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Open Access
Article
Publication date: 28 November 2023

ABM Fazle Rahi, Jeaneth Johansson and Catherine Lions

This study aims to examine the factors that influence the relationship between sustainability and financial performance (FP) of the European listed companies.

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Abstract

Purpose

This study aims to examine the factors that influence the relationship between sustainability and financial performance (FP) of the European listed companies.

Design/methodology/approach

This study analyzed data from 795 companies in 21 European countries by applying linear mixed-effects multilevel regressions, a two steps system generalized method of moments and quantile regression models to uncover the links between sustainability and FP.

Findings

The past four decades have witnessed abundant research to determine the relationship between corporate sustainability and FP. Thus, conducting further research in 2023 could be seen as “reinventing the wheel.” Yet, earlier research considered firms as isolated entities with sustainability and FP being dependent only on that firm’s actions. By contrast, with the help of network governance theory, this study shows that a firm’s sustainability and FP depend on an interplay among interorganizational actors, such as institutional qualities, macroeconomic factors and an embrace of sustainability. Here, large firms play an essential role. Three significant findings are drawn. First, sustainability performance has a significant impact on FP in the European context. Second, the institutional quality (IQ) of the rule of law and control of corruption plays a crucial role in enhancing sustainability and FP, and finally the interaction of IQ and economic growth helps to increase companies’ market value (Tobin’s Q). The consistent and empirically robust findings offer key lessons to policymakers and practitioners on the interplay among multiple actors in corporate sustainability and FP.

Practical implications

A synergetic multifaced relationship between governmental institutions and corporations is inevitable for ensuring sustainable development. The degree of intimacy in the relationship, of course, will be determined by the macroeconomic environment.

Originality/value

In this research, this study theoretically and empirically identified that corporate sustainability and FP are not solely dependent on corporate operation. Rather, it is transformed, modified and shaped through an interaction of multiple actors’ trajectories in the macro business environment.

Details

International Journal of Accounting & Information Management, vol. 32 no. 1
Type: Research Article
ISSN: 1834-7649

Keywords

Article
Publication date: 2 January 2024

Xunzhuo Xi, Can Chen, Rong Huang and Feng Tang

This study aims to examine whether Chinese firms increase their concerns about analysts’ earnings forecasts following the split-share structure reform (SSR) in 2005, which removed…

Abstract

Purpose

This study aims to examine whether Chinese firms increase their concerns about analysts’ earnings forecasts following the split-share structure reform (SSR) in 2005, which removed trading restrictions on approximately 70% of the shares of listed firms.

Design/methodology/approach

Using data from 2002 to 2019, the authors empirically test the association between meeting or beating analysts’ earnings expectations and the implementation of SSR.

Findings

The authors find that firms are more inclined to meet analysts’ earnings expectations after the introduction of SSR. Further analysis shows that firms guide analysts to walk their forecasts down by manipulating third-quarter earnings, suggesting enhanced value relevance between analysts’ forecasts and third-quarter earnings management in the postreform period.

Practical implications

The findings reveal an undesirable side effect of SSR and suggest that policymakers and regulators should consider and carefully manage the complex relationships between firms and analysts.

Originality/value

In contrast to prior studies that predominantly focus on the positive effects of the reform, this study reveals the side effects of SSR and provides new evidence on the mechanisms of meeting or beating analysts’ earnings expectations.

Details

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

Keywords

Article
Publication date: 12 September 2023

Muhammad Ilyas, Rehman Uddin Mian and Affan Mian

Using a comprehensive sample from developed and emerging economies, this study aims to examine whether foreign institutional investors (FIIs) enhance the value of excess cash by…

Abstract

Purpose

Using a comprehensive sample from developed and emerging economies, this study aims to examine whether foreign institutional investors (FIIs) enhance the value of excess cash by constraining the potential self-appropriating managerial propensity related to its inefficient utilization.

Design/methodology/approach

This study uses a large panel data set of firms from 32 non-US countries from 2007 to 2018. Using data from COMPUSTAT Global and S&P Capital IQ, this study uses ordinary least squares regression with year- and firm-fixed effects for the baseline analysis. In addition, two-stage least squares with instrumental variable regression and propensity score matching approaches were used to address the potential endogeneity.

