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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.

The present study aimed to examine the effect of received remittance inflows on the price level ratio of the purchasing power parity conversion factor to the market exchange rate in 36 developed and developing countries from 2004 to 2020.

The panel data conducted a comparative analysis and used panel least squares, regression with Driscoll-Kraay standard errors of fixed effect, random effect, feasible generalised least squares and maximum likelihood robust least squares to overcome the heterogeneity issue. Furthermore, the two-step difference generalised method of moments to overcome the endogeneity issue. Diagnostic tests were used to increase robustness.

In the studied countries, there was a statistically significant negative relationship between received remittance inflows and the price-level ratio of the purchasing power parity conversion factor to the market exchange rate. This relationship explains why remittance flows depreciate the real exchange rate. The study’s results also indicated that attracting investments can improve the quality of institutions despite high tax rates, leading to low tax revenue.

The current study findings enrich the understanding of policies of how governments should minimise tariff rates on capital imports and introduce export-oriented incentive programmes. The study also revealed that Dutch disease can occur due to differences in the demand structure and manufacturing development policy.

The growing volume of trade misinvoicing in Sub-Saharan Africa (SSA) calls for serious concern, particularly given its effect on macroeconomic fundamentals. Despite the growing body of literature on the growth effect of trade misinvoicing, empirical evidence on the role of governance in moderating the effect is quite scarce, particularly for SSA. The purpose of this paper is to provide insights into the growth effect of trade misinvoicing in SSA as well as the moderating role of governance in this regard.

The feasible generalised least square estimator was applied to analyse relevant data, spanning 2009–2018, of 35 SSA countries. Governance indicators were classified into economic, political and institutional governance, and their individual role in moderating the nexus between trade misinvoicing and economic growth was explored.

This paper showed the presence of cross-sectional dependence among SSA countries and long-run convergence of the estimated variables. The empirical finding showed that trade misinvoicing has a negative growth effect in the selected SSA countries, but both economic and political governance are crucial in lowering the observed negative growth effect.

To curtail trade misinvoicing, SSA policymakers should go beyond just designing anti-money laundering policies to effectively implementing the policies for improved growth prospects. More so, the government of each SSA country must devise means of strengthening governance and building effective, accountable and transparent institutional frameworks that will constantly check and discourage trade misinvoicing activities.

The originality of this paper stems from its novel assessment of the role governance plays in moderating the growth effect of trade misinvoicing in SSA using the feasible generalised least square estimator. It also details the strategies needed to effectively tackle trade misinvoicing.

This study examines a link between firms' product market power, industry concentration, the degree of earnings management and the role of governance in curbing earnings management.

The author uses different panel techniques of feasible generalized least squares (FGLS) and system generalized method of moments (GMM) to show robust study findings.

The study results reveal that firms lacking product market pricing power engage in earnings management, adding a new dimension to the existing literature. These findings mirror even at the industry level, where the authors document immense competitiveness led to earnings manipulation and stringent corporate governance mechanism has the potency to curb earnings management.

The paper has valuable insights and practical implications for policymakers and market participants. The results indicate robust institutional oversight mechanisms can deter earnings management in a concentrated market.

To the best of the authors’ knowledge, this is among the first paper from India, a growing emerging economy, to look at the various aspects of market characteristics, earnings management and the role of corporate governance.

This study aims to examine the impact of financial inclusion and financial innovation on corruption, considering the moderating role of education, as well as identify the specific modality of digital inclusion and payments that contribute to corruption reduction.

The study uses a representative sample consisting of 46 African countries in three different years 2011, 2014 and 2017. On the data, feasible generalized least squares (FGLS), instrumental variables – two stages least squares (IV-2SLS) and two-stage generalized method of moments (IV-2GMM) model estimation methods were employed.

