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Article
Publication date: 14 September 2023

Yazhou Wang, Dehong Luo, Xuelin Zhang, Zhitao Wang, Hui Chen, Xiaobo Zhang, Ningning Xie, Shengwei Mei, Xiaodai Xue, Tong Zhang and Kumar K. Tamma

The purpose of this paper is to design a simple and accurate a-posteriori Lagrangian-based error estimator is developed for the class of backward differentiation formula (BDF…

Abstract

Purpose

The purpose of this paper is to design a simple and accurate a-posteriori Lagrangian-based error estimator is developed for the class of backward differentiation formula (BDF) algorithms with variable time step size, and the adaptive time-stepping in BDF algorithms is demonstrated for efficient time-dependent simulations in fluid flow and heat transfer.

Design/methodology/approach

The Lagrange interpolation polynomial is used to predict the time derivative, and then the accurate primary result is obtained by the Gauss integral, which is applied to evaluate the local error. Not only the generalized formula of the proposed error estimator is presented but also the specific expression for the widely applied BDF1/2/3 is illustrated. Two essential executable MATLAB functions to implement the proposed error estimator are appended for practical applications. Then, the adaptive time-stepping is demonstrated based on the newly proposed error estimator for BDF algorithms.

Findings

The validation tests show that the newly proposed error estimator is accurate such that the effectivity index is always close to unity for both linear and nonlinear problems, and it avoids under/overestimation of the exact local error. The applications for fluid dynamics and coupled fluid flow and heat transfer problems depict the advantage of adaptive time-stepping based on the proposed error estimator for time-dependent simulations.

Originality/value

In contrast to existing error estimators for BDF algorithms, the present work is more accurate for the local error estimation, and it can be readily extended to practical applications in engineering with a few changes to existing codes, contributing to efficient time-dependent simulations in fluid flow and heat transfer.

Details

International Journal of Numerical Methods for Heat & Fluid Flow, vol. 33 no. 12
Type: Research Article
ISSN: 0961-5539

Keywords

Article
Publication date: 5 June 2023

Apoorva Arunachal Hegde, Ajaya Kumar Panda and Venkateshwarlu Masuna

This paper aims to investigate the non-homogeneity in the speed of adjustment (SoA) of the capital structure of manufacturing companies. It also attempts to study the key…

Abstract

Purpose

This paper aims to investigate the non-homogeneity in the speed of adjustment (SoA) of the capital structure of manufacturing companies. It also attempts to study the key determinants that accelerate the speed of adjustment towards the target leverage level.

Design/methodology/approach

Using the dynamic panel fraction (DPF) estimator on the partial adjustment model, the study captures the heterogeneous SoA of 2,866 firms across eight prominent sectors of the Indian manufacturing industry from 2009 to 2020. To ensure robustness, the empirical inferences of DPF are cross-verified with the estimates of panel-corrected standard errors (PCSE).

Findings

The authors find a combination of the capital structure's slow, moderate and rapid adjustment speed along with the relevance of trade-off theory. Interestingly, the lowest and fastest SoA is recorded by the dwindling textile sector and expanding food and agro sector, respectively. Profitability, firm size, asset tangibility and non-debt tax shields are the key firm-specific parameters that impact the SoA towards the target.

Originality/value

Availing the rarely employed estimator ‘DPF’ and the objective of documenting diverse and non-uniform adjustment speeds across the Indian manufacturing sectors marks a novel addition to capital structure literature.

Details

Journal of Advances in Management Research, vol. 20 no. 5
Type: Research Article
ISSN: 0972-7981

Keywords

Article
Publication date: 20 November 2023

Ping Wei, Jingzi Zhou, Xiaohang Ren and Farhad Taghizadeh-Hesary

This paper aims to explore the quantile-specific short- and long-term effects of economic policy uncertainty (EPU) on the efficiency of the green bond market.

Abstract

Purpose

This paper aims to explore the quantile-specific short- and long-term effects of economic policy uncertainty (EPU) on the efficiency of the green bond market.

