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1 – 10 of 139Woon Leong Lin, Jo Ann Ho, Siew Imm Ng and Chin Lee
The purpose of this study is to investigate the relationship between corporate social responsibility (CSR) and corporate financial performance (CFP), as the findings on the…
Abstract
Purpose
The purpose of this study is to investigate the relationship between corporate social responsibility (CSR) and corporate financial performance (CFP), as the findings on the relationship have been inconsistent and have led to calls to further examine this relationship. However, instead of investigating the connection between CSR and CFP, academics have stated that a contingency viewpoint must be used for uncovering the context and conditions which catalyse the relationship between both constructs.
Design/methodology/approach
This study acquired the CSR data from 100 companies listed in Fortune’s most admired US companies between 2007 and 2016. These data were used to investigate the CSR–CFP link with the help of the dynamic panel data system, which is the generalised method of moments (GMM) estimator.
Findings
The results indicate that CSR and CFP have a neutral relationship which characterises the effect between CFP and CSR. However, this study found that financial slack positively affected the CSR–CFP relationship, implying that companies will only benefit from CSR activities if they have excess financial resources.
Originality/value
This study offers a very distinctive perspective regarding the CSR–CFP link according to the financial slack perspective.
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Ozoemena Stanley Nwodo and Ezebuilo Romanus Ukwueze
The greatest challenge facing most economies today is how to grow their economies and reduce over-dependence on imports in the midst of increasing integration of world economies…
Abstract
The greatest challenge facing most economies today is how to grow their economies and reduce over-dependence on imports in the midst of increasing integration of world economies. Addressing this challenge seems to be difficult despite all efforts by policymakers at different times to salvage the situation, the problem persists as evident in the global financial crisis of 2008 and the Eurozone crisis of 2012 which were generally viewed as a glaring illustration of limitless pursuit of economic integration and governance failure at the expense of carefulness, prudence, due diligence, and regulation. It also reflects the lack of proper coordination and lack of proper economic integration facing most emerging market economies of the world. Against this background, this study focuses on the reexamination of the impact of trade openness (TOP) and financial openness (FOP) on economic growth in emerging market economies. The direct and interaction effect of the both openness variables on economic growth in these markets is investigated using data from 2000 to 2017 adopted from World Development indicators of the World Bank. Over 30 emerging market economies covering Asia, Latin America, and Europe are included in the study. For empirical analysis, the study uses one measure of FOP: de facto (total capital flow) variables following Aizenman and Noy (2009) and a measure of TOP as total trade–GDP ratio. The study applies the Dynamic Panel Approach, that is, the Arellano–Bond GMM estimation technique and Granger Causality Test to address the objectives. The results of this study show that TOP has a positive and significant impact on all the countries studied, whereas FOP has positive but no significant impact on economic growth of these countries, implying that these countries have not harnessed the benefit of financial liberalization and integration. It is recommended that the emerging market economies should open not only their economies to trade but also open their economies to finance so as to reap the benefits of FOP and integration.
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Biplab Kumar Guru and Inder Sekhar Yadav
The purpose of this paper is to examine the relationship between financial development and economic growth for five major emerging economies: Brazil, Russia, India, China and…
Abstract
Purpose
The purpose of this paper is to examine the relationship between financial development and economic growth for five major emerging economies: Brazil, Russia, India, China and South (BRICS) during 1993 to 2014 using banking sector and stock market development indicators.
Design/methodology/approach
To begin with, the study first examined some of the principal indicators of financial development and macroeconomic variables of the selected economies. Next, using generalized method of moment system estimation (SYS-GMM), the relationship between financial development and growth is investigated. The banking sector development indicators used in the study include size of the financial intermediaries, credit to deposit ratio (CDR) and domestic credit to private sector (CPS), whereas the stock market development indicators are value of shares traded and turnover ratio. Also, some macroeconomic control variables such as inflation, exports and the enrolment in secondary education were used.
Findings
The examination of the principal indicators of financial development and macroeconomic variables have shown considerable differences between the selected economies. Results from the dynamic one-step SYS-GMM estimates confirm that in presence of turnover ratio, all the selected banking development indicators such as size of financial intermediaries, CDR and CPS are positively significantly determining economic growth. Similarly, in presence of all the selected banking sector development indicators, value of shares traded is found to be positively significantly associated with economic growth. However, the same is not true when turnover ratio is regressed in presence of banking sector variables. Overall, the evidence suggests that banking sector development and stock market development indicators are complementary to each other in stimulating economic growth.
Practical implications
A positive association between financial development and growth indicates that the policymakers should take necessary measures toward simultaneous development of both banking sector as well as stock market for inducing growth.
Originality/value
The present paper attempts to examine the relationship between financial development and growth using both banking sector and stock market development indicators which has not been attempted before for BRICS. Also, most of the existing studies are found in case of developed economies. This paper tries to fill this void by studying five major emerging economies.
