Firms In Countries Research Articles

International currency legal relations and international economic relations: interconnection and interaction

International currency relations are considered through the prism of international economic relations. It is emphasized that the latter arise between subjects from different countries, between tax residents of different tax jurisdictions regarding the production, distribution, exchange and consumption of goods, provision and receipt of services, capital circulation.
 It is argued that international economic relations are manifested at different levels of the economy (micro-, meta-, macro-levels). Where the macro level is the level of state and interstate international processes; metalevel these are international ties of industry and regional importance; micro level is the level of connections between firms of different countries.
 International economic contacts, international economic interaction, international economic cooperation, international economic integration are considered in detail.
 It is proved that the existence of international economic relations gave impetus to the formation of international economic and international currency (monetary) law. So, in the context of international economic law, international currency law and the corresponding legal relations arose as early as the 19th century, and they received the greatest development in the second half of the 20th century. In the XIX-XX centuries currency and financial systems are actively developing both domestically and internationally. It also gave impetus to the formation and development of economic and financial science.
 The stages of the evolutionary development of the world monetary and financial system are considered. The main principles of the organization of currency relations in different periods are analyzed.
 Alternative options to the existing currency system proposed by various authors are critically considered.
 It is proven that the formation and development of international trade relations, the world economy, and the world currency system contributed to the formation of a certain system of legal norms regulating relations in the currency sphere. At the same time, such norms are considered within the framework of different legislation, studied in different academic disciplines.

Factors for Capital Structure towards Firm Performance: Evidence from Listed Manufacturing Firms in East African Countries

Factors for Capital Structure towards Firm Performance: Evidence from Listed Manufacturing Firms in East African Countries

Labor protection and stock price crash risk: Evidence from international equity markets

We utilize the exogenous intertemporal variation in employment protection across countries and study the impact of employment protection on international equity markets. We find robust evidence that firms located in countries with weak labor protection regulation exhibit a low level of one-year-ahead stock price crash risks relative to those in countries with strong labor protection regulation. It is consistent with the view that when employees face material unemployment risk, they are more incentivized to engage in information search and analysis, thereby curtailing the effectiveness of managerial bad news hoarding activities (i.e., the protection heightening risk hypothesis). Our findings are robust to a battery of sensitivity tests. Further evidence shows that the impact of employment protection on crash risk is more pronounced for firms with a higher proclivity to suppress bad news and for firms in countries with stronger legal enforcement. Our findings have important implications for policymakers concerning equity extreme risk and labor protection around the globe.

Social trust and the choices to provide audited financial statements by private firms in emerging markets

Our study explores the association between social trust and private firms' choices to provide audited financial statements. By exploring an international sample from emerging markets, we find that private firms in countries with higher social trust are less likely to provide audited financial statements. This finding arises because social trust helps address contracting imperfections, substituting for audited financial statements in mitigating agency problems. Our study suggests that social trust renders private firms rely less on audited financial statements to facilitate contracting. We contribute to the literature on private firms’ financial reporting choices and the role of social trust in shaping economic decisions.

Lawyers in the boardroom and firms’ environmental performance

This paper studies whether and how firms’ legal environment influences their environmental performance. After presenting new evidence on the positive link between civil law origin and firms’ environmental outcomes, we propose and show that directors with legal study or work experience exert a stronger impact on firms’ environmental outcomes in civil law than in common law countries. The results suggest the compliance effect of legal directors is stronger for firms located in civil law countries than the litigation risk effect for firms in common law countries. Using a quasi-natural experiment of the Paris Agreement, we find evidence consistent with our interpretation.

