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1 – 10 of 149
Book part
Publication date: 5 April 2024

Badi H. Baltagi

This chapter revisits the Hausman (1978) test for panel data. It emphasizes that it is a general specification test and that rejection of the null signals misspecification and is…

Abstract

This chapter revisits the Hausman (1978) test for panel data. It emphasizes that it is a general specification test and that rejection of the null signals misspecification and is not an endorsement of the fixed effects estimator as is done in practice. Non-rejection of the null provides support for the random effects estimator which is efficient under the null. The chapter offers practical tips on what to do in case the null is rejected including checking for endogeneity of the regressors, misspecified dynamics, and applying a nonparametric Hausman test, see Amini, Delgado, Henderson, and Parmeter (2012, chapter 16). Alternatively, for the fixed effects die hard, the chapter suggests testing the fixed effects restrictions before adopting this estimator. The chapter also recommends a pretest estimator that is based on an additional Hausman test based on the difference between the Hausman and Taylor estimator and the fixed effects estimator.

Article
Publication date: 26 March 2024

Abba Ya'u, Mohammed Abdullahi Umar, Nasiru Yunusa and Dhanuskodi Rengasamy

Most research on tax evasion focused on microeconomic variables revolving around perceptions and decisions of individual taxpayers. However, a new wave of research is now…

Abstract

Purpose

Most research on tax evasion focused on microeconomic variables revolving around perceptions and decisions of individual taxpayers. However, a new wave of research is now investigating the role of macroeconomic variables in inducing tax evasion. This study adds to the limited studies in this new direction of research. Previous studies found that inflation, low gross domestic product (GDP) growth and gross fixed capital formation causes recession, increases unemployment, raise interest rates, hurts both domestic and foreign direct investments. This study examined the relationship between these variables and estimated tax evasion in Sub-Saharan Africa.

Design/methodology/approach

The study adopts a correlation research design with 2,300 data points collected from 23 countries in Sub-Saharan Africa. Specifically, tax to GDP ratio, gross fixed capital formation per GDP and the GDP annual growth report from each country for the period 2011–2020 was retrieved. Generalised least square regression technique was employed to analyse the data due to the presence of heteroskedasticity in the model and random effect was utilized based on the Hausman test. To avoid misspecification and biased result; therefore, all relevant test was conducted including the multicollinearity test.

Findings

The results indicate that GDP annual growth and gross fixed capital formation have a significant negative impact on estimated tax evasion in Sub-Saharan Africa. The findings further indicate a negative but insignificant relationship between inflation and estimated tax evasion in Sub-Saharan Africa. The study concludes that both GDP annual growth rate and gross fixed capital formation negatively influence estimated tax evasion and the policy implications in the African continent were discussed.

Originality/value

The new findings on the effects of GDP annual growth, growth fixed capital formation and inflation on estimated tax evasion provide novel knowledge that is currently lacking in the current literature, specifically Sub-Saharan African continent.

Details

African Journal of Economic and Management Studies, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2040-0705

Keywords

Book part
Publication date: 4 April 2024

De-Wai Chou, Pi-Hsia Hung and Lin Lin

This study focuses on listed and over-the-counter (OTC) companies in the Taiwan Stock Exchange. It found that an increase in the ownership proportion of institutional investors…

Abstract

This study focuses on listed and over-the-counter (OTC) companies in the Taiwan Stock Exchange. It found that an increase in the ownership proportion of institutional investors (INs), including foreign investors, investment trusts, and dealers can enhance the informativeness of stock prices. The relationship between these factors follows an inverted U-shaped pattern, indicating that excessively high ownership ratios can actually lead to a decrease in the informativeness of stock prices. Additionally, increasing the ownership proportions of foreign investors and investment trusts can reduce the risk of stock price collapse, while dealers show no significant relationship in this regard. This study also reveals that the technical variable of the price deviation rate is an important explanatory factor for post-collapse returns. It is positively correlated with the magnitude of the price decline after a collapse, meaning that stocks with weaker pre-collapse performance experience larger post-collapse declines. When the data during the 2020 pandemic period are excluded, changes in foreign ownership ratios show a significant positive correlation with postcrash returns in both the long and short term. The significant correlation in the short term may be due to a high proportion of foreign ownership. Any reduction in this could put pressure on stock prices, and retail investors may follow suit and sell-off, using foreign investors as a reference. The significant correlation in the long term might be due to foreign investors themselves possibly also trying to avoid the pressure that their own short-term sell-offs could exert on stock prices. The changes in the ownership ratios of investment trusts and dealers indicate that medium and long-term changes have a significant impact on postcrash returns, while the changes in the major players' ownership show no significant correlation. When data from 2020 are included in the analysis, the significance of all INs decreases.

