Feasible Generalized Least Squares Research Articles

FDI and their participation in global value chains: An analysis based on East Asia

Abstract Subject and purpose of work East Asia, particularly China, Japan, and South Korea has experienced rapid economic growth in recent decades, partly through active participation in global value chains (GVCs). Foreign direct investment (FDI) has played a crucial role in this process, enabling the transfer of technology and skills and access to international markets. This paper aims to empirically analyse the effects of FDI on GVCs in East Asian countries over the last two decades. Materials and methods The paper covers six East Asian countries from 2000 to 2022 and explores the relationship between FDI and GVCs using the Driscoll and Kraay (1998) estimator. The estimation techniques are ordinary least squares (OLS) and feasible generalized least squares (FGLS). Results The results reveal that FDI inflows into East Asia positively and significantly affect the countries participation in GVCs, both upstream and downstream. Conclusions These results suggest the need to support FDI in Asian countries to improve their participation in GVCs.

Unveiling the Nexus: Analyzing foreign direct investment and energy consumption in shaping carbon footprints across Africa’s leading CO2-emitting countries

Carbon emissions have become a pressing global concern because of its contribution to climate change and environmental degradation. Given the urgency to tackle climate change, especially by reducing carbon emissions, this study focuses on Africa’s leading CO2 emitters from 2000 to 2020. The aims of the study are; to examine whether there is evidence of an energy-Kuznets Curve among the leading CO2 emitters in Africa, to examine whether there is evidence of an FDI-Kuznets Curve among the leading CO2 emitters in Africa, and to Identify the turning points. The study employs an innovative analysis of unbalanced panel data utilizing sophisticated econometric techniques, the contemporaneous correlation methodology, which are; the feasible generalized least squares (FGLS), and the panel-corrected standard errors (PCSE) to uncover insights. The results reveal consistency across all employed techniques. The study confirms the existence of an Energy-Kuznets Curve among the leading CO2 emitters in Africa; it also finds evidence of a U-shaped relationship between foreign direct investment and carbon emissions among the leading CO2 emitters in Africa; finally, it also identifies crucial turning points at 2760.12kg and 2886.29kg of oil equivalent per capita for energy use and 6.89% and 6.17% for FDI inflow, respectively. By investigating the factors influencing carbon emissions and evaluating their impacts, our study offers valuable insights for policymakers. These findings can inform the development of targeted interventions to curb emissions intensity, enhance energy efficiency, and foster the adoption of renewable energy sources.

Corporate Governance Reforms and the Quality of Financial Information of Listed Non-Financial Services Firms in Nigeria

The increasing demand for high quality financial information by the relevant users of financial report has become a serious concern and inevitable on the management of listed non-financial services firms in Nigeria. The primary objective of this study is to examine the nexus between corporate governance reforms and the quality financial information of listed non-financial services firms in Nigeria. Using an ex-post facto as the research design for the study, data was obtained from the secondary sources through the extraction method from the annual financial reports and accounts of the listed firms for 276 firm-year observations, from 2018 to 2023 period. Out of the seventy-five (75) listed non-financial services firms in Nigerian Exchange Group as at 31st December, 2018, a sample size of fourty-six (46) listed firms were used with aid of purposive filter sampling technique. The Feasible Generalized Least Square (FGLS) regression was used as the model estimation technique for the study. Based on the regression analysis, it was found that board size, assurance services and transparency have positive significant impact on financial information quality of listed non-financial services firms in Nigeria. However, sustainability was statistically found to have insignificant impact on quality of financial information of listed non-financial services firms in Nigeria. Therefore, it is recommended that the board of directors of listed non-financial services firms in Nigeria ensure that more members are nominated to participate in the board’s decision. This is because of the fact that larger board sizes are more likely to create avenue for cross-fertilization of ideas thereby, making decisions that can safeguard, uphold and enhance the quality of the financial information of the listed non-financial services firms in Nigeria. The results also underscore the relevance of corporate governance codes and their impacts on FIQ and transparent disclosure. This study offers policy implications to regulatory agencies and standard-setters in their oversight function over the quality of financial information disclosed in annual reports.

