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Empirical accounting research frequently makes use of data sets with a time‐series and a cross‐sectional dimension ‐ a panel of data. The literature review indicates that South African researchers infrequently allow for heterogeneity between firms when using panel data and the empirical example shows that regression results that allow for firm heterogeneity are materially different from regression results that assume homogeneity among firms. The econometric analysis of panel data has advanced significantly in recent years and accounting researchers should benefit from those improvements.

The purpose of this paper is to investigate the currency union (CU) effect on aggregate intra-trade in the Economic Community of West African States (ECOWAS) and on bilateral trade among individual countries using the gravity model.

Using panel dynamic ordinary least square, we examined the short- and long-run CU effect on aggregate intra-ECOWAS trade and bilateral trade among ECOWAS countries from 1995 to 2010. Chow poolability test was conducted for the appropriateness of pooling the cross-section parameters as against individual model. The augmented Dickey–Fuller (ADF) test; the Phillips–Perron (PP) test; and the Kwiatkowski, Phillips, Schmidt and Shin (KPSS) test were conducted on the individual data series, and the Levin, Lin and Chu test; the Im, Pesaran and Shin test; the Breitung test; and the Hadri test were used for testing cross-sectional independent panel unit root tests. Kao panel cointegration test was conducted to identify long-run relationships.

We found evidence of significant positive CU effect on aggregate intra-ECOWAS trade. The estimates also show that Benin, Burkina Faso, Niger, Senegal and Togo trade more with countries they share common currency with than what they would have been in both short and long run. We again observed that CU is insignificant in explaining Cote d’Ivoire, Mali and Senegal intra-trade with ECOWAS countries, though their observed intra-trade with ECOWAS is relatively high which is found to be explained by export diversification.

The findings reveal that CU is good for aggregate intra-regional trade though some individual members respond negative to CU. The finding of diversification as a necessary tool to increase intra-regional trade imply that as effort of introducing single currency is being pursued rigorously, effort to diversify export or trade complement should not be overlooked.

There exist panel studies on CU on aggregate intra-regional trade in ECOWAS. However, there is a need to have country level study to identify CU effect on each country, as it is sensitive to country-specific factors which are unobservable in time series analysis of group of countries. Also, our group estimate differs in methodology in the sense that the dynamic generalised least takes care of endogeneity in trade gravity literature.

The purpose of this study is to examine the moderating effect of mandatory corporate social responsibility (CSR) reporting on CSR expenditure and financial performance of listed firms in India. It uses institutional theory to explain the relationship.

The study used the Indian stock market as the testing grounds and applied descriptive statistics, hierarchical regression and panel regression with fixed effect assumptions for 800 firm-year observations for the period 2010 to 2019.

The study shows a positive and statistically significant association between CSR expenditure and financial performance [return on assets (ROA) and Tobin’s q]. Also, the study shows a positive association between financial performance (ROA and Tobin’s q) and CSR expenditure. Furthermore, the study shows that mandatory CSR reporting leads to an increase in CSR expenditure. Finally, the study shows that mandatory CSR reporting moderates the association between CSR expenditure and financial performance stock price returns). The study control for any form of heteroscedasticity, serial correlation and endogeneity effects.

The study used one country data to represent the emerging economies. The use of one country data can limit the generalisation of the study.

Different studies have examined mandatory CSR reporting association with CSR disclosure or financial performance. However, this study takes the discussion further and contribute a novelty to sustainability development studies with the examined moderating effect of mandatory CSR reporting in the association between CSR expenditure and financial performance.

This is a survey paper of the recent literature on the application of semiparametric–econometric advances to testing for functional form of the environmental Kuznets curve (EKC). The EKC postulates that there is an inverted U-shaped relationship between economic growth (typically measured by income) and pollution; that is, as economic growth expands, pollution increases up to a maximum and then starts declining after a threshold level of income. This hypothesized relationship is simple to visualize but has eluded many empirical investigations. A typical application of the EKC uses panel data models, which allows for heterogeneity, serial correlation, heteroskedasticity, data pooling, and smooth coefficients. This vast literature is reviewed in the context of semiparametric model specification tests. Additionally, recent developments in semiparametric econometrics, such as Bayesian methods, generalized time-varying coefficient models, and nonstationary panels are discussed as fruitful areas of future research. The cited literature is fairly complete and should prove useful to applied researchers at large.

The purpose of this paper is to test if the empirical relationship between the size of trades and market liquidity can be pooled across different block sizes on the London Stock Exchange (LSE).

The authors use pooling and non-pooling econometric tests in a panel framework.

When the authors differentiate between various block sizes, the authors find that for trades in excess of 50,000 shares, there is a positive association between the size of the trade and the bid-ask spread, due to a lack of liquidity in the financial market. The results provide strong evidence that an upstairs market may be required in order to provide liquidity for large block trades on the LSE.

This is the first study to directly test if the LSE requires an upstairs market to provide liquidity for large trade transactions.

Theoretical and empirical research suggests a connection between the presence of role models and the emergence of entrepreneurs. Existing entrepreneurs may act as role models for self-employment candidates by providing successful examples. The purpose of this paper is to show that role models matter in aggregate decision outcomes regarding self-employment.

By explicitly considering the self-employment rates of the natives, which may influence locally the decisions of immigrants towards entrepreneurship, the authors develop a simple model that explains immigrant self-employment rates for a sample of 2,490 Swiss municipalities. In addition, the authors accommodate for the presence of spatial spillovers in the distribution of rates, and test a spatial autoregressive model which takes into account the average self-employment rates of immigrants living in nearby municipalities.

