International Journal of Business and Emerging Markets (12 papers in press)
The effect of managerial choices around liquidity, leverage, and company size on corporate bond yield: A case study from Indonesia
by Hari Gursida, Yohanes Indrayono
Abstract: This study uses structural equation modelling (SEM) to chart the effects of managerial choices concerning capital structure on bond yield, captured by company size, leverage, and liquidity. The results are based on 22 Indonesian companies, over the period 2012 to 2016. Only company size had a statistically significant direct effect on bond yield. When company size was held as a moderator variable, both leverage and liquidity displayed positive, indirect effects. However, different accounting definitions of leverage and liquidity may alter the direction of the estimated effect, thereby highlighting the alerts of basing financing strategies solely on accounting metrics. Taken together, the results of this study contribute to our understanding of the effects that managerial choices in terms of financing strategies on bond yield.
Keywords: liquidity; leverage; company size; bond yield; Indonesia.
Business across borders: perceptions of political risk in internationalized Brazilian companies
by Ronaldo De Oliveira Santos Jhunior, Gustavo Abib, Fabricio Stocker
Abstract: Brazil is an emerging country in terms of political, economic, and social development. Its companies are usually in a scenario of instability, especially since mid-2010. In this context, the paper provides unpublished evidence on political risk perception in companies of diverse branches. The purpose of this study is to analyse the perception of political risk in business abroad by managers of internationalised Brazilian companies. Qualitative and descriptive research was conducted in a multiple case study through document collection and semi-structured interviews. The internationalisation processes of six small and medium-sized Brazilian companies and their managers political risk perception were investigated. The findings reveal the political risk factors inherent to different environments for internationalised companies in a context of political and economic uncertainties, namely, the internal environment, the external environment and the environment related to the organisation itself.
Keywords: risk perception; political risk; international business; internationalisation process.
Firm nominal value and the role of some accounting information: an investigation of Indonesian listed firms
by Yohanes Indrayono
Abstract: This study introduces the firms nominal value rather than using market value only in the stock market which should be considered by investors and firm management when they make decisions. This research work examines the accounting informations effect, which comprises the earnings, sales, book value per share, and operating profit of firms nominal value of the stock. This study uses regression analysis with 184 non-financial Indonesian listed sample firms from thirteen industries for the period 20072016. The result is that the firms accounting information, namely the earnings, sales, book value per share and operating profit has a significant influence on the firms nominal worth. In order to make a better decision in stock markets, it is suggested that investors and firm management should use the firms nominal value and certain accounting parameter, which include the earnings worth per share, book value, sales and operating profit to predict the stock market price.
Keywords: firm nominal value; earnings per share; book value; sales; operating profit.
Exchange Rate Regime and Economic Growth in Nigeria: Evidence from Sectoral Level
by JAMES T. DADA
Abstract: The purpose of this study is to examine the effect of exchange rate regime on sectoral output in Nigeria from 1970 to 2017. The study centres on six sectors namely: mining and quarrying, telecommunication, agricultural, manufacturing, building and construction and retail and business trade. Dummy variable is used to capture the effect of exchange rate regime, while generalise method of moments (GMM) is used as the estimation technique. The findings from the study reveal that both fixed and flexible exchange rates have positive and significant effects on sectoral output in Nigeria. In magnitude, the result shows that fixed exchange rate stimulates output than flexible exchange rate in Nigeria. The study concludes that exchange rate regime matters for growth in developing countries.
Keywords: exchange rate; exchange rate regime; economic growth; sectoral output; generalise method of moments; GMM.
Efficiency classification among MENA region stock markets indexes: Insights from multifractal spectrum and MSM forecasts
by Monia Antar
Abstract: This paper proposes an efficiency ranking of the stock-market indexes in the MENA region based on the scale-invariant characteristics of stock returns. The methodology involves the computation of the multifractal spectrum width. We also estimate a Markov switching multifractal (MSM) model and use it to forecast stock-return volatility. The value of the loss function associated with the volatility forecasts provides an alternative metric to gauge the efficiency of the stock market. We find that the ranking based on the MSM model forecasts shows some inconsistencies with that based on the spectrum width, suggesting that the MSM model does not perform as well in predicting stock-market volatility in emerging markets as it does in developed countries.
