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This paper investigates the effect of the volatility of resource revenue on the volatility of non-resource revenue.
Abstract
Purpose
This paper investigates the effect of the volatility of resource revenue on the volatility of non-resource revenue.
Design/methodology/approach
The empirical analysis has utilized an unbalanced panel data set comprising 54 countries over the period 1980–2015. The two-step system generalized methods of moments (GMM) is the main economic approach used to carry out the empirical analysis.
Findings
Results show that resource revenue volatility generates lower non-resource revenue volatility only when the share of resource revenue in total public revenue is lower than 18%. Otherwise, higher resource revenue volatility would result in a rise in non-resource revenue volatility.
Research limitations/implications
In light of the adverse effect of volatility of non-resource revenue on public spending, and hence on economic growth and development prospects, countries whose total public revenue is highly dependent on resource revenue should adopt appropriate policies to ensure the rise in non-resource revenue, as well as the stability of the latter.
Practical implications
Economic diversification in resource-rich countries (particularly in developing countries among them) could contribute to reducing the dependence of economies on natural resources, and hence the dependence of public revenue on resource revenue. Therefore, policies in favour of economic diversification would contribute to stabilizing non-resource revenue, which is essential for financing development needs.
Originality/value
To the best of our knowledge, this topic has not been addressed in the literature.
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The purpose of this study is to introduce a matching function approach to analyze matching in financial reporting.
Abstract
Purpose
The purpose of this study is to introduce a matching function approach to analyze matching in financial reporting.
Design/methodology/approach
The matching function is first analyzed analytically. It is specified as a multiplicative Cobb-Douglas-type function of three categories of expenses (labor expense, material expense and depreciation). The specified matching function is solved by the generalized reduced gradient method (GRG) for 10-year time series from 8,226 Finnish firms. The coefficient of determination of the logarithmic model (CODL) is compared with the linear revenue-expense correlation coefficient (REC) that is generally used in previous studies.
Findings
Empirical evidence showed that REC is outperformed by CODL. CODL was found independent of or weakly negatively dependent on the matching elasticity of labor expense, positively dependent on the material expense elasticity and negatively dependent on depreciation elasticity. Therefore, the differences in matching accuracy between industries emphasizing different expense categories are significant.
Research limitations/implications
The matching function is a general approach to assess the matching accuracy but it is in this study specified multiplicatively for three categories of expenses. Moreover, only one algorithm is tested in the empirical estimation of the function. The analysis is concentrated on ten-year time-series of a limited sample of Finnish firms.
Practical implications
The matching function approach provides a large set of important information for considering the matching process in practice. It can prove a useful method also to accounting standard-setters and other specialists such as managers, consultants and auditors.
Originality/value
This study is the first study to apply the new matching function approach.
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The purpose of this paper is to examine the influence of earnings persistence and earnings power on equity valuation.
Abstract
Purpose
The purpose of this paper is to examine the influence of earnings persistence and earnings power on equity valuation.
Design/methodology/approach
The purposive sampling method was applied to determine the samples of selected 100 firms. This study employed secondary data obtained from the annual reports and financial statements of consumer goods firms listed on the Indonesian Stock Exchange for the period 2010–2014. The analysis technique used a multiple regression analysis.
Findings
The study result shows that, partially, earnings persistence and earnings power affect equity valuation by investors. Earnings persistence has a negative influence, whereas earnings power has a positive influence on equity valuation.
Originality/value
This study throws additional lights on equity valuation specific to consumer goods industries.
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This paper aims to examine how the volatility of foreign direct investment (FDI) inflows affects the volatility of corporate income tax revenue.
Abstract
Purpose
This paper aims to examine how the volatility of foreign direct investment (FDI) inflows affects the volatility of corporate income tax revenue.
Design/methodology/approach
The study has used an unbalanced panel data set of 129 countries over the period 1981–2016 and the two-step system generalized methods of moment approach to perform the empirical analysis.
Findings
The main findings are that FDI volatility enhances the volatility of corporate income tax revenue in less advanced economies, but reduces it in relatively advanced countries. The positive corporate income tax revenue volatility effect of FDI inflows is far higher in non-tax haven countries than in tax haven countries. Additionally, FDI volatility exerts a higher positive effect on corporate income tax revenue volatility as countries experience greater dependence on natural resources. Finally, the positive effect of FDI volatility on corporate income tax revenue volatility is further amplified by higher FDI volatility.
