Pub Date : 2023-11-06DOI: 10.1108/jefas-01-2023-0021
Justin G. Davis, Miguel García-Cestona
Purpose As the influence of institutional investors over managerial decision-making grows, so does the importance of understanding the effect of institutional investor ownership (IO) on firm outcomes. The authors take a comprehensive approach to studying the effect of IO on earnings management (EM). Design/methodology/approach The authors study the relation between IO and EM using a sample of 59,503 listed U.S. firm-year observations from 1981–2019. The authors proxy EM with earnings surprises and with accrual-based and real activity measures. The authors test for nonlinear relations and analyze changes resulting from the passage of the Sarbanes–Oxley Act. Findings The findings support a positive IO-EM relation overall, but show that the relation is dynamic and heavily context-dependent with evidence of nonlinearity. The authors also find evidence that IO positively affects accrual-based EM and real activities EM negatively. Originality/value To the authors’ knowledge, this is the first study of the IO-EM relation to consider evidence of nonlinearity in the U.S. context, measuring changes to the relation over time, and with the use of several measures of EM.
{"title":"Institutional ownership, earnings management and earnings surprises: evidence from 39 years of U.S. data","authors":"Justin G. Davis, Miguel García-Cestona","doi":"10.1108/jefas-01-2023-0021","DOIUrl":"https://doi.org/10.1108/jefas-01-2023-0021","url":null,"abstract":"Purpose As the influence of institutional investors over managerial decision-making grows, so does the importance of understanding the effect of institutional investor ownership (IO) on firm outcomes. The authors take a comprehensive approach to studying the effect of IO on earnings management (EM). Design/methodology/approach The authors study the relation between IO and EM using a sample of 59,503 listed U.S. firm-year observations from 1981–2019. The authors proxy EM with earnings surprises and with accrual-based and real activity measures. The authors test for nonlinear relations and analyze changes resulting from the passage of the Sarbanes–Oxley Act. Findings The findings support a positive IO-EM relation overall, but show that the relation is dynamic and heavily context-dependent with evidence of nonlinearity. The authors also find evidence that IO positively affects accrual-based EM and real activities EM negatively. Originality/value To the authors’ knowledge, this is the first study of the IO-EM relation to consider evidence of nonlinearity in the U.S. context, measuring changes to the relation over time, and with the use of several measures of EM.","PeriodicalId":53491,"journal":{"name":"Journal of Economics, Finance and Administrative Science","volume":"85 3","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-11-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135585246","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-11-06DOI: 10.1108/jefas-12-2021-0257
Mohammad Tayeh, Rafe’ Mustafa, Adel Bino
Purpose This study investigated the impact of corporate ownership structure on agency costs in the insurance industry. Design/methodology/approach The study sample included 23 insurance companies listed on the Amman Stock Exchange (ASE) from 2010 to 2019. Panel regression was used to account for the firm- and time-specific unobservable variables and system-GMM estimation was used to address endogeneity concerns. Findings The results show that managerial ownership positively (negatively) affects selling, general and administrative (SG&A) expenses (assets turnover), implying that unmonitored managers engage in activities that serve their own interests rather than those of shareholders. The largest shareholder's ownership has no impact on agency costs, implying that the ownership of the largest shareholder is irrelevant. However, as the wedge between the percentage of capital owned by the largest shareholders and managers increases, SG&A expenses (efficiency ratio) decrease (increases), indicating that the existence of large non-management shareholders reduces agency costs. After accounting for the endogeneity problem, the impact of ownership structure on agency costs measured by asset turnover remains robust. Originality/value To the best of the authors' knowledge, this study is the first to provide unique evidence and useful insights into the determinants of agency costs from a frontier market in the Middle East and North Africa (MENA), with a focus on the insurance sector. Additionally, this study uses a new measure of separation between ownership and control by calculating the wedge between managers' and large shareholders' ownership.
