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The aim of this paper is to empirically investigate whether social contacts can mediate the way in which current unemployment impacts future unemployment.
Abstract
Purpose
The aim of this paper is to empirically investigate whether social contacts can mediate the way in which current unemployment impacts future unemployment.
Design/methodology/approach
We use 2006–2017 data from the Household Income and Labour Dynamics in Australia (HILDA) survey and a dynamic random-effects model to describe the evolution of individual unemployment status over time.
Findings
Once controlled for the local context where individuals live and create friendships, we find that above-average social contacts reduce unemployment persistence. However, social contacts seem to be slightly less effective in deprived neighborhoods. These findings are consistent with the idea that individuals obtain information about job opportunities through a network of social contacts, and unemployment may lead to a decay of social capital, making it more difficult to find employment in future periods. Our results also show that neighborhood deprivation increases individual unemployment risk, while above-average neighborhood cohesion reduces the probability of unemployment in deprived neighborhoods.
Originality/value
Although many studies have been published on unemployment persistence, to the best of the author's knowledge, this is the first study quantifying the impact of social contacts on unemployment persistence. The study also offers fresh empirical evidence on the impact of neighborhood characteristics on unemployment risk.
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This study investigates the significance of trade credit (TC) as an alternative source of funding in financing the growth of financially dependent firms.
Abstract
Purpose
This study investigates the significance of trade credit (TC) as an alternative source of funding in financing the growth of financially dependent firms.
Design/methodology/approach
Panel data analysis using the difference generalized method of moments (GMM) and fixed-effects ordinary least squares (FE-OLS) is conducted on annual data from publicly listed firms across a number of developing economies. The data cover the period from 2003 to 2019.
Findings
The findings indicate that financially dependent firms rely on TC to manage their growth, especially when they have exhausted their debt capacity. This dependence on TC displays a cyclical pattern. As firms enhance their financial position, they tend to scale back their dependence. Nevertheless, firms with significant growth opportunities continue utilizing TC for at least two years after their initial identification as financially dependent.
Practical implications
The author's conclusion highlights that TC can be a valuable and accessible source of funding, especially in developing economies where the real sector may require alternative financing channels. Hence, TC has the potential to play a very significant role in financing corporate growth in these economies.
Originality/value
The current study adds to the existing body of literature by revealing that access to alternative sources of finance is also critical for firms that are dependent on external sources and for firms that have exhausted their financial debt capacity.
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This study aims to examine the effect of foreign direct investment (FDI) inflows on tax revenue in 34 developed and developing countries from 2006 to 2020.
Abstract
Purpose
This study aims to examine the effect of foreign direct investment (FDI) inflows on tax revenue in 34 developed and developing countries from 2006 to 2020.
Design/methodology/approach
Feasible generalised least squares (FGLS), a dynamic panel of a two-step system generalised method of moments (GMM) system and a pool mean group (PMG) panel autoregressive distributed lag (ARDL) approach were used to compare the developed and developing countries. Basic estimators were used as pre-estimators and diagnostic tests were used to increase robustness.
Findings
The FGLS, a two-step system of GMM, PMG–ARDL estimator’s results showed that there was a significant negative long and positive short-term in most countries relationship between FDI inflows and tax revenue in developed countries. This study concluded that attracting investments can improve the quality of institutions despite high tax rates, leading to low tax revenue. Meanwhile, there was a significant positive long and negative short-term relationship between FDI inflows and tax revenue in the developing countries. The developing countries sought to attract FDI that could be used to create job opportunities and transfer technology to simultaneously develop infrastructure and impose a tax policy that would achieve high tax revenue.
Originality/value
The present study sheds light on the effect of FDI on tax revenue and compares developed and developing countries through the design and implementation of policies to create jobs, transfer technology and attain economic growth in order to assure foreign investors that they would gain continuous high profits from their investments.
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The rise of emerging economies in the innovation landscape has often been attributed to the positive spillovers of innovation capabilities from multinational corporations (MNCs)…
Abstract
Purpose
The rise of emerging economies in the innovation landscape has often been attributed to the positive spillovers of innovation capabilities from multinational corporations (MNCs). However, it is less certain that their innovative capabilities imported from the home country function effectively in the host country from the outset. This study examines the performance of the innovation capabilities of MNC subsidiaries in emerging economies over time by considering the gradual process of their learning about host countries.
Design/methodology/approach
We employed stochastic frontier analysis to measure innovation capabilities, our focal construct. For regression analysis, we applied the Mundlak estimator, a variant of the fixed-effects panel estimator, to a sample comprising subsidiaries of MNCs from technologically advanced nations operating in Korea between 2006 and 2016.
Findings
Our results indicate that the innovation capabilities of MNC subsidiaries initially underperform those of local firms but improve over time, eventually surpassing the capabilities of their local counterparts. Furthermore, our findings reveal that institutional distance amplifies the underperformance of the innovation capabilities of MNC subsidiaries.
