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Book part
Publication date: 19 June 2019

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Asia-Pacific Contemporary Finance and Development
Type: Book
ISBN: 978-1-78973-273-3

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Book part
Publication date: 19 December 2012

Lee C. Adkins, Randall C. Campbell, Viera Chmelarova and R. Carter Hill

The Hausman test is used in applied economic work as a test of misspecification. It is most commonly thought of as a test of whether one or more explanatory variables in a…

Abstract

The Hausman test is used in applied economic work as a test of misspecification. It is most commonly thought of as a test of whether one or more explanatory variables in a regression model are endogenous. The usual Hausman contrast test requires one estimator to be efficient under the null hypothesis. If data are heteroskedastic, the least squares estimator is no longer efficient. The first option is to estimate the covariance matrix of the difference of the contrasted estimators, as suggested by Hahn, Ham, and Moon (2011). Other options for carrying out a Hausman-like test in this case include estimating an artificial regression and using robust standard errors. Alternatively, we might seek additional power by estimating the artificial regression using feasible generalized least squares. Finally, we might stack moment conditions leading to the two estimators and estimate the resulting system by GMM. We examine these options in a Monte Carlo experiment. We conclude that the test based on the procedure by Hahn, Ham, and Moon has good properties. The generalized least squares-based tests have higher size-corrected power when heteroskedasticity is detected in the DWH regression, and the heteroskedasticity is associated with a strong external IV. We do not consider the properties of the implied pretest estimator.

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Essays in Honor of Jerry Hausman
Type: Book
ISBN: 978-1-78190-308-7

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Article
Publication date: 8 June 2021

Belal Ali Abdulraheem Ghaleb, Hasnah Kamardin and Abdulwahid Ahmed Hashed

The main aim of this study is to examine the effect of investment in outside governance monitoring (IOGM), through non-executive directors' remuneration (NEDR) and…

Abstract

Purpose

The main aim of this study is to examine the effect of investment in outside governance monitoring (IOGM), through non-executive directors' remuneration (NEDR) and external audit fees (AFEE), on real earnings management (REM) in an emerging market in the Southeast Asia region, Malaysia.

Design/methodology/approach

The data comprises 1,056 observations from manufacturing companies listed on Bursa Malaysia for the four-year period, 2013 to 2016. The study tests IOGM individually and aggregately with REM. Feasible generalized least squares (FGLS) regression is used to test the hypotheses.

Findings

The results show that NEDR is negatively and significantly associated with REM. Likewise, AFEE is significantly associated with lower REM. Aggregate IOGM significantly mitigates REM. Additional tests conducted show consistent findings.

Research limitations/implications

This evidence supports agency theory and signaling theory, that a high level of investment in governance monitoring signals a high demand for monitoring and fewer agency problems. It justifies more investment in outside scrutiny and monitoring to limit the existence of managers' opportunistic behavior in concentrated markets. This study relies on an aggregate measure of REM and focuses on manufacturing companies in Malaysia; thus, the results may not be the same using other measurements and samples.

Originality/value

The study, to the best of the researchers' knowledge, is the first to document evidence in an emerging market suggesting that higher NEDR and AFEE are individually and aggregately associated with lower REM. Policymakers, shareholders and researchers may consider investment in these two mechanisms as a proxy of high-quality monitoring that mitigates REM.

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Journal of Accounting in Emerging Economies, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2042-1168

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Article
Publication date: 29 June 2017

Habib Kachlami, Darush Yazdanfar and Peter Öhman

The purpose of this paper is to empirically investigate determinants of social entrepreneurship.

Abstract

Purpose

The purpose of this paper is to empirically investigate determinants of social entrepreneurship.

Design/methodology/approach

The study uses a large-scale database covering Sweden’s 290 municipalities over the 1990-2014 period. The theoretical analysis is based on the demand and supply theory of entrepreneurship, while the empirical analysis is based on feasible generalized least-squares regression models.

Findings

The results indicate that the male proportion of the workforce, education level, the presence of entrepreneurial role models, wealth, unemployment rate, age, and urbanization positively influence the rate of social venture creation in a region.

Originality/value

This is one of few studies that empirically investigate determinants of social entrepreneurship, and the very first in the Swedish context. The study uses a large-scale database and advanced regression methods.

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International Journal of Entrepreneurial Behavior & Research, vol. 24 no. 3
Type: Research Article
ISSN: 1355-2554

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Article
Publication date: 21 October 2019

Orhan Akisik and Graham Gal

The purpose of this paper is to examine the relationship between integrated reports, external assurance and financial performance for North American firms between 2011 and 2016.