Design/methodology/approach

This study examines the long-term cointegration relationship and the short-term fluctuation relationship of EPU, WTI crude oil price (WTI) and European Union Allowances price (EUA) with the green bond market efficiency (GBE) using the quantile autoregressive distributed lag method. Additionally, the authors analyze the differences before and after the Covid-19 pandemic.

Findings

EPU has a significant positive impact on the GBE before the outbreak. However, during the crisis period, the impact of EPU and WTI was greatly weakened, whereas the impact of EUA was strengthened.

Practical implications

This paper demonstrates the dynamics of GBE and its influencing factors under different periods. The findings provide insights for market participants and policymakers to gain a clearer understanding of the green bond market.

Originality/value

This paper extends the study of green bonds by quantifying the GBE and elucidating the nonlinear relationship between efficiency and independent variables at different quantiles over different periods.

Details

Review of Accounting and Finance, vol. 23 no. 1
Type: Research Article
ISSN: 1475-7702

Keywords

Article
Publication date: 6 February 2024

Mawih Kareem Al Ani, Faris ALshubiri and Habiba Al-Shaer

This study aims to examine whether firms that appear to exhibit high sustainable outputs are more likely to pay higher audit fees than firms without such outputs.

Abstract

Purpose

This study aims to examine whether firms that appear to exhibit high sustainable outputs are more likely to pay higher audit fees than firms without such outputs.

Design/methodology/approach

The sustainability outputs are measured using a sustainable product portfolio consisting of four products: clean energy products, eco-design products (EDP), environmental products (EP) and sustainable building projects (SBP). The audit fee variable is measured by the natural logarithm of the total amount of audit fees. The study tests two models of the association between these outputs and audit fees; Model 1 tests this association in the absence of the moderating variable (sustainability committee), and Model 2 tests the association in the presence of the moderating variable.

Findings

An analysis of data on 261 European firms from the Refinitiv Eikon database from 2010 to 2019 shows that high sustainability outputs are significantly and positively associated with audit fees. More importantly, this association is moderated by the presence of a board-level sustainability committee, suggesting that this type of committee reflects a factor considered by auditors in their audit risk assessment practices. The findings indicate that in Model 1, one (EP) out of four variables has a significant and positive association with audit fees, while in Model 2 and in the presence of sustainability committee, two variables (EP and EDP) have a significant and negative association with audit fees. However, the robust analysis shows that three variables (EP, EDP and SBP) have significant and negative associations with audit fees.

Practical implications

The study findings have important implications for policymakers, auditors and firms’ managers. For policymakers, the findings provide support for the argument that sustainable attitudes incentivise firms to manage sustainable product profiles more effectively. As such, policymakers should incentivise firms to establish a sustainability committee and regulate its role and responsibilities. Auditors should coordinate with the sustainability committee to facilitate audit efforts and reduce audit fees.

Social implications

Understanding the relationship between sustainable products and audit fees will allow firms to improve their portfolio of sustainable products. In addition, other social implications of this study relate to improving relationships with society by establishing a sustainability committee that is responsible to communicate with that society.

Originality/value

The results support the argument that firms should manage sustainable product portfolios more effectively. In addition, the results of the study highlight the importance of a new variable as a moderator, the sustainability committee, which has not been examined before.

Details

Sustainability Accounting, Management and Policy Journal, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2040-8021

Keywords

Open Access
Article
Publication date: 20 February 2024

Elvis Achuo, Bruno Emmanuel Ongo Nkoa, Nembo Leslie Ndam and Njimanted G. Forgha

Despite the longstanding male dominance in the socio-politico-economic spheres, recent decades have witnessed remarkable improvements in gender inclusion. Although the issue of…

Abstract

Purpose

Despite the longstanding male dominance in the socio-politico-economic spheres, recent decades have witnessed remarkable improvements in gender inclusion. Although the issue of gender inclusion has been widely documented, answers to the question of whether institutional arrangements and information technology shape gender inclusion remain contentious. This study, therefore, empirically examines the effects of institutional quality and ICT penetration on gender inclusion on a global scale.

