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1 – 10 of 84The authors emphasize the information role of earnings management and how it may be used to “mislead some stakeholders about the underlying economic performance of the company or…
Abstract
Purpose
The authors emphasize the information role of earnings management and how it may be used to “mislead some stakeholders about the underlying economic performance of the company or to influence contractual outcomes that depend on reported accounting numbers.” Specifically, the authors examine the causal effect of tax incentives on private firms' earnings management based on a corporate tax reform in China.
Design/methodology/approach
In December 2001, China implemented a tax collection reform which moved the collection of corporate income taxes from the local tax bureau to the state tax bureau. This reform results in exogenous variations in the effective tax rate among similar firms established before and after 2002. The authors apply a regression discontinuity design and use the generated variation in the effective tax rate to investigate the impact of taxes on firm earnings management.
Findings
The authors find that tax reduction substantially increases private firms' incentives to manage earnings information, and such effect is particularly pronounced when tax collection intensity and government interventions are low. Further evidence shows that lower tax rates stimulate firms' investment, inventory turnover and recruitment of skilled human capital. A plausible mechanism is that private firms signal a promising outlook by managing earnings to attain greater financing and improve investment/operation levels when financial constraints are removed.
Originality/value
First, the authors present the causal effects of tax incentives on private firm's earnings management, which deepens the authors’ understanding on the determinants of firm's earnings information production. Second, this study also contributes to the literature on tax-induced earnings management. Third, the authors believe that this topic offers clear policy implications and would be of particular interest to regulators.
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Jae Yeon Sim, Natalie Kyung Won Kim and Jeong-Taek Kim
This study investigates how the introduction of a stricter loss carryforward offset rule affects firms' innovation.
Abstract
Purpose
This study investigates how the introduction of a stricter loss carryforward offset rule affects firms' innovation.
Design/methodology/approach
This study investigates the overall impact of a Korean tax reform that introduced a tighter loss deduction through a difference-in-differences approach and regression discontinuity design.
Findings
This study finds that firms subject to the more restrictive tax loss offset provisions tend to file fewer patents than firms not subject to the provision. The authors further find that this effect is more pronounced for firms with high R&D intensity, more investment opportunities and weaker monitoring mechanisms.
Research limitations/implications
The results of this study suggest that more restrictive loss carryforward provisions may deter firms from innovation. This study contributes to the literature on the impact of tax loss rules, the effect of tax policies on investments and the real effects of corporate taxation.
Practical implications
This study sheds light on the debate of the consequences of a Korean tax reform. Specifically, the authors examine whether a stricter tax loss offset policy indeed dampens corporate innovation.
Originality/value
This study exploits a unique and infrequent exogenous tax policy change. The South Korean tax reform creates a treatment group of large firms that were affected by the tax reform, and a control group of small and medium-sized firms that were unaffected. This study takes advantage of this setting to examine the research question.
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To the best of the author’s knowledge, the author conducts the first detailed review on the impact of ownership variables on corporate tax avoidance, based on 69 archival studies…
Abstract
Purpose
To the best of the author’s knowledge, the author conducts the first detailed review on the impact of ownership variables on corporate tax avoidance, based on 69 archival studies over the two last decades.
Design/methodology/approach
Referring to an agency-theoretical framework, the author differentiates between six categories of ownership (institutional, state, family, foreign, managerial and cross-ownership/ownership concentration). The author also includes research on ownership proxies as moderators of other determinants of tax avoidance.
Findings
The review indicates that most research refers to institutional, state and family ownership. Moreover, except for state ownership, no clear tendencies on the impact of included ownership types can be found in line with the author’s agency-theoretical framework.
Research limitations/implications
Regarding research recommendations, among others, the author stresses the urgent need for recognizing heterogeneity within and interactions between ownership proxies. Researchers should also properly address endogeneity concerns by advanced econometric models (e.g. by the difference-in-difference approach).
Practical implications
As international standard setters have implemented massive reform initiatives on both tax avoidance and corporate governance, this literature review underlines the huge interaction between those topics. Firms should carefully analyze their ownership structure and change their tax planning due to owners' individual tax preferences.
Originality/value
This analysis makes useful contributions to prior research by focusing on six categories of ownership and their impact on tax avoidance in (multinational) firms and moderating effects. The author provides a detailed overview about current archival research and likes to guide researchers to focus on ownership heterogeneity and endogeneity concerns.
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Praveen Bhagawan and Jyoti Prasad Mukhopadhyay
The purpose of this study is to examine the impact of mandatory corporate social responsibility (CSR) spending on firm value in the Indian context.
Abstract
Purpose
The purpose of this study is to examine the impact of mandatory corporate social responsibility (CSR) spending on firm value in the Indian context.
Design/methodology/approach
Using firm-level data over the period 2012–2017, this study uses the difference-in-differences (DID) technique combined with matching to control for potential endogeneity of the decision to comply with the CSR Act since the Act in its current form is applicable as a comply-or-explain obligation.