Abstract

Purpose

The purpose of this paper is to examine the relationship between integrated reports, external assurance and financial performance for North American firms between 2011 and 2016.

Design/methodology/approach

Corporate websites were examined for disclosures which included both financial and non-financial information. Compustat North America and Global Reporting Initiative (GRI) websites provided additional data for the analysis.

Findings

Using a panel data analysis, the results provide evidence that there is a significant positive association between integrated reports and multiple measures of financial performance. Moreover, this positive effect is enhanced when integrated reports are assured by accounting firms.

Research limitations/implications

There are relatively a small number of firms that do this kind of reporting. A major limitation of the study is the small sample size.

Practical implications

As stakeholders find information in integrated reports relevant, there needs to be standardization on their content and level of assurance. Standard setters and regulators should be involved in setting these standards and assurance guidelines.

Social implications

Although it is clear that there is a cost to firms which produce integrated reports, the benefits to society may outweigh these costs. This may go beyond the benefits to shareholders as they make investment decisions.

Originality/value

According to the knowledge of the authors, this is the first study that examines the impact of integrated reports and external assurance on financial performance for North American firms.

Details

Sustainability Accounting, Management and Policy Journal, vol. 11 no. 2
Type: Research Article
ISSN: 2040-8021

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Article
Publication date: 7 October 2019

Faisal Shahzad, Ijaz Ur Rehman, Waqas Hanif, Ghazanfar Ali Asim and Mushahid Hussain Baig

This study aims to empirically investigate the effect of financial reporting quality (FRQ) and audit quality (AQ) on the investment efficiency (IE) for the firms listed on…

Abstract

Purpose

This study aims to empirically investigate the effect of financial reporting quality (FRQ) and audit quality (AQ) on the investment efficiency (IE) for the firms listed on the Pakistan Stock Exchange during the period 2007-2014.

Design/methodology

The authors use pooled ordinary least squares (OLS) regression which cluster at the firm and year level to test the hypotheses. For sensitivity check, the authors also account for reverse causality and cross-sectional dependence by using the GMM and FGLS regression methods. Furthermore, the authors built their theoretical arguments based on alignment hypothesis of the agency theory and resource-based view of the firm.

Findings

The findings suggest that higher FRQ and AQ are associated with higher IE. The results for these particular estimates are robust when tested using alternative estimation techniques. Overall, the outcomes of this study are in line with the arguments presented by the alignment hypothesis of the agency theory and resource-based view of the firm.

Practical implications

This study is fruitful for policymakers’ and investors. This study finds that the audit done by the Big 4 also reduces the information gap and, thus, reduces the moral hazard and adverse selection problems, thereby enhancing the IE.

Originality

The authors extend the debate on determinates of IE and highlight two monitoring mechanisms: FRQ and AQ. The authors further extend the literature on the economic consequences of AQ in terms of IE, as proposed by Francis (2011). For the first time, this study investigates the impact of AQ on IE in a setting where minority shareholder risk of exploitation is high relative to other markets in Asia.

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International Journal of Accounting & Information Management, vol. 27 no. 4
Type: Research Article
ISSN: 1834-7649

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Book part
Publication date: 14 October 2019

Sameer Mathur and Ashish Dubey

This paper identifies and models the effect of eight attributes that influence hotel room rents in India. These attributes are conceptually grouped into three factors: (1…

Abstract

This paper identifies and models the effect of eight attributes that influence hotel room rents in India. These attributes are conceptually grouped into three factors: (1) site factors including the presence or absence of a “swimming pool,” “free breakfast,” and the “hotel capacity”; (2) situational factors including, “distance from the airport,” “weekend/weekday,” “city population,” “cost of living”; and (3) a reputation factor indicated by “star rating.” Our regression model uses secondary data collected from a hotel booking website for 570 hotels across 18 cities of India. The results indicate that six out of these eight variables namely, presence of swimming pool, free breakfast, hotel capacity, distance from the airport, city population, and hotel star rating have a significant impact on hotel room rents in India.

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Advances in Hospitality and Leisure
Type: Book
ISBN: 978-1-83867-956-9

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Article
Publication date: 29 July 2020

Faten Ben Ahmed, Bassem Salhi and Anis Jarboui

The purpose of this study is to present an extension to the research area dealing with the Tunisia initial public offering (IPO) associated earnings management forecasts…

Abstract

Purpose

The purpose of this study is to present an extension to the research area dealing with the Tunisia initial public offering (IPO) associated earnings management forecasts, by an examination of the corporate governance mechanisms and earnings forecast accuracy relating impacts.

