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Article
Publication date: 3 January 2019

Mohamed A. Ayadi, Nesrine Ayadi and Samir Trabelsi

This paper aims to analyze the effects of internal and external governance mechanisms on the performance and risk taking of banks from the Euro zone before and after the 2008…

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Abstract

Purpose

This paper aims to analyze the effects of internal and external governance mechanisms on the performance and risk taking of banks from the Euro zone before and after the 2008 financial crisis.

Design/methodology/approach

To avoid macroeconomic problems and shocks and because of data availability, the authors select some countries of the Euro zone, namely, France, Belgium, Germany and Finland, during the 2004-2009 period. These countries share similar macroeconomic environments (unemployment, inflation and economic growth rates). All the data relating to the banks are manually drawn from the supervising reports submitted to banks and are available on the banks’ websites and/or on that of the AMF website. The banks included in our sample are drawn from the list of European central banks on www.ecb.int

Findings

The empirical results show that banks undertake tradeoffs between different governance mechanisms to alleviate the intensity of the agency conflicts between the shareholders and managers. The findings also confirm that internal mechanisms and capital regulations are complementary and significantly impact bank performance.

Research limitations/implications

This analysis can be extended through studying the interaction between bondholders’ governance and shareholders’ governance and their impact on the 2008 financial crisis.

Practical implications

The changes in banking governance help banks find a useful and necessary way to avoid ill-considered risks that can cause a systemic risk. Therefore, some conditions should be met so that banking governance can contribute to the economic development.

Social implications

Culture and mentality of good banking governance must grow as much as possible through awareness-raising, training, promotion, recognition of performance, enhancing procedure transparency and stability of good banking governance and regulations, strengthening the national capacity to fight against corruption, and preventive mechanisms.

Originality/value

This paper complements previous studies, mainly those of Andres and Vallelado (2008) who examine the impact of the components of the board on banking performance and of Laeven and Levine (2009) who estimate the combined effect of regulatory and ownership structure on the risk-taking of each bank.

Details

Managerial Auditing Journal, vol. 34 no. 3
Type: Research Article
ISSN: 0268-6902

Keywords

Open Access
Article
Publication date: 27 July 2023

Samir Trabelsi and Amna Chalwati

This paper examines the relationship between poison pills, real earnings management and initial public offering (IPO) failure.

Abstract

Purpose

This paper examines the relationship between poison pills, real earnings management and initial public offering (IPO) failure.

Design/methodology/approach

The authors sampled 2,997 IPO firms that went public during 1993-2015.

Findings

The authors find that IPO firms manipulate earnings upward using real earnings management. The authors also find that IPO firms exhibiting a higher level of real earnings management have a higher probability of IPO failure. In addition, the authors find that weak shareholders' governance is positively associated with IPO failure.

Practical implications

These results suggest that poor governance structures in failed firms open the door to manipulating real activities and increasing operational risk.

Originality/value

The study findings are of most significant interest to potential investors and other stakeholders affiliated with a firm going public, an auditor, an underwriter, the lawyers who consult with the firm and employees or executives who might consider joining that firm.

Details

China Accounting and Finance Review, vol. 25 no. 4
Type: Research Article
ISSN: 1029-807X

Keywords

Open Access
Article
Publication date: 3 August 2022

Mariem Khalifa and Samir Trabelsi

The purpose of this paper is to examine whether managers of bankrupt firms are more or less conditionally conservative in their financial reporting relative to non-bankrupt firms…

Abstract

Purpose

The purpose of this paper is to examine whether managers of bankrupt firms are more or less conditionally conservative in their financial reporting relative to non-bankrupt firms. The study further examines the cross-sectional differences in conditional conservatism among bankrupt and non-bankrupt firms.

Design/methodology/approach

The study employs a sample of US firms to investigate conditional conservatism in firms that experience financial distress and go bankrupt relative to non-stressed non-bankrupt firms. The study also uses switching regression models to identify the drivers of the cross-sectional difference in conditional conservatism among bankrupt and non-bankrupt firms.

