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Article
Publication date: 15 August 2022

Habib Hussain Khan

The purpose of this study is to explore the possible impact of banking market structure on the idiosyncratic risk of financially dependent firms in China.

Abstract

Purpose

The purpose of this study is to explore the possible impact of banking market structure on the idiosyncratic risk of financially dependent firms in China.

Design/methodology/approach

The study analyzes firm-level data for China from 1999 to 2018 using a two-step dynamic panel system generalized method of moments (GMM).

Findings

The findings imply that bank competition lowers corporate risk, particularly among firms that are highly dependent on external funding for their financing needs. The findings are consistent with alternative indicators of competition, corporate risk, and financial dependence. The analysis of the transmission mechanism – the channel through which competition affects corporate risk – reveals that bank competition reduces corporate risk by curtailing financing constraints faced by firms.

Research limitations/implications

The competition-enhancing policy should consider the optimum level of bank competition for financial and economic stability. Further research is necessary to define the “desirable” or “optimum” level of bank competition.

Practical implications

In China, where the banking sector is still highly concentrated, the findings of this study call for policies aimed at encouraging healthy competition among banks. Nevertheless, such a policy must also consider the extent of bank competition that is optimal for the economy, particularly for financial and economic stability.

Originality/value

The paper provides the first evidence of the possible linkage between bank competition and corporate risk in China.

Details

International Journal of Emerging Markets, vol. 19 no. 4
Type: Research Article
ISSN: 1746-8809

Keywords

Open Access
Article
Publication date: 6 November 2023

Albulena Shala, Peterson K. Ozili and Skender Ahmeti

This study examines the impact of competition and concentration on bank income smoothing in Central and Eastern European (CEE) countries.

Abstract

Purpose

This study examines the impact of competition and concentration on bank income smoothing in Central and Eastern European (CEE) countries.

Design/methodology/approach

The two-step system GMM method was used to analyse the impact of competition and concentration on bank income smoothing in 17 CEEs from 2004 to 2015.

Findings

Loan loss provisions (LLPs) are negatively related to bank competition and concentration. The authors find no evidence for income smoothing using LLPs in a high-competition or high-concentration environment.

Research limitations/implications

A limitation of the study is that the analysis was restricted to commercial banks. The authors did not examine investment banks or microfinance banks in this study. Also, not having access to databases does not allow them to include recent years in the study.

Practical implications

CEE commercial banks will likely keep fewer provisions or engage in under-provisioning when they face intense competition, and this can expose them to credit risk, which may threaten their stability.

Originality/value

This study is the first to investigate the effect of concentration and competition on income smoothing among CEE banks.

Details

Journal of Economics, Finance and Administrative Science, vol. 29 no. 57
Type: Research Article
ISSN: 2077-1886

Keywords

Article
Publication date: 25 March 2024

Nemanja Berber and Dimitrije Gašić

The main goal of this study is to determine the role of employee commitment in the relations between the compensation system and turnover intentions of employees in the Republic…

Abstract

Purpose

The main goal of this study is to determine the role of employee commitment in the relations between the compensation system and turnover intentions of employees in the Republic of Serbia, as well as to investigate whether there is a mediating effect of employee commitment in this relation.

Design/methodology/approach

The primary methodology implemented in the research was data gathering, obtaining theoretical research works on the proposed relations and empirical studies based on the PLS-SEM, analysed by IBM SPSS Statistics and SmartPLS data processing software. The data for the analysis was obtained from a total sample of 764 employees, collected in the Republic of Serbia via an online questionnaire.

Findings

The results indicated a positive statistically significant relationship between the formative construct (compensation system) and reflective construct (commitment), as well as a negative statistically significant relationship between the compensation system and reflective construct (turnover intentions). Employee commitment partially mediates the relationship between the compensation system and turnover intentions of employees.

Originality/value

The study was conducted in Serbia and is thus rooted in the specific national context which is characterized by high power distance and high uncertainty avoidance and more collectivistic society with feminine values more expressed. Most of the previous investigations related to the mentioned constructs were performed in companies from more developed countries, including Western Europe and the United States of America, whereas there has been no such research conducted in Serbia to date. The results portrayed a mismatch between the expected relations regarding the attitudes of employees to the rewards and the proposed national context. Modern companies in Serbia need to follow a modern reward mechanism to build stronger commitment and decrease turnover intentions. Moreover, in most earlier research works, compensation was examined in terms of satisfaction with rewards, while this study was based on questions related to perceptions of employees toward HR compensation practices (“The organization offers me”-type questions), not related to their satisfaction. Further, in the majority of previous research works, the compensation system was examined as a variable in combination with other HR processes (staffing, training and development, career development, employee relations, HR planning, communication, etc.), as a HPWP, while in this case the authors used only the practice of compensation (reward elements and employee performance evaluation) to investigate relations with commitment and turnover intentions.

