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21 – 30 of over 4000Tina T. Swan, Bruce Q. Swan and Zuopeng (Justin) Zhang
We address the question of how the Internet promotes international trade volume, and especially, whether the global human resources affect the bilateral international trade during…
Abstract
Purpose
We address the question of how the Internet promotes international trade volume, and especially, whether the global human resources affect the bilateral international trade during the technology development across countries.
Design/methodology/approach
A dynamic panel causality analysis is carried out to demonstrate empirically that the causality of the Internet diffusion on the international trade volumes. Evidence shows a significant positive effect of the Internet on international trade volume from time-series and cross-sectional regressions. Furthermore, the magnitude of elasticity is discussed.
Findings
There is strong evidence that the Internet stimulates international trade for all countries. Growth of trade volumes changes over time with heteroscedastic responses. The positive impacts of the growth of GDP are diluted by the growth of global human resources.
Originality/value
The data on the number of web hosts is not necessarily correlated to where the site is actually located. We contribute to the new Internet measurement which helps to explain the information transferring that stimulates the international trade and examine the global human resources.
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This paper aims to analyze existing corporate governance rules which aim to regulate and control the following type of problems: to restore confidence in the financial markets, to…
Abstract
Purpose
This paper aims to analyze existing corporate governance rules which aim to regulate and control the following type of problems: to restore confidence in the financial markets, to reformulate the existing corporate governance systems and mechanisms that have been inadequate, and, finally, to rethink the relationship between ethics and economy. It also aims to identify the factors determining the corporate governance systems and mechanisms in a global economy.
Design/methodology/approach
The paper reports the results of a comparative analysis between different corporate governance systems and mechanisms. In addition, in order to explore the role of institutional determinants in attracting foreign direct investment (FDI) flows, this study considers variables such as an index of shareholder protection, openness to FDI and the interaction between the two above mentioned variables.
Findings
This analysis confirms the economic theory that less open countries are characterized by stronger ownership restrictions and a weak corporate governance mechanism. Conversely, open market and investment regimes are particularly powerful instruments to attract investment in general and FDI in particular.
Originality/value
This study provides a survey of the main system and mechanisms of corporate governance all supported by a survey of recent developments regarding the empirical analysis on the role of institutional determinants in attracting FDI flows.
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Ji Wu, Bang Nam Jeon and Alina C. Luca
This chapter examines whether the geographic distance between subsidiaries of multinational banks and their headquarters is an important factor in determining the performance of…
Abstract
This chapter examines whether the geographic distance between subsidiaries of multinational banks and their headquarters is an important factor in determining the performance of the subsidiaries. Using various performance indicators of 340 subsidiaries in 54 emerging and developing economies from 69 global banks during the years 1994–2008, we find evidence that first, the distance constraint adversely affects loan growth, profitability, and performance of foreign bank subsidiaries, and second, the unfavorable information asymmetry faced by foreign banks, due to the distance constraint, in financing foreign clients cannot be fully overcome by establishing their presence abroad such as setting up their foreign subsidiaries. We further examine if the effect of distance is symmetric across different banks and countries and find the following various economic, financial, and institutional factors to affect the strength of distance constraints in the multinational banking activities: the entry mode of foreign banks, the history of presence in local markets, the existence of credit information institutions, the cultural similarity between the home and host markets, financial depth, financial crisis periods, the stock market development, the banking market structure in host markets, and the hierarchy of the subsidiary in the multinational banking conglomerate.
Andrew J. Abbott and Glauco De Vita
The purpose of this paper is to investigate the impact of a menu of country‐pair exchange rate regime combinations upon bilateral foreign direct investment (FDI) flows.
Abstract
Purpose
The purpose of this paper is to investigate the impact of a menu of country‐pair exchange rate regime combinations upon bilateral foreign direct investment (FDI) flows.
Design/methodology/approach
The authors use panel data from 27 OECD and non‐OECD high income countries for the period 1980 to 2003. Instrumental variable estimation of a dynamic panel model within a system generalised methods of moments framework allows us to control for both potential correlation issues and endogeneity bias.