The results suggest that financial inclusion and education significantly reduce corruption. As well, the interaction between financial inclusion and education reduces corruption. Additionally, the authors find that the expansion of bank credit and the use of credit and debit cards are the specific modes of financial inclusion and digital payments that can contribute to corruption reduction.

This study awakens policymakers in African countries about the need to consider education as an alternative measure to support financial inclusion and reduce the use of physical cash in transactions for an effective fight against corruption.

Regarding practical implications, the study shows that financial inclusion besides reducing poverty for households can contribute to macroeconomic stability in Africa.

The study uses a representative sample composed of 46 African countries and considers the role of education in moderating the relationship between financial inclusion and financial innovation on corruption. Furthermore, the study identifies the specific modality of financial inclusion and digital payments that contribute to corruption reduction.

The present study aims to examine the relationship between corporate governance factors and financial reporting transparency pre and post of ISIS.

A multivariate regression model was used to test the hypotheses for this purpose. The research hypotheses were tested on a sample of 35 companies listed on the Iraqi Stock Exchange from 2012 to 2018 using a multivariate regression model based on panel data technique.

The results indicate a negative and significant correlation between the board independence, audit committee independence, management team stability and remuneration of the board of directors and financial reporting transparency. In contrast, there is a positive and significant correlation between the board expertise, audit committee expertise and managerial ownership, with financial reporting transparency. Moreover, ISIS has had a direct and significant impact on the correlation between the board of directors’ independence and remuneration with financial reporting transparency. The present study also tested research models using additional methods (such as feasible generalised least squares, ordinary least squares, random effects and T + 1) to obtain better results. The results of these different methods were entirely in line with the main results of the research.

The political and economic instability resulting from the entry of ISIS into Iraq has created severe problems for society’s economic, political, security and performance dimensions. Macroeconomic uncertainty driven by terrorist activities can negatively affect managers’ perceptions of firms’ future performance and result in poor judgments and estimations, significantly impacting business units' financial reporting transparency. Because no study has examined the relationship between corporate governance and financial reporting transparency on the Iraq stock exchange before and after the presence of ISIS, this study examines such a relationship. Although the economic and political situation in Iraq may not be identical to that in other nations, much of the experience in Iraq is anticipated to apply to other countries in the region.

In this paper, the authors examine the association between the banking regulatory regime and the quality of bank earnings. We further investigate whether the banking agency regulatory characteristics moderate the association between banking regulation and earnings quality.

Using panel data spanning 29 years over the period 1991 to 2019, the authors model bank earnings quality as a function of scores for banking regulation for 170 banks in the East African region using both the feasible generalized least squares (FGLS) and generalized method of moments (GMM) estimation methods.

The results, which are robust for endogeneity among other checks, reveal a positive impact of bank regulatory mechanisms on the quality of bank earnings. The authors further establish differential impact of specific regulatory mechanisms, with some contributing positively toward earnings management while others contributing negatively toward earnings management. The differential impacts of banking regulation on earnings quality are also manifested in the country-level analyses.

First, the study utilises a mix of bank-specific, country-specific as well as economy-specific variables in one dataset. Second, the authors utilise survey-based data using the World Bank's Bank Regulation and Supervision Surveys (BRSS) for the periods 1999 to 2019. The authors assume that the bank regulatory mechanisms in place pre-1999 are close to the mechanisms in place as per the 1999 BRSS. Given limitations in data availability, the authors are not able to control for banks engaging in multiple activities such as insurance, underwriting of securities, FinTechs, among others.

The results are useful in bridging the gap between theory and practice regarding the expected effect of strict banking regulations on the quality of earnings in Eastern African Banks. For the positive impact of banking regulation on bank earnings quality to be felt, the institutional, social and environmental specificities of the five selected countries need to be adequately developed and taken into consideration.

This study is perhaps the first to utilise a large dataset of commercial banks from countries in a developing region characterised by relatively lower enforcement and dynamism in the banking regulation. Further, in-depth studies on the association between banking regulation and earnings quality remain sparse.

