• Financial Development and Economic Activity in Advanced and Developing Open Economies: Evidence from Panel Cointegration.

      Chortareas, G.; Magkonis, Georgios; Moschos, D.; Panagiotidis, T. (2015-02)
      This study considers the effects of financial development on output in a panel cointegration framework, focusing on the implications of trade and financial openness. Our analysis indicates that after controlling for cross-sectional dependence, the typical relationship between finance and output does not hold in the long run. This relationship, however, is re-established once we account for economic openness. While trade openness emerges as more important for developing countries, financial openness is more important for advanced economies. In the long run, causality runs from financial development to output in the advanced economies, while in developing economies causality is bidirectional. There is no short-run causality between financial development and output, however.
    • The financial development and growth nexus: A meta-analysis

      Magkonis, Georgios; Arestis, P.; Chortareas, G. (2014-08)
      We conduct a meta-analysis of the literature of financial development and economic growth. We cover a large number of empirical studies and estimations that have been published in journal articles. We measure the degree of heterogeneity and identify the causes of the observed differentiation. Among the most significant factors behind this heterogeneity is the choice of financial-variable proxies, the kind of data used as well as whether a study takes into account the issue of endogeneity. Our results suggest that the empirical literature on the finance–growth nexus is not free from publication bias. Also, a genuine positive effect exists between financial development and economic growth.
    • Financial Development, Human Capital and Economic Growth: The Indian Case

      Arora, Rashmi; Jalilian, Hossein (2020-07)
      Although at the national level the relationship between financial development, human capital and economic growth has received some attention, this is largely an under-researched area at the sub-national level. Human capital may impact economic growth through the channel of innovation and along with financial development could be complementary or substitute in their relationship to economic growth. Also, human capital investment, enabled by the financial sector development, not only affects growth but also directly and indirectly affects poverty reduction through the channel of growth. In this study we examine the interaction between financial development, human capital and economic growth at the sub-national level using panel datasets covering 23 states of India for the period 1999-2013. Our analysis suggests that there is evidence of positive relationship between human capital and financial development to economic growth.
    • Financial flexibility, corporate investment and performance: evidence from financial crises

      Arslan-Ayaydin, O.; Florackis, C.; Ozkan, Aydin (2014)
      This study examines the impact of financial flexibility on the investment and performance of East Asian firms over the period 1994–2009. We employ a sample of 1,068 firms and place particular emphasis on the periods of the Asian crisis (1997–1998) and the recent credit crisis (2007–2009). The results show that firms can attain financial flexibility, primarily through conservative leverage policies and less commonly by holding large cash balances. Financial flexibility appears to be an important determinant of investment and performance, mainly during the Asian 1997–1998 crisis. In particular, firms that are financially flexible prior to this crisis (1) have a greater ability to take investment opportunities, (2) rely much less on the availability of internal funds to invest, and (3) perform better than less flexible firms during the crisis. Our analysis covering the credit crisis period of 2007–2009 suggests that some of the advantages of flexible firms towards investing persist but are significantly less pronounced over that period. We also find that the value of financial flexibility is region/country specific, which may be explained by the fact that different regions/countries often adopt different macroeconomic policies and operate in diverse economic/legal environments.
    • Firm bosses or helpful neighbours? The ambiguity and co-construction of MNE regional management mandates

      Alfoldi, Eva A.; McGaughey, S.L.; Clegg, L.J. (2017-12)
      As multinational enterprises (MNEs) increasingly disaggregate and disperse corporate headquarters (CHQ) activities, the allocation of regional management mandates (RMMs) to local operating subsidiaries is becoming more common. RMMs explicitly break with the traditional assumption of a clear separation between centralised and local decision-making. Yet we know little of how RMMs are enacted by the units involved, or how they evolve over time. Based on a case study of Unilever, we find that RMMs are inherently ambiguous, and identify circumstances under which ambiguity manifests and triggers cycles of sensemaking and sensegiving about the meaning of the mandate. These cycles result in the co-construction of the mandate by multiple units, with changes in RMM scope and governance over time. We also find that sensemaking and sensegiving are most intense among boundary-spanning middle managers. Our work challenges prevailing assumptions that mandates are largely unambiguous when assigned and are unilateral or dyadic accomplishments; demonstrates the importance of sub-unit level analysis in MNEs; and highlights the potential of structuration theory to enrich our understanding of sensemaking and sensegiving in organisations.
    • Firm Corruption in the Presence of an Auditor

