How Does COVID-19 Affect the Volatility Spillover Between the Exchange Rate and the Export-oriented Businesses in Iran?

This study concentrates on examining the volatility spillover effects between the exchange rate (IRR to USD) and the leading export-oriented industries (i.e., petrochemical, basic metals and minerals) in Tehran Stock Exchange before and after the COVID-19 pandemic. Using DCC- and asymmetric DCC-GARCH approaches, the data sample (from 15 December 2018 to 24 April 2021) has been partitioned into two sub-samples: before and after the official announcement of COVID-19 outbreak. The results demonstrate that from the pre- to post-COVID-19 periods, first, the average returns of all industries have sharply fallen; second, the volatility of all variables has been significantly augmented in different horizons; third, for all industries, not only has the fractal market hypothesis approved in both separated periods, but also analysing the values of the fractional difference parameter, together with the outcomes of GARCH models, supports in the higher-risk post-COVID-19 period, wherein the effects of exogenous shocks last longer than their impacts in the alternative lower-risk period. Furthermore, our investigations demonstrate that the asymmetric spillover (based on the ADCC-GARCH models) in both pre- and post-COVID-19 periods are confirmed in all three industries, except for minerals after the novel coronavirus.Ultimately, the results not only corroborate the increase in the volatility spillover effects right after the COVID-19 but also substantiate that the exchange rate contributes most of the spillover effects into the petrochemical and minerals industries, which have been almost twice as much as those of the basic metals.

‘New Age’ Preferential Trade Agreements and Global Value Chains: A Comparative Sectoral Analysis

The past three decades witnessed a simultaneous proliferation in the number of preferential trade agreements (PTAs) and the network of global value chains (GVCs). The rise in the number of PTAs has been accompanied by inclusion of ‘deeper’ provisions such as services, competition, intellectual property rights (IPR), etc. This study aims to explain the differential impact PTA ‘depth’ on trade in value added as well as the heterogeneous results observed across industries based on their distinctive characteristics. For this purpose, an augmented gravity equation with three-way fixed effects is estimated, using a relatively newer dataset for the time period 2000-2015 for 64 countries. The results conclude that the PTA ‘depth’ determined by nontariff and ‘behind-the-border’ provisions leads to greater participation of member countries in GVCs. Furthermore, it is shown that value added trade for a sector like automotive, which has higher product differentiation, intra-industry trade, IPR and FDI linkages is most impacted by the PTA ‘depth’.

Capital Regulation and Market Competition in the MENA Region: Policy Implications for Banking Sector Stability During COVID-19 Pandemic

This article investigates the impact of capital requirements and market competition on the stability of financial institutions in the Middle East and North African (MENA) region. We test the hypothesis that capital requirements significantly affect the risk behaviour of both Islamic and conventional banks in the MENA region. We also investigate the moderating effect of market power and concentration on the relationship between capital regulation and bank risk. We find that capital ratio has a strong positive impact on conventional banks’ credit risk, whereas this effect is insignificant in the sample of Islamic banks. Our analysis indicates that, for the conventional banking sector, the increase in the capitalization level is negatively linked to bank credit risk only when banks’ level of market power is high. Regarding the Islamic banks’ behaviour, we find that the relationship between capital and credit risk is weakly moderated by banking competition. This means that Islamic banks are less sensitive to the market’s competitive conditions in the MENA countries, as they still apply their theoretical models, based on prohibition of interest. Our findings inform regulatory authorities concerned with improving the banking sector’s financial stability in the MENA region to strengthen their policies and force banks to better align with regulatory capital requirements during the COVID-19 pandemic.

The Value Relevance of Earnings in the Presence of Earnings Management: Indonesia as Evidence

This study examines the influence of earnings management on the value relevance of earnings, that is, the value relevance of level and changes of earnings. The sample consists of manufacturing companies listed on the Indonesia Stock Exchange (IDX), comprising 606 observations. By using panel data regression, this study provides evidence that the level of earnings has no value relevance; conversely, changes in earnings have value relevance, indicating that earnings have less value relevance. Furthermore, the results of the relevance test of earnings value with the presence of earnings management show that the relevance of the value of the earnings level increases with the presence of earnings management; on the contrary, the relevance of earnings changes decreases with the presence of earnings management. Based on the value of earnings response coefficient, the impact of earnings management on the value relevance of level and changes of earnings appears to indicate that earnings management reduces the value relevance of earnings.

Revisiting Leadership Communication: A Need for Conversation

Effective communication is critical for leaders to influence and create an impact within and outside organizations. Despite this, questions are raised regarding the efficacy & effectiveness of organizational leaders in conducting meaningful communication & conversations with their teams. Often, organizations are unsure of the specific leadership communication attributes and their outcomes at the individual, team and organizational levels. The primary objective of this study is to evaluate the impact of leaders’ communication on the feelings and thoughts of subordinates and to identify attributes for a possible measure of ‘effective leadership communication’. On the basis of ‘communicative leadership’ theorization by Johansson et al. (2014) , primary data was collected from employees’ across organizations. The study reveals gaps in the leader’s communication competence and suggests a need for more meaningful conversation with subordinates. The study proposes a tool for leadership communication assessment comprising two factors: transforming thoughts and transforming individuals.

