scholarly journals Corporate ownership patterns in developing countries

2016 ◽  
Vol 13 (2) ◽  
pp. 101-112 ◽  
Author(s):  
Tesfaye T. Lemma ◽  
Minga Negash
Keyword(s):  
Developing Countries ◽  
Ownership Concentration ◽  
Institutional Pressures ◽  
Agency Conflicts ◽  
Corporate Ownership ◽  
African Countries ◽  
Firm Level ◽  
Country Level ◽  
Real Gdp Per Capita ◽  
Ownership Patterns

This paper examines the effect of firm-, industry-, and country-level factors on corporate ownership pattern within the context of six African countries. Based on theory, we develop multi-dimensional models and examine data pertaining to 377 non-financial firms across a time period of 15 years using a battery of econometric procedures. In the sample countries, ownership concentration and/or block shareholding increases with firm level debt maturity structure, industry regulation, and perceived level of corruption in a country and its real GDP per capita. We also find ownership concentration and/or block shareholding decreases with firm level basic capital structure, firm size, and orientation of the financial system of a country. Our findings signify the role that information asymmetries, agency conflicts, and institutional pressures play in the determination of corporate ownership patterns in developing countries. The findings have practical implications for the investment community in assessing ownership patterns of companies listed in developing countries. Furthermore, the results spark insights that are potentially useful to enhance corporate governance institutions in developing countries.

scholarly journals Financial constraint, trust, and export performances: firm-level evidence from Africa

2021 ◽  
pp. 1-23
Author(s):  
Maty Konte ◽  
Gideon Ndubuisi
Keyword(s):  
Financial Constraints ◽  
Interpersonal Trust ◽  
Negative Relationship ◽  
Financial Constraint ◽  
African Countries ◽  
Firm Level ◽  
Country Level ◽  
The World Bank ◽  
Negative Effect ◽  
Enterprise Surveys

Abstract Several existing studies have documented a negative relationship between firm financial constraint and export activities but do not attempt to examine factors that could attenuate this relationship in Africa. In this paper, we examine the effect of financial constraint on exports in Africa and explore how the level of trust in countries where firms are located shapes this relationship. We combine the World Bank Enterprise Surveys with different measures of country-level personal and interpersonal trust computed from the Afrobarometer surveys of 19 African countries. Our results show that financial constraints negatively affect export activities. However, this negative effect is attenuated for firms that are located in trust-intensive societies. These findings are robust to different specifications. Interestingly, we find that small and medium-sized enterprises in Africa are more likely to be affected by financial constraints but also more likely to benefit from a higher level of both personal and interpersonal trust, while for larger firms only interpersonal trust matters.

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 Corporate Governance Mechanisms, Ownership and Firm Value: Evidence from Listed Chinese Firms

2020 ◽  
Vol 8 (2) ◽  
pp. 20 ◽  
Author(s):  
Yusheng Kong ◽  
Takuriramunashe Famba ◽  
Grace Chituku-Dzimiro ◽  
Huaping Sun ◽  
Ophias Kurauone
Keyword(s):  
Corporate Governance ◽  
Firm Value ◽  
Ownership Concentration ◽  
Institutional Setting ◽  
Tobin’S Q ◽  
Governance Mechanism ◽  
Corporate Ownership ◽  
Firm Level ◽  
Tobin's Q ◽  
Negative Effect

This study analyzes corporate ownership as a corporate governance mechanism and its role in creating firm value. Previous research shows that there is no convergence on the firm-value corporate ownership relationship. Most research in this area takes a cross national approach ignoring the uniqueness of each institutional setting particularly those of emerging nations. Using a unique firm level dataset, we investigate how corporate control nature and ownership concentration affect the value of Chinese listed firms. First, non-state owned control is associated with a higher Tobin’s Q while a negative premium is found for state owned. Using the hybrid and the correlated random effects model we confirm a U-shaped non-linear relationship between ownership concentration and Tobin’s Q, implying that firm value first decreases and then increases as block holders own more shares. Further investigation reveals that the negative effect of ownership concentration is weaker when a firm equity nature is non-state owned enterprises (non-SOEs) compared to state-owned enterprises (SOEs). While ownership concentration appears to be an efficient mechanism for corporate governance its effect is weaker for SOEs compared to non-SOEs. The results support privatization of SOEs, sound reforms such as the split share structure reform as crucial for the development of China’s stock market.

