A survey on institutions and new firm entry: How and why do entry rates differ in emerging markets?

This paper considers the impact of institutions on new firm entry in emerging markets. In particular, it surveys the findings of a 2-year research project on the sources of success in terms of entry rates and conditions (including gross entry rates, exit rates and therefore net entry rates) across the BRIC countries (Brazil, Russia, India, China). These emerging market economies display widely varying entry and exit rates and a framework is developed to capture the interaction between key aspects of formal institutions, how those institutions play out in practice, and their impact on entry and exit rates. The country case studies reveal that, whilst different contingencies affect the relationships between institutions and entry in each country, there are some empirical regularities in the determinants of successful entry and conversely in its constraints. One such regularity is the critical interaction between formal rules and informal mechanisms. There is also variation in whether these works so as to compensate for deficiencies in formal institutions, as in China and India, or whether deficiencies in formal mechanisms are compounded by poor informal mechanisms, as is sometimes true in Brazil. Indeed, relatively good formal rules and structures can be undermined by informal mechanisms deterring or blocking entry, as is largely the case in Russia.     

Commonality in liquidity among Middle East and North Africa emerging stock markets: Does it really matter?

This study investigates commonality in daily liquidity among 11 emerging stock markets from the Middle East and North Africa from January 2005 to June 2017. First, we test long memory in liquidity in these markets. Second, we select a number of factors eligible to affect liquidity commonality among local, regional and global factors. We find that regional and US factors do not explain liquidity variations in all the markets that exhibit low sensitivity to external factors. Our results are robust to the use of alternative proxies. The analysis in sub-periods confirms our results showing that most markets are not very sensitive to fluctuations and external shocks of liquidity. For international investors, stock markets in the Middle East and North Africa present an opportunity for further diversification, as these markets exhibit weak correlations between them and with the global market with regard to liquidity.     

Collaboration practices, strategic capabilities and performance in Japanese and American product development: Do they differ?

Do New Product Development (NPD) collaboration practices differ across national subsets and, if so, does this make a difference to overall NPD performance? To address these questions, we studied the NPD programs of both Japanese and American firms and explored whether there are differences between the use of internal and external collaboration and strategic innovation practices. We further examined whether this had any significant effects on overall program performance. We found that the American firms we surveyed used collaboration practices significantly more often than the Japanese firms. However, when taking all factors into consideration, only strategic innovation capabilities were significantly linked with both overall performance and nationality. Thus, the use of collaboration without developing innovation capabilities is not enough for performance effects.     

Geopolitical risk and stock market volatility in emerging markets: A GARCH – MIDAS approach

In this study, we examine the connection between geopolitical risk (GPR) and stock market volatility in emerging economies. Our motivation for this study is premised on the need to assess both the predictability and the associated economic gains in relation to the subject in order to offer more useful insights to investors and practitioners. To the best of our knowledge, this is the first study that jointly considers these objectives. Consequently, we employ the GARCH-MIDAS framework which accommodates mixed data frequencies thereby circumventing information loss or any associated bias. We find that emerging stock market volatility responds more positively to geopolitical risks although the act-related GPR index offers better out-of-sample forecasts than the threat-related GPR. We also find that accounting for global economic factors in the predictability analysis is crucial for robust outcomes. Finally, we provide some utility gains of including GPR in the predictive model of stock market volatility while also highlighting some useful implications of our findings for investment and policy decisions.     

Examining supply chain relationships: Do buyer and supplier perspectives on collaborative relationships differ?

Firms are building collaborative relationships with their supply chain partners in order to achieve efficiencies, flexibility, and sustainable competitive advantage. However, it is unclear if collaborative relationships provide benefits that compensate for the additional expense associated with such relationships. Further, it is unclear what factors promote successful collaborations. This research examines collaborative relationships in two separate studies using structural equation modeling: one study examines buyers’ perceptions and the second study examines suppliers’ perceptions. The two studies are then compared using invariance testing in order to determine economic and relational factors that drive satisfaction and performance from each party's perspective. Results show that collaborative activities, such as information sharing, joint relationship effort, and dedicated investments lead to trust and commitment. Trust and commitment, in turn, lead to improved satisfaction and performance. Results from the two independent studies exhibit similarities and differences; while the conceptual model is highly similar, certain paths vary in their significance and/or their importance across buyer and supplier firms such that buyers focus more on relationship outcomes while suppliers look to safeguard their transaction specific investments through information sharing and joint relationship effort. Managerial and theoretical implications of the findings are discussed.     

Risk spillovers and hedge strategies between global crude oil markets and stock markets: Do regime switching processes combining long memory and asymmetry matter?