      Dietrich, M.; McHardy, J.; Sharma, Abhijit (2016-12)
      We develop a theoretical framework exploring firm corruption accounting for interactions with an auditor who provides auditing and other services. A multiplicity of equilibria can exist including stable corruption and auditor controlled corruption. Whilst fining the auditor cannot eliminate all corruption, fining the firm can, but marginal increases in this fine can also have perverse effects. Investing in corruption detection may be effective in deterring auditor corruption but ineffective in deterring firm corruption. Policy effectiveness is highly dependent upon several factors which may be hard to observe in practice making general rules about policy interventions to address corruption very difficult.
    • Firm performance, corporate governance and executive compensation in Pakistan

      Sheikh, M.F.; Shah, S.Z.A.; Akbar, Saeed (2018)
      This study examines the effects of firm performance and corporate governance on chief executive officer (CEO) compensation in an emerging market, Pakistan. Using a more robust Generalized Method of Moments (GMM) estimation approach for a sample of non-financial firms listed at Karachi Stock Exchange (KSE) over the period 2005 to 2012, we find that both current and previous year accounting performance has positive influence on CEO compensation. However, stock market performance does not appear to have a positive impact on executive compensation. We further find that ownership concentration is positively related with CEO compensation, indicating some kind of collusion between management and largest shareholder to get personal benefits. Inconsistent with agency theory, CEO duality appears to have a negative influence, while board size and board independence have no convincing relationship with CEO compensation, indicating board ineffectiveness in reducing CEO entrenchment. The results of dynamic GMM model suggest that CEO pay is highly persistent and takes time to adjust to long-run equilibrium.
    • Fiscal federalism and European economic integration

      Baimbridge, Mark J.; Whyman, P.B. (2004)
      The pace of economic integration amongst European Union (EU) member states has accelerated considerably during the past decade, highlighted by the process of Economic and Monetary Union (EMU). Many aspects of the EU's apparatus, however, have failed to evolve in order to meets these new challenges. This book explores the issue of fiscal federalism within the context of EU integration from theoretical, historical, policy and global perspectives. It contrasts the pace of integration amongst EU member states with the failure of financial and administrative apparatus to evolve to encompass fiscal federalism, i.e. the development of a centralised budgetary system. This impressive collection, with contributions from a range of internationally respected authors, shall interest students and researchers involved with European economics and economic integration. Its accessible style will also make it extremely useful to policy-makers and professionals for whom European economic integration is a daily topic of conversation.
    • Followers in leadership theory: Fiction, fantasy and illusion.

      Ford, Jackie M.; Harding, Nancy H. (2016)
      This article introduces a critical approach to follower/ship studies through exploring the unarticulated but highly influential implicit academic theory of follower/ship that informs dominant paradigms of leadership. Research into follower/ship is developing apace but the field lacks a critical account. Such an absence of critical voice renders researchers unaware of the performative effect of their studies, that is, how their studies actively constitute that of which they speak. So, do studies of followers (and leaders, it follows) constitute that very actuality they are studying? Analysis of seminal papers in three major categories of leadership, leader-centric, multiple leadership and leader-centred, shows that leadership theory is underpinned by the desire for power and control over the potentially dangerous masses, now labelled ‘followers’. The etiolated perspective of the people called ‘followers’ undermines leadership theory, and we recommend the wisdom of leaving follower/ship unexplored.
    • Forecasting the term structure of volatility of crude oil price changes

