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1 – 10 of over 5000Kamal Naser, Khalid Al‐Khatib and Yusuf Karbhari
Over the last decade, Jordanian Authorities and Government adopted several far‐reaching measures aimed at improving its investment environment. These measures included the…
Abstract
Over the last decade, Jordanian Authorities and Government adopted several far‐reaching measures aimed at improving its investment environment. These measures included the introduction of International Accounting Standards (IASs) in 1990, amendment of the Companies Act in 1997 and amendments to Investment Promotion Law in 1998. This study specifically provides empirical evidence on changes in the depth of corporate disclosure after introducing IASs. In addition, the relationship between the depth of corporate disclosure and company's attributes is investigated. The outcome of the analysis reveals a slight improvement in the depth of disclosure after the introduction the IASs. The depth of disclosure seems to be associated with corporate size, audit firm status, liquidity, gearing, and profitability.
The purpose of this paper is to shed light on the relationship between the Internet Financial Reporting (IFR) levels and corporate characteristics. It is assumed that the…
Abstract
Purpose
The purpose of this paper is to shed light on the relationship between the Internet Financial Reporting (IFR) levels and corporate characteristics. It is assumed that the relationship between the disclosure level and its determinants is known. Nevertheless, the results of the empirical studies confirm that it is a naive assumption. As a result, the author suggests refusing the conventional methods of econometric analysis.
Design/methodology/approach
The research methodology consisted of four stages: First, the author tried to select the “best” model using the Akaike Information Criterion (AIC). Second, the author checked out the stability of the relationship between corporate disclosure level and its determinants. Third, the regression analysis was used. Finally, the author proposed a “genetic-fuzzy system” for studying the determinants of corporate disclosure. The firms' yearly data collected consisted of a random sample of 152 Tunisian companies' websites.
Findings
The results show that the variables that should be used to explain the level of IFR are firm size, ownership concentration, firm performance and liquidity. The Chow forecast test shows that there is a significant and large difference between the actual and the predicted values. Consequently, the author suggests using non-parametric methods, particularly a methodology based on fuzzy logic concepts and genetic algorithms. This technique would allow the author to discover the true form of the relationship between the disclosure level and its determinants. Regarding the hypotheses of this study, the findings of the “genetic-fuzzy system” validate all the hypotheses. Indeed, the arguments of the agency theory, the signaling theory, and the political cost hypothesis were supported using the “genetic-fuzzy system.”
Originality/value
The originality of the paper lies in providing a new research methodology based on several statistical tools for dealing with an important research topic in accounting and finance, i.e. the determinants of IFR. The results of this study can be considered as a starting point to develop a unified methodology.
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The management of liquidity has always been seen as a critical but often ignored issue in finance. Despite the abundance of studies on liquidity management, these studies mainly…
Abstract
Purpose
The management of liquidity has always been seen as a critical but often ignored issue in finance. Despite the abundance of studies on liquidity management, these studies mainly focus on developed countries and on large firms. Liquidity is critical for the small firm but studies on liquidity management in small and medium enterprises (SMEs) are lacking. The purpose of this paper is to examine the firm-level determinants of liquidity of SMEs in Malaysia.
Design/methodology/approach
Data are collected for a total of 986 small firms in Malaysia from 2011 to 2014, resulting in a total of 2,683 observations. Firm-specific variables and the effect of the economy are considered as the possible determinants of liquidity. Ordinary least squares (OLS) regression analysis with standard errors adjusted for firm-level clustering and quantile regression analysis are used for this purpose.
Findings
Analysis using OLS regression technique indicates that a firm’s profitability, its growth, asset tangibility, size, age and firm status are significant factors in influencing its liquidity decision. Leverage and economic condition are not found to have any significant influence on liquidity. However, quantile regression analysis provides a different picture especially for SMEs with liquidity at the quantile levels of θ=0.10 and 0.90. At θ=0.10, only profitability, tangibility and firm status are significant, while at θ=0.90, tangibility, size, firm status and, to some extent, age are significant in influencing liquidity levels.
Originality/value
To the author’s knowledge, this is the first study analyzing the liquidity decision of SMEs in an emerging market such as Malaysia. Most studies on liquidity management of SMEs are focused on developed countries due to data availability but these studies are also only a handful. Additionally, this study uses quantile regression analysis which highlights the need to analyze financial decisions at different levels rather than at the aggregate level as done in OLS regression analysis.
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Abdul Rashid and Mahir Ahmed Hersi
The paper examines the differential effect of liquidity constraints on corporate growth using unbalanced panel data for 457 Pakistani firms over the period 2010–2017.
Abstract
Purpose
The paper examines the differential effect of liquidity constraints on corporate growth using unbalanced panel data for 457 Pakistani firms over the period 2010–2017.
