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Article
Publication date: 8 February 2023

Redhwan Al-Dhamari, Hamid Al-Wesabi, Omar Al Farooque, Mosab I. Tabash and Ghaleb A. El Refae

The purpose of this study is to empirically examine how the voluntary formation of a specialised investment committee (IC) and IC characteristics affect financial distress risk…

Abstract

Purpose

The purpose of this study is to empirically examine how the voluntary formation of a specialised investment committee (IC) and IC characteristics affect financial distress risk (FDR) and whether such impact is influenced by the level of investment inefficiency.

Design/methodology/approach

The authors use a large sample of Gulf Cooperation Council (GCC) non-financial companies during 2006–2016. A principal component analysis is done to aggregate and derive a factor score for IC characteristics (i.e. independence, size and meeting) as a proxy for the effectiveness of IC. This study also uses three measurements of FDR to corroborate the findings and partitions sample firms into overinvesting and underinvesting companies to examine the potential impact of investment inefficiency on the IC–FDR nexus.

Findings

Using feasible generalised least square estimation method, the authors document that the likelihood of financial distress occurrence decreases for firms with separate ICs. The authors also find that firms with effective ICs enjoy lower FDR. In other words, the probability of financial distress minimises if the IC is large, meets frequently and has a high number of independent directors. However, the authors find neither any moderation nor any mediation effect of investment inefficiency for the impact of IC and IC attributes on FDR. The additional analysis indicates the expected benefits of an actively performing IC are amplified for firms with risk of both over- and underinvestment. These findings are robust to alternative measures of FDR and investment inefficiency, sub-sample analysis and endogeneity concerns.

Originality/value

This study, to the best of researchers’ knowledge, is the first to provide evidence in GCC firms’ perspective, suggesting that the existence of an effective IC is associated with a lower risk of financial distress, and to some extent, the economic benefits of IC are aggrandised for companies with a high probability of over- and underinvestment problems. These results are unique and contribute to a small but growing body of literature documenting the need for effective ICs and their economic consequences on investment efficiency in the FDR environment. The findings of this study carry valuable practical implications for regulatory bodies, policymakers, investors and other interested parties in the GCC region.

Details

International Journal of Accounting & Information Management, vol. 31 no. 2
Type: Research Article
ISSN: 1834-7649

Keywords

Article
Publication date: 26 September 2023

Md Jahidur Rahman, Hongtao Zhu and Sihe Chen

This study aims to investigate the relationship between corporate social responsibility (CSR) and financial distress and the moderating effect of firm characteristics, auditor…

Abstract

Purpose

This study aims to investigate the relationship between corporate social responsibility (CSR) and financial distress and the moderating effect of firm characteristics, auditor characteristics and the Coronavirus disease 2019 (Covid-19) in China.

Design/methodology/approach

The research question is empirically examined on the basis of a data set of 1,257 Chinese-listed firms from 2011 to 2021. The dependent variable is financial distress risk, which is measured mainly by Z-score. CSR score is used as a proxy for CSR. Propensity score matching, two-stage least square and generalized method of moments are adopted to mitigate the potential endogeneity issue.

Findings

This study reveals that CSR can reduce financial distress. Specifically, results show an inverse relationship between CSR and financial distress, more significantly in non-state-owned enterprises, firms with non-BigN auditor and during Covid-19. The results are consistent and robust to endogeneity tests and sensitivity analyses.

Originality/value

This study enriches the literature on CSR and financial distress, resulting in a more attractive corporate environment, improved financial stability and more crisis-resistant economies in China.

Details

International Journal of Accounting & Information Management, vol. 31 no. 5
Type: Research Article
ISSN: 1834-7649

Keywords

Article
Publication date: 19 October 2023

Guotai Chi and Ahmed R. Gooda

This study aims to explore how earnings management techniques are affected by corporate financial debt risk (FDR), internal control (IC) effectiveness and CEO education.

