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Article
Publication date: 1 February 2021

Mahdi Salehi and Fatemeh Ghasempour

This study aims to assess the influence of material internal control weaknesses (ICWs) on investment in intangible assets, capital structure and commercial risk of…

Abstract

Purpose

This study aims to assess the influence of material internal control weaknesses (ICWs) on investment in intangible assets, capital structure and commercial risk of organizations. Also, it analyses the impact of investment in intangible assets on the presence of material ICWs. This paper expects that ICWs and investment in intangible assets are interactively incorporated.

Design/methodology/approach

The statistical population of this study includes listed firms on the Tehran Stock Exchange during 2012-2017, selected using the systematic elimination method. A total of 588 firms is selected as the final sample of the study. Four hypotheses are developed to meet the study’s objectives and data analysis is carried out using the panel data method in Stata Software.

Findings

Results show that material ICWs have a positive and significant impact on investment in intangible assets and financial leverage. Moreover, this study finds that investment in intangible assets deteriorates the ICWs’ degree. However, the findings show no significant relationship between ICWs and commercial risks of companies.

Originality/value

The current study fills the gap in the literature science; there is no evidence on the subject of the study.

Details

Management Research Review, vol. 44 no. 7
Type: Research Article
ISSN: 2040-8269

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Article
Publication date: 28 September 2012

Michael J. Alderson and Brian L. Betker

The purpose of this paper is to examine the impact of managerial risk exposure on capital structure selection (net debt, or debt minus cash) as well as return on assets

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967

Abstract

Purpose

The purpose of this paper is to examine the impact of managerial risk exposure on capital structure selection (net debt, or debt minus cash) as well as return on assets, capital expenditures, research and development expenditures and stock price performance.

Design/methodology/approach

The paper compares a sample of 123 all‐equity firms to a set of matching levered firms selected on the basis of industry, market cap and market‐to‐book assets. Managerial incentives are measured using the delta and vega of the manager's stock and option holdings.

Findings

Net debt levels decline as CEO wealth sensitivity to stock price changes (delta) increases. However, the paper finds no differences between the all‐equity firms and their levered matching firms in terms of return on assets, capital expenditures, R&D expense, or long run stock price performance.

Research limitations/implications

Findings are consistent with the idea that managerial incentives drive net debt decisions even among all‐equity firms. However, given that there are no differences between the sample firms and their matched firms in terms of investment or stock price performance, the effect of managerial risk aversion appears to be confined to financial policy.

Originality/value

The paper uses modern methods for measuring managerial risk exposure to revisit the literature on all‐equity firms, and show that managerial risk exposure affects the net debt decision in these firms.

Details

Studies in Economics and Finance, vol. 29 no. 4
Type: Research Article
ISSN: 1086-7376

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Book part
Publication date: 4 April 2005

Franco Parisi, Carlos Maquieira and Antonino Parisi

This chapter develops a Probit model that identifies the financial variables explaining the bankruptcy of banking institutions in Ecuador as a function of efficiency…

Abstract

This chapter develops a Probit model that identifies the financial variables explaining the bankruptcy of banking institutions in Ecuador as a function of efficiency, assets, capital, risk and operating income. The implications of this study verify the validity of the solvency theory over the self-fulfilled panic speculations. The criteria used was a high Pseudo R2 and an as high as possible Efficiency Index. The model yielded a Pseudo R2 of 89.14% and an Efficiency Index of 96.7%. The model is useful in preventing bankruptcy of a bank one year in advance.

Details

Latin American Financial Markets: Developments in Financial Innovations
Type: Book
ISBN: 978-1-84950-315-0

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Article
Publication date: 15 January 2019

Taehoon Lim, Juan Diego Porras-Alvarado and Zhanmin Zhang

The purpose of this paper is to present a methodology for estimating the “price,” or the not-to-loss value, of individual highway assets, which reflects not only the…

Abstract

Purpose

The purpose of this paper is to present a methodology for estimating the “price,” or the not-to-loss value, of individual highway assets, which reflects not only the assets’ capital value but also economic productivity, by adopting a productivity-based asset valuation framework. The price tags can be used in prioritizing highway assets in support of transportation asset management processes.

Design/methodology/approach

The methodology adopts the utility theory to consider multiple performance measures reflecting the economic productivity generated by the assets, as well as their capital value. Key performance measures are first selected, and their values are retrieved from highway asset management databases. Next, the utility functions representing decision makers’ preferences convert the performance measures into utility values, which adjust the replacement cost (RC) of each highway asset to estimate price tags. To demonstrate its applicability, case studies were conducted for the highway networks of Texas and Washington State in the USA.

