Additional Control Variables Research Articles

Analisis Efisiensi Belanja Modal terhadap Pertumbuhan Ekonomi Daerah di Indonesia : Pendekatan Data Panel

Regional economic growth is one of the main indicators for assessing the success of development, and it is significantly influenced by the effectiveness and efficiency of public budget management, particularly capital expenditure. Within the framework of fiscal decentralization, the efficiency of capital expenditure allocation by local governments becomes a crucial factor in enhancing productivity, creating economic added value, and promoting equitable distribution of public welfare. This study aims to examine the effect of capital expenditure efficiency on economic growth at the district/city level in Aceh Province using a panel data approach. The approach employed is quantitative in nature, utilizing secondary data from the Central Bureau of Statistics (BPS) over an annual time period. The analysis is conducted using a panel data regression model, and based on the Chow and Hausman tests, the Random Effect Model (REM) is selected as the most appropriate model. The estimation results indicate that capital expenditure has a positive and significant effect on regional economic growth, suggesting that government investment through capital spending can stimulate economic activity and enhance the region’s production capacity. These findings are in line with endogenous growth theory, which emphasizes the importance of government spending as a key driver of long-term economic development. This study provides an important contribution to the literature on regional economics and offers fiscal policy implications, particularly in improving the effectiveness and efficiency of development spending. For future research, it is recommended to expand the study to a broader regional scope and consider additional control variables such as institutional quality, infrastructure conditions, and other socio-economic indicators to obtain a more comprehensive understanding of public expenditure effectiveness.

The Role of Agriculture in Shaping CO2 in Saudi Arabia: A Comprehensive Analysis of Economic and Environmental Factors

This research examines the critical issue of greenhouse gas emissions, focusing on carbon dioxide (CO2) as a significant contributor to climate change and its threats to environmental sustainability. The primary objective of this paper is to highlight the environmental impacts resulting from economic growth, energy consumption, and agricultural development in Saudi Arabia. The purpose of the empirical research is to investigate the dynamic causal relationships between CO2 emissions, agricultural development, economic growth, energy consumption, and additional control variables in Saudi Arabia from 1990 to 2022. It is hypothesised that increases in agricultural land, economic activity, and energy use contribute to rising CO2 emissions. This study examines these relationships using the Autoregressive Distributed Lag (ARDL) and Fully Modified Ordinary Least Squares (FMOLS) methodologies, along with unit root tests, the ARDL bounds test, and Vector Error Correction Model (VECM) causality analysis, to assess both short-term and long-term interactions among the variables. The findings reveal that agricultural land expansion, economic growth, and energy consumption significantly contribute to increased CO2 emissions. Specifically, a 1% increase in agricultural land correlated with a 0.16% rise in CO2 emissions, while a 1% increase in economic growth and energy use led to 0.28% and 0.85% rises, respectively. These results underscore the environmental challenges posed by economic expansion and energy dependence. This paper emphasises the need for policies that balance economic growth with emissions reduction, in line with Saudi Vision 2030. Transitioning to a low-carbon, circular economy supported by renewable energy and innovation is essential for sustainable development and climate change mitigation.

Can mixed ownership reform improve labor investment efficiency: evidence from China

ABSTRACT Using a Difference-in-Differences (DiD) approach, we investigate the impact of MOR on the labor investment efficiency (LIE) in China. We find that MOR can improve labor investment efficiency by reducing SOEs’ deviations of labor investment from the level justified by economic fundamentals. Specifically, the significant mitigating effects of MOR mainly apply to inefficiencies concerning both over-investments in labor through over-hiring and under-investments through over-firing. These findings demonstrate robustness across an array of empirical tests, including the application of alternative Difference-in-Differences (DiD) or Triple Difference (DDD) methodologies, the inclusion of additional control variables along with province-fixed effects, and the exclusion of firms with changes in ownership type. The conclusions hold steady after considering the impact of anticorruption measures. The effect of MOR is more prominent for firms with less privatization, greater market frictions, higher external pressure, limited political connections, and lower financial constraints. In addition, we show that MOR in China reduces the labor misallocation within manufacturing sector, improves the education level of employees, but has no significant effects on the employment size or the labor share at the firm level.