Abstract

Purpose

This study aims to explore how earnings management techniques are affected by corporate financial debt risk (FDR), internal control (IC) effectiveness and CEO education.

Design/methodology/approach

The study uses a sample from listed firms in China from 2010 to 2017, comprising different industries, including agriculture, forestry, livestock farming and fishing; mining; manufacturing; electric power, gas and water production and supply; construction; transport and storage; information technology; the real estate industry; social services; and communication and cultural. The regression analysis is used to test the hypotheses. The two-stage least squares technique is used to check for endogeneity issues.

Findings

The study finds that firms are less likely to manage real earnings when they have more robust IC and FDR. Likewise, companies with weak ICs are more likely to manipulate real earnings. Besides, the study finds an influence of CEO education on the relationship between IC, FDR and real earnings management (REM). These results can be applied to the sectors in the sample covered by the research, and the authors do not overlook the energy industry sector for the importance of its role in the economy.

Research limitations/implications

There are some limitations for the researcher when performing any research, and this study is no exception. Researchers are urged to take these circumstances into consideration when generalizing or comparing the results because the methods used to calculate the measurement variables in each study may differ somewhat from those used in other research. In addition, expanding the current research design to incorporate additional nations may be an area of interest for future research and could aid in evaluating the effects of nation-specific elements (such as inflation, culture, legal systems and political considerations) on the usefulness of IC and decreasing FDR. Second, the current study focuses on the impact of IC and FDR on REM; this paper does not dissect the “black box” of IC and consider how each element affects earnings management. Future research may need to focus specifically on how effective IC would affect earnings management and precisely what IC mechanisms would discourage the management of earnings.

Practical implications

Helping companies listed in China to make decisions and improve investors’ vision of the results of real companies’ businesses, as well as helping management to avoid falling into debt risk and the consequent effects and manipulation of earnings.

Originality/value

By highlighting the significance of IC and debt risk in enhancing information quality in China, the results contribute to the body of work examining the relationship between IC, FDR and REM. In addition, this study uses a CEO’s education to moderate this link.

Details

Journal of Financial Reporting and Accounting, vol. 22 no. 1
Type: Research Article
ISSN: 1985-2517

Keywords

Article
Publication date: 1 March 2005

Terry Ann Jankowski and Debra S. Ketchell

At the foundation of FDRx was the drug formulary for UW Medicine published by the Drug Information Center. The DIC pharmacist had contracted with USPDI to receive the full text of…

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Abstract

Purpose

At the foundation of FDRx was the drug formulary for UW Medicine published by the Drug Information Center. The DIC pharmacist had contracted with USPDI to receive the full text of its drug information electronically and reformat it into a print, pocket‐sized guide for distribution to clinicians. The goal of the FDRx project was to add to this core and distribute an expanded drug reference as part of a clinical resource.

Design/methodology/approach

Librarians at the University of Washington Health Sciences Libraries collaborated with clinicians to create an electronic federated drug knowledge resource, FDRx, to be used at the point of care.

Findings

Skills and experiences gained in previous projects, e.g. negotiating the licensure of campus‐wide access to bibliographic databases, project leadership, developing interfaces, instruction in the use of information resources, and IAIMS planning, easily transferred to the development of the FDRx project. The most immediate outcome, FDRx itself, had a short but successful lifespan, meeting the drug information needs of its users.

Originality/value

This partnership set the stage for future developments in the knowledge management arena at the University of Washington and changes in the roles of librarians.

Details

Reference Services Review, vol. 33 no. 1
Type: Research Article
ISSN: 0090-7324

Keywords

Article
Publication date: 2 August 2013

Raditya Sukmana and Muhammad Kholid

This paper aims to describe, compare and analyze liquidity policies from the central bank of Indonesia, particularly reserve requirements, with respect to Islamic as well as…

1581

Abstract

Purpose

This paper aims to describe, compare and analyze liquidity policies from the central bank of Indonesia, particularly reserve requirements, with respect to Islamic as well as conventional banks.