Design/methodology/approach

To control for the endogeneity of modeled variables and cross-sectional dependence inherent with large panel datasets, the study employs the Driscoll-Kraay Fixed Effects (DKFE) and the system Generalised Method of Moments (GMM) estimators for a panel of 142 countries from 1996 to 2020.

Findings

The empirical findings from the DKFE and system GMM estimators reveal that strong institutions significantly enhance gender inclusion. Moreover, by disaggregating institutional quality into various governance indicators, we show that besides corruption control, which has a positive but insignificant effect on women’s empowerment, other governance indicators significantly enhance gender inclusion. Furthermore, there is evidence that various ICT measures promote gender inclusion.

Practical implications

The study results suggest that policymakers in developing countries should implement stringent measures to curb corruption. Moreover, policymakers in low-income countries should create avenues to facilitate women’s access to ICTs. Hence, policymakers in low-income countries should create and equip ICT training centers and render them accessible to all categories of women. Furthermore, developed countries with high-tech knowledge could help developing countries by organizing free training workshops and sensitization campaigns concerning the use of ICTs vis-à-vis women empowerment in various fields of life.

Originality/value

The present study fills a significant research gap by comprehensively exploring the nexuses between governance, ICT penetration, and the socio-politico-economic dimensions of gender inclusion from a global perspective. Besides the paucity of studies in this regard, the few existing studies have either been focused on region and country-specific case studies in developed or developing economies. Moreover, this study is timely, given the importance placed on gender inclusion (SDG5), quality of institutions (SDG16), and ICT penetration (SDG9) in the 2015–2030 global development agenda.

Details

Journal of Economics and Development, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1859-0020

Keywords

Article
Publication date: 10 August 2023

Miranda Tanjung

Studies on sustainable finance examine how it is interrelated with economic, social, governance and environmental issues. Using financial data on publicly traded firms in…

1189

Abstract

Purpose

Studies on sustainable finance examine how it is interrelated with economic, social, governance and environmental issues. Using financial data on publicly traded firms in Indonesia, this study aims to explore the interplay between the cost of capital, firm performance and the COVID-19 pandemic.

Design/methodology/approach

This study uses firm-level data sets of publicly listed firms from 2012 to 2021. The regression analysis reported in the study includes the Driscoll–Kraay estimator, propensity score matching model and fixed-effects regression.

Findings

The study revealed three significant findings. First, on average, non-environmental, social and governance (ESG) companies’ cost of capital is lower than that of ESG firms. Second, ROE in ESG enterprises is significantly impacted by capital costs. Third, the cost of capital has a negative impact on the market value (Tobin’s q) of non-ESG firms. The study specifically shows that after accounting for the pandemic, ESG firms did not benefit during the troubled COVID-19 crisis after controlling for the pandemic dummy years of 2020 and 2021. These results indicate that the adoption of green or sustainable finance is still in its infancy and that the sector requires more time to establish an enabling environment.

Research limitations/implications

This study benefits from capital structure and ESG theories. It supports the argument that the debt utilization ratio is still relevant to a company’s value because it affects its financial performance. Moreover, adopting ESG principles helps businesses survive crises. Thus, the analysis confirms the superiority of ESG-based firms.

Practical implications

This study draws two conclusions. First, the results could be a reference for academics and practitioners to understand the effect of pandemic-related crises on a firm’s capital structure and performance. In terms of survival during a crisis, such as the COVID-19 pandemic, this study demonstrates how firms with strong ESG may perform differently than those without ESG. Second, this study supports the need for an empirical study and examination of the development of sustainable finance in the country while considering setbacks.

Social implications

The results should be of interest to policymakers who focus on the ESG market and academics conducting ESG-related research on emerging markets.

Originality/value

This study contributes to the literature by establishing empirical evidence on the relationship between the cost of capital and firm performance of ESG- and non-ESG-rated enterprises in the Indonesian setting while controlling for the impact of the pandemic.

