Managerial FinanceTable of Contents for Managerial Finance. List of articles from the current issue, including Just Accepted (EarlyCite)https://www.emerald.com/insight/publication/issn/0307-4358/vol/50/iss/4?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestManagerial FinanceEmerald Publishing LimitedManagerial FinanceManagerial Financehttps://www.emerald.com/insight/proxy/containerImg?link=/resource/publication/journal/12c578c9f48dd6727464670d5daa0f9c/urn:emeraldgroup.com:asset:id:binary:mf.cover.jpghttps://www.emerald.com/insight/publication/issn/0307-4358/vol/50/iss/4?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestExercise decision of employee stock options: does Herding Bias influence the employees' decision?https://www.emerald.com/insight/content/doi/10.1108/MF-03-2023-0146/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestEmployee Stock Options [ESOs] have been used widely as a component of employees' compensation. To maximise the incentive effect of these options it is very important to understand the exercise decision of the employees. This is an important financial decision that is dependent on both rational and psychological factors. This paper aims to study the mediating role of Herding Bias on Personality Traits and the employees' decision to exercise ESOs. The data were collected through a self-structured questionnaire from 210 employees of Banks and NBFCs [Non-Banking Financial Companies] who have received and exercised the ESOs. SPSS MACRO version 25 was used to understand the mediational effect of Herding Bias on Personality Traits and Employees' decision to exercise their ESOs. The results showed that Personality Traits affect the employees' decision to exercise their ESOs. The study also shows a partial negative mediating effect of Herding Bias on Personality Traits and employees' decision to exercise ESOs. Limited study has been conducted on how the employees make their decision to exercise ESOs. Although extant studies have touched upon the importance of including behavioural biases in ascertaining the exercise decision of the employees, the predictors of the behavioural biases have not been studied under this context. To the best of the author's knowledge, this study is the first in itself to study the inter-linkage between Personality Traits, Herding Bias and employees' decision to exercise ESOs.Exercise decision of employee stock options: does Herding Bias influence the employees' decision?
Manpreet K. Arora, Sukhpreet Kaur
Managerial Finance, Vol. 50, No. 4, pp.653-675

Employee Stock Options [ESOs] have been used widely as a component of employees' compensation. To maximise the incentive effect of these options it is very important to understand the exercise decision of the employees. This is an important financial decision that is dependent on both rational and psychological factors. This paper aims to study the mediating role of Herding Bias on Personality Traits and the employees' decision to exercise ESOs.

The data were collected through a self-structured questionnaire from 210 employees of Banks and NBFCs [Non-Banking Financial Companies] who have received and exercised the ESOs. SPSS MACRO version 25 was used to understand the mediational effect of Herding Bias on Personality Traits and Employees' decision to exercise their ESOs.

The results showed that Personality Traits affect the employees' decision to exercise their ESOs. The study also shows a partial negative mediating effect of Herding Bias on Personality Traits and employees' decision to exercise ESOs.

Limited study has been conducted on how the employees make their decision to exercise ESOs. Although extant studies have touched upon the importance of including behavioural biases in ascertaining the exercise decision of the employees, the predictors of the behavioural biases have not been studied under this context. To the best of the author's knowledge, this study is the first in itself to study the inter-linkage between Personality Traits, Herding Bias and employees' decision to exercise ESOs.

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Exercise decision of employee stock options: does Herding Bias influence the employees' decision?10.1108/MF-03-2023-0146Managerial Finance2023-10-23© 2023 Emerald Publishing LimitedManpreet K. AroraSukhpreet KaurManagerial Finance5042023-10-2310.1108/MF-03-2023-0146https://www.emerald.com/insight/content/doi/10.1108/MF-03-2023-0146/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
External audit quality, auditor selection and hostile takeovers: evidence from half a centuryhttps://www.emerald.com/insight/content/doi/10.1108/MF-01-2023-0056/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestExploiting a unique measure of hostile takeover exposure principally based on the staggered adoption of state legislations, the authors investigate how external audit quality is influenced by the discipline of the takeover market. External auditors and the takeover market both function as important instruments of external corporate governance. The authors execute a standard regression analysis and run a variety of robustness checks to minimize endogeneity, namely, propensity score matching (PSM), entropy balancing, an instrumental-variable analysis, Generalized method of moment (GMM) dynamic panel data analysis and Lewbel's (2012) heteroscedastic identification. The authors’ immense sample spans half a century, encompassing nearly 180,000 observations and 17 takeover-related state legislations, one of the largest samples in the literature in this area. The authors’ results suggest that firms with more takeover exposure are significantly less likely to use Big N auditors. Therefore, a more active takeover market results in poorer external audit quality, corroborating the substitution hypothesis. The discipline of the takeover market substitutes for the necessity for a high-quality external auditor. Specifically, a rise in takeover susceptibility by one standard deviation lowers the probability of using a Big N auditor by 4.29%. The authors’ study is the first to examine the effect of the takeover over market on audit quality using a novel measure of hostile takeover susceptibility mainly based on the staggered implementation of state legislation. Because the enactment of state legislation is beyond the control of any firm individually, it is plausibly exogenous. The authors’ results therefore probably reflect a causal influence rather than merely a correlation.External audit quality, auditor selection and hostile takeovers: evidence from half a century
Kriengkrai Boonlert-u-thai, Pattanaporn Chatjuthamard, Suwongrat Papangkorn, Pornsit Jiraporn
Managerial Finance, Vol. 50, No. 4, pp.676-696

Exploiting a unique measure of hostile takeover exposure principally based on the staggered adoption of state legislations, the authors investigate how external audit quality is influenced by the discipline of the takeover market. External auditors and the takeover market both function as important instruments of external corporate governance.

The authors execute a standard regression analysis and run a variety of robustness checks to minimize endogeneity, namely, propensity score matching (PSM), entropy balancing, an instrumental-variable analysis, Generalized method of moment (GMM) dynamic panel data analysis and Lewbel's (2012) heteroscedastic identification.

The authors’ immense sample spans half a century, encompassing nearly 180,000 observations and 17 takeover-related state legislations, one of the largest samples in the literature in this area. The authors’ results suggest that firms with more takeover exposure are significantly less likely to use Big N auditors. Therefore, a more active takeover market results in poorer external audit quality, corroborating the substitution hypothesis. The discipline of the takeover market substitutes for the necessity for a high-quality external auditor. Specifically, a rise in takeover susceptibility by one standard deviation lowers the probability of using a Big N auditor by 4.29%.

The authors’ study is the first to examine the effect of the takeover over market on audit quality using a novel measure of hostile takeover susceptibility mainly based on the staggered implementation of state legislation. Because the enactment of state legislation is beyond the control of any firm individually, it is plausibly exogenous. The authors’ results therefore probably reflect a causal influence rather than merely a correlation.

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External audit quality, auditor selection and hostile takeovers: evidence from half a century10.1108/MF-01-2023-0056Managerial Finance2023-11-03© 2023 Emerald Publishing LimitedKriengkrai Boonlert-u-thaiPattanaporn ChatjuthamardSuwongrat PapangkornPornsit JirapornManagerial Finance5042023-11-0310.1108/MF-01-2023-0056https://www.emerald.com/insight/content/doi/10.1108/MF-01-2023-0056/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Does intellectual capital influence banks' efficiency? Evidence from India using panel data tobit modelhttps://www.emerald.com/insight/content/doi/10.1108/MF-05-2023-0303/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis study investigates the effect of intellectual capital (IC) and its components on the technical efficiency of Indian commercial banks after controlling the influence of bank-specific and macroeconomic variables. The study selects a sample of 37 listed Indian commercial banks from 2005 to 2019 and uses the two-step data envelopment analysis (DEA) approach. Banks' technical efficiency scores are first estimated, while the relationship between IC and technical efficiency is examined in the second stage using the panel data Tobit model. This study's findings suggest a fluctuating trend in the technical efficiency of Indian banks. Notably, from 2015 onwards, a declining technical efficiency trend is observed for all banks. However, private-sector banks outperform public-sector banks in terms of technical efficiency. This study's regression analysis indicates a positive relationship between IC and banks' technical efficiency scores. Further, by decomposing IC into its components like human capital, structural capital and capital employed, the study's findings show that human capital and structural capital enhance banks' technical efficiency. Notably, capital employed reduces technical efficiency. Moreover, bank size, diversification, capitalization, net interest margin and the country's growth rate significantly drive Indian banks' efficiency. In contrast, their operating cost ratio and the country's inflation negatively influence the same. This study makes a novel endeavor to examine the IC and bank's technical efficiency nexus in the Indian context, encompassing a period of landmark banking reforms.Does intellectual capital influence banks' efficiency? Evidence from India using panel data tobit model
Santi Gopal Maji, Rupjyoti Saha
Managerial Finance, Vol. 50, No. 4, pp.697-717

This study investigates the effect of intellectual capital (IC) and its components on the technical efficiency of Indian commercial banks after controlling the influence of bank-specific and macroeconomic variables.

The study selects a sample of 37 listed Indian commercial banks from 2005 to 2019 and uses the two-step data envelopment analysis (DEA) approach. Banks' technical efficiency scores are first estimated, while the relationship between IC and technical efficiency is examined in the second stage using the panel data Tobit model.

This study's findings suggest a fluctuating trend in the technical efficiency of Indian banks. Notably, from 2015 onwards, a declining technical efficiency trend is observed for all banks. However, private-sector banks outperform public-sector banks in terms of technical efficiency. This study's regression analysis indicates a positive relationship between IC and banks' technical efficiency scores. Further, by decomposing IC into its components like human capital, structural capital and capital employed, the study's findings show that human capital and structural capital enhance banks' technical efficiency. Notably, capital employed reduces technical efficiency. Moreover, bank size, diversification, capitalization, net interest margin and the country's growth rate significantly drive Indian banks' efficiency. In contrast, their operating cost ratio and the country's inflation negatively influence the same.

This study makes a novel endeavor to examine the IC and bank's technical efficiency nexus in the Indian context, encompassing a period of landmark banking reforms.

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Does intellectual capital influence banks' efficiency? Evidence from India using panel data tobit model10.1108/MF-05-2023-0303Managerial Finance2023-11-16© 2023 Emerald Publishing LimitedSanti Gopal MajiRupjyoti SahaManagerial Finance5042023-11-1610.1108/MF-05-2023-0303https://www.emerald.com/insight/content/doi/10.1108/MF-05-2023-0303/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
The surprising role of audit committee financial experts and the need for more of them to combat financial corruptionhttps://www.emerald.com/insight/content/doi/10.1108/MF-11-2022-0522/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThe purpose of this research is to examine the impact of audit committee financial experts on the risk of financial corruption in public companies. A time-lagged, matched-pairs sample of 352 corporations was utilized to test the study's hypotheses (176 financially corrupt firms plus 176 compliant firms). To uncover financially corrupt firms, 2,895 Accounting and Auditing Enforcement Releases from the Securities and Exchange Commission were thoroughly evaluated. The results show that financial experts on audit committees generally increased financial corruption. However, the impact was reversed when audit committees had three or more financial experts, showing that having at least three financial experts reduced financial corruption. The study's findings call into question the long-held practice of appointing at least one financial expert to audit committees. This study offers a novel approach to improve corporate oversight and reduce financial corruption by having at least three financial experts on audit committees.The surprising role of audit committee financial experts and the need for more of them to combat financial corruption
Mikhail Gorshunov
Managerial Finance, Vol. 50, No. 4, pp.718-733

The purpose of this research is to examine the impact of audit committee financial experts on the risk of financial corruption in public companies.

A time-lagged, matched-pairs sample of 352 corporations was utilized to test the study's hypotheses (176 financially corrupt firms plus 176 compliant firms). To uncover financially corrupt firms, 2,895 Accounting and Auditing Enforcement Releases from the Securities and Exchange Commission were thoroughly evaluated.

The results show that financial experts on audit committees generally increased financial corruption. However, the impact was reversed when audit committees had three or more financial experts, showing that having at least three financial experts reduced financial corruption.

The study's findings call into question the long-held practice of appointing at least one financial expert to audit committees. This study offers a novel approach to improve corporate oversight and reduce financial corruption by having at least three financial experts on audit committees.