Design/methodology/approach

This paper provides some critical assessments on the policy applied by the central bank of Indonesia to both Islamic and conventional banks with regards to the reserve requirements applied in the Indonesian banking system. The analysis is based on whether both policies (Islamic and conventional) provide fairness to the banks as well as whether those policies support the real sector. In addition, the current global practice is also briefly described as a justification of the important and relevance of the current study.

Findings

The authors find that the policy imposed on the Islamic banks is designed to boost the real sector, compared to that of conventional banks. For the policy with respect to Islamic banks, it recognizes the banks which have been doing well in their main role as financial intermediaries and “punishes” them when they fail to do so. This policy could not be found in the context of conventional banks.

Practical implications

The authors argue that the current approach used for Islamic banks can also be adopted and imposed on conventional banks. This leads to a more stable financial system, since it supports the real sector.

Originality/value

This paper is the first to analyze central bank policies with respect to banks (Islamic as well as conventional banks) in relation to their role as financial intermediaries.

Details

Qualitative Research in Financial Markets, vol. 5 no. 2
Type: Research Article
ISSN: 1755-4179

Keywords

Article
Publication date: 31 July 2019

Robin DiPietro, Drew Martin and Thomas Pratt

This paper aims to investigate talent management (TM) practices of independent fine dining restaurant (FDR) organizations and explores why employee retention rates in FDRs are…

1782

Abstract

Purpose

This paper aims to investigate talent management (TM) practices of independent fine dining restaurant (FDR) organizations and explores why employee retention rates in FDRs are higher than other restaurants. This research adds to the TM literature by surfacing attitudes and influences that lead to employee retention.

Design/methodology/approach

The present study collects data using McCracken’s (1988) long interview method to provide insights into value similarities and differences between employees and independent restaurant managers. Fourteen interviews at two independent FDRs inform the results. This study employs a grounded theory approach.

Findings

Study results show that people take pride in working for the restaurants and the culture within the restaurant inspires a higher level of self-esteem. This independent, family-owned environment helps employees and managers achieve higher work performance and satisfy overall lifestyle needs. Respondents report their employment helps them to do things that bring out the best in them and allows them to accomplish other things that they want in life. The study also suggests that a shared value system between employees and managers creates a more stable workforce and longer tenure.

Research limitations/implications

The current study examines only two independent family-owned FDRs, so generalization is limited. The current study uses grounded theory to expand on research in the TM literature.

Practical implications

If owners and managers of FDR focus on addressing employees’ higher-order motivational needs, they have a better chance of retaining employees. Losing productive employees has high direct and indirect costs, and the restaurant industry is plagued with high turnover. Independent restaurants also need to evaluate their new employee orientations because unstructured training contributes to an environment of uncertainty. Developing a positive culture in an FDR is possible with a focused, family-oriented business. This work culture takes time to develop. Recruiting and selection methods to ensure a fit with the culture and values are a cost-effective method to ensure the continuation of this culture. The consistent values between employees and managers in this study demonstrate that hiring for personal values and not necessarily for skills already developed helps with positive TM in FDR.

Originality/value

The current study extends the knowledge in TM, ecological systems theory and motivational needs-based theory through detailed interviews and value analyses. Long interviews and triangulation of the data surface conscious and nonconscious memories from both employees and managers specifically relating to employee retention factors in FDR.

Details

International Journal of Contemporary Hospitality Management, vol. 31 no. 10
Type: Research Article
ISSN: 0959-6119

Keywords

Article
Publication date: 3 September 2020

Hande Yavuz

This study aims to investigate the relationship between material properties and alloying elements of carbon steels through predictive modeling. Aircraft control cables are usually…

Abstract

Purpose

This study aims to investigate the relationship between material properties and alloying elements of carbon steels through predictive modeling. Aircraft control cables are usually made of steel materials and subjected to deformation because of the motion of control surfaces such as aileron, rudder, elevator and trailing edge flaps. Investigation of the relationship between material properties and alloying elements would therefore be explored.