Details

Employee Relations: The International Journal, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0142-5455

Keywords

Article
Publication date: 1 June 2023

Lijun Lei and Yan Luo

Unlike other types of corporate disclosure, corporate political disclosure (CPD), which is the disclosure of corporate political contributions and the related governing policies…

Abstract

Purpose

Unlike other types of corporate disclosure, corporate political disclosure (CPD), which is the disclosure of corporate political contributions and the related governing policies and oversight mechanisms, does not provide completely new information to stakeholders. Some of the information disclosed in CPD is available from other public records (e.g. the Federal Election Committee website or OpenSecrets website). Given this unique feature of CPD, it is interesting to investigate the cost and benefit tradeoff for firms of altering their CPD practice in response to policy and political uncertainty.

Design/methodology/approach

This study employs recently developed indexes of aggregate economic policy uncertainty (EPU) and a novel dataset of CPD transparency to examine the impact of EPU on CPD transparency and how the proprietary cost of corporate political activities moderates this association. The sample consists of S&P 500 companies from the 2012 to 2019 period.

Findings

The authors document that firms mitigate the heightened information asymmetry associated with higher aggregate EPU by increasing CPD transparency. The positive association between EPU and CPD is less pronounced for firms that are more sensitive to EPU, for firms that more actively manage EPU through corporate political contributions or lobbying activities and for firms that are followed by more analysts. The authors also find that more transparent CPD helps to mitigate the information asymmetry caused by heightened EPU. This study’s results hold when the authors control for other types of voluntary corporate disclosure.

Originality/value

This study contributes to the emerging literature on the determinants of CPD transparency by identifying EPU's positive impact on CPD transparency. This study also provides empirical evidence that the proprietary costs arising from the controversial nature of corporate political activities dampen firms' incentives to provide transparent CPD in response to heightened EPU, and that information on corporate political activities gathered and processed by financial analysts seems to lower the marginal benefit to companies of publicizing CPD on their own website.

Details

Journal of Accounting Literature, vol. 46 no. 2
Type: Research Article
ISSN: 0737-4607

Keywords

Article
Publication date: 12 February 2024

Trevor England

This study aims to examine whether and how the experience of specialized external governance mechanisms mandated by the Employee Retirement Income Security Act of 1974 – the…

Abstract

Purpose

This study aims to examine whether and how the experience of specialized external governance mechanisms mandated by the Employee Retirement Income Security Act of 1974 – the actuary and auditor – affect pension plan funding.

Design/methodology/approach

This study uses data from annual pension plan regulatory reports (Form 5500), Form 10-K filings, Form DEF 14A filings (company proxy statements) and publicly available data sources. The hand-collected data include information related to the pension plan’s actuary and auditor and various pension plan data disclosed in the company’s financial statement footnotes.

Findings

The author finds that more experienced actuaries and auditors are associated with better funded pension plans, especially when the company has higher financial risk or lower board independence. Additional analyses indicate that companies with more experienced actuaries and pension plan auditors are more likely to make higher annual pension plan contributions and hold fewer Level 3 fair value assets.

Originality/value

The dearth of pension plan governance research generally focuses on whether and how internal governance mechanisms affect pension plan funding. To the best of the author’s knowledge, this is the first empirical study of the relationship between external pension plan governance mechanisms and pension plan funding.

Details

Managerial Auditing Journal, vol. 39 no. 3
Type: Research Article
ISSN: 0268-6902

Keywords

Content available
Article
Publication date: 14 August 2023

Christiana Osei Bonsu, Chelsea Liu and Alfred Yawson

The role of chief executive officer (CEO) personal characteristics in shaping corporate policies has attracted increasing academic attention in the past two decades. In this…

Abstract

Purpose

The role of chief executive officer (CEO) personal characteristics in shaping corporate policies has attracted increasing academic attention in the past two decades. In this review, the authors synthesize extant research on CEO attributes by reviewing 232 articles published in 29 journals from the accounting, finance and management literature. This review provides an overview of existing findings, highlights current trends and interdisciplinary differences in research approaches and identifies potential avenues for future research.

Design/methodology/approach

To review the literature on CEO attributes, the authors manually collected peer-reviewed articles in accounting, finance and management journals from 2000 to 2021. The authors conducted in-depth analysis of each paper and manually recorded the theories, data sources, country of study, study period, measures of CEO attributes and dependent variables. This procedure helped the authors group the selected articles into themes and sub-themes. The authors compared the findings in various disciplines and provided direction for future research.

