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Journal of Asian Business and Economic Studies |
Vol. 27(2)
, August 2020, Page 135-151
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The mediating role of board size, philanthropy and working capital management between basic corporate governance factors and firm's performance |
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Muhammad Naeem Shahid & Aamir Abbas & Khalid Latif & Ayesha Attique & Safwan Khalid |
DOI: 10.1108/JABES-07-2018-0050
Abstract
"Purpose – This study aims to identify the impact of corporate governance on performance of sugar mills. In order to study this relation, a model is constructed in which ownership structure and independent directors are taken as independent variables. Whereas firm performance is analyzed by using proxy variables such as return on asset (ROA), return on equity (ROE) and sales growth. Moreover, size of board, working capital management (WCM) and philanthropy are taken as mediating variables between governance variables and firm performance.
Design/methodology/approach – The data of 32 sugar mills listed at Pakistan Stock Exchange for the period of four years (i.e. 2014–2017) is used for this research. Moreover, to investigate the model, generalized least squares statistical method is used to measure the relationship between variables.
Findings – The results revealed that there is significant but positive relationship between independent directors and ROA while ownership structure and ROE have significant but negative relationship. Thus, the board of directors should make it sure that all stakeholders and organizations should increase the nonfamily ownership in firms for better corporate performance. Moreover, philanthropy and WCM mediate the relationship between corporate governance and firms' performance.
Practical/implications – This research work will be helpful in the corporate governance, and further researchers can conduct their study by considering executive/nonexecutive director and institutional owners as governance variables.
Originality/value – This paper fulfills an identified need to study how Corporate Governance effect the performance of firm."
Keywords
Corporate governance, Firm’s performance, ROA, ROE, Stakeholder, Ownership, Philanthropy
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Corporate diversification and firms' value in emerging economy: The role of growth opportunity
2020, Journal of Asian Business and Economic Studies
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Abstract
"Purpose – This paper examines empirically how growth opportunities determine the relationship between corporate diversification and firm's value in an emerging economy.
Design/methodology/approach – This study employs annual data of Indonesian manufacturing firm's spanning five years. To test the potential nonlinear relationship between diversification and value, nonlinear regression model is employed. Baron and Kenny’s (1986) procedure is also employed to test the mediation role of the growth opportunities in the relation between diversification strategy and firm's value. This study also performs further robustness analysis on mediating role of growth opportunities on the relationship between diversification strategy and corporate value using path analysis approach.
Findings – The analyses reveal the U-shaped diversification and value relationship; this result suggests that the effect of diversification on value will vary across firms, the negative effect of diversification strategy on firm's value may reverse at higher levels of diversification. Further analysis indicates that such relationship is fully mediated by firm's growth opportunities.
Practical implications – Given the results, firms that are considering implementing diversification strategy should seek the optimal level of diversification to gain diversification premium. Furthermore, the manager should observe the best opportunities available for the firm before undertaking the diversification strategies.
Originality/value – This paper contributes to the existing literature on diversification strategy by extending the insight of this research area of a large emerging economy, on which prior studies have not reached conclusive results."
Effects of supply chain collaboration on customer loyalty for household electronic appliances in Vietnam
2023, Journal of Asian Business and Economic Studies
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Abstract
Purpose
In an era of global competition, firms need to collaborate for long-term benefits. Researchers have investigated the linkages between supply chain collaboration (SCC), customer satisfaction and loyalty. However, little attention has been paid to these linkages in the home electronics sector. This study attempts to investigate the impacts of SCC on firms' competitive advantage, customer satisfaction and customer loyalty in the home electronics sector of Vietnam.
Design/methodology/approach
Besides aggregation of literature review, the authors conducted an experimental study with a sample of 300 customers who bought household electronic appliances in the first six months of 2021 in Hanoi city, Vietnam. In this study, structural equation modelling (SEM) was used to analyse the hypotheses.
Findings
The findings indicate that SCC has a positive impact on competitive advantage, increasing customer satisfaction and loyalty in the home electronics sector. Evidence also revealed that competitive advantage can be enhanced through information sharing, decision synchronisation and incentive alignment.
Originality/value
This study can be applied to foster a more effective collaboration approach amongst supply chain members in the household electronic appliances sector, which, in turn, will increase competitiveness, customer satisfaction and loyalty.
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.
Corporate governance and remuneration: a bibliometric analysis
2021, Journal of Asian Business and Economic Studies
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Abstract
Purpose
This study aims to pinpoint gaps in the literature on corporate governance and remuneration by producing a comprehensive bibliometric review for the period 1990–2020.
Design/methodology/approach
Bibliometric analysis is the quantitative study of the bibliographic material in a specific research field. It allows an analyst to classify that material by paper, journal, author, indexation, institution or country, among other possibilities. This study reviews a total of 298 Web of Science–indexed journal articles on corporate governance and top-management remuneration schemes.
Findings
The authors find five distinct research strands: (1) firm performance and remuneration of top management, (2) the remuneration and independence of boards of directors and the efficiency of boards of directors as a governance system, (3) outside-director remuneration and the efficiency of outside directors as a monitoring system, (4) director remuneration and the corporate governance of companies and (5) the role of ownership structure and top managers' compensation schemes as corporate-governance tools. The authors identify gaps in the literature and avenues for future research for each of these strands.
Practical implications
The authors’ findings have implications for board diversity (e.g. gender diversity), remuneration policy for top-level managers and governance issues (independent directors, separation of ownership with control). This study is the only one to summarize the key topics on which top research has been focused and can be broadly used for corporate governance management perspective.
Originality/value
This paper provides an overview of how the literature on corporate governance and remuneration has developed and a synopsis of the most influential and most productive authors, countries and journal sources. It creates an opportunity for other researchers to focus on this area. This study will also serve as a foundation for future meta-analyses.
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