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Journal of Asian Business and Economic Studies |
Vol. 26(01)
, April 2019, Page 34-55
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Empirical study on the effective factors of social responsibility disclosure of Iranian companies |
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Mahdi Salehi & Hossein Tarighi & Malihe Rezanezhad |
DOI: 10.1108/JABES-06-2018-0028
Abstract
Purpose – The purpose of this paper is twofold: first, to investigate the relationship between some characteristics of corporations including firm size, financial leverage, profitability, firm age and the type of industry with social responsibility disclosure of firms listed on Tehran Stock Exchange (TSE); and second, to study the association between the level of corporate social responsibility disclosure (CSRD) and some of the audit variables such as audit fees, audit tenure and audit firm’ size.
Design/methodology/approach – The study population consists of 125 firms listed on the TSE during the years 2010–2015. Following Salehi et al. (2017), content analysis is used to measure the level of social responsibility disclosure, and hypotheses are performed using multiple regression analysis and R software.
Findings – The results represented that there is a positive significant relationship between a firm size and a firm age with the level of CSRD. However, there is a negative significant association between financial leverage and profitability with the level of CSRD. Given that CSRD is different among various industries and the type of industry can be an influential factor in CSRD, an industry type’ variable in the fourth hypothesis is of a type of index variable and has eight levels, of which the first level is ranked as the base level. Our findings showed that the level of CSRD at industries of machinery and appliances, production of metal products, food and beverage products, and textiles is lower than the baseline level (pharmacy). Nevertheless, companies in the fifth industry (mineral products) have a higher level of CSRD in comparison with the pharmacy industry. Moreover, the authors find that there is a significant positive connection between audit fees and CSRD. This implies that Iranian managers in an inflationary economy probably manage earnings when they provide more CSRDs, which leads to increase in the audit risk and audit fees.
Practical implications – Needless to say, the findings of this paper will have practical implications for investors, auditors and other users of financial statements. First of all, this study will aware them of the fact that when a country faces economic sanctions and most of its companies are in financial strain investors should not consider the firms engaging in corporate social responsibility activities to behave morally and provide transparent financial reports. Second, the results will convince auditors to be conservative toward the firms that are financially distressed, for audit risk of them will be high. Thus, policymakers should be cautious concerning directors’ opportunistic actions and increase monitoring to enforce social obedience.
Originality/value – The turning point of this research is related to the time period of research related to firms that have faced severe financial problems due to economic sanctions. In fact, the study revealed another aspect of CSRD that could have negative consequences when managers are in financial strain and take opportunistic actions.
Keywords
CSR disclosure, Firm size, Audit fees, Financial leverage
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Which formula for corporate risk-taking around the world? Exploring happiness as the “black box”
2023, Journal of Asian Business and Economic Studies
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Abstract
Purpose
This paper examines how the degree of happiness affects corporate risk-taking and the moderating influence of family ownership of firms on this relationship.
Design/methodology/approach
The authors use an international sample of 17,654 firm-year observations from 24 countries around the world from 2008 to 2016.
Findings
Using the happiness index from the World Happiness Report developed by the United Nations Sustainable Development Solutions Network, the authors show that a country's overall happiness is negatively correlated with risk-taking behavior by firms. The findings are robust to an alternative measure of risk-taking by firms. Further analyses document that the negative influence of happiness on firm risk-taking is more pronounced for family-owned firms.
Practical implications
The paper is consistent with the notion that happier people are likely to be more risk-averse in making financial decisions, which, in turn, reduces corporate risk-taking.
Originality/value
This study contributes to the broad literature on the determinants of corporate risk-taking and the growing literature on the role of sentiment on investment decisions. The authors contribute to the current debate about family-owned firms by demonstrating that the presence of family trust strengthens the negative influence of happiness on corporate risk-taking, a topic that has been unexplored in previous studies.
Hedging, managerial ownership and firm value
2021, Journal of Asian Business and Economic Studies
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Abstract
Purpose
This study investigates the impact of derivatives as risk management strategy on the value of Malaysian firms. This study also examines the interaction effect between derivatives and managerial ownership on firm value.