Findings
This paper finds that a currency union is the policy framework most conducive to cross‐border investment. Being a member of EMU also appears to spur greater FDI flows with countries floating their currency vis‐à‐vis the default regime of a double‐float. Country‐pair regime combinations involving one country fixing its currency and the other floating or being a member of EMU, are found not to be more pro‐FDI than the default regime combination. For country‐pairs fixing or pegging their currency to each other, the effect on bilateral FDI flows is the least consistent across alternative specifications and, hence, the most ambiguous.
Originality/value
The contribution is also distinguished by the comparative use of recently developed “natural” or de facto exchange rate regime classification schemes, in addition to the de jure classification published by the IMF.
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Phuc Canh Nguyen, Christophe Schinckus, Binh Quang Nguyen and Duyen Le Thuy Tran
This study investigates the effect of global and domestic uncertainty on the dynamics of portfolio investment in 21 economies (mostly advanced and larger emerging economies) from…
Abstract
Purpose
This study investigates the effect of global and domestic uncertainty on the dynamics of portfolio investment in 21 economies (mostly advanced and larger emerging economies) from 2001–2016.
Design/methodology/approach
Specifically, the evolution of the net portfolio equity investment inflows (FPI net inflows) and the evolution of net portfolio investment (FPI net) are investigated in a context in which the degree and the volatility of domestic economic policy uncertainty (EPU) and world uncertainty index (WUI) varied. The authors provide an empirical analysis through the sequential (two-stage) estimation of linear panel data models for unbalanced panel data.
Findings
An increase in the degree and volatility of domestic EPU has a significant negative influence on FPI net inflows, while an increase in WUI has a significant positive one. Notably, a simultaneous increase in the domestic EPU and WUI enhances the net inflows of FPI, whereas a simultaneous increase in the volatility of these indicators reduces the net inflows of FPI. An increase in the degree and volatility of both domestic EPU and WUI have a significant positive effect on the net portfolio investment, implying that a significant net portfolio investment is going out of the country.
Research limitations/implications
The results of this study encourage international investors to consider uncertainty indicators (and, more specifically, their variations) in their portfolio strategy to optimize their position on the international markets. The findings of this study invite policy-makers from large countries to reduce the perceived domestic uncertainty since this parameter can influence international investors' sensitivity and willingness to diversify their position out of the country.
Originality/value
The authors' approach focuses on the variations of uncertainty (existing literature mainly works with the indicators). While the results confirm the role played by large markets in international portfolio investment management, it nuances the changes in the portfolio management behaviors toward other markets when facing a changing uncertainty.
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Tanja Steigner, Marian K. Riedy and Antonina Bauman
The purpose of this paper is to investigate the interaction between legal origin and cultural distance and its impact on foreign direct investment (FDI) flows into the OECD.
Abstract
Purpose
The purpose of this paper is to investigate the interaction between legal origin and cultural distance and its impact on foreign direct investment (FDI) flows into the OECD.
Design/methodology/approach
Ordinary least squares regression analysis is used to evaluate FDI flows into OECD countries between 2003 and 2012. Estimations use fixed effects and clustered standard errors.
Findings
FDI flows from civil to common law countries are greater than vice versa. Further, cultural distance impacts FDI flows depending on the legal origin of the source country. Specifically, more FDI flows from civil and common law countries, when the host country has a higher (lower) power distance (individualism) score. Civil law countries send more FDI into countries with higher masculinity, uncertainty avoidance and indulgence scores and with lower long-term orientation scores. The opposite is the case with common law source countries. The findings remain robust for various changes to the sample selection.
Research limitations/implications
The concepts of cultural distance and legal origin have been criticized. However, neither concept has been rejected; rather, both concepts persist as robust empirical research tools.
Practical implications
Scholars, managers and investors can gauge the impact of cultural distance on FDI flows based on the legal family of the source country. Further, policy makers might want to consider rebranding their countries in terms of cultural perceptions to show the attractiveness of specific cultural dimensions to foreign companies and investors.
Originality/value
To the best of the authors’ knowledge, this is the first paper that jointly investigates FDI, legal origin and national culture.