BOARD STRUCTURE AND ISLAMIC BANK STABILITY: A STANDALONE RISK COMMITTEE MODERATING EFFECT

This study investigates the impact of board attributes on the stability of Islamic banks and whether the presence a standalone risk management committee (SARC) moderates their relation. Applying the feasible generalized least squares (FGLS) regression as well as the two-step system generalized method of moments (GMM) estimator for robustness to a panel sample of 43 Islamic banks across 15 countries over eleven years from 2010 to 2020, we document evidence suggesting that board meetings, board gender diversity and foreign directors do not influence the stability of Islamic banks. Conversely, board members holding doctorate degrees (PhDs) significantly and negatively affect the stability of Islamic banks. In addition, the presence of SARC significantly improves the stability of Islamic banks. The study further finds that SARC partially and positively moderates the effects of board members with PhDs and foreign directors on the stability of Islamic banks.

Female directors and cash holdings: The case of Vietnam

This study investigates the impact of gender equality on corporate cash reserves, focusing on the roles women occupy on corporate boards. Using data from 325 publicly listed companies in Vietnam between 2020 and 2022, the research employs various statistical models, including ordinary least squares (OLS), fixed-effect model (FEM), random-effect model (REM), and Feasible Generalized Least Squares (FGLS), to address heteroscedasticity. The findings reveal that the presence of female directors on corporate boards is significantly associated with lower cash reserves, suggesting that gender diversity influences cash management practices. This study contributes to the literature by highlighting the role of female directors in enhancing a firm's financial flexibility. It underscores the importance of creating an equitable workplace for female employees and provides insights into the benefits of gender diversity in corporate governance. The research specifically examines the Vietnamese context, reflecting the global trend towards gender diversity in corporate leadership. Regression analysis shows a significant negative relationship between the proportion of female CFOs and cash holdings, indicating that firms with more female CFOs tend to hold less cash. These findings have important implications for policymakers, investors, and corporate leaders by demonstrating the potential of female directors to shape financial policies and reduce risks associated with representative issues.

Does Islamic Mutual Fund Bear Higher Risk than Conventional Mutual Funds? An Empirical Analysis from Bangladesh

This study aims to identify whether Islamic mutual funds bear higher risk exposure than conventional mutual funds due to implementing their shariah screening criteria to select assets on the portfolio. For this purpose, monthly closing price data of Islamic and conventional funds operated in Bangladesh are collected from January 2016 to August 2023. A total of 2320 observations of each risk measure (e.g., standard deviation, semi-standard deviation, semi-standard deviation, and beta) are computed using a 12-month rolling window method to compare risk exposure between Islamic and conventional funds using univariable and multivariate analysis. The univariate analysis is conducted by performing an independent samples t-test, which confirms that overall, Islamic funds bear lower risk exposure than conventional funds. In multivariate analysis, the Feasible Generalized Least Square (FGLS) method, a dynamic panel data analysis model, is applied where the effects of macroeconomic variables such as deposit rate, GDP growth rate, exports, imports, broad money, and remittances are controlled. The results of the multivariate analysis also confirm that Islamic mutual fund risk exposure is lower than that of conventional mutual funds. This study will be helpful for practitioners and institutional investors in decision-making.

Balancing environmental sustainability: Socio-economic drivers and policy pathways in oil-importing nations

This paper explores the intricate interplay of socio-economic drivers influencing environmental sustainability in oil-importing countries, examining CO2 emissions and greenhouse gas concentrations over the period from 2000 to 2021. Employing the Feasible Generalized Least Squares (FGLS) and Prais-Winsten regression method (PCSE), data from fifteen major oil-importing nations are scrutinized. The study identifies pivotal socio-economic factors, including environmental innovations, green energy adoption, and energy prices, as key drivers in mitigating emissions. Environmental innovations, catalyzing cleaner technologies, emerge as effective tools in curbing hazardous emissions and promoting green energy sources. The study underscores the trade-off between energy use and prices, advocating a strategic shift towards green energy adoption. It also highlights the adverse association between industrial and agricultural production with emissions. Policy interventions are recommended, emphasizing the need for cleaner technologies and the adoption of renewable energy practices, thus achieving a harmonious balance between economic development and environmental quality. The research offers valuable insights into the socio-economic dimensions of environmental sustainability, emphasizing the importance of well-balanced policies that align environmental innovations, environmental conservation, and energy transition in oil-importing nations within the broader context of human-environment interactions.