This paper investigates risk spillovers and hedge strategies between global crude oil markets and stock markets. In the paper, we propose a multivariate long memory and asymmetry GARCH framework that integrates state-dependent regime switching in the mean process with multivariate long memory and asymmetry GARCH in the variance process. Our results first show that there are linear risk spillovers running from the US stock markets to the WTI oil market in the short term. However, the linear risk spillover effect running from the oil market to the US stock market can only exist in the long term. In addition, there is a bidirectional linear risk spillover effect between the European stock markets and the Brent oil market in the short and long terms. Furthermore, there is no linear risk spillover effect between the Dubai oil market and the Chinese stock market. Second, the nonlinear risk spillovers running from the WTI oil market to the US stock market can be found in the tranquil regime. Moreover, there is also a nonlinear risk spillover effect running from the European stock markets to the Brent oil market in the tranquil regime. In addition, the nonlinear risk spillover effect running from the Brent oil markets to the European stock market can be found in the crisis regime. Furthermore, there is bidirectional nonlinear Granger causality between the Dubai crude oil market and the Chinese stock market in the tranquil regime. Finally, dynamic hedge effectiveness shows that the regime switching process combined with long memory and asymmetry behavior seems to be a plausible and feasible way to conduct hedge strategies between the global crude oil markets and stock markets.     

Accounting Scandals in IPO Firms: Do Underwriters and VCs Help?

We examine whether underwriter reputation, venture capitalist (VC) backing, and VC reputation are related to the probability that a newly public firm has serious accounting problems. Using a novel data set, we find that the probability of restatement by an initial public offering (IPO) firm is positively related to underwriter reputation and negatively related to VC backing, VC reputation, and VC maturity. Our results do not appear to be driven by the endogeneity of underwriter reputation or VC backing. Our findings suggest that while VCs positively influence the financial reporting quality of IPO firms, underwriters’ concerns about revenue generation outweigh their concerns about reputation.     

Board structures,liberal countries,and developed market economies. Do they matter in environmental reporting? An international outlook

Previous empirical evidence has shown the effect of most corporate governance mechanisms on corporate social responsibility and environmental disclosure. However, there is scant empirical evidence that examines the influence of liberal countries, developed market economies, and board structures on environmental disclosure. Thus, this research aims to explore how liberal and developed countries and board structures affect environmental reporting. We hypothesise a linear and positive association between companies located in countries with liberal and developed market economies and environmental reporting. Moreover, we hypothesise that one‐tier board structures negatively affect environmental disclosure. Focusing on 13,100 companies domiciled in 39 different countries from 2005 to 2015, it is established that those companies located in liberal and developed economies are more likely to disclose environmental information, whereas one‐tier boards have a negative effect.     

Modelling and forecasting value at risk and expected shortfall for GCC stock markets: Do long memory,structural breaks,asymmetry, and fat-tails matter?

This paper addresses the question whether dual long memory (LM), asymmetry and structural breaks in stock market returns matter when forecasting the value at risk (VaR) and expected shortfall (ES) for short and long trading positions. We answer this question for the Gulf Cooperation Council (GCC) stock markets. Empirically, we test the occurrence of structural breaks in the GCC return data using the Inclan and Tiao (1994)’s algorithm and we check the relevance of LM using Shimotsu (2006) procedure before estimating the ARFIMA-FIGARCH and ARFIMA-FIAPARCH models with different innovations’ distributions and computing VaR and ES. Our results show that all the GCC market's volatilities exhibit significant structural breaks matching mainly with the 2008–2009 global financial crises and the Arab spring. Also, they are governed by LM process either in the mean or in the conditional variance which cannot be due to the occurrence of structural breaks. Furthermore, the forecasting ability analysis shows that the FIAPARCH model under skewed Student-t distribution turn out to improve substantially the VaR and the ES forecasts.     

Measuring the concentration of information and communication technology infrastructure in Australia: Do affordability and remoteness matter?

This study measures the concentration of information and communication technology (ICT) infrastructure and expenditure inequality in the disaggregated spatial unit of various locations in Australia. Using survey data from the Household, Income and Labour Dynamics in Australia, a composite concentration index for ICT infrastructure is constructed for urban and rural households. In addition, the Gini coefficient of ICT expenditure is computed to measure the concentration of affordability of ICT services. Findings demonstrate that the concentrations of ICT infrastructure and affosrdability are profound in the Greater Sydney and Greater Melbourne areas. Nevertheless, results indicate that the remoteness of spatial units has a noteworthy impact on the concentration of ICT infrastructure. In addition, canonical correlation analysis reveals that the association between the concentration of ICT infrastructure and inequality in the affordability of ICT services is statistically significant. These findings imply that policy makers should employ a holistic approach that will not only include technological and economic considerations but also examine place-based context in designing an all-inclusive ICT policy.     

