Pooled OLS Estimator Research Articles

Testing the Economic Growth Path “Green-Resilience” Under Natural Resources Constraint in Asia-Pacific Economies

This study investigates the existence of the environmental Kuznets curve hypothesis under natural resources (NRs) constraint in nine Asian-Pacific countries with data spanning from 2000 to 2019. Using Pooled OLS estimations, results show that economic growth is on a pathway from which environmental quality is improved. Hypothesising that NRs exploitation is a potential factor that can exacerbate environmental quality, the study shows that the Asian economic structure is on a “green-resilience” path when controlling for total and each NRs component. The magnitude of each NR component in the ability of increasing CO2 emissions is characterised. Results are robust with different methods of estimations (control variables, alternative dependent variable, Two Stages Least Squares (2SLS)-3SLS Instrumental Variables strategies, Panel-Corrected Standard Error (PCSE) and Driscoll and Kraay methods). As policy implications, Asia-Pacific countries should amplify eco-innovation, development of renewable energies and fiscal policies as they positively impact FDI on green growth.

Gender-, Age- and Educational Attainment Level-Specific Output–Employment Relationship and Its Dependence on Foreign Direct Investment

This paper analyses the gender-, age- and educational attainment level-specific output–employment relationship and its dependence on foreign direct investment (FDI). The unbalanced panel covers 25 European Union countries’ data from 2000 to 2020. Empirical estimations are made using the pooled OLS estimator. The impact of FDI on gender-, age- and educational attainment level-specific output–employment elasticities is estimated by including the multiplicative terms between gross domestic product (GDP) and FDI in regression models. The main results indicate the positive impact of economic growth on employment, with the highest output–employment elasticities for males and youth regardless of gender. The estimation results also indicate limited abilities of economic growth to increase the employment of highly educated people and females older than 25 years regardless of their educational attainment level. Our results suggest that higher FDI level in the host countries is mostly associated with the decreasing employment reaction to economic growth. Although FDI is an important factor affecting the output–employment relationship, it does not help to solve the problem of unemployment in the EU, especially for youth.

Air pollution and tourism growth relationship: exploring regional dynamics in five European countries through an EKC model.

The present study intends to explore the relationship between tourism growth and air pollution at a regional level for five important tourism European destinations: France, Spain, Greece, Portugal, and Italy. Most of the studies found in the literature examine this relationship on a national scale and focus only on the CO2 pollutant, which is a greenhouse gas but not a critical pollutant in terms of air quality and human exposure. This research focuses on a regional basis (NUTS 2 classification) and takes into account the main critical pollutants in terms of urban air pollution (namely: NOx, PM10, and PM2.5), and considers 10 years, from 2009 until 2018. This work aims to investigate evidence of a tourism-induced Environmental Kuznets Curve (EKC) for the countries through the construction of five panels, one for each country, including different variables: the Gross Domestic Product, the energy consumption, and the number of nights spent at tourist accommodation establishments from both domestic and foreign tourists. The Levin-Lin-Chu unit root test proves the variables to be stationary, while the Pedroni cointegration test shows that they are integrated. The pooled OLS estimator is employed throughout the countries to check the relationship among the variables. Results reveal that the tourism-induced EKC hypothesis is not validated for any of the countries. The findings also show that in Portugal, Italy, and Greece, there is a negative relationship between economic growth and environmental pollution, while mixed evidence is found for France and Spain. Moreover, differences in the impacts of international and domestic tourists on air pollution are found: foreign tourists negatively impact emissions, while domestic ones increase them. This result is clear for Spain, Greece, and Italy. The Granger panel causality test is then conducted to see the causality among the variables.

Productivity and wage effects of the Iso9001 certification for leader and laggard companies in Italy

In this paper I study whether the adoption of the Iso9001 certification in Italy, between 2011 and 2019, has helped small firms to reduce the gap in productivity, profitability and wages paid to the workers, with the leading group of firms operating on the frontier. After a pooled OLS estimation, a difference-in-difference model with fixed effects has been applied. I find that Iso9001 certification does support firms below the frontier to partially recover the gap in terms of multifactor productivity incorporating the mark-up and profits, while no robust effect has been detected for the mark-up corrected productivity and wages.

