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Open Access
Article
Publication date: 13 December 2023

Oli Ahad Thakur, Matemilola Bolaji Tunde, Bany-Ariffin Amin Noordin, Md. Kausar Alam and Muhammad Agung Prabowo

This study empirically investigates the relationship between goodwill assets and capital structure (i.e. debt ratio) of firms and the moderating effect of financial market…

Abstract

Purpose

This study empirically investigates the relationship between goodwill assets and capital structure (i.e. debt ratio) of firms and the moderating effect of financial market development on the relationship between goodwill assets and capital structure.

Design/methodology/approach

This research applied a quantitative method. The article collects large samples of listed firms from 23 developing and nine developed countries and applied the panel data techniques. This research used firm-level data from the DataStream database for both developed and developing countries. The study uses 4,912 firm-level data from 23 developing countries and 4,303 firm-level data from nine developed countries.

Findings

The findings reveal a significant positive relationship between goodwill assets and capital structure in developing countries, but goodwill assets have a significant negative relationship with capital structure in developed countries. Moreover, financial market development positively moderates the relationship between goodwill assets and the capital structure of firms in developing countries. The results inform firm managers that goodwill assets serve as additional collateral to secure debt financing. Moreover, policymakers should formulate a debt market policy that recognizes goodwill assets as additional collateral for the purpose of obtaining debt capital.

Research limitations/implications

The study has several implications. First, goodwill assets are identified as a factor of capital structure in this study. Fixed assets have been identified as one of the drivers of capital structure in previous research, although goodwill assets are seldom included. Second, this article shows that along with demand-side determinants, supply-side determinants also play an important role in terms of the firms' choice about the capital structure. Therefore, firms should take both the demand-side and supply-side factors into consideration when sourcing for external financing (i.e. debt capital).

Originality/value

The study considered goodwill as a component of capital structure. The study analysis includes a large sample of enterprises, including 4,912 big firms from 23 developing countries and 4,303 large firms from nine industrialized or developed countries, which adds to the current capital structure information. Furthermore, a large sample size increases the results' robustness and generalizability.

Details

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

Keywords

Article
Publication date: 11 January 2023

Dmitry Shevchenko, Weili Zhao and Qiyang Guo

The purpose of this study is to probe into the influence mechanism of financial opening onto industrial restructuring from the prism of financial development and examine the role…

Abstract

Purpose

The purpose of this study is to probe into the influence mechanism of financial opening onto industrial restructuring from the prism of financial development and examine the role of the credit market, capital market and currency market in transmitting the impact of financial opening onto industrial restructuring in both developed countries and developing countries.

Design/methodology/approach

In the theoretical model, the indicator of financial opening was introduced in Cobb–Douglas production function formula. Using constant elasticity of substitution utility function, based on Engel’s law, the optimal industrial structure in the economy was concluded. For the empirical analysis, data was collected from 36 developed countries and 34 developing countries during the period 2000 to 2019. Multiple mediator models with bootstrap techniques were used to identify the linkage between financial opening, financial development and industrial restructuring.

Findings

First, there is a U-shaped relationship between financial opening and industrial restructuring. Second, financial development plays a mediating role in transmitting the effects of financial opening onto industrial restructuring mainly through the credit market at the global level. Third, developed countries are in a trend of “reindustrialization,” while developing countries show a trend of “premature deindustrialization.” Moreover, for developed countries, the capital market leads to reindustrialization, while the credit market and currency market contribute to deindustrialization. For developing countries, the capital market and credit market lead to deindustrialization, while the currency market contributes to industrialization.

Originality/value

Unlike most previous researches, this paper focuses on examining three-variable relationship between financial opening, financial development and domestic industrial restructuring. Against the backdrop of the pandemic, monetary policy shifts of developed economies have led to an increase in cross-border capital flows, which will lead to the increasing risks for international financial markets and the reallocation of the global value chain. It is of great significance to clarify the linkage between these three variables in the face of a volatile international financial environment.

