Non-financial Sector Research Articles

The influence of ownership structure on the extent of CSR reporting: An emerging market study

AbstractTo examine how different ownership structures, varying from diverse ownership bases to narrow ownership bases, influence the extent of corporate social responsibility (CSR) reporting by companies in emerging market. The motivation for this study is the reported inconsistent results for this association in developing countries and the lack of research in emerging markets. Eight hundred observations of 80 nonfinancial sector listed companies in the Amman Stock Exchange for the period 2006 to 2015 were used for a content analysis to assess the extent of CSR reporting. Ordinary least square multiple regression analysis was undertaken to examine the association between five different ownership structures and their extent of CSR reporting. The results reveal three separate associations between the types of ownership and the extent of CSR reporting. First, the two types of ownership (foreign and government) have a significant and positive influence on the extent of CSR reporting. Second, another two types of ownership (Family and managerial) have a significantly negative association. Finally, institutional ownership has an insignificant and negligible influence on the extent of CSR reporting. These findings provide insights into how ownership structure influences the CSR reporting extent by emerging market companies such as Jordan. These findings suggest that policy makers, regulatory bodies, companies, and investors should increase their awareness about how different concentration of company ownership influences the extent companies voluntarily disclose CSR reporting. The evidence adds to the limited body of knowledge about different ownership groups' influence on the extent of CSR reporting in a developing country because few empirical studies have undertaken such a comprehensive analysis of this association.

PENGARUH PROFITABILITAS, FIRM SIZE DAN AKTIVITAS PERUSAHAAN TERHADAP PENGUNGKAPAN SUSTAINABILITY REPORT

The purpose of this study is to look at the effect of profitability, firm size, and company activities on disclosure of sustainability reports. The measurement index used as a reference for the sustainability report in this study is the Global Reporting Initiative (GRI) G4. The population in this study is non-financial sector companies listed on the Indonesia Stock Exchange in 2016-2019. The sample companies in this study were selected based on a purposive sampling method with several criteria to obtain 10 sample companies. After the data are collected, data analysis is done using multiple linear regression analysis with the help of the SPSS program. Based on the results of the analysis, it shows that the profitability variable has a negative effect on the disclosure of sustainability report. And company activities variable has a positive effect on the disclosure of sustainability report. While the firm size variable did not affect the disclosure of sustainability report.
 
 Keywords: Profitability, Firm Size, Company Activities, Sustainability Report.

ASSET RETRENCHMENT DAN PERFORMA PERUSAHAAN: EFEK PADA BERBAGAI STAGE LIFE CYCLE PERUSAHAAN

Asset retrenchment strategy is one way for a company to stay afloat in financial distress and to improve firm performance. However, previous research has mostly focused on companies operating in mature industries. This study aims to examine the effect of Assets Retrenchment on firm performance in different competitive environments. The population used in this study are companies from non-financial sector listed on the Indonesia Stock Exchange between 2010 and 2020. The sample size was determined using the purposive sampling method. Research data was collected from Osiris then analyzed using regression analysis techniques using SPSS software. Overall, asset retrenchment strategy is positively correlated with increasing firm performance. The implications of the findings will be taken into account in decision-making for management in choosing a turnaround strategy in dealing with financial distress and to improve company performance.

Elite recruitment in US finance: How university prestige is used to secure top executive positions.

Status attainment theories assert that individuals are recruited based on the length and functional background of their training. Elite theories assume that top managers often deviate from these socially acceptable mechanisms of status attainment to entrench their advantage. In this study, focusing on the US financial sector, we investigate whether educational institution prestige—rather than the subject or length of education—increasingly influences appointments to top executive positions. We analyze 1987 US top executive managers affiliated with 147 firms from both financial and non‐financial sectors in 2005 and 2018. Our study demonstrates that alumni of prestigious universities have a strikingly higher likelihood of attaining a top executive role in finance than in non‐finance. Within finance it is no longer investment banking, but private equity, that contains the highest proportion of elite university graduates. Our findings suggest that notwithstanding the major power shifts between finance and non‐finance—and also within the finance sector—elite groups still dominate the most symbolically valued education, and as a result, top managerial positions.