Knowledge sourcing and national technological development: The weak internationalization of R&D in South Korea

South Korea has developed strong technological capabilities in firms based in the home country rather than through the R&D activities of subsidiaries in foreign countries. Investigating knowledge sourcing patterns in Korean firms offers new insights into cross-border knowledge sourcing in international businesses. Hence, this study investigates how firms in a home country with weak internationalization of R&D source international knowledge. Specifically, using patent data from the United States Patent and Trademark Office (USPTO), this study employs a probit model to examine the impact of Korea’s comparative technological development on the knowledge-sourcing behavior of its firms. The results show that Korea's comparative technological development influences firms' international knowledge sourcing, their technological diversity, and cross-country geography. Our findings have practical applications in developing public policies for emerging market countries to enhance their domestic capacity for international knowledge sourcing and keep up with the advanced technologies available in selected locations worldwide.

The Effect of Language on Income Smoothing: Cross-Country Evidence

We examine whether and how the time-oriented tendency embedded in languages influences income smoothing. Separating languages into weak- versus strong-future time reference (FTR) groups, we find that firms in weak-FTR countries tend to smooth earnings more. We also find that relationships with major stakeholders (i.e., debtholders, suppliers, and employees) amplify the effect of the FTR of languages on income smoothing. Additional analyses suggest that income smoothing driven by the FTR of languages enhances earnings informativeness. These findings provide new insights on the role that language plays in financial reporting decisions and on how relationships with major stakeholders influence the relation between an important feature of language and corporate income smoothing behavior. This paper was accepted by Brian Bushee, accounting. Funding: L. A. Myers acknowledges financial support from the University of Tennessee [the Haslam Chair of Business and the Haslam Family Faculty Research Fellowship]. Supplemental Material: The data files and online appendix are available at https://doi.org/10.1287/mnsc.2021.01753 .

Culture and payout policy: International evidence

The purpose of the study is to examine the effect of national culture on corporate payout mix policy (dividends and share repurchases). Using an extensive data set covering 55 countries during 1980–2018, we find that the national cultural dimension significantly affects the payout policy mix, choice, and levels. Firms in countries with high uncertainty avoidance, masculinity, long-term orientation, and indulgence vs. restraint are inclined to pay out through share repurchases. In contrast, firms in countries with low uncertainty avoidance, masculinity, long-term orientation, and indulgence vs. restraint tend to pay out through dividends. Our findings are robust to control for firm and country characteristics, alternative payout ratios, different culture proxies, sub-period samples, and subsamples.

CORPORATE SPECIFIC ATTRIBUTES AND THE PERFORMANCE OF LISTED FIRMS IN SELECTED SUB-SAHARA AFRICA COUNTRIES

The paper investigated the effect of corporate specific attributes on financial performance by employing samples from listed non-financial firms in Sub-Sahara African countries of Kenya, Nigeria, and South Africa between the periods of 2012-2021. The study sourced data from annual reports of non-financial firms in Nigeria, Kenya, and South Africa. The model evidenced that, the series are evenly spread, are not faced with multi-collinearity issues, and that the robust fixed effect model is appropriate for the study since the p-value of the Hausman Test estimated at 0.000 is below 0.05 significant level. Evidently, the results obtain from the fixed effect regression shows that, firm size has an inconsiderable (insignificant) positive effect on firm performance both in Kenya and Nigeria. However, it has an insignificant negative effect on firm performance in the case of South Africa. Again, liquidity (current ratio) has an insignificant positive effect on firm performance. Furthermore, asset tangibility has a negative and insignificant effect on the performance of understudied firms in Kenya but reduce the performance of understudied firms in Nigeria. In the case of South Africa, asset tangibility improves the performance of South African firms minimally. However, only leverage was consisted in the three sampled firms in that leverage has a negative and significant effect on the performance of firms in Kenya, Nigeria and South Africa. Meanwhile, cash-flow from operations exerted direct yet considerable effect on understudied firms in Kenya but had adverse yet negligible effect on understudied firms in Nigeria. Hence, the paper submits that, managers of SSA firms should endeavor to reinvest profitability into the firm, which will increase the growth of the company and enhance financial performance.
 Keywords: Corporate Specific Attributes, Performance, Listed Firms, Sub-Sahara Africa Countries.