Effect of Foreign Direct Investment on Growth-Unemployment Nexus

This paper examines the effect of foreign direct investment (FDI) on the growth-unemployment nexus. A review of previous contributions on Okun’s law uncovered which aspects of international relations are more prone to affect growth-unemployment nexus. It was found that inward FDI and outward FDI are most likely to affect this nexus. EU-28 panel data and interactive model with pooled OLS estimator were used to empirically test whether both inward and outward FDI moderates the relationship between growth and unemployment. The estimations showed that, as expected, FDI weakens the effect of growth on unemployment. Moreover, with an increase in FDI, the effect of growth on unemployment becomes less statistically significant.

Measuring economic, social and environmental wellbeing of Asian economies.

This study aims to address the economic, social, and environmental wellbeing issues simultaneously by measuring the carbon intensity of wellbeing (CIWB) of Asian economies employing Prais-Winsten and pooled OLS estimator. The measure of CIWB is made taking into account a ratio of the two indicators-CO2 emissions per capita and life expectancy at birth. There is a paucity of studies that concentrate on human and social wellbeing indicators (i.e., water, sanitation, life expectancy) together applying the Environmental Kuznets Curve (EKC) hypothesis. Therefore, we have also investigated the EKC hypothesis as this theory hypothesizes the link involving human and environmental wellbeing and development. The findings utilizing the two econometric techniques indicate that in both the estimation models urban population access to an improved water source and total population access to improved water source has consistently negative and significant effects on CIWB. The fertility rate and prevalence of HIV pose no threat to CIWB. These findings demonstrate that social and human wellbeing indicators of the Asian economies are sustainable to this moment as they are lowering CIWB which is desirable. Contrary, GDP per capita, exports as a percent of GDP, and urban population have a significant and positive impact on CIWB which poses a challenge for the sustainability issue. We also have found the existence of the EKC hypothesis indicating environmental quality will increase past a turning point. The findings of the paper are well matched with the view of the "Economic and ecological modernization" theory and "human ecology" theory.

Abnormal real activities, meeting earnings targets and firms' future operating performance: evidence from an emerging economy

PurposeThis paper aims to examine the extent to which real earnings management (REM) is used in Jordan to meet zero or previous year's earnings, and how this impacts the subsequent operating performance of Jordanian firms.Design/methodology/approachThe study used a sample of 98 Jordanian listed firms over the 2010–2018 period. To test the research hypotheses, which are formulated in accordance with both, agency theory and signalling theory, multivariate regression is performed using a pooled OLS estimation. Additionally, a two-step dynamic generalised method of moment (GMM) model has been estimated to address any concerns regarding the potential occurrence of endogeneity issues.FindingsThe results show that Jordanian firms that meet zero or last year's earnings tend to exhibit evidence of real activities manipulations. More specifically, suspect firms show unusually low abnormal discretionary expenses and unusually high abnormal production costs. Further, consistent with the signalling earnings management argument, the authors find that abnormal real-based activities intended to meet zero earnings or previous year's earnings potentially improve the subsequent operating performance of Jordanian firms. This implies that REM is not totally opportunistic, but it can be used to enhance the subsequent operating performance of Jordanian firms. Our findings are robust to alternative proxies and endogeneity concerns.Practical implicationsThe findings have several implications for policymakers, regulators, audit professionals and investors in their attempts to constrain REM practices to enhance financial reporting quality in Jordan. Managing earnings by reducing discretionary expenses appeared to be the most convenient way to manipulate earnings in Jordan. It provides flexibility in terms of time and the amount of spending. The empirical evidence, therefore, reiterates the crucial necessity to refocus the efforts of internal and external auditors on limiting this type of manipulation to reduce the occurrence of REM activities and enhance the subsequent operating performance of listed firms in Jordan. Drawing on Al-Haddad and Whittington (2019), the evidence also urges regulators and standards setters to develop a more effective enforcement mechanism for corporate governance provisions in Jordan to minimise the likelihood of REM incidence.Originality/valueThis study contributes to the body of the accounting literature by providing the first empirical evidence in the Middle East region overall on the use of REM to meet zero or previous year earnings by Jordanian firms. Moreover, the study is the first to empirically examine the relationship between REM and Jordanian firms' future operating performance.

