OWNERSHIP STRUCTURE AND FINANCIAL REPORTING QUALITY IN LISTED NON-FINANCIAL FIRMS IN NIGERIA

The objective of this study is to appraise the effect of the ownership structure on the quality of financial reporting in Nigeria. The study used data from 41 non-financial firms listed on the Nigerian Stock Exchange (NSE) for the 2011 to 2019 period. The Generalised Method of Moments (GMM) technique was adopted for the study which is vigorous to the threat of heteroskedasticity and endogeneity. The study findings revealed that institutional and foreign ownership has a significant negative relationship with earnings management, thereby, improving the reporting quality. However, the results show that managerial ownership has an insignificant negative relationship with earnings management. The finding of this study is also robust in scope concerning the issue of unobserved heterogeneity which prior studies have failed to address. Thus, future corporate governance reforms should recognize and sustain these efforts. The study recommends that Firms should expand their institutional and foreign ownership by providing sufficient shares to them. This is important because they frequently deploy their professionalism and wealth of experience to the firms towards meeting corporate goals and agitation of good reporting practice. On the other hand, Firms should ensure that the shareholding of the insider managers is not too high in such a way that the proportion of their shareholding should be minimal. Their shares should not exceed 10% of the total shareholding in the company as it was found to be among the variables that reduce firms' performance.

One or many European models of agriculture? How heterogeneity influences income creation among farms in the European Union

Agricultural structures are quite heterogeneous across the European Union (EU), and it is likely that the underlying technology also differs across regions. In this article, we claim that the heterogeneity of agriculture across the EU affects the process of income creation (i.e. the relative importance of the factors of farm income differ for different agricultural models). A panel of farms representative for 125 regions reporting to the EU Farm Accountancy Data Network (FADN) during the period from 2007 to 2018 is used. In this article, those regions are grouped into three clusters. A system generalised method of moments (GMM) panel estimator is applied to each cluster. The results showed that total factor productivity (TFP), relative prices and agricultural subsidies make different contributions to farm net value added (FNVA). In particular, the income growth of farms in regions dominated by large farms seems to react more to marginal changes of the explanatory variables.

Bilateral Investment Treaty and Foreign Direct Investment in India

India has one of the largest Bilateral Investment Treaty (BIT) networks with other counties around the world. The BITs is to promote foreign investment by increasing investor confidence, empowering individual private parties to take international arbitral proceedings against the threat of appropriation by the government of the host country. This paper analyses the effect of BITs on FDI inflows in India using panel data for 76 countries for the time period 2000-2016 applying a dynamic panel generalised method of moments instrumental variable estimation method. The differenced GMM and system GMM estimates show a significant negative effect of bilateral investment treaties on the FDI inflows in India. While the lagged FDI has a significant positive effect, the financial openness of the source nations is reducing FDI inflows to India. The POLCON index shows that the countries with lesser political constraints have positive FDI outflow towards India. As opposed to domestic variables, the Chinn-Ito and POLCON indices have a greater share of change in FDI inflows to India. It seems that the BITs is not efficient enough to create investor confidence to invest in India.

Do institutions matter for tourism spending?

Institutional frameworks are important for individuals’ attitudes and behaviours, and thus they are important for travel decisions. This study endeavours to examine the influence of various formal and informal institutional factors on tourism spending for a global sample of 120 countries from 2002 to 2019. Applying the two-step system generalised method of moments estimate, the results are robust and consistent. First, informal institutions, that is, colonial history, socialist history, origin of the legal system, religion and language, are important explanatory factors for differences in tourism spending between countries. Second, improvements in formal institutions appear to increase domestic tourism spending while they decrease outbound tourism spending. The results have important policy implications. JEL code: E02, Z30, Z32.

Effects of foreign direct investment and trade on the prevalence of tobacco consumption in Africa: a panel study

Background As African governments take measures to enhance international trade and Foreign Direct Investment (FDI) inflows, a major concern is that, these measures can make Africa more vulnerable to the strategies of the tobacco industry. This concern is based on the fact that, each year, tobacco use is estimated to be responsible for the deaths of over eight million people in the world. However, there is very little empirical evidence to refute or confirm the above concern, especially in the African context. This study therefore investigates the effects of FDI and trade on the prevalence of tobacco consumption in Africa. Methods Data on a sample of 31 African countries for the period, 2010–2018 are used. The system Generalised Method of Moments (GMM) regression model is employed as the empirical estimation technique. Results The findings show that, FDI and trade have negative and positive significant association with the prevalence of tobacco consumption respectively. These findings are robust even after using different specifications and indicators of FDI and trade. Conclusion Rising trade (and not FDI) should be of concern to African governments in the quest to reduce the prevalence of tobacco consumption on the continent.