Does small firm dynamics matter for occupation diversity and job quality? Evidence from Brazil

Recent studies have explored the role of firm dynamics and the connection to job reallocation. However, limited attention has been devoted to the role of micro and small firms in this process, particularly about the quality of the jobs generated. Therefore, this article aims to measure the impact of micro and small firm dynamics on occupation diversification in Brazil, with specific emphasis on job quality. The study used data from 558 microregions within the Brazilian industrial sector between 2003 and 2015. Panel data were applied to three econometric models: Feasible Generalized Least Squares (FGLS), Driscoll–Kraay (DK) and Instrumental Variable (IV) models for robustness analysis, including Two-Stage Least Squares (2SLS), Limited Information Maximum Likelihood (LIML), and the Generalized Method of Moments with Continuously Updating Estimators (GMM-CUE). Our main finding reveals that the dynamics of micro and small firms positively impact occupation diversity in Brazil, leading to the creation of a wider range of job types. Furthermore, the frequency of change of firms from microenterprises to small businesses increases the occupation diversity in the Brazilian industrial sector. Our findings are significant in providing policy recommendations for developing countries to achieve a more diverse labor market.

Exploring integrated reporting's influence on international firms' value relevance

Purpose Analyzing the impact of integrated reporting (IR) on international firms' value relevance, considering diverse information such as income, cash flows, risks, uncertainties and various capitals. Design/methodology/approach This paper used a sample of 300 international companies between 2010 and 2019. This paper collected the data from the Thomson Reuters Eikon database. Quantitative methods were used to test the hypotheses. Furthermore, the feasible generalized least squares (FGLS) method was performed to test the hypotheses. Findings The results suggest that IR and value relevance positively correlate, confirming the hypothesis. Moreover, this paper verified these results by conducting robustness tests on the contribution of the framework and guidelines prepared by the International Integrated Reporting Council (IIRC) in 2013. Practical implications This study enables users to evaluate company transparency and the relevance of disclosed nonfinancial information, providing valuable insights for report preparers and investors seeking profitable opportunities. Originality/value The interest in this research was motivated by the authors’ research field, which is innovative, as few studies have been conducted to explain the relationship between IR and value relevance. Similarly, this paper incorporated into their analysis the importance of the framework created by the IIRC in 2013 in preparing and presenting an integrated report. This paper considered the contribution of this framework to the creation of information content. This design has been overlooked in previous studies. However, this paper mobilized the FGLS method, which has been little used in previous studies.

Cross-sectional analysis of socioeconomic drivers of PM2.5 pollution in emerging SAARC economies

Within the intricate interplay of socio-economic, natural and anthropogenic factors, haze pollution stands as a stark emblem of environmental degradation, particularly in the South Asian Association for Regional Cooperation (SAARC) region. Despite significant efforts to mitigate greenhouse gas emissions, several SAARC nations consistently rank among the world’s most polluted. Addressing this critical research gap, this study employs robust econometric methodologies to elucidate the dynamics of haze pollution across SAARC countries from 1998 to 2020. These methodologies include the Pooled Mean Group (PMG) and Augmented Mean Group (AMG) estimator, Panel two-stage least squares (TSLS), Feasible Generalized Least Squares (FGLS) and Dumitrescu–Hurlin (D–H) causality test. The analysis reveals a statistically significant cointegrating relationship between PM2.5 and economic indicators, with economic development and consumption expenditure exhibiting positive associations and rainfall demonstrating a mitigating effect. Furthermore, a bidirectional causality is established between temperature and economic growth, both influencing PM2.5 concentrations. These findings emphasize the crucial role of evidence-based policy strategies in curbing air pollution. Based on these insights, recommendations focus on prioritizing green economic paradigms, intensifying forest conservation efforts, fostering the adoption of eco-friendly energy technologies in manufacturing and proactively implementing climate-sensitive policies. By embracing these recommendations, SAARC nations can formulate comprehensive and sustainable approaches to combat air pollution, paving the way for a healthier atmospheric environment for their citizens.