Findings
The results of this study suggest that mandatory CSR spending has a positive and statistically significant impact on firm value. These results remain robust to alternative econometric techniques such as regression discontinuity design (RDD) and randomization inference test as well as to alternative empirical specifications. Furthermore, the study demonstrates that the positive effect of CSR spending on firm value is more pronounced for firms with higher information asymmetry problem and lower institutional holdings.
Originality/value
This study explicitly considers the “comply-or-explain” flexibility option, in terms of spending on CSR, provided to Indian firms for the initial two to three years and investigates whether spending on CSR helps firms enhance their firm value. The study also finds that the positive effect of CSR spending on firm value is more pronounced for firms with higher information asymmetry problems and lower institutional holdings.
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Countries have implemented various migration policies targeting the migrants' economic and political integration and social inclusion. However, little is known about the impact of…
Abstract
Purpose
Countries have implemented various migration policies targeting the migrants' economic and political integration and social inclusion. However, little is known about the impact of migration policies on migrants' participation in socio-cultural activities and their link with well-being. The first aim of this study is to explore the effect of the Migration Act of 2000 in Germany on participation in socio-cultural activities of first-generation migrants. The second aim is to examine the impact of socio-cultural activities on subjective well-being (SWB), measured by life satisfaction, and how it is compared between first-generation immigrants and natives.
Design/methodology/approach
The Migration Act of 2000 was extended in 2005 to provide permanent residence permits to high-skilled migrants and deliver cultural orientation and German language courses. The author will implement a Difference-in-Differences (DiD) methodology comparing the relationship between socio-cultural participation and SWB of first-generation immigrants and natives.
Findings
The results show that while first-generation immigrants participate less frequently in the socio-cultural activities explored, they experience an increase in participation after the implementation of the 2000 Migration Act. Furthermore, migrants report lower levels of SWB than natives, but their life satisfaction significantly improves with the increase in socio-cultural participation.
Social implications
The findings of this study have implications for researchers and policymakers, such as income, education and employment promoting migrant integration. Providing employment opportunities and a permanent residence permit, cultural participation, and thus, the integration of migrants can be successfully achieved.
Originality/value
While there is a long debate about the effectiveness of migration integration policies, this is the first study investigating the effect of the Migration Act of 2000 on migrants' socio-cultural participation and well-being.
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Richard Ramsawak, Samuel Buertey, Greeni Maheshwari, Duy Dang and Chung Thanh Phan
This paper explores the relationship between board interlocks and firm outcomes by reviewing the most recent peer-reviewed articles examining this research theme.
Abstract
Purpose
This paper explores the relationship between board interlocks and firm outcomes by reviewing the most recent peer-reviewed articles examining this research theme.
Design/methodology/approach
A systematic and bibliometric methodology of assessing 369 peer-reviewed articles from the Web of Science (WoS) database was applied. The study also leverages key R-packages litsearchr and Bibliometrix software to enhance the descriptive and thematic literature analysis to identify gaps and opportunities for new research.
Findings
This study confirms a rapid increase in articles on this thematic area, over the last decade, with increasing collaboration occurring among researchers in the United States, Europe, China, South Korea and India. Four core research clusters are identified. The first and largest cluster links interlocked directors to issues related to corporate governance and firm outcomes. The second cluster links social network theory, interlocking directorates and firm outcomes. Smaller emerging research clusters include topics related to ownership structure, board size, political connectedness and impacts on firm outcomes. The final cluster examines the influence of board interlocks on market value and firm innovation.
Practical implications
Interlocked directors can have both positive and negative impacts on a wide variety of firm outcomes. This study places great interest in the selection of new directors, ensuring that the selection has aligned with the needs and interests of the company and disclosures of potential competing interests are declared and considered. Equally important are the governance practices used to monitor directors' behavior and to protect the interest of shareholders and the firm. This is particularly relevant in the internal appointment of interlocked directors to critical positions, such as audit committees or instances where interlocked directors may simultaneously hold CEO or executive leadership positions in other companies.
Originality/value
This paper examines the board interlocks literature related to firm outcomes. Additionally, this review identifies several topics and disciplines which, if pursued, could enrich the literature and promise new avenues for future research.
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Maohong Guo, Osama Khassawneh, Tamara Mohammad and Xintian Pei
Grounded on the conservation of resources (COR) theory, this study examines the relationship between tyrannical leadership and knowledge hiding. Additionally, this study aims to…
Abstract
Purpose
Grounded on the conservation of resources (COR) theory, this study examines the relationship between tyrannical leadership and knowledge hiding. Additionally, this study aims to investigate the mediating role of psychological distress and the moderating role of psychological safety.
Design/methodology/approach
Data was gathered from 435 employees in the corporate sector in China. The study used the partial least squares structural equation modelling approach to assess the proposed connections and analysed the data collected with the help of SmartPLS 4 software.
Findings
In the study, it was found that there is a positive relationship between tyrannical leadership and knowledge hiding, and this association is mediated by psychological distress. Additionally, the results asserted that the positive effect of tyrannical leadership on knowledge hiding through psychological distress is less pronounced when there is a greater degree of psychological safety.