Determinants of Bioenergy Consumption in the European Continental Countries: Evidence from GMM Estimation

This study contributes to the existing literature by examining bioenergy consumption and related factors in continental European countries (ECC). This study extends the current research through its focus on the ECC, which mainly consists of nationwide studies. This study analyses the determinants of bioenergy consumption in the ECC from 2005-2013, estimates its economic variables and evaluates the influence of each variable on bioenergy consumption and related significance level. A generalised method of moments estimator (GMM) was designed for ECC. The estimated models show that bioenergy capital input (CI) positively impacts bioenergy consumption. The most influential factor on use was the price of bioenergy (PR) followed by investment (INV), then gross domestic product (GDP). These results should be considered and used as a tool to develop legislation and policies that could benefit the bioenergy sector in ECC. The evidence shows that CI, INV, and PR have been the primary keys in improving bioenergy consumption in recent years in ECC countries. Thus, they have advanced the efficiency of bioenergy consumption.

The Impact of Bilateral Investment Treaties on FDI Inflows Into India: Some Empirical Results

After a run of adverse investor-state dispute settlements, India has recently denounced all its erstwhile investment treaties. New investment treaties need to be negotiated on the basis of a new Model Treaty that privilege state rights over investor rights. We study the impact of bilateral investment treaties on foreign direct investment (FDI) inflows into India before the denunciation with the intent of inferring the consequences of changing the system. Our work captures the effects of international investment agreements on FDI inflows specifically into India. We construct an empirical model drawing on the Gravity Model, and estimate parameters using generalised method of moments. The results show that while the individual signing of bilateral investment treaties does not influence the inflow of FDI, the effect of the cumulative bilateral investment treaties signed is statistically very significant—suggesting that the spill over effect of signing a series of bilateral investment treaties are important, signalling a regime of overall protection to investors. The importance of institutional variables in influencing FDI tells us that overall participation in a system governed by international investor agreements influenced the inflow of FDI positively and therefore recent policy changes should be viewed with caution. JEL Codes: F21, F23, F550, F63, K33, O19, C22, C29

Correlation Between Freight Transport Industry and Economic Growth – Panel Analysis of CEE Countries

The paper tests for statistical association between employment and value added of freight transport industry and its component activities against overall economy in a ten-year panel ranging from 2008 to 2017 of the thirteen newest European Union member countries. In this paper, the nature of correlation between economic growth as the independent variable and freight transport industry as a dependent variable is examined. To achieve stationarity, and to lose autocorrelation and the idiosyncratic effects, the variables are first differenced. The results of the “Granger causality” tests show the null hypothesis of no-causation may be rejected for most conjectures with high F-Statistics as well as high statistical significance. The results of the Panel EGLS cross-section fixed effects do not reject the results gained by the Granger test, and the same may be said for the Panel Generalised Method of Moments First Differences test. The result of the Arellano-Bond test shows no serial correlation in the residuals. It has been concluded that changes in overall economy (value added and employment) have a significant and measurably strong impact on freight transportation and warehousing sector. This conclusion is useful in assessing future impacts on freight transport industry, especially as a consequence of contingent events.

Financial crisis and diversification strategies: the impact on bank risk and performance

The paper investigates the impacts of diversification strategies on various indicators of bank risks and performance in emerging markets before, during, and after the global financial crisis. We use a data set of 44 commercial banks in Vietnam over the period 2002-2019 and the Generalised Method of Moments (GMM). The results suggest that income and funding diversification improve bank performance without increasing their risk-taking. During the financial crisis, assets and funding diversity help reduce risk, while income diversified banks bear more risk. The empirical findings show that different diversification dimensions affect bank risk and performance differently during crisis and non-crisis periods so bank managers need to adjust their strategy accordingly.

Nonlinear linkages between bank asset quality and profitability: evidence from dynamic and quantile approaches using a global sample

PurposeThe purpose of this study is to examine whether the relationship between asset quality and profitability is linear or nonlinear, using a global dataset containing 2,943 banks from advanced and emerging economies.Design/methodology/approachThe authors use the U-shape test to investigate the existence of a nonlinear relationship between asset quality and profitability. In addition, the dynamic panel generalised method of moments (GMM) and quantile regression are used to examine the nonlinear effect of profitability on nonperforming loans (NPLs).FindingsAfter controlling for macroeconomic and bank internal factors, the authors find empirical evidence supporting the existence of a nonlinear relationship in the form of a U-shape. This is also confirmed through the three-stage U test procedure. After distinguishing between advanced and emerging economies, the authors also find that, in advanced markets, the credit policy responds more rapidly to changes in credit market conditions than in emerging markets, providing insights into credit market dynamics.Research limitations/implicationsFurther research can check the robustness of this study’s findings in different markets and investigate the existence of nonlinearity in other bank variables.Practical implicationsIn a nutshell, the results demonstrate potential implications for policymakers who need to carefully monitor banks' lending behaviour to ensure that banks do not lower lending standards. In addition, banking regulators and supervisors should consider the possible nonlinear relationship in their risk assessments and macrostress tests. Further, these results are important for bank managers, who should monitor the performance of their loan portfolios to ensure that their credit officers do not lower credit standards. Likewise, for banks located in an emerging economy, investing in human capital and advanced technologies can enable them to respond more effectively to changes in the credit market.Originality/valueTo the best of the authors' knowledge, this study is considered the first to provide empirical evidence for the nonlinear relationship between asset quality and profitability.