Details

Sustainability Accounting, Management and Policy Journal, vol. 14 no. 6
Type: Research Article
ISSN: 2040-8021

Keywords

Article
Publication date: 6 December 2021

Andrzej Cieślik and Giang Hien Tran

The main aim of this paper is to verify whether the modern mainstream economic theory of multinational enterprise that explains foreign direct investment (FDI) from developed…

Abstract

Purpose

The main aim of this paper is to verify whether the modern mainstream economic theory of multinational enterprise that explains foreign direct investment (FDI) from developed countries is also able to account for investment decisions of multinational enterprises (MNEs) from emerging economies.

Design/methodology/approach

Using Knowledge-And-Physical-Capital (KAPC) model as an analytical framework and Poisson-pseudo maximum likelihood estimation technique, the authors identify determinants of FDI flows from emerging economies. The data set consists of 38 home and 134 host countries during the period 2000–2012. Empirical evidence supports high explanatory power of KAPC model. Further, compared with the earlier Knowledge-Capital (KC) model, results confirm the importance of physical capital.

Findings

The estimation results confirm the hypothesis that mainstream economic theory can explain FDI flows from the emerging economies by highlighting the roles of total market size, skilled-labor abundance, investment and trade costs and geographical distance between two countries.

Research limitations/implications

This study casts doubt on the alternative way that the KAPC model suggests to distinguish between horizontal and vertical FDI. The argument that horizontal MNE headquarters would be relatively more abundant than vertical MNE headquarters in countries that are abundant in physical capital relative to skilled labor seems reasonable but the idea of variable specification in the estimated equation should be revised.

Practical implications

Firms should be allowed to move their resources freely into and out of specific activities, both internally and internationally across border. To reach that goal, governments of potential host countries can adopt several measures, most importantly remove restrictions on payments, transfers and capital transactions and open previously closed industries to welcome foreign investment. In addition, to improve investment climate in general, governments need to pay attention to enhancing security of property rights, regulating internal taxation (i.e. corporate income tax), guaranteeing adequacy of infrastructure, efficient functioning of finance and labor markets and fighting against corruption.

Social implications

The location choice of emerging investors set priority on similarity in economic size, geographical and cultural proximity. It is because shared borders or common official languages would reduce information costs and enhance information flows. Also, investors consider horizontal FDI (with motivation to expand market demand) as one of main modes of entry into a foreign market and a substitute for export. Likewise, distance is often understood as an important investment friction.

Originality/value

The outstanding contribution is that the research has uncovered the positive and statistically significant effect of physical capital on FDI activity, which has not been discussed in the earlier KC model. However, at the same time, the study casts doubt on the KAPC model's argument that relative abundance in physical capital to skilled labor between two countries determines FDI types and suggests that this argument and its empirical model specification should be carefully reviewed.

Article
Publication date: 11 December 2023

Admir Meskovic, Alija Avdukic and Emira Kozarevic

Explaining the sources of the differences in social performance among Islamic banks (IBs) is the motivation for this research. Consequently, the purpose of this paper is to…

Abstract

Purpose

Explaining the sources of the differences in social performance among Islamic banks (IBs) is the motivation for this research. Consequently, the purpose of this paper is to investigate the relationship between the development of Islamic finance regulation, the development of an Islamic financial system, the proportions of affected Muslim populations and the level of competition, on the one hand, and the social performance of IBs, on the other. To the best of the authors' knowledge, this is the first study that investigates the impact of the development of regulation and the Islamic financial system on the social performance of IBs.

Design/methodology/approach

A balanced panel of annual data for 40 banks from 13 countries is applied, spanning 2012–2018. A social performance index with eight dimensions is constructed and measures the social performance of IBs. The index based on qualitative and quantitative data derives from IBs’ annual reports and financial statements. The linear scaling transformation method articulates the quantitative dimensions of the index. In hypotheses testing, the authors use OLS, LSDV, FEM and Random Effect Model to estimate Model (1) and panel-corrected standard errors with Prais–Winsten transformation to estimate Model (2).

Findings

This unique research confirms the positive impact of the development of Islamic finance regulation on the social performance of IBs. The results show that the development of Islamic finance regulation is consistently significant on all standard significance levels. IBs’ age and the presence of Muslim populations in the country are also significant in most estimators.

Research limitations/implications

The results of this research highlight a significant value for regulators, shareholders and the management of IBs. Without proper regulation, these banks can hardly operate under the principles and expectations of the Islamic moral economy.