Details

Advances in Pacific Basin Business, Economics and Finance
Type: Book
ISBN: 978-1-83753-865-2

Keywords

Article
Publication date: 11 March 2024

Saida Belhouchet and Jamel Chouaibi

This paper aims to shed light on the relationship between audit committee attributes and integrated reporting quality (IRQ).

Abstract

Purpose

This paper aims to shed light on the relationship between audit committee attributes and integrated reporting quality (IRQ).

Design/methodology/approach

Data on a sample of 360 European firms selected from the STOXX Europe 600 index between 2010 and 2021 were used to test the model based on multiple regression for panel data to analyze the effect of audit committee attributes on IRQ. This paper considers generalized least squares (GLS) estimation for panel data models.

Findings

The findings of this study confirm expectations concerning the impact of audit committee attributes on the IRQ. Indeed, audit committee independence and meetings have a significant positive impact on IRQ. However, no significant association is found between financial expertise and IRQ.

Practical implications

The findings of this paper have significant implications for policymakers, who, through proper legislation, should encourage the formation of larger audit committees and ones with a higher percentage of independent members. They should also establish a minimum number of audit committee meetings per year. These regulations, which aim to increase the efficacy of audit committees’ supervisory and monitoring tasks, would promote corporate transparency and improve IRQ.

Originality/value

This study supports the existing literature. First, it expands the scientific debate on IRQ. Second, unlike previous studies, which used more subjective methods to measure the degree of integrated reporting (IR), this study relied on the CGVS variable from the DataStream ASSET 4 Database. Third, the research is novel because it indicates the crucial role of internal assurance mechanisms in wide managerial reporting practices in European companies. The sample consisted of European firms only, whereas previous studies used a global sample. Finally, this study is based on recent data (2010–2021), while other studies covered the period between 2008 and 2013.

Details

Meditari Accountancy Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2049-372X

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Article
Publication date: 19 February 2024

Harshani Shashikala Wijerathna, Niluka Anuradha and Roshan Ajward

This study aims to explore the relationship between institutional and macroeconomic factors and corporate financial flexibility while also investigating the moderating impact of…

Abstract

Purpose

This study aims to explore the relationship between institutional and macroeconomic factors and corporate financial flexibility while also investigating the moderating impact of selected board governance mechanisms on this relationship.

Design/methodology/approach

The sample of the study comprises 174 firms listed on the Colombo Stock Exchange for a period of eight years, from 2014 to 2021. Data were collected from secondary sources, and both descriptive and inferential statistical techniques were used for analyses.

Findings

Corporate financial flexibility is notably affected by profitability as an institutional factor and by gross domestic product growth rate and banking sector development as macroeconomic factors. Furthermore, the relationship between a company’s profitability and corporate financial flexibility is found to be moderated by selected board governance mechanisms. However, these governance mechanisms do not influence the relationship between corporate financial flexibility and other institutional factors (i.e. other than profitability) and macroeconomic factors considered in this study.

Originality/value

This study adds a fresh perspective to the existing body of knowledge in the field of corporate finance by emphasizing the interaction effect of board governance mechanisms on the association between macroeconomic and institutional variables and financial flexibility of firms. The findings are expected to be useful for business decision-makers in managing their corporate financial flexibility effectively and maximizing the use of their financial resources.

