Private Firms Research Articles

The Choice of Accounting Standards under Competing Tax and External Reporting Preferences: Evidence from Intangible Asset Reporting in Small Private Firms

The Choice of Accounting Standards under Competing Tax and External Reporting Preferences: Evidence from Intangible Asset Reporting in Small Private Firms

Life Satisfaction Among Chinese Aged Workers: Interplay of Organizational Justice, Workplace Emotions, and Subjective Age Perception.

Organizational justice, as a multifaceted construct, plays an essential role in shaping organizational behaviors vital for boosting productivity. Previous research has underlined its influential role in both task performance and organizational citizenship behaviors. Importantly, positive emotions stemming from perceptions of both distributive and procedural justice have been associated with heightened levels of life satisfaction. This study aimed to elucidate the mediating role of these emotions in the connection between organizational justice perceptions and life satisfaction. Participants (N= 588) in two waves of multisource data from fifteen private firms in China, have been aged workers from 40 to 60 years old. The findings revealed a significant mediation effect of positive emotions linking employees' perceptions of justice and their overall life satisfaction. In alignment with the Spill-over hypothesis, our findings underscore the importance of cultivating an equitable work environment. Such an environment does not only drive job-specific outcomes but also deeply influences employees' broader well-being and happiness. By grasping the intricacies of organizational justice and its myriad effects on employee satisfaction, organizations can devise precise interventions, thereby elevating both employee well-being and overall productivity.

Innovation Race, Politics, and Resource Misallocation

Purpose - This paper aims to explain how politics can affect the innovation race in the private sector. Ideally, politics can help the economy develop or grow faster. However, it can slow the economy by obstructing the innovative activities of firms. The main objective of this paper is to examine how politics generates inefficiency and cost through Nash competition for political gain.
 Design/Methodology/Approach - This paper launches a game-theoretic approach to find the impact that political competition can leave upon an innovation race and R&D investments. It is modelled that private firms are involved non-cooperatively in a dynamic game for innovation. The strategic choices of R&D investment represent a subgame-perfect Nash equilibrium.
 Findings - Before an election, political parties tend to announce a commitment to supporting innovative activities for the private sector. It is ideal that the commitment helps firms establish R&D investment schedules as early as possible, and their innovation contributes to improving social welfare. However, political over-competition raises the problems of inconsistency or inefficiency.
 Research Implications - Public supportive programs can be designed to inspire innovative activities. However, public supportive programs can obstruct innovative activities and hurt social welfare through the misallocation of public resources. This paper can contribute to the research area of R&D and trade.

An Economic Model of Media Ethics

Ethics and economic profits are considered to be trade-offs to one another. Akin to other disciplines, private media face the same dilemma. Pursuing more economic profit through increased viewership, advertising rates, or other practices usually comes at the cost of diminished ethical compliance. However, many studies highlight the importance of ethical guidelines in increasing revenues and profits in media organizations. This article aims to reconcile previous scholarship on the subject and develop an economic model of media ethics. The model is based on the literature and methodology of public economics, particularly that of public goods and externalities. It predicts that private media firms, when left to the perfectly competitive market, produce a greater quantity of news that may not be socially desirable and is of low quality and poor ethical compliance. When the social cost of producing ethical and quality media products is considered, the revenue of the private firms decreases, thereby suggesting an inverse relationship between ethical compliance and profits. This demands a case for libertarian paternalism, nudges, or incentives to restore private firms to the socially optimal equilibrium to ensure independent, ethical, free, and sustainable media.

Distance and Financial Connection: Dynamics in Private Firms’ Bank Loan Availability

ABSTRACT This study investigates the impact of borrower-lender distance on credit availability for private firms. Utilizing an extensive loan record history, we categorize loans into initial and subsequent borrowings. Our analysis reveals a consistent trend: loan size diminishes with increasing distance, even after accounting for Fintech effects. A noteworthy finding is the divergent role of financial connections. During initial borrowings, they mitigate the adverse effects of distance, while in subsequent borrowings, they become a positive signal to lenders, particularly post-soft information insights. These insights highlight intricate dynamics in credit availability, emphasizing the evolving roles of technology and financial connections in shaping lending relationships for private firms.

