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Article
Publication date: 1 March 2014

Per Molander

The single-most important parameter of a public procurement system is the threshold above which the framework applies. The optimization problem consists of finding a reasonable…

Abstract

The single-most important parameter of a public procurement system is the threshold above which the framework applies. The optimization problem consists of finding a reasonable trade-off between the gains from public procurement and the administrative costs associated with procurement rules. In the present study, based on a sample of central and local government procurement operations in Sweden, an optimal threshold value in the range of 5,000—6,000 EUR is computed based on the requirement that the average gain should supersede the average cost. If a larger proportion of procurements is required to gain from the regulation imposed, a threshold value of 20,000—25,000 EUR should apply. The general conclusion is that there are strong arguments for maintaining procurement rules below the European Union threshold.

Details

Journal of Public Procurement, vol. 14 no. 2
Type: Research Article
ISSN: 1535-0118

Article
Publication date: 13 November 2017

Xing Wang and Xuefeng Shao

This paper aims to seek the optimal proportion of female executives in corporate management teams, and to analyze the threshold effect of the proportion of female executives on…

Abstract

Purpose

This paper aims to seek the optimal proportion of female executives in corporate management teams, and to analyze the threshold effect of the proportion of female executives on the enterprise market value and enterprise management performance by using a panel threshold regression model. The purpose of this paper is to obtain the optimal interval, during which female executives exert positive effects on enterprise market value and enterprise management performance.

Design/methodology/approach

Based on the data of listed companies in SSE from 2003 to 2012, this paper conducts theoretical and empirical analysis by using a panel threshold regression model.

Findings

This paper proves that the proportion of female executives has a threshold effect on the enterprise market value and enterprise management performance. The results show that the proportion of female executives has an optimal interval. In other words, during the 53.8-68.4 percent interval, the proportion of female executives exerts the least negative effect on the enterprise market value and the most positive effect on the enterprise management performance.

Originality/value

In this paper, the non-linear relationship between female executives, enterprise market value and enterprise management performance has been verified, and the optimization interval of the female executives’ proportion has been figured out as well.

Details

Journal of Organizational Change Management, vol. 30 no. 7
Type: Research Article
ISSN: 0953-4814

Keywords

Article
Publication date: 7 July 2023

John Kwaku Amoh, Abdallah Abdul-Mumuni, Randolph Nsor-Ambala and Elvis Aaron Amenyitor

Most emerging economies have made conscious efforts through policy initiatives to attract foreign direct investment (FDI). However, a significant obstacle to FDI inflow has been…

Abstract

Purpose

Most emerging economies have made conscious efforts through policy initiatives to attract foreign direct investment (FDI). However, a significant obstacle to FDI inflow has been the prevalence of corruption in the host country. This study, therefore, aims to examine whether there is an optimum corruption value that results in threshold effects of corruption on FDI.

Design/methodology/approach

To achieve this objective, this study used Hansen’s (1999) panel threshold regression (PTR) model by using a panel data of 30 sub-Saharan African (SSA) countries from 2000 to 2021.

Findings

This study finds that the nexus between corruption and FDI has a single threshold effect, with a 5.37% optimum corruption threshold value. At this threshold value, corruption affects FDI negatively. Any corruption value that is below the threshold value also elicits a negative corruption–FDI relationship. Despite having a negative relationship when the corruption value is above the optimum corruption threshold, it is not statistically significant.

Research limitations/implications

The implication of the results is that it is deleterious to use corrupt practices to draw FDI to SSA nations.

Originality/value

To the best of the authors’ knowledge, this study is one of the first in the corruption–FDI nexus literature to use Hansen’s PTR model to estimate an optimal corruption threshold. The authors recommend that policymakers in the selected SSA countries reconsider the use of corruption to attract FDI because there is an optimal corruption threshold that could impact FDI in the host country.

Details

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

Keywords

Article
Publication date: 4 March 2014

Rizki E. Wimanda

– This paper aims to investigate the impact of exchange rate depreciation and money growth to the consumer price index (CPI) inflation in Indonesia.

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Abstract

Purpose

This paper aims to investigate the impact of exchange rate depreciation and money growth to the consumer price index (CPI) inflation in Indonesia.

Design/methodology/approach

Using threshold model applied to Phillips curve equation.