Research limitations/implications
One important limitation of the present analysis is the use of aggregate FDI inflows because of the lack of data over a long period on greenfield FDI inflows and cross-border mergers and acquisitions FDI inflows. Therefore, an avenue for future research could be to explore separately the effect of the volatility greenfield FDI inflows and the volatility of cross-border mergers and acquisitions FDI inflows on the volatility of corporate income tax revenue, when long-time series data (covering many countries) would be available.
Practical implications
These outcomes particularly shed light on the role of FDI volatility on the volatility of corporate income tax revenue, particularly in countries that are highly dependent on natural resources. Foreign capital flows, notably FDI flows, play an essential role for countries’ economic development through, inter alia, technology transfer, jobs creation and economic growth. Policymakers should aim to attract FDI, while also reducing their volatility, by designing and implementing policies and measures (such as those in favor of business environment improvement, property rights enforcement and political stability) that would assure foreign investors of the continuous high returns of their investments.
Originality/value
To the best of the author’s knowledge, this is the first time this topic is being addressed empirically in the literature.
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Andrea Valenzuela-Ortiz, Jorge Chica-Olmo and José-Alberto Castañeda
This research investigates the effect of accessibility to points of tourist interest (buffer) and direct and indirect spatial spillover effects of agglomeration economies on…
Abstract
Purpose
This research investigates the effect of accessibility to points of tourist interest (buffer) and direct and indirect spatial spillover effects of agglomeration economies on tourism industry revenues in Spain.
Design/methodology/approach
Data were collected from the Bureau van Dijk's (BvD) Orbis global database. The data were analysed using a spatial econometric model and the Cobb–Douglas production function.
Findings
This study reveals that hotels located inside the buffer zone of points of tourist interest achieve better economic outcomes than hotels located outside the buffer. Furthermore, the results show that there is a direct and indirect spatial spillover effect in the hotel industry.
Practical implications
The results provide valuable information for identifying areas where the agglomeration of hotels will produce a spillover effect on hotel revenue and the area of influence of location characteristics. This information is relevant for hotels already established in a destination or when seeking a location for a new hotel.
Social implications
The results of this study can help city planners in influencing the distribution of hotels to fit desired patterns and improve an area's spatial beauty.
Originality/value
The paper provides insights into how investment, structural characteristics, reputation and location affect hotel revenue.
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Keywords
This paper aims to explore the effect of non-resource tax revenue instability on non-resource tax revenue in developed and developing countries.
Abstract
Purpose
This paper aims to explore the effect of non-resource tax revenue instability on non-resource tax revenue in developed and developing countries.
Design/methodology/approach
The analysis has used an unbalanced panel data set of 146 countries over the period 1981–2016, as well as the two-step system generalized methods of moment approach.
Findings
The empirical analysis has suggested that non-resource tax revenue instability influences negatively non-resource tax revenue share of gross domestic product. The magnitude of this negative effect is higher in less developed countries than in relatively advanced countries. This negative effect materializes through public expenditure instability: non-resource tax revenue instability exerts a higher effect on non-resource tax revenue share as the degree of public expenditure instability increases. Finally, non-resource tax revenue instability exerts a higher negative effect on non-resource tax revenue share as economic growth volatility rises, inflation volatility increases and terms of trade instability increases.
Research limitations/implications
The main policy implication of this analysis is that policies that help ensure the stability of non-resource tax revenue also contribute to improving countries’ non-resource tax revenue share. For example, governments’ measures that help cope with or prevent the severe adverse effects of shocks on economies (shocks that could translate into higher tax revenue instability) would ultimately help enhance countries’ tax revenue performance.
Practical implications
The severity of the current COVID-19 pandemic shock (which is a supply and demand shock) and the macroeconomic uncertainty that it has generated – inter alia, in terms of economic growth instability, terms of trade instability, inflation volatility and public expenditure instability – are likely to result in severe tax revenue losses. Governments in both developed and developing countries would surely learn from the management of this crisis so as to prepare for possible future economic, financial and health crises with a view to dampening their adverse macroeconomic effects, including here their negative tax revenue effects.
Originality/value
To the best of the author’s knowledge, this topic is being addressed in the empirical literature for the first time.