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The surprising role of audit committee financial experts and the need for more of them to combat financial corruption10.1108/MF-11-2022-0522Managerial Finance2023-11-10© 2023 Emerald Publishing LimitedMikhail GorshunovManagerial Finance5042023-11-1010.1108/MF-11-2022-0522https://www.emerald.com/insight/content/doi/10.1108/MF-11-2022-0522/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Do contingent liabilities affect dividend decisions?https://www.emerald.com/insight/content/doi/10.1108/MF-06-2023-0362/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThe paper examines contingent liabilities' effect on the firm's dividend decisions. Fixed-effects regression and logit model results estimate the influence of contingent liabilities on firms' dividend decisions using a sample of 2,288 firm-year observations of S&P 500 firms from 2012 until 2022. Robustness checks and results from the 2SLS model further support the authors’ findings. The results show that contingent liabilities negatively affect dividend payment decisions. This analysis further demonstrates that the stated effect of contingent liabilities on dividend decisions is more substantial for firms with financing deficits and those with above-industry-average corporate governance scores. There needs to be more systematic conceptual reason for measuring uncertainty for firms and its influence on dividend decisions. Future research should use other measures of firm uncertainty to examine the relation of the firm's uncertainty with dividend decisions. The authors suggest that contingent liabilities create uncertainty for future cash flows, influence a firm's agency costs and provide credible signals on a firm's prospects to the market. The findings support existing literature that measurable firm-specific variables significantly influence a firm's dividend decisions. The results are robust for an alternative explanation. By investigating the impact of the influence of contingent liabilities on dividends, the authors extend research on dividend decisions and attempt to provide insights into a firm's dividend decisions by incorporating an off-the-balance sheet item (contingent liabilities) as a significant predictor for dividend decisions.Do contingent liabilities affect dividend decisions?
Barnali Chaklader, Hardeep Singh Mundi
Managerial Finance, Vol. 50, No. 4, pp.734-747

The paper examines contingent liabilities' effect on the firm's dividend decisions.

Fixed-effects regression and logit model results estimate the influence of contingent liabilities on firms' dividend decisions using a sample of 2,288 firm-year observations of S&P 500 firms from 2012 until 2022. Robustness checks and results from the 2SLS model further support the authors’ findings.

The results show that contingent liabilities negatively affect dividend payment decisions. This analysis further demonstrates that the stated effect of contingent liabilities on dividend decisions is more substantial for firms with financing deficits and those with above-industry-average corporate governance scores.

There needs to be more systematic conceptual reason for measuring uncertainty for firms and its influence on dividend decisions. Future research should use other measures of firm uncertainty to examine the relation of the firm's uncertainty with dividend decisions.

The authors suggest that contingent liabilities create uncertainty for future cash flows, influence a firm's agency costs and provide credible signals on a firm's prospects to the market. The findings support existing literature that measurable firm-specific variables significantly influence a firm's dividend decisions. The results are robust for an alternative explanation.

By investigating the impact of the influence of contingent liabilities on dividends, the authors extend research on dividend decisions and attempt to provide insights into a firm's dividend decisions by incorporating an off-the-balance sheet item (contingent liabilities) as a significant predictor for dividend decisions.

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Do contingent liabilities affect dividend decisions?10.1108/MF-06-2023-0362Managerial Finance2023-11-17© 2023 Emerald Publishing LimitedBarnali ChakladerHardeep Singh MundiManagerial Finance5042023-11-1710.1108/MF-06-2023-0362https://www.emerald.com/insight/content/doi/10.1108/MF-06-2023-0362/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Asset redeployability and corporate cash holdingshttps://www.emerald.com/insight/content/doi/10.1108/MF-01-2023-0060/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThe purpose of the study is to investigate the impact of asset redeployability on the level of corporate cash holdings. The authors use regression analysis to examine the relation between asset redeployability and corporate cash holdings. Using a large panel sample of US public firms from 1990 to 2020, the authors find a significant positive relation between asset redeployability and cash, which suggests that firms with more redeployable assets hold more cash. The authors contribute to a growing literature in accounting and finance that investigates the impact of asset redeployability on firm characteristics and also contribute to the literature on the determinants of cash holdings.Asset redeployability and corporate cash holdings
Wray Bradley, Li Sun
Managerial Finance, Vol. 50, No. 4, pp.748-767

The purpose of the study is to investigate the impact of asset redeployability on the level of corporate cash holdings.

The authors use regression analysis to examine the relation between asset redeployability and corporate cash holdings.

Using a large panel sample of US public firms from 1990 to 2020, the authors find a significant positive relation between asset redeployability and cash, which suggests that firms with more redeployable assets hold more cash.

The authors contribute to a growing literature in accounting and finance that investigates the impact of asset redeployability on firm characteristics and also contribute to the literature on the determinants of cash holdings.

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Asset redeployability and corporate cash holdings10.1108/MF-01-2023-0060Managerial Finance2023-11-14© 2023 Emerald Publishing LimitedWray BradleyLi SunManagerial Finance5042023-11-1410.1108/MF-01-2023-0060https://www.emerald.com/insight/content/doi/10.1108/MF-01-2023-0060/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Six decades of corporate disclosure research: a bibliometric reviewhttps://www.emerald.com/insight/content/doi/10.1108/MF-01-2023-0020/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestCorporate disclosures are essential because they provide transparent and accurate information about a company's financial health, performance, risks and governance practices. They enable investors to make informed decisions, promote market efficiency and maintain trust in the financial system. This paper uses bibliometrics to identify the intellectual composition of the literature on corporate disclosure. Based on the bibliometric information of 4,551 articles on corporate disclosure research, the authors conducted citation, keyword co-occurrence, bibliographic coupling and publication analyses to elucidate the leading articles, authors, sources, institutions, countries, themes and topics in the field of corporate disclosure from the 1960s to 2021. The findings of this review demonstrate that corporate disclosure research is based on four broad themes – the role of disclosure in capital markets, non-financial disclosure, determinants of corporate disclosure and firm risk and intellectual capital disclosure. This review suggests that management should pay attention to the financial and non-financial corporate information that investors, regulators and the government emphasise. This paper is the first comprehensive bibliometric review on corporate disclosure. It summarises the regulatory shifts, technological changes and industry trends that have influenced corporate disclosure research. Besides identifying broad research themes, the authors performed bibliographic coupling for research on disclosure sources, including annual reports, management forecasts, earnings calls, press releases, the Internet and social media, to reveal the thematic clusters related to these sources.Six decades of corporate disclosure research: a bibliometric review
Anjali Srivastava, Anand
Managerial Finance, Vol. 50, No. 4, pp.768-790

Corporate disclosures are essential because they provide transparent and accurate information about a company's financial health, performance, risks and governance practices. They enable investors to make informed decisions, promote market efficiency and maintain trust in the financial system. This paper uses bibliometrics to identify the intellectual composition of the literature on corporate disclosure.

Based on the bibliometric information of 4,551 articles on corporate disclosure research, the authors conducted citation, keyword co-occurrence, bibliographic coupling and publication analyses to elucidate the leading articles, authors, sources, institutions, countries, themes and topics in the field of corporate disclosure from the 1960s to 2021.

The findings of this review demonstrate that corporate disclosure research is based on four broad themes – the role of disclosure in capital markets, non-financial disclosure, determinants of corporate disclosure and firm risk and intellectual capital disclosure. This review suggests that management should pay attention to the financial and non-financial corporate information that investors, regulators and the government emphasise.

This paper is the first comprehensive bibliometric review on corporate disclosure. It summarises the regulatory shifts, technological changes and industry trends that have influenced corporate disclosure research. Besides identifying broad research themes, the authors performed bibliographic coupling for research on disclosure sources, including annual reports, management forecasts, earnings calls, press releases, the Internet and social media, to reveal the thematic clusters related to these sources.

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Six decades of corporate disclosure research: a bibliometric review10.1108/MF-01-2023-0020Managerial Finance2023-11-23© 2023 Emerald Publishing LimitedAnjali Srivastava AnandManagerial Finance5042023-11-2310.1108/MF-01-2023-0020https://www.emerald.com/insight/content/doi/10.1108/MF-01-2023-0020/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Student loan debt in retirement: identifying the correlates and implications for policy, practice and researchhttps://www.emerald.com/insight/content/doi/10.1108/MF-11-2022-0543/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestResearch shows that having student loan debt in retirement is associated negatively with life satisfaction, suggesting that student debt is a bane of retiree well-being. The rationale for this study is to determine the factors related to owing student debt in retirement, given the adverse effects on the well-being of retired households. The study utilizes pooled cross-sectional data from the 2015 and 2018 U.S. National Financial Capability Study. The empirical analysis uses a sample of retired Americans aged 65 years and older (N = approximately 8,000) and estimates two-block logistic regression models to examine the effects of demographic, socioeconomic and behavioral factors on student loan indebtedness in retirement. A sensitivity analysis is performed for the subsample of retirees holding student debt for their children's education. Statistical interpretations use odds ratios. The findings indicate that financial literacy, age, homeownership and high subjective financial knowledge are associated with a low likelihood of holding student loan debt in retirement. However, being Black, having postsecondary education, having difficulty covering expenses, having financially dependent children, having high-risk preferences and spending more than income increase the likelihood of holding student debt in retirement. The ensuing discussion will assist financial planners and educators identify practical ways to shape decisions regarding student loan debt in retirement. The amount of student loan debt is unavailable in the dataset for analysis. One cannot infer causal relations from the study. The factors examined do not reflect the time the student loan was obtained. The study focuses on the determinants of student loan indebtedness among retired Americans rather than young adults or older adults on the verge of retirement. The paper enhances the understanding of student loan holdings in the decumulation phase of the life cycle. Many US individuals have low retirement savings from which they draw a retirement income. The more the student debt burdens on retired Americans, the greater the likelihood of outliving their resources and experiencing poverty.Student loan debt in retirement: identifying the correlates and implications for policy, practice and research
Thomas Korankye
Managerial Finance, Vol. 50, No. 4, pp.791-810

Research shows that having student loan debt in retirement is associated negatively with life satisfaction, suggesting that student debt is a bane of retiree well-being. The rationale for this study is to determine the factors related to owing student debt in retirement, given the adverse effects on the well-being of retired households.

The study utilizes pooled cross-sectional data from the 2015 and 2018 U.S. National Financial Capability Study. The empirical analysis uses a sample of retired Americans aged 65 years and older (N = approximately 8,000) and estimates two-block logistic regression models to examine the effects of demographic, socioeconomic and behavioral factors on student loan indebtedness in retirement. A sensitivity analysis is performed for the subsample of retirees holding student debt for their children's education. Statistical interpretations use odds ratios.

The findings indicate that financial literacy, age, homeownership and high subjective financial knowledge are associated with a low likelihood of holding student loan debt in retirement. However, being Black, having postsecondary education, having difficulty covering expenses, having financially dependent children, having high-risk preferences and spending more than income increase the likelihood of holding student debt in retirement. The ensuing discussion will assist financial planners and educators identify practical ways to shape decisions regarding student loan debt in retirement.

The amount of student loan debt is unavailable in the dataset for analysis. One cannot infer causal relations from the study. The factors examined do not reflect the time the student loan was obtained.

The study focuses on the determinants of student loan indebtedness among retired Americans rather than young adults or older adults on the verge of retirement. The paper enhances the understanding of student loan holdings in the decumulation phase of the life cycle. Many US individuals have low retirement savings from which they draw a retirement income. The more the student debt burdens on retired Americans, the greater the likelihood of outliving their resources and experiencing poverty.

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Student loan debt in retirement: identifying the correlates and implications for policy, practice and research10.1108/MF-11-2022-0543Managerial Finance2023-11-29© 2023 Emerald Publishing LimitedThomas KorankyeManagerial Finance5042023-11-2910.1108/MF-11-2022-0543https://www.emerald.com/insight/content/doi/10.1108/MF-11-2022-0543/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Upper echelons in college sport: the impact of athletic directors on organizational performance and revenueshttps://www.emerald.com/insight/content/doi/10.1108/MF-10-2023-0629/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestUsing the lens of upper echelons theory, this study examines the degree to which National Collegiate Athletic Association athletic department performance outcomes are associated with the personal characteristics and experiences of the athletic director leading the organization. The authors match organizational performance data with athletic director and institutional characteristics to form a robust data set spanning 16 years from the 2003–04 to 2018–19 seasons. The sample contains 811 observations representing 136 unique athletic directors. Fixed effects panel regressions are used to analyze organizational performance and quantile regression is used to analyze organizational revenues. The authors fail to uncover statistically significant evidence that athletic director personal characteristics, functional experience and technical experience are associated with organizational performance. Rather, the empirical modeling indicates organizational performance is primarily driven by differentiation in the ability to acquire human capital (i.e. playing talent). The results also indicate that on average, women are more likely to lead lower revenue organizations, however, prior industry-specific technical experience offsets this relationship. In opposition to upper echelons research in numerous settings, the modeling indicates the personal characteristics and experiences of the organization's lead executive are not an economically relevant determinant of organizational performance. This may indicate college athletics is a boundary condition in the applicability of upper echelons theory.Upper echelons in college sport: the impact of athletic directors on organizational performance and revenues
Tyler Skinner, Steven Salaga, Matthew Juravich
Managerial Finance, Vol. 50, No. 4, pp.811-833

Using the lens of upper echelons theory, this study examines the degree to which National Collegiate Athletic Association athletic department performance outcomes are associated with the personal characteristics and experiences of the athletic director leading the organization.