Originality/value

This is pioneering research that explores the development of Islamic finance regulation and market concentration as a determinant of social performance of IBs. Development of Islamic finance regulation has proved significant in all estimated models, which confirms that a new variable has been discovered among determinants of the social performance of IBs.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 17 no. 1
Type: Research Article
ISSN: 1753-8394

Keywords

Article
Publication date: 22 June 2023

Zied Saadaoui and Salma Mokdadi

This paper aims to improve the debate linking the business models of banks to their riskiness by checking if diversification exerts different impacts on the probability of bank…

Abstract

Purpose

This paper aims to improve the debate linking the business models of banks to their riskiness by checking if diversification exerts different impacts on the probability of bank distress depending on the level of capital buffers.

Design/methodology/approach

The paper focuses on a sample of listed bank holding companies observed between 2007:Q3 and 2022:Q4. The authors use three subindexes of bank diversification. The authors estimate a dynamic model specification using a system generalized method of moments with robust standard errors and consistent estimators under heteroskedasticity and autocorrelation within a panel. Sensitivity and robustness checks are performed.

Findings

Asset and income diversification increase the probability of distress in low-capitalized banks during normal periods (excluding periods of crises and high uncertainty). Concerning crisis periods, a marginal increase in asset diversification during the global financial crisis (GFC) and the COVID-19 pandemic crisis induces a more important increase in the probability of failure of well-capitalized banks relative to low-capitalized ones. Contrary to the results obtained for the GFC period, well-capitalized banks were found to pursue more careful funding diversification in reaction to the sudden increase of uncertainty during the Russia–Ukraine war.

Research limitations/implications

Prudential supervision should concentrate on well-capitalized banks to encompass unexpected excessive risk-taking during crisis periods. Regulatory requirements should constrain fragile banks to avoid pursuing assets and income diversification strategies that increase earnings volatility.

Originality/value

The main originality of this paper is to consider the interaction between three different dimensions of bank diversification and capital regulation during stable and unstable periods using the marginal effect analysis. Moreover, this paper uses, initially, the GFC as the reference crisis period to study the impact of capital buffers and diversification interactions on the probability of bank distress. Then, the authors extend the observation period until 2022:Q4 to include two additional major events, namely, the COVID-19 pandemic and the Russia-Ukraine war.

Details

Journal of Financial Regulation and Compliance, vol. 31 no. 5
Type: Research Article
ISSN: 1358-1988

Keywords

Article
Publication date: 27 November 2023

Oğuz Kara, Levent Altinay, Mehmet Bağış, Mehmet Nurullah Kurutkan and Sanaz Vatankhah

Entrepreneurial activity is a phenomenon that increases the economic growth of countries and improves their social welfare. The economic development levels of countries have…

Abstract

Purpose

Entrepreneurial activity is a phenomenon that increases the economic growth of countries and improves their social welfare. The economic development levels of countries have significant effects on these entrepreneurial activities. This research examines which institutional and macroeconomic variables explain early-stage entrepreneurship activities in developed and developing economies.

Design/methodology/approach

The authors conducted panel data analysis on the data from the Global Entrepreneurship Monitor (GEM) and International Monetary Fund (IMF) surveys covering the years 2009–2018.

Findings

First, the authors' results reveal that cognitive, normative and regulatory institutions and macroeconomic factors affect early-stage entrepreneurial activity in developed and developing countries differently. Second, the authors' findings indicate that cognitive, normative and regulatory institutions affect early-stage entrepreneurship more positively in developed than developing countries. Finally, the authors' results report that macroeconomic factors are more effective in early-stage entrepreneurial activity in developing countries than in developed countries.

Originality/value

This study provides a better understanding of the components that help explain the differences in entrepreneurship between developed and developing countries regarding institutions and macroeconomic factors. In this way, it contributes to developing entrepreneurship literature with the theoretical achievements of combining institutional theory and macroeconomic indicators with entrepreneurship literature.

Details

Management Decision, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0025-1747

Keywords

1 – 10 of over 1000