Findings

Using monthly data from 1980:1 to 2008:12, the econometric evidence shows that there are indeed threshold effects of money growth on inflation, but no threshold effect of exchange rate depreciation on inflation. Even though the threshold value for exchange rate depreciation is found at 8.4 percent, the F-test suggests that there is no significant difference between the coefficient below and that above the threshold value. While two threshold values are found for money growth, i.e. 7.1 and 9.8 percent, and they are statistically different. The impact on inflation is high when money grows by up to 7.1 percent, it is moderate when money grows by 7.1-9.8 percent, and it is low when money grows by above 9.8 percent.

Research limitations/implications

This research is using methodology proposed by Hansen which the threshold is based on the minimum SSR. The value of SSR will differ from one model to one model. For example, model using quarterly data will give the different result from that using monthly or yearly data. Also, when the author uses the new data, the result could be different.

Practical implications

Even though inflation targeting framework has been adopted by Bank Indonesia (BI) since 2005, BI should not disregard the monetary aggregate variable, especially M1. This is because the growth of money is still matter to influence inflation in the short run. The impact on inflation is found to be larger than the impact of exchange rate depreciation when it is below a certain threshold value.

Originality/value

This is the first paper that evaluates the threshold effect of exchange rate and money growth in emerging country, especially in Indonesia.

Details

Journal of Economic Studies, vol. 41 no. 2
Type: Research Article
ISSN: 0144-3585

Keywords

Article
Publication date: 21 February 2020

Oyakhilome Ibhagui

The threshold regression framework is used to examine the effect of foreign direct investment on growth in Sub-Saharan Africa (SSA). The growth literature is awash with divergent…

Abstract

Purpose

The threshold regression framework is used to examine the effect of foreign direct investment on growth in Sub-Saharan Africa (SSA). The growth literature is awash with divergent evidence on the role of foreign direct investment (FDI) on economic growth. Although the FDI–growth nexus has been studied in diverse ways, very few studies have examined the relationship within the framework of threshold analysis. Furthermore, even where this framework has been adopted, none of the previous studies has comprehensively examined the FDI–growth nexus in the broader SSA. In this paper, within the standard panel and threshold regression framework, the problem of determining the growth impact of FDI is revisited.

Design/methodology/approach

Six variables are used as thresholds – inflation, initial income, population growth, trade openness, financial market development and human capital, and the analysis is based on a large panel data set that comprises 45 SSA countries for the years 1985–2013.

Findings

The results of this study show that the direct impact of FDI on growth is largely ambiguous and inconsistent. However, under the threshold analysis, it is evident that FDI accelerates economic growth when SSA countries have achieved certain threshold levels of inflation, population growth and financial markets development. This evidence is largely invariant qualitatively and is robust to different empirical specifications. FDI enhances growth in SSA when inflation and private sector credit are below their threshold levels while human capital and population growth are above their threshold levels.

Originality/value

The contribution of this paper is twofold. First, the paper streamlines the threshold analysis of FDI–growth nexus to focus on countries in SSA – previous studies on FDI-growth nexus in SSA are country-specific and time series–based (see Tshepo, 2014; Raheem and Oyınlola, 2013 and Bende-Nabende, 2002). This paper provides a panel analysis and considers a broader set of up to 45 SSA countries. Such a broad set of SSA countries had never been considered in the literature. Second, the paper expands on available threshold variables to include two new important macroeconomic variables, population growth and inflation which, though are important absorptive capacities but, until now, had not been used as thresholds in the FDI–growth literature. The rationale for including these variables as thresholds stems from the evidence of an empirical relationship between population growth and economic growth, see Darrat and Al-Yousif (1999), and between inflation and economic growth, see Kremer et al. (2013).

Details

Journal of Economic Studies, vol. 47 no. 1
Type: Research Article
ISSN: 0144-3585

Keywords

Article
Publication date: 28 February 2023

Ons Triki and Fathi Abid

The objective of this paper is twofold: first, to model the value of the firm in the presence of contingent capital and multiple growth options over its life cycle in a stochastic…

Abstract

Purpose

The objective of this paper is twofold: first, to model the value of the firm in the presence of contingent capital and multiple growth options over its life cycle in a stochastic universe to ensure financial stability and recover losses in case of default and second, to clarify how contingent convertible (CoCo) bonds as financial instruments impact the leverage-ratio policies, inefficiencies generated by debt overhang and asset substitution for a firm that has multiple growth options. Additionally, what is its impact on investment timing, capital structure and asset volatility?