The authors match organizational performance data with athletic director and institutional characteristics to form a robust data set spanning 16 years from the 2003–04 to 2018–19 seasons. The sample contains 811 observations representing 136 unique athletic directors. Fixed effects panel regressions are used to analyze organizational performance and quantile regression is used to analyze organizational revenues.

The authors fail to uncover statistically significant evidence that athletic director personal characteristics, functional experience and technical experience are associated with organizational performance. Rather, the empirical modeling indicates organizational performance is primarily driven by differentiation in the ability to acquire human capital (i.e. playing talent). The results also indicate that on average, women are more likely to lead lower revenue organizations, however, prior industry-specific technical experience offsets this relationship.

In opposition to upper echelons research in numerous settings, the modeling indicates the personal characteristics and experiences of the organization's lead executive are not an economically relevant determinant of organizational performance. This may indicate college athletics is a boundary condition in the applicability of upper echelons theory.

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Upper echelons in college sport: the impact of athletic directors on organizational performance and revenues10.1108/MF-10-2023-0629Managerial Finance2023-12-04© 2023 Emerald Publishing LimitedTyler SkinnerSteven SalagaMatthew JuravichManagerial Finance5042023-12-0410.1108/MF-10-2023-0629https://www.emerald.com/insight/content/doi/10.1108/MF-10-2023-0629/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
The mediating role of capital on deposit insurance and financial stability: evidence from Islamic and conventional bankshttps://www.emerald.com/insight/content/doi/10.1108/MF-02-2023-0075/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis study aims to evaluate the interaction between bank capital and explicit deposit insurance scheme (DIS) on the financial stability of Islamic and conventional banks. The author's sample covers 52 Islamic and 108 conventional banks operating in 12 countries over the period 2000–2021 using the random-effects generalized least squares (RE-GLS) regression technique. The author's results reveal that bank capital negatively mediates the relationship between explicit DIS and the financial stability of both Islamic and conventional banks. Additionally, explicit DIS has a positive impact on the financial stability of conventional banks. However, the results are mixed for Islamic banks, as the effect of explicit DIS is positive for the Middle East and North Africa (MENA) region but negative for the South and Southeast Asia (SSA) region. Finally, the interaction between explicit DIS and the COVID-19 pandemic has a negative effect on conventional banks operating in the MENA region, while it has a positive effect on Islamic banks operating in the SSA region. The findings of this paper have important implications for regulators in evaluating DIS policies and in anticipating any potential adverse consequences that might arise for both Islamic and conventional banks in normal and crisis times. Policymakers should strive to preserve the benefits of DIS while mitigating the destabilizing effects of its interaction with capital ratios. This study introduces a novel aspect by examining the mediating role of capital in the relationship between explicit DIS and the financial stability of Islamic and conventional banks.The mediating role of capital on deposit insurance and financial stability: evidence from Islamic and conventional banks
Houssem Ben-Ammar
Managerial Finance, Vol. ahead-of-print, No. ahead-of-print, pp.-

This study aims to evaluate the interaction between bank capital and explicit deposit insurance scheme (DIS) on the financial stability of Islamic and conventional banks.

The author's sample covers 52 Islamic and 108 conventional banks operating in 12 countries over the period 2000–2021 using the random-effects generalized least squares (RE-GLS) regression technique.

The author's results reveal that bank capital negatively mediates the relationship between explicit DIS and the financial stability of both Islamic and conventional banks. Additionally, explicit DIS has a positive impact on the financial stability of conventional banks. However, the results are mixed for Islamic banks, as the effect of explicit DIS is positive for the Middle East and North Africa (MENA) region but negative for the South and Southeast Asia (SSA) region. Finally, the interaction between explicit DIS and the COVID-19 pandemic has a negative effect on conventional banks operating in the MENA region, while it has a positive effect on Islamic banks operating in the SSA region.

The findings of this paper have important implications for regulators in evaluating DIS policies and in anticipating any potential adverse consequences that might arise for both Islamic and conventional banks in normal and crisis times. Policymakers should strive to preserve the benefits of DIS while mitigating the destabilizing effects of its interaction with capital ratios.

This study introduces a novel aspect by examining the mediating role of capital in the relationship between explicit DIS and the financial stability of Islamic and conventional banks.

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The mediating role of capital on deposit insurance and financial stability: evidence from Islamic and conventional banks10.1108/MF-02-2023-0075Managerial Finance2024-01-11© 2023 Emerald Publishing LimitedHoussem Ben-AmmarManagerial Financeahead-of-printahead-of-print2024-01-1110.1108/MF-02-2023-0075https://www.emerald.com/insight/content/doi/10.1108/MF-02-2023-0075/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Can the Sell in May effect be enhanced by a size tilt?https://www.emerald.com/insight/content/doi/10.1108/MF-02-2023-0111/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThe authors evaluate the Sell in May effect in the Canadian context to comprehensively explore the Sell in May effect as well as its interactions with the size effect and risk and with multiple indices. The authors use ordinary least squares (OLS) regressions to examine the Sell in May effect and Huber M-estimation to handle potential outliers. They also use the generalized autoregressive conditional heteroskedasticity (GARCH) models to explore the role of risk in the Sell in May effect. The results demonstrate that the Sell in May effect is present in all three main Canadian stock market indices. More telling, the anomaly is strongest in small cap indices and in indices that give equal weighting to small and large cap stocks. They do not find that the effect is driven by risk. While several papers have explored the Sell in May phenomenon in several countries, little scholarly attention has been paid to this effect in Canada and to its interaction with the size effect. The authors contribute to the literature by examining of the interactions between Sell in May and the size effect in Canada. They examine the Sell in May effect using CFMRC value-weighted and equally weighted indices of all Canadian companies. They also incorporate in their analysis the role of risk.Can the Sell in May effect be enhanced by a size tilt?
Kobana Abukari, Erin Oldford, Vijay Jog
Managerial Finance, Vol. ahead-of-print, No. ahead-of-print, pp.-

The authors evaluate the Sell in May effect in the Canadian context to comprehensively explore the Sell in May effect as well as its interactions with the size effect and risk and with multiple indices.

The authors use ordinary least squares (OLS) regressions to examine the Sell in May effect and Huber M-estimation to handle potential outliers. They also use the generalized autoregressive conditional heteroskedasticity (GARCH) models to explore the role of risk in the Sell in May effect.

The results demonstrate that the Sell in May effect is present in all three main Canadian stock market indices. More telling, the anomaly is strongest in small cap indices and in indices that give equal weighting to small and large cap stocks. They do not find that the effect is driven by risk.

While several papers have explored the Sell in May phenomenon in several countries, little scholarly attention has been paid to this effect in Canada and to its interaction with the size effect. The authors contribute to the literature by examining of the interactions between Sell in May and the size effect in Canada. They examine the Sell in May effect using CFMRC value-weighted and equally weighted indices of all Canadian companies. They also incorporate in their analysis the role of risk.

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Can the Sell in May effect be enhanced by a size tilt?10.1108/MF-02-2023-0111Managerial Finance2024-02-02© 2024 Emerald Publishing LimitedKobana AbukariErin OldfordVijay JogManagerial Financeahead-of-printahead-of-print2024-02-0210.1108/MF-02-2023-0111https://www.emerald.com/insight/content/doi/10.1108/MF-02-2023-0111/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2024 Emerald Publishing Limited
Google Trends, bank popularity and depositors' fears in Indonesiahttps://www.emerald.com/insight/content/doi/10.1108/MF-03-2023-0144/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis paper investigated whether a bank’s popularity and depositors' fear of Google search volume could affect bank deposits and credit. The authors used two different quarterly data from Google Trends and banking data from 2012 Q1 to 2020 Q1. Based on available data, Google Trends data start from 2012. The authors exclude data after 2020 Q1 because the Covid-19 pandemic arguably increased the volume of Internet users due to shifting behavior to online activities. They merged and cleaned the data by winsorizing at 5 and 95 percentiles to avoid any outlier problems, reaching 74 banks in the sample. They used panel data estimation of quarterly data following Levy-Yeyati et al. (2010) and Trinugroho et al. (2020). The results show that a higher search volume of a bank’s name leads to higher deposits. A higher search volume of depositor fear reduces deposits and credit. The authors also found that banks with high risk and a high search volume of their name have a significantly lower volume of deposits. To the best of the authors’ knowledge, not many papers in banking and finance have used Google Trends data to gauge related issues regarding depositors' behavior. The authors have filled a gap in the literature by investigating whether the popularity of Google search and depositors' fear could impact deposits and credit. This study also attempted to establish whether Google Trends data could be a reliable source of information to predict depositors' behavior by using a Zscore to measure bank risk.Google Trends, bank popularity and depositors' fears in Indonesia
Nugroho Saputro, Putra Pamungkas, Irwan Trinugroho, Yoshia Christian Mahulette, Bruno Sergio Sergi, Goh Lim Thye
Managerial Finance, Vol. ahead-of-print, No. ahead-of-print, pp.-

This paper investigated whether a bank’s popularity and depositors' fear of Google search volume could affect bank deposits and credit.

The authors used two different quarterly data from Google Trends and banking data from 2012 Q1 to 2020 Q1. Based on available data, Google Trends data start from 2012. The authors exclude data after 2020 Q1 because the Covid-19 pandemic arguably increased the volume of Internet users due to shifting behavior to online activities. They merged and cleaned the data by winsorizing at 5 and 95 percentiles to avoid any outlier problems, reaching 74 banks in the sample. They used panel data estimation of quarterly data following Levy-Yeyati et al. (2010) and Trinugroho et al. (2020).

The results show that a higher search volume of a bank’s name leads to higher deposits. A higher search volume of depositor fear reduces deposits and credit. The authors also found that banks with high risk and a high search volume of their name have a significantly lower volume of deposits.

To the best of the authors’ knowledge, not many papers in banking and finance have used Google Trends data to gauge related issues regarding depositors' behavior. The authors have filled a gap in the literature by investigating whether the popularity of Google search and depositors' fear could impact deposits and credit. This study also attempted to establish whether Google Trends data could be a reliable source of information to predict depositors' behavior by using a Zscore to measure bank risk.

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Google Trends, bank popularity and depositors' fears in Indonesia10.1108/MF-03-2023-0144Managerial Finance2024-01-10© 2023 Emerald Publishing LimitedNugroho SaputroPutra PamungkasIrwan TrinugrohoYoshia Christian MahuletteBruno Sergio SergiGoh Lim ThyeManagerial Financeahead-of-printahead-of-print2024-01-1010.1108/MF-03-2023-0144https://www.emerald.com/insight/content/doi/10.1108/MF-03-2023-0144/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Financial literacy–a regulator of intended investment behaviour: analysing the hypothetical portfolio compositionhttps://www.emerald.com/insight/content/doi/10.1108/MF-03-2023-0177/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThe investment behaviour of individuals has been a major area of interest for several researchers and policymakers due to its great impact on the economy. This study aimed to assess the investment behaviour of individuals in light of their risk appetite and how financial literacy regulates this relationship. A self-administered structured questionnaire was used to collect responses from individuals using purposive and convenience sampling techniques. Individuals were presented with 16 investment avenues widely offered by the Indian financial market to choose from to construct a hypothetical portfolio. The association between risk appetite, financial literacy and the composition of the hypothetical portfolio was analysed using a gologit model. Increased risk appetite increased the probability of respondents creating a portfolio with a greater proportion of risky assets and less diversification. Lower levels of financial literacy pointed towards portfolios with traditional and low-risk avenues. The results also revealed a significant moderating impact of financial literacy on risk appetite and the creation of the type of a hypothetical portfolio. Even though the intended behaviour is a close estimate of actual behaviour, there is a possibility of deviation that cannot be ignored. The present study provides insights into how individuals make portfolio choices by incorporating risk appetite and diversification factors whilst making investment decisions, thereby expanding the literature from an emerging economy perspective. The role of financial literacy as a moderator has not been studied in the domain of hypothetical portfolio creation in India, which has been empirically explored in the current study.Financial literacy–a regulator of intended investment behaviour: analysing the hypothetical portfolio composition
Crystal Glenda Rodrigues, B.V. Gopalakrishna
Managerial Finance, Vol. ahead-of-print, No. ahead-of-print, pp.-

The investment behaviour of individuals has been a major area of interest for several researchers and policymakers due to its great impact on the economy. This study aimed to assess the investment behaviour of individuals in light of their risk appetite and how financial literacy regulates this relationship.