Details

Journal of Asia Business Studies, vol. 18 no. 2
Type: Research Article
ISSN: 1558-7894

Keywords

Article
Publication date: 4 September 2023

Oussama Gafrej

This paper aims to evaluate the performance of the multiple linear regression (MLR) using a fixed-effects model (FE) and artificial neural network (ANN) models to predict the…

Abstract

Purpose

This paper aims to evaluate the performance of the multiple linear regression (MLR) using a fixed-effects model (FE) and artificial neural network (ANN) models to predict the level of customer deposits on a sample of Tunisian commercial banks.

Design/methodology/approach

Training and testing datasets are developed to evaluate the level of customer deposits of 15 Tunisian commercial banks over the 2002–2021 period. This study uses two predictive modeling techniques: the MLR using a FE model and ANN. In addition, it uses the mean absolute error (MAE), R-squared and mean square error (MSE) as performance metrics.

Findings

The results prove that both methods have a high ability in predicting customer deposits of 15 Tunisian banks. However, the ANN method has a slightly higher performance compared to the MLR method by considering the MAE, R-squared and MSE.

Practical implications

The findings of this paper will be very significant for banks to use additional management support to forecast the level of their customers' deposits. It will be also beneficial for investors to have knowledge about the capacity of banks to attract deposits.

Originality/value

This paper contributes to the existing literature on the application of machine learning in the banking industry. To the author's knowledge, this is the first study that predicts the level of customer deposits using banking specific and macroeconomic variables.

Details

Managerial Finance, vol. 50 no. 3
Type: Research Article
ISSN: 0307-4358

Keywords

Article
Publication date: 1 November 2023

Sabri Burak Arzova and Bertaç Şakir Şahin

The purposes of this study are to contribute to the limited green growth (GG) literature in emerging markets, to analyze GG from a financial economy perspective and to determine…

Abstract

Purpose

The purposes of this study are to contribute to the limited green growth (GG) literature in emerging markets, to analyze GG from a financial economy perspective and to determine the contribution of financial development and innovation to GG in Brazil, Russian Federation, India, China and South Africa and Türkiye (BRICS-T). BRICS-T countries significantly impact the world population, international politics, energy resources and economy. In addition, BRICS-T countries are one of the leading countries in the world with their sustainability efforts. Investigating the GG model in these countries may contribute to structuring emerging economies around the principles of GG and advancing global green transformation efforts.

Design/methodology/approach

The authors applied panel data analysis from 2001 to 2019. GG is economic growth free from environmental depletion in the model. National income, personnel expenditure and foreign direct investments are macroeconomic variables. These variables measure economic development and promote economic and social progress, which is essential for GG. Capital accumulation and innovation are essential tools in GG transformation. Therefore, financial development and patent applications represent the moderating variables. The authors estimate the fixed effect model with Parks-Kmenta robust.

Findings

Empirical results show that national income growth and foreign direct investments positively affect GG. Personnel expenditure negatively affects GG. On the contrary, financial development and patent growth have little moderating role.

Originality/value

This study contributes to the literature on creating a GG model in emerging countries. The study is original in its model and sample.

Details

Management of Environmental Quality: An International Journal, vol. 35 no. 3
Type: Research Article
ISSN: 1477-7835

Keywords

Article
Publication date: 20 November 2023

Shubham Singhania, Akshita Arora and Varda Sardana

This study aims to evaluate the relationship of corporate social responsibility (CSR) reporting with the financial performance of firms using various market and accounting-based…

Abstract

Purpose

This study aims to evaluate the relationship of corporate social responsibility (CSR) reporting with the financial performance of firms using various market and accounting-based parameters in a developing economy, India.

Design/methodology/approach

The study uses content analysis to develop a CSR reporting index for the Indian firms listed on the Bombay Stock Exchange. The two-step system generalized methods of moments has been used for the estimation of the panel data.

Findings

The results from the study suggest that the CSR reporting-based activities of the firms may impact the financial performance of the firms, but at the same time, the need of the hour is to create awareness among the investors and market players so that they realize the relevance of CSR reporting, which can further improve other dimensions of financial performance as well.