This paper aims to examine the relation between executive compensation, firm size and firm performance on a panel of the so‐called “new economy” firms in the USA over the period 1996‐2002.

The authors use two measures of performance, total shareholder return and return on assets, and concentrate on total CEO compensation, which includes stock option compensation, as equity‐based compensation practices have been prevalent in new economy firms. The estimation process uses both the feasible generalized least squares method of Parks and Kmenta and the panel corrected standard error method of Beck and Katz. These methodologies investigate error structures that do not conform to the classical ordinary least squares assumptions.

The econometric results indicate that estimates on firm size are robust to alternative specifications of the error structures. There is evidence however that the effect of firm size on CEO compensation is more significant after the stock market crash of 2000. The opposite holds true for the estimates on firm performance. In addition, estimates on firm performance are more sensitive to the estimation method and the specification of the error structures.

The research presented in this paper is a first step in the direction of understanding the pay to performance relation in the “new economy” industries in the USA. Additional research is warranted, which should extend both the time series and the cross section aspects of the data.

The paper fills an important gap in the existing literature by providing rigorous econometric evidence on the pay to performance relation in the so‐called “new economy” industries. The evidence provided in this paper is relevant as it complements the findings in the literature on executive compensation in the so‐called “old economy” industries, which typically make up the samples of most previous studies.

This study aims to empirically analyze how interest rate liberalization affects bank liquidity creation, and investigate whether the relationship between them is linear.

Based on panel data on 145 banks in China over the period 1997–2015, this paper regresses the econometric model by conducting feasible generalized least square estimation.

The regression results show that, first, interest rate liberalization has a nonlinear impact on bank liquidity creation, and the relationship between them is inverted U-shaped. In other words, as interest rate liberalization progresses, bank liquidity creation increases first, and then decreases. Second, through the mediation effect tests, this study found that interest rate liberalization affects bank liquidity creation through bank risk-taking. That is, interest rate liberalization leads to changes in bank risk-taking, thus resulting in changes in bank liquidity creation.

The effect of interest rate liberalization on bank liquidity creation is nonlinear, so promoting interest rate liberalization faces a trade-off because excessive bank liquidity creation may lead to asset price bubbles, while insufficient bank liquidity creation may inhibit economic growth.

Interest rate liberalization has a significant impact on bank liquidity creation; therefore, bank liquidity creation should be added to the objective function of the regulator that determines interest rate liberalization reform in China.

Interest rate liberalization has a direct impact on bank risk-taking, so the consequences of interest rate liberalization should be included in the framework of macro-prudential supervision.

Interest rate liberalization is one of the most important financial reforms in China, yet its potential impact on firm-level bank liquidity is little explored. This paper attempts to fill the gap.

This study aims to examine organized crime, corruption and their challenges to the economic growth of the Economic Community of West African States (ECOWAS). Organized crime and corruption can have a grossly negative impact on the economic growth process of every system, but the extent of damage they have needs to be measured to determine the policy implications to the region.

The study uses the fixed effects model and the feasible generalized least square known also as the random-effects model with the pooled ordinary least square as a control on the defined objectives using secondary time series data that covers the period 2000 to 2019 for 11 countries in the ECOWAS region. The panel nature of the data set provides a rich degree of freedom with 220 (20 years for 11 countries – 20*11 = 220) observations.

Results show among others that organized crime does not have a significant impact on economic growth, whereas corruption significantly reduces economic growth.

Unavailability of data affected the scope of the study in the areas of a number of countries selected and years chosen for the study. The implication is that it would have given the study better degrees of freedom.

The practical implication of this study has exposed corruption hinders economic growth in West Africa.

The social implication of the study is that it has exposed that though the organized crime was a bad phenomenon it does not retard economic growth significantly in West Africa.

This study is original and of immense importance as its the first study to focus on organized crime and corruption’s influence on economic growth among West African states.