RELATIONSHIP BETWEEN BOARD CHARACTERISTICS AND FIRM FINANCIAL DIVERSIFICATION (GEOGRAPHIC SALES) AMONG LISTED FIRMS ON NAIROBI SECURITIES EXCHANGE, KENYA: STATIC PANEL APPROACH

2018 ◽  
Vol 2 (7) ◽  
pp. 19
Author(s):  
Elijah Museve ◽  
Philip Mulama Nyangweso ◽  
Joel Tenai
Keyword(s):  
Capital Market ◽  
Free Cash Flow ◽  
Geographic Diversification ◽  
Resource Based View ◽  
Listed Firms ◽  
Board Characteristics ◽  
Operational Risks ◽  
The Government ◽  
Free Cash Flow Hypothesis ◽  
The Relationship

Purpose: The purpose of the study was to determine the relationship between board characteristics and firm financial diversification (geographic sales) among listed firms on Nairobi securities exchange, Kenya: static panel approach.Methodology: Fisher and Levin-Lin-Chu tests were used to test the presence of unit root in the series under study. Hadri residual-based Lagrange multiplier test was used to determine the feasible model.Results: Results revealed existence of positive and significant relationship between interlock directorship and geographic diversification as positive and significant directors’ remuneration had a negative and significant effect on firm’s geographic sales, while operational risk negatively varied with geographic sales Agency Theory, free cash flow hypothesis Resource Based view theory provided theoretical framework. Directors’ remuneration negatively impacted geographic sales but did not explain diversification in relation to national sales. This study affirmed the managerial heuristics as determinant of firm financial diversification providing support to the convectional financial dimensions of firm performance particularly ROE, ROI and EPS.Unique contribution to theory, practice and policy: The Government of Kenya and Capital Market regulator should enact and implement legislations that guides on interlock directorship, directors remuneration diversity and tolerable operational risks as determinants of diversification

scholarly journals CORPORATE STRATEGY DEVIATION AND INSTITUTIONAL INVESTOR RECOGNITION: COMPLEX NETWORK-BASED AND GRAPH CLUSTERING ANALYSIS

2021 ◽  
Vol 0 (0) ◽  
pp. 1-30
Author(s):  
Chunyan Lin ◽  
Jia Liu ◽  
Peide Liu
Keyword(s):  
Capital Market ◽  
Institutional Investors ◽  
Clustering Analysis ◽  
Corporate Strategy ◽  
Strategic Choices ◽  
Research Perspective ◽  
Listed Firms ◽  
The Common ◽  
The Stability ◽  
The Relationship

In this paper, the quantitative analysis is implemented on the relationship between strategy deviation of listed firms and institutional investors’ recognition. For research methodology, financial complex networks and clustering techniques are employed to measure the de-gree of recognition by creating links to the common stockholding behaviour of institutional investors. Besides, quarterly panel data from 2006 to 2020 are constructed for an innovative study of the degree of recognition of institutional investors’ strategy deviation of listed firms under different innovation fields, firm properties, and market style heterogeneity and asymmetry. The stability test is conducted by the transformation of the measures and methods, thereby effectively avoiding the “cluster fallacy”. We validate the mechanism by which the differences in strategic choices and propensities of listed firms affect capital market recognition, and enrich the microscopic research perspective and methodology on related issues.

scholarly journals Board of Directors and Environmental Reporting: Evidence From Plantation Industry.

2018 ◽  
pp. 916-925
Author(s):  
Raudah Siman ◽  
Rina Fadhilah Ismail ◽  
Zanariah Aziz@ Omar ◽  
Zuraidahq Mohd Zam
Keyword(s):  
Annual Reports ◽  
Environmental Reporting ◽  
Policy Makers ◽  
Listed Firms ◽  
Reporting Practices ◽  
Board Characteristics ◽  
Content Analysis Method ◽  
Regulatory Bodies ◽  
Code Of Corporate Governance ◽  
The Relationship

The purpose of this study is to examine the extent of environmental reporting by listed firms in the plantation industry in Malaysia. The relationship between board characteristics and the extent of environmental reporting by listed firms in Malaysia plantation industry is examined for the first three years after the issuance of the new revised Malaysian Code of Corporate Governance in 2012 (MCCG 2012). Three board characteristics have been used to explain the level of environmental reporting by Malaysia’s plantation industry firms. The correlation analysis is employed to investigate the relationship between the board characteristics and environmental reporting. This study employs a content analysis method by reviewing 110 annual reports consisting of 37 firms listed in Bursa Malaysia for three years (2013-2015). The result reports that most of the board characteristics are not significantly related to environmental reporting by the firms. Out of six measurements, only the environmental related expenses have a positive relationship with environmental reporting. The results from this study may provide knowledge and empirical understanding concerning the environmental reporting practices by the plantation industry. The policy makers and regulatory bodies such as Bursa Malaysia and Securities Commission may consider formulating guidelines for reporting environmental information to encourage voluntary compliance.