Design/methodology/approach
The study examines 200 nonfinancial firms engaged in derivatives for the period 2012–2017 using the generalized method of moments (GMM) to establish the influence of derivatives and managerial ownership on firm value. The study refers to two related theories (hedging theory and managerial aversion theory) to explain its findings. Firm value is measured using Tobin's Q with return on assets (ROA) and return on equity (ROE) as robustness checks.
Findings
The study found evidence on the positive influence of derivatives on firm value as proposed by the hedging theory. However, the study concludes that managers less hedge when they owned more shares based on the negative interaction between derivatives and managerial ownership on firm value. Hedging decision among managers in Malaysian firms therefore does not subscribe to the managerial aversion theory.
Research limitations/implications
This study focuses on the derivatives (foreign currency derivatives, interest rate derivatives and commodity derivatives) and managerial ownership that is deemed relevant and important to the Malaysian firms. Other forms of ownership such as state-/foreign owned and institutional ownership are not covered in this study.
Practical implications
This study has important implications to managers and investors. First is on the importance of risk management using derivatives to increase firm value, second, the influence of derivatives and managerial ownership on firm value and finally, the quality reporting on derivatives exposure by firms in line with the required accounting standard.
Originality/value
There is limited empirical evidence on the impact of derivatives on firm value as well as the influence of managerial ownership on hedging decisions of Malaysian firms. This study analyzes the influence of derivatives on firm value during the period in which reporting on derivatives in financial reports is made mandatory by the Malaysian regulator, hence avoiding data inaccuracy unlike the previous studies on Malaysia. This study therefore fills the gap in the literature in relation to the risk management strategies using derivatives in Malaysia.
Earnings quality and crash risk in China: an integrated analysis
2021, Journal of Asian Business and Economic Studies
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Abstract
Purpose - The authors provide a comprehensive empirical examination on the impact of earnings quality on stock price crash risk in China.
Design/methodology/approach - The authors acknowledge and distinguish two-dimensional proxies for earnings quality – accounting-based (earnings management degree) and market-based (earnings transparency) known in accounting and finance literature.
Findings - The authors find that both generally indicate that better earnings quality is associated with less crashes. However, extremely high earnings transparency interacted with insider trading profit can also actually exacerbate stock price crashes.
Originality/value - This study is the first to highlight the pertinence of accounting-based measures to proxy for earnings quality in a fast-growing emerging market environment such as China.
Does information asymmetry lead to higher debt financing? Evidence from China during the NTS Reform period
2020, Journal of Asian Business and Economic Studies
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Abstract
Purpose – The purpose of this paper is to test an implication of the pecking order theory to explain capital structure decisions among Chinese listed companies during the 2005-2007 NTS Reform transition period.
Design/methodology/approach – The authors utilize direct proxies for information asymmetry based on microstructure models including Probability of the arrival of informed trades (PIN), Adverse selection component of the bid-ask spread (λ), Illiquidity ratio (ILLIQ) and liquidity ratio, and Information asymmetry index (InfoAsy) to examine their relation with firms’ debt financing.
Findings – Consistent with the prediction of Pecking Order Theory, the authors find that companies for which stock investors are challenged with more severe informational disadvantages are associated with higher degree of leverage use.
Originality/value – The study provides a more direct test on the positive relation between information asymmetry and financial leverage of Chinese firms. In contrast to previous findings by Chen (2004), the results suggest that capital structure choices among Chinese firms progressively conform to conventional finance theories (e.g. Pecking Order Theory) with the decline of non-tradable shares.
Corporate governance, pyramid ownership, and firm value: Evidence from Vietnam
2020, Journal of Asian Business and Economic Studies
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Abstract
This paper examines the relation among corporate governance practices, pyramid ownership structure, and firm value by using a sample of Vietnamese listed firms. Using a sample of 103 non-financial firms listed on HOSE for the period from 2012 to 2014, and employing two-stage least square regression (2SLS) to deal with potential endogeneity, we find that some indicators, commonly adopted as a key components of corporate governance, such as size or independence of board of directors, are imperfect proxies for corporate governance practices. Our results indicate that it is better to employ a corporate governance index (CGI), including 117 criteria developed by Connelly, Limpaphayom, and Nagarajan (2012) since it allows for more comprehensive estimation of corporate governance. More interestingly, our results show that the pyramid ownership plays an important role in the effect of corporate governance on firm value. The results are consistent regardless of whether companies have high or low family ownership.
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