Board size,corporate regulations and firm valuation in an emerging market: a simultaneous equation approach

We investigate the association between board size and firm valuation for a sample of 169 firms from 2002 to 2011 in South Africa (SA). The SA corporate context is interestingly and uniquely characterised by an urgency to meet affirmative action regulations, such as black empowerment in board appointments, limited qualified and experienced directors, especially black directors, concentrated ownership, weak enforcement of corporate regulations and greater government ownership. These features make SA corporate boards perform a weaker agency (advisory, monitoring and disciplining) role than Western European and US boards, but a stronger resource dependence role, by providing access to resources, such as business contacts and contracts. This suggests that any positive impact of board size on firm valuation is likely to depend on the effective execution of the resource dependence role more than the agency role. Our results suggest that board size has a positive association with firm valuation, consistent with larger boards providing better access to resources. Overall, our results support the resource dependence role of boards more than their agency role. The results are robust across a raft of econometric models that control for different types of endogeneity, as well as different types of accounting and market-based firm valuation measures.     

Corporate financial soundness and its impact on firm performance: implications for corporate debt restructuring in Slovenia

This article studies the extent of corporate leverage and range of excessive debt of Slovenian firms during the recent financial crisis. Half of all firms (of those with some non-zero debt and at least one employee) are found to face an unsustainable debt-to-EBITDA leverage ratio beyond 4, accounting for almost 80% of total outstanding debt. Moreover, a good quarter of all firms experience debt-to-EBITDA ratios exceeding 10 and hold almost half of total aggregate net debt. We then examine how this financial distress affects firm performance in terms of productivity, employment, exports, investment and survival. We find that, while less important during the good times (pre-recession period), lack of firms’ financial soundness during the period of financial distress becomes a critical factor constraining firm performance. The extent of financial leverage and ability to service the outstanding debt are shown to inhibit firms’ productivity growth as well as the dynamics of exports, employment and investment. Micro and small firms are found to suffer relatively more than larger firms from high leverage in terms of export and employment performance during the recession period.     

Outsourcing of accounting tasks and tax management: evidence from a corporate tax rate change

The aim of this article is to investigate if small firms react to a national corporate tax rate reduction by managing their taxable income. In contrast to previous studies, we also analyse whether outsourcing of accounting tasks affects the magnitude of the reaction. Based on a sample of Finnish firms and measures of earnings management, evidence is provided that firms with an internalized accounting function are more active tax planners in this context. This study suggests that outsourcing of accounting tasks increases the corporate tax reporting quality.     

How does ownership structure affect capital structure and firm value?Recent evidence from East Asia1

The present paper examines the effects of ownership structures on capital structure and firm valuation. It argues that the effects of separation of control from cash flow rights on capital structure and firm value also depend on the separation of control from management as well as on legal rules and enforcement defining investors’ protection. We obtain firm‐level panel data (three stage least squares, 3SLS) estimates from four of the East Asian countries worst affected by the last crisis. There is evidence that the general wisdom that higher control than cash flow rights may lower firm value may be reversed among owner‐managed family firms in the sample countries.     

Taming uncertainty: towards a new governance approach for nuclear waste management in Belgium

We focus on the new governance practices in Belgian nuclear waste management (NWM) from its ‘participatory turn’ in the late 1990s. Rather than praising (or rejecting) participation versus expert analysis, we make use of a theoretical and analytical framework in which the relevant dynamics for the analysis are ‘opening up’ and ‘closing down’ technological appraisals and commitments. Even though NWM agencies often plead for an integrative approach between expert analysis and stakeholder participation, in practice both exercises are often kept separate. We address this separation and its consequences and we find that societal concerns remain subsumed in the technical options that have long been favoured by the Belgian agency. This article encourages scholars, waste managers, and decision-makers to scrutinise the moments and situations in which opening up would be desirable, and when, by contrast, it would be better to close down options in NWM.     

Quality-oriented growth: a new trend for Chinese firms

ABSTRACT

Based on data from the China Employer-Employee Survey (CEES), this study analyses the actual effect of quality-driven growth on firms’ performances in the economic transition of recent years. The results show positive and significant effects between the firms’ performance and quality-oriented growth, which is defined as a strategy that supports the spirit of greater entrepreneurial innovation, the advancement of input quality, and corporate governance improvement. Using a quality-driven growth mode, firms can effectively relieve the adverse effect of downward macroeconomic growth pressure on performance. This study proposes that China’s macroeconomic policy should shift from demand-oriented management to supply-oriented management, with a particular focus on quality development strategy. Moreover, firms should establish a quality-driven development strategy, facilitating a spirit of entrepreneurial innovation, advancing input quality, and improving corporate governance. This strategy will increase the firm’s performance, and effectively relieve the macroeconomic downward pressure.