Stock returns and real activity in the G-7 countries: did the relationship change during the 1980s?

Several empirical studies show that a substantial fraction of the changes in growth rates of real activity can be explained by lagged aggregate stock return variations in the U.S. as well as in other G-7 countries from the 1950s to the 1990s. However, the results presented in Binswanger.[International Review of Economics and Finance 9 (2000) 387] indicate that this traditionally strong relation has disappeared in the U.S. in the early 1980s. This paper shows that a similar breakdown occurred in Canada, Japan and in an aggregate economy consisting of the four European G-7 countries. The results provide evidence in favor of the hypothesis that speculative bubbles during the 1980s and 1990s were an international phenomenon.     

Bank profitability in the Eurasian Economic Union: Do funding liquidity and systemic importance matter?

The post-crisis regulatory architecture targets greater banking stability by imposing additional capital and liquidity requirements. Profit persistence, however, remains an important factor for attaining this goal. Using annual data for 2008–2017, this study analyzes the relationship between funding stability, systemic importance, and the profitability of banks in the three founding states of the Eurasian Economic Union (EAEU): Russia, Kazakhstan, and Belarus. The results show a strong degree of stability in net interest margin (NIM) and a lack of persistence in return on assets (ROA). Compliance with the minimum level of the Net Stable Funding Ratio (NSFR) reduces both the funding liquidity risk and the NIM of EAEU banks. Moreover, systemically important banks in the region historically operate at a lower interest spread and less prudent NSFR, which implies a potentially greater adverse effect on their NIM. Bank-specific variables have various impacts depending on the measure of profitability. The results also highlight that greater market concentration protects the NIM and negatively impacts the ROA of EAEU banks. Finally, Western sanctions have a destabilizing effect on the NIM of EAEU banks, but not on systemically important banks.     

Innovation-Oriented Culture in the Public Sector: Do managerial autonomy and result control lead to innovation?

This article examines the effect of specific new public management (NPM)-related characteristics to explain innovation-oriented culture within public sector organizations. According to NPM doctrines, an enhanced managerial autonomy combined with result control will stimulate a more innovation-oriented culture in such organizations. Using multi-country survey data of over 200 public sector agencies, we test for the influence of organizational autonomy, result control and their interactions, on innovation-oriented culture. High levels of managerial autonomy and result control have independent and positive effects. However, the interaction between high personnel management autonomy and high result control has a negative effect.     

Time-frequency co-movements between bank credit supply and economic growth in an emerging market: Does the bank ownership structure matter?

This study aims to shed some light on the causal link between bank credit supply and economic growth in Turkey for the banks with the different ownership structures between 1993Q4 and 2017Q3. Wavelet coherence test is used to obtain this objective and to answer the following questions: (i) does bank credit supply lead to economic growth in Turkey and vice versa, and (ii) does the bank ownership matters in this linkage? The findings from wavelet coherence reveal that between 1993 and 2003 in the short and medium term, economic growth leads credit supply but in the long run there is feedback causality between credit supply and economic growth for only public and private banks. However, in the long-run between 1993 and 2003 economic growth leads credit supply in the foreign banks in Turkey. Between 2004 and 2017, there is feedback causality between credit supply and economic growth. Moreover, our findings suggest that bank ownership affects the strength of the linkage between credit supply and economic growth in Turkey especially in the short and medium terms. More specially, within the three types of bank ownership, the findings imply that the strongest correlation among the variables is for the private banks while the weakest one is for foreign banks.     

Market and learning orientation in times of turbulence: relevance questioned? An analysis using a multi-case study

This paper aims to pinpoint and to discuss the factors that determine (i) why companies which have previously not been market oriented become so, and (ii) why already market-oriented companies increase their level of market orientation. This paper also analyses drivers of market orientation adoption and dynamics of processes as well as potential links between market orientation, strategy and learning orientation. Empirical research is based on a multi-case study of the Spanish construction and real state industry, providing a longitudinal approach. Data suggest that competitive environments trigger heightened interest in the market orientation and learning orientation constructs. In the analysed industry market orientation seems to be more prevalent in the “sunset” rather than before during the “sunrise” of the industry, which is opposite to the early work of Baker et al. (In: Sauders J (ed) The Marketing Initiative: ESRC Studies into British Marketing. Preentice-Hall, Hemel Hempstead, 1994). The link between market orientation and strategy is unclear, but proactive firms are better prepared for periods of crisis. Thinking on practical implications, this research highlights the relevance of market orientation and learning orientation in times of turbulence and suggests that proactive firms are better prepared for times of turbulence. The paper also includes discussion and implications for both literature and practice. Recommendations for best practices are also provided.     