Environmental regulations and trade credit activities of corporate sector: A new panel data evidence

Trade credit activities include such business operations e.g., production, distribution, and consumption of industrial goods that have greater impact on environmental quality. Therefore, such business operations are directly affected from various environmental regulations and respond dynamically. Given that, this study articulates the impact of various environmental regulations on the trade credit activities of corporate firms. The empirical analysis is based upon annual data covering the span of 2007–2016 of non-financial sector firms founded in 11 Asian economies. We hypothesize that environmental regulations have a significant impact on trade credit activities and test this hypothesis by employing the two econometric techniques named panel PQR (Panel Quantile Regression) and system GMM (generalized method of moments) model. The statistical outputs corroborate the underlying logic of all alternative hypotheses, implying that the carbon tax rate has a negative while the other three environmental regulations including environmental tax, environmental policy stringency index, and green growth productivity have a positive and significant impact on accumulated trade-credit activities. The current empirical analysis particularly supports the notions of Porter's win-win hypothesis and suggests the various policy implications to both corporate managers and environmental policy officials.

TAX AMNESTY, CORPORATE SOCIAL RESPONSIBILITY, GOOD CORPORATE GOVERNANCE TERHADAP PENGHINDARAN PAJAK

Some elements of this research are important elements in the company, but also become one of the elements of the company to do tax avoidance. This study aims to prove empirically the effect of tax amnesty, Corporate Social Responsibility (CSR), and Good Corporate Governance (GCG) on tax avoidance by companies. The data in this study used a sample of all non-financial sector companies that have been listed on the IDX with a total sample of 591 companies for 3 years, selected using purposive sampling technique. The hypothesis that was tested using multiple linear regression models. The results showed that the tax amnesty had a positive and significant effect on tax avoidance. CSR has a positive and significant effect on tax avoidance. Meanwhile, GCG which is proxied by independent commissioners and audit committee has a negative and significant effect on tax avoidance.

The Relationship Between Agricultural Value Added, Investment and Consumption: Vector Error Correction Model Approach

The purpose of this study was to determine the impact of the relationship between agriculture on investment and consumption in Indonesia. This study uses data from a period of 36 years, from 1985 to 2020 by vector modeling to understand causal relationships between variables. This research is based on secondary data from the world bank. We use the variables of value-added agriculture, consumption, and investment in Indonesia. We find that macroeconomic variables such as agricultural value-added, consumption to GDP, and non-financial investment have a mutually influencing relationship. Changes that occur in one variable will affect other variables. With the decline in the value-added of agriculture, the level of consumption of the total GDP in Indonesia will increase. This happens because in Indonesia the decline in agricultural value-added can make consumption increase due to imports of agricultural products which increase along with it. However, an increase in consumption will also increase the value-added of agriculture, an increase in investment in the non-financial sector will increase the value-added of agriculture, and an increase in investment will increase consumption.

Blowing the whistle on corporate fraud: the role of regulators and journalists in the financial vs non-financial sectors

ABSTRACT We investigate the role of the regulatory environment and the press freedom in detecting corporate fraud. We study 1,242 internal frauds from 79 countries during the period of 2011–2019. The importance of regulation is assessed by splitting the sample into the highly regulated and monitored financial sector and the non-financial sector subject to less strict internal standards and industry-specific regulation. To examine the importance of journalists in fraud detection, we use the Word Press Freedom index and postulate that in countries with free media more internal frauds are detected. We find empirical evidence on a global sample that in the financial sector designated authorities (professional bank supervisors) play an important role in fraud detection. For the non-financial sector, we show that the media is crucial in detecting corporate fraud: the more freely journalists can write, the more events are detected.