Findings

The methodology yielded price tags that better reflect the importance of highways’ roles in the economy in comparison to methods where only RCs are used. Furthermore, it was proven to be flexible enough to accommodate local conditions such as varying data availability.

Originality/value

The research provides a practical and reasonable way to prioritize critical highway assets in purport of maintenance and rehabilitation resource allocations, based on their economic productivity as well as physical condition and historical cost information, enhancing the overall efficiency and effectiveness of highway asset management.

Details

Built Environment Project and Asset Management, vol. 9 no. 1
Type: Research Article
ISSN: 2044-124X

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Article
Publication date: 1 April 2011

Corinne Gregoire

Developing and maintaining a pattern of sustainable livelihood (SL) is dependent upon the use to which we put our resources, particularly, our natural resources. SL is…

Abstract

Developing and maintaining a pattern of sustainable livelihood (SL) is dependent upon the use to which we put our resources, particularly, our natural resources. SL is dependent upon five principal components; namely the vulnerability context, livelihood assets, transforming structures and processes, livelihood strategies and livelihood outcomes. DFID (1999), DFID, FAO, IFAD, UNDP, WFP (2001) liveli hood assets also have many components one of which is natural assets/capital. Once the environment is shocked the natural assets are directly affected and all other types of assets and principal components become inoperable. The livelihood outcomes of the Caribbean people, poor and otherwise, are therefore linked to these natural as sets. The objective of this study is to possibly shape and create ways of developing and maintaining patterns that can lead to SLs. It should focus on the available natural resources, access to and optimal use of, which can transit into the best livelihood outcomes specifically for the poor. Basically, the outcome should be a body of knowledge that can contribute to SLs within the Caribbean. This is done with the use of two case studies of Caribbean islands, namely St. Vincent and the Grenadines (SVG) and Grenada. This paper is divided into four sections. Section one provides the background for the paper and briefly introduces the concept of SL. Section two outlines the SL approach. Section three provides an application of the SL approach in SVG and Grenada from two varying standpoints. Section four makes concluding remarks on the types and the sustainability of the livelihood strategies and outcomes.

Details

World Journal of Science, Technology and Sustainable Development, vol. 8 no. 1
Type: Research Article
ISSN: 2042-5945

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Article
Publication date: 24 July 2021

Noor Ulain Rizvi, Smita Kashiramka and Shveta Singh

This paper aims to develop a holistic understanding of the state of implementation of the Basel III regulation in India. It offers essential insights related to its impact…

Abstract

Purpose

This paper aims to develop a holistic understanding of the state of implementation of the Basel III regulation in India. It offers essential insights related to its impact on the macroeconomy, non-performing assets, capital flows and modifications required for the Indian banking sector. Another central aspect of this study is the identification of challenges faced by bankers in implementing Basel III in India.

Design/methodology/approach

A survey was conducted with the help of a well-structured close-ended questionnaire. It was based on six themes identified after a comprehensive review of the literature. Seven experts validated the construction of the questionnaire. A total of 18 responses (42.8%) were received.

Findings

The findings substantiate the importance of Basel III regulations. Although high costs and roadblocks are involved in its implementation, yet, the benefits are notable. Banking experts sense the necessity to modify the Tier 1 ratio, risk-weights and ratings. It is felt that credit ratings will impact the capital and investment flows received by India.

Research limitations/implications

The number of responses limits the ability to conduct several statistical tests.

Practical implications

The findings support the industry’s view that Basel III focuses more on industrialized countries and that many emerging countries lack the technology and infrastructure to implement it.

Originality/value

Since the implementation of Basel, the norm is a continuous process; the findings provide vital insights to regulators and academicians focusing on the Indian banking sector about its current state to aid in developing a future roadmap. This paper delivers important values as follows: a holistic view of banking experts on Basel III in India, required modifications, its impact and future scope of research in this area.

Details

Qualitative Research in Financial Markets, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1755-4179

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Abstract

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Tools and Techniques for Financial Stability Analysis
Type: Book
ISBN: 978-1-78756-846-4

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Article
Publication date: 19 June 2020

Eman Almehdawe, Saqib Khan, Manish Lamsal and Angèle Poirier

The purpose of this paper is to identify the factors that affect the Canadian credit unions' financial performance which play an important role in providing financial…

Abstract

Purpose

The purpose of this paper is to identify the factors that affect the Canadian credit unions' financial performance which play an important role in providing financial services to the agriculture sector.

Design/methodology/approach

We surveyed the literature to identify different performance metrics of credit unions and a set of possible factors that might affect their performance. We collected data related to different dependent and independent variables from financial statements and balance sheets of 189 credit unions and from general websites like Statistics Canada and Bank of Canada. Then, we imputed the missing data and developed fixed effect and random effect panel data regression models. First, we used return on asset as the main dependent variable. Afterwards, we used six performance metrics to check the robustness of our models.