Foreign capital inflows and poverty linkages in South Asia: Do the forms of capital inflows matter?

The relationship between foreign direct investment and poverty reduction has received modest attention in the empirical literature. However, little is known about the relative significant impact of different forms of capital inflows on poverty reduction. This study attempts to investigate the impact of different forms of capital inflows (foreign direct inflows, portfolio equity and portfolio debt inflows) on poverty reduction in major South Asian economies during the post-reform period. The capital inflows-poverty nexus is explored using panel econometric methods robust to cross-sectional dependence. Our empirical results show that while portfolio equity inflows exert a favorable impact on poverty reduction, foreign direct inflows and debt inflows fail to influence poverty. The panel causality results demonstrate that portfolio equity inflows also support poverty alleviation via stimulating economic growth and trade openness. The findings of our study highlight the importance of considering the differential welfare impacts of different forms of capital inflows while implementing capital account liberalization.     

Citizens’ e-participation on agenda setting in local governance: Do individual social capital and e-participation management matter?

Although a growing body of literature has touted e-participation as a means of facilitating greater citizen participation in policy decision-making processes, little is known about the driving forces behind citizens’ use of e-participation. Based on a literature review of social capital and citizen participation, this study develops and tests a model proposing that three dimensions of social capital and three dimensions of citizen participation management should be positively associated with e-participation in agenda setting. Using data from a Korean e-participation survey conducted in 2009, we found that citizens tend to be more active e-participants when they have greater trust in government and are weakly tied to offline social groups. We also found that citizen participants’ perception of government responsiveness to their input can facilitate their e-participation. The study findings imply that local governments should pay more attention to the function of public trust in local government and provide quality feedback in response to citizen input. They should also be sensitive to how the social factors of e-participants can facilitate involvement in agenda setting.     

Use and abuse of regulated prices in electricity markets: “How to regulate regulated prices?”

We consider the regulation of the tariffs charged by a public utility in the electricity sector. Consumers differ in terms of their privately known demands. When regulating a firm's tariffs, the government is concerned by the redistribution across consumer classes. A conflict between redistribution and screening induces pricing distortions when the firm is a monopoly. Introducing competition with an unregulated fringe improves efficiency but jeopardizes redistribution. In response to this problem, the government may now want to manipulate information about the incumbent's cost to restrict entry and better promote its own redistributive objective. To prevent such obstacle to entry, the government's discretion in fixing the incumbent's regulated tariffs should be restricted by imposing floors or caps on those tariffs and/or by controlling the market share left to the competitive fringe. We highlight the determinants of such limits on discretion and unveil to what extent they depend on the government's redistributive concerns.     

Public-private partnerships in health care services: Do they outperform public hospitals regarding quality and access? Evidence from Portugal

Public-private partnerships (PPPs) are widely spread long-term arrangements between governments and strategic private partner(s). One of their objectives is to reduce the financial pressure on the public treasury with regard to new investments. PPPs have been employed within the health care sector which, in turn, carries a huge social burden. In Portugal, for instance, PPPs in health care concern bundling hospital infrastructure and clinical services management. Notwithstanding the need to ensure sustainability and efficient use of hospital resources, it is clearly compulsory to guarantee that patients receive appropriate and timely care, with maximum security, and equitable manner. Still, little or even no attention has been paid in the literature to the clinical response capacity of PPP hospitals and to the populism arguing that these entities have a lower social performance than typical public hospitals. This study uses robust benchmarking methodologies alongside recent data about Portuguese hospitals (FY2012-FY2017) to demystify this idea and to demonstrate that, actually, PPP hospitals can deliver health care services with social performance levels at least as good as public hospitals.     

Toeholds,rejected offers,and bidder gains: Do rebuffed bidders put targets in play to profit from their toeholds?

Previous research shows that on average acquirers who buy shares in the pre-bid market gain because the average price of the acquisition is reduced. This study addresses a different question, one that relies on the withdrawal of the bidder rather than the successful completion of the acquisition. Do some firms with toeholds bid for the target to entice other bidders into the contest for the gain that they make when they sell their shares in the target to another bidder? This paper argues that holding a toehold makes hostile bidders more likely to withdraw from the contest if another bidder enters. The evidence is consistent with our hypothesis: hostile bidders that have a toehold, on average, earn significant abnormal returns of 4.98%, with a mean toehold of 13.81%. Those without a toehold, on average, earn a significantly lower 0.06% return.