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The purpose of this study is to examine the effect of bank-specific, industry-specific and macroeconomic determinants of bank profitability amongst domestic UK commercial banks.
Abstract
Purpose
The purpose of this study is to examine the effect of bank-specific, industry-specific and macroeconomic determinants of bank profitability amongst domestic UK commercial banks.
Design/methodology/approach
This study used an empirically driven single equation framework that incorporates the traditional structure–conduct–performance (SCP) hypothesis. A generalised method of moments technique was applied to a panel of UK banks covering the period 1998–2018 to account for profit persistence.
Findings
The estimation results show that all bank-specific determinants, with the exception of credit risk, significantly affect bank profitability in the anticipated way. However, no evidence was found in support of the SCP hypothesis. Interest rates, especially longer-term interest rates, and the rate of inflation has a significant effect on bank profitability, with the business cycle having a symmetric insignificant effect once other variables have been accounted for. Profitability persists to a moderate extent within the UK banking market, indicating that there exists a departure from a perfectly competitive market structure.
Originality/value
The literature that examines the actual underlying determinants of UK domestic bank profitability is limited.
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Luca Di Simone and Davide Zanardi
Our paper shows an empirical analysis of the European football companies to test the association between sport results, proxied by ranking position and financial performance in…
Abstract
Purpose
Our paper shows an empirical analysis of the European football companies to test the association between sport results, proxied by ranking position and financial performance in panel framework (starting from 59 firms over the 2013–2018 time span).
Design/methodology/approach
We use panel data models for studying the relationship of our interest and we make no a priori assumption about the strict exogeneity of the covariates and estimate equation using both Random Effects GLS (RE-GLS) and Fixed Effects OLS (FE-OLS) estimations.
Findings
Our results suggest there is stable and significant relationship between the two types of performance and that when detectable this is linked in a positive way to the profit maximization of the business model, suggesting that it is more useful for investor remuneration and to increase technical-tactical resources and therefore sports results. Not surprisingly, as for many clubs, concentration effect is relevant while the financial fair play regulation is not. In fact, the current regulation of UEFA authority does not seem to have an impact on sport and financial results.
Originality/value
This work complements literature in several ways. First, we offer new empirical evidence for the association between the sport and financial performance for a panel of the European football companies, listed and not. Second, we show that the persistence of the sport results is strongly correlated with financial performance.
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Purpose – Previous studies distinguish revenue management based on discretionary accruals; the research of studies is to investigate the factors that affect the finance manager at…
Abstract
Purpose – Previous studies distinguish revenue management based on discretionary accruals; the research of studies is to investigate the factors that affect the finance manager at the discretionary accrual in General financial information statement.
Design/Methodology/Approach – Literature review models used in research aimed at detecting any company that performs the company’s discretion to fulfill the accrual of interests internally. This research study also discusses the relationship between earnings and discretionary manager behavior.
Findings – The researcher wants to re-examine the hypothesis of market efficiency on Indonesia’s capital market. The current company information technology uses greatly influences worldwide investor interest to invest on Indonesian’s capital market. Emerging Indonesia Capital market status becomes very interesting to be studied.
Originality/Value – It also presented the shortcomings of current research and the trends for future study in capital market.
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Md. Tofael Hossain Majumder and Xiaojing Li
This study aims to investigate the impacts of bank capital requirements on the performance and risk of the emerging economy, i.e. Bangladeshi banking sector.
Abstract
Purpose
This study aims to investigate the impacts of bank capital requirements on the performance and risk of the emerging economy, i.e. Bangladeshi banking sector.
Design/methodology/approach
The study applies an unbalanced panel data which comprises 30 banks yielding a total of 413 bank-year observations over the period 2000 to 2015.
Findings
Using generalized methods of moments, the empirical results of this research reveal that bank capital is positively and significantly impressive on bank performance, whereas negatively and significantly impact on risk. The study also finds the inverse relationship between risk and performance in both the performance and risk equations. The results also indicate that there is a persistence of performance and risk from one year to the next year.
Originality/value
This is the unique investigation on Bangladeshi bank industry that considers the simultaneous effect of bank capital requirements on risk and performance. Therefore, it is predicted that the empirical evidence of this research shows policy implications to the regulatory authority of Bangladeshi banking industry to determine relevant policies.
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