Client Employee Training and Audit Efficiency

SUMMARY We investigate whether client employee training facilitates a more efficient audit. Our hypothesis is that training improves the ability of the client personnel to process transactions accurately, improve internal control, and contribute to evidence gathering and information sharing in the conduct of the audit. Using a large sample of Belgian private firms with data on employee training, we find that a one standard deviation increase in clients’ training cost (hours) reduces audit fees by approximately 3.4 percent (1.7 percent). The effect is stronger for clients with highly educated employees. Using the Belgian labor status reform of 2014 as a natural experiment, we show that improving job security also reduces audit fees and enhances the negative association between training and audit fees. Consistent with higher audit efficiency, we also find a negative association between training and report lags. However, we find no association between training and audit quality.

Changing landscapes: helping caregivers, an experience from Tuscany.

Introduction: While multi-professional care interventions are guaranteed through an integrated care model, sometimes there is no possibility to support full-time assisting patients’ families in terms of allowing them the time for their life and home management activities. The role of the caregiver is essential throughout the day to address the patient’s needs: in this way, an appropriate level of well-being can be assured to who is undergoing the last stages of illness. The growing need for forms of support caregivers who assist those patients at home, generated a reflection by the family and community nurses operating in the territory of Pistoia, Tuscany. 
 Targeted population and stakeholders: Caregivers and families that care for under 63 patients in the end-stages of disease. 
 Timeline: The project started in 2022 and will not be interrupted. 
 Highlights: The patient may be untreatable, but never incurable: the healthcare professionals take care of the person and until the end. This resolution gave rise to the idea of a project called "Quick Assistance”, aimed at expanding the available services at the local level. It provides a package of 20 hours of a healthcare assistant presence at home to be used by the families needing them and provided by private firms. The activation of the service is guaranteed by the professionals’ network that revolves around the patient (Family and Community Nurses, GPs), that can identify a manifest, latent or unexpressed need and provide the appropriate response. The project is supported by the Società della Salute Pistoiese, a public entity constituted by Municipalities and the Local Health Autority for the associated exercise of territorial, socio-sanitary, and social activities. Where needs arise, care must be available to the patient and to the caregivers. This is the way in which the Tuscan NHS engages with the population, that is implementing the concept of integrated care at the microlevel, with the goal of enabling the extended concept of “patient” (patients and caregivers) to be at the centre of the care coordination. In other words, the system is adapting to the real needs expressed by the population, filling “unintentional gaps” that derive from an ongoing population knowledge process: through a participatory approach, solutions are shaped. This was the case of a 63-year-old patient in the last stages of illness that couldn’t benefit from the services offered by the system being him under 65, age above which the NHS provides for a very wide range of services, designed for elderly and fragile people. 
 Conclusions: The project aims to provide support to families in the surveillance and assistance of the patient. “Quick Assistance” strengthens the implementation of care provision at home and is effective in reducing the caregiver burden to prevent a more serious condition, as the caregiver’s burnout. The latter becomes more frequent in modern societies: that is due to changing cultural and social characteristics that have delegated the function of proximity and presence to external subjects.

The role of the strategic apex in shaping the disclosure strategy: A family firm in crisis

This study draws on attribution theory to examine how and by what means the firm's top management team, board members, and owner(s) (i.e., the strategic apex) shape disclosure strategies. Drawing on interviews and archival data spanning six years, we conduct a case study of a financially distressed private family-owned media group. Unique access to these data allowed us to peer into the disclosure strategy formation process that typically takes place behind closed doors in private firms. Our findings show that financial distress preceded the formation of the disclosure strategy and the voluntary disclosure practices designed to satisfy financially powerful stakeholders, and that internal whistleblowers act as a low-cost disclosure tool to inform financially weaker stakeholders. In addition, the development of the disclosure strategy is strongly influenced by the strategic apex, which forms collaborative teams, organises stakeholders and their information needs, and meticulously manages and controls the content and timing of voluntary disclosures. Our findings also suggest that a tightly knit disclosure strategy and voluntary disclosure practices are used to influence rather than inform, to manage stakeholder interactions, and to influence public opinion.