Findings

This study shows that FIIs significantly increase the value of excess cash holdings. The authors also found that the positive impact of FIIs is more significant when investors come from common-law countries with better governance and investor protection. Furthermore, in countries and firms with weaker governance controls, the relationship between FIIs and the value of excess cash is stronger, consistent with the institutional monitoring hypothesis. Collectively, the findings imply that FIIs are advantageous to investees because they effectively promote the efficient deployment of corporate resources.

Practical implications

Collectively, the findings of this study imply that FIIs are advantageous to investees because they effectively promote the efficient deployment of corporate resources.

Originality/value

This study offers new evidence on how FIIs impact the value of excess cash in an international setting. In addition, it highlights the significance of the legal origin of institutional investors’ home country and the governance quality of host countries and investee firms in influencing the effect of foreign institutional monitoring on the value of excess cash.

Details

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

Keywords

Article
Publication date: 6 June 2023

Manish Bansal

To report inflated operating performance indicators, such as operating revenue and operating profit, managers vertically reposition revenue and expense items inside the income…

Abstract

Purpose

To report inflated operating performance indicators, such as operating revenue and operating profit, managers vertically reposition revenue and expense items inside the income statement. This study aims to investigate the relationship between credit market incentives and these practices.

Design/methodology/approach

This study examined a sample of 1,592 Bombay Stock Exchange-listed companies from 2009 to 2021 and tested them using panel data regression models. The propensity score matching method and different measurements of classification shifting practices are used to validate the results.

Findings

The conclusions drawn from the empirical data show that firms prefer revenue shifting over expense shifting to prevent debt covenant violations. It shows that the firm’s classification-shifting practices are driven by credit market incentives. This finding is consistent with the notion of positive accounting theory that firms engage in classification shifting (earnings management) to avoid violation of debt covenants. Further, the firm’s preference for revenue shifting is in line with the ease-need-advantage-based shifting framework where firms choose the shifting tool based on costs and constraints associated with each tool.

Practical implications

The finding suggests that if managers heavily rely on revenue shifting to avoid debt covenant violations, the firm may end up breaking these covenants based on its actual operating performance. Managers may use aggressive accounting techniques to prevent covenant violations, which can be a warning indicator of financial difficulties or operational problems. It highlights the necessity for creditors and investors to carefully evaluate a company’s financial stability outside of the financial statements that are publicly disclosed. Authorities should create separate forensic accounting standards for auditors to check revenue items and stop the corporate misfeasance of revenue shifting.

Originality/value

The study is among the earlier attempts to provide empirical evidence on credit market incentives behind classification shifting practices. It is the first study that documents the substitution relationship between classification shifting forms for avoiding violation of debt covenants.

Details

International Journal of Accounting & Information Management, vol. 31 no. 3
Type: Research Article
ISSN: 1834-7649

Keywords

Article
Publication date: 23 March 2023

Yousry Ahmed, Mohamed Elsayed and Yuru Chen

This paper aims to examine the effect of family ownership on the payment method of mergers and acquisitions (M&A) deals. It also investigates the market reaction around the…

Abstract

Purpose

This paper aims to examine the effect of family ownership on the payment method of mergers and acquisitions (M&A) deals. It also investigates the market reaction around the announcement of these M&A deals.

Design/methodology/approach

Archival data of M&A deals of a sample of Taiwanese listed firms during 2008–2018 are collected and examined using probit, event study and OLS models. This study addresses the endogeneity concern using the two-stage least squares statistical technique and Heckman’s two-step estimation method.

Findings

This study finds that family firms are more likely to use cash as an exchange medium in M&A deals to avoid the problem of diluting control rights. This study further finds that family firms receive a positive market reaction around the announcement of M&A deals relative to non-family counterparts. The empirical results support the notion that family ownership is a value-creation structure.

Practical implications

The findings provide additional evidence-based insights into the debate about family ownership with the aim of informing policy and offering practical recommendations to expand the US-based literature.