SOCIO-ECONOMIC AND INSTITUTIONAL DETERMINANTS OF FOREIGN DIRECT INVESTMENT IN SOUTH ASIA

Determinants of foreign direct investment (FDI) is the key area of research in development economics. Earlier studies did not give due weight to the segregation of analysis across economic, social, and institutional factors for FDI. This study specifically attempts to explore the intervening role of social and institutional factors which affects the relationship between economic factors and inward FDI. For this purpose, three segregate models relating to economic, social, and institutional factors along with a composite model comprised of all these factors are taken into consideration in this study. Panel data utilized is related to South Asian countries from 2008 to 2016. In the light of Breusch-Pagan LM Statistics, Pooled OLS estimates are preferred for analyses. This study leads to the conclusion that in segregation analysis economic factors and institutional factors have an important role in attracting FDI, but social factors have no significant role in this regard. The intervening role of social and institutional factors is not found in this study. The only factors which are recognized in the composite analysis are economic. Enlarged market size having an efficient financial market with no inflationary pressure is found to be an economic environment in the South Asian region which is helpful for attracting FDI. The rule of law is not found to be an effective characteristic for inward FDI.

CAPITAL STRUCTURE AND CORPORATE PERFORMANCE OF LISTED PHARMACEUTICAL COMPANIES IN NIGERIA

This study examined capital structure and corporate performance of listed pharmaceutical companies in Nigeria. The study specifically analyzed the impact of short-term debt (STD), long term debt (LTD) and Firms Size (FZ) on return on equity (ROE). The study focused on five pharmaceutical companies listed on the Nigeria stock exchange. Secondary data were collected from annual reports of sampled pharmaceutical companies over a period of six years (2012-2017) and were analyzed using descriptive analysis, correlation analysis, pooled OLS estimator, fixed effect estimator, and random effect estimator and Hausman test. The most consistent and efficient estimator revealed that short term debt exerts insignificant positive effect on return on equity, with coefficient estimate of 0.094800 (p=0.0946> 0.05), effect of long-term debt is negative and significant, with coefficient estimate of -0.302446 (p=0.0094< 0.05), and firms size exert insignificant negative impact on return on equity, with coefficient estimate of -0.026763 (p=0.3892> 0.05). The study concluded that using large proportion of debt significantly influence the performance of pharmaceutical companies in Nigeria. The study recommends that firms should consider the mixture of equity and debt for better performance of the organization, since they are major determinants of corporate performance.

Estimation of heterogeneous panels with systematic slope variations

We analyse estimation procedures for the panel data models with heterogeneous slopes. Specifically we take into account a possible dependence between regressors and heterogeneous slope coefficients, which is referred to as systematic variation. It is shown that under relevant forms of systematic slope variations (i) the pooled OLS estimator is severely biased, (ii) Swamy’s GLS estimator is inconsistent if the number of time periods T is fixed, whereas (iii) the mean-group estimator always provides consistent estimators at the risk of high variances. Following Mundlak (1978) we propose an augmentated regression which results in a simple and robust version of the pooled estimator. The latter approach avoids the risk of large standard errors of the mean-group estimator, whenever T is small. We also propose two test statistics for systematic slope variation using the Lagrange multiplier and Hausman principles. We derive their asymptotic properties and provide a local power analysis of both test statistics. Monte Carlo experiments corroborate our theoretical findings and show that for all combinations of N and T the Mundlak-type GLS estimator outperform all other estimators.

Capital Structure and Profitability of Manufacturing Firms listed on the Nigerian Stock Exchange