scholarly journals Board of Directors and Environmental Reporting: Evidence From Plantation Industry

2019 ◽  
pp. 49-58
Author(s):  
Raudah Siman ◽  
Rina Fadhilah Ismail ◽  
Zanariah Aziz@ Omar ◽  
Zuraidah Mohd Zam
Keyword(s):  
Annual Reports ◽  
Environmental Reporting ◽  
Policy Makers ◽  
Listed Firms ◽  
Reporting Practices ◽  
Board Characteristics ◽  
Content Analysis Method ◽  
Regulatory Bodies ◽  
Code Of Corporate Governance ◽  
The Relationship

The purpose of this study is to examine the extent of environmental reporting by listed firms in the plantation industry in Malaysia. The relationship between board characteristics and the extent of environmental reporting by listed firms in Malaysia plantation industry is examined for the first three years after the issuance of the new revised Malaysian Code of Corporate Governance in 2012 (MCCG 2012). Three board characteristics have been used to explain the level of environmental reporting by Malaysia’s plantation industry firms. The correlation analysis is employed to investigate the relationship between the board characteristics and environmental reporting. This study employs a content analysis method by reviewing 110 annual reports consisting of 37 firms listed in Bursa Malaysia for three years (2013-2015). The result reports that most of the board characteristics are not significantly related to environmental reporting by the firms. Out of six measurements, only the environmental related expenses have a positive relationship with environmental reporting. The results from this study may provide knowledge and empirical understanding concerning the environmental reporting practices by the plantation industry. The policy makers and regulatory bodies such as Bursa Malaysia and Securities Commission may consider formulating guidelines for reporting environmental information to encourage voluntary compliance.

scholarly journals Manajemen Risiko Reputasi Dalam Pasar Modal Syariah

2019 ◽  
Vol 8 (2) ◽  
pp. 270-282
Author(s):  
Sri Rahmani
Keyword(s):  
Capital Market ◽  
The State ◽  
Human Beings ◽  
Legal Basis ◽  
The Government ◽  
First Time ◽  
The Relationship ◽  
The Capital Market

The application of sharia principles in the capital market certainly comes from the Qur'an and the Hadith of the Prophet Muhammad. Both of these sources made the scholars interpret later called the science of jurisprudence. One of the discussions in the science of jurisprudence is a discussion about muamalah, namely the relationship between human beings related to commerce. Based on that Islamic capital market activities are developed on the basis of muamalah fiqh. There are muamalah fiqh rules which state that basically, all forms of muamalah are permissible unless there is an argument which forbids it. This concept is the principle of the Sharia Capital Market in Indonesia. The development of the Sharia Capital Market reached a new milestone with the enactment of Law Number 19 of 2008 concerning Government Sharia Securities on May 7, 2008. This law is needed as a legal basis for the issuance of state sharia securities or state Sukuk. On August 26, 2008, for the first time, the Government of Indonesia issued the State Sharia Securities series IFR0001 and IFR0002.

scholarly journals Testing the Relationship between Free Cash Flow and Company Performance in Borsa Istanbul

2017 ◽  
Vol 10 (5) ◽  
pp. 148
Author(s):  
Eyup Kadioglu ◽  
Saim Kilic ◽  
Ender Aykut Yilmaz
Keyword(s):  
Cash Flow ◽  
Negative Relationship ◽  
Free Cash Flow ◽  
Company Performance ◽  
Data Set ◽  
Dividend Payments ◽  
Significant Negative Relationship ◽  
Free Cash Flow Hypothesis ◽  
The Relationship ◽  
Positive Effect

This study tests whether free cash flow affects the performance of firms in the context of the free cash flow hypothesis. The study applies a panel regression method to a data set consisting of 2,175 observations belonging to 370 companies listed in Borsa Istanbul during the period 2009-2015. A significant, negative relationship is found between free cash flow and firm performance measured by Tobin’s Q ratio. Greater free cash flow in the hands of managers leads to the lower performance and, conversely, less free cash flow in the hands of managers leads to higher performance. The results also confirm that leverage and dividend payments have a positive effect on performance. Thus, the results support the free cash flow hypothesis for Turkey.

Investor recognition and stock returns: evidence from China

2018 ◽  
Vol 8 (2) ◽  
pp. 199-215 ◽  
Author(s):  
Hongquan Zhu ◽  
Lingling Jiang
Keyword(s):  
Stock Market ◽  
Stock Returns ◽  
Capital Market ◽  
Univariate Analysis ◽  
Chinese Stock Market ◽  
Cross Sectional ◽  
Content Type ◽  
Listed Firms ◽  
Monthly Return ◽  
The Relationship