{"title":"Ownership structure and agency costs: evidence from the insurance industry in Jordan","authors":"Mohammad Tayeh, Rafe’ Mustafa, Adel Bino","doi":"10.1108/jefas-12-2021-0257","DOIUrl":"https://doi.org/10.1108/jefas-12-2021-0257","url":null,"abstract":"Purpose This study investigated the impact of corporate ownership structure on agency costs in the insurance industry. Design/methodology/approach The study sample included 23 insurance companies listed on the Amman Stock Exchange (ASE) from 2010 to 2019. Panel regression was used to account for the firm- and time-specific unobservable variables and system-GMM estimation was used to address endogeneity concerns. Findings The results show that managerial ownership positively (negatively) affects selling, general and administrative (SG&A) expenses (assets turnover), implying that unmonitored managers engage in activities that serve their own interests rather than those of shareholders. The largest shareholder's ownership has no impact on agency costs, implying that the ownership of the largest shareholder is irrelevant. However, as the wedge between the percentage of capital owned by the largest shareholders and managers increases, SG&A expenses (efficiency ratio) decrease (increases), indicating that the existence of large non-management shareholders reduces agency costs. After accounting for the endogeneity problem, the impact of ownership structure on agency costs measured by asset turnover remains robust. Originality/value To the best of the authors' knowledge, this study is the first to provide unique evidence and useful insights into the determinants of agency costs from a frontier market in the Middle East and North Africa (MENA), with a focus on the insurance sector. Additionally, this study uses a new measure of separation between ownership and control by calculating the wedge between managers' and large shareholders' ownership.","PeriodicalId":53491,"journal":{"name":"Journal of Economics, Finance and Administrative Science","volume":"96 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-11-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135584441","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-11-03DOI: 10.1108/jefas-01-2022-0007
Bruno Uekane Okumura, Tabajara Pimenta Júnior, Márcia Mitie Durante Maemura, Luiz Eduardo Gaio, Rafael Confetti Gatsios
Purpose This study aims to investigate the occurrence of the decoy effect in stock investment decisions based on fundamental analysis. Design/methodology/approach In this study, the decoy effect was investigated by applying two questionnaires, one of them with the presence of a decoy alternative, to a set of 224 respondents with knowledge of business fundamentals, simulating investment decisions in stocks of companies listed on the Brazilian Stock Exchange. The data analysis was performed using the Fisher's exact test, Student's t -test and ANOVA. The research also aimed to detect a potential relationship between the variables gender, age, degree and professional experience with the type of decision made. Findings The results pointed to the occurrence of the decoy effect when analysing the general response data. However, such evidence was not confirmed when the sample was analysed by classes (gender, course, age and professional experience). There is no statistical evidence that the decoy effect influences classes. Originality/value The recent decoy effect literature is little explored in investment decision-making. This study is unique in examining the decoy effect in investment decisions in the Brazilian context.
{"title":"Behavioural finance: the decoy effect on stock investment decisions","authors":"Bruno Uekane Okumura, Tabajara Pimenta Júnior, Márcia Mitie Durante Maemura, Luiz Eduardo Gaio, Rafael Confetti Gatsios","doi":"10.1108/jefas-01-2022-0007","DOIUrl":"https://doi.org/10.1108/jefas-01-2022-0007","url":null,"abstract":"Purpose This study aims to investigate the occurrence of the decoy effect in stock investment decisions based on fundamental analysis. Design/methodology/approach In this study, the decoy effect was investigated by applying two questionnaires, one of them with the presence of a decoy alternative, to a set of 224 respondents with knowledge of business fundamentals, simulating investment decisions in stocks of companies listed on the Brazilian Stock Exchange. The data analysis was performed using the Fisher's exact test, Student's t -test and ANOVA. The research also aimed to detect a potential relationship between the variables gender, age, degree and professional experience with the type of decision made. Findings The results pointed to the occurrence of the decoy effect when analysing the general response data. However, such evidence was not confirmed when the sample was analysed by classes (gender, course, age and professional experience). There is no statistical evidence that the decoy effect influences classes. Originality/value The recent decoy effect literature is little explored in investment decision-making. This study is unique in examining the decoy effect in investment decisions in the Brazilian context.","PeriodicalId":53491,"journal":{"name":"Journal of Economics, Finance and Administrative Science","volume":"159 s331","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-11-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135775431","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The study investigates the causal flow between government tax revenue and economic growth in Ghana using time series data from 1970-2021. The study employs the Auto-Regressive Distributed Lag (ARDL) bounds test approach and Granger Causality test to investigate the long run and short run relationship between government tax revenue and economic growth. Findings of this study indicated that there is significant correlation between total tax revenue and economic growth with 87% speed of adjustment in the short run towards equilibrium level in the long run. Empirically, the analysis also indicates the evidence of long run equilibrium correlation. Thus, the Granger Causality test indicated positive and statistically significant unidirectional causal flow from tax revenue to economic growth. Based on the findings, the policy makers should consider the tax revenue-led growth policies for effective formulation and implementation to enhance the nature of the Ghanaian economy. Hence, to curb the persistent budget deficit, the outlook is that policymakers should employ efficient, ideal and buoyant tax system which would then bring substantial increase in gross tax revenue of the government leading to optimum mobilization of resources for higher economic growth in Ghana. This can only be sustained via efficient allocation of the tax revenue collected to productive sectors and similarly using the distributive principle through societal welfare maximization. Efficient tax regulation system has to be adopted to mitigate the issue of tax evasion, especially among firms and corporate entities. Also, tax rates should be frequently revised to avoid discouraging investments.