The finance of innovation in Africa

2019 ◽  
Vol 23 (3) ◽  
pp. 348-382 ◽  
Author(s):  
Misraku Molla Ayalew ◽  
Zhang Xianzhi ◽  
Demis Hailegebreal Hailu
Keyword(s):  
Developing Countries ◽  
Trade Credit ◽  
Innovation Process ◽  
Medium Size ◽  
African Countries ◽  
Firm Level ◽  
Content Type ◽  
Significant Difference ◽  
Innovative Firms ◽  
Finance Innovation

Purpose The purpose of this paper is to investigate how firms in developing countries finance innovation. Notably, the study seeks to investigate whether innovative firms exhibit financing patterns different from those of non-innovative ones. It also examines the effect of financing sources on firm’s probability to innovate. Design/methodology/approach The study utilizes firm-level data from the World Bank Enterprise Survey. From 28 African countries, 11,173 firms have been included in the sample. A statistical t-test is used for two independent samples and logistic regression models. Findings The results show that innovative firms, specifically innovative small- and medium-size firms exhibit financing patterns different from non-innovative peers. Further analysis indicates that there is no statistically significant difference between the financing patterns of innovative and non-innovative large firms. In Africa, innovation is mostly financed using internal sources and bank finance. Equity finance and bank finance have shown a higher effect followed by internal finance, finance from non-bank financial institutions and trade credit finance on firms’ probability to innovate. Practical implications The management of innovative firms should reduce dependency on short-term and retained earning financing and increase the use of long-term instruments improve innovation performance. Social implications A pending policy task for African leaders is to design and evaluate reforms to create a strong financial sector that willing to support the innovation process. Originality/value This study contributes to the existent literature on finance of innovation by examining how firms finance innovation activities in developing countries. This study provides evidence on how innovative firms exhibit financing patterns different from non-innovative ones from developing countries.

The effect of financial constraints on innovation in developing countries

2019 ◽  
Vol 28 (3) ◽  
pp. 273-308
Author(s):  
Misraku Molla Ayalew ◽  
Zhang Xianzhi
Keyword(s):  
Adverse Effect ◽  
Developing Countries ◽  
Firm Size ◽  
Financial Constraints ◽  
Age Groups ◽  
Probit Model ◽  
African Countries ◽  
Firm Level ◽  
Content Type ◽  
Recursive Bivariate Probit

Purpose The purpose of this paper is to investigate the effect of financial constraints on innovation in developing countries. It also examines how the effect of financial constraints varies by sector and with main firm characteristics such as size and age. Design/methodology/approach The study utilizes matched firm-level data from two sources; the World Bank Enterprise Survey and the Innovation Follow-Up Survey. From 11 African countries, 4,720 firms have been included in the sample. A recursive bivariate probit model is used. Findings The result shows that financial constraints adversely affect a firm’s decision to engage in innovative activities and the likelihood to have product innovation and process innovation. The results point out that the extent of the adverse effect of financial constraints on innovation differs across the sectors, firm size and age groups. A firm’s innovation is also explained by firm size, R&D, cooperation/alliance, the human capital of the firm, staff training, public financial support and export. At last, the probability of encountering financial constraints is explained by firms’ ex ante financing structure, amount of collateral, accounting and auditing practices and group membership. Practical implications Managers should strengthen the internal and external financing capacity to reduce financing constraints and their adverse effect on innovation. Social implications A pending policy task for African leaders is to design and evaluate reforms that reduce the adverse effects of financial constraints on innovation. Originality/value This study contributes to the existing literature on financing of innovation by examining how and to what extent financial constraints affect innovation across various sectors, size and age groups.

scholarly journals THE IMPACTS OF CORRUPTION ON FIRM PERFORMANCE: SOME LESSONS FROM 40 AFRICAN COUNTRIES

2016 ◽  
Vol 21 (04) ◽  
pp. 1650022 ◽  
Author(s):  
COLIN C. WILLIAMS ◽  
ABBI M. KEDIR
Keyword(s):  
Firm Performance ◽  
Cost Benefit ◽  
Evidence Base ◽  
Current Evidence ◽  
African Countries ◽  
Firm Level ◽  
Public Authorities ◽  
Country Level ◽  
Current Evidence Base ◽  
The Individual

The current evidence-base regarding the impacts of corruption on firm performance is based largely on studies of individual countries and contains mixed results. Therefore, the aim of this paper is to achieve a better insight into this relationship by reporting the results of a firm-level analysis of the impacts of corruption on firm performance using World Bank Enterprise Survey (WBES) data across 40 African countries. The clear result is that corruption significantly enhances rather than harms annual sales, employment and productivity growth rates. The outcome is to re-theorize participation in acts of corruption as beneficial for the individual firms engaged in such activity, while recognizing the wider evidence that this is not an optimal strategy at the aggregate country level. The outcome will be to advance knowledge about how corruption needs to be tackled. To eliminate corruption, it is shown here to be necessary for public authorities to recognize that corruption is an efficient strategy at the firm level and to adopt measures to alter the cost/benefit ratio confronting individual enterprises, and at the same time, to address the country-level formal institutional deficiencies that characterize many developing countries and result in the prevalence of corruption.