A self-administered structured questionnaire was used to collect responses from individuals using purposive and convenience sampling techniques. Individuals were presented with 16 investment avenues widely offered by the Indian financial market to choose from to construct a hypothetical portfolio. The association between risk appetite, financial literacy and the composition of the hypothetical portfolio was analysed using a gologit model.

Increased risk appetite increased the probability of respondents creating a portfolio with a greater proportion of risky assets and less diversification. Lower levels of financial literacy pointed towards portfolios with traditional and low-risk avenues. The results also revealed a significant moderating impact of financial literacy on risk appetite and the creation of the type of a hypothetical portfolio.

Even though the intended behaviour is a close estimate of actual behaviour, there is a possibility of deviation that cannot be ignored.

The present study provides insights into how individuals make portfolio choices by incorporating risk appetite and diversification factors whilst making investment decisions, thereby expanding the literature from an emerging economy perspective. The role of financial literacy as a moderator has not been studied in the domain of hypothetical portfolio creation in India, which has been empirically explored in the current study.

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Financial literacy–a regulator of intended investment behaviour: analysing the hypothetical portfolio composition10.1108/MF-03-2023-0177Managerial Finance2023-12-04© 2023 Emerald Publishing LimitedCrystal Glenda RodriguesB.V. GopalakrishnaManagerial Financeahead-of-printahead-of-print2023-12-0410.1108/MF-03-2023-0177https://www.emerald.com/insight/content/doi/10.1108/MF-03-2023-0177/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Comparing sentiment and sentiment shock in stock returnshttps://www.emerald.com/insight/content/doi/10.1108/MF-04-2023-0226/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThe authors compare sentiment level with sentiment shock from different angles to determine which measure better captures the relationship between sentiment and stock returns. This paper examines the relationship between investor sentiment and contemporaneous stock returns. It also proposes a model of systems science to explain the empirical findings. The authors find that sentiment shock has a higher explanatory power on stock returns than sentiment itself, and sentiment shock beta exhibits a much higher statistical significance than sentiment beta. Compared with sentiment level, sentiment shock has a more robust linkage to the market factors and the sentiment shock is more responsive to stock returns. This is the first study to compare sentiment level and sentiment shock. It concludes that sentiment shock is a better indicator of the relationship between investor sentiment and contemporary stock returns.Comparing sentiment and sentiment shock in stock returns
Qiang Bu, Jeffrey Forrest
Managerial Finance, Vol. ahead-of-print, No. ahead-of-print, pp.-

The authors compare sentiment level with sentiment shock from different angles to determine which measure better captures the relationship between sentiment and stock returns.

This paper examines the relationship between investor sentiment and contemporaneous stock returns. It also proposes a model of systems science to explain the empirical findings.

The authors find that sentiment shock has a higher explanatory power on stock returns than sentiment itself, and sentiment shock beta exhibits a much higher statistical significance than sentiment beta. Compared with sentiment level, sentiment shock has a more robust linkage to the market factors and the sentiment shock is more responsive to stock returns.

This is the first study to compare sentiment level and sentiment shock. It concludes that sentiment shock is a better indicator of the relationship between investor sentiment and contemporary stock returns.

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Comparing sentiment and sentiment shock in stock returns10.1108/MF-04-2023-0226Managerial Finance2024-01-15© 2023 Emerald Publishing LimitedQiang BuJeffrey ForrestManagerial Financeahead-of-printahead-of-print2024-01-1510.1108/MF-04-2023-0226https://www.emerald.com/insight/content/doi/10.1108/MF-04-2023-0226/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Specifying and validating overconfidence bias among retail investors: a formative indexhttps://www.emerald.com/insight/content/doi/10.1108/MF-04-2023-0237/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThe study explored various dimensions of overconfidence bias (OB) among retail investors in Indian financial markets. Further, these dimensions were validated through formative assessments for OB. The study applied exploratory factor analysis (EFA) to 764 respondents to explore dimensions of OB. These were validated with formative assessments on 489 respondents by the partial least square path modeling (PLS-PM) approach in SmartPLS 4.0 software. The major findings of EFA explored four dimensions for OB, i.e. accuracy, perceived control, positive illusions and past investment success. The formative assessments revealed that positive illusions followed by past investment success among retail investors played an instrumental role in orchestrating the OBs that affect investment decisions in financial markets. The formative index of OB has several practical implications for registered financial and investment advisors, bank advisors, business media companies and portfolio managers, besides individual investors in the domain of behavioral finance. This research provides a novel approach to provide a formative index of OB with four dimensions. This formative index can acts as an overview for upcoming researchers to investigate the OB of retail individual investors. Overconfidence bias is an important predictor of retail investors' behaviorFormative dimensions of the overconfidence bias index.Accuracy, perceived control, positive illusions and past investment success are important dimensions of overconfidence bias.Modern portfolio theory and illusion of control theory support this study.Specifying and validating overconfidence bias among retail investors: a formative index
Parvathy S. Nair, Atul Shiva
Managerial Finance, Vol. ahead-of-print, No. ahead-of-print, pp.-

The study explored various dimensions of overconfidence bias (OB) among retail investors in Indian financial markets. Further, these dimensions were validated through formative assessments for OB.

The study applied exploratory factor analysis (EFA) to 764 respondents to explore dimensions of OB. These were validated with formative assessments on 489 respondents by the partial least square path modeling (PLS-PM) approach in SmartPLS 4.0 software.

The major findings of EFA explored four dimensions for OB, i.e. accuracy, perceived control, positive illusions and past investment success. The formative assessments revealed that positive illusions followed by past investment success among retail investors played an instrumental role in orchestrating the OBs that affect investment decisions in financial markets.

The formative index of OB has several practical implications for registered financial and investment advisors, bank advisors, business media companies and portfolio managers, besides individual investors in the domain of behavioral finance.

This research provides a novel approach to provide a formative index of OB with four dimensions. This formative index can acts as an overview for upcoming researchers to investigate the OB of retail individual investors.

  1. Overconfidence bias is an important predictor of retail investors' behavior

  2. Formative dimensions of the overconfidence bias index.

  3. Accuracy, perceived control, positive illusions and past investment success are important dimensions of overconfidence bias.

  4. Modern portfolio theory and illusion of control theory support this study.

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Specifying and validating overconfidence bias among retail investors: a formative index10.1108/MF-04-2023-0237Managerial Finance2023-12-29© 2023 Emerald Publishing LimitedParvathy S. NairAtul ShivaManagerial Financeahead-of-printahead-of-print2023-12-2910.1108/MF-04-2023-0237https://www.emerald.com/insight/content/doi/10.1108/MF-04-2023-0237/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Predicting returns using moving averages: the role of investor inattentionhttps://www.emerald.com/insight/content/doi/10.1108/MF-04-2023-0257/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestInvestors are inattentive to continuous information as opposed to discrete information, resulting in underreaction to continuous information. This paper aims to examine if the well-documented return predictability of the strategies based on the ratio of short-term to long-term moving averages can be enhanced by conditioning on information discreteness. Anchoring bias has been the popular explanation for the source of underreaction in the context of moving averages-based strategies. This paper proposes and studies another possible source based on investor inattention that can potentially result in superior performance of these strategies. The paper uses portfolio sorting as well as Fama-MacBeth cross-sectional regressions. For examining the role of information discreteness in the return predictability of the moving average ratio, the sample stocks are double-sorted based on the moving average ratio and information discreteness measure. The returns to these portfolios are computed using standard approaches in the literature. The regression approach controls for various well-known return predictors. This study finds that the equally-weighted monthly returns to the long-short moving average ratio quintile portfolios increase monotonically from 0.54% for the discrete information portfolio to 1.37% for the continuous information portfolio over the 3-month holding period. This study observes a similar pattern in risk-adjusted returns, value-weighted portfolios, non-January returns, large and small stocks, for alternative holding periods and the ratio of 50-day to 200-day moving average. The results are robust to control for well-known return predictors in cross-sectional regressions. To the best of the authors’ knowledge, this is the first paper to document the significant role of investor inattention to continuous information in the return predictability of strategies based on the moving average ratios. There are many underreaction anomalies that have been reported in the literature, and the paper's results can be extended to those anomalies in subsequent research. The findings of this paper have important practical implications. Strategies based on moving averages are an extremely popular component of a technical analyst's toolkit. Their profitability has been well-documented in the prior literature that attributes the performance to investors' anchoring bias. This paper offers a readily implementable approach to enhancing the performance of these strategies by conditioning on a straightforward measure of information discreteness. In doing so, this study extends the literature on the role of investor inattention to continuous information in anomaly profits. While there is considerable literature on technical analysis, and especially on the performance of moving averages-based strategies, the novelty of this paper is the analysis of the role of information discreteness in strategy performance. Not only does the paper document robust evidence, but the findings suggest that the investor’s inattention to continuous information is a more dominant source of underreaction compared to anchoring. This is an important result, given that anchoring has so far been considered the source of return predictability in the literature.Predicting returns using moving averages: the role of investor inattention
Ajay Bhootra
Managerial Finance, Vol. ahead-of-print, No. ahead-of-print, pp.-

Investors are inattentive to continuous information as opposed to discrete information, resulting in underreaction to continuous information. This paper aims to examine if the well-documented return predictability of the strategies based on the ratio of short-term to long-term moving averages can be enhanced by conditioning on information discreteness. Anchoring bias has been the popular explanation for the source of underreaction in the context of moving averages-based strategies. This paper proposes and studies another possible source based on investor inattention that can potentially result in superior performance of these strategies.

The paper uses portfolio sorting as well as Fama-MacBeth cross-sectional regressions. For examining the role of information discreteness in the return predictability of the moving average ratio, the sample stocks are double-sorted based on the moving average ratio and information discreteness measure. The returns to these portfolios are computed using standard approaches in the literature. The regression approach controls for various well-known return predictors.

This study finds that the equally-weighted monthly returns to the long-short moving average ratio quintile portfolios increase monotonically from 0.54% for the discrete information portfolio to 1.37% for the continuous information portfolio over the 3-month holding period. This study observes a similar pattern in risk-adjusted returns, value-weighted portfolios, non-January returns, large and small stocks, for alternative holding periods and the ratio of 50-day to 200-day moving average. The results are robust to control for well-known return predictors in cross-sectional regressions.

To the best of the authors’ knowledge, this is the first paper to document the significant role of investor inattention to continuous information in the return predictability of strategies based on the moving average ratios. There are many underreaction anomalies that have been reported in the literature, and the paper's results can be extended to those anomalies in subsequent research.

The findings of this paper have important practical implications. Strategies based on moving averages are an extremely popular component of a technical analyst's toolkit. Their profitability has been well-documented in the prior literature that attributes the performance to investors' anchoring bias. This paper offers a readily implementable approach to enhancing the performance of these strategies by conditioning on a straightforward measure of information discreteness. In doing so, this study extends the literature on the role of investor inattention to continuous information in anomaly profits.

While there is considerable literature on technical analysis, and especially on the performance of moving averages-based strategies, the novelty of this paper is the analysis of the role of information discreteness in strategy performance. Not only does the paper document robust evidence, but the findings suggest that the investor’s inattention to continuous information is a more dominant source of underreaction compared to anchoring. This is an important result, given that anchoring has so far been considered the source of return predictability in the literature.