Keywords: multifractal spectrum width; efficiency; volatility prediction; Markov switching multifractal; MSM simulation; MENA emerging markets.
Financial Pressure and Related Party Transactions on Financial Statements Fraud: Fraud Triangle Perspective
by Ataina Hudayati, Titis Khairun Nisa, Zuraidah Mohd-Sanusi
Abstract: This study aims to analyse the effect of financial pressure (financial stability, personal financial need and financial targets) and related party transactions (RPTs) on financial statement fraud. Respondents of the study are manufacturing companies listed on the Indonesia Stock Exchange for the years 2011 to 2015. By using fixed effect panel regressions, the survey results show that financial stability as measured by sales divided by total asset and RPTs negatively affect financial statement fraud. In addition, financial targets have a significant positive effect on financial statement fraud. However, this study shows that personal financial need does not affect the financial statement fraud. This study provides several important conclusions. First, companies are in a stable financial condition, enabling them to reduce their financial report fraud. Second, the findings suggest the possibility of a negative impact on the quality of financial statements due to the use of financial performance targets such as ROA. Third, the result of the study which states that RPTs negatively affect fraudulent financial statements implies that in Indonesia with reference to manufacturing companies, RPTs do not reflect negative behaviour or even vice versa.
Keywords: pressure; related party transactions; RPTs; financial statement fraud; FSF.
Influence of institutional investor heterogeneity on stock liquidity and its underlying liquidity channels
by J.I.A. J.I.A. HING, Y.E.E. PENG CHOW
Abstract: This paper investigates the influence of institutional investor heterogeneity (i.e., active and passive institutional investors) and the underlying liquidity channels (i.e., information asymmetry and trading activity channels) through which these institutional investor groups affect stock liquidity. Drawing on a sample of listed firms in Malaysia from 2012 to 2018, this paper employs the pooled ordinary least squares method to conduct the empirical tests. Initially, the empirical results based on the linear model show that the association between institutional investor shareholdings and stock liquidity is solely attributed to the active institutional investors. Further tests using the quadratic model reveal that a non-monotonic relationship arises between shareholdings by both active and passive institutional investors and stock liquidity due to competing liquidity channels. In particular, passive institutional investors improve stock liquidity due to lower level of information asymmetry, while active institutional investors improve stock liquidity by enhancing the level of trading activity.
Keywords: institutional investor heterogeneity; active institutional investors; passive institutional investors; liquidity channels; information asymmetry; trading activity; stock liquidity.
Cultural Values, Intensity of Religiosity and Consumer Attitudes towards Promotion of Funeral Products: Insights from Botswana
by Tshegofatso A. Monkge, Rina Makgosa
Abstract: This paper investigates the relative importance of intensity of religiosity and cultural values on consumer attitudes towards promotion of funeral products. Data was collected from a sample of 457 urban Christian consumers in Gaborone, Botswana through a structured questionnaire. The results reveal that consumers with a high level of intensity of religiosity exhibit positive and significant evaluations about the promotion of funeral products. Further results relating to cultural values demonstrate that those who attach more value to power and tradition express negative beliefs and evaluations about the promotion of funeral products. However, consumers who attach more importance to universalism and security display positive beliefs and evaluations with regard to promotion of funeral products. This study provides insight into the predictive ability of intensity of religiosity and cultural values using an under-studied product and context of a developing country, Botswana. Additional insights revealed that older, highly educated and employed consumers tend to project positive attitudes towards the promotion of funeral products than their counterparts. The paper also offers implications for the development of promotional strategies associated with funeral products drawing insights from intensity of religiosity, cultural values, and demographic characteristics.
Keywords: Botswana; controversial products; consumer attitudes; cultural values; funeral products; intensity of religiosity.