Design/methodology/approach

This study is focused on the modeling of mechanical properties of carbon steels concerning the content of alloying elements by using response surface methodology with false discovery rate (FDR) correction approach. SAS Institute JMP data analysis software was used to develop response and argument relationships in various carbon steels without including thermomechanical treatment effect. Mechanical properties were considered as tensile strength, yield strength, ductility, and Brinell hardness. Carbon (0.28 Wt.%-0.46 Wt.%) and manganese (0.7 Wt.%-0.9 Wt.%) proportions were gathered from ASM Handbook. Linear regression models were tested for the statistical adequacy by using analysis of variance and statistical significance analysis. A posterior probability, which refers to Benjamini–Hochberg FDR (BH-FDR), was embedded as multiple testing corrections of the t-test p-values.

Findings

Predictive modeling of the material properties for aircraft control cables was successfully achieved by using the response surface method with BH-FDR significance level of 0.05.

Originality/value

The effect of statistically developed graphical interactions of alloying elements on the common mechanical properties of such steels would provide prompt comparison to material suppliers and part manufacturers except those subjected to thermomechanical treatment applications.

Details

Aircraft Engineering and Aerospace Technology, vol. 92 no. 10
Type: Research Article
ISSN: 1748-8842

Keywords

Open Access
Article
Publication date: 26 July 2021

Unggul Priyadi, Kurnia Dwi Sari Utami, Rifqi Muhammad and Peni Nugraheni

This study aims to examine the influence of internal and external factors on the credit risk (represented by nonperforming financing [NPF]) of Indonesian Sharīʿah rural banks…

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Abstract

Purpose

This study aims to examine the influence of internal and external factors on the credit risk (represented by nonperforming financing [NPF]) of Indonesian Sharīʿah rural banks (SRBs) – a type of Islamic bank that provides Islamic financial services especially to small and medium businesses in Indonesia. Internal variables comprise capital adequacy ratio (CAR), financing to deposit ratio (FDR), return on assets (ROA), operating expense ratio (OER), financing to value (FTV) and profit and loss sharing (PLS) financing ratio. External variables comprise inflation, economic growth and interest rate.

Design/methodology/approach

The study uses the annual reports of SRBs in Indonesia as secondary data for the years 2010–2019. Auto regressive distributed lag (ARDL) is used as the analysis method to examine the short-run and long-run relationships between the variables.

Findings

The findings indicate that four variables experienced a lag in the short run, namely, NPF, inflation, CAR and PLS, with different results recorded for each of the variables. Furthermore, the long-run results show that CAR and ROA influence the NPF of SRBs positively, whereas inflation and PLS have a negative influence on NPF. The rest of the variables – notably economic growth, interest rate, FDR, FTV and OER – do not have an influence on NPF in SRBs.

Research limitations/implications

The level of NPF in SRBs exceeds the provision of the Central Bank of Indonesia. The findings are expected to have implications for SRBs and the regulator to consider and to manage the factors related to NPF properly due to the important role of SRBs in small and medium businesses’ development.

Originality/value

This study measures the determinants of NPF using internal and external variables, including the addition of a dummy variable, notably FTV. This study also uses ARDL to analyze the financial policies involving data at the present time and lagged time.

Details

ISRA International Journal of Islamic Finance, vol. 13 no. 3
Type: Research Article
ISSN: 0128-1976

Keywords

Article
Publication date: 28 October 2013

Xinzhe Xu, Chaojun Yang, Daolun Chen and Gongmeng Chen

With the launch of CSI 300 Index Futures trading on April 16, 2010, China's stock market presents a more diversified trend, such as arbitrage, trends strategy entering the market…

Abstract

Purpose

With the launch of CSI 300 Index Futures trading on April 16, 2010, China's stock market presents a more diversified trend, such as arbitrage, trends strategy entering the market rapidly. Therefore, the liquidity demand also presents a higher frequency, and the change is more complex than the original situation. In recent years, many literatures are engaged in high-frequency trading (HFT) related research, and an important concern is the impact of HFT on market volatility and liquidity. Is it playing the role of stabilizing the market, or bringing more noise and turmoil? Based on this, the purpose of this study is trying to study what kind of impact the HFT have on market liquidity before and after the launch of the CSI 300 Index Futures.