The evidence shows a significant (positive) effect of such spatial network effects, which are characterized by a quick distance decay, suggesting spatial spillovers at the household and social network level. Additionally, the paper shows that local conditions and immigrant pool characteristics differ, with respect to self-employment choices, when examining separately urban and rural contexts. Finally, a spatial sensitivity analysis shows that the findings are consistent over different assumptions on the nature of spatial interaction.

By using highly geographically disaggregated data, the authors are able to test the extent to which the influence of role models can be traced, and to measure these effects both within local units as well as in neighbouring units. Understanding the relationship between the native and immigrant attitudes towards entrepreneurship, the local characteristics of the immigrant community and geography is crucial in a country with a relevant share of the working population made up by immigrants.

This paper examines a nonparametric CUSUM-type test for common trends in large panel data sets with individual fixed effects. We consider, as in Zhang, Su, and Phillips (2012), a partial linear regression model with unknown functional form for the trend component, although our test does not involve local smoothings. This conveniently forgoes the need to choose a bandwidth parameter, which due to a lack of a clear and sensible information criteria is difficult for testing purposes. We are able to do so after making use that the number of individuals increases with no limit. After removing the parametric component of the model, when the errors are homoscedastic, our test statistic converges to a Gaussian process whose critical values are easily tabulated. We also examine the consequences of having heteroscedasticity as well as discussing the problem of how to compute valid critical values due to the very complicated covariance structure of the limiting process. Finally, we present a small Monte Carlo experiment to shed some light on the finite sample performance of the test.

Corporate social responsibility (CSR) has evolved since the nineteenth century and is becoming mandatory for firms. However, the association between CSR and financial performance remains fluid. The purpose of this paper is to examine the mediating effect of third-party assurance (TPA) and the moderating effect of financial leverage in CSR – financial performance relationship.

Panel and hierarchical regression models are used to analyse data covering 29 companies in the Indian stock market for the period, from 2010 to 2017.

The study shows that CSR has a positive association with financial performance (ROA (return on assets) and ROE (return on equity)) of listed firms in India. The second finding shows that TPA has a negative association with financial performance (ROA and ROE) and negatively mediate the association between CSR and financial performance (ROA and ROE). Further, the findings also show that financial leverage has a negative association with ROA but no association with ROE, and is unable to moderate the association between CSR and financial performance. Lastly, financial leverage has no association with TPA and unable to moderate the association between CSR and TPA.

The scope of the study is limited to large firms submitting sustainability reports based on the Global Reporting Initiative (GRI) guidelines, and this criterion is likely to limit the generalisation of the findings.

Capital market investors look for new markets to invest, and CSR results show a positive return for equity investors, which may encourage capital market investments in a mandatory CSR environment. The mediating effect of TPA has the potential to force managers to undertake CSR activities, which leads to a user-friendly environment and improved social sustainability.

Previous studies show a mix association between CSR and financial performance. Nevertheless, some of the possible reasons for the mix association have not received scholarly attention. Hence, the role of the mediating effect of TPA and the moderating effect of financial leverage in CSR-financial performance relationship.

We examine the impact of market frictions in the form of trading costs on investor average holding periods for stocks in the S&P global 1200 index to examine constraints on international portfolio diversification.

We determine whether it is appropriate to pool stocks listed in the USA, Canada, Latin America, Europe, Japan, Asia and Australia into investigations using the same empirical specification. This is very important because the pooled effects may not provide consistent estimates of the average.

We report overwhelming econometric evidence that it is not valid to pool stocks in all the underlying regional equity indices for our investigation, indicating that the effect of frictions varies between markets.

When we pool the stocks within markets, we discover that for companies listed in the USA, Europe, Canada and Australia, market frictions do not significantly influence holding periods and hence are not a barrier to portfolio rebalancing. However, companies listed in Latin America and Asia face market frictions, which are significant in terms of increasing holding periods.

We ascertain that taking into account the properties of stock markets in different geographical locations is vital for understanding the limits on achieving international portfolio diversification.

Unlike prior research, we overcome the problems caused by contemporaneous correlation, endogeneity and joint determination of investor average holding periods and trading costs by employing the Generalized Method of Moments (GMM) system panel estimator. This makes our empirical estimates robust and more reliable than the previous empirical research in this area.

This paper aims to shed new light on the multinationality‐performance debate by examining the performance of standardizing versus customizing firms from Spain.

The reasons for variations in performance of exporting firms build on the industrial organization and resource‐based views of strategy, which are shown to be linked to the integration (standardization) versus responsiveness (customization) framework of international business. The paper also incorporates the Uppsala model and the home region nature of international business activity. It develops hypotheses for both standardizing and customizing paths of international expansion for exporting firms. The paper uses the Survey on Business Strategies which has the support of the Ministry of Industry of Spain. This databank collects data of a representative sample of the Spanish manufacturing sector. The paper uses fixed‐effects regression models for the period 2000‐2008.

The paper provides evidence on how firms with a strategy of product standardization follow an M curve‐fourth degree polynomial relationship between the degree of internationalization (DOI) and performance. In contrast, product customization firms are observed to follow an inverted M curve relationship. Furthermore, by using both models, an appropriate level of internationalization can be suggested.

The paper provides theoretical and empirical support for the different relationships of standardizing and customizing firms when expanding abroad. This paper is one of the first to find empirical support for an M curve relationship between the DOI and performance, and certainly is the first one testing and corroborating an inverted M curve.