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Open Access
Article
Publication date: 13 December 2023

Oli Ahad Thakur, Matemilola Bolaji Tunde, Bany-Ariffin Amin Noordin, Md. Kausar Alam and Muhammad Agung Prabowo

This study empirically investigates the relationship between goodwill assets and capital structure (i.e. debt ratio) of firms and the moderating effect of financial market…

Abstract

Purpose

This study empirically investigates the relationship between goodwill assets and capital structure (i.e. debt ratio) of firms and the moderating effect of financial market development on the relationship between goodwill assets and capital structure.

Design/methodology/approach

This research applied a quantitative method. The article collects large samples of listed firms from 23 developing and nine developed countries and applied the panel data techniques. This research used firm-level data from the DataStream database for both developed and developing countries. The study uses 4,912 firm-level data from 23 developing countries and 4,303 firm-level data from nine developed countries.

Findings

The findings reveal a significant positive relationship between goodwill assets and capital structure in developing countries, but goodwill assets have a significant negative relationship with capital structure in developed countries. Moreover, financial market development positively moderates the relationship between goodwill assets and the capital structure of firms in developing countries. The results inform firm managers that goodwill assets serve as additional collateral to secure debt financing. Moreover, policymakers should formulate a debt market policy that recognizes goodwill assets as additional collateral for the purpose of obtaining debt capital.

Research limitations/implications

The study has several implications. First, goodwill assets are identified as a factor of capital structure in this study. Fixed assets have been identified as one of the drivers of capital structure in previous research, although goodwill assets are seldom included. Second, this article shows that along with demand-side determinants, supply-side determinants also play an important role in terms of the firms' choice about the capital structure. Therefore, firms should take both the demand-side and supply-side factors into consideration when sourcing for external financing (i.e. debt capital).

Originality/value

The study considered goodwill as a component of capital structure. The study analysis includes a large sample of enterprises, including 4,912 big firms from 23 developing countries and 4,303 large firms from nine industrialized or developed countries, which adds to the current capital structure information. Furthermore, a large sample size increases the results' robustness and generalizability.

Details

Journal of Economics, Finance and Administrative Science, vol. 29 no. 57
Type: Research Article
ISSN: 2077-1886

Keywords

Graphic analysis
Publication date: 19 March 2024

The near-term risk of defaults in emerging market (EM) sovereign debt markets is easing

Details

DOI: 10.1108/OXAN-GA285940

ISSN: 2633-304X

Keywords

Geographic
Topical
Open Access
Article
Publication date: 25 August 2022

Ashish Kumar, Shikha Sharma, Ritu Vashistha, Vikas Srivastava, Mosab I. Tabash, Ziaul Haque Munim and Andrea Paltrinieri

International Journal of Emerging Markets (IJoEM) is a leading journal that publishes high-quality research focused on emerging markets. In 2020, IJoEM celebrated its fifteenth…

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Abstract

Purpose

International Journal of Emerging Markets (IJoEM) is a leading journal that publishes high-quality research focused on emerging markets. In 2020, IJoEM celebrated its fifteenth anniversary, and the objective of this paper is to conduct a retrospective analysis to commensurate IJoEM's milestone.

Design/methodology/approach

Data used in this study were extracted using the Scopus database. Bibliometric analysis, using several indicators, is adopted to reveal the major trends and themes of a journal. Mapping of bibliographic data is carried using VOSviewer.

Findings

Study findings indicate that IJoEM has been growing for publications and citations since its inception. Four significant research directions emerged, i.e. consumer behaviour, financial markets, financial institutions and corporate governance and strategic dimensions based on cluster analysis of IJoEM's publications. The identified future research directions are focused on emergent investments opportunities, trends in behavioural finance, emerging role technology-financial companies, changing trends in corporate governance and the rising importance of strategic management in emerging markets.

