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11 – 20 of 84This article reviews the empirical accuracy of various alternatives for size used in measuring corporate performance. The primary focus is to expose inherent weaknesses in…
Abstract
This article reviews the empirical accuracy of various alternatives for size used in measuring corporate performance. The primary focus is to expose inherent weaknesses in usefully interpreting these size factors. The empirical performance of a number of size alternatives which are frequently used in the management literature is then analysed. Consistent with explanations offered by Coffman (1983) and in most other financial studies, the market value of equity is identified as the most robust single measure of corporate size. However, measures of size that are based on total capitalisation and sales performance, appear to provide increasing explanatory power.
Mohammed Mohi Uddin, Mohammad Tazul Islam and Omar Al Farooque
In this study, the authors explore the effects of politically controlled boards on bank loan performance in both state-owned commercial banks (SCBs) and private sector commercial…
Abstract
Purpose
In this study, the authors explore the effects of politically controlled boards on bank loan performance in both state-owned commercial banks (SCBs) and private sector commercial banks (PCBs) in Bangladesh.
Design/methodology/approach
The data consist of 409 bank-year observations from 46 sample SCBs and PCBs of Bangladesh for the period 2008–17. The authors apply ordinary least squares pooled regression with year fixed effect for baseline econometric analyses and generalized method of moments regression for robustness tests after addressing the endogeneity issue.
Findings
The regression results reveal that the presence of bank “boards controlled by politically affiliated directors” (PA) have significant positive effects on non-performing loans (NPLs). Similarly, the presence of “boards controlled by politically affiliated directors without substantial ownership interests” (PAWOI) show positive association with NPLs. In contrast, the presence of “boards controlled by politically affiliated directors with substantial ownership interests” (PAOI) exhibit an inverse relationship with NPLs. These findings support ‘agency conflict’ arguments and document that both PA and PAWOI are detrimental to bank loan performance in Bangladesh, while PAOI do not have significant effect on increasing NPLs.
Originality/value
This study contributes to the existing bank governance literature by providing evidence from an emerging economy perspective, where politically affiliated directors (PADs) exploit their positions for personal and/or political gain at the cost of other stakeholders by taking advantage of relaxed regulatory oversights and investor protections.
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Maryam Kriese, Joshua Yindenaba Abor and Elipklimi Agbloyor
The purpose of this paper is to examine the link between financial consumer protection (FCP) and economic growth.
Abstract
Purpose
The purpose of this paper is to examine the link between financial consumer protection (FCP) and economic growth.
Design/methodology/approach
The authors use cross-country data on 114 countries surveyed in the World Bank Global Survey on FCP and Financial Literacy (2013) and endogenous treatment regressions for the estimation.
Findings
The results indicate that FCP enhances economic growth through fair treatment, responsible lending, enforcement and dispute resolution and recourse regulations. The authors find no evidence to suggest that disclosure and compliance monitoring regulations have an effect on economic growth.
Practical implications
This study provides rich insight into the important question faced by policy makers, as to which FCP regulatory mechanisms to put in place to enhance economic growth.
Originality/value
This study provides current, cross-country empirical evidence on the debate as to whether FCP enhances economic growth.
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James Forjan, David Durr and John Thesis
It is well established in academic literature that self‐tender offers and corporate dividends can be used independently to effectively signal firm value. It is unclear, however…
Abstract
It is well established in academic literature that self‐tender offers and corporate dividends can be used independently to effectively signal firm value. It is unclear, however, whether these two forms of earnings distributions can be used simultaneously. This paper is an empirical examination of the relationship between dutch auction repurchases and corporate dividend policy. This research indicates that a substantial number of firms choose to repurchase their shares in the form of dutch auctions between dividend payments. Because signalling is a likely motivation for both repurchases and cash dividends, these two events may not be independent of each other. The results of this study confirm positive stock market reaction to repurchase announcements and that firm prediction errors are significantly related to signaling variables.
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Jon Tucker, John Pointon and Moji Olugbode
The purpose of this study is to investigate the incidence of target gearing behaviour in firms as well as the drivers of such behaviour.
Abstract
Purpose
The purpose of this study is to investigate the incidence of target gearing behaviour in firms as well as the drivers of such behaviour.
Design/methodology/approach
The paper employs a triangulation approach across three methodological phases: a questionnaire survey, logistic regression modelling of firm data, and interviews with finance directors. The results are then discussed under the key themes of gearing optimality, valuation issues, external drivers, the finance life‐cycle, the impact of risk, and the relationship between gearing and corporate strategy.
Findings
The results reveal that the majority of firms engage in targeting, though targets are subject to fairly frequent revision as both external and internal drivers evolve. Important external drivers include macroeconomic variables and analysts' views, whereas important internal drivers include income gearing and profitability.
Practical implications
Given the range and variety of drivers, target gearing evidently represents a complex strategic decision for finance directors. The paper provides a benchmark perspective for finance directors when determining their firm's gearing strategy.
Originality/value
The innovation of the paper is the study of target gearing across three methods, the results of which are then triangulated to provide a deeper understanding of both the quantifiable and qualitative drivers of gearing. This provides a far broader insight into the real‐world determination of gearing strategy than a conventional empirical approach.
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