Findings

Empirical results show that bankrupt firms are timelier in recognizing bad news than good news when compared to non-bankrupt firms. The higher level of conditional conservatism in bankrupt firms is mainly driven by their higher levels of leverage and tax-reduction incentives. The cross-sectional analyses show that these results largely hold for more leveraged firms and firms with higher tax costs. Taken together, these results suggest that the conservative tendency of managers of bankrupt firms can stem from the agency problem between lenders and managers and from tax-decreasing motivations.

Originality/value

The novelty of the authors’ research stands in studying the drivers of the cross-sectional differences in conditional conservatism between bankrupt and non-bankrupt firms and specifically, the demonstration that taxation also induces conditional conservatism in the setting of ex post bankrupt firms.

Details

China Accounting and Finance Review, vol. 25 no. 1
Type: Research Article
ISSN: 1029-807X

Keywords

Article
Publication date: 15 April 2022

XiaoXiao Han, Skander Lazrak and Samir Trabelsi

The purpose of this study is to investigate whether the organizational form of an investment management firm affects the performance of the mutual funds under its operation. More…

Abstract

Purpose

The purpose of this study is to investigate whether the organizational form of an investment management firm affects the performance of the mutual funds under its operation. More explicitly, this study aims to test whether funds managed by publicly listed firms achieve different risk-adjusted performance when compared with funds operated by privately held investment firms.

Design/methodology/approach

This study uses Jensen's alpha to measure funds’ performance based on the Carhart’s (1997) benchmarks and market timing factors. The researchers test the relation between fund performance and organizational form using regressions. It alleviates the reverse causality and endogeneity using propensity score matching (PSM) methodology. The study investigates the difference in performance of funds managed by public firms on the post- vs pre- initial public offering (IPO) basis. Alternatively, this study tests the performance change post-public listing of the parent firm. It computes the difference for a matched sample of funds managed by private firms that were likely to go public but did not. The researchers match funds using PSM methodology.

Findings

This paper provides robust evidence that publicly traded management companies administer relatively under-performing mutual funds in comparison to those managed by privately held firms. To the best of the authors’ knowledge, this is the first paper that confirms that organizational decision is endogenous to performance. The study finds that after a privately held company goes public, the performance of their mutual funds and the performance of the matched group funds, whose companies remained private at the same time, tends to decline, compared with companies prior to the public offering. However, the decline in mutual fund performance is larger for the companies who chose to pursue their IPO.

Originality/value

The contribution of this study to the literature is twofold. First, while there is a wealth of literature on the impact of ownership structures on corporate performance, there are very few studies focused on mutual fund markets, despite the evidence that supports a generally mixed effect. This study confirms that the performance of mutual funds managed by publicly traded investments firms is lower than that of funds managed by privately held firms. Second, the organizational decision (private vs public) is not exogenous but depends on the actual funds’ performance.

Details

International Journal of Managerial Finance, vol. 19 no. 3
Type: Research Article
ISSN: 1743-9132

Keywords

Article
Publication date: 10 July 2017

Walid Ben Omrane, Chao He, Zhongzhi Lawrence He and Samir Trabelsi

Forecasting the future movement of yield curves contains valuable information for both academic and practical issues such as bonding pricing, portfolio management, and government…

Abstract

Purpose

Forecasting the future movement of yield curves contains valuable information for both academic and practical issues such as bonding pricing, portfolio management, and government policies. The purpose of this paper is to develop a dynamic factor approach that can provide more precise and consistent forecasting results under various yield curve dynamics.

Design/methodology/approach

The paper develops a unified dynamic factor model based on Diebold and Li (2006) and Nelson and Siegel (1987) three-factor model to forecast the future movement yield curves. The authors apply the state-space model and the Kalman filter to estimate parameters and extract factors from the US yield curve data.

Findings

The authors compare both in-sample and out-of-sample performance of the dynamic approach with various existing models in the literature, and find that the dynamic factor model produces the best in-sample fit, and it dominates existing models in medium- and long-horizon yield curve forecasting performance.