      Balaban, E.; Lu, Shan (2016-04)
      This is a pioneering effort to test the comparative performance of two competing models for out-of-sample forecasting the term structure of volatility of crude oil price changes employing both symmetric and asymmetric evaluation criteria. Under symmetric error statistics, our empirical model using the estimated growth factor of volatility through time is overall superior, and it beats in most cases the benchmark model of the square-root-of-time for holding periods between one and 250 days. Under asymmetric error statistics, if over-prediction (under-prediction) of volatility is undesirable, the empirical (benchmark) model is consistently superior. Relative performance of the empirical model is much higher for holding periods up to fifty days.
    • Forecasting using high-frequency data: a comparison of asymmetric financial duration models

      Zhang, Q.; Cai, Charlie X.; Keasey, K. (2009)
      The first purpose of this paper is to assess the short-run forecasting capabilities of two competing financial duration models. The forecast performance of the Autoregressive Conditional Multinomial–Autoregressive Conditional Duration (ACM-ACD) model is better than the Asymmetric Autoregressive Conditional Duration (AACD) model. However, the ACM-ACD model is more complex in terms of the computational setting and is more sensitive to starting values. The second purpose is to examine the effects of market microstructure on the forecasting performance of the two models. The results indicate that the forecast performance of the models generally decreases as the liquidity of the stock increases, with the exception of the most liquid stocks. Furthermore, a simple filter of the raw data improves the performance of both models. Finally, the results suggest that both models capture the characteristics of the micro data very well with a minimum sample length of 20 days.
    • Foreign Direct Investment and economic growth in OECD countries

      Zang, Wenyu; Baimbridge, Mark J. (2014)
      The role of inward FDI on economic growth has attracted the attention of researchers for many years as its beneficial impact has been recognised theoretically by scholars and policymakers; however, the empirical evidence remains ambiguous. Hence, the objective of this chapter is to investigate the causal relationship between FDI inflows/outflows and economic growth in developed OECD countries. Investigation of the causal link between FDI inflows and growth has important implications such that if there is a unidirectional causality it would support the FDI-led growth hypothesis. Alternatively, if the causal link runs in the opposite direction, it would imply that economic growth may be a prerequisite for countries to attract FDI. Finally, if the causal process is bi-directional, FDI inflows and growth would have a reinforcing causal relationship. In particular, this chapter contributes to the existing literature by focusing on developed countries as inward/outward FDI has become an increasingly significant factor in influencing the economic activity. In contrast, most previous time-series causality studies focus on developing countries with only a few covering developed countries. However, almost all of the world’s FDI originates from developed countries and the majority of FDI is also located in developed countries. Another feature is that this chapter also tests the causal link between outward FDI and economic growth. Outward FDI might promote the home country’s economic growth as it might yield higher profits, transfer technology and management skills to the home country, expand production abroad, secure raw materials overseas and avoid trade barriers and so on. Following an Introduction, the chapter then reviews FDI trend across OECD countries. Next it discusses the alternative theories and literature exploring the relationship between FDI and economic growth (i.e. the impact of inward FDI on host country’s economic growth, the impact of outward FDI on home country’s economic growth, together with the impact of economic growth on inward/outward FDI). We then describe empirical causality testing methodology, together discussing the empirical results.
    • Foreign interfirm networks and internationalization: Evidence from sub-Saharan Africa

      Liu, L.; Henley, J.; Mousavi, Mohammad M. (2021-03)
      This study investigates how buyer-supplier interfirm networks with foreign affiliates affect the internationalization of local firms in developing countries. In a study of 1601 sub-Saharan African manufacturing firms, we find that foreign supply linkages positively influence firm internationalization, but this does not relate to marketing linkages. We further examine the role of absorptive capacity and find that both potential and realized absorptive capacity has positive and independent effects on firm internationalization. However, potential absorptive capacity has no moderating effect and realized absorptive capacity negatively moderates the relationship between foreign supplying networks and internationalization. Finally, implications for public policy and managerial practice are discussed.
    • FOREX risk premia and policy uncertainty: A recursive utility analysis.