Have credit risk mitigation warrants eased the difficulty and expensive of financing for private enterprises?

ABSTRACT The Credit Risk Mitigation Warrants (CRMW), as the primary tools for supporting bond financing for Chinese private enterprises, have the capacity to guide the market in reducing risk concerns associated with private enterprises and alleviating their financing challenges. Consequently, CRMW has garnered sustained attention and support within the bond market. Few empirical studies have analyzed the effects of CRMW on private enterprise bonds in the Chinese market. Using a sample of 1,171 bonds issued by 210 private firms between 2018 and 2020, we conducted an empirical analysis to examine CRMW’s effect on the enthusiasm for private enterprise bond subscriptions and issuance costs. We find that private enterprises issuing bonds with CRMW can significantly increase the enthusiasm for bond subscriptions. CRMW’s effects in expanding such enthusiasm are more evident among high-rated private enterprises. The CRMW is more effective in non-listed, smaller-asset enterprises, while the effects of reducing bond issuance costs are more significant in lower-rated private enterprises. This study provides precise empirical evidence for lowering the difficulty of private corporate bond financing for CRMW. The study also addresses the debate in existing literature regarding whether CRMW reduces the cost of debt financing for private enterprises, and provides references for policy improvements related to CRMW.

The impact of cultural orientation towards secrecy on innovation

Our empirical analyses, based on a large international dataset of private firms, show that a cultural orientation towards secrecy significantly negatively affects the likelihood of investing in innovation. This finding is robust to a host of concerns and suggests that cultural orientation towards secrecy explains a significant portion of the cross-country variations in private firms’ innovation.

Rigid debt maturity structure and enterprise innovation

This paper selects Chinese A-share listed companies from 2011 to 2021 as a research sample to explore the relationship between rigid debt maturity structure and corporate innovation. It is found that rigid debt maturity structure has a positive impact on corporate innovation; private firms are more significantly promoted by long-maturity, rigid debt maturity structure than state-owned enterprises; the higher the rigid debt dependence, the more the firms' capital needs for technological innovation depend on rigid debt.

Money in the Digital Age: Exploring the Dynamics of the Digital Economy and Online Payment System Advancements

This research delves into the transformative evolution of online payment systems in India, unraveling a narrative shaped by government initiatives, burgeoning internet and smartphone usage, and a thriving e-commerce sector. Key players such as the Unified Payments Interface (UPI) and the Bharat Interface for Money (BHIM) app, introduced by the National Payments Corporation of India (NPCI) in 2016, have been instrumental in redefining the digital economic landscape. Notably, UPI has demonstrated exceptional growth, showcasing a compelling year-on-year performance.From its inception in 2017, witnessing a staggering 900% YoY growth and handling transactions valued at INR 67 billion, to the close of 2022 where it contributed nearly 86% of India's GDP, UPI's journey exemplifies a paradigm shift in online transactions. Despite challenges like the COVID-19 pandemic, UPI's momentum persisted, with a 72% YoY growth in 2021, resulting in transactions worth INR 5.6 trillion. The digital payment ecosystem's expansion is fueled by the increasing reach of the internet and smartphones, while the thriving e-commerce industry is projected to grow at a CAGR of 31%, reaching $200 billion by 2026. Private firms have played a pivotal role, with 16 distinct digital payment modes identified through stakeholder consultations with the Ministry of Finance and the Reserve Bank of India.This study not only highlights the monumental growth and significance of digital payments in India but also underscores the convergence of e-commerce and digital payments, reshaping the financial landscape. UPI's journey signifies the widespread adoption of digital transactions, driven by convenience, accessibility, and government-led initiatives. The amalgamation of e-commerce and digital payments fosters financial inclusion, propelling India towards a cashless society. The dynamic environment outlined in this research paper unveils vast opportunities for innovation and growth in the digital payment sector, leaving an indelible mark on India's economy and financial landscape.

