The recent issue of the journal Corporate Ownership and Control is devoted to the issues of foreign investors, tax avoidance, state owned enterprises, financing structures, stock returns, credit risks, retail banking etc.
More detailed issues are given below:
Natalia Simoes and Andre Carvalhal aim to identify the characteristics of Brazilian listed companies that have foreign investors. The purpose is to examine whether such companies have higher performance and valuation and better corporate governance. Researchers study 215 listed companies from 2001 to 2012, and find that there is a significant relationship between the presence of foreign investors and higher firm valuation, higher profitability and better corporate governance.
Yudha Aryo Sudibyo and Sun Jianfu investigated the relationship between political connections and tax avoidance behaviour in Indonesian listed-firms in 2007-2013 year period. Some firms created links to government for obtaining benefits in various variables such import licensing, taxes, and supply-funds. The authors have manually managed to identify politically connected-firms from the annual reports and measure tax avoidance by using Cash Effective Tax Rate (CETR) as the proxy. Their observation indicated that politically connected-firms paid lower corporate income tax than non-politically connected-firms.
Innocent Bayai and Sylvanus Ikhide probe the link between financing structure and outreach noting the commercialization trend for selected Southern Africa Development Community (SADC) MFIs. Assuming MIX panel data on 60 MFIs, this study tackles outreach depth and breadth – a diversion from an outreach depth-centered study which employed Planet Rating data on 74 Sub-Saharan African MFIs. Robust panel methods show that, both outreach depth and breadth are affected by the same variables, though in a different way. Equity, deposits and ‘new’ MFIs significantly further depth whilst borrowings limit depth. Breadth is constrained by borrowings, equity and ‘new’ MFIs while deposits expand the breadth. The authors suggest that, permitting MFIs to collect deposits go a long way in spurring outreach depth and breadth.
Hai Yen Pham, Richard Chung, Eduardo Roca and Ben-Hsien Bao Do investigate into the relation between the firm’s technical efficiency change and subsequent stock returns. The authors employ a stochastic frontier analysis to evaluate a firm’s efficiency for a large panel of non-financial companies in Australia from January 1990 to October 2012. The results show that over the sample period, the estimated mean improvement in firm’s efficiency is 3% per year. They find that an equally-weighted (value-weighted) portfolio of stocks with the top tertile level change in efficiency outperforms an equally-weighted (value-weighted) portfolio of stocks with the bottom tertile level change in efficiency, by an average of 11% (7%) per annum during the sample period.
Khamis H. Al-Yahyaee and Ahmed Al-Hadi examine whether the voluntary formation of a Risk Committee (RC) compromises the effectiveness of other monitoring duties carried out by the board members. Researchers argue that adding more monitoring committees increases the board’s internal busyness, which reduces the effectiveness of monitoring by the Audit Committee (AC). Using a sample of financial firms over the period 2007 to 2011 from the Gulf Cooperation Countries (GCC), they find that voluntarily adopting a risk committee impairs the effectiveness of the audit committee, which in turn reduces financial reporting quality. The authors’ findings suggest that multiple layers of monitoring capacity viz-a-viz the existence of both an audit and risk committee may weaken the quality of monitoring provided by the audit committee.
Flavio Barboza, Herbert Kimura, Vinicius A. Sobreiro and Leonardo F. C. Basso aim to present a systematic literature review on credit risk for academic papers. To meet this objective, the main studies on credit risk were classified and coded, and a citation-based approach was used to determine their relevance and contributions to the state of the art. This identified some gaps and research recommendations.
Vincenzo Zarone, Alessia Patuelli and Simone Lazzini analyse recent tendencies of managing public real estate and public stake-holdings in a sample of Italian municipalities. The data, retrieved from the Italian Ministry of Interior (Central Department of Local Finances), has been analysed to understand if the local public group, intended in a wider sense and including both subsidiaries and real estate property, is changed over time, in terms of size and composition. The first results show that there has not been adequate divestment to postulate on a general reduction of the boundaries of the “Integrated” Public Groups.
Md Safiullah aims to contribute to the corporate governance literature by examining the effects of board governance and ownership structure on financing decisions in an emerging country context. Using hand collected corporate governance data from a panel sample of 110 publically-listed firms in Bangladesh over 2009-2012, this study finds that the corporate debt ratio is not related to standard board of directors mechanisms. The results indicate that board of directors play little role in resolving conflicts in an environment with the presence of strong principal-principal agency conflict. The study also finds no evidence of institutional investors’ activism in a manner that is consistent with the goals of other outside stockholders due to the weak regulatory and market discipline. This empirical evidence from the principal-principal agency conflicts (conflict of interest between majority shareholders and minority shareholders) offers insights to policy makers in emerging countries interested to protect minority shareholders’ rights and to ensure effective corporate governance of capital structure decisions.
Rossi Matteo, Giacosa Elisa and Mazzoleni Alberto intent to identify the appropriate financing methods for Small and Medium-sized Enterprises (SMEs) - with particular reference to alternative instruments to the banking ones- by comparing Italian and German companies. Based on a sample of Italian and German SMEs and thanks to a quantitative method, the research methodology was developed by the following logical steps: i) illustration of the informative matrix used, thanks to which it’s possible to identify different types of financing instruments (also those alternative to the banking ones) the most suitable for the analyzed companies; ii) adoption of the informative matrix to the sample of Italian and German companies; iii) comparison Italy-Germany.
Mondher Bouattour, Ramzi Benkraiem and Anthony Miloudi explain the underreaction of investors to information. In order to study the adjustment of prices to a fundamental value, we implement experimental markets with fluctuating fundamental values. The experimental design employed involves two treatments differentiated according to the information disclosed to the participants. The results show an underreaction to a change in the fundamental value. This underreaction is greatest when most of the subjects are facing a paper loss. This suggests that the disposition effect has a strong impact on price formation. Once most of the subjects are in a paper gain situation, the underreaction is at its lowest level when they receive good news. Thus, underreaction to information is influenced by paper gains and losses.
B Smit, F J Mostert and J H Mostert focuse on the improvement of financial decision-making by executive managers in retail banking when they are engaging in financial innovations. A literature study represented the start of this research to provide a proper basis for compiling the empirical study’s questionnaire. The empirical study consisted of an opinion survey where the three pillars of financial innovation were addressed, viz.: products and services innovation, organisational innovation and distribution channel innovation. The empirical study indicated amongst others the importance of these three pillars of financial innovations as perceived by eight of the largest banks in South Africa. Furthermore, the obstacles to financial innovations also received the necessary attention. The empirical results of this research should be valuable to countries which are classified as developing economies with emerging market economies, as South Africa is a member of this group.
Claudette Rabie, Michael C. Cant and Ricardo Machado investigate the current use of social media among star-graded accommodation establishments operating in the Western Cape Province of South Africa. A web-based self-administered questionnaire was distributed to star-graded accommodation establishments, who were registered by the Tourism Grading Council of South Africa (TGCSA). A total of 361 useable responses were received. The findings mainly revealed that social media are used in accommodation establishments but that they are still learning how to fully and successfully implement social media platforms in their area of business.
To access the papers, please follow this link.