Analyzing the regional impact: A comprehensive study of covid-19 on the real estate market in Kazakhstan

The purpose of the research is to determine the impact of the COVID-19 pandemic and macroeconomic factors on the real estate prices in the regions of Kazakhstan during the period between 2010 and 2022. Feasible Generalized Least Square (FGLS) model was implemented to assess determinants of real-estate market performance. This study analyzes the performance of the real estate market in Kazakhstan not on a country level but on a more deep, regional level. The findings show that COVID-19, as well as macroeconomic variables, had a significant impact on real-estate market prices. COVID-19 negatively affected real estate prices in Kazakhstani regions, whereas the effect of macroeconomic variables was positive. Factors such as household income, gross regional product, inflation, unemployment, and time dummy contributed to the increase in prices of real estate.

Unpacking the financial attributes of blue-chip non-fungible tokens (NFTs) against traditional and digital assets

PurposeThis study aims to identify the financial attributes of non-fungible tokens (NFTs) as safe havens, hedges or diversifiers against traditional (stock indices, foreign exchange, gold and government bonds) and digital (Bitcoin and Ethereum) assets.Design/methodology/approachThe quantile via moments was utilized, and the data spanned from 20 September 2021 to 31 January 2022. The authors incorporated feasible generalized least squares (FGLS) and difference-generalized method of moments (diff-GMM) as the robustness check.FindingsOverall, NFTs offer strongly safe havens, hedging and diversifier attributes against cryptocurrencies, while weak properties for traditional assets. The specific findings are: (1) Bored Ape Yacht Club (BAYC) serves as a strong hedge for Bitcoin during market rise; (2) Mutant Ape Yacht Club (MAYC) serves as a strong safe haven against Bitcoin during market bull; (3) Crypto punk (CP) provides strong safe havens properties for gold during market turmoil while serving as a strong hedge against gold and Bitcoin on average and (4) the three blue-chip NFTs are powered by Ethereum blockchain, thus serving as a diversifier against Ethereum.Practical implicationsBitcoin investors are suggested to include NFTs in their investment portfolio to mitigate the losses when Bitcoin falls. Meanwhile, the inclusion of crypto punk is advised for risk-averse investors who invest in gold. NFTs are powered by the Ethereum blockchain, indicating co-movement among them and thus, serve as diversifiers. Policymakers and regulators are suggested to watch closely over NFTs' great development and restructure the existing policies and thus, stabilization of asset markets can be achieved.Originality/valueThe originality aspects are: (1) focusing on the three blue-chip NFTs (i.e. BAYC, MAYC and CP) that are categorized as the largest NFTs by floor market capitalization; (2) testing the NFT attributes (safe havens, hedges or diversifiers) against traditional and digital assets, a.k.a., cryptocurrencies and (3) panel setting on 14 countries with the highest NFT users.

Environmental policy stringency, ICT, and technological innovation for achieving sustainable development: Assessing the importance of governance and infrastructure

Achieving sustainable development goals (SDGs) has garnered significant attention from academia and policymakers worldwide. In this study, we examine the impact of ICT, technological innovation (TI), and environmental policy stringency (EPS) on SDI, considering the moderating role of governance quality (GQI) and transport infrastructure (TIS). A comprehensive dataset of 17 advanced nations is utilized from 1996 to 2021. To capture the dynamic and extreme marginal impacts of these policy instruments on SDG attainment, we employ the advanced technique of Feasible Generalized Least Square (FGLS). The results demonstrate that ICT has a positive and significant effect on SDGs, particularly when combined with high levels of governance quality (GOV) and transport infrastructure (TIS). Likewise, TI has a positive impact on SDGs, especially in the presence of strong governance. Furthermore, EPS exhibits a positive association with SDGs. The findings also reveal that while governance hurts SDGs, this effect diminishes when combined with higher levels of ICT, TI, and EPS, and when TIS positively moderates the relationships. The robustness estimations using DOLS and PCSE methods validate the FGLS findings. These results underscore the importance of ICT, TI, and EPS in advancing sustainable development. Moreover, they highlight the significance of good governance and robust transport infrastructure in maximizing the positive effects of these factors. These findings hold implications for policymakers and stakeholders involved in promoting sustainable development.