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Pier Paolo Miglietta, Donatella Porrini, Giulio Fusco and Fabian Capitanio
The term “charity hazard” refers to the issue of the crowding out of insurance by co-existing relief programs in the context of different institutional governmental disaster…
Abstract
Purpose
The term “charity hazard” refers to the issue of the crowding out of insurance by co-existing relief programs in the context of different institutional governmental disaster schemes. In this context, the aim of this paper is to verify if the charity hazard phenomenon exists in the Italian agricultural insurance scheme.
Design/methodology/approach
Annual data regarding crop insurance, subsidies and farm structure were extracted from ISMEA, ISTAT and FADN databases. A SYS-GMM dynamic panel model was estimated, considering the 2010–2017 time period and the Italian Regions as units of the analysis.
Findings
The empirical results highlight a negative relation between crop subsidies and the farmers' policies and total premium paid. The disincentive and crowd-out effects of public aid and subsidies on the choice of whether or not to take out an agricultural insurance policy ends up being one of the key factors for the low level of penetration of the agricultural insurance in Italy.
Practical implications
Since the diffusion of agricultural insurance can contribute to the general objective of sustainability and resilience, the implementation of alternative solutions to subsidies could be needed (e.g. the introduction of mandatory insurance against adversities or financial support for a geographically specific insurance tool).
Originality/value
Investigating empirically the determinants of the agricultural insurance policy diffusion among the Italian Regions, this study ensures an original contribution to the scientific progress in the field, demonstrating the existence of charity hazard caused by the public subsidies provision.
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Biplab Kumar Guru and Inder Sekhar Yadav
This study empirically examines the effect of capital controls on the volume and composition of capital flows at aggregated as well as at disaggregated level by different asset…
Abstract
Purpose
This study empirically examines the effect of capital controls on the volume and composition of capital flows at aggregated as well as at disaggregated level by different asset classes such as debt, FDI, equity, and derivatives.
Design/methodology/approach
Several dynamic panel SYS-GMM models are employed on two sets of unique data on cross-border capital flows and capital control index along with control variables at aggregated and disaggregated level by different asset classes during 1995–2015 for a sample of 31 Asian economies.
Findings
Econometric findings suggest that higher capital controls effectively reduce gross capital flows. The reduction in gross capital flows is largely found to be on account of effectiveness of controls on equity flows. However, the impact of controls on overall debt and derivative flows is found to be insignificant. Further, it was found that an increase in direct capital controls disaggregated by inflow and outflow categories significantly reduced the inflow of debt and equity + FDI flows and outflow of equity + FDI and derivative flows. Finally, the study did not find any substitution effect (due to indirect controls) and net effect on capital flows.
Practical implications
Results of such empirical examination may enable governments in respective countries to pursue prudent and rational capital controls as a shield against capital flight and shock transmission.
Social implications
Preventing capital flight through effective controls has macroeconomic benefits such as maintaining stability in income, growth, interest rate, exchange rate, and employment levels for the society.
Originality/value
The primary contribution of the study is the analysis of effectiveness of capital controls disaggregated by different asset categories such as debt, equity, FDI, and derivatives using two unique recent data sets for a large sample of Asian economies.
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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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Andrea Garnero, Romina Giuliano, Benoit Mahy and François Rycx
– The purpose of this paper is to estimate the impact of fixed-term contracts (FTCs) on labour productivity, wages (i.e. labour cost), and productivity-wage gaps (i.e. profits).
Abstract
Purpose
The purpose of this paper is to estimate the impact of fixed-term contracts (FTCs) on labour productivity, wages (i.e. labour cost), and productivity-wage gaps (i.e. profits).
Design/methodology/approach
The authors apply dynamic panel data techniques to detailed Belgian linked employer-employee panel data covering the period 1999-2006.
Findings
Results indicate that FTCs exert stronger positive effects on productivity than on wages and (accordingly) that the use of FTCs increases firms’ profitability.
Originality/value
This paper is one of the first to examine the FTC-productivity-wage nexus while addressing three important methodological issues related to the state dependency of the three explained variables, to firm time-invariant heterogeneity, and to the endogeneity of FTCs.
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Othar Kordsachia, Alexander Bassen, Christian Fieberg and Katharina Wolters
This empirical study aims to examine the association between gender-diverse boards and corporate carbon emissions and estimates the effect of board gender diversity on stock price…
Abstract
Purpose
This empirical study aims to examine the association between gender-diverse boards and corporate carbon emissions and estimates the effect of board gender diversity on stock price reactions to climate activism. This study contributes to the inconclusive literature on the link between gender-diverse boards and firms' financial performance by examining a single and plausibly isolated channel of association (i.e. attention to climate change).
Design/methodology/approach
The authors use parametric and non-parametric panel data techniques to examine the association between gender-diverse boards to corporate carbon emission. The system generalized methods of moments (SYS-GMM) estimator is used to address endogeneity concerns. The authors use the event study methodology to examine difference in stock price reactions to climate activism.
Findings
The results show that high board gender diversity is associated with lower corporate carbon emissions and higher stock returns to climate activism.
