Financial performance of commercial banks in the emerging markets

In the economic growth of a country, the banking sector plays a significant role (Alam, Rabbani, Tausif, & Abey, 2021). The overall objective of the study is to investigate the financial performance of commercial banks in emerging markets. The study tried to see the impact of governance, exchange rate volatility, trade openness, and internet access on the financial performance of commercial banks in Ethiopia during the years from 2014 to 2019. The study employed a random-effects model using balanced panel data. The result indicated that composite governance index, trade openness, and internet access have a positive and statistically significant effect on the financial performance of commercial banks as measured by their return on assets. However, the exchange rate volatility has a negative and statistically significant effect on the financial performance of commercial banks. On the other hand, the result of bank-specific variables considered in the study such as profit margin, asset utilization, net interest margin, overhead efficiency, and numbers of branches have a positive and statistically significant effect on the financial performance of commercial banks. Contrarily, the equity multiplier ratio has a negative and significant effect on the financial performance of commercial banks

Family social capital and governance of family businesses: The emerging market evidence

Considered as the most dominant business form in the entrepreneurial fabric in Morocco, as in the majority of countries in the world (Salhi, 2017), the family business is distinguished by a family social capital (FSC) making it competitive and perennial (Mesfar & Ben Kahla, 2018). This paper aims to analyze the influence of this capital, through its three dimensions — structural, relational, and cognitive — on the governance system of Moroccan family firms. The results of our exploratory study conducted among 30 family businesses in the form of interviews showed, on the one hand, that the existence of a strong FSC within the company makes its governance system based on informal family mechanisms. On the other hand, the weakness of the said capital has not led the companies that are the subject of our study to adopt formal corporate governance mechanisms as shared by several researchers. This is due, according to the interviewees, to socio-cultural considerations. Our results contribute to the enrichment of the literature while showing that the informality of governance mechanisms can be explained, not only by the strength of its FSC but also by such a socio-cultural context where the family model is of a communal and clan type welded by Islamic religious values of group cohesion

Standardization and strengthening the functionality of hospital management boards in central hospitals: Evidence of a developing economy

Zimbabwe’s public hospitals have been criticised for the declining standard of health service delivery for the past three decades with fingers pointed towards the hospital governance system. In response to the criticism, the government of Zimbabwe, through the Ministry of Health, has begun the process of making structural changes to the entire hospital governance system (Moyo, 2016; Sikipa, Osifo-Dawodu, Kokwaro, & Rice, 2019). The aim of the study is to examine the processes of appointing hospital management board (HMB) members in central hospitals of Zimbabwe. The study sought to explore the standardization, strengthening, and performance of HMBs in central hospitals of Zimbabwe with a focus on six central hospitals which include Harare, Chitungwiza, Parirenyatwa Group of Hospitals, United Bulawayo Hospitals (UBH), Mpilo, and Ingutsheni. The study employed a mixed-method design using the questionnaire and interviews to collect data. The target population included 66 board members. The census approach was used meaning that all members of the population formed the sample size. The study revealed that 67% of hospitals had functional HMBs with a quorum despite lacking a clear policy to evaluate their performance. The gaps identified required policy review to strengthen the appointment and performance of HMBs

Principal-principal conflicts leading to activism of a large government-owned investor in Brazil

This article analyzes conflicts between principals that led to activism by one large Brazilian government-owned investor as a minority shareholder and verifies the antecedents, means employed, apparent motivations, and effectiveness of its reactions (Goranova & Ryan, 2014). It examines the cases of three large high ownership concentration listed companies using solely public sources. Poor performance was a frequent conflict antecedent. No evident trade-off between activism and corporate governance (CG) practices emerged. High ownership concentration influenced the way the investor reacted and its success because opposition through internal CG mechanisms was usually not successful and led to legal proceedings. The limitations of the regulatory framework became evident from the mixed outcomes of these proceedings. The investor was not exclusively financially motivated and it occasionally opposed the interests of other minority shareholders to follow government policy. These findings illustrated how high ownership concentration rendered difficult the mitigation of principal-principal conflicts even for a large government-owned investor and help explain the failure of previous econometric studies to relate activism, quality of CG practices and performance (Young, Peng, Ahlstrom, Bruton, & Jiang, 2008)

Theory A, Theory B and Theory C of managing people at work

Managing people and productivity are prime concerns of modern business organizations. Many empirical studies were conducted during the era of scientific management (Taylor, 1911) to investigate What and How? McGregor’s (1960) epic theory — Theory X and Theory Y, categorizing all employees into two groups and prescribing methods to motivate and control them was the best. However, his findings also suffered strong criticisms, creating research gaps. The objective of this study was to investigate further and to conclude that there are three major groups named Theory A, Theory B, and Theory C. Amongst them, a middle group — Theory B is most dominant, having all capabilities to significantly influence productivity and prosperity of organizations. The methodology used was qualitative, based upon intensive and critical shop-floor observations. Since this study was not empirical, it had many limitations requiring further researches. Therefore, rightly recommended that future studies should correlate the impact of technological advancements upon motivations and productivity of the modern business organization (Veitch, 2018).