Abbreviations: CEES: China Employer-Employee Survey, TFP: Total factor productivity     

内部控制法制化的理论依据、法律特征与实践影响

内部控制法制化的理论依据是管理者与股东在内部控制上的利益冲突,而内部控制治理功能是管理者与股东内部控制利益冲突的根源。内部控制有效性是影响财务报告可靠性的重要因素,但是,内部控制法制化在法律上独立于财务报告法制化。内部控制法制化可以有效抑制内部控制设计上的机会主义,但是不能有效抑制内部控制执行上的机会主义。面对内部控制法制化,管理者用内部控制执行上的机会主义代替设计上的机会主义,阻碍着内部控制法制化目标的实现。因此,要有效推行内部控制法制化,就必须解决内部控制执行的法律认定问题。     

Risk management and dynamic network performance: an illustration using a dual banking system

This study applies dynamic network data envelopment analysis to compare a dual banking system, namely conventional and Islamic banks, with emphasis on risk measures. Non-oriented, variable return-to-scale dynamic network slacks-based measure is used to model the banking performance for the period 2008–2012. Under the consideration of risk measures, the findings highlight that Islamic banks excel in managerial efficiency while conventional banks surpass in profitability efficiency. Furthermore, the regression results find that the number of directors on the risk management committee has a positive impact on banking performance. Meanwhile, the high number of independent directors improves the profitability efficiency but worsens the managerial efficiency.     

Natural capital and quality of life: a model for evaluating the sustainability of alternative regional development paths

Natural capital contributes to the quality of life of a region in two complementary ways: first, by directly providing environmental services that cannot be imported, and second, by supplying the natural resources that, through a human controlled production process, become valuable to humans. The evolution of the combination of these two components of the quality of life determines the path of development a region takes. Environmental services also determine the ability of natural capital to regenerate itself. Ecosystems and other components of the regional natural capital produce environmental services that provide life-support functions necessary for natural capital reproduction. The destruction of this critical natural capital impairs the internal sources of improvement of the quality of life of a region, leading to a non-sustainable path of development. This article describes a model of the relationship between natural capital and quality of life that provides a stricter definition of sustainable development through explicit characterization and classification of natural capital according to its ability to produce life-supporting environmental services, by its substitutability, and by its possible reconstruction. Application of this model then shows that there are 51 possible regional development paths, only 32 of which are sustainable and only 14 of which are sustainable while also providing improvements in quality of life. Only six of these 14 sustainable development paths are attained with economic growth, however, while the other eight paths increase quality of life by increasing the production of environmental services. The model could help in the development of institutional interventions that would promote regional development paths that are sustainable.     

Powering economic growth and development in Africa: telecommunication operations

This study investigates the effect of telecommunication operations on economic growth and development in selected African countries. The analysis considers a panel of 46 African countries from 2000 to 2015. To measure economic growth, real gross domestic product serves as the proxy, while economic development is measured by the Human Development Index, and telecommunication operations by a composite index of telecommunication computed from mobile line, fixed/CDM line and Internet access penetration via principal component analysis. The physical capital stock is measured by gross fixed capital formation, level of employment by the employment to population ratio, human capital development by enrolment in secondary education for both sexes and technology transfer by net inflows of foreign direct investment in Africa. The empirical results suggest that telecommunication operations promote economic growth and development in Africa. These results imply that for every positive expansion in telecommunication operations and physical capital stock, aggregate output and standard of living will adjust positively in Africa. Thus, an appropriate policy to improve overall investment in Africa and most especially in the telecommunication sector since the spillover effect cut across other sectors and the general economic performance.     

Complementarity between water pricing, water rights and local water governance: A Bayesian analysis of choice behaviour of farmers in the Krishna river basin, India

To ensure efficient water allocation and use, policy designers have adopted various strategies, including price setting, decentralising irrigation water management or improving water rights. Most of these strategies have been applied individually, without considering the complementary relationships between them. This paper uses a discrete choice model to analyse the scope for combinations of tools for irrigation water demand management and farmers' acceptance of these. In terms of local irrigation water governance, the presence or absence of collective irrigation water management, in the form of a Water Users Association, is considered. Water rights are specified in terms of the duration and quality of the entitlement and its transferability. Finally, four types of water pricing methods (area, crop, block and volumetric pricing) are considered. Using a choice experiment, we elicit the most preferred water pricing method, under different water rights situations, at different price levels and under various contexts for local irrigation water governance. Our results indicated that under conditions of improved water rights, preference for volumetric pricing increases, whilst the presence of a Water Users Association reduces this preference. Furthermore, it was found that using an appropriate combination of water demand management tools considerably increases the willingness to pay for a change in scenario.     

Converging scientific fields and new technological paradigms as main drivers of the division of scientific labour in drug discovery process: the effects on strategic management of the R&D corporate change

The thesis of this study is that the convergence of genetics, genomics and proteomics spurs new technological paradigms in medicine, which are generating a R&D corporate change: division of scientific labour of the drug discovery process by strategic alliances among firms in order to reinforce the integrative capabilities in different biomedical research fields and collective and cumulative learning between in-house R&D and external sources of innovation. This study shows, by key a case study of pharmaceutical companies, as scientific and technological paradigms in medicine are main drivers of industrial and R&D corporate change to enhance and accelerate the discovery process of ground-breaking drugs for more and more personalised healthcare.