Design/methodology/approach
The study uses the probability of a financial unconstrained index constructed by estimating the endogenous regression model. This approach provides a time-varying measure of financial position for all firm-year observations and takes into account the different degrees of liquidity constraints that a company faces in attaining funds from external markets. It is derived from a multivariate selection equation that simultaneously accounts for all-important features of the underlying company identified in the literature. The cash flow variable has then interacted with various groups of dummy variables for financial constraint, which allows the coefficient of cash flow to vary across firm-year observations in the different liquidity constraint categories. The two-step system-GMM estimator is applied to estimate the main empirical model.
Findings
The results of the study provide evidence of the heterogeneity in firms' growth sensitivity to internal funds, depending on the degree of liquidity constraints. Financing growth through internal funds is found to be essential for both liquidity unconstrained and constrained corporates. However, it is observed that the coefficient of cash flow is greater for firms that do not have access to external financing and it eventually decreases with reductions in the magnitude of liquidity constraints, making the least constrained corporates' growth less responsive to internal funds. The results further indicate that smaller and younger firms show higher responsiveness of growth to internal funds. This finding is mainly attributed to financial market imperfections that make external funding difficult for them.
Practical implications
The results suggest that financially constrained firms should expand their corporate size more than the magnitude of positive income shocks they encounter. The study also suggests important policy implications for liquidity-constrained firms to carefully concentrate on their financing strategies to enhance their growth. By improving the corporate's capacity for production, corporates can achieve a faster effect of a potential positive income shock on their growth.
Originality/value
This paper contributes to the literature by constructing a financial constraint index by running the endogenous regression model. It also contributes by investigating the differential impact of credit constraints on firms' growth in Pakistan and how corporate size and age affect firm growth when financial constraints and investment opportunities are controlled.
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The paper examines how equity mutual funds manage their liquidity. Specifically, the authors investigate what strategies fund managers use to meet investor redemption demand…
Abstract
Purpose
The paper examines how equity mutual funds manage their liquidity. Specifically, the authors investigate what strategies fund managers use to meet investor redemption demand, whether these strategies vary over time, whether different type of funds employ different liquidation practices in response to fund outflows, and whether liquidity strategies impact fund performance.
Design/methodology/approach
This study uses a sample of U.S. actively managed equity funds over the period 1990–2019. The authors use three different measures to capture funds' liquidity management practices. The authors examine the relationship between fund liquidity measures and net flow by estimating panel regressions over the entire sample period, on 2 sub-sample periods of different market conditions measured by the magnitude of implied market volatility (VIX), and on 2 sub-samples of funds with different liquidity profiles. The authors also examine the relationship between funds liquidity status and near-term performance through both a portfolio approach and regression analysis.
Findings
The authors find that on average, mutual funds reduce their cash position and the most liquid asset holdings to meet investor redemption demand. Furthermore, the authors find that fund managers choose different liquidity strategies under different market conditions. During highly volatile markets, mutual funds use cash and their most liquid assets to meet redemption demand while maintaining their portfolio liquidity. During low volatility markets, mutual funds rely heavily on cash but less on liquidity assets and tend to increase their portfolio illiquidity. Upon further examination of funds across portfolio liquidity profiles, the authors find that liquid funds increase portfolio liquidity when facing outflows, whereas illiquid funds maintain their portfolio liquidity position. The different liquidity strategies have significant impact on funds' near-term performance. Specifically, liquid funds underperform illiquid funds following the increase in their portfolio liquidity.
Originality/value
This paper contributes to the literature on liquidity management by asset managers by taking a holistic approach to examine funds liquidation practice at the portfolio holdings level. Considering the recent increase in market volatility, mutual fund liquidity management has drawn an increasing share of interest and attention from policy makers, investment professionals, and academia. This study covers both uncertain and stable market states during a long sample period and provides empirical evidence on the flow-induced liquidation decisions by equity mutual funds. In addition, this paper also contributes to the literature on mutual fund performance by providing evidence that funds' liquidity strategies significantly impact their near-term performance.
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Bhaskar Bagchi and Jayanta Chakrabarti
The present study aims to investigate the impact of liquidity management on profitability of Indian Fast-Moving Consumer Goods (FMCG) firms, as well as the relationship among…
Abstract
Purpose
The present study aims to investigate the impact of liquidity management on profitability of Indian Fast-Moving Consumer Goods (FMCG) firms, as well as the relationship among them, using econometric models.
Design/methodology/approach
Liquidity indices like current ratio, liquid ratio, absolute liquid ratio and cash conversion cycle are taken as explanatory variables, whereas age of creditors, age of debtors, age of inventory, sales and inter-temporal growth in sales are taken as control variables. Profitability is measured in terms of return on investment. The sample size is restricted to 18 Indian FMCG firms, and the secondary data for analysis are retrieved from Prowess Database of Centre for Monitoring Indian Economy for 10-year period from 2001-2002 to 2010-2011. Apart from using descriptive statistics and Pearson’s correlation analysis, panel data regression analysis like fixed-effects model and random effects model are used in the study. Hausman test is also used to make a choice between these two models.