Linking organizational justice and work engagement: Mediating role of trust
by Muhammed Esat Erdogan, Dilsah Ertop, Yigit Okan
Abstract: This study aims to focus on the relationship between organisational justice, trust, and work engagement by testing the impact of organisational justice on work engagement through the mediating role of trust. Data of this study were collected from 396 employees working in different sectors in Turkey. Results showed that: 1) organisational justice has impact on the work engagement; 2) trust has impact on the work engagement; 3) organisational justice influences the level of trust; 4) trust has a partial mediation role between organisational justice and work engagement. The results bring theoretical and practical implications for organisation theory and behaviour researches by broadening the scope of research from understanding basic dimensions to designing an extended framework that connects justice, trust and engagement. Accordingly, organisations need to reconsider or revise their managerial approaches in order to achieve increased organisational justice, trust, and work engagement.
Keywords: justice; organisational justice; trust; engagement; work engagement.
The effect of demographic characteristics on considerations of future consequences and compulsive buying and their interlinks
by Jalal Ahamed
Abstract: This study aims to examine the impacts of demographic variables (gender, age, and income) on consideration of future consequences (CFCs) and compulsive buying tendencies (CBT). It also investigates if and to what extent the demographic characteristics might influence the effect of CFC on CBT. Data for this study were collected from 394 adult respondents using a self-administered survey. The structural equation model in AMOS reveals that consideration of future (CFC-F) has a significant negative effect on CBT, whereas consideration of immediate (CFC-I) has no significant effect. In addition, the multi-group analysis found that the influence of CFC on CBT does not change across genders, yet it varies with income and age differences. These novel insights into consumer behaviour have implications for both research and practice.
Keywords: Bangladesh; consideration of future; CFC-F; consideration of immediate; CFC-I; compulsive buying tendency; CBT; multi-group analysis.
ELECTORAL UNCERTAINTY AND THE VOLATILITY OF INTERNATIONAL CAPITAL FLOWS IN NIGERIA
by Ladi Balakeffi, Victor U. Oboh, ADEGOKE ADELEKE, Shamsudeen Z. Imam, Grace G. Bikefe
Abstract: This study examines the effects of changing political environment on capital flows and investment decision making especially in developing economies like Nigeria. It utilises structural vector autoregressive (SVAR) and Granger causality test to analyse the objectives of the study. The results indicate that shocks from political events have negative impact on the exchange rate with resultant rising positive treasury bill rates. The implication of these results is that attractiveness of yields in the Nigerian financial market appears to outweigh the political uncertainty consideration by investors during the electioneering periods. Though, these political events have depreciating effects on the foreign exchange market. The study, therefore, recommends that a government that is desirous of achieving optimal capital flows must adopt appropriate mix of fiscal, structural and monetary policies, before, during and after the electioneering period.
Keywords: electoral uncertainty; capital flows; structural vector autocorrelation; SVAR; Granger causality; Nigeria.
On the Relation between Credit Market Disruption and Corporate Social Responsibility
by Ibrahim Siraj, Mohammad Kabir Hassan, Austin Dejan, Arja Turunen-Red
Abstract: We exploit the staggered interstate banking and branching deregulation in the US to examine the causal impact of bank competition on corporate socially responsible (CSR) activities. Using financial and CSR practice information of 3,436 unique US firms for 1991 to 2005, we find strong and robust evidence that bank deregulation significantly and negatively affects CSR activities. Firms operating in high margin industries with low market power and financially constrained firms in external finance dependent industries particularly show a negative relation between deregulation and CSR activities. Additionally, firms with excessive leverage and firms that are more exposed to out of state banks tend to experience a substantial decrease in CSR activities. Overall, our findings imply that banking deregulation has led non-financial firms to be more concerned about protecting shareholder interests at other stakeholders expense. Our results are robust to the use of alternative empirical specifications and CSR measures.
Keywords: banking competition; product market competition; social responsibility; access to finance.