Does capital structure mediate the relationship between corporate governance compliance and firm performance? Empirical evidence from Pakistan

PurposeThe purpose of this study is to examine how capital structure mediates the effects of corporate governance (CG) compliance on firm performance (FP) in the context of a developing market experiencing significant reforms to its governance landscape.Design/methodology/approachAn index was built to measure firm-level compliance with Pakistan’s code of CG. Several robustness checks were performed, including alternate proxies of dependent and independent variables, using additional control variables and considering the Global Financial Crisis period. To address dynamic effects and endogeneity, several identification strategies were used: a leading dependent variable, fixed effects model, generalised method of moments model and propensity score matching.FindingsCG compliance leads to higher FP. However, higher leverage partially and negatively mediates this association. The results of this study are robust against alternate proxies of dependent and independent variables and possible endogeneity issues.Originality/valueThis study constructs a summative measure of CG compliance that captures not only firm-level compliance to the prescribed codes but also the benefits of incremental improvements and reforms in the governance of the Pakistan market. This study offers insights into an emerging market, contributing further empirical evidence to support greater market transparency through mechanisms such as CG compliance and the monitoring effects of debt. However, this study cautions that greater compliance raises costs, especially when associated with higher leverage, and can undermine FP.

Association between the COVID-19 vaccination campaign and fertility trends: a population-level time series analysis for 22 countries

IntroductionAt the turn of 2021–2022, monthly birth rates declined in many higher-income countries. We explore how the rollout of COVID-19 vaccination was associated with this decline.MethodsUsing an interrupted time series...

Downside Risk and Hedge Fund Returns

Downside Risk and Hedge Fund Returns

Unveiling the nexus between ESG performance, climate policy uncertainty and corporate innovation: evidence from textual analysis

PurposeThis paper aims to examine the relationship between environmental, social and governance (ESG) performance and text-based corporate innovation based on a sample of India’s ESG-disclosed companies from financial year 2011–2012 to 2021–2022. Further, it endeavors to investigate the moderating role of heightened climate policy uncertainty (CPU) in this relationship.Design/methodology/approachTo verify these hypotheses, the authors first construct a corporate innovation index for India using a sophisticated natural language processing model on each firm-year’s management discussion and analysis reports. Next, the authors use a panel fixed effects model to examine how ESG performance impacts corporate innovation and its moderating and mediating components.FindingsEmpirical evidence suggests higher ESG performance bolsters text-based corporate innovation. After addressing endogeneity issues with the system GMM estimator and two-stage least square IV, incorporating additional control variables and using alternative innovation measurement, the baseline results remain unchanged. Next, the authors find this link is mediated by reducing information asymmetry, financial constraints and managerial myopia. The authors also observe that increased CPU favorably moderates the ESG-innovation nexus. Additionally, the heterogeneity research shows that ESG only positively impacts innovation in specific industries and firms in their growth and mature life cycle phases.Practical implicationsThe results demonstrate that sustainable and ethical business practices can foster corporate innovation. Thus, this study may provide valuable insight for investors, managers and policymakers.Originality/valueTo the best of the authors’ knowledge, this is the first study to examine the relationship between ESG performance and text-based corporate innovation using a machine learning model.

Audit report readability and information efficiency: evidence from the Tehran Stock Exchange

PurposeThis study investigates the impact of audit reports’ readability on informational efficiency within the Tehran Stock Exchange (TSE), emphasizing challenges in an emerging market context characterized by voluntary IFRS adoption and the absence of Big 4 audit firms.Design/methodology/approachBy utilizing hand-collected data from TSE-listed companies, covering 1,097 firm-year observations from 2012 to 2023, readability is assessed using three well-established indexes (Fog, Flesch–Kincaid and Simple Measure of Gobbledygook). Informational efficiency is evaluated by analyzing how stock prices align with a random walk pattern, with additional control variables including governance factors, auditor characteristics and firm-specific indicators to enhance model robustness.FindingsThe findings indicate a positive association between audit report readability and informational efficiency, suggesting that clearer and more readable audit reports help reduce information asymmetry. Control variables such as board independence and auditor tenure showed significant impacts, supporting the conclusion that governance and auditor-specific factors enhanced informational efficiency. Agency and institutional theories are used to contextualize these findings, especially within TSE’s unique regulatory environment. The study addresses endogeneity with firm fixed effects and sample selection bias through Heckman’s two-stage procedure. The absence of Big 4 auditors in Iran prompted controls for auditor size effects, supporting our findings across different audit market segments.Research limitations/implicationsLimitations include potential omitted variable bias and challenges in generalizing findings beyond the TSE. Despite applying firm fixed effects and Heckman’s two-stage procedure to control for endogeneity, some residual biases may remain.Practical implicationsFor regulators, auditors and investors, these findings underscore the value of promoting readability in audit reports to improve informational efficiency, particularly in emerging markets with evolving regulatory standards.Originality/valueBy focusing on audit report readability within an emerging market lacking Big 4 presence, this study offers unique insights into how readability can foster transparency and investor confidence in regions with distinct market dynamics.