A Systematic Review of Agile-Adaptive Balanced Scorecard and Sustainable Performance: Bibliometric, and Future Direction

While sustainability initiatives have gained recognition and significance in modern organizations, they often encounter obstacles within firms, especially SMEs. Consequently, the adoption of integrated tools like AABSC has become crucial, replacing traditional BSC tools, to empower managers to make informed decisions amid sudden economic fluctuations. However, the adoption of AABSC remains limited in the literature review and is still in the process of dissemination and adoption by scholars and researchers. Therefore, this study aims to analyze the literature that has adopted AABSC in developing countries, particularly to focus on SMEs. The research methodology involved a systematic review of the ScienceDirect, IEEE, Scopus, and Web of Science databases from 2010 to 2021, resulting in the gathering of 1,841 papers. These articles were then filtered based on inclusion and exclusion criteria defined in the systematic review protocol. From the findings, a total of 39 articles were selected and divided into four distinct categories. The first category encompasses MAS, accounting for 20.50%, followed by AABSC at 10.26%. The third category pertains to sustainable performance, representing 30.77%, while the final category consists of Hybrid Studies, accounting for 38.46%. Nevertheless, the systematic review also highlights the necessity for more rigorous evaluations regarding the adoption of AABSC. This research has implications for both the body of knowledge and practice, as it sheds light on the outcomes and potential benefits of implementing AABSC in developing country firms, particularly SMEs.

The Effect of Time Orientation in Languages on the Recognition of Goodwill Impairment Losses

Synopsis The research problem In this study, we investigated the relationship between future-time reference (FTR) in languages and goodwill impairment. Motivation Previous studies on goodwill have focused mainly on firms’ economic and reporting incentives in single-country settings using economic theories. There have been recent calls for more research on goodwill accounting across countries (d’Arcy and Tarca, 2018), and greater use of behavioral theories in goodwill accounting studies (Amel-Zadeh et al., 2021). In response, we applied the linguistic relativity hypothesis to a new and highly significant area of future-oriented behavior (impairment decision) to explain cross-country variations in goodwill impairment reporting. The test hypotheses We hypothesized that firms in countries that use weak-FTR languages have higher levels of (and greater quality) goodwill impairment than those in countries that use strong-FTR languages. Target population We used a sample of 15,179 firm-year observations taken from firms reporting under IFRS across 21 countries for the fiscal years 2005–2018. Adopted methodology We used Tobit regressions, logit regressions, mixed-effects modeling, and propensity score-matching analyses for robustness. Analyses We tested the relationship between FTR in languages and (a) goodwill impairment decisions, (b) goodwill impairment amounts, and (c) abnormal goodwill impairments. We repeated our main analyses using several subsamples, different measures of FTR, and alternative regression specifications. Findings In line with the linguistic relativity hypothesis, our findings indicate that managers who speak weak-FTR languages are more willing to bear the costs of their impairment decisions in the present and are less motivated to shift current impairment into future accounting periods. In contrast, speakers of strong-FTR languages tend to delay the recognition of current impairments to future periods to reduce their anxiety about the negative effects of current impairment decisions. Findings from further analyses indicate that firms in weak-FTR countries report lower abnormal goodwill impairment, thereby bringing impairment levels closer to their normal optimal levels. Our inferences are robust to alternative samples, different measures of FTR, and alternative model specifications.