Originality/value

To the best of the authors’ knowledge, this is the first study to provide empirical evidence on the impact of family ownership on payment method choice in M&A activities in Taiwan. It also provides novel evidence that family firms experience value gains when taking M&A investment decisions relative to non-family firms.

Details

International Journal of Accounting & Information Management, vol. 31 no. 3
Type: Research Article
ISSN: 1834-7649

Keywords

Article
Publication date: 12 July 2022

Sedki Karoui, Samy Belaid and Romdhane Khemakhem

Religious tendencies have increased in post-Arab Spring countries, raising the question of whether this geopolitical event has affected consumers' orientations towards foreign…

Abstract

Purpose

Religious tendencies have increased in post-Arab Spring countries, raising the question of whether this geopolitical event has affected consumers' orientations towards foreign products, including those that have positive country-of-origin image. This paper investigates the effect of Islamic religiosity on the relationship between consumer ethnocentrism and buying intention towards products from a developed country (France) in an Arab Spring country (Tunisia).

Design/methodology/approach

A survey questionnaire was lunched and data was collected from 492 Tunisian consumers living in both rural and urban areas. Research hypotheses were tested using a Partial Least Square- Structural Equation Modelling (PLS-SEM) method.

Findings

Tunisian consumers do not associate their ethnocentric feelings towards French products with their Islamic religiosity. Results show that both highly and moderately religious Tunisians trust French products because of their high country-of-origin image and their potential social connotations.

Originality/value

The results of this paper contribute to the literature that focuses on understanding consumption behaviours in developing countries in the aftermath of geopolitical events such as the Arab Spring.

Details

International Journal of Emerging Markets, vol. 18 no. 12
Type: Research Article
ISSN: 1746-8809

Keywords

Article
Publication date: 29 September 2023

Kiattichai Kalasin

This study aims to examine the role of returnee managers that can affect the strategic-divestment decision of emerging-market firms (EM firms). Drawing on arguments from the upper…

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Abstract

Purpose

This study aims to examine the role of returnee managers that can affect the strategic-divestment decision of emerging-market firms (EM firms). Drawing on arguments from the upper echelons theory and international human resource mobility perspectives, this study aims to propose that returnee managers influence corporate divestitures when the business outlook is negative. In addition, this study aims to examine the interplay between returnee managers and CEOs, whose characteristics can foster or undermine the efforts of returnee managers to engage in corporate divestments.

Design/methodology/approach

This study examines 278 firms from nine emerging economies. The negative binomial regression was employed to estimate the model. In the robustness checks, the logistic regression was adopted to confirm the earlier findings.

Findings

The empirical results support the notion that returnee managers strengthen the relationship between firm performance and divestments. Because of the limited liabilities of foreignness and outsidership, returnee managers can gain social trust and credibility through communication and social interaction. Furthermore, the results provide mixed support for the moderating effect of CEO characteristics on the performance–divestment relationship.

Practical implications

This study reveals that returnee managers are a great asset for EM firms that aim to find synergies and upgrade their capabilities through asset reconfiguration, which is an essential activity of emerging market firms to integrate themselves into the global competition. Meanwhile, CEO characteristics can foster (through their education level) or hinder (due to their age) divestment attempts, influenced by returnee managers.

Originality/value

This study explores an understudied phenomenon in international business (IB): strategic divestment of EM firms. The literature that examines strategic divestment and corporate refocusing in emerging markets is extremely limited. Furthermore, this study explores the novel topic that intersects the international business (IB) and international human resource management (IHRM) research areas. Specifically, this study investigates the impact of returnee managers on strategic divestments.

Details

Journal of Global Mobility: The Home of Expatriate Management Research, vol. 12 no. 1
Type: Research Article
ISSN: 2049-8799

Keywords

Article
Publication date: 25 December 2023

David Veganzones and Eric Severin

This study investigates the connection between corporate governance and zombie firm’s exit time.

Abstract

Purpose

This study investigates the connection between corporate governance and zombie firm’s exit time.

Design/methodology/approach

With a sample of 2,794 French zombie firms, the analysis focuses on four aspects of corporate governance: board size (BS), managerial ownership (MO), director turnover (DT) and ownership concentration, using tobit regression.