Findings

From an initial list of 16 possible factors that might affect the financial performance of a credit union, we were able to narrow the factors down to the nine most significant ones. It was observed that credit unions in the prairies were more likely to perform well financially as compared to other provinces. Membership size, the size of a credit union in terms of total assets, capital adequacy ratio, market penetration, diversification of income, inflation rate and provincial GDP and interest rates were significant. The cross-sectional analysis performed confirmed the findings of the fixed effect panel data models.

Research limitations/implications

This study has a limitation concerning the number of years included into the time series analysis. Only ten years worth of data were available.

Practical implications

Results provide credit union management, service providers for credit unions and market analysts with a current understanding of how different internal and external factors might affect return on assets, return on equity, delinquency, cash ratio, efficiency ratio, asset growth and loan growth. Our models can be used to predict financial performance of credit unions based on the defined significant variables.

Originality/value

Although there is a wide body of literature that studies performance of banks, not many studies focus on credit unions. Moreover, the existing studies are based on credit unions in United States or Europe, and literature on Canadian credit unions is scarce. The data collected covered 189 Canadian credit unions. To our knowledge this is the first study that looks at the various internal, external and regulatory factors together that affect the credit unions in various jurisdictions of Canada.

Details

Agricultural Finance Review, vol. 81 no. 1
Type: Research Article
ISSN: 0002-1466

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Article
Publication date: 13 July 2015

Sirinuch Nimtrakoon

The purpose of this paper is to explore and compare the extent of intellectual capital (IC) and its four components among ASEAN countries, and examine the relationship…

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4556

Abstract

Purpose

The purpose of this paper is to explore and compare the extent of intellectual capital (IC) and its four components among ASEAN countries, and examine the relationship between firms’ IC, market value, and financial performance.

Design/methodology/approach

The study uses the data of 213 technology firms listed on five ASEAN stock exchanges. Pulic’s Value Added Intellectual Coefficient model is modified by adding an extra component, namely, relational capital efficiency (RCE). The Kruskal-Wallis one-way ANOVA and multiple regression analysis have been utilized to test the hypotheses.

Findings

The results reveal that there is no significant difference in Modified Value Added Intellectual Coefficient (MVAIC) across five ASEAN countries; however, firms in each country tend to place a different degree of emphasis on components of MVAIC to generate corporate value. The results further indicate a positive relationship between IC and market value, confirming that firms with greater IC tend to have greater market value. Likewise, a positive relationship between IC and financial performance measures is confirmed. Specifically, IC is found to be positively associated with margin ratio and return on assets. Capital employed efficiency and human capital efficiency are found to be the most influential value drivers for both market value and financial performance while structural capital efficiency and relational capital efficiency possess less importance.

Originality/value

This study contributes to the IC literature by expanding our knowledge of IC in the emerging economies, and providing a national comparative IC research when such research is limited.

Details

Journal of Intellectual Capital, vol. 16 no. 3
Type: Research Article
ISSN: 1469-1930

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Article
Publication date: 1 December 2005

Bernice Kotey

The purpose of this study is to examine the impact of firm size on performance (measured as profits, growth, efficiency and liquidity) differences between family and…

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3446

Abstract

Purpose

The purpose of this study is to examine the impact of firm size on performance (measured as profits, growth, efficiency and liquidity) differences between family and non‐family small‐ to medium‐sized enterprises (SMEs).

Design/methodology/approach

The samples of 441 family and 473 non‐family firms were divided into four size groups and performance differences analysed for each size group using MANOVA.

Findings

The findings indicate that family SMEs perform at least as well as non‐family SMEs. Although the two types of firms shared several similar performance characteristics at the small level, certain differences were evident. Performance differences between family and non‐family SMEs became prominent at the critical growth phase (20‐49 employees), reached an optimum at 50‐99 employees and narrowed again thereafter. For family firms, the benefits of higher gross margins and efficient use of assets began to wane after 100 plus employees but the disadvantages of lower employee performance continued.

Research limitations/implications

The study could be improved by a longitudinal examination of the same firms across various growth stages. Further, the findings may be industry‐specific and not generally applicable.

Practical implications

The findings show that greater resources do not necessary lead to better performance and that non‐family firms could benefit from more efficient use of resources. The findings also confirm that the benefits of the informal system are not sustainable at larger firm sizes and that larger family firms would benefit from improved management of employee performance.

Originality/value

The pattern of performance differences observed between family and non‐family SMEs is unique to the paper. The paper shows that differences in performance between the two types of firms noted in the literature do no hold at all firm sizes.

Details

International Journal of Entrepreneurial Behavior & Research, vol. 11 no. 6
Type: Research Article
ISSN: 1355-2554

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