Originality/value
This study contributes to the literature by extending both theoretical development and empirical measurement of innovation capabilities in cross-national settings. Additionally, it deepens our understanding of whether and how MNC subsidiaries adapt their innovation capabilities to the local market environment.
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Benedikt Gloria, Sebastian Leutner and Sven Bienert
This paper investigates the relationship between the sustainable finance disclosure regulation (SFDR) and the performance of unlisted real estate funds.
Abstract
Purpose
This paper investigates the relationship between the sustainable finance disclosure regulation (SFDR) and the performance of unlisted real estate funds.
Design/methodology/approach
While existing literature has primarily focused on the impact of voluntary sustainability disclosure, such as certifications or reporting standards, this study addresses a significant research gap by constructing and analyzing the financial J-Curve of 40 funds under the SFDR. The authors employ a panel regression analysis to examine the effects of different SFDR categories on fund performance.
Findings
The findings reveal that funds categorized under Article 8 of the SFDR do not exhibit significantly poorer performance compared to funds categorized under Article 6 during the initial phase after launch. On average, Article 8 funds even demonstrate positive returns earlier than their peers. However, the panel regression analysis suggests that Article 8 funds slightly underperform when compared to Article 6 funds over time.
Practical implications
While investors may not anticipate lower initial returns when opting for higher SFDR categories, they should nevertheless be aware of the limitations inherent in the existing SFDR labeling system within the unlisted real estate sector.
Originality/value
To the best of our knowledge, this study represents the first quantitative examination of unlisted real estate fund performance under the SFDR. By providing unique insights into the J-Curves of funds, our research contributes to the existing body of knowledge on the impact of sustainability regulations in the financial sector.
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Pabitra Kumar Das, Mohammad Younus Bhat, Sonal Gupta and Javeed Ahmad Gaine
This study aims to examine the links between carbon emissions, electric vehicles, economic growth, energy use, and urbanisation in 15 countries from 2010 to 2020.
Abstract
Purpose
This study aims to examine the links between carbon emissions, electric vehicles, economic growth, energy use, and urbanisation in 15 countries from 2010 to 2020.
Design/methodology/approach
This study adopts seminal panel methods of moments quantile regression with fixed effects to trace the distributional aspect of the relationship. The reliability of methods is confirmed via fully modified ordinary least squares coefficients.
Findings
This study reveals that fossil fuel use, economic activity, and urbanisation negatively impact environmental quality, whereas renewable energy sources have a significant positive long-term effect on environmental quality in the selected panel of countries.
Research limitations/implications
The main limitation of this study is the generalisability of the findings, as the study is confined to a limited number of countries, and focuses on non-renewable and renewable energy sources.
Practical implications
Finally, this study proposes several policy recommendations for decision-makers and policymakers in the 15 nations to address climate change, boost sales of electric vehicles, and increase the use of renewable energy sources.
Originality/value
This study calls for a comprehensive transition towards green energy in the transportation sector, enhancing economic growth, fostering employment opportunities, and improving environmental quality.
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Nadia Yusuf, Inass Salamah Ali and Tariq Zubair
This study investigates the impact of US dollar volatility and oil rents on the performance of small and medium-sized enterprises (SMEs) in the Gulf Cooperation Council (GCC…
Abstract
Purpose
This study investigates the impact of US dollar volatility and oil rents on the performance of small and medium-sized enterprises (SMEs) in the Gulf Cooperation Council (GCC) region, with an emphasis on understanding how these factors influence SME financing constraints in economies with fixed currency regimes.
Design/methodology/approach
Employing a random effects panel regression analysis, this research considers US dollar volatility and oil rents as independent variables, with SME performance, measured through the financing gap, as the dependent variable. Controls such as trade balance, inflation deltas and gross domestic product (GDP) growth are included to isolate their effects on SME financing constraints.
Findings
The study reveals a significant positive relationship between dollar volatility and the financing gap, suggesting that increased volatility can exacerbate SME financing constraints. Conversely, oil rents did not show a significant direct influence on SME performance. The trade balance and inflation deltas were found to have significant effects, highlighting the multifaceted nature of economic variables affecting SMEs.
Research limitations/implications
The study acknowledges potential biases due to omitted variables and the limitations inherent in the use of secondary data.
Practical implications
Findings offer pertinent guidance for SMEs and policymakers in the GCC region seeking to develop strategies that mitigate the impact of currency volatility and support SME financing.
Originality/value
The research provides new insights into the dynamics of SME performance within fixed currency regimes, which significantly contributes to the limited literature in this area. The paper further underscores the complex connections between global economic factors and SME financial health.