Originality/value

To the best of the authors' knowledge, this is the first study to conduct a comprehensive bibliometric analysis of IJoEM. The study presents the key themes and trends emerging from a leading journal considered a high-quality research journal for research on emerging markets by academicians, scholars and practitioners.

Details

International Journal of Emerging Markets, vol. 19 no. 4
Type: Research Article
ISSN: 1746-8809

Keywords

Article
Publication date: 29 February 2024

Tim Gocher, Wen Li Chan, Jayalakshmy Ramachandran and Angelina Seow Voon Yee

This study aims to explore the effects of responsible international investment in a least developed country (LDC) on ethics and corruption in the local industry. While investment…

Abstract

Purpose

This study aims to explore the effects of responsible international investment in a least developed country (LDC) on ethics and corruption in the local industry. While investment growth in least developed countries (LDCs) is essential to meet the United Nations Sustainable Development Goals, international investment in LDCs poses challenges, including corruption. The authors explore perspectives from relevant stakeholders on the influence, if any, on an LDC’s banking sector, of investment in the LDC by a multinational bank with an environmental, social and governance focus – using a case study of Standard Chartered Bank (SCB) in Nepal.

Design/methodology/approach

The authors conducted thematic analysis on: focus groups with current and former SCB Nepal management; semi-structured interviews with Nepal banking regulator representatives; senior staff from SCB global divisions; and management of other commercial banks in Nepal.

Findings

Knowledge transfer, organisational enablers and constructive international competition contributed to the dissemination of best practices within the Nepal banking sector, supporting the notion of beneficial spill-over effects of multinationals on LDC host countries.

Practical implications

Practical insights will aid LDC governments, international businesses, investment funds and donor organisations seeking to invest in/assist LDCs with economic development.

Originality/value

To the best of the authors’ knowledge, this may be the first case study on ethics and anti-corruption practices of a multinational bank in a LDC. Through a practice-driven focus, the authors provide “on-the-ground” insights to better understand the complex nature of corruption.

Details

Journal of Financial Regulation and Compliance, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1358-1988

Keywords

Open Access
Article
Publication date: 1 March 2024

Songhee Kim, Jaeuk Khil and Yu Kyung Lee

This paper aims to investigate the impact of corporate dividend policy on the capital structure in the Korean stock market. To distinctly discern the voluntariness of changes in…

Abstract

This paper aims to investigate the impact of corporate dividend policy on the capital structure in the Korean stock market. To distinctly discern the voluntariness of changes in corporate dividend policy, we analyze companies that, following a substantial increase, do not reduce dividends for the subsequent two years or, after a significant decrease, do not raise dividends for the following two years. Our empirical findings indicate that companies that increase dividends experience a significant decrease in both book and market leverage, even after controlling for variables such as target leverage ratios. This result suggests that a large increase in dividends can effectively reduce information asymmetry, leading to a lower cost of equity. On the contrary, after a decrease in dividends, both book leverage and market leverage significantly increase, revealing a symmetric relationship between dividend policy and capital structure. In conclusion, large dividend increases in Korean companies not only reduce information asymmetry but also lower the cost of equity capital, resulting in observable changes in the leverage ratio.

Details

Journal of Derivatives and Quantitative Studies: 선물연구, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1229-988X

Keywords

Article
Publication date: 15 November 2023

Wang Dong, Weishi Jia, Shuo Li and Yu (Tony) Zhang

The authors examine the role of CEO political ideology in the credit rating process.

Abstract

Purpose

The authors examine the role of CEO political ideology in the credit rating process.

Design/methodology/approach

This study adopts a quantitative method with panel data regressions using a sample of 5,211 observations from S&P 500 firms from 2001 to 2012.