This study examined capital structure and profitability of manufacturing firms listed on theNigerian stock exchange. Specifically the study analyzed the impact of disaggregated variables of debt finance(Short term debt and long term debt) and equity finance (share capital and share premium) on profit aftertax. Secondary data were gathered from annual reports of sampled firms over a period of ten years (2008-2017) and were analyzed using panel data estimators such as pooled OLS estimator, fixed effect estimator,random effect estimator, Hausman test, and Pesaran test of cross sectional dependence. The findings revealedthat short term debt has insignificant positive effect on profit after tax of manufacturing firms showing inspecific term a coefficient estimate of 0.114985 (p=0.5890> 0.05) long term debt exerts significant positiveimpact on profit after tax, with specific coefficient estimate of 0.578290 (p=0.0001< 0.05) share capital exertssignificant positive effect on profit after tax, with coefficient estimate of 0.784525 (p=0.0000< 0.05) sharepremium exerts insignificant negative effect on profit after tax, with coefficient estimate of -0.000395 (p=0.9924> 0.05). The study concluded that short term debt has declining effect on the profitability ofmanufacturing firms in the country, while the long term variable of debt finance of firms spurs the rate ofprofitability. In clear term disaggregated debt finance subsets exerts significant effect on the profitability offirms sampled in the study. On the other hand equity finance disaggregated into share capital and sharepremiums reflect that share capital has significant positive effect on profit after tax, while share premium hasinsignificant negative effect on profit after tax.

Liquidity and The Profitability of Manufacturing Firms in Nigeria

This study examined the relationship between liquidity and profitability of manufacturing firms in Nigeria. The study specifically analyzed the effect of cash ratio, current ratio and quick ratio on profit after tax of the manufacturing firms in Nigeria. Secondary data were collected from annual reports of sampled firms over a period of ten years (2007-2016) and were analyzed using panel data estimators such as pooled OLS estimator, fixed effect estimator, random effect estimator, Hausman test, panel co-integration and pooled granger causality tests. The findings revealed that financial liquidity proxy in terms of quick ratio (QR) had a negative and insignificant impact on profit after tax with coefficient estimate of -0.094121 (p=0.2247 > 0.05). Financial liquidity measured in terms of Cash ratio (CR) exert positive and significant impact on profit after tax with coefficient estimate of 0.379774 (p=0.0121< 0.05). Result also showed that financial liquidity measured in terms of Current ratio (CNR) exert insignificant negative impact on profit after tax with coefficient estimate of -0.024989 (p=0.1163 > 0.05). Meanwhile the study revealed that quick ratio (QR), cash ratio (CR) and current ratio (CNR) has 0.581533 (58.1%) variation in profit after tax (PAT). Result further revealed that that there is no long-run relationship between liquidity and profitability of manufacturing firms in Nigeria. The study concluded that financial liquidity has helped to improve financial performance selected manufacturing firms in Nigeria. Also, that cash ratio has positive and significant effect on the profitability of manufacturing Firms in Nigeria. Thus, firms in the manufacturing industry should objectively try to reduce their bill receivable, so as to guide against waiting longer to collect from customers, for the purpose of increasing their profitability.

Statutory Allocation and Budget Implementation in Southwest Nigeria

This study examined statutory allocation and budget implementation in Nigeria. This study covered all the six states of southwest geopolitical zone of Nigeria including Lagos State, Ogun State, Oyo State, Osun State, Ondo State and Ekiti State, over the period of 10 years spanning from 2008 to 2017. Data used in the study were collected from National Bureau of Statistics, Office of the Accountant General of the Federation, and annual budget of the selected states. The study made use of static panel estimation techniques such as pooled OLS estimator, fixed effect estimator and random effect generalized least square estimator, as well as Dumitrescu-Hurlin panel based granger causality test. Result showed that statutory allocation exerts insignificant, positive impact on actual expenditure to the tune of 0.109719 (p = 0.000 causal relationship between statutory allocation and actual expenditure of southwest states in Nigeria. The study thus established that though impact of statutory allocation on actual expenditure is positive, such impact is not significant in the context of southwest states, and that past period statutory allocation to southwest states does not significantly depict the level of budget implementation in the current period. In addition, this study established among other things that there is heterogeneity effect across southwest states in the discourse of statutory allocation and budget implementation. Thus the study underscores the place of states uniqueness in the matter of budget implementation. Hence state government especially in the southwest geopolitical zone should device budget implementation plan based on the reality, their revenue generating capacity, without much dependence on federal government allocation in other to improve the effectiveness and efficient of revenue mobilization and disbursement for project execution and state management for each fiscal year.