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Kingsley O. Olibe and William M. Cready
This paper reports the results of the effects of the release, in the United Kingdom, annual reports and accounts (ARA), on security prices and trading volume of the U.K. firms. If…
Abstract
This paper reports the results of the effects of the release, in the United Kingdom, annual reports and accounts (ARA), on security prices and trading volume of the U.K. firms. If the information reported in the annual reports and accounts (ARA) is relevant, the U.S. security market will respond to the release news through return and volume variances. Both signals are indicators of the relevance of the annual reports and accounts. The results of the analysis suggest the existence of unexpected returns to the annual reports and accounts and no corresponding U.S. trading volume response. The price results are in marked contrast to the findings of previous research that examined the information content of U.S. domestic annual reports, but do not detect a stock price response (e.g., Foster et al. 1986; Bernard and Stober 1989; Cready and Mynatt 1991). Our stock price analyses indicate that non‐U.S. GAAP accounting measures do not impede U.S investors' ability to use U.K. firms' ARA in valuing the sample firms. Indeed, U.S. investors use information from the ARA in their valuation of U.K. firms. Since trading responses to a disclosure are generally more easily detected than price responses (Cready and Hurtt 1999), these findings jointly suggest the provincial nature of the ARA release.
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Syed Jawad Hussain Shahzad, Memoona Kanwal, Tanveer Ahmed and Mobeen Ur Rehman
The assessment of interdependence between stock markets is an important aspect of international portfolio management. The purpose of this paper is to examine and highlight the…
Abstract
Purpose
The assessment of interdependence between stock markets is an important aspect of international portfolio management. The purpose of this paper is to examine and highlight the diversification potential of South Asian stock markets vis-à-vis developed and European stock markets.
Design/methodology/approach
The developed stocks markets include USA and UK, and South Asian stock markets include India, Pakistan and Sri Lanka while DJ STOXX 600 index is used to represent the European stock markets. Monthly data are used to examine long-run relationship through ARDL bound testing approach and estimates are obtained using DLOS. Short-term dynamics are captured through vector error correction-based Granger causality.
Findings
South Asian stock markets are closely linked with each other; similarly, developed/European markets are interlinked. US stock market not only impacts European stock markets, it also Granger cause South Asian stock markets. The findings suggest increase in comovement of South Asian stock markets with the global markets after financial crises of 2007-2008.
Practical implications
The diversification benefits of South Asian stock markets for international investors are still evident due to their low relationship (in both long and short run) with developed/European stock markets.
Originality/value
Given the emergence of South Asian stock markets, new insight on their relationship with developed stock markets can provide interesting findings for international portfolio diversification. The South Asian equity markets are an important source of investment because of their immense growth and weak correlation with international markets.
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Youcef Mameche and Abdullah Masood
The present paper seeks to investigate the impact of International Financial Reporting Standards (IFRS) adoption on the foreign direct investment (FDI) in the Gulf Cooperation…
Abstract
Purpose
The present paper seeks to investigate the impact of International Financial Reporting Standards (IFRS) adoption on the foreign direct investment (FDI) in the Gulf Cooperation Council (GCC) region for the period 1980–2017. This study relies on the information asymmetry theory, according to which IFRS adoption, as a positive signal for investors, should attract more FDI. This research is crucial and presents an interesting framework for providing a major motivation for empirical insights since the macroeconomic evidence on the impact of IFRS adoption on FDI is still unclear in the GCC region and no empirical evidence has been provided in the existing related literature.
Design/methodology/approach
The analysis was conducted based on panel data from GCC countries over the period 1980–2017 and using the autoregressive distributed lag (ARDL) modeling approach and the pooled mean group (PMG) estimation method.
Findings
The findings indicate that the decision of adopting IFRS in GCC countries has a positive impact of 3% on FDI inflows in the short run. However, the adoption of IFRS in the region leads to a decrease of 10.4 % in FDI inflows in the long run.
Practical implications
These findings should be of a major interest to regulators and policymakers in GCC countries, practitioners and academic researchers, international investors, managers and any other interested groups about the accounting environment in GCC countries and other developing countries having an interest in the economic consequences of IFRS adoption, as a driver of FDI, in developing countries.
Originality/value
This investigation provides original empirical evidence on the effect of IFRS adoption on FDI inflows within the context of the GCC area. In fact, the current international literature is lacking empirical evidence on the effect of IFRS adoption on FDI inflows for the GCC countries as a whole. Furthermore, this study offers an original methodological contribution to the macroeconomic impact of IFRS adoption literature by using the PMG estimator since there has been no research works to date that has used this method of estimation.
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