Characteristics of the boards of directors at firms listed on Nasdaq Baltic

The board of directors plays a pivotal role in firm governance, endorsing strategic choices, coordinating operations, ensuring regulatory compliance, and furnishing organizational support. This paper aims to examine the characteristics of the boards of directors and the guidelines for board composition in publicly listed firms in the Baltic countries. The analysis consists of two stages. The first is a quantitative investigation of the attributes of boards (board size, CEO duality, gender diversity, foreign directors, board committees, board independence, and directors’ occupational background) targeting 35 firms and 187 directors. The second is a qualitative analysis of guidelines for board composition of Nasdaq Baltic-listed firms in Estonia, Latvia, and Lithuania. The results reveal that the attributes of boards of directors do not raise concerns. Despite their relatively smaller scale in contrast to the United States or Europe, the boards of Nasdaq Baltic companies align effectively with their respective firm sizes. Notably, CEO duality is absent in Estonian and Latvian listed firms, while it is only partially evident in Lithuania. Moreover, directors’ heterogeneous professional backgrounds distinctly contribute to these boards’ overall enhancement. While the existence of board committees is strongly recommended, they are primarily implemented as a tool for controlling.

Government Support During COVID-19 and Corruption

We analyze the allocation and effectiveness of government support in response to the COVID-19 outbreak across a nationally representative sample of firms in 32 countries representing different levels of institutional transparency. The probability of receiving government support is higher for larger firms, firms belonging to business support groups and innovative firms in low corruption countries. In high corruption, countries firms competing against unregistered establishments, with lack of internationally recognized quality certification and no formalized business strategy are more likely to receive government support. Using the panel structure of the data to address reverse causality, selection bias and unobserved heterogeneity, we then find that government support improves firm-level outcomes more strongly in low corruption countries. Among different types of government support, we find wage subsidies to be more effective in high corruption countries while technical assistance for adoption of digital technologies in low corruption countries. In addition, social distancing and lockdown policies do not seem to be as effective in improving firm-level outcomes in high-corruption countries most likely because of weaker capacities to enforce such policies. These results show the importance of enhancing systems of accountability and enforcement procedures that will ensure that fiscal stimulus aid is deployed to benefit those who need it the most.

Differential impact of ICT on MSMEs' productivity in Africa’s emerging market

The observed low level of information and communication technology (ICT) usage among micro, small, and medium-sized enterprise (MSME) firms in many African countries may serve as a major constraint to their productivity. The productivity of service and manufacturing firms is impacted differently due to this low uptake of ICT. This paper seeks to examine the differential effects of ICT on MSMEs’ productivity in emerging African economies, specifically Egypt and Nigeria. This study evaluates the effects of ICT on MSMEs’ productivity across different sectors (services and manufacturing), by size and aggregated. The estimated results support the positive impact of MSMEs’ website presence and use of email on their productivity, though the magnitude varies across different analyses and sectors. This appears to support the differential sectoral impacts of ICT on MSMEs’ productivity across countries in emerging markets. Specifically, this study finds evidence for a higher impact of firms’ website presence on productivity in the manufacturing sector than the services sector across emerging economies. The study, therefore, recommends that emerging markets economies that want to implement appropriate national technology policies to enhance their firms’ productivity should always consider their differential effects on various sectors, as universal ICT policies may not achieve the desired objectives.

Global value chains and firms’ environmental performance

This paper analyzes the link between joining global value chains (GVCs) and firms’ environmental performance. Based on new survey data for firms in countries in Central Asia, Eastern Europe, and MENA, we use propensity score matching (PSM) to compare similar companies that differ in terms of GVC participation. Our results show that firms that enter GVCs perform better across several environmental indicators. In particular, these firms are more likely to adopt environmentally friendly production technologies, comply with more demanding standards and regulations and, in the case of manufacturing firms, monitor CO2 emissions along their supply chains. Moreover, by combining PSM with difference-in-differences, we find that becoming active in GVCs is also linked to more efficient energy use. Our results are stronger for firms in non-EU countries, and highlight the importance of environmental regulation in ensuring that global supply chains go hand in hand with greener production.