Internal Resources Mobilization and Financial Control of Government Budget in Southwest Nigeria

This study examined the impact of internal resources mobilization and financial control of government budget in southwest Nigeria. The study focused on all the southwest states over a period of 15 years (2003 to 2017). Pooled OLS estimation, fixed effect estimation and random effect estimation were used in the study, alongside trend analysis. Result showed significant trend of resources mobilization performance, though with varying strength of fluctuation across the sampled states. Internally generated revenue exert positive significant impact on government financial control measured in terms of revenue budgeted actual variance (0.407566, p = 0.000 < 0.05) and in terms of expenditure budgeted actual variance (0.1694784, p = 0.000 < 0.05). This study concluded that internal resources mobilization has significant positive influence on the level of financial control of government budget in Southwest Nigeria. Hence state government in southwest Nigeria should ensure adequate generation of revenue within the States, so as to boost the level of financial control in government budget process.

Poverty and Adverse Peer Relationships among Children in Germany: a Longitudinal Study

Low socioeconomic status is regarded as a risk factor for social exclusion and victimization of children, but empirical evidence is mixed. Using longitudinal data from parent-child dyads of the German Family Panel (pairfam), we apply both pooled OLS (POLS) and fixed-effects regression models to test whether children experience more peer relationship problems if they live in a household with adverse economic conditions, i.e. with a household equivalence income below the poverty line. As fixed-effects models are based on intraindividual change over time, it is precluded that time-constant attributes of the child and its environment bias the estimation. We also estimate POLS models to link our results to prior research and to identify the role of time-constant factors such as migration background and parental education. We find a significant association between poverty and adverse peer relationships in the POLS estimations, but not in the within (fixed-effects) estimations. Parental education and family structure are found to significantly increase the likelihood of peer relationship problems, whereas this is not the case for migration background. Our findings imply that while children from disadvantaged families experience more adverse peer relationships, poverty itself is not the cause, but rather factors related to social status.

Free Cash Flow and Firms' Growth: An Empirical Investigation of Nigerian Quoted Non - Financial Firms

This study analyzes the effect of free cash flow on the growth of non- financial quoted firms in Nigeria. Specifically, the impact of free cash flow on the percentage change in a total asset of selected quoted firms (Dangote Flour Mills, Honeywell Nig. Plc, Dangote Sugar Refinery, Flour Mills of Nig. Plc, and PZ CussonsPlc) over a period of five years (2012 - 2016) was analysed . Data used in the study were sourced from the annual reports of the selected quoted firms. Correlation analysis, restricted F - test, Hausmantest, and some panel estimation methods (pooled OLS estimation, fixed effect estimation, and random effect estimation) were employed to analyse the data. Results revealed that free cash flow exerts a negative impact on firms ' growth rate, to the tune of - 0.000391(p=0.179 &gt; 0.05). The study, therefore, established that rising free cash flow has the capacity to erode the growth prospect of firms quoted on the Nigeria stock exchange. Based on this result, the study recommends that quoted firms in the country decrease their free cash flow, leverage increased turnover, explore viable/positive net present value projects, and reduce operational costs so as to be positioned for better growth in terms of percentage change in total asset.

Corporate Structural Changes And Financial Reporting In Nigerian Banking Industry

This study examined the impact connection between corporate structural changes and financial reporting in Nigerian Banking Industry. The study specifically analyzed the impact of changes in share capital and change in share premium on profit after tax, and earning per share. The study focused on five commercial banks in Nigerian including Access banks Plc, Diamond banks Plc, First bank Plc, Guaranty trust bank Plc, and First City Monument banks Plc. Secondary data were collected from annual reports of sampled banks over a period of five years (2011-2015) and were analyzed using panel data estimators such as pooled OLS estimator, fixed effect estimator, and random effect estimator. The most consistent and efficient estimator revealed that corporate structural changes measured in terms of changes in share capital has insignificant positive impact of profit after tax given the reported coefficient estimate corresponding to change in share capital that stood at 5.729072 alongside probability value of 0.308. Corporate structural changes measured in terms changes in share premium exert insignificant negative impact on profit after tax given the reported coefficient estimate of -.5492376 alongside probability values of 0.122. Result also showed that corporate structural changes measured in terms of change in share capital exert significant negative impact on earnings per share, while corporate structural changes measured in terms of change in share premium exert insignificant impact on earnings per share. The study established that any changes in the structural composition of finance mix in terms share capital and share premium exert measurable influence of indicators such as profit after tax and earnings per share reported by firms for awareness of the operational outcome for the years to stakeholders including government, regulatory authorities as well as standpoint for investment by prospective investors. Thus firms in the banking industry should objectively design corporate structural framework that can withstand flexibility and dynamics of business operation in the industry, so as to guide against excessive inconsistencies in financial reporting as a result of structural changes.