Details

International Journal of Development Issues, vol. 22 no. 2
Type: Research Article
ISSN: 1446-8956

Keywords

Article
Publication date: 10 November 2022

Qunyong Xie

Applying the internationalization process model (IPM) and the strategic fit perspective, this research aims to test the effects of firm age on Chinese firms’ outward foreign…

Abstract

Purpose

Applying the internationalization process model (IPM) and the strategic fit perspective, this research aims to test the effects of firm age on Chinese firms’ outward foreign direct investment (OFDI) in developing and developed countries.

Design/methodology/approach

Using data on some Chinese firms, this study applied the zero-inflated negative binomial model and Heckman two-stage model to do the analyses.

Findings

This research found that firm age has different effects on Chinese firms’ OFDI in developed and developing countries. State ownership and industry munificence independently and jointly can moderate these effects.

Originality/value

This study contributes to the IPM and solves the theoretical conflict about the firm age–OFDI relationship.

Details

Chinese Management Studies, vol. 17 no. 6
Type: Research Article
ISSN: 1750-614X

Keywords

Open Access
Article
Publication date: 22 May 2023

Rafael Curras-Perez, Alejandro Alvarado-Herrera and Jorge Vera-Martínez

This work proposes a framework that attempts to explain the connection between the dimensions of consumer perceived corporate social responsibility (social, environmental…

4096

Abstract

Purpose

This work proposes a framework that attempts to explain the connection between the dimensions of consumer perceived corporate social responsibility (social, environmental, economic), firm trustworthiness and firm reputation, using market level of development as a moderating factor.

Design/methodology/approach

Mexico and Spain were selected as the emerging and developed markets; a cross-cultural study with 1173 consumers (521 from Mexico and 652 from Spain) was undertaken. In each country, participants evaluated one of two well-known companies (one making consumer products and one providing retail services). The hypotheses were tested through SEM.

Findings

The results showed that, in the emerging market, perceived environmental actions did not influence consumers' perceptions and, in the developed market, perceived social actions had no effect.

Originality/value

The study identifies two mechanisms through which consumers' perceptions of a company's CSR influence company reputation, offering evidence that the level of development of a country can have a moderating effect on how the mechanisms operate.

Details

Asia Pacific Journal of Marketing and Logistics, vol. 35 no. 11
Type: Research Article
ISSN: 1355-5855

Keywords

Article
Publication date: 15 April 2022

Rama Krishna Reddy, Frances Fabian and Sung-Jin Park

According to the 2019 World Investment Report, recent events in deglobalization have made many countries, especially developed markets, resist inward foreign direct investment…

Abstract

Purpose

According to the 2019 World Investment Report, recent events in deglobalization have made many countries, especially developed markets, resist inward foreign direct investment (FDI) as ceding control to foreign countries. At the same time, many emerging market firms (EMFs) have been increasing their acquisitions in developed markets. The authors elaborate three unconventional motives that justify such acquisitions, and test whether conditions in home countries related to these motives predict the pursuit of greater or lesser equity control. Understanding how home country conditions may spur seeking greater equity control can help policymakers and business firm decision-makers improve these dynamics.

Design/methodology/approach

Examining data covering the period 2006–2018, the authors test hypotheses using a sample of 4,130 acquisitions by EMFs into developed markets, and test hypotheses to investigate “How does the institutional and resource environment of an EMF's home country relate to the respective EMF acquisition behavior of seeking equity control?”

Findings

The authors found that higher institutional quality, poorer factor market development, and higher capital market quality in the home country are related to higher equity positions sought.

Practical implications

Acquiring and target firm managers, along with other stakeholders, can gain insights on how to respond to acquisition opportunities by recognizing how home country conditions influence emerging market internationalizing behaviors into developed markets.