Findings

The authors highlight the role of CEO personal attributes in influencing corporate decision-making and firm outcomes. The authors categorize studies of CEO traits into three main research themes: (1) demographic attributes and experience (including age, gender, culture, experience, education); (2) CEO interactions with others (social and political networks) and (3) underlying attributes (including personality, values and ideology). The evidence shows that CEO characteristics significantly affect a wide range of specific corporate policies that serve as mechanisms through which individual CEOs determine firm success and performance.

Practical implications

CEO selection is one of the most crucial decisions made by corporations. The study findings provide valuable insights to corporate executives, boards, investors and practitioners into how CEOs’ personal characteristics can impact future firm decisions and outcomes that can, in turn, inform the high-stake process of CEO recruitment and selection. The study findings have significant practical implications for corporations, such as contributing to executive training programs, to assist executives and directors attain a greater level of self-awareness.

Originality/value

Building on the theoretical foundation of upper echelons theory, the authors offer an integrated theoretical framework to consolidate existing empirical research on the impacts of CEO personal attributes on firm outcomes across accounting and finance (A&F) and management literature. The study findings provide a roadmap for scholars to bridge the interdisciplinary divide between A&F and management research. The authors advocate a more holistic and multifaceted approach to examining CEOs, each of whom embodies a myriad of personal characteristics that comprise their unique identity. The study findings encourage future researchers to expand the investigation of the boundary conditions that magnify or moderate the impacts of CEO idiosyncrasies.

Article
Publication date: 28 March 2023

Osama F. Atayah, Khakan Najaf, Md Hakim Ali and Hazem Marashdeh

The purpose of this paper is to provide empirical evidence on the suitability of a Bloomberg Environmental (E), Social (S) and Governance (G) (ESG) disclosure index designed for…

Abstract

Purpose

The purpose of this paper is to provide empirical evidence on the suitability of a Bloomberg Environmental (E), Social (S) and Governance (G) (ESG) disclosure index designed for companies from the USA and to investigate the sustainability quality and stock performance of FinTech companies.

Design/methodology/approach

Data from all FinTech and non-FinTech firms in the USA was acquired from Bloomberg to undertake the study and evaluate the suggested hypotheses efficiently. The final sample consists of 1,672 company-year observations from 2010 to 2019. The methodology used ordinary least squares regressions of performance metrics on the Bloomberg ESG disclosure index and its components.

Findings

The findings indicated that the Bloomberg ESG disclosure index is a valid proxy for sustainability and has a direct relationship with stock performance. Furthermore, this study suggests that non-FinTech firms outperform FinTech firms in sustainability and stock performance. The findings support stakeholder theory, which suggests that increased disclosure of ESG information will mitigate the agency problem and protect shareholders’ interests.

Research limitations/implications

This study’s findings were significant because the findings emphasised ESG disclosure in FinTech and non-FinTech firms, providing information to academics, legislators, regulators, financial report users, investors, environmental unions, workers, customers and society.

Originality/value

This research is unique as it evaluates ESG practices in both FinTech and non-FinTech firms.

Details

Meditari Accountancy Research, vol. 32 no. 2
Type: Research Article
ISSN: 2049-372X

Keywords

Article
Publication date: 13 April 2023

Sebastian Schneck and Julia Hautz

This study aims to explain the cognitive bias of overconfidence and portray the different ways in which overconfident top managers may affect firm outcomes. This paper outlines…

Abstract

Purpose

This study aims to explain the cognitive bias of overconfidence and portray the different ways in which overconfident top managers may affect firm outcomes. This paper outlines their opportunities and risks and how these managers are surrounded by contextual factors.

Design/methodology/approach

This study draws on a systematic overview of the current literature on senior executives' overconfidence and empirical studies investigating its impact on strategic outcomes.

Findings

This study identifies the opportunities and risks of overconfident top managers in firms and considers the contextual factors that influence firm outcomes. The results provide three important managerial implications for interactions with overly confident top managers.

Practical implications

These findings help us understand top managers' overconfidence. Organizations receive guidance on how to constrain inappropriately confident top managers who are detrimental to their businesses.

Originality/value

This study contributes to a better understanding of overconfidence among top managers, illustrates associated opportunities and risks and provides recommendations for controlling and dealing with top managers characterized by this cognitive bias.

Details

Journal of Business Strategy, vol. 45 no. 2
Type: Research Article
ISSN: 0275-6668

Keywords

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