Search results

This paper aims to investigate the internal and external determinants of firms’ efficiency and develop optimal corporate governance risk benchmarks for the manufacturing sector across different countries.

Corporate governance risk data were acquired from Institutional Shareholder Services Europe SA. Data on firms’ efficiency and for explanatory and control variables were taken from the DataStream database. The generalised directional distance function data envelopment analysis (GDDF-DEA) model and its stochastic extension provided corporate efficiency measures and optimal corporate governance benchmarks. The authors used ordinary least squares multiple regression analysis with wild bootstrapping to test the study hypotheses.

The authors found significant differences between firms’ optimal and actual efficiency input/output variables and corporate governance risks in the manufacturing sector across countries. Internal firm characteristics such as group affiliations, product market competition and insider ownership and external institutional factors such as the legal system, the rule of law, control of corruption, law enforcement and cultural values are vital determinants of firms’ efficiency.

This paper provides valuable guidance to enable corporate managers, regulators and policymakers to enhance firms’ efficiency and corporate governance practices.

This paper develops optimal corporate governance risk benchmarks and identifies the most critical internal and external factors affecting firms’ efficiency in the manufacturing sector in various countries. It also used a novel GDDF-DEA model, with the multi-parametric model for bias correction of efficiency estimator.

This study aims to examine the relationships among International Financial Reporting Standards (IFRS) adoption, earnings management, and corporate efficiency.

First, the authors employ the epsilon-based measure (EBM) of the data envelopment analysis to measure the corporate performance of the Taiwanese electronics industry from 2011 to 2014. Second, the authors regress the IFRS adoption and earnings management on corporate efficiency.

The findings show that the corporate efficiency deteriorated after IFRS adoption. Although the regression analysis shows that the relationship between earnings management and corporate efficiency is significantly positive, the authors find that IFRS adoption is effective in unveiling earnings management. Moreover, IFRS adoption moderates the impact earnings management and corporate efficiency.

This study provides reference for decision-makers in the application of accounting principles and in the understanding of the IFRS impact adoption.

IFRS adoption can either facilitate or limit the earnings management that would affect corporate efficiency significantly and help the electronics industry as well as investors to know the changes in accounting principles and their effects on corporate efficiency.

The authors use the EBM of efficiency model to measure corporate efficiency and employ the modified Jones model to measure earnings management.

This study aims to analyse the effect of corporate governance on investment efficiency and the moderating impact of industry competition on the relationship between corporate governance and investment efficiency.

The research sample includes a total of 36 publicly listed companies assessed by the Indonesian Institute for Corporate Directorship from 2012 to 2018. Testing is performed on full sample and overinvestment and underinvestment subsamples. Additional testing is further carried out using the generalized method of moments to address endogeneity problems and a robustness test is performed to assess the estimated investment efficiency.

Corporate governance can increase investment efficiency and the effectiveness of corporate governance is found to drop when the level of industry competition is higher.

The results of the present study corroborate the suggestion that companies need to implement corporate governance mechanisms. Furthermore, designing a corporate governance mechanism requires the scrutiny of the external environment, including industry competition.

The present study adds the profitability factor in the calculation of investment efficiency levels. This study also considers external factors that can influence the effectiveness of corporate governance in determining investment efficiency.

This study aims to analyse the impact of corporate social responsibility (CSR) on corporate innovation efficiency and the mechanism underlying this effect.

Data of non-financial listed companies operating in China from 2010 to 2019 were employed. Dual fixed-effects and dynamic panel models were used to explore the relationship between CSR and corporate innovation efficiency, and analyse its heterogeneity.

The researchers found that CSR reduces innovation efficiency in China. Further, (1) when enterprises conduct CSR to obtain excess returns, it is easy to form excess goodwill; (2) under the pressure of the government and society, enterprises passively assume CSR, thereby crowding out R&D funds; and (3) regardless of whether companies in the high-tech industry actively or passively assume social responsibilities, CSR will not have a significant impact on their innovation efficiency.

