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Article
Publication date: 28 January 2019

Monika Singla and Shveta Singh

This paper aims to analyze the monitoring role of board and product market competition in relation to firm performance. Further, this paper analyzes the moderating role of product…

Abstract

Purpose

This paper aims to analyze the monitoring role of board and product market competition in relation to firm performance. Further, this paper analyzes the moderating role of product market competition in influencing the board monitoring and firm value relationship in the context of an emerging economy, India.

Design/methodology/approach

A large sample of 3,854 firm-year observations has been used over a period of 10 years (2007-2016). Industry and year-fixed effect regression methodology has been used to test the hypothesized relationships.

Findings

The empirical findings indicate that board monitoring adds negatively to the firm value. The results also indicate that product market competition bears an insignificant moderating effect on the effectiveness of board monitoring in India. However, a more in-depth analysis reveals that product market competition complements the weak board monitoring of business-group firms. Further, the effectiveness of the board monitoring (which is relatively stronger in business-group firms) is weakened by the increased level of product market competition for stand-alone firms.

Research limitations/implications

A significant negative effect of board independence on the firm value raises the effectiveness of various policies advocating the board independence to strengthen the governance structure of the firms. The findings relating to the moderating role of product market competition for the business-group and stand-alone firms are helpful in understanding the governance behavior of the firms in relation to the external product market competition.

Originality/value

External governance mechanisms such as the market for corporate control and product market competition have been described as significant corporate governance mechanisms. However, the empirical efficacy of these governance mechanisms has not been explored in a greater detail in the context of the emerging markets. This study aims to address this research gap.

Details

International Journal of Organizational Analysis, vol. 27 no. 4
Type: Research Article
ISSN: 1934-8835

Keywords

Article
Publication date: 10 February 2020

Ayesha Ashraf, M. Kabir Hassan, Khurram Abbas and Qamar Uz Zaman

This paper aims to examine the impact of general elections on the stock returns of the politically connected group affiliated firms of Pakistan.

Abstract

Purpose

This paper aims to examine the impact of general elections on the stock returns of the politically connected group affiliated firms of Pakistan.

Design/methodology/approach

This study uses the market model to assess the impact of political connections (PCs) on abnormal stock returns, before and after election events. We have used share price data of non-financial firms of Pakistan for the years 2008-2013.

Findings

It has been found that behavior of cumulative average abnormal returns (CAAR) is significantly different for standalone and politically connected group affiliated firms. The results reveal that CAARs of politically connected group affiliated firms have experienced less deviation as compared to stand alone firms. Therefore, it is argued that politically connected group firms may reduce the impact of political uncertainty on stock returns in comparison to stand alone firms.

Practical implications

This study is helpful for policy regulators of Pakistan to devise appropriate policies to maintain a level playing field for politically connected and standalone firms.

Originality/value

This study provides a new dimension to understand the role and association of PCs and general elections with stock markets returns.

Details

Journal of Financial Crime, vol. 27 no. 1
Type: Research Article
ISSN: 1359-0790

Keywords

Article
Publication date: 25 July 2019

Jing Jia, Zhongtian Li and Lois Munro

This paper aims to examine the relationship between risk management committees (RMCs) and risk management disclosure (RMD) quality. Specifically, the existence of stand-alone RMCs…

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Abstract

Purpose

This paper aims to examine the relationship between risk management committees (RMCs) and risk management disclosure (RMD) quality. Specifically, the existence of stand-alone RMCs and a number of RMC characteristics, including RMC size, RMC independence, number of RMC meetings and RMC members’ human capital is investigated.

Design/methodology/approach

The sample comprises top 100 Australian Securities Exchange (ASX)-listed companies during the period between 2010 and 2012, when RMD began to be guided by detailed recommendations in Australia. Following the RMD framework used by Jia et al. (2016), RMD quality is measured based on its quantity, relevance, width and depth. Ordinary least squares (OLS) regressions were used to test the relationship between stand-alone RMC, RMC characteristics and RMD quality.