Financial Instruments to Improve the Competitiveness of Enterprises

Against the background of globalization and the deepening struggle for international markets, competitiveness is among the most important indicators describing the performance of an enterprise. The purpose of this study is to create a methodology for assessing the level of competitiveness of enterprises. The proposed methodology is based on a dual model integrating the parametric and nonparametric methods for assessing the effect of using the financial mechanisms of competitiveness management. This study relies on regression and factor analysis. The focus is on the competitiveness level of 12 agricultural enterprises operating in Russia. Among the studied enterprises, the most competitive one is the enterprise that makes the best use of available resources when moving toward the desired amount of income (profit) and minimum costs. The proposed approach allows not only to assess the true level of competitiveness of an enterprise but also to identify reserves it can exploit to improve its competitiveness using financial instruments. At the same time, the stochastic dual approach proved to be a better choice in developing a competitiveness strategy.

Power in Value Cocreation Process: The Emergence of a New Dimension

There are different scales to measure value cocreation, but it still has no consensus about its uses. In this way, the aims to validate a multidimensional scale with seven factors related to individual characteristics and consumer behaviour included a new emerging dimension inside individual characteristics that are relevant to analyse value cocreation: power importance. The measurement instrument was developed, validated and tested using 1,300 Colombian and Vietnam consumers. For the final analysis, a confirmatory factor analysis was used, resulting in an adjusted and reliable multidimensional model. The results suggest seven dimensions (personal interaction, feedback, helping, tolerance, learning, personalization and power importance). Regarding the power importance that includes items that are related to the way in which consumers develop emotions at the moment of influencing others (authority, social recognized, wellness and monetary retribution). Finally, the present study contributes to the literature on value cocreation through the identification of a key aspect in the interaction between the company and the consumer. This term has recently attracted the attention of scholars and that has been little explored in the field of consumer behaviour.

Effects of Export Orientation, Exchange Rates and Leverage on Firm Productivity: Evidence from Pakistan

This article empirically scrutinizes the effect of exchange rate changes, exchange rate uncertainty and firm leverage on firm-level productivity growth. It also examines the differential effects of these variables, conditional on the levels of exports. Finally, it investigates whether a firm’s heterogeneity in terms of its share of exports in total sales matters in determining the response of a firm’s productivity growth to these variables. The empirical analysis is based on an unbalanced panel data set with annual observations of 222 exporting firms listed on the Pakistan Stock Exchange over the 2009–2017 period. We find that both exchange rate changes and exchange rate uncertainty have significant, negative effects on the firm’s productivity growth, and exporting further makes intense these effects. Yet, we show that export activities are positively related to firms’ productivity growth. We also reveal that there is a significant heterogeneity in the effects of exchange rate changes, its uncertainty and leverage, which is attributed to export intensity. Specifically, we observe that the effects are more prominent in firms that export more shares of their output to foreign markets.

Efficiency of Shadow Banks in India and Its Drivers

With the growth of shadow banking (SB) across the globe, their importance as an inevitable segment of the financial system is already established. Therefore, along with banking institutions, the assessment of the efficiency of this segment has become imperative. This article tries to look into the aspects of their efficiency in the Indian context. With the data set of all the listed companies in the SB category for the past 10 years, the efficiency score is ascertained and the drivers of efficiency are identified. Data envelopment analysis and Malmquist Index are employed to ascertain the efficiency score and analyse the efficiency change, respectively. Tobit regression is employed to identify the drivers of efficiency. The findings reveal that many of the firms are operating at the efficiency frontier with the maximum score of 1, and few others are yet to achieve the same. The size of the institution, earning capacity and liquidity drive the efficiency further, whereas the quality of the assets drags it down. There is a need to improve the managerial efficiency for inefficient firms to achieve economies of scale and optimum efficiency. As size has emerged as an important driver, small SBs need to scale up their operation. Furthermore, there is a need to improve the quality of loan assets.

Impact of COVID-19 Pandemic on Earnings Management: An Evidence from Financial Reporting in European Firms

The aim of this study is to determine the impact of COVID-19 pandemic on earnings management practices. Focusing on a sample of 2,031 firms listed in 15 European countries, the study uses three discretionary accrual metrics as a proxy for earnings management ( Dechow et al., 1995 ; Kothari et al., 2005 ; McNichols, 2002 ) models. To this end, ordinary least squares (OLS) regressions are applied to compare earnings management during the pre-pandemic period (2017q1–2019q4) and the pandemic period (2020q1–2020q4). The results indicate that the sample firms tend to manage earnings during the pandemic period than during the preceding period. This finding implies a reduced reliability of the financial reports during the COVID-19 pandemic. Further analysis provides evidence of significant income-increasing earnings management during 2020. This finding suggests that firms manage earnings upward by alleviating the level of reported losses to rebuild investor and stakeholder confidence needed to support the economic recovery.