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Predicting returns using moving averages: the role of investor inattention10.1108/MF-04-2023-0257Managerial Finance2023-12-29© 2023 Emerald Publishing LimitedAjay BhootraManagerial Financeahead-of-printahead-of-print2023-12-2910.1108/MF-04-2023-0257https://www.emerald.com/insight/content/doi/10.1108/MF-04-2023-0257/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Response of anchor investors to pre-IPO earnings management: evidence from an emerging markethttps://www.emerald.com/insight/content/doi/10.1108/MF-04-2023-0264/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis study aims to examine the reaction of anchor investors (AIs) to pre-IPO earnings management (EM). The authors use the unique detailed bid data from the Indian anchor experiment. The authors also study the reputed AIs’ EM detection ability and pricing behavior in response to pre-IPO EM. The authors use unique AI bid data for 169 Indian IPO firms. Utilizing the logistic regression and Tobit regression models with industry and year-fixed effects, the authors examine the relationship between various measures of AI participation and proxies of short-term and long-term discretionary accruals. The authors document that pre-IPO EM is positively associated with the likelihood of anchor backing but negatively related to the likelihood of reputed anchor backing. The findings indicate that AIs are misled by pre-IPO EM, but reputed AIs are not. The authors also observe that reputed AIs, compared to the non-reputed, pay less than the upper band with increasing EM. The findings are robust to using various AI measures and EM proxies. The findings have significant implications for regulators in the implementation of AI concept in non-anchor markets and better implementation of policies in existing anchor settings. Findings can also be relevant for non-institutional investors in the IPO domain. This is one of the few studies on institutional investors' IPO bidding behavior in response to pre-IPO EM. However, this is the first study to analyze AIs' IPO bidding behavior in response to pre-IPO EM.Response of anchor investors to pre-IPO earnings management: evidence from an emerging market
Sahil Narang, Rudra P. Pradhan
Managerial Finance, Vol. ahead-of-print, No. ahead-of-print, pp.-

This study aims to examine the reaction of anchor investors (AIs) to pre-IPO earnings management (EM). The authors use the unique detailed bid data from the Indian anchor experiment. The authors also study the reputed AIs’ EM detection ability and pricing behavior in response to pre-IPO EM.

The authors use unique AI bid data for 169 Indian IPO firms. Utilizing the logistic regression and Tobit regression models with industry and year-fixed effects, the authors examine the relationship between various measures of AI participation and proxies of short-term and long-term discretionary accruals.

The authors document that pre-IPO EM is positively associated with the likelihood of anchor backing but negatively related to the likelihood of reputed anchor backing. The findings indicate that AIs are misled by pre-IPO EM, but reputed AIs are not. The authors also observe that reputed AIs, compared to the non-reputed, pay less than the upper band with increasing EM. The findings are robust to using various AI measures and EM proxies.

The findings have significant implications for regulators in the implementation of AI concept in non-anchor markets and better implementation of policies in existing anchor settings. Findings can also be relevant for non-institutional investors in the IPO domain.

This is one of the few studies on institutional investors' IPO bidding behavior in response to pre-IPO EM. However, this is the first study to analyze AIs' IPO bidding behavior in response to pre-IPO EM.

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Response of anchor investors to pre-IPO earnings management: evidence from an emerging market10.1108/MF-04-2023-0264Managerial Finance2023-12-15© 2023 Emerald Publishing LimitedSahil NarangRudra P. PradhanManagerial Financeahead-of-printahead-of-print2023-12-1510.1108/MF-04-2023-0264https://www.emerald.com/insight/content/doi/10.1108/MF-04-2023-0264/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Corporate governance and firm’s risk behavior: the moderating role of corporate social responsibilityhttps://www.emerald.com/insight/content/doi/10.1108/MF-04-2023-0265/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis study aims to examine the nexus of corporate governance with firms' financial risk-taking behavior under the corporate social responsibility (CSR) disclosures in the context of non-financial listed firms of an emerging economy. This study investigates the relationship between corporate governance as evaluated by an index and several financial risks, including idiosyncratic, default and systematic risks. The connection of corporate governance with financial risks is also studied while considering the moderation of CSR disclosures. The data are collected from 2014 to 2018 of 73 top 100-index listed non-financial firms of Pakistan Stock Exchange (PSX). Panel regression fixed effect and 2-step generalized method of moments techniques are applied to confirm the hypothesis along with the diagnostic tests to confirm that all outcomes of models must be authentic and reliable. The study’s findings confirm that enhancing the overall corporate governance measures resulted in an augment in the firm’s risk due to weak control and regulations prevailing in emerging economies. Moreover, CSR disclosures enhance stakeholder information, lessen information asymmetry about management policies and mitigate the risk associated with operational uncertainties. This study has a practical implementation to policymakers that effective monitoring and controlling measures facilitate the corporate management for minimizing the financial risks. Further, the study’s findings shed light that implementing corporate governance measures is not enough to mitigate financial risks until supervisory measures in the form of CSR disclosures are not taken to analyse corporate governance effectiveness. This paper enhances the key findings in the literature by examining the role of corporate governance measures with respect to firms’ financial risks considering the moderating role of CSR disclosures. Furthermore, this research adds to the body of knowledge regarding the implementation of monitoring measures that assist in the mitigation of firms’ financial risks hence firm value.Corporate governance and firm’s risk behavior: the moderating role of corporate social responsibility
Khurram Shahzad, Rizwan Ali, Ramiz Ur Rehman
Managerial Finance, Vol. ahead-of-print, No. ahead-of-print, pp.-

This study aims to examine the nexus of corporate governance with firms' financial risk-taking behavior under the corporate social responsibility (CSR) disclosures in the context of non-financial listed firms of an emerging economy.

This study investigates the relationship between corporate governance as evaluated by an index and several financial risks, including idiosyncratic, default and systematic risks. The connection of corporate governance with financial risks is also studied while considering the moderation of CSR disclosures. The data are collected from 2014 to 2018 of 73 top 100-index listed non-financial firms of Pakistan Stock Exchange (PSX). Panel regression fixed effect and 2-step generalized method of moments techniques are applied to confirm the hypothesis along with the diagnostic tests to confirm that all outcomes of models must be authentic and reliable.

The study’s findings confirm that enhancing the overall corporate governance measures resulted in an augment in the firm’s risk due to weak control and regulations prevailing in emerging economies. Moreover, CSR disclosures enhance stakeholder information, lessen information asymmetry about management policies and mitigate the risk associated with operational uncertainties.

This study has a practical implementation to policymakers that effective monitoring and controlling measures facilitate the corporate management for minimizing the financial risks. Further, the study’s findings shed light that implementing corporate governance measures is not enough to mitigate financial risks until supervisory measures in the form of CSR disclosures are not taken to analyse corporate governance effectiveness.

This paper enhances the key findings in the literature by examining the role of corporate governance measures with respect to firms’ financial risks considering the moderating role of CSR disclosures. Furthermore, this research adds to the body of knowledge regarding the implementation of monitoring measures that assist in the mitigation of firms’ financial risks hence firm value.

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Corporate governance and firm’s risk behavior: the moderating role of corporate social responsibility10.1108/MF-04-2023-0265Managerial Finance2024-02-23© 2024 Emerald Publishing LimitedKhurram ShahzadRizwan AliRamiz Ur RehmanManagerial Financeahead-of-printahead-of-print2024-02-2310.1108/MF-04-2023-0265https://www.emerald.com/insight/content/doi/10.1108/MF-04-2023-0265/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2024 Emerald Publishing Limited
Investigating nexus between corporate re-branding and stock market performance: a study of Indian service sectorhttps://www.emerald.com/insight/content/doi/10.1108/MF-05-2023-0275/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThe present study, by using signaling perspective aims to investigate short-term valuation impact of rebranding announcements (with name change) on stock performance of 160 service firms listed on NSE NIFTY-500 over the period of 2000–2019. An event study methodology is used to estimate the cumulative abnormal returns (CARs) and its statistical significance is tested with both parametric and non-parametric test-statistics. Separate analysis has been conducted for firms with “major vs minor” and “restructuring vs non-restructuring” name change. Findings of the study suggest that rebranding decisions are negatively associated with abnormal returns around the announcement period indicating strong disapproval of name change event. In addition, investors formed strong adverse opinion for major name change firms as compared to minor name change firms. Further, restructured name change sample document larger negative drift than non-restructured sample. Findings offer substantial repercussions for shareholders who can make informed judgments about name change as a signal of reinventing brand identity. Managers should announce detailed rationale behind name change decision to market for enhancing corporate reputation. This study contributes to marketing-finance interface literature and is first to examine market reaction to name change of Indian service firms and moreover, made a distinction between major vs minor and restructured vs non-restructured name change events for these firms.Investigating nexus between corporate re-branding and stock market performance: a study of Indian service sector
Pushpanjali Kaul, Sangeeta Arora
Managerial Finance, Vol. ahead-of-print, No. ahead-of-print, pp.-

The present study, by using signaling perspective aims to investigate short-term valuation impact of rebranding announcements (with name change) on stock performance of 160 service firms listed on NSE NIFTY-500 over the period of 2000–2019.

An event study methodology is used to estimate the cumulative abnormal returns (CARs) and its statistical significance is tested with both parametric and non-parametric test-statistics. Separate analysis has been conducted for firms with “major vs minor” and “restructuring vs non-restructuring” name change.

Findings of the study suggest that rebranding decisions are negatively associated with abnormal returns around the announcement period indicating strong disapproval of name change event. In addition, investors formed strong adverse opinion for major name change firms as compared to minor name change firms. Further, restructured name change sample document larger negative drift than non-restructured sample.

Findings offer substantial repercussions for shareholders who can make informed judgments about name change as a signal of reinventing brand identity. Managers should announce detailed rationale behind name change decision to market for enhancing corporate reputation.

This study contributes to marketing-finance interface literature and is first to examine market reaction to name change of Indian service firms and moreover, made a distinction between major vs minor and restructured vs non-restructured name change events for these firms.

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Investigating nexus between corporate re-branding and stock market performance: a study of Indian service sector10.1108/MF-05-2023-0275Managerial Finance2024-01-12© 2023 Emerald Publishing LimitedPushpanjali KaulSangeeta AroraManagerial Financeahead-of-printahead-of-print2024-01-1210.1108/MF-05-2023-0275https://www.emerald.com/insight/content/doi/10.1108/MF-05-2023-0275/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
The impact of co-opted executives on earnings managementhttps://www.emerald.com/insight/content/doi/10.1108/MF-06-2023-0348/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThe authors seek to analyze the impact of weak corporate governance by top executives of a firm on the firm's earnings reports. This research is meant to further emphasize the impact of co-opted executives on a firm, primarily through their impact on earnings management. Using financial data from 11,473 firm-year observations, the authors utilize ordinary least squares (OLS), 2-stage IV regressions, propensity score matching (PSM) and entropy balancing to analyze the impact of a co-opted top management team on discretionary accruals and restatements. The authors find empirical evidence that firms with weak corporate governance from top executives are more likely to manipulate reported earnings and have lower financial reporting quality. The authors also find that the effect of co-opted executives on earnings management is weaker when a chief executive officer's (CEO’s) incentives are not aligned with those of top executives, suggesting that executives prevent earnings management due to reputational concerns. Co-opted chief financial officers (CFOs) increase the magnitude of earnings management in a firm but are not solely responsible for the authors' results. The authors' results suggest that the top executive team provides an important first defense in the prevention of earnings management and corporate wrongdoing. Co-option of the top executive team may be an important consideration when doing research into corporate governance.The impact of co-opted executives on earnings management
Eric Valenzuela, Michael Zheng
Managerial Finance, Vol. ahead-of-print, No. ahead-of-print, pp.-

The authors seek to analyze the impact of weak corporate governance by top executives of a firm on the firm's earnings reports. This research is meant to further emphasize the impact of co-opted executives on a firm, primarily through their impact on earnings management.

Using financial data from 11,473 firm-year observations, the authors utilize ordinary least squares (OLS), 2-stage IV regressions, propensity score matching (PSM) and entropy balancing to analyze the impact of a co-opted top management team on discretionary accruals and restatements.

The authors find empirical evidence that firms with weak corporate governance from top executives are more likely to manipulate reported earnings and have lower financial reporting quality. The authors also find that the effect of co-opted executives on earnings management is weaker when a chief executive officer's (CEO’s) incentives are not aligned with those of top executives, suggesting that executives prevent earnings management due to reputational concerns. Co-opted chief financial officers (CFOs) increase the magnitude of earnings management in a firm but are not solely responsible for the authors' results.

