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The purpose of this paper is to investigate the relationship between CEOs' inside debt holdings (pension benefits and deferred compensation) and the operating leverage of the firms they manage, with the aim to examine whether CEO incentives play a role in corporate risk-taking.

The authors investigate the relation between CEO inside debt holdings (CIDH) (pension benefits and deferred compensation) and the operating leverage (DOL) of the firms they manage. Using a sample of 11,145 US firm-year observations over the period 2006–2017, the authors find a strong negative association between CIDH and DOL. Additional analyses reveal that the relationship between CIDH and DOL is more pronounced in firms with heightened agency issues, powerful CEOs and for CEOs with stronger professional networks. The results are robust to various sensitivity and endogeneity tests.

The authors find strong evidence confirming the expected negative association between CEO inside debt and DOL suggesting that firms with higher inside debt tend to maintain lower levels of operating leverage. These findings continue to hold with the alternative measure for the inside debt and operating leverage, and across a range of tests designed to rule out the possibility that the primary findings are in any way driven by potential endogeneity. In addition, the findings demonstrate that the presence of manager-shareholder agency conflicts can strengthen the inside debt–DOL relationship suggesting the strong role of inside debt in reducing firm risk.

Findings in this paper have implications for design of compensation structures so that corporate boards can establish incentives as a tool for risk management. A limitation of this study is that it is focused on one market, i.e. US listed companies, so the findings may not be applicable on a global scale.

To the best of the authors’ knowledge, this is the first study that links firm-level management of operating leverage through design of CEO inside debt incentives (two obvious choices for risk-reduction at the CEOs’ disposal include reducing financial risk through reduction of firm leverage and reducing operating risk through reduction of operating leverage). While use of firm leverage as an instrument of choice has been explored in the past, use of operating leverage to achieve risk reduction when CEO possess high inside holding, has received very little attention.

This chapter examines the influence of external public borrowing resources on economic progress in Tunisia. The study focuses on two stages: First, the influence is studied in a direct sense and then in an indirect sense, i.e., through a transmission channel of this influence. By applying the autoregressive distributed technique with staggered lags (ARDL), over a period ranging from 1986 to 2019, the results showed that the influence of external borrowing resources on growth seems to be unfavorable in the short term but positive in the long term, hence the importance of the empirical technique chosen. Second, three interaction variables were tested, namely total government expenditure, government investment expenditure, and the real effective exchange rate. The results obtained call for better attention to the channels identified to maximize the positive influence of external public debt on the country's economic progress.

Microfinance emerged as an essential catalyst for socio-economic development and financial inclusion to reduce poverty. Microfinance institutions cannot meet their primary objective of poverty reduction if they are not sustainable financially. With the theoretical support of profit incentive theory, this paper aims to investigate the impact of organizational structure (OS), growth outreach (average loan per borrower [ALPB] and number of active borrowers), women empowerment (percentage of women borrowers [PWB]), liquidity, leverage and cost efficiency (cost per borrower) on the financial sustainability of microfinance providers (MFPs) in India and explore the possible moderating effect of the national governance indicators (NGIs).

A financial sustainability index has been developed by using principal components analysis, including both conventional measures (return of assets and return on equity) and efficiency measures (operational self-sufficiency and financial self-sufficiency). Due to the existence of endogeneity and heteroskedasticity, this study uses two-step system generalized method of moments estimates to examine the relationships for a period of 2006 to 2018.

The finding reveals that there is a strong significant relationship between financial sustainability and its influential factors. Organizatioanl Structure, loan size, women borrowers, Gross Domestic Products and inflation enhance the financial sustainability of India’s microfinance sector. However, a number of borrowers, liquidity, leverage and operating costs negatively affect the financial sustainability of MFPs of India. The estimates demonstrate that NGIs significantly moderate the association between financial sustainability and its influential factors. The NGIs negatively affect the positive impact of Organizatioanl Structure on financial sustainability. National governance increases the positive effect of loan size (ALPB) and reduces the negative effect of a number of borrowers and leverage on the financial sustainability of MFPs of India. However, NGIs negatively affect the positive relationship between Percentage of Women Borrowers and Financial sustainability of Microfinance Providers of India.