Impact Of Corporate Taxation On Dividend Policy Of Quoted Firms In Nigeria

This study examined the impact of corporate taxation on dividend policy of selected quoted firms in Nigeria. Specifically, it analyzed the impact of company income tax and educational tax on dividend per share of 10 randomly sampled consumer goods firms. Data used were collected from the published annual reports of the selected firms over a period of 5 years spanning from 2011 to 2015. Panel data estimation techniques employed in the study are pooled OLS estimation, fixed effect estimation and random effect estimation. The most consistent and efficient estimation result showed that company income tax has insignificant positive impact on dividend per share β=.0000659 (p=0.705 > 0.05), education tax exert insignificant positive impact on dividend per share β=0.0142983 (p=0.088 > 0.05). It was concluded in the study that corporate taxation has no clear cut influence on dividend distribution policy of quoted consumer goods firms in Nigeria. Thus, firms are advised to devise investment and financing framework that will give room for adequate and consistent dividend distribution, and strive toward capacity expansion and operational efficiency to foster increased profitability, which is a sine-qua-non for higher dividend distribution.

Insurance Investment in Strategic Human Capital Development: The Pains and Gains from Panel Microdata

This study examined the effect of insurance investment in strategic human capital development (SHCD) on performance of insurance companies in Nigeria. The fact that investment in SHCD is one of the most topical issues in the Nigerian insurance management and the continuous weak performance of insurance sector made this investigation necessary. The major objective of the study therefore was to examine the effect of insurance investment in staff training & development, wages & salary, retirement benefits compensation on employee value added (EVA), gross premium written (GPW), return on asset (ROA), and return on equity (ROE) of insurance companies. The study employed a quantitative research design and collected data from 20 insurance companies listed in Nigerian stock Exchange (NSE) over 2010 to 2014. The analysis was performed using pooled OLS, fixed effect and random effect estimation techniques. Results indicated that investment in SHCD on aggregate has no significant relationship with EVA but does with GPW, ROA and ROE whereas investment in SHCD practice like retirement benefits allowance has no relationship with all dimensions of performance of insurance companies. It was concluded that insurance investment in SHCD affect its performance unevenly. We recommend that management of insurance companies should train and develop its staff, devise incentivized salary and wags packages and committed to after work life benefits. This way, its SHCD investment will yield all-round proportionate increase in its performance in Nigeria.

IFRS ADOPTION AND PERFORMANCE OF QUOTED CONSUMER GOODS MANUFACTURING COMPANIES IN NIGERIA

Abstract Globalization has generated the need for a world-wide harmonized Standards of Accounting and financial reporting for the benefit of users and preparers of the financial reports. This study seeks to investigate the Adoption of International Financial Reporting Standards (IFRSs)by Nigerian Quoted Consumer Manufacturing Companies with the view of establishing empirically, the appropriateness or otherwise of the adoption. An ex-post-facto research design was adopted for the study. Secondary data were obtained from the audited annual financial reports of ten (10) of such manufacturing companies purposively selected from the population of manufacturing companies listed on the Nigerian stock exchange for a period of five (5) years (2010-2014). The data analysis was done using the pooled OLS estimator through the aid of Stata software version 11. The findings show that there is no significant relationship between the adoption of IFRS and performance of manufacturing firms listed on the Nigerian Stock Exchange. However, the findings of this study might be affected by the choice of accounting policies of the companies under investigation and some environmental factors such as the economic, socio-cultural, political and legal factors. Hence, one can therefore assert that, although the adoption of IFRS is not significantly related to the performance of Quoted Consumer Manufacturing Companies, Nigerian companies’ adoption of IFRS is worthwhile in view of the fact that it enhances better accountability, comparability, transparency and as well, improves the quality of financial reporting, however, IFRS is not an end in itself but a means to an end.