Credit Resource Misallocation and Macroeconomic Fluctuations in China: From the Perspective of Heterogeneous Financial Frictions

Abstract In China, state-owned firms exhibit easier access to external credit but have lower productivity than private firms. We construct a dynamic general equilibrium model incorporating heterogeneous financial frictions to investigate their impact on credit resource misallocation and macroeconomic fluctuations in the Chinese economy. A calibration of our model suggests that heterogeneity in financial frictions can reduce macroeconomic volatility. The mechanism is that heterogeneity in financial frictions induces the procyclicality of credit resource misallocation within entrepreneurs, thus the procyclicality of productivity loss. The stabilization effect depends on the relative magnitude of the impact of the shock on credit resource misallocation within entrepreneurs compared to its impact on the output. In addition, we show that the cost of the stabilization effect of heterogeneity in financial frictions is that it reduces the economy’s aggregate TFP and output at the steady state. Our results imply that neglecting heterogeneity may overestimate the impact of financial frictions on economic volatility in previous studies.

Government Subsidy Nexus: The Case of Employment and Performance Dynamics

In this article, the impact of nexus of subsidy on economic growth and performance is examined, with focus on age influence. We analyse data from 1,272 Chinese manufacturing firms from 2007 to 2017 using quantile regressions and Generalized Method of Moments. The findings indicate that subsidies have a positive effect on employment growth but a negative impact on performance. Age is found to have a weaker moderating effect on the subsidy-performance relationship but a stronger effect on the subsidy-employment-growth relationship. Young and private firms experience alternating growth patterns, while state and matured firms consistently exhibit positive growth across all quantiles. The study also reveals that lagged employment and subsidy levels have a significant positive relationship with current employment-related issues, while performance shows a change in direction with lags. Our result shows that subsidy impacts better on growth rather than performance as a by-product. However, with limiting recommendations on governments efforts to overspend on young firms. We discuss our findings within the theoretical frameworks of the economics of subsidy and the theory of cost and benefit for emerging markets.

Environmental Strategy and Sustainable Performance: The Mediating Role of Environmental Innovation

This study investigates the interrelated connections between environmental strategy, environmental innovation, and sustainable performance in private firms located in the Erbil-Kurdistan region of Iraq. Using a quantitative research design, data was collected from 118 employees in 19 organizations to analyze the intricate factors influencing sustainable business practices. The study demonstrates a direct correlation between environmental strategy and both environmental innovation and sustainable performance. Significantly, environmental innovation plays a vital role in converting strategic environmental goals into measurable results. Path and mediation studies elucidate the sequential links among these variables, offering a thorough comprehension of the mechanisms in operation. This research focuses on the comprehensive aspect of sustainable business practices, making a valuable contribution to the strategic management literature. The results emphasize the significance of fostering a culture that promotes creativity in addition to implementing environmental strategies. The paper admits limitations and recommends avenues for further research, advocating a detailed analysis of elements that moderate and influence individuals at the individual level. Organizations are strongly encouraged to embrace a complete approach that combines strategic planning, innovation, and performance monitoring in order to promote long-lasting sustainability. Amidst the challenge of reconciling economic expansion and environmental stewardship, these ideas provide vital direction for successfully navigating the intricacies of the contemporary corporate climate and contributing to a more sustainable future.

An Analysis of Indigenous Knowledge Systems Through the Eye of ‘iintsomi’ (folk tales)

The Indigenous Knowledge (IK) and Indigenous Knowledge System (IKS) are separate and different from the ‘international knowledge system’, which includes knowledge generated by the scientific community, namely: Universities, research institutions, and private firms. International knowledge is knowledge created based on modern scientific systems, research, and development, which are all part of the global scientific and technological enterprise of human civilization. This knowledge is acquired through formal education and ‘book learning’ and boosted by advanced study, internships, training, and mentoring that essentially ensure that the existing paths and developments for scientific knowledge creation, confirmation, and distribution are maintained and continued, which by and large is western in alignment. Therefore, this article aimed at promoting the value and the role played by Indigenous Knowledge Systems in the community. This was done by analysing the role played by songs in selected iintsomi (folk tales). Methodologically, this was a qualitative study based on a literature review assessment. The central thesis is that Indigenous Knowledge (IK) as opposed to Western universalism originates in a community of locals with a broader cultural background and is rich in its tradition (s), teachings and human conduct. IK is believed to be a critical basis of mannerisms and is the intertwining factor in society. Keywords: Indigenous Knowledge (IK), Knowledge, iintsomi (folk tales), Western Universalism