Does Climate Change and Energy Consumption Affect the Food Security of European Union Countries? Empirical Evidence from a Panel Study

This study aims to provide empirical evidence on whether using renewable and non-renewable energy, CO2 emissions, and the resulting changes in temperature and precipitation can alter cereal yields in European Union countries. To this end, a panel data set covering 1992–2021 has been used to analyse the impact of climate change and economic factors on cereal production in European Union countries. The study employed various analytical techniques to better understand the impact of climate change and economic factors on cereal crop yields. These included using annual average temperature and rainfall to measure climate change, energy consumption, and economic growth to analyse the economic aspects. To achieve the objective, feasible generalised least squares (FGLS) models with robust standard errors and bootstrap and a quantile regression (QR) model with marginal analysis were employed. The Westerlund cointegration test confirmed the presence of cointegration between cereal production and climate variables, economic growth, and energy consumption. The results indicate that increases in temperature and precipitation may contribute to increased cereal production in European Union countries. In contrast, energy consumption, including renewable energy and CO2 emissions, may have a nonlinear effect on cereal production. Quantile regression analysis suggests climate change may impact crop yields most in countries with low and moderate cereal production per hectare. Increased CO2 emissions may increase yields in the initial period, but excessive CO2 may negatively impact cereal production in the long term. It would be advisable for countries with low and moderate crop productivity to consider implementing technological advances and combating global warming by modernising cultivation methods and making greater use of renewable energy sources.

IMPACT OF CLIMATE CHANGE ON RICE PRODUCTIVITY IN KHYBAR PAKHTUNKHWA, PAKISTAN

Climate change is currently the most significant concern on the planet. This study examined the impacts of climate change on rice yield across agro-ecological zones of Khybar Pakhtunkhwa, Pakistan. This study focused only on four districts across four agroecological zones in Khybar Pakhtunkhwa based on the availability of data on areas under rice, rice production, and meteorological variables. Districts Swat from Zone A, Mansehra from Zone B, Mardan from Zone C, and D.I. Khan from Zone D were selected. This study covered 33 years (1986-2018) of data across these four districts. Panel unit root tests of LLC and IPS suggested that all variables included in the model were stationary. Durbin Wu Hausman's test favored the fixed effect model compared to the random effect model. Diagnosis of fixed effect model results showed that it was plagued with problems of cross-sectional dependency, heteroscedasticity, and autocorrelation. Final findings were estimated using the Feasible Generalized Least Squares (FGLS) model to overcome the problems in the fixed effect model. Results revealed that area under rice crop has a positive and significant effect on rice yield. The estimated critical temperature for the maximum yield of rice was 34.48 ºC in the sowing stages, 35.85 ºC in the vegetative stages, and 29.43 ºC in the maturity stages, and Rainfall in the vegetative stages was 152 mm. It is concluded that rice yield showed a decline when temperature and rainfall exceeded the critical levels. The government needs to use afforestation and other appropriate measures to keep the temperature from rising in these three zones (zones A, C and D). The extension department needs to inform rice growers about adaptation strategies to climate change.

IS VIETNAM'S TOURISM DEMAND MODEL COMPATIBLE WITH THE EXTENDED GRAVITY MODEL?

The purpose of this study is to use an extended gravity model to examine the factors that influence the demand for tourism from origin nations to Vietnam. Data from eleven major marketplaces were gathered for the study between 2005 and 2020. The research employs stepwise regression techniques to choose variables and testing procedures to identify the most suitable model among Ordinary Least Squares (OLS), Random Effects Model (REM), Fixed Effects Model (FEM), and Feasible Generalized Least Squares (FGLS) models. The gravity model comprises variables associated with geographic features, tourism supply capacity, demand attributes, and interconnected variables. Surprisingly, geographical distance holds no statistical significance in the international tourist demand model based on the gravity model, a phenomenon bolstered by globalization. Conversely, the emerging investment factor in restaurants and hotels emerges as the most pivotal determinant influencing tourism demand. Hence, the tourism sector must devise nation-specific policies that target key influencing factors and actively appeal to potential source markets to attract visitors.

The association between institutional monitoring, political connections and audit report lag: evidence from the Malaysian capital market

PurposeThis study aims to examine the association between institutional investors’ ownership (IOW), politically connected firms (POCF) and audit report lag (AUDRL).Design/methodology/approachThis study employs a feasible generalised least squares (FGLS) model for panel data to examine the association between IOW, POCF and AUDRL for Malaysian publicly listed companies.FindingsThe findings reveal a statistically significant negative relationship between IOW and AUDRL, with this negative relationship being more pronounced amongst POCF. Additionally, the results demonstrate that the relationship between IOW and AUDRL varies depending on the domicile of IIs (local vs. foreign). Specifically, local institutional investors exhibit a negative and statistically significant relationship with AUDRL, whilst foreign institutional investors show a positive and statistically significant relationship with AUDRL.Originality/valueThe results of this study provide a new understanding of auditor responses to institutional investor monitoring and political connections (PCs) in an emerging economy.