The effect of specific and rotating health warnings on smoking risk perception and quitting intentions: Evidence from China.

This study aims to investigate whether non-rotating, specific health risk messages on cigarette packaging could be a practical alternative to rotating health warnings to improve smokers' health risk perceptions and intentions to quit smoking. The study employs a cross-sectional randomized survey experiment conducted among 1700 adult smokers (aged ≥18 years) in China, with data collected using a snowball sampling method. Participants were randomly assigned to one of three groups: the control group (viewed standard packaging with a general health warning), the rotating health risk text group (exposed to four rotating disease-related warnings), and the reproductive health risk text group (focused on smoking's impact on sexual health). After viewing the corresponding health warnings, participants reported their health risk perceptions and intentions to quit smoking, and responses to additional control variables. Rotating health risk text warnings on cigarette packaging significantly increased participants' perceptions of cardiovascular (β=0.20; 95% CI: 0.05-0.35), digestive (β=0.22; 95% CI: 0.07-0.37), respiratory (β=0.17; 95% CI: 0.07-0.26), and reproductive system risks (β=0.21; 95% CI: 0.06-0.37), while the non-rotating reproductive health risk text warnings only significantly improved perceptions of reproductive system risks (β=0.18; 95% CI: 0.10-0.25). Both types of text warnings significantly increased smokers' intentions to quit smoking (p≤0.001), indicating that non-rotating specific health risk warnings can be equally effective in promoting quitting intentions. This study demonstrates that rotating health risk text on cigarette packaging offers comprehensive advantages in enhancing health risk perceptions. However, its effects on intentions to quit smoking are similar to those of non-rotating reproductive health risk warnings. These findings suggest that in contexts where implementing rotating warnings is challenging, non-rotating, specific health risk messages can serve as a feasible alternative to support the effective implementation of tobacco health warning policies.

Language similarity and IPO underpricing

In this study, we investigate whether language similarity between auditors and chairpersons mitigates IPO underpricing. We focus on China, a country with a high incidence of IPO underpricing. We define language similarity as the auditor and the chairperson sharing the same dialect. To measure this, we manually collect the identification (ID) numbers of auditors and chairpersons and construct a proxy for language similarity based on the birthplaces identified by their ID numbers. Our findings indicate that auditor-chairperson language similarity helps alleviate IPO underpricing. We also find that IPO companies are more likely to select auditors who share the same language with their chairpersons. Our results remain robust even after controlling for additional control variables and employing matching methods, 2SLS instrumental variables, and alternative measurements. The mechanism through which language similarity reduces IPO underpricing is by compensating for informational gaps in low-readability and high-similarity prospectuses through incremental information production. Furthermore, the effects of language similarity are more pronounced when IPO companies are audited by Big 10 audit firms, followed by greater analyst coverage, and are listed under the registration-based IPO regime. Our research confirms the significant role of language similarity in emerging capital markets.

A flamelet-based Eulerian transported PDF method for the modeling and simulation of supersonic combustion

A flamelet-based Eulerian transported PDF method for the modeling and simulation of supersonic combustion

Assessing the Influence of Digital Inclusive Finance on Household Financial Vulnerability in China: Insights from Health Insurance Participations

Poverty reduction is the primary goal of the United Nations 2030 Agenda for Sustainable Development. Enhancing the purchase rate of health insurance is essential for alleviating poverty caused by health shocks, as it serves as a crucial risk management tool for addressing health-related risks. In this paper, we investigate the impact of digital inclusive finance on household participation in terms of health insurance and financial vulnerability, utilizing the Digital Inclusive Finance Index developed by Peking University and survey data from the China Household Finance Survey. Our findings indicate that the advancement of digital inclusive finance can significantly reduce the risk of household financial vulnerability by increasing household health insurance enrollment rate. The findings are robust across various digital inclusive finance indices, different metrics for financial vulnerability, alternative econometric models, and additional control variables. Furthermore, the effects of digital inclusive finance on health insurance enrollments and household financial vulnerability are particularly pronounced among urban households and those led by younger and more risk-averse household heads. Our findings advocate for further development of digital inclusive finance, mainly targeted at rural households and those with elderly heads, to enhance health insurance participation and mitigate the risk of illness-related poverty.