      Kenc, Turalay; Evans, L. (2004)
      We compare actual and calibrated values for the foreign exchange risk premium based on the definition in [J. Int. Econ. 32 (1992) 305]. Calibrated values are found from within a dynamic stochastic general equilibrium model of a small open economy consisting of risk averse optimizing agents with unconventional preferences. We find that the equilibrium foreign exchange risk premium is a function of exogenous shocks in the model and is sensitive to assumed attitudes towards risk. Furthermore, various forms of policy uncertainty improve the capacity of the model to generate values closer to those found in the data.
    • Fostering Financial Inclusion in Developing Countries: Predicting User Acceptance of Mobile Wallets in Cameroon

      Fosso Wamba, S.; Queiroz, M.M.; Blome, C.; Sivarajah, Uthayasankar (2021-07)
      Financial inclusion is a vital development priority for countries worldwide. Mobile wallet (m-wallet) is considered as a disruptive payment method that will substitute the traditional physical wallet to achieve the so-called cashless society and enables financial inclusion. This study aims at developing and testing a research model that integrates a set of technology factors (perceived usefulness, perceived ease of use, fun to use, monetary value), external factors (peer influence and perceived status benefit), and cultural factors (humane orientation and societal collectivism) to assess the intention to adopt and use m-wallet, for financial inclusion, in a developing country. The proposed conceptual model is tested using data collected from 621 m-wallet users in Cameroon. The model explains 47.5% of the variance of the actual use of m-wallet and 32.90% of the variance of financial inclusion. Finally, implications for research and practice are discussed.
    • Fostering Smart Cities through ICT Driven Policy-Making: Expected Outcomes and Impacts of DAREED Project

      Sivarajah, Uthayasankar; Lee, Habin; Irani, Zahir; Weerakkody, Vishanth J.P. (2014-07)
      The concept of smart city is emerging as a key strategy to tackle the problems generated by the urban population growth and rapid development. It is widely recognised that Information and Communications Technology (ICT) play a key role in addressing some of the urban societal challenges such as improving energy efficiency and reducing carbon emissions. Although there are various ICT tools providing intelligence and services relating to energy consumption and monitoring processes, they mostly tend to work in isolation. Therefore, this paper presents the outcomes and impacts of the concept of DAREED which aims to deliver an integrated ICT service platform to drive energy efficiency and low carbon activities at neighbourhood, city and district levels. Furthermore, the research highlights the need for ICT-driven policy making using platforms such as DAREED in the context of e-Government. This paper contributes to the current understandings of e-Government literature in terms of how ICT can help public authorities and stakeholders such as policy makers to achieve and drive energy efficiency. From a practical stance, the paper offers valuable insights to public administrations on how ICT can be used to address pressing societal challenges such as efficient energy use and facilitate better policy making.
    • Founder retention as CEO at IPO in emerging economies: The role of private equity owners and national institutions

      Hearn, Bruce; Filatotchev, I. (2019-05)
      We integrate the institutional perspective with research on the governance role of private equity firms in an investigation of Founder-CEO successions in Initial Public Offerings (IPOs) in emerging markets. Using a unique, hand-collected and comprehensive sample of 191 firms having undertaken IPOs in 21 markets across the African continent between January 2000 and August 2016, we apply instrumental variable (IV) Probit methodology and find that higher levels of private equity ownership are positively associated with the probability of the founder's retention as CEO, especially in the context of low-quality formal institutions. Further, in societies with high tribalism, higher private equity ownership is associated with an increased likelihood of founder retention. Voids in the institutional architecture underscore the importance of the founder as a key organizational resource for the firm and a source of institutionalized legitimacy, which in turn confers on the firm an ability to access required resources.