{"title":"Long-Run and Short-Run Causality between Government Tax Revenue and Economic Growth in Ghana","authors":"Godfred Nyamadi","doi":"10.12691/jfe-11-3-5","DOIUrl":"https://doi.org/10.12691/jfe-11-3-5","url":null,"abstract":"The study investigates the causal flow between government tax revenue and economic growth in Ghana using time series data from 1970-2021. The study employs the Auto-Regressive Distributed Lag (ARDL) bounds test approach and Granger Causality test to investigate the long run and short run relationship between government tax revenue and economic growth. Findings of this study indicated that there is significant correlation between total tax revenue and economic growth with 87% speed of adjustment in the short run towards equilibrium level in the long run. Empirically, the analysis also indicates the evidence of long run equilibrium correlation. Thus, the Granger Causality test indicated positive and statistically significant unidirectional causal flow from tax revenue to economic growth. Based on the findings, the policy makers should consider the tax revenue-led growth policies for effective formulation and implementation to enhance the nature of the Ghanaian economy. Hence, to curb the persistent budget deficit, the outlook is that policymakers should employ efficient, ideal and buoyant tax system which would then bring substantial increase in gross tax revenue of the government leading to optimum mobilization of resources for higher economic growth in Ghana. This can only be sustained via efficient allocation of the tax revenue collected to productive sectors and similarly using the distributive principle through societal welfare maximization. Efficient tax regulation system has to be adopted to mitigate the issue of tax evasion, especially among firms and corporate entities. Also, tax rates should be frequently revised to avoid discouraging investments.","PeriodicalId":53491,"journal":{"name":"Journal of Economics, Finance and Administrative Science","volume":"4 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-09-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135109952","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-09-07DOI: 10.1108/jefas-04-2023-332
Nestor U. Salcedo, Samuel Mongrut
{"title":"Editorial: 60th anniversary of the foundation of ESAN and first special section on business economics in Ibero-America","authors":"Nestor U. Salcedo, Samuel Mongrut","doi":"10.1108/jefas-04-2023-332","DOIUrl":"https://doi.org/10.1108/jefas-04-2023-332","url":null,"abstract":"","PeriodicalId":53491,"journal":{"name":"Journal of Economics, Finance and Administrative Science","volume":"55 1","pages":""},"PeriodicalIF":2.4,"publicationDate":"2023-09-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"83830091","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Corporate Governance, Institutional Quality, and Firm Performance: A Comprehensive Analysis of the Oil & Gas Sector","authors":"Akinbola Olawale, Ezeala Obinna","doi":"10.12691/jfe-11-3-4","DOIUrl":"https://doi.org/10.12691/jfe-11-3-4","url":null,"abstract":"","PeriodicalId":53491,"journal":{"name":"Journal of Economics, Finance and Administrative Science","volume":"144 1","pages":""},"PeriodicalIF":2.4,"publicationDate":"2023-08-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"79620872","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"An Empirical Analysis of Capital Structure, Liquidity and Banking Sector Performance in Nigeria (2011-2021)","authors":"Akinbola Olawale, Ezeala Obinna","doi":"10.12691/jfe-11-3-3","DOIUrl":"https://doi.org/10.12691/jfe-11-3-3","url":null,"abstract":"","PeriodicalId":53491,"journal":{"name":"Journal of Economics, Finance and Administrative Science","volume":"37 1","pages":""},"PeriodicalIF":2.4,"publicationDate":"2023-08-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"87289836","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"The Determining Factors of Financial Performance of Tourism Companies from Romania – Comparisons with the Pandemic Period","authors":"Adriana-Nicoleta Cârlan (Tămaș)","doi":"10.12691/jfe-11-3-2","DOIUrl":"https://doi.org/10.12691/jfe-11-3-2","url":null,"abstract":"","PeriodicalId":53491,"journal":{"name":"Journal of Economics, Finance and Administrative Science","volume":"os-16 1","pages":""},"PeriodicalIF":2.4,"publicationDate":"2023-08-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"87889305","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-07-19DOI: 10.1108/jefas-08-2020-0302
José Antonio Romero Tellaeche, Rodrigo Aliphat