Profitability analysis with the fuzzy logic: A hospital example

Implementation of the fuzzy logic is a modern approach for cost-volume-profit analysis and decision-making process under risk and uncertainty (Yuan, 2009). The implementation of the fuzzy logic approach especially makes sense for profit or loss estimations in developing countries, where uncertainties and risks are often observed (Roztocki & Weistroffer, 2005). This study aimed to estimate the profit or loss of indirect Coombs blood test, which is among the 100 blood tests run by the laboratory department of a healthcare organization located in Istanbul, Turkey, that started operations in 2018. Another purpose of the research was to compare the profit or loss estimated by fuzzy logic with the actual values. Research questions of the study were: 1) Can fuzzy logic be used in the health sector’s profitability estimates? 2) What is the estimated success rate of fuzzy logic in the case of uncertainty and complexity? 3) If the fuzzy logic can be used in the health sector’s profit forecasts, how close are the estimated profit sums achieved by the fuzzy logic to the actual profit sums? Based on the findings of the study, profit estimated by the fuzzy logic is in a close range to actual values with a low error rate

The effect of financial literacy on behavioral biases of individual investors in the Egyptian stock exchange

The purpose of this paper is to examine how the dimensions of financial literacy could affect the behavioral biases of individual investors in the Egyptian stock exchange. The study examines the data collected from 403 individual investors in Egypt. The findings revealed the presence of some kinds of behavioral biases among individual investors in the Egyptian stock exchange, which could be categorized into three main categories: belief perseverance biases, information processing biases, and emotional biases (Pompian, 2012). This supports the view that individual investors do not necessarily act rationally. The findings also support the general view that financial literacy has a negative effect on behavioral biases; however, the effect differs between the categories of the behavioral biases, with the most effect on information processing biases, moderate effect on belief perseverance biases, and low effect on emotional biases. Also, this study indicated that the impact of financial literacy on behavioral biases is greater on females than males (Baker, Kumar, Goyal, & Gaur, 2019). Financial intermediaries and consultants can possibly become more effective by understanding the decision-making processes of individual investors. This study adds to the limited academic research that attempted to tackle the impact of financial literacy on the categories of behavioral biases

Earnings management determinants: A study of Egyptian listed firm characteristics post the Egyptian revolution

This research aims to look at how firm characteristics and audit quality can affect the earning management practices in the Egyptian context, within the period of 2011–2019. This period was after the Egyptian revolution and has not been well investigated in Egypt, especially after the new release of corporate governance rules for listing firms. A sample of 157 non-financial listed companies in the Egyptian stock exchange is selected for achieving the research objective through analysing their financial reports. The panel least squares, using the fixed-effect model, is used to test the hypotheses and investigate the relationship between discretional accruals and firm characteristics, where the dependent variable is the earnings management, measured by the discretionary accruals and the independent variables are the firm characteristics (size, financial leverage, age, survival and audit quality). The results illustrate that the relationship between a firm’s financial leverage and earnings management is positive. This study may help the firms to control their financial leverage for avoiding any earnings management practice. The stakeholders should notice such significant firm characteristics in making their own decisions, especially after the COVID-19 pandemic crisis, which may expectedly increase the firm financial leverage, and in turn, some earning management practices can be used intentionally to hide the bad firm performance

Editorial: Rethinking operational governance and board composition

There is a lot going on, nowadays, in terms of corporate governance (CG). The amount of discussion concerning CG and the boardroom dynamic, and behaviors is quite phenomenal; even in developing countries with weak institutions (Aguilera, 2005), where scholars are doing valuable work to shed light on what is missing to reinforce the CG practices. Poor ethical leadership, fraud, corruption, lack of cultural homogeneity, lack of diversity, and mismanagement are the main contributors to failures. Rethinking operational governance, the board composition, and how decisions are made, executed, and monitored can deeply affect organizational effectiveness and corporate performance (Wyman, 2015). The following papers published in the present issue mainly discuss how organizational effectiveness and performance are a function of the board composition, diversity, and behavior

Comparison of the labor market between the countries of the Western Balkans

The improvement of the labor market, the management, the expansion of foreign direct investment, etc., all play a key role in the economic development of the Western Balkans. The main purpose of this study is to analyze and compare trends in employment, unemployment, gross domestic product (GDP), foreign direct investment (FDI), labor market management and to study the effects of foreign direct investment on employment in the Western Balkans (Albania, Bosnia and Herzegovina, Kosovo, North Macedonia, Montenegro, and Serbia) between 2015 and 2019. However, evidence for FDI’s impact is mixed (Navaretti & Venables, 2004). In terms of methodology, comparative and empirical analyses of the strength of the correlation between the dependent variable of employment and the independent variable of FDI for the countries of the Western Balkans have been conducted. Based on analyses, the employment rate in the six Western Balkan countries in 2019 has improved when compared to 2018, except in Montenegro, where it has declined. This study will contribute to enhance understanding of the labor market and the impact of FDI on employment in the Western Balkan countries