FIRM MATTER IN THE RELATIONSHIP BETWEEN FOREIGN OWNERSHIP AND DIVIDEND POLICY?

2020 ◽  
Vol 24 ◽  
Author(s):  
Adamu ‪Idris Adamu ◽  
Oyindamola Ekundayo ◽  
Hussaini Bala
Keyword(s):  
Dividend Policy ◽  
Foreign Ownership ◽  
Great Tendency ◽  
Cash Dividend ◽  
Data Set ◽  
Listed Firms ◽  
Propensity To Pay ◽  
The Relationship ◽  
Moderating Role

Prior studies have revealed that foreign shareholders have a greater influence on dividend policy. However, it is unclear how foreign owners in large firms affect the propensity to pay dividends. This paper is aimed at exploring the relationship between the propensity to pay dividends and foreign ownership. It also examined the moderating role of firm size on the relationship between the decision to pay cash dividend and foreign ownership. The study uses pooled logistic regression on a data set of non-financial listed firms on the Nigerian Stock Market from 2011 to 2015. The results showed that foreign ownership has a great tendency to influence the propensity of a firm to pay a cash dividend. The effect is more pronounced in larger firms, thus, indicating that in larger firms, foreign owners mitigate agency problems using dividends. Based on the findings, firms should be encouraged to pay a dividend to attract foreign investors and in return will help the firms to acquire the expertise of foreign owners.  

scholarly journals THE ROLE OF INTERNAL FINANCING IN MEDIATING THE EFFECT OF MANAGERIAL OVERCONFIDENCE AND CORPORATE GOVERNANCE TOWARDS INVESTMENT EFFICIENCY

2021 ◽  
Author(s):  
Riski Amalia Madi ◽  
Hamrini Mutia ◽  
Enny Wati ◽  
sujono
Keyword(s):  
Corporate Governance ◽  
Stock Exchange ◽  
Sampling Technique ◽  
Investment Efficiency ◽  
Panel Data Regression ◽  
Internal Financing ◽  
Corporate Funding ◽  
Owned Company ◽  
Managerial Overconfidence

This study aims to examine empirically the factors that influence investment efficiency in State-Owned Enterprises on the Indonesia Stock Exchange. This study was tested with two independent variables are managerial overconfidence and corporate governance, intervening variable is internal financing. The object of this research is the state-owned company for the period 2011-2018. 10 companies as the sample using purposive sampling technique. The analysis used in this research is panel data regression analysis. The results of this study found that investment efficiency in state-owned enterprises in Indonesia is largely determined by managerial overconfidence bias. Managers who have an overconfidence seek more aggressive and risky ventures so that they invest excessively beyond optimal levels. Managerial overconfidence in a manager can also strengthen the choice of internal financing, especially in state-owned companies. However, investment efficiency in this study is not influenced by corporate governance and internal financing. Corporate governance has also proven to have no role in corporate funding decisions. The role of internal financing as mediation was not found in this study.

scholarly journals Relationship Between Accounting Conservatism and Investment Efficiency with the Moderating Role of IFRS Adoption in Pakistan

2020 ◽  
Vol 6 (4) ◽  
pp. 1139-1150
Author(s):  
Khalid Latif ◽  
Ghulam Mujtaba Chaudhary ◽  
Aon Waqas
Keyword(s):  
Stock Exchange ◽  
Accounting Conservatism ◽  
Policy Implications ◽  
Investment Efficiency ◽  
Return On Assets ◽  
Ifrs Adoption ◽  
Mandatory Adoption ◽  
The Relationship ◽  
Moderating Role

ABSTRACT This study investigated the mandatory role of IFRS adoption in the association of accounting conservatism and investment efficiency in Pakistan. The study applied the model of Basu's (1997) to measure the conditional accounting conservatism for timely recognition of expected loss and gain. For empirical analysis, the study took a sample of 165 firms listed at Pakistan Stock Exchange and employed panel data methodology over the data of 2008-2017. Firms size, leverage, return on assets, and growth are taken as control variables to assess the relationship between accounting conservatism and investment efficiency. Findings of the study revealed that conditional accounting conservatism significantly affected the firms’ investment efficiency with the mandatory adoption of IFRS in Pakistan. IFRS adoption enhanced the firms’ investment efficiency and motivated to adopt the principle of accounting conservatism for recognizing the expected losses in timely manner in order to achieve investment efficiency. Timely recognition of expected losses played an important role in reducing agency problems and asymmetric information. In Pakistani setting, it is the pioneer study which highlighted the importance of accounting conservatism in protecting the surplus resources of investors and enhancing the overall investment efficiency under mandatory adoption of IFRS. These findings offer policy implications for focusing on the adaptation of IFRS in Pakistan.

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