PurposeThis study estimated total import demand elasticities concerning income, import prices and domestic prices. A high propensity to import constitutes a significant obstacle to economic growth in Mexico since the benefits of increased exports or any other aggregate demand expansion leak to the rest of the world.Design/methodology/approachThis paper estimated a Vector Error Correction Model of the total import demand elasticities concerning income, import prices and domestic prices. Total imports are a dependent variable, while Gross Domestic Product (GDP) and import and domestic prices are the independent variables.FindingsThe principal finding is that an increase of 1 peso in the Mexican GDP leads to a rise of 0.50 pesos in Mexican imports; the elasticity of import demand for prices is low. Still, the elasticity of import demand for domestic prices is 2.14 times greater than that for import prices. These results have significant economic policy implications, such as promoting the expansion of the domestic market and the national content of exports.Research limitations/implicationsIt is tempting to estimate the import demand function for the entire 1993–2019 period since such data is available. But by doing so, the authors would overestimate the propensity to import, given that from 1993 to 2019, the proportion of imports as a percentage of GDP went from 11.37 in 1993 to 29.66 in 2019. Therefore, it makes more sense to estimate the import demand function from 2000 to 2019, a period with a stable proportion of imports to GDP.Originality/valueA high level of imports in developing countries means that much of their aggregate demand is filtered abroad. Therefore, the low impact of its exports on GDP is related to the Mexican economy’s high imports. The authors calculate this relationship with new data and methods.
{"title":"Estimation of the aggregate import demand function for Mexico: a cointegration analysis","authors":"José Antonio Romero Tellaeche, Rodrigo Aliphat","doi":"10.1108/jefas-08-2020-0302","DOIUrl":"https://doi.org/10.1108/jefas-08-2020-0302","url":null,"abstract":"PurposeThis study estimated total import demand elasticities concerning income, import prices and domestic prices. A high propensity to import constitutes a significant obstacle to economic growth in Mexico since the benefits of increased exports or any other aggregate demand expansion leak to the rest of the world.Design/methodology/approachThis paper estimated a Vector Error Correction Model of the total import demand elasticities concerning income, import prices and domestic prices. Total imports are a dependent variable, while Gross Domestic Product (GDP) and import and domestic prices are the independent variables.FindingsThe principal finding is that an increase of 1 peso in the Mexican GDP leads to a rise of 0.50 pesos in Mexican imports; the elasticity of import demand for prices is low. Still, the elasticity of import demand for domestic prices is 2.14 times greater than that for import prices. These results have significant economic policy implications, such as promoting the expansion of the domestic market and the national content of exports.Research limitations/implicationsIt is tempting to estimate the import demand function for the entire 1993–2019 period since such data is available. But by doing so, the authors would overestimate the propensity to import, given that from 1993 to 2019, the proportion of imports as a percentage of GDP went from 11.37 in 1993 to 29.66 in 2019. Therefore, it makes more sense to estimate the import demand function from 2000 to 2019, a period with a stable proportion of imports to GDP.Originality/valueA high level of imports in developing countries means that much of their aggregate demand is filtered abroad. Therefore, the low impact of its exports on GDP is related to the Mexican economy’s high imports. The authors calculate this relationship with new data and methods.","PeriodicalId":53491,"journal":{"name":"Journal of Economics, Finance and Administrative Science","volume":"44 1","pages":""},"PeriodicalIF":2.4,"publicationDate":"2023-07-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"82550964","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Analysis of the Relationship between International Trade and Carbon Border Adjustment Mechanism","authors":"Yen-hui Kuo, Shuching Chou","doi":"10.12691/jfe-11-3-1","DOIUrl":"https://doi.org/10.12691/jfe-11-3-1","url":null,"abstract":"","PeriodicalId":53491,"journal":{"name":"Journal of Economics, Finance and Administrative Science","volume":"29 1","pages":""},"PeriodicalIF":2.4,"publicationDate":"2023-07-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"85764263","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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