Research limitations/implications

The study relies on Tobin’s Q and return on assets while measuring financial performance, though there are various other parameters that can be used to gauge the performance. The outcomes of this study have practical implications for the practitioners as well as policymakers, incentivizing them to integrate CSR aspects into their decision-making frameworks.

Originality/value

To the best of the authors’ knowledge, this is the first Indian study to develop a unique index for CSR reporting and linking it with financial performance. This study shall assist the researchers in broadening the scope of CSR studies in India and can be used to draw a systematic comparison with developed nations.

Article
Publication date: 6 March 2023

Ismail Khan, Iftikhar Khan, Ikram Ullah Khan, Shahida Suleman and Shoukat Ali

This study aims to investigate the impact of extensive board diversity on firm performance from the perspective of resource-based view (RBV) theory in the context of Pakistan.

Abstract

Purpose

This study aims to investigate the impact of extensive board diversity on firm performance from the perspective of resource-based view (RBV) theory in the context of Pakistan.

Design/methodology/approach

The analyses are made using a panel random-effects model and generalized method of moment (GMM) across 188 non-financial firms listed in the Pakistan Stock Exchange (PSX) over the period of 2009–2020. The robustness of findings is checked through alternative measurements of the variables and alternative estimation techniques.

Findings

The results show that board members' nationality, ethnicity and educational level diversities are significantly positively related to firm performance. In contrast, age and educational background diversities negatively affect firm performance. However, gender and tenure diversities have an insignificant relationship with firm performance.

Research limitations/implications

This study is conducted in the context of Pakistani firms; thus, the findings may not be generalizable to other economies because different economies have different institutional settings and governance structures.

Practical implications

The policy-makers should encourage the inclusion of board members' nationality, ethnicity and educational level diversities having relevant educational backgrounds to improve firms' competitive performance. The suggested structure of the corporate board may improve firm performance by attracting multiple stakeholders and fulfilling their expectations.

Social implications

The appointment of a director should be based on merit rather than on political connections or personnel relationships to improve social welfare and avoid their negative impact on firm competitive performance.

Originality/value

To the best of the authors' knowledge, this is the first study that investigates the impact of board diversity on firm accounting-based performance and market-based performance in the emerging economy of Pakistan. This study uses RBV theory to provide a unique corporate governance structure based on board diversity, particularly in Pakistan.

Details

International Journal of Productivity and Performance Management, vol. 73 no. 3
Type: Research Article
ISSN: 1741-0401

Keywords

Article
Publication date: 22 September 2023

Najul Laskar, Jagadish Prasad Sahu and Khalada Sultana Choudhury

The main purpose of the study is to investigate the impact of gender diversity both at the board and workforce level on firm performance (FP) in the Indian context.

Abstract

Purpose

The main purpose of the study is to investigate the impact of gender diversity both at the board and workforce level on firm performance (FP) in the Indian context.

Design/methodology/approach

This study is based on annual data of 200 companies listed on Bombay Stock Exchange (BSE) for the period 2012–2019. The authors have used the fixed-effects (FE) regression and system generalized method of moments to estimate the impact of board gender diversity and workforce gender diversity (WGD) on FP. The authors have used Blau's Index (BI) and Shannon's Index (SI) to measure gender diversity. Further, the authors have used return on assets and Tobin's Q (TBQ) to measure FP.

Findings

The authors' panel regression results suggest that board gender diversity and WGD have a positive and statistically significant impact on FP. The authors' findings are robust across different methods of estimation and alternative measures of FP.

Originality/value

This paper examines the impact of gender diversity both at the board and workforce level on FP of 200 companies listed on BSE. The authors' study contributes to the literature that is sparse in the Indian context and provides new insights on the impact of board and WGD on FP. The findings have useful policy implications. To achieve better performance, it is imperative to appreciate gender diversity at the governance and workforce level in a fast-growing economy like India.

Details

Managerial Finance, vol. 50 no. 3
Type: Research Article
ISSN: 0307-4358

Keywords

1 – 10 of 149