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1 – 2 of 2William Mbanyele and Fengrong Wang
This study aims to examine the real effects of financial misconduct on corporate innovation.
Abstract
Purpose
This study aims to examine the real effects of financial misconduct on corporate innovation.
Design/methodology/approach
The authors use a sample of Chinese A-share listed firms from 2006 to 2017. This study uses several empirical strategies to deal with endogeneity concerns, including Heckman’s two-stage correction approach, propensity score matching and instrumental variables.
Findings
The authors’ findings consistently show that financial misconduct impedes corporate innovation. Furthermore, the authors’ analysis demonstrates that the negative impact of financial misconduct is more pronounced in nonstate enterprises. The authors also show that financial misconduct discourages innovation through information, short-termism and financing channels.
Practical implications
This paper is of particular interest to policymakers, as firm behavior is heavily regulated and altered by securities laws and regulations over time. The authors recommend firms to observe financial regulatory laws to promote capital market integrity and enhance shareholder value through innovation projects. The authors also recommend that regulators provide incentives that encourage corporate transparency and use new technologies to detect financial misconduct quickly.
Originality/value
Few studies in literature investigate the real consequences of financial misconduct on firm investments. Hence, this paper fills this gap by analyzing the implications of financial misconduct on corporate innovation. This study is one of the first to provide new insights into the adverse effects of financial misconduct on firm-level innovation, supported by empirical evidence.
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Keywords
The purpose of this study is to examine the role of board networks in promoting stock liquidity when there is high economic policy uncertainty using a sample of Brazilian firms…
Abstract
Purpose
The purpose of this study is to examine the role of board networks in promoting stock liquidity when there is high economic policy uncertainty using a sample of Brazilian firms from 2002 to 2015.
Design/methodology/approach
The study employs the ordinary least squares estimation method with standard errors clustered at the firm level for preliminary analysis, besides the study employs the two-step GMM dynamic estimation method to deal with potential endogeneity issues.
Findings
First, the findings show that economic policy uncertainty disproportionately contributes to stock illiquidity and the impact is mainly prominent for high risky companies, small firms and firms in competitive industries. Second, the author provides evidence that board networks promote stock liquidity more via the information channel when economic policy uncertainty is very high.
Practical implications
Given the adverse effects of economic policy uncertainty on stock liquidity, governments need to swiftly communicate and implement policies that affect the capital market to avoid the drying up of liquidity, which is exacerbated by communication or implementation lags. Also, there is a need for the regulators to continuously encourage the inclusion of independent directors in boards, which helps to increase board monitoring capacity and the firms' ability to respond to changes in the external environment.
Originality/value
Unlike other studies that focus on the adverse effects of economic policy uncertainty on firm outcomes, the novel contribution is that the author uncovers the role of board networks in mitigating the negative effects of economic policy uncertainty on stock liquidity.
Details