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1 – 10 of over 61000Sri Mangesti Rahayu, Suhadak and Muhammad Saifi
The purpose of this paper is to investigate the reciprocal relationship between profitability and capital structure and its impacts on the corporate values of manufacturing…
Abstract
Purpose
The purpose of this paper is to investigate the reciprocal relationship between profitability and capital structure and its impacts on the corporate values of manufacturing companies in Indonesia.
Design/methodology/approach
This research is a quantitative research using the general structural component analysis as the analysis tool. This research involved a number of manufacturing companies registered in the Indonesia Stock Exchange in 2008‒2015 period.
Findings
Profitability has a negative significant influence on capital structure, indicating that profitability is a determining factor upon the corporate capital structure. This finding also implies that the improvement in profitability in the forms of return on investment, return on equity and net profit margin triggers decrease in the proportion of debt within the capital structures of manufacturing companies registered in BEI or Indonesia Stock Exchange.
Originality/value
Previous research only addressed the one-way correlation between profitability and capital structure, whereas this research measured the two-way correlation and reciprocal relationship at the same time. This research measured the influences of profitability and capital structure on the corporate value, in order to find a consistent finding that has not been yet obtained in previous research. This research also attempted to find out whether the use of the same variables within different time and setting (in Indonesia) leads to different results. The inconsistent findings also motivate the researcher to re-explore the reciprocal influence of corporate profitability on corporate capital structure and its effect toward the corporate value.
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Juan Manuel Menéndez Blanco and José-Luis Montes-Botella
The purpose of this paper is to evaluate the importance and contribution of human capital, combined with human resources and research and development (R&D) measures, to nurturing…
Abstract
Purpose
The purpose of this paper is to evaluate the importance and contribution of human capital, combined with human resources and research and development (R&D) measures, to nurturing company resilience as new knowledge and human capital artifices to face challenges derived from globalization, competitiveness, and the knowledge-based economy.
Design/methodology/approach
By means of structural equation modeling with latent variables, a new type of synthetic index is developed, with which the evolution and incidence of human capital structure, human resources development, and R&D in the company’s accumulated resiliency can be tested.
Findings
The results indicate a remarkable contribution of human capital to company resilience (standardized path coefficient 0.8365; p<0.0001 and R2=0.7486). Differences in company-nurtured resilience are related to categories such as productivity, products diversification, human capital structure, human resources management, innovation results, technology, and a productive environment.
Research limitations/implications
The main limitation is that the applied literature on this topic is scarce in economics and focused on company survival.
Practical implications
Management for resilience requires the development of the ability to balance efficiency in the short term with adaptability in the medium and long term. Recruitment and training and development policies should consider the role of emotions and motivation in creative thinking and innovation.
Originality/value
Most research on the topic has been conducted within the ecological resilience approach. The adaptive resilience approach is considered an integrated framework based on the internal perspective of company capabilities, the theory of complex adaptive systems, and the Schultz-Nelson/Phelps view on human capital.
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The purpose of this paper is to propose joint stock company with variable capital (JSCVC), as financial sharing funds and banks necessitate that their capital and number of…
Abstract
Purpose
The purpose of this paper is to propose joint stock company with variable capital (JSCVC), as financial sharing funds and banks necessitate that their capital and number of shareholders be instantaneously variable. Legal personality and accounts clearing of this type of corporations are different from conventional companies.
Design/methodology/approach
JSCVC is a corporation in which capital and shares of shareholders vary by new entrance or withdrawal of shareholders at any point of time.
Findings
Interest rate-based calculations were removed and Rastin Sharing Accounting was applied for JSCVS. Shareholders of JSCVC share the company’s nominal capital proportional to nominal values of their shares. Financial outcome of JSCVC is proportional to values of shares weighted by shares duration of participation.
Research limitations/implications
To prevent spoiling of shareholders’ rights, legal procedure of issuing shares for JSCVC should be defined in compliance with domestic commerce laws in any country.
Practical implications
JSCVC can be used by majority of investment funds, credit unions, saving and loan associations, pension and provident funds, thrift saving plans as well as Islamic banks and financial sharing activities. In JSCVC, deposit at a bank is treated as a share of the company (bank).
Social implications
JSCVC has fair profit distribution and accounts clearing arrangements.
Originality/value
Different variable capital companies have been defined in many countries’ laws, but essential modifications are presented in JSCVC definition to regulate financial sharing arrangements and bank’s performances.
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Rui Yi, Haojun Wang, Bei Lyu and Qinghua Xia
The study aims to empirically study the effect of venture capital on open innovation of China's enterprises.
Abstract
Purpose
The study aims to empirically study the effect of venture capital on open innovation of China's enterprises.
Design/methodology/approach
This paper selects China's A-share listed companies on the small and medium-sized enterprises (SMEs) board and the Growth Enterprise Market from 2014 to 2018 as research samples to empirically study the effect of venture capital on open innovation of China's enterprises.
