Search results

The current analysis aims to explore the role of cash holdings in the nexus of national governance and capital investment (CIN).

To achieve this aim, the authors sample the nonfinancial enterprises from 5 Brazil, Russia, India, China, South Africa (BRICS) economies and employ system generalized method of moments(GMM) models as an estimation technique.

The empirical analysis infers that national governance has a positive relationship with CIN and a negative relationship with cash holdings. The cash holdings negatively determine CIN. However, the cash holdings show a positive relationship with CIN in the presence of the national governance index (NGI).

The important policy layout of the current analysis is that corporate managers should reduce cash holdings during better governance situations. Alternatively, corporate managers can disentangle the negative impact of bad country governance conditions on CIN by holding more cash.

The study is innovative as it explores mediating impact of cash holdings in the NGI-CIN nexus.

The world order is experiencing unremitting changes. With this, the national governance of emerging economies is also becoming robust. Therefore, the current study examines the efficacy of national governance in the context of emerging economies by investigating its effects on the profitability of the microfinancing sector. Further, the study inspects if national governance mitigates the impact of credit risks to protect profitability.

The study considers panel data from 224 microfinancing institutions from five economies of world importance: Brazil, Russia, India, China and South Africa (BRICS). The study uses dynamic panel data modeling, particularly the generalized method of moments, alongside multiple univariate and multivariate techniques.

The findings indicate that credit risks negatively impact profitability. In addition, the study documents a significant positive linkage between national governance and profitability. However, national governance fails to restrict the adverse effects of credit risks. National governance is found to be effective in reducing internal agency problems; the monitoring effects successfully limit the moral hazards due to managers' actions. Conversely, the national governance in these economies misses the mark in regulating the moral hazards due to borrowers' behavior.

The current study provides fresh perspectives on the efficacy of national governance in microfinancing in the setting of emerging economies.

This paper examines the impact of founder ownership concentration (FOC) on risk disclosures. It further investigates the moderating role of risk governance in the association between FOC and risk disclosures.

We use data from the top 200 Indian listed firms as our sample and rely on ordinary least squares (OLS) for our results. In addition, we use the propensity score matching, Heckman selection model and instrumental variable estimates for robustness checks.

We find that FOC decreases the risk disclosures. However, the effectiveness of risk management committee composition (risk governance) mitigates the negative influence of FOC on risk disclosures.

The paper is built on the agency theory. Based on the agency theory, the ownership concentration has two implications: first, it reduces the conflicts between managers and shareholders. Here, the managers act in favour of shareholders and therefore, brings more risk disclosers. Second, it invites conflicts between controlling and minority shareholders. The study is, therefore, interesting to see the cost and benefits of FOC on risk disclosures.

The study has practical implications for the regulatory bodies to encourage risk disclosures and benefit the outsiders of the firm. It also has implications for the companies to see the benefits of risk management committee as improved risk governance.

It contributes to the literature of risk disclosures and risk governance in emerging economies. It is the first study to investigate the role of risk governance in mitigating the adverse effects of founder’s ownership on risk disclosures in developing economies. It also contributes to the theory of agency cost and information asymmetry.

This study aims to examine the impact of firm-level corporate social responsibility (CSR) governance characteristics on the extent, quality and comprehensiveness of CSR reporting of Pakistani listed enterprises.

This study used content analysis of corporate annual reports and stand-alone CSR reports available on corporate websites in 2021 to identify CSR-related governance features and to calculate CSR reporting scores. Multivariate regression is used to test relationships. In addition, the analysis tested the moderating role of profitability in these relationships.

Firm-level CSR governance characteristics contribute to the extent, quality and comprehensiveness of CSR reporting in a developing country. Further, results confirm that profitability moderates the relationship between CSR governance and the extent and comprehensiveness of CSR reporting.

This study employed cross-sectional data and focused on a single developing country. Future studies might include a cross-national sample and longitudinal data to demonstrate the broader relevance of these findings. The outcomes of this study are restricted to CSR disclosures based on CSR reports and annual reports. Future research may examine additional corporate communication channels, such as websites and social media platforms.

This research validates the important role of CSR governance mechanisms as a driver of comprehensive CSR reporting. Business leaders and policymakers can facilitate improved corporate reporting by requiring companies to implement CSR-related governance mechanisms.

This is the first study to test the influence of firm-level CSR governance mechanisms in promoting the quantity, quality and comprehensiveness of CSR reporting in a developing country.

Momentum returns are considered an anomaly in the finance literature as their existence cannot be fully explained under the asset pricing paradigm. This study attempts to shed more light on this anomaly by investigating the determinants of momentum returns.

The panel data technique is applied to the sample of 40 countries worldwide from 1996 to 2018. The authors use the panel-corrected standard error (PCSE) model to estimate the coefficient of World Governance Indicators (WGI), whereas the fixed effect model is used to determine the coefficient for corporate governance indicators (CGIs). The choice of PCSE estimation methods is guided by the fact that WGI variables are subjected to serial correlation, heteroskedasticity and cross-sectional dependence problems while CGI variables are not. Furthermore, a composite WGI index is constructed using principal component analysis (PCA).

Regression analysis shows a negative and significant relationship between WGI index and momentum returns. The negative coefficient value of WGI supports the prediction of the overreaction hypothesis, which postulates a lower behavioral bias in the market with high governance quality. Breaking down of the WGI by their six indicators reveals that four of the indicators (control over corruption, government effectiveness, stability and avoidance of violence) are negative statistically significant with momentum returns while two indicators are not significant. As for CGIs, only one (strength of investor protection) of the four tested indicators is negative and significantly related to momentum returns.