The sample of this research is limited to Chinese A-share listed companies and lacks consideration for small and medium-sized enterprises. Therefore, whether the conclusions of this article are applicable to small and medium-sized enterprises or family enterprises needs further verification.

The research explores the intrinsic motivation and possible consequences of CSR from the dual perspectives of corporate active and passive.

The ultimate goal of a firm is to make a profit. In practice, few enterprises pay without any return. Perhaps some companies actively assume social responsibilities in order to obtain greater benefits, while passively assume social responsibilities due to oppression.

This study analyses the impact of CSR on corporate innovation efficiency from both active and passive perspectives. The results have important implications for government officials and entrepreneurs.

Previous literature posits that corporate governance and information asymmetry are the main factors in making efficient investments. Meanwhile, a growing body of studies is of the opinion that corporate governance can also mitigate the problem of information asymmetry and consequently exerts significant impacts on the association between information asymmetry and investment efficiency. This study aims to analyze the impact of corporate governance and information asymmetry on investment efficiency. It also tests the moderating role of corporate governance in the relationship between information asymmetry and investment efficiency.

The sample consists of 4,082 firms domiciled in 20 developed countries over the years from 2003 to 2019, including 33,812 firm-year observations. The bid–ask spread is used as a proxy for information asymmetry. To measure corporate governance performance, a proxy provided by ASSET4 is employed, and to determine the optimal levels of investments, we relied on the growth opportunity. To estimate the models, ordinary least squares and generalized method of moment are used.

The results reveal that information asymmetry is inversely related to investment efficiency, and, corporate governance mitigates this negative association.

This paper sheds light on the role of corporate governance in firms as a lever for mitigating information asymmetry and tries out information asymmetry and agency theories in relation to the impact of information asymmetry on investment efficiency. It also confirms the theory stating that corporate governance can be considered as a determinant of investment efficiency.

Consensus on how intellectual capital (IC) affects corporate performance is limited because of various measurement models of IC and corporate performance. This study thus aims to further the debate on the relationship between IC and corporate performance from the perspectives of nonlinearity, the capital values of IC and the use of a holistic measure of corporate performance.

Using 1,395 firm-year observations derived from Vietnamese listed companies from 2010 to 2018, this study focuses on (1) presenting an IC model benchmarked on value-creating expenses; (2) using a directional distance function (DDF)-based stochastic nonparametric envelopment of data (StoNED) framework to scrutinize multiple performance indicators and the capital values of people, structures and relationships simultaneously; and (3) adopting firm-year cluster-robust regressions to analyze the nonlinear association between IC and corporate performance empirically with an appropriate U test.

Results suggest that human capital (HC), structural capital (SC) and relational capital (RC) are the main contributors of high corporate efficiency, whereas only HC and RC contribute to high corporate profitability. These results are absent when this study employs the conventional data envelopment analysis (DEA), which is also a multidimensional framework, as the dependent variable. More importantly, IC and its components can improve corporate performance, namely, both corporate efficiency and corporate profitability up to a critical point, after which the effects would drop.

Overall, this study highlights not only the need to invest in IC but also its associated costs. That is, policymakers also need to note the marginal cost of investing in IC, which may in the end outweigh the benefits from IC.

This study extends IC-related studies by investigating the nonlinear relationship between IC and corporate performance. Moreover, the value of this study also lies in the multidimensional DDF-based StoNED framework.

This study aims to examine the effect of corporate risk disclosure on investment efficiency. This study also seeks to contribute to existing literature of corporate risk disclosure by investigating voluntary and mandatory risk disclosure and its effect on the investment efficiency.

This study used two measures of corporate risk disclosure, level and quantity of corporate risk disclosure. A content analysis approach is adopted for non-financial Malaysian firms over the period 2010–2018.

The empirical results show that level of corporate risk disclosure leads toward efficient investment, whereas quantity of corporate risk disclosure causes inefficient investment when firms disclose more voluntary risks. Further, categorizing corporate risk disclosure into mandatory and voluntary risk disclosure, this study finds that voluntary risk disclosure tends to have higher investment inefficiency, while no evidence was found for mandatory risk disclosure.