The authors' results suggest that the top executive team provides an important first defense in the prevention of earnings management and corporate wrongdoing. Co-option of the top executive team may be an important consideration when doing research into corporate governance.

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The impact of co-opted executives on earnings management10.1108/MF-06-2023-0348Managerial Finance2023-12-15© 2023 Emerald Publishing LimitedEric ValenzuelaMichael ZhengManagerial Financeahead-of-printahead-of-print2023-12-1510.1108/MF-06-2023-0348https://www.emerald.com/insight/content/doi/10.1108/MF-06-2023-0348/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
CSR inequality, managerial myopia and hostile takeover threatshttps://www.emerald.com/insight/content/doi/10.1108/MF-07-2023-0429/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestExploiting a novel measure of hostile takeover exposure primarily based on the staggered adoption of state legislations, we explore a crucial, albeit largely overlooked, aspect of corporate social responsibility (CSR). In particular, we investigate CSR inequality, which is the inequality across different CSR categories. Higher inequality suggests a less balanced, more lopsided, CSR policy. In addition to the standard regression analysis, we perform several robustness checks including propensity score matching, entropy balancing and an instrumental-variable analysis. Our results show that more takeover exposure exacerbates CSR inequality. Specifically, a rise in takeover vulnerability by one standard deviation results in an increase in CSR inequality by 4.53–5.40%. The findings support the managerial myopia hypothesis, where myopic managers promote some CSR activities that are useful to them in the short run more than others, leading to higher CSR inequality. Our study is the first to exploit a unique measure of takeover vulnerability to investigate the impact of takeover threats on CSR inequality, which is an important aspect of CSR that is largely overlooked in the literature. We aptly fill this void in the literature.CSR inequality, managerial myopia and hostile takeover threats
Pattanaporn Chatjuthamard, Pandej Chintrakarn, Pornsit Jiraporn, Weerapong Kitiwong, Sirithida Chaivisuttangkun
Managerial Finance, Vol. ahead-of-print, No. ahead-of-print, pp.-

Exploiting a novel measure of hostile takeover exposure primarily based on the staggered adoption of state legislations, we explore a crucial, albeit largely overlooked, aspect of corporate social responsibility (CSR). In particular, we investigate CSR inequality, which is the inequality across different CSR categories. Higher inequality suggests a less balanced, more lopsided, CSR policy.

In addition to the standard regression analysis, we perform several robustness checks including propensity score matching, entropy balancing and an instrumental-variable analysis.

Our results show that more takeover exposure exacerbates CSR inequality. Specifically, a rise in takeover vulnerability by one standard deviation results in an increase in CSR inequality by 4.53–5.40%. The findings support the managerial myopia hypothesis, where myopic managers promote some CSR activities that are useful to them in the short run more than others, leading to higher CSR inequality.

Our study is the first to exploit a unique measure of takeover vulnerability to investigate the impact of takeover threats on CSR inequality, which is an important aspect of CSR that is largely overlooked in the literature. We aptly fill this void in the literature.

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CSR inequality, managerial myopia and hostile takeover threats10.1108/MF-07-2023-0429Managerial Finance2024-02-02© 2024 Emerald Publishing LimitedPattanaporn ChatjuthamardPandej ChintrakarnPornsit JirapornWeerapong KitiwongSirithida ChaivisuttangkunManagerial Financeahead-of-printahead-of-print2024-02-0210.1108/MF-07-2023-0429https://www.emerald.com/insight/content/doi/10.1108/MF-07-2023-0429/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2024 Emerald Publishing Limited
A frontier-based parametric framework for exploring the competition–efficiency nexus in commercial banking: insights from an emerging economyhttps://www.emerald.com/insight/content/doi/10.1108/MF-07-2023-0445/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThe present study assesses the commercial bank profit efficiency and its relationship to banking sector competition in a rapidly growing emerging economy, India from 2009 to 2019 using stochastic frontier analysis (SFA). Lerner indices, conventional and efficiency-adjusted, quantify competition. Two SFA models are employed to calculate alternative profit efficiency (inefficiency) scores: the two-step time-decay approach proposed by Battese and Coelli (1992) and the recently developed single-step pairwise difference estimator (PDE) by Belotti and Ilardi (2018). In the first step of the BC92 framework, profit inefficiency is calculated, and in the second step, Tobit and Fractional Regression Model (FRM) are utilized to evaluate profit inefficiency correlates. PDE concurrently solves the frontier and inefficiency equations using the maximum likelihood process. The results suggest that foreign banks are less profit efficient than domestic equivalents, supporting the “home-field advantage” hypothesis in India. Further, increasing competition drives bank managers to make riskier lending and investment choices, decreasing bank profit efficiency. However, this effect varies depending on bank ownership and size. Literature on the competition bank efficiency link is conspicuously scant, with a focus on technical and cost efficiency. Less is known regarding the influence of competition on bank profit efficiency. The article is one of the first to examine commercial bank profit efficiency and its relationship to banking sector competition. Additionally, the study work represents one of the first applications of the FRM presented by Papke and Wooldridge (1996) and the PDE provided by Belotti and Ilardi (2018).A frontier-based parametric framework for exploring the competition–efficiency nexus in commercial banking: insights from an emerging economy
Bhavya Srivastava, Shveta Singh, Sonali Jain
Managerial Finance, Vol. ahead-of-print, No. ahead-of-print, pp.-

The present study assesses the commercial bank profit efficiency and its relationship to banking sector competition in a rapidly growing emerging economy, India from 2009 to 2019 using stochastic frontier analysis (SFA).

Lerner indices, conventional and efficiency-adjusted, quantify competition. Two SFA models are employed to calculate alternative profit efficiency (inefficiency) scores: the two-step time-decay approach proposed by Battese and Coelli (1992) and the recently developed single-step pairwise difference estimator (PDE) by Belotti and Ilardi (2018). In the first step of the BC92 framework, profit inefficiency is calculated, and in the second step, Tobit and Fractional Regression Model (FRM) are utilized to evaluate profit inefficiency correlates. PDE concurrently solves the frontier and inefficiency equations using the maximum likelihood process.

The results suggest that foreign banks are less profit efficient than domestic equivalents, supporting the “home-field advantage” hypothesis in India. Further, increasing competition drives bank managers to make riskier lending and investment choices, decreasing bank profit efficiency. However, this effect varies depending on bank ownership and size.

Literature on the competition bank efficiency link is conspicuously scant, with a focus on technical and cost efficiency. Less is known regarding the influence of competition on bank profit efficiency. The article is one of the first to examine commercial bank profit efficiency and its relationship to banking sector competition. Additionally, the study work represents one of the first applications of the FRM presented by Papke and Wooldridge (1996) and the PDE provided by Belotti and Ilardi (2018).

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A frontier-based parametric framework for exploring the competition–efficiency nexus in commercial banking: insights from an emerging economy10.1108/MF-07-2023-0445Managerial Finance2023-12-12© 2023 Emerald Publishing LimitedBhavya SrivastavaShveta SinghSonali JainManagerial Financeahead-of-printahead-of-print2023-12-1210.1108/MF-07-2023-0445https://www.emerald.com/insight/content/doi/10.1108/MF-07-2023-0445/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Assessment of working capital management efficiency – a two-stage slack-based measure of data envelopment analysishttps://www.emerald.com/insight/content/doi/10.1108/MF-08-2020-0432/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis study aims to assess the efficiency of managing working capital in 1,388 Indian manufacturing firms from 2008 to 2019 and investigate the effects of firm-specific and macro-level determinants on working capital management (WCM) efficiency. The current study accommodates a slack-based measure (SBM) in data envelopment analysis (DEA) for computing WCM efficiency. Further, we implement a panel data fixed-effects model that controls for heterogeneity across firms in determining the relationships of selected variables with WCM efficiency. The results highlight that manufacturing firms operate at around 50 percent efficiency, which is constant throughout the study period. Furthermore, among the selected variables, yield, earnings, age, size, ability to create internal resources, interest rate and gross domestic product (GDP) significantly affect WCM efficiency. Instead of the traditional models used for assessing efficiency, the SBM-DEA model is unit-invariant and monotone for slacks, implying that it can handle zero and negative data, which overcomes the incapability of prior DEA models. Hence, this provides accurate efficiency scores for robust analysis. Additionally, this paper provides a holistic working capital model recognizing firm-specific and macro-level determinants for a more explicit estimation of the relationship between WCM efficiency and the selected determinants.Assessment of working capital management efficiency – a two-stage slack-based measure of data envelopment analysis
Himanshu Seth, Deepak Deepak, Namita Ruparel, Saurabh Chadha, Shivi Agarwal
Managerial Finance, Vol. ahead-of-print, No. ahead-of-print, pp.-

This study aims to assess the efficiency of managing working capital in 1,388 Indian manufacturing firms from 2008 to 2019 and investigate the effects of firm-specific and macro-level determinants on working capital management (WCM) efficiency.

The current study accommodates a slack-based measure (SBM) in data envelopment analysis (DEA) for computing WCM efficiency. Further, we implement a panel data fixed-effects model that controls for heterogeneity across firms in determining the relationships of selected variables with WCM efficiency.

The results highlight that manufacturing firms operate at around 50 percent efficiency, which is constant throughout the study period. Furthermore, among the selected variables, yield, earnings, age, size, ability to create internal resources, interest rate and gross domestic product (GDP) significantly affect WCM efficiency.

Instead of the traditional models used for assessing efficiency, the SBM-DEA model is unit-invariant and monotone for slacks, implying that it can handle zero and negative data, which overcomes the incapability of prior DEA models. Hence, this provides accurate efficiency scores for robust analysis. Additionally, this paper provides a holistic working capital model recognizing firm-specific and macro-level determinants for a more explicit estimation of the relationship between WCM efficiency and the selected determinants.

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Assessment of working capital management efficiency – a two-stage slack-based measure of data envelopment analysis10.1108/MF-08-2020-0432Managerial Finance2024-03-19© 2024 Emerald Publishing LimitedHimanshu SethDeepak DeepakNamita RuparelSaurabh ChadhaShivi AgarwalManagerial Financeahead-of-printahead-of-print2024-03-1910.1108/MF-08-2020-0432https://www.emerald.com/insight/content/doi/10.1108/MF-08-2020-0432/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2024 Emerald Publishing Limited
Defining and measuring financial literacy in the Indian context: a systematic literature reviewhttps://www.emerald.com/insight/content/doi/10.1108/MF-08-2022-0358/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis paper aims to analyse how financial literacy (FL) is conceptualised and operationalised in the Indian context. A systematic literature review (SLR) was conducted using the Preferred Reporting Items for Systematic Reviews and Meta-analyses (PRISMA) protocol. Thirty-six articles published between 2010 and 2020 were considered for analysis. The FL conceptualisation was examined based on knowledge, ability, skill, attitude and confidence elements. The FL operationalisation was analysed using the modified version of the Organisation for Economic Co-operation and Development’s (OECD) Programme for International Student Assessment (PISA) 2012 model for organising the domain for an assessment framework. The findings indicate that, despite offering operationalisation details of the FL, 13 out of 36 studies did not include a conceptual definition of FL. Of the 23 studies that mentioned a conceptual definition, 87% are primarily focused on the “knowledge” element and only 39% have combined knowledge, ability/skill and attitude elements in defining FL. As in the developed countries, the Indian studies also preferred investment/saving-related contents in their FL measures. The volume of content focusing on the financial landscape is meagre amongst the FL measures used in India and developed countries. The survey instruments of most studies have been designed in the individuals’ context but have failed to measure the extent to which individuals apply the knowledge in performing their day-to-day financial transactions. Further, it was found that 20 out of 36 studies did not convert the FL level of their target groups into a single indicator or operational value. To the best of our knowledge, this is the first study that explores the FL’s assessment practices in India. Further, this study offers new insights by comparing the contents of FL measures used in Indian studies with those used in developed countries.Defining and measuring financial literacy in the Indian context: a systematic literature review
T.P. Arjun, Rameshkumar Subramanian
Managerial Finance, Vol. ahead-of-print, No. ahead-of-print, pp.-

This paper aims to analyse how financial literacy (FL) is conceptualised and operationalised in the Indian context.