What do Private Companies Prioritise When Implementing International Development Projects? Evidence from Four Central and Eastern European Donors

As donors channel more of their development assistance through private companies, a discussion is growing on what this shift means for international development. This paper focuses on four Central European donors, the Czech Republic, Hungary, Poland and Slovakia, who have recently implemented new incentives to promote the greater engagement of the private sector in their international development programmes. The paper uses new survey data of project managers at organisations implementing aid projects funded by these four donors to explore how private actors differ in their approaches to aid implementation. The analysis reveals that the type of implementing organisation does not affect their focus on internal project goals (budget, schedule, and scope), but project managers at private firms consider long-term impact and economic sustainability of the project less important. These findings support claims that for-profit organisations exercise a short-term approach to satisfy funders, but lack a deeper focus on long-term development.

Environmental protection tax and firms’ ESG investment: Evidence from China

We examine whether and how environmental protection tax (EPT) affects environmental governance performance of firms. To address this problem, we first construct unique indicators to present the different environmental governance of firms in the aspect of E, S, and G, and then combine them with panel data of Chinese listed companies from 2013 to 2020. Through the empirical analysis, we find that EPT has a positive effect on the ESG investment of firms, and the positive effect is more pronounced in private firms, firms with weak competitiveness, and firms located in cities with sound environmental justice. We also find that the pressure on tax payment cost and ex-post non-compliance cost caused by EPT improves the ESG investment of firms. Overall, this paper emphasizes the importance of EPT in promoting the environmental governance of firms.

Effect of the Strategic Emerging Industry Support Program on Corporate Innovation among Listed Companies in China

In this paper, we analyze the relationship between the Chinese government’s Strategic Emerging Industry Support Program and the innovation level of strategic emerging industry firms. We use panel data of A-share-listed firms from 2007 to 2017 and apply a difference-in-difference model. We obtain evidence that firms exhibit strategic innovation behavior in response to the Strategic Emerging Industry Support Program, as evidenced by firms focusing solely on increasing their research and development (R&D) input and number of patent outputs, neglecting innovation efficiency and quality, and failing to convert patent results into firm profitability. Moreover, we observe that the aforementioned support program, through the provision of subsidies, tax incentives, and easy access to credit, as well as the reduction in stock liquidity, prompts increases in firm R&D input and, consequently, the number of patents firms are granted. Our results also indicate that for state-owned enterprises in strategic emerging industries, government support in the form of subsidies and tax incentives has the strongest effect on innovation; by contrast, for private firms, innovation is more strongly stimulated through convenient credit support, tax incentives, and reduced stock liquidity. This paper provides empirical evidence on whether industrial policy promotes firm innovation and argues more generally whether government industrial policy is effective.

Do financing constraints affect the financial integrity of firms?

We use micro-survey data from 126,309 private non-financial firms in 138 developing nations during the period of 2006–2018 to investigate how financing constraints affect the integrity of their financial information. Our findings indicate that private firms with greater financing constraints are less inclined to undergo external audits voluntarily. This effect varies depending on factors such as firm size, business sector, ownership structure, accounting and auditing conditions, as well as the prevailing institutional environment. Our results remain robust even after subjecting them to various sensitivity and endogeneity tests. They suggest that financially constrained firms in developing countries may have stronger motivations to manipulate earnings, employ aggressive tax avoidance strategies, or be susceptible to managerial short-sightedness. Additionally, it is possible that finance providers rely on alternative mechanisms rather than audited accounts to monitor firm performance.