Findings

The results show that the existence of a stand-alone RMC, the human capital of RMC and RMC size are positively associated with RMD quality. In contrast, RMC independence and the number of RMC meetings are not found to have a significant association with RMD quality.

Originality/value

This study contributes to the current RMD literature by investigating whether a stand-alone RMC and different RMC characteristics are associated with RMD quality. The results of this study provide useful and new empirical evidence about the relationship between RMCs and RMD quality for researchers, companies, and regulators.

Details

Pacific Accounting Review, vol. 31 no. 3
Type: Research Article
ISSN: 0114-0582

Keywords

Article
Publication date: 28 June 2021

Qamar Uz Zaman, Waheed Akhter, Mariani Abdul-Majid, S. Iftikhar Ul Hassan and Muhammad Fahad Anwar

This study aims to assess the determinants of corporate debt with a particular focus on bank-affiliated and non-bank-affiliated firms during the global financial crisis.

Abstract

Purpose

This study aims to assess the determinants of corporate debt with a particular focus on bank-affiliated and non-bank-affiliated firms during the global financial crisis.

Design/methodology/approach

The authors analyse the data of 395 listed manufacturing firms from Pakistan with 2,370 firm-year observations. The sample is divided into subsamples, namely bank-affiliated, non-bank-affiliated and stand-alone firms. Fixed and panel effect regression models are applied to determine the during, pre-crisis and post-crisis effects on corporate capital structure.

Findings

The robust results of the study reveal that non-bank-affiliated firms have different leverage determinant behaviours with a greater reliance on size, tangibility and profitability. However, bank-affiliated firms seemed to show greater immunity from a crisis compared to other firms. Simultaneously, the stand-alone firms remained at a disadvantage subject to internal financial ties of group-affiliated firms and form a base of market imperfection.

Practical implications

This study's findings imply that financial managers should contain better ties with financial institutions to enhance financial immunity in worse time of financial crisis or COVID-19 global calamity. On the regulation front, these findings call for critical policy regulations to govern the internal ties with financial institutions to create a level playing field for the corporate sector.

Originality/value

To the best of the authors’ knowledge, this study is the first to investigate determinants of corporate debt with a particular focus on bank-affiliated and non-bank-affiliated firms. This work is also novel to explore corporate debt of bank-affiliated and non-bank-affiliated firms during the financial crisis.

Details

Journal of Economic and Administrative Sciences, vol. 39 no. 1
Type: Research Article
ISSN: 1026-4116

Keywords

Article
Publication date: 5 March 2024

Cristian Pinto-Gutiérrez

This study aims to investigate the relationship between business group affiliation and CO2 emissions in Chile, providing insights into the pollution externalities associated with…

Abstract

Purpose

This study aims to investigate the relationship between business group affiliation and CO2 emissions in Chile, providing insights into the pollution externalities associated with business group structures and their implications for environmental performance.

Design/methodology/approach

A hand-matched sample of industrial facilities and subsidiaries of listed firms in Chile was utilized to analyze the CO2 emissions of business group-affiliated firms compared to stand-alone firms. Fixed-effect regression analysis and propensity score matching were employed to examine the differences in emissions levels.

Findings

The results suggest that firms affiliated with business groups have higher CO2 emissions in comparison to similar stand-alone firms. This suggests that business group structures may weaken the pressures for emission reduction and maintenance of public legitimacy among affiliated firms.

Research limitations/implications

The findings of this study are subject to certain limitations, such as the use of a specific dataset from Chile and the inability to explore certain factors due to data constraints. For instance, we were unable to examine the separation between control and cash-flow rights as well as the influence of manager characteristics on pollution levels. Future research should address these limitations and expand the analysis to other emerging market countries to further investigate the impact of lax or ineffective environmental regulations on pollution outcomes.

Practical implications

The research findings have practical implications for investors and policymakers. Investors interested in environmentally sustainable investments should consider the higher pollution levels associated with business group-affiliated firms. Policymakers can use these findings to design more effective regulations and incentives to encourage emission reduction efforts within business group structures.

Social implications

The study’s results emphasize the need for a comprehensive understanding of the environmental implications of business group affiliation. By recognizing the potential for higher emissions in business group structures, stakeholders can advocate for sustainable practices, encourage transparency and promote responsible environmental management within corporate entities.