Design/methodology/approach

The current paper elaborates the modeling of a dynamic problem with respect to the interaction between funding and investment policies during multiple sequential investment cycles simultaneously with dynamic funding. The authors model the value of the firm in the presence of contingent capital that provides flexibility in dealing with default risks as well as growth options in a stochastic universe. The authors examine the firm's closed-form solutions at each stage of its decision-making process before and after the exercise of the growth options (with and without conversion of CoCo) through applying the backward indication method and the risk-neutral pricing theory.

Findings

The numerical results show that inefficiencies related to debt overhang and asset substitution can go down with a higher conversion ratio and a larger number of growth options. Additionally, the authors’ analysis reveals that the firm systematically opts for conservative leverage to minimize the effect of debt overhang on decisions so as to exercise growth options in the future. However, the capital structure of the firm has a substantial effect on the leverage ratio and the asset substitution. In fact, the effect of the leverage ratio and the risk-shifting incentive will be greater when the capital structure changes during the firm's decision-making process. Contrarily to traditional corporate finance theory, the study displays that the value of the firm before the investment expansion decreases and then increases with asset volatility, instead of decreasing overall with asset volatility.

Research limitations/implications

The study’s findings reveal that funding, default and conversion decisions have crucial implications on growth option exercise decisions and leverage ratio policy. The model also shows that the firm consistently chooses conservative leverage to reduce the effect of debt overhang on decisions to exercise growth options in the future. The risk-shifting incentive and the debt overhang inefficiency basically decrease with a higher conversion ratio and multiple growth options. However, the effect of the leverage ratio and the risk-shifting incentive will be greater when the capital structure changes during the firm's decision-making process.

Originality/value

The firm's composition between assets in place and growth options evolves endogenously with its investment opportunity and growth option financing, as well as its default decision. In contrast to the standard capital structure models of Leland (1994), the model reveals that both exogenous conversion decisions and endogenous default decisions have significant implications for firms' growth option exercise decisions and debt policies. The model induces some predictions about the dynamics of the firm's choice of leverage as well as the link between the dynamics of leverage and the firm's life cycle.

Details

China Finance Review International, vol. 13 no. 2
Type: Research Article
ISSN: 2044-1398

Keywords

Article
Publication date: 20 November 2009

Maria Soledad Pera and Yiu‐Kai Ng

The web provides its users with abundant information. Unfortunately, when a web search is performed, both users and search engines must deal with an annoying problem: the presence…

Abstract

Purpose

The web provides its users with abundant information. Unfortunately, when a web search is performed, both users and search engines must deal with an annoying problem: the presence of spam documents that are ranked among legitimate ones. The mixed results downgrade the performance of search engines and frustrate users who are required to filter out useless information. To improve the quality of web searches, the number of spam documents on the web must be reduced, if they cannot be eradicated entirely. This paper aims to present a novel approach for identifying spam web documents, which have mismatched titles and bodies and/or low percentage of hidden content in markup data structure.

Design/methodology/approach

The paper shows that by considering the degree of similarity among the words in the title and body of a web docuemnt D, which is computed by using their word‐correlation factors; using the percentage of hidden context in the markup data structure within D; and/or considering the bigram or trigram phase‐similarity values of D, it is possible to determine whether D is spam with high accuracy

Findings

By considering the content and markup of web documents, this paper develops a spam‐detection tool that is: reliable, since we can accurately detect 84.5 percent of spam/legitimate web documents; and computational inexpensive, since the word‐correlation factors used for content analysis are pre‐computed.

Research limitations/implications

Since the bigram‐correlation values employed in the spam‐detection approach are computed by using the unigram‐correlation factors, it imposes additional computational time during the spam‐detection process and could generate higher number of misclassified spam web documents.

Originality/value

The paper verifies that the spam‐detection approach outperforms existing anti‐spam methods by at least 3 percent in terms of F‐measure.

Details

International Journal of Web Information Systems, vol. 5 no. 4
Type: Research Article
ISSN: 1744-0084

Keywords

Article
Publication date: 31 May 2013

Abd Halim Ahmad and Nur Adiana Hiau Abdullah

The purpose of this paper is to investigate the effect of leverage on Malaysian listed firms' value and the optimal level of debt at which a firm could maximize its value.