Economic Activity And Employment in the Non-Financial Sector of Bulgaria under Conditions of Covid-19 Crisis. Sectoral Vulnerability Assessment

This article examines the economic consequences in the non-financial sector of Bulgaria as a result of the Covid-19 pandemic. The analysis of the development of the pandemic in Bulgaria from a medical point of view leads to the conclusion that the health factor for the crisis will not be overcome soon. The mutations of the virus and the fluctuating rates of vaccination in Bulgaria are likely to put the country in need of periodic lockdowns (restrictions) of some economic sectors for at least a few more years. For this reason, it is particularly important to highlight the most vulnerable sectors in order to provide more targeted support, rather than supporting sectors and businesses that do not need support, which only creates inflation. The article identifies a set of criteria for assessing sectoral vulnerability to restrictions imposed by the government and health authorities in connection with the pandemic.

Variability in the impacts of partisan conflict: a new perspective from bank credit

The purpose of this article is to analyse the impact of partisan conflict on bank credit, and take the global financial crisis as the time node to analyse the variability of this impact before and after the financial crisis. This article examines the impacts of partisan conflict on the bank credit by employing the US data covering the past 40 years and captures the variability in the effects of partisan conflict based on the rolling sample and time-varying parameter VAR analysis. The full sample results reveal that one standard deviation partisan conflict shock will shrink the bank credit growth rate to nonfinancial sectors, and the negative effects of partisan conflict on bank credit are more substantial after the global financial crisis. The rolling sample and time-varying parameter VAR analysis further confirm that the impacts of partisan conflict shock have varied substantially over time, where bank credit still negatively reacts to the impacts of partisan conflict in recent periods. Additionally, we estimate two extended models and support the intermediate role of economic policy uncertainty in transmitting the partisan conflict and the substitution effect of cross-border bank lending on domestic bank credit. Finally, our major results are unchanged by performing a series of robustness checks. The conclusion of this article is that partisan conflict has a significant impact on bank credit and shows obvious variability, which is more significant after the global financial crisis.

A cross-impact analysis of the bank payment card market parameters and non-financial sectors’ indicators in the Ukrainian economy

In Ukraine, card payment systems develop at a rate similar to that of modern digital payment instruments in most European countries. The purpose of the paper is to establish interdependence and explain the nature of changing situations in the market of bank payment cards (BPC) taking into account the dynamics of economic development parameters in non-financial sectors of the Ukrainian economy. The methodology of the study includes graphic methods analyzing the dynamics of economic development indicators and a method for analyzing the cause-and-effect relationship between the studied parameters considered with different lags. Results showed that the most significant parameters for the development of the payment card infrastructure were the level of provision with POS terminals and the share of non-cash transactions. Their correlation with the economic development indicators reached 0.97. Up to the stage when the volume of non-cash payments by cards reached 5% of GDP, the impact of the BPC market on the change in the level of economic development had been insignificant according to the general idea. The development of the economy up to that point stimulated the development of the BPC market. Subsequently, the BPC market that was already sufficiently developed became one of the drivers aimed at the development of non-financial sectors of the Ukrainian economy after overcoming the 5% GDP level.

Impact of CEO Characteristics on Capital Structure: Evidence from a Frontier Market

Manuscript type: Research paper Research aims: This study examines the impact of CEO characteristics on the capital structure of non-financial listed companies in Sri Lanka Design/methodology/approach: This study employs multiple regression selecting a sample based on a data set from a panel of 123 mainboard listed companies which covers all the non-financial sectors of the Colombo Stock Exchange for an eight-year period from 2012 to 2019. Research findings: This study finds a significant positive relationship between male CEOs and capital structure. It suggests that male CEOs tend to employ more debt within the capital structure due to their aggressive nature and overconfidence. Similarly, this study finds a significant positive relationship between CEO’s age and capital structure. The evidence provides that as they age, CEOs tend to have more experience, better risk management capabilities, and enhanced business sense to take proper financing decisions at the right time with more debt financing. Theoretical contribution/originality: Since there is no research conducted on CEO characteristics and capital structure in the Sri Lankan context, this study has made a significant contribution to the local literature and mitigates the gap in the frontier market literature. Practitioner/policy implications: The findings are helpful for the organisations when appointing key decision-makers to run the organisation and make strategic choices based on formulating corporate policies among debt and equity. Research limitation: The study has been limited to six CEO characteristics; there are other factors such as risk appetite levels that may have implications and the study has not focused on any impact towards real financing decisions. Keywords: CEO Characteristics, Capital Structure, Frontier Market, Non-Finance Companies, Sri Lanka, Upper Echelon Theory. JEL Classification: G32