Originality/value

This study contributes to the literature on corporate governance, climate risks and pollution externalities by providing an empirical evidence on the relationship between business group affiliation and CO2 emissions. It highlights the importance of considering the influence of corporate structures on environmental performance, particularly in the context of emerging market economies.

Objetivo

Este estudio tiene como objetivo investigar la relación entre la afiliación a grupos empresariales y las emisiones de CO2 en Chile, proporcionando información sobre las externalidades de contaminación asociadas con las estructuras de grupos empresariales y sus implicaciones para el desempeño ambiental de las empresas.

Diseño/Metodología/Aproximación

Se utilizó una muestra recolectada de manera manual de instalaciones industriales y subsidiarias de empresas listadas en Chile para analizar las emisiones de CO2 de empresas afiliadas a grupos empresariales en comparación con empresas independientes. Se emplearon análisis de regresión de efectos fijos y modelos de emparejamiento por puntaje de propensión para examinar las diferencias en los niveles de emisiones.

Hallazgos

Los resultados sugieren que las empresas afiliadas a grupos empresariales tienen mayores emisiones de CO2 en comparación con empresas independientes similares. Esto sugiere que las estructuras de grupos empresariales pueden debilitar las presiones para la reducción de emisiones y el mantenimiento de la legitimidad pública entre las empresas afiliadas.

Originalidad

Este estudio contribuye a la literatura sobre gobierno corporativo, riesgos climáticos y externalidades de contaminación al proporcionar evidencia empírica sobre la relación entre la afiliación a grupos empresariales y las emisiones de CO2. Destaca la importancia de considerar la influencia de las estructuras corporativas en el rendimiento ambiental, especialmente en el contexto de las economías de mercados emergentes.

Limitaciones/Implicaciones de la Investigación

Los hallazgos de este estudio están sujetos a ciertas limitaciones, como el uso de un conjunto de datos específico de Chile y la incapacidad para explorar ciertos factores debido a restricciones de datos. Por ejemplo, no pudimos examinar la influencia de las características de los ejecutivos de las empresas en los niveles de contaminación. Investigaciones futuras deberían abordar estas limitaciones y ampliar el análisis a otros países de mercados emergentes para investigar más a fondo el impacto de regulaciones ambientales laxas o ineficaces en los resultados de contaminación.

Implicaciones Prácticas

Los hallazgos de la investigación tienen implicaciones prácticas para inversores y responsables políticos. Los inversores interesados en inversiones ambientalmente sostenibles deben tener en cuenta los niveles más altos de contaminación asociados con empresas afiliadas a grupos empresariales. Los responsables políticos pueden utilizar estos hallazgos para diseñar regulaciones más efectivas e incentivos para fomentar los esfuerzos de reducción de emisiones dentro de las estructuras de grupos empresariales.

Implicaciones Sociales

Los resultados del estudio enfatizan la necesidad de comprender de manera integral las implicaciones ambientales de la afiliación a grupos empresariales. Al reconocer el potencial de mayores emisiones en las estructuras de grupos empresariales, los interesados pueden abogar por prácticas sostenibles, fomentar la transparencia y promover una gestión ambiental responsable dentro de las entidades corporativas.

Article
Publication date: 23 December 2020

Gaurav Gupta, Jitendra Mahakud and Vivek Verma

The purpose of this study is to examine the impact of financial and technical education of chief executive officer (CEO) on investment–cash flow sensitivity (ICFS) of Indian…

Abstract

Purpose

The purpose of this study is to examine the impact of financial and technical education of chief executive officer (CEO) on investment–cash flow sensitivity (ICFS) of Indian manufacturing firms.

Design/methodology/approach

The study uses the dynamic panel data model and more specifically, the system-generalized method of moments (GMM) technique to investigate the effect of CEOs' education on ICFS of Indian manufacturing firms during the period 1998–1999 to 2016–2017.