To the best of the authors’ knowledge, this study is the first of its kind that incorporates all of the six dimensions of the National Governance Indicators (NGIs) and uses as a moderator. Secondly, a financial sustainability index has been developed for measuring the financial sustainability of Microfinance Providers (MFPs).

This study aims to explore the potential impact of country-level governance in corporate financing structures.

A two-step system generalized method of moment was used due to the endogeneity issue. The whole sample comprises 3,761 firms in five economies – China, India, Pakistan, Singapore and South Korea – from 2007 to 2016.

The results indicate that the debt option for financing is not favorable under governments with an adequate governance arrangement. However, there is a direct and significant link between country governance and equity financing because in adequate governance arrangements, the possibilities of information asymmetry are minimal and businesses consider equity a more appropriate and safer financing instrument. In contrast, firms prefer to trade-credit financing in poor governance economies, which confirms an adverse link between trade credit and adequate governance.

The country’s governance should be considered a sensitive matter when deciding about corporate financing.

This arrangement of variables has not been previously analyzed in the literature, suggesting the study’s novelty.

This study aims to observe and discuss an emerging disintermediation in transportation, finance and health care, and explain how these three key areas depend on intermediary institutions that are the fruit of modern corporate governance conditions that find their roots in classical sociological theory.

The authors review and incorporate a diversity of research literature to explain the likelihood for the development and continuation of disintermediation.

The authors map two sociological perspectives (Emile Durkheim’s theory of interdependence and Herbert Spencer’s theory of contracts) to two modern corporate governance theories (resource dependence theory and agency theory). The authors then discuss the challenging social situation resulting from modern corporate governance and show how these conditions create the potential for a continuum of disintermediation across the specific and crucial economic sectors of transportation, finance and health care.

The implications of this theoretical integration can help organizational leaders navigate complex social and strategic issues and prepare for the consequences that may result from the emerging disintermediation.

European Parliament adopted a new directive on gender balance in corporate boards when by 2026, companies must employ 40% of the underrepresented sex into non-executive directors or 33% among all directors. Therefore, this study aims to analyze the impact of gender diversity (GD) on board of directors and the shareholders’ structure and their impact on the likelihood of company bankruptcy during the COVID-19 pandemic.

The data sample consists of 1,351 companies for 2019 and 2020, of which 173 were large, 351 medium-sized companies and 827 small companies. Three bankruptcy indicators were tested for each company size, and extreme gradient boosting (XGBoost) and logistic regression models were developed. These models were then cross-validated by a 10-fold approach.

XGBoost models achieved area under curve (AUC) over 98%, which is 25% higher than AUC achieved by logistic regression. Prediction models with GD features performed slightly better than those without them. Furthermore, this study indicates the existence of critical mass between 30% and 50%, which decreases the probability of bankruptcy for small and medium companies. Furthermore, the representation of women in ownership structures above 50% decreases bankruptcy likelihood.

This is a pioneering study to explore GD topics by application of ensembled machine learning methods. Moreover, the study does analyze not only the GD of boards but also shareholders. A highly innovative approach is GD analysis based on company size performed in one study considering the COVID-19 pandemic perspective.

This study aims to determine the effect of bank ownership on the credit risk of Indonesian Islamic local banks (ILBs).

This study uses the system generalized method of moments (GMM) estimation technique with a sample of 155 Islamic local banks in Indonesia from 2012 to 2019.

The results show that commissioner board (D.COW) ownership has a negative effect on credit risk. This indicates that an increase in the number of shares of Islamic local banks owned by the commissioner board reduces credit risk. On the other hand, government ownership (D.GOW), the Sharia supervisory board (D.SOW) and the director board (D.DOW) do not affect credit risk.

The government, Sharia supervisory board and director board need opportunities to easily own more Islamic local bank shares. Therefore, the provisions regarding the share ownership rights of the government, Sharia supervisory board and director board need to be improved to increase their role in reducing credit risk.