Design/methodology/approach

The paper uses the simultaneous equations model of price and net order flow proposed by Deuskar and Johnson and for the first time introduces an asymmetric identification through heteroskedasticity (ITH) method. The paper applies the method to the high-frequency data of CSI 300 Index and the Futures and classifies the buying and selling orders through volume clock. The price risks are decomposed into a component driven by the impact of liquidity demand shocks (flow-driven risks (FDRs)) and a component driven by external information (information-driven risks (IDRs)).

Findings

The empirical results show that the flow-driven risk of CSI 300 Index Futures is about 20 percent. In addition, before the introduction of the Index Futures, there is no asymmetric effect between liquidity demand shocks and price shocks existing in either CSI 300 Index or CSI 300 Index Futures. While after the introduction of stock Index Futures, the asymmetric effect in the both two markets emerges. The impact of the buying net order flows on the price is less than the impact of the selling net order flows on CSI 300 Index, whereas the impact of the buying net order flows on the price is larger than the impact of the selling net order flows on CSI 300 Index Futures. The paper further analyzes the relationship between liquidity and FDR and gets the conclusion that the reasons for the deterioration of the liquidity level are caused by the impact of the external information shocks, rather than the liquidity demand shocks. And entries of HFTs like arbitrage traders and hedge traders play a positive role in improving the liquidity level in the market.

Originality/value

The paper introduces an asymmetric ITH method for the first time and finds asymmetric effect of the net order flow on the return in both CSI 300 Index market and the corresponding Index Futures market.

Details

China Finance Review International, vol. 3 no. 4
Type: Research Article
ISSN: 2044-1398

Keywords

Article
Publication date: 9 January 2020

Rakesh Bharati, Susan Crain and Shrikant Jategaonkar

The purpose of this paper is to examine whether the investor reaction to 10-K filings has changed since the implementation of Regulation Full Disclosure (FD) and the…

Abstract

Purpose

The purpose of this paper is to examine whether the investor reaction to 10-K filings has changed since the implementation of Regulation Full Disclosure (FD) and the Sarbanes–Oxley Act (SOX) and examine whether the market still underreacts to 10-K content and exhibits the continuation of filing day returns (FDRs) documented by You and Zhang (2009) after the passage of these regulations.

Design/methodology/approach

The sample consists of 39,270 10-K filings over the sample period of 1996 to 2012. Performance of portfolios created based on FDRs around 10-K filings is examined. Regression models are used for multivariate analysis. Carhart αs are obtained using the four-factor risk adjustment model.

Findings

By comparing investor reaction to 10-K filings pre- and post-regulation, the paper shows a significant change in stock price behavior since the implementation of FD and SOX. Analogous to Burks (2011), results suggest improved price efficiency around 10-K filings. In the long-run of up to one year following the filing, the continuation of FDRs documented by You and Zhang (2009) disappears post-2000, especially after the implementation of SOX. Overall findings suggest that investors price the information in 10-K filings significantly differently after FD and SOX than before.

Research limitations/implications

The sample ends in 2012. Therefore, this study does not examine the implications of the Dodd-Frank Act.

Originality/value

The paper contributes to the literature related to the impact of FD and SOX and market reaction to filings of financial reports. The current literature documents that there is a continuation of FDRs up to a year. This paper shows that the continuation has disappeared since FD and SOX were implemented.

Details

Managerial Finance, vol. 46 no. 1
Type: Research Article
ISSN: 0307-4358

Keywords

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