Findings

The study shows that financial (technical) education of CEOs does (not) affect ICFS. The results explain that the role of the CEO's education in ICFS is highly significant during the crisis period. The robustness test depicts that the influence of financial education on ICFS is less (more) for group-affiliated and large-sized firms (stand-alone and small-sized firms). Further, the CEO's education is significantly associated with corporate investment decisions.

Research limitations/implications

Due to the unavailability of the CEO's compensation data for the selected sample, future research could explore the impact of CEO's education with respect to CEO's compensation on ICFS.

Practical implications

First, the authors find that financially educated CEOs affect ICFS; therefore, firms should take care of CEO's education during recruitment of CEOs. Second, lending agencies should also consider the educational background of the CEO before approval of funding to make it safe. Third, investors should keep in mind the educational background of the CEO for the growth of their investment as it may be easier for financially educated CEOs to borrow from the market at the time of requirement.

Originality/value

This study contributes to the existing literature by providing empirical evidence through analyzing the impact of a CEO's education on ICFS in the context of India. This study is very unique in itself as it uses the sample of manufacturing sectors of India, which are growing very fast and attracting global investors to create a global hub of manufacturing in India. This study also considers different types of education such as financial and technical education of CEOs in the context of a developing economy like India. This study made its findings robust across company characteristics and periods based on the financial crisis.

Details

International Journal of Managerial Finance, vol. 17 no. 4
Type: Research Article
ISSN: 1743-9132

Keywords

Article
Publication date: 9 September 2022

Dipanwita Chakraborty, Neeraj Gupta, Jitendra Mahakud and Manoj Kumar Tiwari

The purpose of this study is to examine the impact of corporate governance (CG) on the shareholding level of retail investors in Indian listed firms.

Abstract

Purpose

The purpose of this study is to examine the impact of corporate governance (CG) on the shareholding level of retail investors in Indian listed firms.

Design/methodology/approach

Primarily, a broad CG-index was constructed based on the Indian Companies Act, 2013; Clause 49 listing agreement; and Securities Contracts (Regulation) Act, 1956. Thereafter, a panel data approach has been used to examine the association between CG attributes and retail shareholdings (RSs) during 2014–2015 and 2018–2019.

Findings

Authors find that the firm-level CG quality positively affects retail investors’ shareholding level. The results explain that among various attributes of CG, retail investors pay more attention to firms’ audit and board information while making investment decisions. The results also reveal that the influence of CG attributes on RSs is lesser for group-affiliated, mature and large-sized firms than for stand-alone, young and small-sized firms.

Practical implications

First, the study provides new insight to the firms for increasing retail-shareholding levels and complying with India’s ongoing minimum public shareholding norms by improving CG practices concerning specific CG mechanisms. Second, it illuminates the regulators and policymakers to monitor and strengthen firms’ governance quality in light of ongoing regulatory reforms.

Originality/value

This study is a new investigation that explores the impact of CG on investment decisions of retail investors from the perspective of an emerging economy.

Details

Managerial Auditing Journal, vol. 38 no. 1
Type: Research Article
ISSN: 0268-6902

Keywords

Article
Publication date: 16 May 2016

Qamar Uz Zaman Malik and Talat Afza

The purpose of this paper is to examine the debt structure of group affiliated firms in Pakistan for the period of 2009-2011. The study seeks to know the level of debt…

Abstract

Purpose

The purpose of this paper is to examine the debt structure of group affiliated firms in Pakistan for the period of 2009-2011. The study seeks to know the level of debt specialization in group affiliated firms. If they do; then how are they different from stand-alone firms?

Design/methodology/approach

The study primarily uses Herfindahl-Hirschman Index and Excl90 as measures of debt specialization, which are further used in cluster, threshold and conditional analysis. Corporate groups are characterized to subsidize their affiliates through internal debt market and loan guarantee. Logistic regression model is used to analyze association among the measures of debt specialization and firm-specific characteristics for group affiliated and stand-alone firms.

Findings

The results show that about 85 percent firms use more than 50 percent of debt from one debt type. However, group affiliated firms are more inclined toward debt specialization than stand-alone firms. Tangibility and book leverage are negatively and significantly associated to the measures of debt specialization. Moreover, internal debt market and loan guarantee are suggestive reasons of debt specialization in group affiliated firms.