Findings
The study results reveal a strong negative relationship between the measures of liquidity management and firms’ profitability, but firms’ size has a strong positive affiliation with profitability.
Research limitations/implications
The study has been constrained by the sample size and the nature of the data, which could have well affected the results.
Originality/value
This study has identified critical management practices which are expected to help out finance managers and practitioners in recognizing vital areas for improving the financial performance of their firm’s operation.
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Yan Han Wang, Hélène de Burgh-Woodman and Keri Spooner
In their work on ‘online consumer stewards’ in E-sports, the authors point to the competing social and commercial imperatives that govern behaviour and who can be seen as…
Abstract
In their work on ‘online consumer stewards’ in E-sports, the authors point to the competing social and commercial imperatives that govern behaviour and who can be seen as ‘authentic’ in a fast-paced digital environment. Drawing on insights from Bauman’s work on ‘liquidity’ they explore the case of Starcraft II, a global, multi-player online game, and show how the most successful stewards need to be both adaptable and free-floating whilst at the same time anchored in solid community structures. The most successful of these stewards are then able to leverage this (perceived) authenticity to meet both community and commercial objectives.
This survey overviews the literature on entrepreneurship and self-employment. The author catalogs the main contributions of this body of research and makes a distinction between…
Abstract
This survey overviews the literature on entrepreneurship and self-employment. The author catalogs the main contributions of this body of research and makes a distinction between issues on which there is now widespread agreement and those for which no consensus has yet emerged. This latter set of issues provides fertile ground for further research.
B. Anthony Billings, Chansog (Francis) Kim and Cheol Lee
In view of the recent enhanced concerns of the SEC and PCAOB that Accounting Principles Board Opinion No. 23 (APB 23)–asserting firms do not comply with the “sufficient evidence”…
Abstract
In view of the recent enhanced concerns of the SEC and PCAOB that Accounting Principles Board Opinion No. 23 (APB 23)–asserting firms do not comply with the “sufficient evidence” criteria of APB 23, we examine whether APB 23–asserting firms that declared their foreign earnings as permanently reinvested abroad are less likely to repatriate those foreign earnings under the American Jobs Creation Act (AJCA) of 2004, compared with similar non-asserting firms. The asserting firms are required to disclose sufficient evidence that validates an ability to meet their domestic cash needs with only earnings generated in the United States and their plans to indefinitely reinvest foreign earnings outside the United States. Estimates show that asserting firms are more likely to repatriate their foreign earnings than non-asserting firms. In addition, we find that the probability of making an election to repatriate permanently invested foreign earnings under the AJCA of 2004 is higher for firms with nonbinding foreign tax credit (FTC) limitations that have made an APB 23 declaration to permanently invest foreign earnings abroad. These findings suggest that asserting firms’ declarations to indefinitely reinvest foreign earnings abroad are not well grounded, thereby indirectly validating the SEC’s and PCAOB’s increased scrutiny for supporting evidence for APB 23 assertion. The estimates also show that the likelihood of making an election to repatriate foreign earnings under the AJCA of 2004 increases with asserting firms’ liquidity constraints and financial distress: the financial characteristics listed as part of APB 23 criteria of sufficient evidence and highlighted by the SEC and PCAOB comment letters, indicating that asserting firms raid permanently reinvested foreign earnings to satisfy their financial needs and constraints.
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Hasan Hüseyin Yildirim and Bahadir Ildokuz
Introduction – The banking sector is one of the most important building blocks of the financial system. A failure in the banking sector can cause serious problems in a country’s…
Abstract
Introduction – The banking sector is one of the most important building blocks of the financial system. A failure in the banking sector can cause serious problems in a country’s economy. In order for countries to achieve economic growth and development goals, the banking sector, which affects all sectors significantly, needs to be strong. Countries with a robust and reliable banking system have a high credit rating. As a result of this high credit rating, the interest of foreign capital in the country increases. Thus, the credit volume of banks expands and loans are provided at a more appropriate rate for investments. In this respect, the performance and profitability of banks are important. The CAMELS performance model is a valuation system used to determine the general status of banks. The CAMELS model consists of six components. According to this, C represents capital adequacy; A, asset quality; M, management adequacy; E, earnings; L, liquidity; and S, sensitivity to market risks.
Purpose – The purpose of this study is to demonstrate the effect of the CAMLS variables on the variable E.
Methodology – In the implementation part of the study, the data of 11 banks in the BIST Bank Index between 2004 and 2018 were used. In the analysis part of the study, a panel data analysis method was used.
Findings – The capital adequacy (C), management adequacy (M) and liquidity (L) variables were effective on profitability. This study revealed the importance of the capital, management and liquidity variables, which are internal factors, in increasing the profitability of banks.
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