Originality/value

The compilation of this data uniquely covers 48 different emerging markets and further concentrates on the relatively less understood pre-deal phase for EMNEs entering developed markets.

Details

International Journal of Emerging Markets, vol. 18 no. 12
Type: Research Article
ISSN: 1746-8809

Keywords

Article
Publication date: 28 December 2022

Aleksey Martynov

This study aims to test the moderating effect of market-supporting institution on the strategic similarity–firm performance relationship.

Abstract

Purpose

This study aims to test the moderating effect of market-supporting institution on the strategic similarity–firm performance relationship.

Design/methodology/approach

The present is study based on a large panel of firms from developed and emerging economies covering the period 2000–2014.

Findings

Highly-developed market-supporting institutions improve the performance of firms that stick to industry's average strategies while weakly-developed market supporting institutions improve the performance of firms that deviate from industry norms.

Originality/value

This is the first paper that shows that the effect of strategic similarity on firm performance depends on the degree of development of market-supporting institutions.

Details

Journal of Strategy and Management, vol. 16 no. 2
Type: Research Article
ISSN: 1755-425X

Keywords

Article
Publication date: 25 December 2023

Vineeta Kumari, Satish Kumar, Dharen Kumar Pandey and Prashant Gupta

This study aims to provide insights into different aspects of the extant literature on the effects of dividend announcements. Along with other outputs of a bibliometric study…

Abstract

Purpose

This study aims to provide insights into different aspects of the extant literature on the effects of dividend announcements. Along with other outputs of a bibliometric study, this study provides deeper insights into the concentration of the extant literature and suggest future research agendas.

Design/methodology/approach

This study uses the bibliometric, network and content analysis of the dividend announcement literature indexed in Scopus. This study presents the temporal analysis, the network of authors, countries, author citations and the co-occurrence of author keywords. This study provides the concentration of the extant literature in three clusters and unearth some key future research areas. This study uses the latent Dirichlet allocation method for robustness.

Findings

A total of 54 documents examining the US sample have received 1,804 citations. Interestingly, the first article on emerging markets was published in 2002, when at least 34 articles on developed markets had already been published from 1982 to 2001. The content analysis of top-cited literature unveils diverse insights into dividend announcements’ effects on financial markets. Contagion effects negatively impact non-announcing banks, particularly larger ones. Dividend maintenance affects stock market momentum, influencing loser returns. While current dividend/earnings news may not predict future company performance, information content dominates bond market reactions to post-dividend announcements. Concomitantly, while financially constrained firms exhibit short-term gains but worse long-term performance following dividend increases, larger stock dividends send stronger market signals in China.

Originality/value

This study significantly contributes to the bibliometric and content analysis literature by analyzing the sample documents based on the sample examined. To the best of the authors’ knowledge, no previous bibliometric study in this domain has been conducted to explore the markets (developed and emerging) to which the samples examined belong and the quality of publications from developed and emerging markets.

Details

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

Keywords

Article
Publication date: 20 March 2024

Priyanka Goyal and Pooja Soni

The present research study aims to explore the impact of the most recent Israeli–Palestinian conflict, which unfolded in October 2023, on global equity markets, including a wide…

Abstract

Purpose

The present research study aims to explore the impact of the most recent Israeli–Palestinian conflict, which unfolded in October 2023, on global equity markets, including a wide range of both emerging and developed markets (as per the Morgan Stanley Capital Investment country classification).

Design/methodology/approach

The market model of event study methodology, with an estimation window of 200 days and 28-day event window (including event day, i.e. October 7, 2023), has been employed to investigate the event’s impact on the stock markets of different countries, with 24 emerging countries and 23 developed countries. The daily closing prices of the prominent indices of all 47 countries have been analyzed to examine the impact of the conflict on emerging markets, developed markets and overall global equity markets. Additionally, cross-sectional regression analysis has been performed to investigate the possible explanations for abnormal returns.