Asset Commonality and Credit Expansion by Banks in Pakistan

Purpose: Diversification by the majority of the banks in a system contribute to the progression of systemic risk on one hand and affects the lending behaviors of the banks on the other. Since lending behaviors of the banks directly affect the availability of credit to the non-financial sector, the situation may worsen, as a consequence of systemic risk. In this study, we examine the relationship between asset commonality and credit expansion by commercial banks in Pakistan.
 Design/Methodology/Approach: We use post-global financial crisis data ranging from 2011-2020. A dynamic model is employed with a two-step system GMM technique to control for the problems of autocorrelation and endogeneity, as indicated by the pre-diagnostic tests.
 Findings: Our results show that asset commonality significantly affects credit expansion by banks in Pakistan. Moreover, the direction of the relationship is negative implying that the asset commonality of the banks in Pakistan, induces banks on the individual level to contract credit to the non-financial sector.
 Implications/Originality/Value: The findings are helpful for policymakers to devise and implement a prudent regulatory framework for the monetary sector, by not only targeting risk indicators of the financial sector but also keeping in view its repercussions to the real sector of the economy.

INFLUENCE OF RETURN ON ASSET (ROA) AND CURRENT RATIO (CR) ON BOND RATING


 
 
 
 Bond rating is something that should be considered for investors and issuers before making a decision on bond investment. This study aims to determine the effect of ROA and CR on the Rating of Bonds. The research population is non-financial sector companies listed on the Indonesia Stock Exchange in 2013-2017. The research sample amounted to 22 companies out of 453 population numbers using the Purposive Sampling method. Data analysis techniques use logistic regression. Results: 1) ROA has a positive and significant effect on bond ratings. 2) CR does not affect the bond rating.
 
 
 

Factors influencing the disclosure of additional financial and non-financial information by large enterprises

Nowadays, more than ever, stakeholders are demanding that additional information are disclosed in addition to financial information as part of corporate reporting. This need is being recognized by regulators, who have begun to enact laws requiring large companies to disclose at least the required information and financial information. This study aims to examine some of the possible company characteristics that may influence the extent of information disclosure, particularly the direction of their influence and significance. The study was conducted on twenty (23.53%) listed companies operating in the real sector (non-financial sector) on the Zagreb Stock Exchange. Initially, the content analysis method was used to analyze the reports. In addition, multilinear regression was conducted to measure the influence of specific company characteristics. The research results revealed that the type of auditor, ownership structure, and size of the board of directors have a statistically significant positive influence on the quality of published financial and non-financial information. In contrast, the quotation days have a negative but not statistically significant influence at the 5% significance level. Finally, even though the overall results regarding the disclosure quality can be interpreted as satisfactory, there is room for further improvement regarding financial and non-financial reporting transparency.

Network Effects and Characteristics of Cross-Industrial Tail Risk Spillover in China

In recent years, the Chinese capital market has suffered several violent shocks, and the characteristics of systemic risk contagion across industries and markets have become increasingly important. It brings great potential danger to the stability of financial markets. Therefore, exploring the risk spillover among the real sectors has gradually attracted the attention of scholars. This paper examines the cross-industrial tail risk spillover network in the Chinese financial market. The characteristics and the dynamic contribution of each industry in the tail risk transmission chains are explored. We use the ∆CoES-ENGDFM-LVDN model based on monthly data from 2006 to 2020 to measure the tail risk of 28 industries in China and form a cross-industrial tail risk spillover network. The results show that different industries have different levels of spillover and importance in the network. Tail risk mainly spills over from the nonfinancial sector to the financial sector. The nonbank financial industry is the main recipient of tail risk spillover and is becoming progressively more important in the risk network. In addition, with the promotion of industrial structure, emerging industries such as communications, computers, and health care have begun to play more important roles in the tail risk spillover network in China. This paper not only enriches the research in the areas of tail risk spillover and systemic risk, but also has implications for regulators to maintain financial stability and prevent financial risks.