Practical implications

This study highlights the issue of group affiliation and its significance on firm’s debt structure. It has implications for determination of the optimal financing strategy. In the context of emerging economies, group affiliated firms can create market imperfections as a protection shield. In case of emerging markets, it is recommended to strengthen regulatory mechanism to avoid such market imperfections.

Originality/value

Prior studies have explored the phenomenon of debt specialization for rated and unrated firms. However, firm group affiliation is widely studied in the context of capital structure. This is a pioneer study to establish and analyze a link between firm group affiliation and debt specialization.

Details

Journal of Economic and Administrative Sciences, vol. 32 no. 1
Type: Research Article
ISSN: 1026-4116

Keywords

Book part
Publication date: 19 June 2012

Franco Cescon

This chapter proposes a contingency model that examines the most relevant contingent variables for understanding the factors that explain innovative costing techniques in a sample…

Abstract

This chapter proposes a contingency model that examines the most relevant contingent variables for understanding the factors that explain innovative costing techniques in a sample of firms investing in advanced manufacturing technologies (AMT firms). Furthermore, the aim of this study was also to ascertain whether AMT firms use significantly innovative managerial practices (IMPs).

The chapter uses material from a survey investigation and interviews with financial directors and the survey was conducted using a sample of AMT firms selected from an Italian industry. The method differs from previous studies in that it considers the relationship between a relevant contingency variable of AMT firms (i.e. the levels of integration, but also environmental uncertainty and size) and various innovative costing, a relationship that has not been previously explored. The research was developed from the relevant literature.

The results indicate that there is no association between innovative costing and AMT firms in general, however the findings show that activity-based costing (ABC) is positively associated with fully integrated AMT firms. Large AMT firms have the highest percentage of innovative costing usage, such as ABC and strategic costing (SC). The relationship between AMT firms that perceive a high degree of environmental uncertainty and innovative costing was supported by the data in case of strategic dimension (target costing (TC) and life cycle costing (LCC)). Expectations of a relationship between AMT firms and IMPs, such as just-in-time (JIT), total quality management (TQM) and activity-based management (ABM), were not supported by the data.

We recognise that specific research limitations might reduce their generalisation, especially the number of statistical observations.

Details

Performance Measurement and Management Control: Global Issues
Type: Book
ISBN: 978-1-78052-910-3

Article
Publication date: 14 September 2018

Amit Baran Chakrabarti and Arindam Mondal

The purpose of this paper is to ascertain the impact of family ownership on the entrepreneurial orientation (EO) of firms in an emerging market and the contingencies under which…

Abstract

Purpose

The purpose of this paper is to ascertain the impact of family ownership on the entrepreneurial orientation (EO) of firms in an emerging market and the contingencies under which it is likely to be affected.

Design/methodology/approach

The paper adopted a panel data multiple regression using ordinary least square methodology on a sample of 51,972 observations belonging to 12,250 firms from India.

Findings

The study finds that family businesses have higher EO than non-family firms. However, it is likely to be affected during institutional transition due to environmental uncertainty. Furthermore, during institutional transition, there will be differences in the EO of family business groups and stand-alone family firms due to the former’s ubiquitous network-level resource advantages.

Research limitations/implications

This paper contributes to the literature on family business by reconciling the positive and negative views on the effect of family ownership on EO by arguing that the risk-taking behavior of family firms is contingent on the environmental conditions and the resource position of the firm.

Practical implications

This study will enable managers and other stakeholders to predict the entrepreneurial attitude of family-owned firms during environmentally stable as well as turbulent times.

Social implications

This study highlights the implication of institutional transition through reforms on a vital part of the economy. Policy makers have to be sensitive to repercussions on family business due to environmental turbulence.

Originality/value

This is one of the first papers that investigate the influence of institutional transition and the resource position of Indian family firms on their EO.

Details

International Journal of Entrepreneurial Behavior & Research, vol. 26 no. 1
Type: Research Article
ISSN: 1355-2554

Keywords

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