Research limitations/implications

The authors find that the dynamic factor model and the Kalman filter technique should be used with caution when forecasting short maturity yields on a short time horizon, in which the Kalman filter is prone to trade off out-of-sample robustness to maintain its in-sample efficiency.

Practical implications

Bond analysts and portfolio managers can use the dynamic approach to do a more accurate forecast of yield curve movements.

Social implications

The enhanced forecasting approach also equips the government with a valuable tool in setting macroeconomic policies.

Originality/value

The dynamic factor approach is original in capturing the level, slope, and curvature of yield curves in that the decay rate is set as a free parameter to be estimated from yield curve data, instead of setting it to be a fixed rate as in the existing literature. The difference range of estimated decay rate provides richer yield curve dynamics and is the key to stronger forecasting performance.

Details

Managerial Finance, vol. 43 no. 7
Type: Research Article
ISSN: 0307-4358

Keywords

Article
Publication date: 30 October 2018

Paul Dunn, Zhongzhi He, Samir Trabelsi and Zhimin (Jimmy) Yu

The purpose of this research is to investigate factors that contribute to technology firms paying higher compensation than non-technology firms, and why the mix of compensation at…

Abstract

Purpose

The purpose of this research is to investigate factors that contribute to technology firms paying higher compensation than non-technology firms, and why the mix of compensation at technology firms is different than the compensation packages at non-technology firms.

Design/methodology/approach

This research used a sample of 1,009 firm-year observations for the five-year period from 2001 to 2005 and random-effects regression models.

Findings

It was found that the total compensation paid to the CEOs of technology firms is higher than the total compensation paid to the CEOs of non-technology firms, and that the value of the stock options granted to the former is greater than the value of the stock options granted to the latter.

Research limitations/implications

The results are largely consistent with the labour market efficiency perspective. The higher compensation paid to CEOs in technology firms seems to be commensurate with the higher compensation risk that CEOs in technology firms bear.

Practical implications

Compensation designers should consider both the benefits and costs of granting stock and stock options to executives. An increased portion of stock options definitely aligns the interests of shareholders and CEOs together, and could maximize the retentive effect if CEOs have a significant amount of their wealth in unvested in-the-money options.

Social implications

Consistent with the literature, a CEO could earn much higher pay if he or she also serves as the chair of the board of directors. Practically, firms do not require all governance mechanisms. They just require one set of suitable governance mechanisms.

Originality/value

This paper is the first to investigate factors that contribute to technology firms paying higher compensation than non-technology firms, and that do explain why the mix of compensation at technology firms is different than the compensation packages at non-technology firms.

Details

Managerial Auditing Journal, vol. 34 no. 3
Type: Research Article
ISSN: 0268-6902

Keywords

Book part
Publication date: 1 November 2018

Zhongzhi (Lawrence) He, Martin Kusy, Deepak Singh and Samir Trabelsi

The Canadian mutual fund setting is unique in that two governance mechanisms – corporate and trust – coexist. This study empirically examines the impact of each mechanism on fund…

Abstract

The Canadian mutual fund setting is unique in that two governance mechanisms – corporate and trust – coexist. This study empirically examines the impact of each mechanism on fund fees and performance. We find that corporate class funds charge higher fees but deliver superior fee-adjusted returns than trust funds. We then analyze the impact of various board characteristics on fees and performance for corporate class funds. We find that a board with smaller size, CEO duality, and a higher percentage of independent directors is more likely to charge lower fees. In addition, smaller boards are strongly associated with higher fee-adjusted performance. Our study supports agency theory over stewardship theory and provides valuable guidelines for Canadian investors and regulatory agencies.

Details

International Corporate Governance and Regulation
Type: Book
ISBN: 978-1-78756-536-4

Keywords

Content available
Article
Publication date: 21 November 2014

18

Abstract

Details

The Journal of Risk Finance, vol. 15 no. 5
Type: Research Article
ISSN: 1526-5943

Content available
Book part
Publication date: 1 November 2018

Abstract

Details

International Corporate Governance and Regulation
Type: Book
ISBN: 978-1-78756-536-4

Abstract

Details

Corporate Fraud Exposed
Type: Book
ISBN: 978-1-78973-418-8

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