Findings

Dimensions of corporate governance have an important role in determining zombie firms’ exit time. MO and ownership concentration increase zombie firm exit time, whereas larger BSs and DT reduce it.

Originality/value

To the best of the authors’ knowledge, this study is the first to include corporate governance as a characteristic relevant to zombie firms’ exit time. It provides new insights on why some zombie firms remain in the market longer than expected.

Details

European Business Review, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0955-534X

Keywords

Open Access
Article
Publication date: 25 September 2023

Md Sajjad Hosain and Abdullah Mohammad Ahshanul Mamun

This empirical paper is an endeavor to explore the relationship between social media advertising (SMA) and customers' purchase intention (CPI) in three South Asian countries. SMA…

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Abstract

Purpose

This empirical paper is an endeavor to explore the relationship between social media advertising (SMA) and customers' purchase intention (CPI) in three South Asian countries. SMA was further divided into three relevant dimensions: perceived relevance (PR), perceived informativeness (PI) and perceived credibility (PC). Furthermore, the authors incorporated a single mediator: customers' brand consciousness (CBC) to test the mediating effects on the direct relationships.

Design/methodology/approach

The authors purposively selected 1937 fashion-conscious individuals based on a cross-sectional survey design. The authors applied SPSS 25 for explanatory statistics and structural equation modeling (SEM) (through AMOS 25) for testing the hypothesized relationships.

Findings

Based on the responses and the application of statistical measures, the authors revealed that all of the three dimensions of SMA have significant positive relationships with CPI. CBC is also significantly and positively related to CPI. Regarding the mediating effects, CBC was identified to have full mediation effects on the relationships between PR and CPI and PI and CPI. On the contrary, the same variable was found to have partial mediation on the relationship between PC and CPI.

Originality/value

South Asia is a growing business hub and the largest consumer market in terms of population. This empirical study was undertaken to reveal the role of SMA on CPI in the three highly populated South Asian countries, which is rare in academia. The outcomes of this empirical study are expected to be useful for further research attempts regarding SMA and consumer behavior. Businesses and policymakers are also expected to benefit from formulating SMA-related strategies to retain present buyers as well as attract the prospective ones.

Details

Business Analyst Journal, vol. 44 no. 2
Type: Research Article
ISSN: 0973-211X

Keywords

Open Access
Article
Publication date: 30 November 2023

H.A. Dimuthu Maduranga Arachchi and G. Dinesh Samarasinghe

This study aims to examine the influence of the derived attributes of embedded artificial intelligence-mobile smart speech recognition (AI-MSSR) technology, namely perceived…

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Abstract

Purpose

This study aims to examine the influence of the derived attributes of embedded artificial intelligence-mobile smart speech recognition (AI-MSSR) technology, namely perceived usefulness, perceived ease of use (PEOU) and perceived enjoyment (PE) on consumer purchase intention (PI) through the chain relationships of attitudes to AI and consumer smart experience, with the moderating effect of consumer innovativeness and Generation (Gen) X and Gen Y in fashion retail.

Design/methodology/approach

The study employed a quantitative survey strategy, drawing a sample of 836 respondents from Sri Lanka and India representing Gen X and Gen Y. The data analysis was carried out using smart partial least squares structural equation modelling (PLS-SEM).

Findings

The findings show a positive relationship between the perceived attributes of MSSR and consumer PI via attitudes towards AI (AAI) and smart consumer experiences. In addition, consumer innovativeness and Generations X and Y have a moderating impact on the aforementioned relationship. The theoretical and managerial implications of the study are discussed with a note on the research limitations and further research directions.

Practical implications

To multiply the effects of embedded AI-MSSR and consumer PI in fashion retail marketing, managers can develop strategies that strengthen the links between awareness, knowledge of the derived attributes of embedded AI-MSSR and PI by encouraging innovative consumers, especially Gen Y consumers, to engage with embedded AI-MSSR.

Originality/value

This study advances the literature on embedded AI-MSSR and consumer PI in fashion retail marketing by providing an integrated view of the technology acceptance model (TAM), the diffusion of innovation (DOI) theory and the generational cohort perspective in predicting PI.

Details

European Journal of Management Studies, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2183-4172

Keywords

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