Findings

The authors find that firms run by Republican-leaning CEOs, who tend to have conservative political ideologies, enjoy more favorable credit ratings than firms run by Democratic-leaning CEOs. In addition, the association between CEO political ideology and credit ratings is more pronounced for firms with high operating uncertainty, low capital intensity, high growth potential, weak corporate governance and low financial reporting quality. Finally, the authors find that CEO political ideology affects a firm's cost of debt incremental to credit ratings, consistent with debt investors incorporating CEO political ideology in their pricing decisions.

Research limitations/implications

Leveraging CEO political ideology, the authors document that credit rating agencies incorporate managerial conservatism in their credit rating decisions. This finding suggests that CEO political ideology serves as a meaningful signal for managerial conservatism.

Practical implications

The study suggests that credit rating agencies incorporate CEO political ideology in their credit rating process. Other capital market participants such as auditors and retail investors can also use CEO political ideology as a proxy for managerial conservatism when evaluating firms.

Social implications

The paper carries practical implications for practitioners, firm executives and regulators. The results on the association between CEO political ideology and credit ratings suggest that other financial institutions could also incorporate CEO political ideology in their evaluation in their evaluation of firms. For example, when evaluating audit risk and determining audit pricing, auditors may add CEO political ideology as a risk factor. For firms, especially those that have Democratic-leaning CEOs, the authors suggest that they could reduce the unfavorable effect of CEO political ideology on credit ratings by improving their corporate governance and financial reporting quality, as demonstrated in the cross-sectional analyses. Finally, this study shows that CEO political ideology, as measured by CEOs' political contributions, is closely related to a firm's credit ratings. This finding may inform regulators that greater transparency for CEOs' political contributions is needed as information on contributions could help capital market participants perform risk analyses for firms.

Originality/value

Credit rating agencies release their research methodologies for determining corporate credit ratings and identify managerial conservatism as an important factor that affects their risk assessments. The extant literature, however, has not empirically investigated the relation between credit ratings and managerial conservatism, which, according to behavioral consistency theory, can be proxied by CEO political ideology. This study provides novel empirical evidence that identifies CEO political ideology as an important input factor in the credit rating process.

Details

American Journal of Business, vol. 39 no. 1
Type: Research Article
ISSN: 1935-5181

Keywords

Book part
Publication date: 8 April 2024

Ladislava Issever Grochová and Michal Škára

This chapter examines the impact of sectoral indebtedness on GDP in Czechia, initially a low-indebted small open economy in which debt dynamics are becoming a major concern. The…

Abstract

This chapter examines the impact of sectoral indebtedness on GDP in Czechia, initially a low-indebted small open economy in which debt dynamics are becoming a major concern. The impact of household debt, non-financial corporation debt and public debt is analysed with the use of local projections based on instrumental variable estimations. The results show a more pronounced influence of household debt compared to non-financial corporation and government debt. Initially, increasing household debt stimulates short-run economic activity, but in the medium run, it limits household consumption and negatively affects output. This negative impact gradually turns into a positive effect in the long run. Non-financial corporation debt has a negative short- to medium-run impact but can have a small positive effect in the long run due to the prevalence of tradable industries. Public debt initially has a short-run negative impact, but then gradually becomes positive. Overall, the findings have implications for macroeconomic policies and the importance of monitoring financial stability.

Details

Modeling Economic Growth in Contemporary Czechia
Type: Book
ISBN: 978-1-83753-841-6

Keywords

Article
Publication date: 1 March 2024

Hon Chung Hui

The purpose of this paper is to examine the effects of financialisation on the changing structure of housing supply in Malaysia. The share of newly launched sub-MYR250,000 houses…

Abstract

Purpose

The purpose of this paper is to examine the effects of financialisation on the changing structure of housing supply in Malaysia. The share of newly launched sub-MYR250,000 houses has been decreasing continuously in the past decade. This implies that housing developers are launching more expensive houses. The greater focus on higher cost housing could be attributed to inflation. But while input cost is rising, the housing sector has also become increasingly financialised. This claim can be supported by the rising share of mortgage and real estate loans in gross domestic product. Financialisation is a process in which the financial sector becomes more dominant relative to the real sector. The extent to which this process is responsible for the changing structure of housing supply in Malaysia is investigated.