The Importance of Social Capital in Promoting Financial Inclusion: An International Perspective

This paper quantitatively explores the significance of social capital in enhancing international financial inclusion, with a specific focus on its usage dimension, represented by formal credit coverage. Through panel FGLS (Feasible Generalized Least Squares) and PCSE (Panel Corrected Standard Errors) analysis of a sample comprised of 24 countries for the period 2006 – 2021 and utilizing data obtained from diverse sources, it demonstrates that a country's credit coverage is influenced by both informal and formal social capital while controlling by factors such as access channels to financial products, measures to address asymmetric information and educational levels. The results underscore that, while financial inclusion is promoted through internationally accepted standards, its effectiveness is closely intertwined with the social context of implementation. Furthermore, formal institutions play a crucial role in shaping financial inclusion by fostering innovation, entrepreneurship, and technological advancement, while attitudes to risk and planning time horizons also significantly impact this dynamic. Notably, nations embracing a pragmatic outlook tend to have more viable access to bank loans, whereas risk aversion impedes economic actors´ propensity to engage in credit agreements, even when accessible.

Evolving waste management: The impact of environmental technology, taxes, and carbon emissions on incineration in EU countries

Amid the urgent global imperatives concerning climate change and resource preservation, our research delves into the critical domains of waste management and environmental sustainability within the European Union (EU), collecting data from 1990 to 2022. The Method of Moments Quantile Regression (MMQR) results reveal a resounding commitment among EU member states to diminish their reliance on incineration, which is evident through adopting green technologies and environmentally conscious taxation policies, aligning with the European Union's sustainability objectives. However, this transition presents the intricate task of harmonizing industrial emissions management with efficient waste disposal. Tailoring waste management strategies to accommodate diverse consumption patterns and unique circumstances within individual member states becomes imperative. Cointegrating regressions highlighted the long-run relationship among the selected variables, while Feasible Generalized Least Squares (FGLS) and Panel-Corrected Standard Errors (PCSE) estimates roughly confirmed MMQR results. ML analyses, conducted through two ensemble methods (Gradient Boosting, GB, and Extreme Gradient Boosting, XGBoost) shed light on the relative importance of the predictors: in particular, environmental taxation, consumption-based emissions, and production-based emissions greatly contribute to determining the variation of combustible renewables and waste. This study recommends that EU countries establish monitoring mechanisms to advance waste management and environmental sustainability through green technology adoption, enhance environmental taxation policies, and accelerate the renewable energy transition.

Does Economic Complexity Influence Carbon Emissions? Evidence from Next Eleven Countries

Abstract Research Purpose The study examines the effect of economic complexity on carbon dioxide emissions in the Next 11 countries with the view to validate or refute the economic complexity-Kuznets curve (EcKC) between 1995 and 2019. The Next 11 countries include Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, South Korea, Turkey, and Vietnam. Design/Methodology/Approach Two econometric methods, correlated Panel standard error (PCSE) and feasible generalized least squares (FGLS) estimating techniques, are used to achieve the objectives of the study. Findings The estimates from the FGLS approach are consistent with that of the PCSE approach. The results from both techniques show that economic complexity increases carbon emissions in the Next 11 countries. Also, from the EcKC, the study invalidates the hypothesis and supports a positive monotonic linear relationship between economic complexity and carbon emissions, which also means the “pollution haven hypothesis”. Originality/Value/Practical Implications The study examines whether the environmental Kuznets curve (EKC) in the Next 11 countries is valid or not. To do this, the current study is different from earlier studies in that it uses economic complexity—that is, the economic complexity-Kuznets Curve (ECKC)—instead of GDP. This is explained by the fact that environmental issues should involve the development of more advanced commodities rather than just raising an economy's GDP productivity. And most of the countries in the Next 11 countries are currently shifting their economies to produce more complex goods.