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Abstract

Purpose

The purpose of this paper is to investigate the effect of leverage on Malaysian listed firms' value and the optimal level of debt at which a firm could maximize its value.

Design/methodology/approach

The authors employ an advanced panel threshold regression estimation developed in 1999 by Hansen that will indicate whether there are positive and negative impacts of leverage on firm value. This estimation procedure has the advantage of quantifying the threshold level of debt as compared to the ad hoc classification procedure of splitting the sample.

Findings

The results show that debt is only pertinent to the firm value up to a threshold level of 64.33 per cent. Additional debt beyond the threshold level does not add to a firm's value. The appropriate level of debt should be applied, which would thus maximize the firm and stockholders' value.

Originality/value

To the best of the authors' knowledge, this is the first study to look at this issue for Malaysian listed firms. The findings from this paper may provide a critical analysis of the usage of debt in firms' capital structure. An excessive level of debt could lead to a debt overhang situation and insolvency at the microeconomic firm level; this could eventually could cause vulnerability in financial systems and thus lead to the financial catastrophes.

Details

Studies in Economics and Finance, vol. 30 no. 2
Type: Research Article
ISSN: 1086-7376

Keywords

Article
Publication date: 9 August 2023

Sedki Zaiane, Halim Dabbou and Mohamed Imen Gallali

The purpose of this study is to examine the nonlinear relationship between financial constraints and the chief executive officer (CEO) stock options compensation and to analyze…

Abstract

Purpose

The purpose of this study is to examine the nonlinear relationship between financial constraints and the chief executive officer (CEO) stock options compensation and to analyze whether the impact of financial constraints on the CEO stock options compensation changes at certain level of financial constraints or not.

Design/methodology/approach

This study is based on a sample of 90 French firms for the period extending from 2008 to 2019. To deal with the non-linearity, the authors use a panel threshold method.

Findings

Using different measures of financial constraints [KZ index (Baker et al., 2003), SA index (Hadlock and Pierce, 2010) and FCP index (Schauer et al., 2019)], the results reveal that the impact of the financial constraints (SA index and FCP index) is positive below the threshold value and it becomes negative above.

Research limitations/implications

The non-linearity between financial constraints and CEO stock options shows that the level of financial constraints can be a major determinant of the CEO compensation structure. More specifically, this study sheds light on the key role played by the level of financial constraints and how this latter influence management decisions.

Originality/value

This paper is the first to the best of the authors' knowledge to examine the nonlinear relationship between financial constraints and the CEO stock options compensation using a panel threshold model.

Details

EuroMed Journal of Business, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1450-2194

Keywords

Article
Publication date: 21 September 2021

Maximilian Bär, Nadine Gatzert and Jochen Ruß

The aim of this paper is to modify the shape of utility functions traditionally used in expected utility theory (EUT) to derive optimal retirement saving decisions. Inspired by…

Abstract

Purpose

The aim of this paper is to modify the shape of utility functions traditionally used in expected utility theory (EUT) to derive optimal retirement saving decisions. Inspired by current reference point based approaches, the authors argue that utility functions with jumps or kinks at certain threshold points might very well be rational.

Design/methodology/approach

The authors suggest an alternative to typical utility functions used in EUT, to be applied in the context of retirement saving decisions. The authors argue that certain elements that are used to model biases in behavioral models should–in the context of optimal retirement saving decisions–be considered “rational” and hence be included in a normative setting as well. The authors compare the optimal asset allocation derived under such utility functions with results under traditional power utility.

Findings

The authors find that the considered threshold levels can have a significant impact on the optimal investment decision for some individuals. In particular, the authors show that a much riskier investment than under EUT can become optimal if some level of income is secured by a social security and a significant portion of the distribution of terminal wealth lies below this level.

Originality/value

Contrary to previous work, this model is especially designed to assess the question of optimal product choice/asset allocation in the specific setting of retirement planning and from a normative point of view. In this regard, the authors first motivate the use of several thresholds and then apply this approach in a capital market model with stochastic stocks and stochastic interest rates to two illustrative investment alternatives.

Details

The Journal of Risk Finance, vol. 22 no. 5
Type: Research Article
ISSN: 1526-5943

Keywords

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