Financialisation, institutions and financing constraints in developing countries

2019 ◽  
Vol 43 (4) ◽  
pp. 825-866 ◽  
Author(s):  
Charilaos Mertzanis
Keyword(s):  
Developing Countries ◽  
Financing Constraints ◽  
External Financing ◽  
Access To Finance ◽  
Firm Level ◽  
Country Level ◽  
Level Data ◽  
Financial Depth ◽  
Level Information ◽  
The Impact

Abstract The paper uses a consistent firm-level data from the World Banks Enterprise Surveys to explore the impact of financialisation in the economy on firms’ access to finance in 138 developing countries. Access to finance reflects survey-based firms’ perceptions of external financing constraints. Financialisation is proxied by consistent cross-country measures of financial depth. These proxies capture separately the role of bank-based versus market-based financing. Firm-, sector- and country-level information is jointly used for the analysis. Firm-specific characteristics and economic and non-economic national factors are included as controls. The results show that the proxies of financialisation are broadly robust predictors of financing constraints of firms in developing countries. However, the magnitude of the financialisation effect varies between bank-based and market-based channels of financing as well as between low- and high-income countries, and it is influenced by social, institutional and religious factors.

Principal–principal agency conflicts, product market competition and corporate payout policy in China

2020 ◽  
Vol 14 (3) ◽  
pp. 265-279
Author(s):  
Amjad Iqbal ◽  
Xianzhi Zhang ◽  
Muhammad Zubair Tauni ◽  
Khalil Jebran
Keyword(s):  
Market Competition ◽  
Agency Problems ◽  
Payout Policy ◽  
Agency Conflicts ◽  
Minority Shareholders ◽  
Firm Level ◽  
Content Type ◽  
Agency Conflict ◽  
Concentrated Ownership ◽  
Country Level

Purpose The purpose of this paper is to examine the interaction between competition and corporate payout policy and more specifically to answer the question that whether competition mitigates the principal–principal agency conflicts and influences firms to distribute dividends to shareholders in Chinese corporations. Design/methodology/approach This research models measures of competition with scaled measures of dividends and analyzes a sample of 16,730 firm-year observations from Chinese-listed manufacturing firms for the period spanning 2003 to 2016. Further, this research uses the Tobit model (a censored regression) to empirically test the proposed hypotheses. Findings This research finds that intense competition not only mitigates agency problems and forces firms to disgorge cash but also increases a firm’s likelihood to pay dividends and weakens the negative association between agency conflicts and dividends. Practical implications The results show an important policy implication for the industry. As the principal–principal agency conflict restrains the dividends, the regulatory authorities could encourage a competitive environment and a more diverse ownership structure to induce a higher dividend rate and protect the minority shareholders. In addition, this study also has implications for other emerging markets characterized by concentrated ownership and principal–principal agency problems. Originality/value This study adds to the literature related to the disciplinary role of competition and identifies competition as a significant determinant of corporate payout policy. Furthermore, this research extends earlier research on corporate payout decisions that besides firm-level corporate governance and country-level legal system, industry-level competition also influences corporate payout decisions, significantly.

Convergence and determinants of anti-corruption disclosure among extractive firms in Africa

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
King Carl Tornam Duho ◽  
Cletus Agyenim-Boateng ◽  
Emmanuel Tetteh Asare ◽  
Joseph Mensah Onumah
Keyword(s):  
Fixed Effects ◽  
Academic Community ◽  
Global Reporting Initiative ◽  
Special Focus ◽  
African Countries ◽  
Firm Level ◽  
Content Type ◽  
Country Level ◽  
High Prevalence ◽  
National Enterprise

Purpose The purpose of this study is to examine the convergence and determinants of anti-corruption disclosures of extractive firms in Africa. Design/methodology/approach The study uses an unbalanced panel data of 27 firms operating in 5 African countries covering the period 2006 to 2018. Corporate data is collected from the global reporting initiative (GRI) database. The study uses an index to measure overall disclosure and individual items are coded as binary. The study uses fixed effects, panel logistic and panel-corrected standard error regression, depending on the type of dependent variable used. Findings The results indicate that the determinants of anti-corruption disclosure are membership in the United Nations global compact (UNGC) and Extractive Industry Transparency Initiative, multi-national enterprise status, corruption perception index and human development index (HDI). Specifically, UNGC membership and multi-national status enhance the disclosure on corruption analysis. Countries with a high prevalence of corruption tend to disclose more on corruption analysis. Disclosure on corruption training is high among firms that are UNGC signatories, countries with a high HDI and countries with a high prevalence of corruption. There is a weak effect of firm-level, industry-level and country-level factors on disclosures on corruption response. Research limitations/implications The study provides insights on the use of GRI 205: Anti-Corruption, which has relevant implications for practitioners, policymakers and the academic community. Originality/value This study is premier in exploring anti-corruption disclosure with a special focus on extractive firms in Africa. It is also unique in providing a test of both beta and sigma convergence among the firms.

Sign in / Sign up

Export Citation Format

Share Document