Firm ESG Performance and Supply-Chain Total-Factor Productivity

Promoting firms’ green evolution and achieving sustainable, high-quality development have become crucial for firms’ sustainability. This study uses data from publicly listed automotive manufacturing firms from 2009 to 2022 to examine the impact of target firms’ environmental, social, and governance (ESG) performance on total-factor productivity (TFP) at upstream and downstream firms from a supply-chain perspective. By employing a two-way, fixed-effects model, mediation analysis, and a moderation model, the study provides comprehensive insights. The findings reveal the following: (1) The ESG performance of target firms in automotive manufacturing significantly improves the TFP of downstream customers, and this conclusion is robust even when using instrumental variable methods, additional control variables, and rigorous robustness tests. (2) Mechanism analysis indicates that the ESG performance of target firms alleviates the financing constraints of their customers, thereby positively impacting the customers’ TFP. Additionally, the study finds that the monopolistic power of the target firm negatively moderates the relationship between its ESG performance and the TFP of its customers. These empirical findings enhance the understanding of supply-chain spillover effects and provide a new theoretical foundation for improving firms’ ESG performance.

Income inequality: The effects of public education expenditure and information and communications technology in sub-Saharan Africa

Background: As nations globally strive to meet the United Nations Sustainable Development Goal (SDG) 10, which underscores the reduction of inequality, there is an increasing need to harness the power of education and information and communications technology (ICT) to achieve this aim. Therefore, this study is motivated by this rationale.Aim: The synergistic effect of government spending on education and ICT on income inequality in sub-Saharan Africa (SSA) in the long run.Setting: Panel data for 30 SSA countries from 1990 to 2022 are used.Method: This research used the Fully Modified Ordinary Least Square (FMOLS) technique, which provides long-run estimates, to achieve the aim of the article.Results: The FMOLS results reveal that public education expenditure increases income inequality while its squared expenditure reduces it in the long run. However, over time, ICT diminishes inequality. Notably, the combined effect of public education spending and ICT strengthens the effect of public education expenditure on income inequality in SSA in the long term.Conclusion: In summary, with the incorporation of additional control variables in the analyses, it suggests that SSA’s governments, along with policymakers, have the opportunity to achieve income inequality reduction by strategically making use of public education spending and ICT.Contribution: This article adds significant value to the literature by demonstrating the effect of public education spending and ICT on income inequality in SSA (characterised by higher level of income inequality). To mitigate concerns regarding endogeneity, this article uses FMOLS.

Association of the belief in conspiracy narratives with vaccination status and recommendation behaviours of German physicians

Association of the belief in conspiracy narratives with vaccination status and recommendation behaviours of German physicians

Attention economy in professional football: A study protocol on the individual perspective of social media marketability of European football player

In the digital age, the attention economy assumes that attention flows along the same channels as money. Attention is a scarce commodity, so competing for it should follow a similar mechanism to the general acquisition of income and can therefore be seen as a social currency (Franck, 1998). Nowhere is this more evident than in the realm of professional sports, where athletes have become both performers and brands (Nufer, 2018), competing not only on the field but also in the arena of attention. For the players themselves but also for the clubs, the market value of a football player is no longer solely determined by their athletic prowess but is equally influenced by their ability to capture and maintain the attention of fans or sponsors (Leo & Kuczkowski, 2020). Seeing players as entrepreneurs, we assume that reputation is a fluid and dynamic asset (Gerbaulet, 2016), wherein the player’s ability to manage and cultivate their public image becomes paramount. Football players aim to maximize their lifetime income, which includes both their performance on the pitch and their marketability off it. Marketability can extend beyond their playing career and may follow a life-cycle concept (Vernon, 1966). Therefore, players are motivated to use social media to boost their reputation and lifetime market value. To investigate this phenomenon, we analyse data from the big five European football leagues (Bundesliga, Premier League, Ligue 1, La Liga, and Serie A) focusing on the 2022/2023 season. This season was chosen to ensure a closed information set, as the 2023/2024 season was ongoing during the initial data collection period, and player market values are typically updated multiple times throughout a season. Our study examines the correlation between social media activity and player market value by employing a regression model to quantify the influence of social media metrics, while controlling for other relevant variables. Player market values are sourced from the widely recognized platform Transfermarkt (https://www.transfermarkt.de). Social media activity is quantified through metrics such as the number of followers, the volume of posts, likes, and engagement rate, with data obtained from Fanpage Karma (https://www.fanpagekarma.com/). To account for players’ footballing abilities, we include performance data such as playing time, shots, and packing index sourced from The Analyst (https://theanalyst.com/eu). Additional control variables, including player age, position, league, and club affiliation, are also sourced from Transfermarkt and incorporated into the regression model. The dataset comprises 2,284 players, of whom 80% (1,805 players) have Instagram accounts. Instagram usage is highest among Premier League players (92%) and lowest among those in Ligue 1 (65%). The results of the regression analysis will be presented and discussed, providing insights into the relationship between social media presence and market value. This analysis will contribute to understanding the patterns of attention generation in relation to marketability and the rationality behind social media use in professional football. References Gerbaulet, D. (2016). Der Unternehmer als Reputator [The entrepreneur as reputator]. Mohr Siebeck. Franck, G. (1998). Ökonomie der Aufmerksamkeit. Ein Entwurf [The economy of attention. A draft]. Carl Hanser. Leo, M., & von Kuczkowski, A. (2020). „Kaufen Sie Ronaldo!“ Wie Facebook, Instagram & Google den Profifußball verändern [„Buy Ronaldo!“ How Facebook, Instagram & Google are changing professional football]. Die Werkstatt. Nufer, G. (2018, 30 January). Viel mehr als nur Sportler. Warum Ronaldo und Neymar mehr zu Marken im Fußball taugen als Götze [Much more than just athletes. Why Ronaldo and Neymar are more suitable as football brands than Götze]. Focus Online. https://www.focus.de/sport/experten/nufer/f-f_id_8386959.html Vernon, R. (1966). International investment and international trade in the product cycle. The Quarterly Journal of Economics, 80(2), 190–207. https://doi.org/10.2307/1880689