Findings

The findings of the study suggest the heterogeneous impact of the selected event on different markets. Notably, emerging markets and the overall global equity landscape exhibited substantial negative responses on the event day, as reflected in average abnormal returns of −0.47% and −0.397%, respectively. In contrast, developed markets displayed resilience, with no significant negative impact observed on the day of the event. A closer examination of individual countries revealed diverse reactions, with Poland, Egypt, Greece, Denmark and Portugal standing out for their positive or resilient market responses. Poland, in particular, demonstrated significantly positive cumulative abnormal returns (CARs) of 7.16% in the short-term and 8.59% in the long-term event windows (−7, +7 and −7, +20, respectively), emphasizing its robust performance amid the geopolitical turmoil. The study also found that, during various event windows, specific variables had a significant impact on the CARs.

Practical implications

The study suggests diversification and monitoring of geopolitical risks are key strategies for investors to enhance portfolio resilience during the Israeli–Palestinian conflict. This study identifies countries such as Poland, Egypt, Greece, Denmark and Portugal with positive or resilient market reactions, providing practical insights for strategic investment decisions. Key takeaways include identifying resilient markets, leveraging opportunistic strategies and navigating market dynamics during geopolitical uncertainties.

Originality/value

As per the authors’ thorough investigation and review of the literature, the present study is the earliest attempt to explore the short-term and long-term impact of the 2023 Israeli–Palestinian conflict on equity markets worldwide using the event study approach and cross-sectional regression analysis.

Details

Journal of Economic Studies, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0144-3585

Keywords

Article
Publication date: 6 November 2023

Rizky Yudaruddin and Dadang Lesmana

This study aims to investigate the market reaction to the Russian invasion of Ukraine, specifically in the banking sector.

Abstract

Purpose

This study aims to investigate the market reaction to the Russian invasion of Ukraine, specifically in the banking sector.

Design/methodology/approach

The research uses an event study and cross-sectional analysis, with market reaction measured by cumulative abnormal return (CAR). The sample comprised 1,126 banks.

Findings

The results show that the market reacted negatively to the invasion both before and after its announcement. Developed and emerging markets saw a negative impact from the invasion, while frontier markets experienced only a slight impact. The authors also find that the banking markets of North Atlantic Treaty Organization (NATO) members reacted significantly and negatively both before and after the invasion was announced. This demonstrates that the negative market reaction of NATO members was more impactful than that of other markets. Overall, this study shows that investors in the banking market are very sensitive to war.

Originality/value

This is the first study to provide international evidence, specifically on the banking sector's reaction during the Russian invasion of Ukraine.

Details

Journal of Economic Studies, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0144-3585

Keywords

Article
Publication date: 27 July 2022

Frank Ohara and Robert Neil Mefford

This study aims to examine the corporate venturing strategy of successful emerging market multinational enterprises and discern commonalities and useful tactics for other firms…

Abstract

Purpose

This study aims to examine the corporate venturing strategy of successful emerging market multinational enterprises and discern commonalities and useful tactics for other firms attempting to follow in their footsteps. Understanding the corporate venturing strategies used by these successful firms may be instructive for other firms whether from emerging markets or developed countries.

Design/methodology/approach

We selected 11 multinationals in emerging markets for this study, from a variety of industries in China, India, Brazil, Mexico, Taiwan and South Korea. Success here is defined as rapid international expansion, increased revenue and greater innovation capacity. These firms have become globally competitive against established companies from the developed countries.

Findings

Some commonality in corporate venturing strategy has been found along with factors that have contributed to this use being effective. They may provide some worthwhile examples for other firms, both in developing and developed countries.

Originality/value

The contributions of this research are to add to the understanding of how some multinationals from developing countries have been able to rapidly build up their capabilities to become successful global competitors through their corporate venturing strategy.

Details

Journal of Business Strategy, vol. 44 no. 5
Type: Research Article
ISSN: 0275-6668

Keywords

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