Findings
The authors find that venture capital can significantly promote open innovation of enterprises. This promoting effect is more significant when the venture capital institutions have profounder industry experience, higher shareholding ratio and are syndicated. Further research finds that venture capital mainly promotes open innovation through three mechanisms: increasing monetary funds, improving absorptive capacity and strengthening executive incentives, and the effect of venture capital on open innovation is significantly different under the conditions of different regions, industries and property rights.
Originality/value
This paper not only reveals the effect of venture capital on enterprises' open innovation and the specific mechanism, but also provides empirical evidence for emerging economies to build a national innovation ecosystem and make use of capital markets to accelerate innovation strategies.
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Zhenjie Wang, Zhuquan Wang and Xinhui Su
The authors point out that the existing research confuses the operational liabilities formed based on the “transaction” relationship with the financial liabilities formed based on…
Abstract
Purpose
The authors point out that the existing research confuses the operational liabilities formed based on the “transaction” relationship with the financial liabilities formed based on the “investment” relationship, which not only exaggerates the value of leverage but also underestimates the level of protection that companies provide for creditors alone. That is, the confusion of concepts not only triggers the problem of leverage misestimate but also triggers the short-term financial risk misestimate. The performance of “nominal leverage” and “nominal short-term solvency” based on total assets calculation cannot reflect the real leverage level and the real short-term financial risk of enterprises.
Design/methodology/approach
To distinguish the concepts of “assets” and “capital” and rationalize the relationship between “transactions” and “investments”, authors systematically design the “real leverage” indicators and “real short-term solvency” indicators, and measure the degree of misestimate of leverage and short-term financial risk indicators by traditional research. On this basis, this paper describes and analyses the trends of leveraged misestimate and short-term financial risk misestimate of listed companies in China and analyses which companies have more serious leverage misestimate. And it helps readers to form an objective understanding of the leveraged misestimate and short-term financial risk misestimate of listed companies in China.
Findings
Firstly, the overall high level of leverage of listed companies in China in the traditional sense is largely because of the misestimate of indicators. And this kind of misestimate is more serious among firms that have advantages in trading, such as state-owned enterprises and firms with higher market shares. Secondly, for most firms with normal solvency, traditional research systematically overestimated the negative impact of “nominal leverage” on financial risk indicators (represented by short-term solvency). The overestimation is significant in firms with serious leverage misestimate. Thirdly, indicators’ misestimate of the traditional research makes the banks cannot make effective credit decisions according to the firm's “real leverage” and “real short-term solvency”.
Originality/value
Firstly, clarify the differences between the concepts of “assets” and “capital”, and clarify the level of “real leverage” of listed companies in China, which is conducive to the process of “de-leveraging”. Secondly, revise the problem of misestimate of related indicators, so that financial institutions can clearly identify the true profitability and real risk level of the entity domain, and thus improve the effectiveness of credit decisions.
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To show different ways the Singapore Variable Capital Company (“VCC”) can be employed and utilized.
Abstract
Purpose
To show different ways the Singapore Variable Capital Company (“VCC”) can be employed and utilized.
Design/methodology/approach
Describes how the Singapore VCC can be used in master-feeder structures, umbrella structures, a “plug-and-play” model, sub-fund structures with different assets and different investors, open-ended structures, and structures that allow for tokenization of securities and the offering of VCC shares as digital securities.
Findings
The flexibility of the VCC allows it to be used across different fund strategies, investor classes and asset classes.
Originality/value
Practical analysis, guidance and market commentary from experienced investment funds lawyers.
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To introduce the various private fund structuring options available in Singapore, an important fund management hub that has increasingly also come to be recognized as a popular…
Abstract
Purpose
To introduce the various private fund structuring options available in Singapore, an important fund management hub that has increasingly also come to be recognized as a popular fund domicile with its pro-business environment, transparent and robust regulatory regime and government support through tailored investment structures, tax incentives and extensive double taxation treaties.
Design/methodology/approach
This article provides an overview of the available private fund structures as well as the key legal issues and considerations that fund managers and investors should take into account when structuring a private fund. It also provides a brief summary of the available tax incentive schemes for funds in Singapore.
Findings
With growth in private market assets under management fueled by private equity funds over the last decade, the use of private investment funds established in Singapore has become a popular means to tap the large capital inflows into Asia. Singapore offers a wide range of fund structures to suit different fund strategies and considerations, including the variable capital company (“VCC”) structure, a legal structure tailored for use as investment funds that was introduced in January 2020.
Practical implications
There are a range of Singapore private fund structures available with different features, including the VCC, which is a corporate structure that allows for umbrella-sub-fund structures with segregated assets and liabilities, and the limited partnership, which is familiar to international investors and permits a large degree of contractual flexibility. Other structures such as unit trusts and private companies may also be suitable depending on the particular circumstances and objectives of the fund. Fund managers who are exploring setting up fund vehicles to tap Asian capital or to invest in Asia should be aware of the possible options, and their pros and cons.
Originality/value
Practical analysis and guidance and market commentary from experienced investment funds lawyers.