Revisiting the Tourism-led Growth Hypothesis: The Case of Tonga using the FARDL Model and Fourier TY Causality Test

In this study, we revisit the tourism-led economic growth hypothesis for Tonga using the Fourier autoregressive distributed lag (FARDL) and Fourier Toda–Yamamoto (TY) causality test, using quarterly data over the sample from 1995Q1 to 2019Q4. The flexible Fourier form allows for incorporating the gradual effect of structural breaks without requiring structural break dummy variables, which are subject to the overfitting problem. The FARDL estimates indicate that tourism contributes positively to long-run growth. The Fourier TY causality test suggests unidirectional causality from tourism to economic growth. The results are robust after additional control variables, such as government expenditure, total trade, remittances, financial development and interaction effects between remittances and financial development. Appropriate attention is paid to remedying endogeneity biases by re-estimation with the generalised method of moments (GMM) estimator. JEL Codes: C22, Z23

Time-varying risk aversion and international stock returns

Time-varying risk aversion and international stock returns

Research on the Sheepskin Effect in China: Factors Influencing Educational Returns and Heterogeneity Analysis

Using sample data from the China General Social Survey (CGSS2021), this study employs econometric methods based on the basic cost-benefit economics perspective. It investigates the relationship between educational investment and labor income in China in recent years, utilizing the Mincer earnings model as well as an extended model incorporating additional control variables. An Ologit model is constructed to analyze the impact of gender, ethnicity, family economic status, and regional registration on educational attainment among the sample population. Furthermore, the study compares educational returns across different genders, regions, workplaces, and job positions. Finally, based on empirical analysis, suggestions are proposed to enhance individual income levels and optimize the allocation of social educational resources from both individual and environmental perspectives.

Experience as a double-edged sword: CEO experience and power on breakthrough innovation

PurposeIn recent years, the trend of hiring external CEOs has become increasingly prevalent. However, the impact of these CEOs' prior experiences in different firms on the innovation of their successor firms has not received sufficient attention. Drawing on upper echelons theory and management power theory, this study explores the non-linear relationship between prior CEO experience and breakthrough innovation, as well as the moderating effects of different types of CEO power.Design/methodology/approachWe selected China’s A-share listed manufacturing companies as samples and used zero-inflated Poisson regression to verify the hypothesis. We employed instrumental variable methodology to address potential endogeneity issues and conducted robustness tests by substituting core variables, changing measures, adding additional control variables, and shrinking the core variables.FindingsWe conclude that there exists an inverted U-shaped relationship between prior CEO experience and breakthrough innovation. Furthermore, we analyze the effects of formal and informal CEO power on the role of prior CEO experience in breakthrough innovation and find that the inverted U-shaped relationship is contingent upon the level of CEO power.Originality/valueThe findings extend research on CEO succession and offer a reference for firms aiming to hire external CEOs with prior experience to foster breakthrough innovation.