FDI deregulation and firm innovation: Evidence from firm patents

This paper studies whether inward FDI deregulation promotes innovation by firms in the host country. A theoretical framework, in which the entry of additional foreign firms is associated with both spillover and competition effects, is built to guide the empirical evaluation. Exploiting data on Chinese firm-level patents in a difference-in-differences setting, this paper finds a positive and significant impact of FDI deregulation on firm innovation. Moreover, we find that FDI deregulation had a heterogeneous effect on firms: the impact was prominent on firms with high productivity while being insignificant on firms with low productivity.

Global value chains and knowledge spillover to local economy in Visegrad 4 countries

AbstractThis study empirically examines knowledge spillover in Visegrad Four (V4) countries, with an emphasis on global value chains (GVCs). Using patent statistics, the study aims to estimate the knowledge production function, including domestic and foreign knowledge stocks, and found that international knowledge spillover does not contribute much to the innovation of the local economy in the V4 countries because of three factors: i) multinational corporations' (MNCs) strategy to locate a low-cost production base, ii) MNCs' strategy to locate supporting (process, production or non-core product related) research and development (R&D) activities and iii) limited technology spillover effect from MNCs to local firms. Local firms in the V4 countries became dependent on the peripheral products and technologies provided by MNCs, and as a result, local R&D activities in the V4 countries were diverted from patentable innovation.

Digital divide: accessing digital technologies for firms in BOP countries

PurposeDigital technologies (DTs) are key and essential in firms and communities. Countries in low-income areas, such as Bottom of the Pyramid (BOP) contexts, struggle with digital development. To understand how firms in BOP countries access DTs, a qualitative study was conducted to provide insight into how firms in these contexts access DTs and the challenges they face while accessing these technologies.Design/methodology/approachAn in-depth qualitative study was done, which included semi-structured interviews with digital enterprises. In total, 12 chief executive officers (CEOs) and owners of small and medium-sized businesses (SMEs) from Ghana and Nigeria were interviewed. NVivo 12 Pro was used for thematic analysis.FindingsFour main findings were identified as follows: (1) how firms in BOP contexts access DTs, (2) the challenges in accessing DTs, (3) factors considered when selecting a technological provider in BOP contexts and (4) solutions and recommendations to the challenges identified. From the results, cost, low technological infrastructure, high transaction costs, regulatory issues, lack of trust, poor digital skills and lack of support were among the barriers to accessing DTs in BOP contexts.Research limitations/implicationsGovernments and stakeholders of firms in BOP contexts need to be intentional with their digitalization development to ensure digital inclusion.Originality/valueThe study developed a synopsis of the factors involved in accessing DTs in BOP contexts and is the first to conceptualize firm digital access in BOP contexts.Peer reviewThe peer review history for this article is available at: https://publons.com/publon/10.1108/OIR-05-2023-0213

Corporate tax evasion: Evidence from international trade

This paper investigates how firms misreport their imports and exports to lower their reported taxable profits and evade corporate income taxes (CIT), which I call the trade evasion channel. Based on correlations between tax rates and mirror statistics of trade flows between countries at the product level, I find evidence suggesting that firms under-report exports (sales) and imports (costs) simultaneously to lower reported taxable profits while maintaining consistent income statements. For a representative firm, the resulting elasticity of reported taxable profits is 0.24, which suggests that the trade evasion channel is quantitatively important. Multinational firms do not exploit this channel, nor do firms in countries with a large informal economy, where other evasion options are available.

Public governance and the demand for corporate governance: The role of political institutions

Our study explores the association between political institutions and the demand for corporate governance. Stulz (2005) suggests that government expropriation reduces the value of corporate governance realized by investors. Accordingly, we argue that strong political institutions induce higher demand for corporate governance because they constrain government expropriation. Exploring an international sample, we find that firms in countries with stronger political institutions implement more governance provisions. Mediation analysis demonstrates that political institutions work through the channel of constraining government expropriation. Moreover, government expropriation makes shareholder direct control over firms more prevalent, where political institutions influence the allocation of control rights between managers and investors, which affects the demand for corporate governance. We contribute to the corporate governance literature and the agency problem literature.