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Bijan Bidabad, Mahmoud Allahyarifard and Mahshid Sherafati
This paper aims to explain a new system of accounting for partnership financing that applies in Rastin profit and loss sharing banking. In this system, the interest rate is not…
Abstract
Purpose
This paper aims to explain a new system of accounting for partnership financing that applies in Rastin profit and loss sharing banking. In this system, the interest rate is not used in calculations and accounting, and instead, the “time value” of capital based on the amount and duration of the partnership is used.
Design/methodology/approach
Rastin Partnership Accounting principles have been founded on off-balance-sheet items and on the basis of the institutions’ obligations to the depositors and receivers of financial resources, and they are in compliance with the nature of the financial intermediary activity (a partnership of depositor in the yields of the fund receiver via the bank).
Findings
The distribution of profit among stakeholders (including workforce and capital owners) is accomplished according to the share of each beneficiary in the created value added. In this regard, Euler’s theorem, as the best mathematical-economic innovation for distribution of income is applied.
Research limitations/implications
This system is novel, and it is required to be more elaborated for further practical development and adjustment.
Practical implications
In this accounting system, the return of the partnership is distributed among sharers based on the amount and duration of their partnership. The penalty for delay in payment is calculated from the amount of the incurred loss due to negligence or blameworthy of the undertaker and not upon a penalty interest rate.
Social implications
Interest rate as an essential factor in conventional accounting is not usable in Islamic banking and other similar institutions that work based on partnership, such as mutual funds and saving and loan associations. The proposed system removes this shortage and is fairer than the conventional accounting.
Originality/value
Approach of this accounting system is fully different from the conventional accounting because of intrinsic characteristics of the intermediary role of financial partnership institutions and Islamic banks.
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Simon Archer, Rifaat Ahmed Abdel Karim and Venkataraman Sundararajan
The aims of this paper are: first, to draw attention to the issues of displaced commercial risk (DCR) which arise as a result of the risk characteristics of profit‐sharing…
Abstract
Purpose
The aims of this paper are: first, to draw attention to the issues of displaced commercial risk (DCR) which arise as a result of the risk characteristics of profit‐sharing investment accounts (PSIA), the main source of funding of Islamic banks in most jurisdictions; and, second, to present a value‐at‐risk approach to the estimation of DCR and the associated adjustments in capital requirements.
Design/methodology/approach
The paper is based on empirical research into the characteristics of PSIA in practice, which vary to a greater or lesser extent from what one would expect them to be in principle, on an analysis of the capital adequacy and risk management implications that flow from this, and on an econometric formulation whereby the extent of DCR in Islamic banks may be estimated.
Findings
The findings are, first, that the characteristics of PSIA can vary from being a deposit like product (fixed return, capital certain, all risks borne by shareholders) to an investment product (variable return, bearing the risk of losses in underlying investments), depending upon the extent to which the balance sheet risks get shifted (“displaced”) from investment account holders to shareholders through various techniques available to Islamic banks' management. Second, the paper finds that this DCR has a major impact on Islamic bank's economic and regulatory capital requirements, asset‐liability management, and product pricing. Finally, it proposes an econometric approach to estimating DCR but report that individual Islamic banks generally lack the data needed to apply this approach, in the absence of which panel data for a population of Islamic banks may be used to estimate DCR for that population.
Research limitations/implications
Empirically, the paper is thus limited by the lack of data just mentioned. Furthermore, the application of the proposed panel data approach has been left for future research.
Originality/value
The analysis of the issues and the development of the econometric model represent in themselves an original research contribution of some significance.
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Stefanella Stranieri, Luigi Orsi and Alessandro Banterle
The aim of the paper is to investigate the determinants leading firms to choose among different voluntary standards within food supply chains. In specific, the authors explored…
Abstract
Purpose
The aim of the paper is to investigate the determinants leading firms to choose among different voluntary standards within food supply chains. In specific, the authors explored the role of transaction risks, i.e. internal and exogenous risks, in the adoption of different traceability standards.
Design/methodology/approach
A survey was conducted within the Italian population of 216 food-processing firms that adopt voluntary traceability schemes. The identification of different transaction risks was based on the literature on supply chain management and transaction cost economics. An ordinal regression model was used in the analysis.
Findings
Empirical results highlight that the transaction risks perceived by food firms play a significant role on the kind of traceability schemes to adopt. There is a positive link between internal risks and the decision to implement complex schemes. Moreover, a negative relationship between the perceived exogenous risks and the complexity of the standard adopted is also observed. Exogenous transaction risk lead to the implementation of standards which do not imply strong co-ordination. On the contrary, internal risks imply complex schemes that lead to closer supply chain relationships.
Research limitations/implications
The analysis is limited to cross-sectional data for a single country, and further investigation would help assess the generalisation of the findings.
Practical implications
The analysis can be considered a useful framework to orient firms strategic decisions towards the most appropriate voluntary standard to adopt for an efficient management of vertical relationships within food supply chains.
Originality/value
The present analysis is the first attempt to explain the determinants leading firms to choose among different kinds of voluntary standards within food supply chains. The approach used reveals that transaction risks can be considered a useful framework to explain firms’ strategic decisions related to the kind of schemes to adopt.
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