A systematic literature review (SLR) was conducted using the Preferred Reporting Items for Systematic Reviews and Meta-analyses (PRISMA) protocol. Thirty-six articles published between 2010 and 2020 were considered for analysis. The FL conceptualisation was examined based on knowledge, ability, skill, attitude and confidence elements. The FL operationalisation was analysed using the modified version of the Organisation for Economic Co-operation and Development’s (OECD) Programme for International Student Assessment (PISA) 2012 model for organising the domain for an assessment framework.

The findings indicate that, despite offering operationalisation details of the FL, 13 out of 36 studies did not include a conceptual definition of FL. Of the 23 studies that mentioned a conceptual definition, 87% are primarily focused on the “knowledge” element and only 39% have combined knowledge, ability/skill and attitude elements in defining FL. As in the developed countries, the Indian studies also preferred investment/saving-related contents in their FL measures. The volume of content focusing on the financial landscape is meagre amongst the FL measures used in India and developed countries. The survey instruments of most studies have been designed in the individuals’ context but have failed to measure the extent to which individuals apply the knowledge in performing their day-to-day financial transactions. Further, it was found that 20 out of 36 studies did not convert the FL level of their target groups into a single indicator or operational value.

To the best of our knowledge, this is the first study that explores the FL’s assessment practices in India. Further, this study offers new insights by comparing the contents of FL measures used in Indian studies with those used in developed countries.

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Defining and measuring financial literacy in the Indian context: a systematic literature review10.1108/MF-08-2022-0358Managerial Finance2024-02-05© 2024 Emerald Publishing LimitedT.P. ArjunRameshkumar SubramanianManagerial Financeahead-of-printahead-of-print2024-02-0510.1108/MF-08-2022-0358https://www.emerald.com/insight/content/doi/10.1108/MF-08-2022-0358/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2024 Emerald Publishing Limited
Industry momentum and trading volume: evidence from Chinahttps://www.emerald.com/insight/content/doi/10.1108/MF-08-2022-0397/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestAs the world's largest emerging market, the evidence of momentum effect in China is also mixed. Meanwhile, prior studies mainly examined individual stock momentum in China, with little concern for industry momentum and its relationship with trading volume. The motivation of this study is to investigate industry momentum in China and examine whether trading volume can enhance its profitability. Firstly, the authors test the existence of industry momentum in China; secondly, the authors test the correlation between trading volume and momentum returns using the double ranking method; finally, the authors test whether trading volume enhances the momentum returns using Fama–French five-factor model. The authors find that there is a significant industry momentum effect in China, and the momentum returns jointly come from winner and loser portfolios. The intervals between the formation and holding periods have an impact on the performance of momentum portfolios. In terms of trading volume, the authors find that high-volume industries have industry momentum effects while low-volume industries do not. The industry momentum strategies achieve higher excess returns in high-volume industries. Prior literature found higher momentum returns in low-volume stocks in China, but the research in this study suggests that implementing an industry momentum strategy in low-volume industries will miss out on higher returns or even bring losses, and instead the investors should invest in high-volume industries to get the best performance. This study extends existing research by focusing on industry momentum and its relationship with trading volume in the Chinese stock market and finds an interesting relationship between industry momentum returns and trading volume, which is different from related studies.Industry momentum and trading volume: evidence from China
Kun Wang, Xu Wu
Managerial Finance, Vol. ahead-of-print, No. ahead-of-print, pp.-

As the world's largest emerging market, the evidence of momentum effect in China is also mixed. Meanwhile, prior studies mainly examined individual stock momentum in China, with little concern for industry momentum and its relationship with trading volume. The motivation of this study is to investigate industry momentum in China and examine whether trading volume can enhance its profitability.

Firstly, the authors test the existence of industry momentum in China; secondly, the authors test the correlation between trading volume and momentum returns using the double ranking method; finally, the authors test whether trading volume enhances the momentum returns using Fama–French five-factor model.

The authors find that there is a significant industry momentum effect in China, and the momentum returns jointly come from winner and loser portfolios. The intervals between the formation and holding periods have an impact on the performance of momentum portfolios. In terms of trading volume, the authors find that high-volume industries have industry momentum effects while low-volume industries do not. The industry momentum strategies achieve higher excess returns in high-volume industries.

Prior literature found higher momentum returns in low-volume stocks in China, but the research in this study suggests that implementing an industry momentum strategy in low-volume industries will miss out on higher returns or even bring losses, and instead the investors should invest in high-volume industries to get the best performance.

This study extends existing research by focusing on industry momentum and its relationship with trading volume in the Chinese stock market and finds an interesting relationship between industry momentum returns and trading volume, which is different from related studies.

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Industry momentum and trading volume: evidence from China10.1108/MF-08-2022-0397Managerial Finance2024-01-09© 2023 Emerald Publishing LimitedKun WangXu WuManagerial Financeahead-of-printahead-of-print2024-01-0910.1108/MF-08-2022-0397https://www.emerald.com/insight/content/doi/10.1108/MF-08-2022-0397/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Financial market shocks and portfolio rebalancinghttps://www.emerald.com/insight/content/doi/10.1108/MF-08-2023-0470/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThe intention of the empirics is to contribute to the general understanding of investor responses to market price shocks. The authors review assumptions about investor behavior in response to price shocks and investigate alternative rebalancing heuristics. The authors use market data over 40 years to define market shocks. Portfolio rebalancing implements constrained Markowitz mean-variance (MV) heuristics. Momentum rebalancing in portfolio management outperforms contrarian rebalancing in the study interval. Sensitivity analysis by decade, sector constraints and proportion of security holdings bought or sold continue to support momentum rebalancing. The results are consistent with under-responding to price shocks at consensus levels in financial markets. The theoretical background provides a basis for experimental lab studies of shocks of different magnitudes under conditions in which participants have information on the levels of other participants and a condition in which they can only observe their previous estimates. Managing portfolios in the face of price disturbances of different magnitudes is informed by empirical studies and their implications for investor behavior. This is the first study the authors can locate that uses market data with alternative rebalancing heuristics to estimate price returns from the respective heuristics over a time interval of 40 years. The authors support the results with sensitivity estimates and consider implications for the underlying agent heuristics in light of background studies.Financial market shocks and portfolio rebalancing
Steven D. Silver, Marko Raseta
Managerial Finance, Vol. ahead-of-print, No. ahead-of-print, pp.-

The intention of the empirics is to contribute to the general understanding of investor responses to market price shocks. The authors review assumptions about investor behavior in response to price shocks and investigate alternative rebalancing heuristics.

The authors use market data over 40 years to define market shocks. Portfolio rebalancing implements constrained Markowitz mean-variance (MV) heuristics.

Momentum rebalancing in portfolio management outperforms contrarian rebalancing in the study interval. Sensitivity analysis by decade, sector constraints and proportion of security holdings bought or sold continue to support momentum rebalancing.

The results are consistent with under-responding to price shocks at consensus levels in financial markets. The theoretical background provides a basis for experimental lab studies of shocks of different magnitudes under conditions in which participants have information on the levels of other participants and a condition in which they can only observe their previous estimates.

Managing portfolios in the face of price disturbances of different magnitudes is informed by empirical studies and their implications for investor behavior.

This is the first study the authors can locate that uses market data with alternative rebalancing heuristics to estimate price returns from the respective heuristics over a time interval of 40 years. The authors support the results with sensitivity estimates and consider implications for the underlying agent heuristics in light of background studies.

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Financial market shocks and portfolio rebalancing10.1108/MF-08-2023-0470Managerial Finance2023-12-21© 2023 Emerald Publishing LimitedSteven D. SilverMarko RasetaManagerial Financeahead-of-printahead-of-print2023-12-2110.1108/MF-08-2023-0470https://www.emerald.com/insight/content/doi/10.1108/MF-08-2023-0470/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Breaking the linear mould: exploring the non-linear relationship between board independence and investment efficiencyhttps://www.emerald.com/insight/content/doi/10.1108/MF-08-2023-0482/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis study examines the non-linear effect of board independence on the investment efficiency of listed firms worldwide. This study further tests whether the COVID-19 pandemic, industry competition and economic development influence the relationship between board independence and investment efficiency. The data are retrieved from the Thomson Reuters (Refinitiv) database and include international data from 33 countries, comprising 21,363 firm-year observations. The authors' regression analyses include firm-specific variables as controls that may impact investment efficiency. The authors also perform various robustness tests including, alternative measures of investment efficiency, weighted least squares regression, quantile regression and endogeneity issues. The results reveal a non-linear relationship between board independence and investment efficiency. Specifically, the relationship follows a U-shaped pattern, indicating that the negative impact of board independence on investment efficiency becomes positive after it reaches its optimal point, thus supporting optimal board structure theory. Interestingly, the authors find no significant evidence of board independence’s effect on investment efficiency during the pandemic. In contrast, the relationship between board independence and investment efficiency is significant only during the non-pandemic period. Furthermore, the authors discover evidence of a U-shaped relationship in both emerging and developed markets, as well as in industries with high and low competition. The authors' study discovers new evidence on the non-linear impact of board independence on investment efficiency, which has not been explored previously in existing research. This study has practical implications for investors by emphasising the importance of corporate governance and the appointment of independent directors. Investors should consider the findings of this study when making decisions related to corporate governance, as they can impact a firm's investment efficiency. Despite a considerable body of literature exploring the link between corporate governance and investment effectiveness, there is a dearth of research on the non-linear effects of board independence. Furthermore, the effects of the COVID-19 pandemic, industry competition and economic development remain unexplored.Breaking the linear mould: exploring the non-linear relationship between board independence and investment efficiency
Khairul Anuar Kamarudin, Nor Hazwani Hassan, Wan Adibah Wan Ismail
Managerial Finance, Vol. ahead-of-print, No. ahead-of-print, pp.-

This study examines the non-linear effect of board independence on the investment efficiency of listed firms worldwide. This study further tests whether the COVID-19 pandemic, industry competition and economic development influence the relationship between board independence and investment efficiency.

The data are retrieved from the Thomson Reuters (Refinitiv) database and include international data from 33 countries, comprising 21,363 firm-year observations. The authors' regression analyses include firm-specific variables as controls that may impact investment efficiency. The authors also perform various robustness tests including, alternative measures of investment efficiency, weighted least squares regression, quantile regression and endogeneity issues.

The results reveal a non-linear relationship between board independence and investment efficiency. Specifically, the relationship follows a U-shaped pattern, indicating that the negative impact of board independence on investment efficiency becomes positive after it reaches its optimal point, thus supporting optimal board structure theory. Interestingly, the authors find no significant evidence of board independence’s effect on investment efficiency during the pandemic. In contrast, the relationship between board independence and investment efficiency is significant only during the non-pandemic period. Furthermore, the authors discover evidence of a U-shaped relationship in both emerging and developed markets, as well as in industries with high and low competition.

The authors' study discovers new evidence on the non-linear impact of board independence on investment efficiency, which has not been explored previously in existing research.

This study has practical implications for investors by emphasising the importance of corporate governance and the appointment of independent directors. Investors should consider the findings of this study when making decisions related to corporate governance, as they can impact a firm's investment efficiency.

Despite a considerable body of literature exploring the link between corporate governance and investment effectiveness, there is a dearth of research on the non-linear effects of board independence. Furthermore, the effects of the COVID-19 pandemic, industry competition and economic development remain unexplored.