Practical implications
Leaders should avoid being tyrannical and adopt a supportive leadership style. They should be aware of the effects of their behaviour on employee well-being, provide resources to help employees cope with distress and foster a culture of psychological safety. This approach promotes knowledge sharing, innovation and employee well-being within the organisation.
Originality/value
This study contributes to the existing literature by investigating a new factor that influences knowledge hiding: tyrannical leadership. Furthermore, it explains that employees who experience tyrannical leadership are more prone to psychological distress, such as anxiety and fear, and are likelier to engage in knowledge-hiding behaviours. Finally, the study identifies psychological safety as a factor that can mitigate the negative effects of tyrannical leadership on knowledge hiding.
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Ioannis Vlassas, Christos Kallandranis, Antonis Ballis, Loukas Glyptis and Lan Mai Thanh
This paper aims to review the literature extensively by analysing recent work and providing a guide for models, data sets and research findings.
Abstract
Purpose
This paper aims to review the literature extensively by analysing recent work and providing a guide for models, data sets and research findings.
Design/methodology/approach
This paper reviews the literature extensively by analysing recent work and providing a guide for models, data sets and research findings within the context of capital market imperfections. The authors further break down the literature into closer-in-nature categories for reader’s convenience and comprehension. Finally, the authors address gaps in the existing literature and propose government policies that can tone down the potential effect of credit rationing on employment.
Findings
This paper provides a map of the literature so as to help future researchers in the relevant literature and give a short insight of what has been explored so far.
Originality/value
This paper is original and is the result of a thorough review of an extensive literature.
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Xueqi Zhao, Longwen Zhao, Xiaozhe Sun and Yibing Xing
China's digital economy is flourishing and playing a pivotal role in the national economy. Government subsidies, as an important tool for the national treasury, are a…
Abstract
Purpose
China's digital economy is flourishing and playing a pivotal role in the national economy. Government subsidies, as an important tool for the national treasury, are a “reassurance” for the digital transformation of manufacturing enterprises. The purpose of this paper is to investigate the relations between the digital transformation of manufacturing enterprises and government subsidies to provide inspiration for promoting the digitization and upgrading of China's manufacturing industry and facilitate enterprises' innovative development.
Design/methodology/approach
Based on the panel data of 2,928 manufacturing listed companies in China from 2016 to 2020, this paper empirically tests the effect of subsidies on the digital transformation of manufacturing enterprises using fixed-effect econometric regression.
Findings
The results illustrate that subsidies effectively incentivize digital transformation in manufacturing enterprises, and verify different situations through heterogeneity. Further analysis of the moderating effect shows that the innovation level and servitization level of manufacturing enterprises positively moderated the relationship between government subsidies and the enterprise's digital transformation.
Originality/value
Based on Chinese manufacturing enterprise samples, this paper empirically tests the incentive effect of government subsidies on the digital transformation of manufacturing enterprises, therefore clarifying the main regulatory effects. This paper could provide enlightenment for manufacturing enterprises to make good use of government subsidies to improve their digital ability, thereby enhancing competitiveness in the digital economy era.
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Kaouther Toumi, Nabil Ghalleb and Mikael Akimowicz
This paper aims to explore individuals’ economic empowerment and political empowerment association and the moderation role of entrepreneurship development programs on this…
Abstract
Purpose
This paper aims to explore individuals’ economic empowerment and political empowerment association and the moderation role of entrepreneurship development programs on this relationship in the context of post-revolution Tunisia, which is a newer developing democracy.
Design/methodology/approach
The study uses a quantitative approach based on econometric modeling. A questionnaire was designed and administrated to a stratified random sample of 343 participants in the Entrepreneurship for the Participation and Inclusion of Vulnerable Youth in Tunisia program, funded by the United Nations Democracy Fund and implemented in rural northwestern Tunisia between 2017 and 2021. A coarsened exact matching method is also applied for robustness analysis.
Findings
The analysis shows that when individuals have enhanced economic decision-making agency and are involved in economic networks, they are more likely to demonstrate higher political empowerment. It also shows that expanding rural individuals’ economic opportunities by providing entrepreneurial resources, such as entrepreneurial training and microcredit, strengthens individuals’ economic empowerment and political empowerment association.
Practical implications
The study provides practical implications for policymakers in newer developing democracies. Citizens’ political empowerment and inclusion in rural areas could be promoted by developing entrepreneurship development programs, which could help reinforce the citizens-state relationship and establish more stable social contracts. The research also provides practical implications for the international development community, donor agencies and program designers through duplicating similar programs in other countries with weak central government structures (i.e. post-conflict environments, post-revolution).
Originality/value
The research attempts to contribute to the ongoing debates linking entrepreneurship, economic empowerment and political/citizen empowerment. It focuses on a Middle East and North Africa country, Tunisia, characterized by socioeconomic issues and low civic participation.
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