This paper contributes to narrow stream of research investigating corporate risk disclosure through level and quantity contributing to the understanding of the level and quantity of risk disclosure in determining organizational investment efficiency.

This study aims to investigate whether and how corporate seniority culture (a form of high power distance or hierarchy), a typical feature of Confucian norms, affects the corporate innovation efficiency in emerging markets.

This study defines and measures seniority culture through the ranking method of independent directors in company’s annual report. Unlike most companies in the USA where directors are listed alphabetically, the ranking of directors in China is meaningful and reflects hierarchy. This study considers a firm with seniority if independent directors are ranked according to their status, including age, social position and political connection. Using data from Chinese listed companies between 2009 and 2013, this study conducts multiple regressions to examine the impact of seniority on innovative efficiency.

The empirical results show that seniority culture is negatively associated with innovative efficiency. Moreover, the negative association between a corporate culture of seniority and innovative efficiency is more pronounced in firms with more male executives and knowledge-intensive firms. Further analysis reveals that seniority culture expands pay disparities among different classes, hinders their enthusiasm to communicate and ultimately damages the corporate efficiency of innovation.

Corporate seniority culture is an essential factor that may hinder employee communication and inhibit innovation efficiency. Therefore, companies should break the identity barrier at different levels and advocate a culture of equality to promote information exchange and knowledge sharing among employees.

This study extends the field of literature on the determinants of corporate innovation efficiency and deepens our theoretical understanding of the negative impact of corporate seniority culture.

The purpose of this paper is to examine the relationship between earnings management and the efficiency of French firms’ investments. It also investigates the moderating effect of board of directors’ features on this relation.

This study is based on a sample of French listed companies from 2011 to 2015, i.e. 435 firm-year observations. The authors use the instrumental variable method based on 2SLS models.

The authors show that there is a negative relationship between earnings management and investment efficiency. This finding supports the theoretical perspective of the agency theory, as the propensity of firms to engage in earnings management practices is associated with high managerial opportunistic behavior and asymmetric information issues, leading to the problem of under and overinvestment. The findings also show that board size, independence and gender diversity are positively associated with investment efficiency. These board features moderate the relationship between earnings management and investment efficiency suggesting that earnings quality plays a more prominent role in guiding managers to choose the right investments when the corporate governance environment is strong.

The negative relationship between earnings management and investment efficiency suggests that firms with lower earnings quality are exposed to high information asymmetries. They are then more likely to deviate from their expected level of investments. In addition, the results highlight the importance of corporate financial transparency and board monitoring to reduce agency costs and ensure the efficiency of corporate investments, particularly in a setting where investors’ interests are poorly protected.

This paper is the first to the best of the authors’ knowledge to examine the effect of earnings management, a metric for earnings quality, on the corporate investment efficiency in France. Besides, they extend previous literature by investigating how board features are able to monitor managerial actions and decisions and therefore to moderate the effect of earnings management on investment efficiency.

The authors examine the impact of corporate investment efficiency on corporate voluntary disclosure for a sample of UK non-financial companies.

The authors use a sample of FTSE All-Share firms for the period of 2007–2014. Disclosure scores are collected from Corporate Financial Information Environment (CFIE). They follow Biddle et al. (2009) and Chen et al. (2011) in measuring corporate investment efficiency.

The authors find that high level of performance-related disclosure is associated with high level of corporate investment efficiency, while high level of good news information is associated with low level of corporate investment efficiency. They also find evidence on a bidirectional relation between disclosure and corporate investment efficiency.

The authors’ findings would be of importance to stakeholders and corporations. Stakeholders' investment decisions could be facilitated by understanding the disclosures provided by their firms and how these firms' performance is presented. Corporations become aware of the language which must be used to signal their performance.

Corporations become aware of the language which must be used in their disclosures. As firms may reflect their efficient investments but not in the form of good news in order to avoid revealing their competitive advantage to competitors.

This paper adds to disclosure studies by introducing a new variable, corporate investment efficiency, as a determinant of corporate disclosure practice.