Design/methodology/approach

The authors use a multiple regression technique (FGLS) to estimate the effect of corporate governance structures and audit quality on earnings forecast accuracy. A sample of 33 IPO companies (165 firm-year observations) collected over the period ranging between 2011 and 2015 was applied.

Findings

The finding of this study reveals that the companies displaying a respectable audit committee size have a significant level of earnings forecast accuracy. Similarly, the accuracy level associated with IPO earnings forecasts is positively influenced by the use of the brand-name auditor.

Research limitations/implications

This study is based on a small sample from a single jurisdiction and limited time period. In fact, the findings examine how financial statements are measured and reported and assess additional regulation to protect investors and understand as well as manage earnings forecast accuracy in IPO prospectuses.

Practical implications

The findings of the study provide some implications for regulators, financial analysts, investors and users of financial statements, particularly who are investigating in potentially IPO firms. This study has an implication for market regulators who suggest that a requirement to publish very detailed forecast information would improve market efficiency by reducing the forecast error.

Originality/value

Previous studies on this subject carried out in other countries with a regulatory framework differ from that of Tunisia, which obligatorily obliges the publication of the forecasts in the prospectus of IPO and capital increase. This is one of the most important studies that simultaneously tests the impacts of corporate governance and audit quality on earnings forecast accuracy in an emerging market, and the results of this study may give strength to Tunisian as well as other developing countries.

Details

Journal of Financial Reporting and Accounting, vol. 19 no. 1
Type: Research Article
ISSN: 1985-2517

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Article
Publication date: 18 September 2019

Ebrahim Mohammed Al-Matari

Consistent with the board of directors and top executive management’s role in ensuring and promoting investments for economic development, this paper aims to examine Omani…

Abstract

Purpose

Consistent with the board of directors and top executive management’s role in ensuring and promoting investments for economic development, this paper aims to examine Omani executive management’s role in helping goals achievement in firms. This paper examines the relationships among the study variables, which are top executive management characteristics and corporate performance in the context of Omani listed firms, with the help of two control variables.

Design/methodology/approach

The study focused on a unique context, a developing nation, Oman and its exchange market for the past seven years (2011-2017). In addition, the data were collected from annual report according to board of directors and top executive management variables, and the financial data were obtained from DataStream. The study used the panel data approach to test the relationships characteristics of board of directors, top executive management and corporate performance.

Findings

Based on the obtained results, showed positive and significant positive relationships between some characteristics of top executive management and corporate performance, and significant negative relationships between others and the same. Specifically, board size, non-executive directors, general experience and account experience were in the former category, while board meeting was in the latter category. Finally, size and professional certificate of top executive management did not have a significant relationship with corporate performance.

Research limitations/implications

This study, like previous studies has some limitations such as sample, country, variables and years; therefore, at the end of this study, many limitations and suggestions for future research studies are provided. Moreover, the study findings can be used by the market to assist managers to enhance corporate weaknesses.

Originality/value

The focus of the study was placed on the top executive management and corporate governance of Omani listed firms that has implications for practitioners particularly concerning the top executive management role. Added to this, the study conducted an investigation of the integration between board of directors and top executive management, with corporate governance among Omani listed firms. The study also provided information that has implications to academics when it comes to board of directors and top executive management strategies to encourage consideration of the relationship to develop best practices.

Details

Corporate Governance: The International Journal of Business in Society, vol. 20 no. 1
Type: Research Article
ISSN: 1472-0701

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Article
Publication date: 12 September 2016

Keith Bender and Ioannis Theodossiou

Since the literature on the effect of the unemployment rate as reflection of economic fluctuations on crime shows an empirically ambiguous effect, the purpose of this…

Abstract

Purpose

Since the literature on the effect of the unemployment rate as reflection of economic fluctuations on crime shows an empirically ambiguous effect, the purpose of this paper is to argue that a new way of modeling the dynamics of unemployment and crime by focussing on the transitory and persistent effect of unemployment on crime helps resolve this ambiguity.

Design/methodology/approach

Panel data for US states from 1965 to 2006 are examined using the Mundlak (1978) methodology to incorporate the dynamic interactions between crime and unemployment into the estimation.

Findings

After decomposing the unemployment effect on crime into a transitory and persistent effect, evidence of a strong positive correlation between unemployment and almost all types of crime rates is unearthed. This evidence is robust to endogeneity and the controlling for cross-panel correlation and indicators for state imprisonment.

Originality/value

The paper is the first to examine the dynamics of the interaction of crime and economic fluctuations using the temporary and persistent effects framework of Mundlak (1978). In one set of estimates, one can evaluation both the short- and long-run effects of changes of unemployment on crime.

Details

Journal of Economic Studies, vol. 43 no. 4
Type: Research Article
ISSN: 0144-3585

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