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Faris Alshubiri, Samia Fekir and Billal Chikhi
The present study aimed to examine the effect of received remittance inflows on the price level ratio of the purchasing power parity conversion factor to the market exchange rate…
Abstract
Purpose
The present study aimed to examine the effect of received remittance inflows on the price level ratio of the purchasing power parity conversion factor to the market exchange rate in 36 developed and developing countries from 2004 to 2020.
Design/methodology/approach
The panel data conducted a comparative analysis and used panel least squares, regression with Driscoll-Kraay standard errors of fixed effect, random effect, feasible generalised least squares and maximum likelihood robust least squares to overcome the heterogeneity issue. Furthermore, the two-step difference generalised method of moments to overcome the endogeneity issue. Diagnostic tests were used to increase robustness.
Findings
In the studied countries, there was a statistically significant negative relationship between received remittance inflows and the price-level ratio of the purchasing power parity conversion factor to the market exchange rate. This relationship explains why remittance flows depreciate the real exchange rate. The study’s results also indicated that attracting investments can improve the quality of institutions despite high tax rates, leading to low tax revenue.
Originality/value
The current study findings enrich the understanding of policies of how governments should minimise tariff rates on capital imports and introduce export-oriented incentive programmes. The study also revealed that Dutch disease can occur due to differences in the demand structure and manufacturing development policy.
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Sitara Karim, Samuel A. Vigne, Brian M. Lucey and Muhammad Abubakr Naeem
While there is an increased demand from various corporate stakeholders on the need for public companies to have risk management frameworks as well as a stand-alone risk management…
Abstract
Purpose
While there is an increased demand from various corporate stakeholders on the need for public companies to have risk management frameworks as well as a stand-alone risk management committee to mitigate risks and simultaneously improve performance, this study investigates the effects of the risk management committee attributes on firm performance, and the role of board size is highlighted on this relationship in Malaysian listed companies.
Design/methodology/approach
Both accounting- and market-based performance measures have been used for measuring performance. A dynamic model using the generalized method of moments (GMM) has been employed to control for potential endogeneity, simultaneity and unobserved heterogeneity.
Findings
The findings reveal that risk management committee attributes such as size, independence and meetings negatively affect book-based performance measures and positively affect market-based performance measures. Moreover, board size positively moderates the risk management committee attributes and performance relationship. The study embraces the predictions of agency theory and resource dependence theory.
Practical implications
The findings are practically significant for Bursa Malaysia, Securities Commission Malaysia to assess the compliance of the Corporate Governance Code (MCCG, 2017) and for academia to further explore significant relationships in other emerging economies.
Originality/value
The paper contributes to multiple aspects: first, it studies the impact of risk management committee attributes on firm performance; second, it investigates the moderating effect of board size on RMC–performance relationship; in the end, the study employs dynamic modeling for estimation process to avoid dynamic endogeneity considered a main econometric problem for CG–performance relationships.
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K. Sandar Kyaw, Yun Luo and Glauco De Vita
This study empirically examines the moderating role of geopolitical risk on the tourism–economic growth nexus by applying a recent geopolitical risk indicator developed by…
Abstract
Purpose
This study empirically examines the moderating role of geopolitical risk on the tourism–economic growth nexus by applying a recent geopolitical risk indicator developed by Caldara and Iacoviello (2022) in a cross-country panel data growth model context for a sample of 24 countries.
Design/methodology/approach
A Dummy Variable Least Squares panel data model, nonparametric covariance matrix estimator and SYS-GMM estimation techniques are employed for the analysis. The authors capture the GPR moderating effect by disaggregating the cross-country sample according to low versus high country GPR score and through a GPR interaction coefficient. Several controls are included in the models such as gross fixed capital formation and—consistent with Barro (1990)—government consumption. Trade openness is used to account for the export-led growth effect. In line with neoclassical growth theory (e.g. Barro, 1991), the authors also include the real interest rate, to account for policy makers' commitment to macroeconomic stability, financial depth, as a proxy for financial development, population growth and the level of secondary school education. The authors also control for unobserved country-specific and time-invariant effects.
Findings
The research finds that the interaction term of geopolitical risk significantly contributes to the predictive ability of the regression and provides empirical evidence that confirms that only in low geopolitical risk countries international tourism positively and significantly contributes to economic growth. Important theoretical and policy implications flow from these findings.
Originality/value
The study not only contributes to advancing academic knowledge on the tourism–growth nexus, it also has impact beyond academia. Many countries have in the past pursued and many continue to pursue, tourism specialization and/or tourism-led growth strategies based on the theoretically well-established and empirically validated positive link between inbound tourism and economic growth. The findings alert policy makers in such countries to the significant moderating role that geopolitical risk plays in affecting the above-mentioned relationship and to the importance of prioritizing geopolitical stability as a policy precursor for the successful implementation of such strategies.
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