Purpose Merton’s model of capital market equilibrium under incomplete information predicts that contemporaneous stock returns are positively related to investor recognition and that future stock returns are negatively related to investor recognition. The purpose of this paper is to empirically investigate whether Merton’s theory holds true for the Chinese stock market. Design/methodology/approach This paper proposes the degree of shareholder base growth (SBG) as a proxy for investor recognition and examines the relationship between investor recognition and stock returns through a univariate analysis and Fama-Macbeth cross-sectional regressions based on A-Share listed firms. Findings The results show that investor recognition is nonlinearly and positively related to contemporaneous stock returns and is negatively related to future stock returns in contrast to the conclusions of Merton’s theory. A long-short trading strategy that involves buying stocks with the lowest SBG rate and that sells stocks with the highest SBG rate will earn an average monthly return of 3.615 percent. Research limitations/implications Though Merton’s theory is not fully reflected in the Chinese stock market, investor recognition is considered an important risk factor in the Chinese stock market. Originality/value No works have yet investigated the validity of Merton’s “investor cognition hypothesis” in relation to the Chinese stock market. This paper strives to fill this gap.

scholarly journals Analysing the Impacts of Free Cash Flow, Agency Cost and Firm Performance in Public Listed Companies in Malaysia

2021 ◽  
Vol 5 (1) ◽  
pp. 211-218
Author(s):  
Noraina Mazuin Sapuan ◽  
Norwazli Abdul Wahab ◽  
Muhammad Ashraf Fauzi ◽  
Aktom Omonov
Keyword(s):  
Firm Performance ◽  
Cash Flow ◽  
Negative Impact ◽  
Positive Impact ◽  
Listed Companies ◽  
Agency Cost ◽  
Free Cash Flow ◽  
Asset Turnover ◽  
Free Cash Flow Hypothesis ◽  
The Relationship

This study intended to examine the relationship between free cash flow and agency costs towards firm performance based on the data from 350 public listed companies in Malaysia. The data was collected from year 2005 to 2015. There is a need to re-examine the free cash flow hypothesis and the agency theory based on Malaysian data as the results from previous studies shown a mix results.The findings shown free cash flow is significantly giving positive impact on firm performance. This result is contradict to free cash flow hypothesis, but it can occur due to, when the availability of investments opportunities that can be generated when firm more free cash flow that later able to increase firm performance. Meanwhile, total asset turnover has a positive impact on return on asset. However, the operating expenses ratio demonstrates that the operating expenses ratio has a negative impact on return on asset. The mix findings of agency cost are supported by previous studies.

scholarly journals Are listed firms better governed? Empirical evidence on board structure and financial performance

2015 ◽  
Vol 13 (1) ◽  
pp. 736-755 ◽  
Author(s):  
Cesario Mateus ◽  
Thomas Hall ◽  
Irina B. Mateus
Keyword(s):  
Financial Performance ◽  
Prima Facie ◽  
Board Structure ◽  
Outside Directors ◽  
Firm Level ◽  
Listed Firms ◽  
Board Characteristics ◽  
Leadership Structure ◽  
The Relationship ◽  
Unlisted Firms

We examine the relationship among board characteristics (network centrality, leadership structure, outsider participation, portion of male directors, director age, and presence of financial experts) and firm-level financial performance (cash holdings, leverage, ROA, risk, and risk-adjusted return). Our data encompass firms from eight countries during 2003-2012. Unlisted firms are smaller and have less leverage. Despite the fact that unlisted firms have prima facie better average governance (they are less likely to have an executive chair (or CEO as chair of the board) and a higher average portion of outside directors), they exhibit worse risk-adjusted returns. Higher levels of director connectedness (centrality) are generally associated with more observable entrenchment (more cash, less leverage), whereas other board characteristics do not show clear relationships with entrenchment. Our findings are consistent with the view that firmly established CEOs are willing and able to pack the board with qualified and connected members, who nevertheless do not act to constrain CEO entrenchment. This is true for both listed and unlisted firms

Free Cash Flow and Earnings Management

2021 ◽  
pp. 85-103
Author(s):  
Sandra Alves
Keyword(s):  
Earnings Management ◽  
Cash Flow ◽  
Fixed Effects ◽  
Positive Impact ◽  
Free Cash Flow ◽  
Mediating Effect ◽  
European Countries ◽  
Free Cash Flow Hypothesis ◽  
Fixed Effects Regression ◽  
The Relationship

This study draws on Jensen's free cash flow hypothesis to evaluate the relationship between free cash flow and earnings management. This study also examines whether the level of leverage moderate the relationship between free cash flow and earnings management. This study uses a fixed effects regression model to examine the effect of free cash flow on earnings management and to test whether leverage levels moderate that relationship for an unbalanced panel of 13,850 firms' year observations from 2011 to 2018 across five European countries. Consistent with the free cash flow hypothesis of Jensen, this study suggests that firms with high free cash flow are more likely to manage earnings. Further, the results also suggest that the positive impact of free cash flow on earnings management is attenuated in firms with high leverage levels. This study contributes to the literature by examining how free cash flow affects the extent of earnings management and by shedding light on the mediating effect of leverage on the relationship between free cash flow and earnings management.

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