Originality/value
This is the first study to isolate public attention to climate change as a relevant channel through which gender-diverse boards have an impact of firms' financial performance. This study is timely and important due to the immediate threat of global warming and the recent introduction of mandatory board gender quotas in many countries around the world.
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Debapriya Samal and Inder Sekhar Yadav
This study investigates the effects of elements of corporate governance along with firm specific variables on the financial leverage of listed Indian firms in the context of…
Abstract
Purpose
This study investigates the effects of elements of corporate governance along with firm specific variables on the financial leverage of listed Indian firms in the context of agency conflicts and new governance laws.
Design/methodology/approach
A series of panel ordinary least squares as well as fixed/random effects regression models of book and market value of financial leverage on variables of corporate governance (board size, board composition, board meeting, board attendance and board gender) along with a set of control variables (asset tangibility, firm size, growth, liquidity and profitability) were estimated by employing 113 listed Indian firms during 2010–2021. Dynamic panel generalized method of moments models were also estimated to check the robustness of empirical results. Further, the full sample of firms was divided into small and large board sized companies using the median approach to investigate differences between small and large board characteristics on financial leverage.
Findings
The evidence predominantly suggested that the governance variables have significant impact on leverage ratios of selected firms. Governance variables such as board size, composition, attendance and gender are significantly found to be reducing the financial leverage of firms indicating that in general these attributes in a way, through monitoring managers, put pressure on them to pursue lower financial leverage. Board meeting is found to be positive and significantly related with financial leverage suggesting that the frequency of meetings signals its monitoring ability that may influence lenders' risk assessment lowering borrowing cost. The results on small and large board sized companies indicate that firms with small boards relatively issue more debt compared to firms with large boards suggesting that small boards adopt high debt policy.
Practical implications
The main policy implication of the study is that elements of internal corporate governance is a significant governance tool that has the potential to reduce agency conflict between the managers and agents through monitoring and decision making that has tangible effects on critical corporate decisions such as capital structure choices.
Originality/value
This paper contributes to the existing literature by bringing new evidence relating to agency conflicts and capital structure decisions in an emerging market like India post adoption of new regulations related to corporate governance specified in Clause 49 of Securities and Exchange Board of India and Companies Act, 2013 as there is significant dearth of such empirical work.
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Gour Gobinda Goswami, Farhan Khan, Kazi Labiba, Farhanaj Achol, Tapas Kumar Saha and Aunanna Zulfikar
The scope of this work is to explore whether Regional Comprehensive Economic Partnership (RCEP) would be beneficial to Bangladesh, given Bangladesh's strong ties with India and…
Abstract
Purpose
The scope of this work is to explore whether Regional Comprehensive Economic Partnership (RCEP) would be beneficial to Bangladesh, given Bangladesh's strong ties with India and the west.
Design/methodology/approach
Using extended gravity equation and data from Head and Mayer (2021) and the Direction of Trade Statistic (IMF, 2021) for Bangladesh with its applicable partner countries from 1972 till 2019, the authors attempted to examine the potential impact of joining RCEP while keeping its relationship with South Asian Association for Regional Cooperation (SAARC), and other existing economic integration schemes intact.
Findings
Using traditional pooled ordinary least squares, two-stage least square and generalized method of moment techniques, it has been revealed that conventional partners in the South led by India are still beneficial to Bangladeshs trading line. Joining RCEP provides ample avenues for trade expansion without replacing the positive effects of SAARC.
Practical implications
Traditional partners from European, American and South Asian trading opportunities are still paying enough dividends to Bangladesh. RCEP is providing a trade-enhancing chance for Bangladesh in the eastern direction. This paper provides a policy suggestion to look east policy of government. A total overhaul of her tax structure through minimizing excessive reliance on import tariff revenue is desired to facilitate her to join RCEP in the future because most of its prospective RCEP partners are import partners.
Originality/value
This is the first and the only study which explores the feasibility of Bangladesh to join the RCEP by using the most recently updated gravity data in a panel framework.
Highlights
Since its inception on November 15, 2020, Regional Comprehensive Economic Partnership (RCEP) has emerged as one of the largest economic integration areas in the world.
As a borderline country between South Asia and RCEP, Bangladesh is in a fix to take a decision either to join or not to join RCEP if they are invited.
This paper used the gravity equation in an extended form by taking Bangladesh with its 197 trading partners’ trade data for 1972–2019.
The findings postulate that the existing relationship with SAARC countries is still beneficial to its welfare, and RCEP is also economically helpful in enhancing its trade.
Since its inception on November 15, 2020, Regional Comprehensive Economic Partnership (RCEP) has emerged as one of the largest economic integration areas in the world.
As a borderline country between South Asia and RCEP, Bangladesh is in a fix to take a decision either to join or not to join RCEP if they are invited.
This paper used the gravity equation in an extended form by taking Bangladesh with its 197 trading partners’ trade data for 1972–2019.
The findings postulate that the existing relationship with SAARC countries is still beneficial to its welfare, and RCEP is also economically helpful in enhancing its trade.
Details