Evidences and Determinants of Zombie Firms: Implication on Economic Growth

The study examined determinants of zombie firms using a sample of seventy five (75) listed non- financial firms in Nigeria. The correlation statistics, panel fully modified ordinary least squares (FMOLS) and panel ordinary least squares estimation methods were applied to analyze the data for the period 2012 to 2019. The study evidenced about 17.3% existence of zombie firms in the non-financial sector. Capital adequacy, interest coverage ratio, earnings before interest, and tax and firm age were found to be the key drivers of zombie phenomenon in the Nigeria clime. These drivers of zombie phenomena were also found to contribute adversely to the economic development of Nigeria, although the impact was not significant. The study concludes that the infiltration/prevalence of zombie firms causes a dragging effect on the economy of Nigeria. The study recommends that the regulatory authority should develop a framework with which firms with a zombie status can be monitored and managed in order to safe guide the interest of shareholders and the adverse implication on economic development. Firms whose performances are akin to zombie firms’ status should be encouraged by regulatory authorities to embrace mergers and acquisition schemes to avoid loss of shareholders wealth and the dragging effect on the economy.

Operational Analysis Of Strategic Plan Based On The Perspective Of Balanced Scorecard Performance Of Hospital Employees At Royal Prima Hospital Medan

Performance appraisal using the Balanced Scorecard method measures a hospital’s performance comprehensively from both the financial and non-financial sectors. As a health service company must have a comprehensive, coherent, balanced and measurable performance appraisal system. This study aims to analyze, test, and measure the performance of the hospital by using The Balance Scorecard case study at Royal Prima Hospital Medan. According to the balanced scorecard, the research problem was how about the performance of Royal Prima Hospital Medan in the period of 2018-2020. The assessment was done from four perspectives: financial perspective, customer perspective, internal business perspective, and growth and learning perspective. The research used mixed methods, a research step by combining two types of research, qualitative and quantitative research. The data were gathered by conducting a documentary study on financial statements, medical records, and personnel records. Primary data were obtained from the interviews with the management and distributing questionnaires to customers and employees in the hospital. The results of the research showed that the performance of the financial perspective on economic ratios is not yet economical, while the efficient and effectiveness ratios are very good, the financial performance of Royal Prima Hospital Medan has been very effective and efficient from 2018 to 2020. The Hospital performance from the customer perspective in the period of 2018-2020 for the percentage of customer retention is still not good, customer acquisition is very good and customer satisfaction is quite good. The performance of internal business perspective in the period 2018-2020 was not good in which the percentage of BOR, BTO, and TOI were not in accordance with the standard of the Ministry of Health. The performance of the percentage of growth and learning at Royal Prima Hospital Medan perspective in the period of 2018 - 2020 shows a fairly good percentage.

INFLUENCE OF FIRM'S SIZE AND AGE ON LEVERAGE OF LISTED FINANCIAL FIRMS IN NIGERIA

Size and age impact firm leverage in any organisation, being in the financial or non-financial sector. Little concerning how these firm characteristics affect leverage in the Nigeria Financial sector is known. This study examines the firm size and listing age on the leverage of listed financial firms in Nigeria. Data extracted from annual accounts of 49 financial firms over 12 years (2008-2019). Descriptive statistics and inferential statistics wear used to estimate the relationship between a firm's size, listening age, and leverage. The study reveals that firm size is negatively and significantly related to the firm's leverage. Age has a positive and significant effect on the leverage of the financial sector. The study suggests that firms continuously employ debt capital to benefit from available tax shields, ultimately enhancing profitability. The limitation of the study is that the survey covered only financial institutions listed on the Nigeria stock exchange as of 2019. The study contributed to the existing finance theory and literature by using empirical evidence from an emerging market to bridge the gap in knowledge of the influence of size and age on the leverage of financial firms.

Revisiting the role of audit and compensation ‘committees’ characteristics in the financial performance of the non-financial sector through the lens of the difference generalised method of moments

Revisiting the role of audit and compensation ‘committees’ characteristics in the financial performance of the non-financial sector through the lens of the difference generalised method of moments