The study fills the gap in economic literature by highlighting the association between governance quality at the country (WGI) and firm level (CGI) on stock momentum returns.

This study examines whether and how the legal origin of foreign institutional investors (FIIs) impacts corporate investment efficiency.

The study employs a large panel dataset of firms from 32 non-USA countries from 2005 to 2018. Financial and institutional ownership data are obtained from the COMPUSTAT Global and Public Ownership databases in S&P Capital IQ, respectively. The study employed ordinary least squares (OLS) regression with year and firm fixed effects. In addition, two-stage least squares with instrumental variable regression (2SLS-IV) and propensity score matching (PSM) approaches were employed to address the potential endogeneity.

The findings of this study suggest that common- and civil-law FIIs differ in their monitoring capabilities to promote investment efficiency. The authors find evidence that increased equity ownership by common-law FIIs, not civil-law investors, strengthens the investment-Q sensitivity, resulting in higher investment efficiency. Consistent with the monitoring and information channel, the results further indicate that the positive impact of common-law FIIs on investment efficiency is stronger in host environments susceptible to agency conflicts and information asymmetry.

This study offers novel evidence on the heterogeneous monitoring role of FIIs with regard to their home countries' legal origins and their impact on investment efficiency in an international context.

The study investigates how firm-level governance (FL_G) affects the disclosure of voluntary risk information. Likewise, it explores the influence of FL_G on the informativeness of voluntary risk disclosure (VRD). Specifically, it examines how FL_G shapes the nexus between VRD and firm value.

It uses a sample of non-financial firms from the FTSE350 index listed on the London Stock Exchange between 2010 and 2018. The authors utilise an automated textual analysis technique to code the VRD in the annual reports of these firms. The firm value, adjusted for the industry median, is a proxy for investor response to VRD.

The results suggest that UK firms with significant board independence and larger audit committees disclose more risk information voluntarily. Nevertheless, firms with larger boards of directors and higher managerial ownership disseminate less voluntary risk information. Besides, VRD contains relevant information that enhances investors' valuation of UK firms. These results are more pronounced in firms with higher independent directors, lower managerial ownership and large audit committees.

The study rationalises the ongoing debate on the effect of FL_G on VRD. The findings are helpful to UK policy-setters in reconsidering the guidelines that regulate UK VRD and to the UK investors in considering risk disclosure in their price decisions and thus enhancing their corporate valuations.

It contributes to the risk reporting literature in the UK by presenting the first evidence on the effect of a comprehensive set of FL_G on VRD. Besides, it enriches the existing research by shedding light on the role of FL_G on the informativeness of discretionary risk information in the UK.

The study examines the effects of corporate governance and countrywide institutions and risk factors on corporate liquidity.

Using firm-level data, the authors analyze the effect of corporate governance and various economic, regulatory and social institutions on the liquidity of firms operating in the Middle East and North Africa (MENA) region. The authors use fixed-effects, firm-specific and country-level controls, disaggregated analysis, sensitivity and endogeneity analysis to test the robustness of the estimates.

The corporate governance characteristics of firms influence in diverse ways their liquidity decisions. The independence and diversity of the board and institutional ownership are especially strong predictors. The effect also depends on the size of the firm and the degree of economic development and exhibits time sensitivity and nonlinearity. Enforcement institutions and risk factors play a strong role.

The analysis contributes to the literature by using a large sample of countries and firms over a larger period, distinguishing between poorer and richer countries and using sensitivity and endogeneity analysis. The analysis considers explicitly the role of regulatory and enforcement conditions, social structures and religious beliefs.

The connection between digital manufacturing technologies (Industry 4.0) and the environment has sparked discussions on firms' disclosure of negative information on pollutant emissions and the pursuit of positive environmental outcomes. However, very few studies explore how it relates to a firm's robot usage and its mechanism. The purpose of this paper is to investigate the impacts of robot penetration on firms' environmental governance in China.

The ordered probit model (and probit model) are employed and empirically tested with a sample of 1,579 Chinese listed firms from 2010 to 2019.

The study reveals a negative relationship between robot usage and the disclosure of negative indicators and a U-shaped relationship between robot usage and positive environmental outcomes. Among the sample, nonstate-owned enterprises (SOEs) display unsatisfactory performance, while heavily polluting industries disclose more information on pollutant emissions. The robot–environmental governance nexus is conditional on firm size, capital intensity and local economic development.

The study proposes a fresh view of corporate environmental governance to assess the environmental implications of robot adoption. It also contributes to identifying the curvilinear, moderating and heterogenous effects in the robot–environment nexus. The results provide rich policy implications for the development of industrial intelligence and corporate environmental governance in the circular economy (CE) context.

The study aims to examine the association between corporate transparency and firm value (capital market effect) and investigate whether auditor choice moderates this relationship.

This study uses the Malaysian Institute of Corporate Governance (2017) data set, which provides scores on anti-corruption commitment, organisational transparency and sustainability of Malaysia’s top 100 listed firms. The methodology entails an ordinary pooled least square regression method for empirical research.

The positive association between corporate transparency and firm value is more evident in anti-corruption and sustainability initiatives. More importantly, government-linked companies have higher scores. Firms with enhanced anti-corruption commitment are more likely to have higher firm value, and this relationship is more evident for politically connected firms. This study also finds that auditor choice is associated with the firm value in the sampled listed firms.

The findings provide implications for investors and regulators on the role of corporate transparency in an emerging capital market.

The study recommends that emerging market regulators continue enhancing corporate governance codes and practices to improve reporting transparency for listed firms.

This study contributes to the growing literature on sustainability disclosures by incorporating corporate reporting transparency, explicitly relating to firms’ commitment to anti-corruption, organisational transparency and sustainability.