Design/methodology/approach

A survey of the literature suggested that the decreasing the proportion of newly launched sub-MYR250,000 housing could be result of rising input cost, greater degree of financialisation and changing market concentration. Thus, long-run cointegrating equations were formulated and estimated. These equations linked housing share with financialisation, market structure and input cost. The quantitative and qualitative impact of financialisation on the structure of housing supply is of interest.

Findings

The analyses of secondary data suggested that financialisation and input cost did indeed contribute to the decrease in proportion of newly launched sub-MYR250,000 housing. However, the impact of market concentration on housing share was ambiguous. This conclusion survived several robustness checks.

Practical implications

The financialisation of the housing sector implies that developers are increasingly building for profits instead of accommodating the social objective of providing shelter. This result is unsettling because access to adequate housing is a human right. The transformation of housing from the concept of a shelter to a tradable, money-making asset could be a major contributor to the declining housing affordability in the country. Thus, efforts to improve affordability must take account of the effects of financialisation.

Originality/value

An empirical framework for assessing the changes in the structure of housing supply was developed. Existing studies tended to focus only on the volume of housing supply. It is a comprehensive study on changes in the structure of housing supply. Second, while existing studies on the financialisation of housing are mostly qualitative in methodology, this paper offers a quantitative assessment of the financialisation in the housing sector.

Details

International Journal of Housing Markets and Analysis, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1753-8270

Keywords

Article
Publication date: 27 March 2024

Toan Khanh Tran Pham and Quyen Hoang Thuy To Nguyen Le

The purpose of this study is to explore the relationship between government spending, public debt and the informal economy. In addition, this paper investigates the moderating…

Abstract

Purpose

The purpose of this study is to explore the relationship between government spending, public debt and the informal economy. In addition, this paper investigates the moderating role of public debt in government spending and the informal economy nexus.

Design/methodology/approach

By utilizing a data set spanning from 2000 to 2017 of 32 Asian economies, the study has employed the dynamic ordinary least squares (DOLS) and fully modified ordinary least squares (FMOLS). The study is also extended to consider the marginal effects of government spending on the informal economy at different degrees of public debt.

Findings

The results indicate that an increase in government spending and public debt leads to an expansion of the informal economy in the region. Interestingly, the positive effect of government spending on the informal economy will increase with a rise in public debt.

Originality/value

This study stresses the role of government spending and public debt on the informal economy in Asian nations. To the best of the authors' knowledge, this study pioneers to explore the moderating effect of public debt in the public spending-informal economy nexus.

Details

International Journal of Sociology and Social Policy, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0144-333X

Keywords

Book part
Publication date: 4 April 2024

Haoyu Gao, Ruixiang Jiang, Junbo Wang and Xiaoguang Yang

This chapter investigates the cost of public debt for firms using a comprehensive sample consisting of 17,368 industrial bond issues from 1970 to 2011. The empirical evidence…

Abstract

This chapter investigates the cost of public debt for firms using a comprehensive sample consisting of 17,368 industrial bond issues from 1970 to 2011. The empirical evidence shows that yield spreads for seasoned bond issues are significantly lower than those for initial bond issues. This seasoning effect is robust across different sample periods, subsamples, and model specifications. On average, the yield spreads for seasoned bond issues are around 50 bps lower than those for initial bond issues. This difference cannot be explained by other bond and firm characteristics. The seasoning effect is more pronounced for firms with higher levels of uncertainty, lower information disclosure quality, and longer time intervals between the first and subsequent issues. Our empirical findings provide supportive evidence for the extant theories that aim to rationalize the information role in determining the cost of capital.

Details

Advances in Pacific Basin Business, Economics and Finance
Type: Book
ISBN: 978-1-83753-865-2

Keywords

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