Previous researchers have not studied the effect of government ownership, the commissioner board, the Sharia supervisory board and the ownership of directors on credit risk at the ILB in Indonesia.

This paper aims to investigate the impact of family involvement in ownership and governance on the quality of internal auditing.

Leveraging a hand-collected data set of listed family firms from 2014 to 2020, this study uses regression analyses to investigate the impact of family ownership, family involvement on the board, family CEO and the generational stage of the family business on the quality of internal auditing.

The results provide evidence that family ownership is positively associated with the quality of internal auditing, while later generational stages of family businesses have the opposite effect. Additional analyses reveal that the presence of a sustainability board sub-committee moderates the relationship between generational stages of family businesses and the quality of internal auditing function.

This paper does not consider country-institutional factors and other potentially family-related antecedents or governance factors that may affect the quality of internal auditing.

The results are informative for investors and non-family stakeholders interested in understanding under which conditions family-related factors influence the quality of internal auditing functions.

This study offers fresh evidence regarding the relationship between family-related factors and the quality of internal auditing and board sub-committees that moderate such a relationship in family businesses.

The reason for concern is the rapid decline in loans to small enterprises which is critical to their performance, compared to large businesses following the periods of banking reformations in Nigeria. Thus, the purpose of this paper is to investigate the influence of risk perception on bank lending behaviour to small enterprises. It also investigates the impact of government intervention, consolidation and recapitalization on the relationship between risk perception and bank lending behaviour to small enterprise.

This study empirically analysed (ordinary least square) secondary data obtained from the Central Bank of Nigeria Statistical Bulletins, Annual Statement of Accounts covering the period 1992–2020.

The results show that the absence of government interventions and the presence of banking reformations have statistically negative significant effect on bank lending to small enterprises. The findings challenge the argument that generally assumes risk aversion of banks towards small enterprise lending because of small enterprise’s inability to prove their credit worthiness and consequently constraining access to finance to the sector. Instead, the results and analysis from this study found theoretical support for the variation of bank behaviour in lending to small enterprises depending on the status of wealth of the financial system.

A key lesson from this study for government concerned about promoting performance of the small enterprise sector is that regulating and enforcing lending requirements on access to debt financing of the sector is necessary if constraints in access debt finance is to be eliminated. Second, while strategies such as bank consolidation, recapitalization may help strengthen and make financially robust the banking system; it places the banks in a gain position where losses looms to them than gain.

This study challenges the argument that generally assumes risk aversion of banks towards small enterprise lending as a result of inability to prove their credit worthiness and consequently constraining access to finance to the sector. Instead, the results and analysis from this study reveal a variation in lending to small enterprises and suggests that the position of the bank in relation to a reference point influences how risk is perceived by the bank and thus impacts on their risk decision-making behaviour.

A major source of external funding for US airports comes from issuing municipal bonds. Credit rating agencies evaluate the bonds using multiple factors, but the judgments behind the ratings are not well understood. This paper examines if airport rate-setting methods affect the bond ratings of US airports.

Using a set of unbalanced panel data for 58 hub airports from 2010 to 2019, we examine the effect of the rate-setting methods and other airport characteristics on Fitch’s airport bond rating.

We find that compensatory airports consistently receive a very high bond rating from Fitch. The probability of getting a very high Fitch rating increases by ∼28 percentage points for a compensatory airport. Additionally, the probability of getting a very high rating is about 33 percentage points higher for a legacy hub.

The study uses Fitch bond ratings. Future studies could examine if S&P’s and Moody’s ratings are also influenced by airport rate-setting methods and legacy hub status.

The results uncover the linkage between bond ratings and their determinants for US airports. This information is important for investors when assessing airport creditworthiness and for airport operators as they manage capital project financing.

This is the first study to evaluate the effects of rate-setting methods on airport bond rating and also the first to document a statistically significant relationship between airports’ legacy hub status and bond ratings.