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Breaking the linear mould: exploring the non-linear relationship between board independence and investment efficiency10.1108/MF-08-2023-0482Managerial Finance2024-01-09© 2023 Emerald Publishing LimitedKhairul Anuar KamarudinNor Hazwani HassanWan Adibah Wan IsmailManagerial Financeahead-of-printahead-of-print2024-01-0910.1108/MF-08-2023-0482https://www.emerald.com/insight/content/doi/10.1108/MF-08-2023-0482/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Stewardship regulation and institutional investors' preference for investee governance qualityhttps://www.emerald.com/insight/content/doi/10.1108/MF-08-2023-0532/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis paper examines whether the adoption of Japan’s Stewardship Code by institutional investors influences their preference for investee companies' governance quality. The Code, introduced by the Financial Services Agency in 2014, promotes constructive engagement between institutional investors and investee companies. Engagement with investees should improve institutional investors' ability to assess governance quality across their portfolios. The paper examines if this results in a positive relationship between the levels of Code-compliant institutional shareholding and investee governance quality. The association between Code-compliant institutional shareholding levels and a governance quality score is examined for Nikkei 500 companies. A positive association is observed between shareholdings by Code-compliant institutional investors and investee governance, with board independence playing a key role. Analysis shows that the association between institutional shareholding and governance is stronger for the Code-compliant shareholding than for overall institutional shareholdings. In addition, no significant relationship is found between the levels of shareholding by non-Code-compliant institutional investors and the governance quality score of investee companies. Taken together, the results suggest that Code adoption strengthens institutional investors' preference for high-quality investee governance. Despite the introduction of stewardship regulation worldwide, there is a scarcity of empirical research that examines its operation. The study contributes to the existing literature by providing insights into how compliance with stewardship regulation influences institutional investor decision-making.Stewardship regulation and institutional investors' preference for investee governance quality
James Routledge
Managerial Finance, Vol. ahead-of-print, No. ahead-of-print, pp.-

This paper examines whether the adoption of Japan’s Stewardship Code by institutional investors influences their preference for investee companies' governance quality. The Code, introduced by the Financial Services Agency in 2014, promotes constructive engagement between institutional investors and investee companies. Engagement with investees should improve institutional investors' ability to assess governance quality across their portfolios. The paper examines if this results in a positive relationship between the levels of Code-compliant institutional shareholding and investee governance quality.

The association between Code-compliant institutional shareholding levels and a governance quality score is examined for Nikkei 500 companies.

A positive association is observed between shareholdings by Code-compliant institutional investors and investee governance, with board independence playing a key role. Analysis shows that the association between institutional shareholding and governance is stronger for the Code-compliant shareholding than for overall institutional shareholdings. In addition, no significant relationship is found between the levels of shareholding by non-Code-compliant institutional investors and the governance quality score of investee companies. Taken together, the results suggest that Code adoption strengthens institutional investors' preference for high-quality investee governance.

Despite the introduction of stewardship regulation worldwide, there is a scarcity of empirical research that examines its operation. The study contributes to the existing literature by providing insights into how compliance with stewardship regulation influences institutional investor decision-making.

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Stewardship regulation and institutional investors' preference for investee governance quality10.1108/MF-08-2023-0532Managerial Finance2024-01-02© 2023 Emerald Publishing LimitedJames RoutledgeManagerial Financeahead-of-printahead-of-print2024-01-0210.1108/MF-08-2023-0532https://www.emerald.com/insight/content/doi/10.1108/MF-08-2023-0532/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Impact of dynamic working capital management on operational efficiency: empirical evidence from Scandinaviahttps://www.emerald.com/insight/content/doi/10.1108/MF-09-2023-0582/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestConsumer goods firms often tie up inventory and accounts receivable resources, creating cost and liquidity issues. Dynamic working capital management (DWCM) can mitigate these concerns and enhance operational profitability. The study investigates DWCM's impact on operational efficiency (OE). The empirical estimation uses pooled ordinary least squares (OLS), random effect and system generalized method moments (GMM) regression analysis of consumer goods firms in Scandinavia from 2005 to 2022 to present the results. The findings indicate that DWCM has an inverse relationship with operating cost, while positively impacting operating profit. The final outcome demonstrates that DWCM enhances OE. Furthermore, the working capital ratio (WCR) consistently exceeds the cash conversion cycle (CCC) in all models, indicating that prudent management of cash in accounts receivable, inventory and accounts payable leads to higher cost savings and superior performance. The results suggest that organizations that prioritize the management of the absolute cash committed to inventory, receivables and payables as much as the CCC experience improved OE. This paper adds to the literature on how DWCM affects OE in the consumer goods sector. It also highlights the impact of time management and cash management in WCM on OE. Additionally, it analyzes how DWCM variables affect operating costs and profits, shedding light on their efficiency impact.Impact of dynamic working capital management on operational efficiency: empirical evidence from Scandinavia
Samuel Yeboah, Frode Kjærland
Managerial Finance, Vol. ahead-of-print, No. ahead-of-print, pp.-

Consumer goods firms often tie up inventory and accounts receivable resources, creating cost and liquidity issues. Dynamic working capital management (DWCM) can mitigate these concerns and enhance operational profitability. The study investigates DWCM's impact on operational efficiency (OE).

The empirical estimation uses pooled ordinary least squares (OLS), random effect and system generalized method moments (GMM) regression analysis of consumer goods firms in Scandinavia from 2005 to 2022 to present the results.

The findings indicate that DWCM has an inverse relationship with operating cost, while positively impacting operating profit. The final outcome demonstrates that DWCM enhances OE. Furthermore, the working capital ratio (WCR) consistently exceeds the cash conversion cycle (CCC) in all models, indicating that prudent management of cash in accounts receivable, inventory and accounts payable leads to higher cost savings and superior performance.

The results suggest that organizations that prioritize the management of the absolute cash committed to inventory, receivables and payables as much as the CCC experience improved OE.

This paper adds to the literature on how DWCM affects OE in the consumer goods sector. It also highlights the impact of time management and cash management in WCM on OE. Additionally, it analyzes how DWCM variables affect operating costs and profits, shedding light on their efficiency impact.

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Impact of dynamic working capital management on operational efficiency: empirical evidence from Scandinavia10.1108/MF-09-2023-0582Managerial Finance2024-01-16© 2024 Emerald Publishing LimitedSamuel YeboahFrode KjærlandManagerial Financeahead-of-printahead-of-print2024-01-1610.1108/MF-09-2023-0582https://www.emerald.com/insight/content/doi/10.1108/MF-09-2023-0582/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2024 Emerald Publishing Limited
Addressing endogeneity in marginal revenue product estimates of shirking in Major League Baseballhttps://www.emerald.com/insight/content/doi/10.1108/MF-09-2023-0586/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestWhile much of the literature testing for shirking by professional athletes have used performance metrics, some works have quantified shirking in dollar terms by comparing salary to estimated marginal revenue product (MRP). However, Ordinary Least Squares (OLS) approaches to measuring shirking by comparing salary to MRP have an endogeneity problem, as salary and contract length are determined simultaneously. We test for shirking in Major League Baseball (MLB) using an MRP approach, addressing this potential endogeneity. This paper uses instrumental variables regression to address potential endogeneity using MLB season-level player and team data from 2010 to 2017. Using OLS regression, the impact of an additional year of guaranteed contract on shirking is estimated at approximately $1m in 2010 US dollars, and the impact of having a long-term contract is estimated at $5m, estimates comparable to those in the literature. Using instrumental variables regression, these impacts increase to $1.6m and over $9m in 2010 dollars. Given large, causal shirking estimates, profit maximizing sports organizations should take caution when negotiating long-term contracts. These findings also have important implications for other labor market settings where workers feel job security. To our knowledge, this is the first work testing for shirking in sports using an MRP approach which uses instrumental variables regression to address potential endogeneity.Addressing endogeneity in marginal revenue product estimates of shirking in Major League Baseball
Richard J. Paulsen
Managerial Finance, Vol. ahead-of-print, No. ahead-of-print, pp.-

While much of the literature testing for shirking by professional athletes have used performance metrics, some works have quantified shirking in dollar terms by comparing salary to estimated marginal revenue product (MRP). However, Ordinary Least Squares (OLS) approaches to measuring shirking by comparing salary to MRP have an endogeneity problem, as salary and contract length are determined simultaneously. We test for shirking in Major League Baseball (MLB) using an MRP approach, addressing this potential endogeneity.

This paper uses instrumental variables regression to address potential endogeneity using MLB season-level player and team data from 2010 to 2017.

Using OLS regression, the impact of an additional year of guaranteed contract on shirking is estimated at approximately $1m in 2010 US dollars, and the impact of having a long-term contract is estimated at $5m, estimates comparable to those in the literature. Using instrumental variables regression, these impacts increase to $1.6m and over $9m in 2010 dollars.

Given large, causal shirking estimates, profit maximizing sports organizations should take caution when negotiating long-term contracts. These findings also have important implications for other labor market settings where workers feel job security.

To our knowledge, this is the first work testing for shirking in sports using an MRP approach which uses instrumental variables regression to address potential endogeneity.

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Addressing endogeneity in marginal revenue product estimates of shirking in Major League Baseball10.1108/MF-09-2023-0586Managerial Finance2024-02-27© 2024 Emerald Publishing LimitedRichard J. PaulsenManagerial Financeahead-of-printahead-of-print2024-02-2710.1108/MF-09-2023-0586https://www.emerald.com/insight/content/doi/10.1108/MF-09-2023-0586/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2024 Emerald Publishing Limited
Corporate tax policy, Shariah compliance and financial decisions: evidence from Malaysiahttps://www.emerald.com/insight/content/doi/10.1108/MF-10-2022-0478/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis study investigates the influence of corporate income tax on two corporate financial decisions — dividend and capital structure policies, particularly for Shariah compliant companies in Malaysia. The study considered data from a sample of 529 Malaysian listed companies from four industrial sectors from 2007–2021 (6,746 company-year observations, before eliminating outliers). Panel models such as Fixed Effect and Random effect models were used. The study specifically tested the effect of corporate income tax on dividend and capital structure policies for Shariah compliant companies (3,148 observations) and controlled for industrial sectors. (1) Firms are mostly Shariah-compliant, less liquid, less profitable and smaller in size, (2) Broadly when analysed together, tax has no impact on debt-equity ratio while it has an impact on dividend per share, (3) However, when tested separately for Shariah compliant companies, the influence of effective tax on capital structure is very evident but not for dividend and (4) influence of industrial sector on the relationship between corporate tax and capital structure and dividend policy is significant. Results indicate that Shariah firms might be raising debt to gain tax advantage. Companies in general pay dividends to avoid reputational damage. This study assumes that leverage and dividend policy decisions are the main outcomes of the changing tax policies, while it seems that there could be other important outcomes that can be tested in future research. The study also shows the changing tax regimes of different ASEAN countries but they have not been tested to see the differences between countries. It will be indeed interesting for future researchers to focus on this aspect. The findings contribute to the literature on tax planning of the Shariah-compliant firms, a high growth business segment in the Asian context. The study discussed potential tax-based Islamic market product development.Corporate tax policy, Shariah compliance and financial decisions: evidence from Malaysia
Jayalakshmy Ramachandran, Joan Hidajat, Selma Izadi, Andrew Saw Tek Wei
Managerial Finance, Vol. ahead-of-print, No. ahead-of-print, pp.-

This study investigates the influence of corporate income tax on two corporate financial decisions — dividend and capital structure policies, particularly for Shariah compliant companies in Malaysia.

The study considered data from a sample of 529 Malaysian listed companies from four industrial sectors from 2007–2021 (6,746 company-year observations, before eliminating outliers). Panel models such as Fixed Effect and Random effect models were used. The study specifically tested the effect of corporate income tax on dividend and capital structure policies for Shariah compliant companies (3,148 observations) and controlled for industrial sectors.

(1) Firms are mostly Shariah-compliant, less liquid, less profitable and smaller in size, (2) Broadly when analysed together, tax has no impact on debt-equity ratio while it has an impact on dividend per share, (3) However, when tested separately for Shariah compliant companies, the influence of effective tax on capital structure is very evident but not for dividend and (4) influence of industrial sector on the relationship between corporate tax and capital structure and dividend policy is significant. Results indicate that Shariah firms might be raising debt to gain tax advantage. Companies in general pay dividends to avoid reputational damage.

This study assumes that leverage and dividend policy decisions are the main outcomes of the changing tax policies, while it seems that there could be other important outcomes that can be tested in future research. The study also shows the changing tax regimes of different ASEAN countries but they have not been tested to see the differences between countries. It will be indeed interesting for future researchers to focus on this aspect.

The findings contribute to the literature on tax planning of the Shariah-compliant firms, a high growth business segment in the Asian context. The study discussed potential tax-based Islamic market product development.

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Corporate tax policy, Shariah compliance and financial decisions: evidence from Malaysia10.1108/MF-10-2022-0478Managerial Finance2024-01-10© 2023 Emerald Publishing LimitedJayalakshmy RamachandranJoan HidajatSelma IzadiAndrew Saw Tek WeiManagerial Financeahead-of-printahead-of-print2024-01-1010.1108/MF-10-2022-0478https://www.emerald.com/insight/content/doi/10.1108/MF-10-2022-0478/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Activity of informed traders and stock returnshttps://www.emerald.com/insight/content/doi/10.1108/MF-10-2023-0613/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestRecent studies suggested the ratio of option to stock volume reflected the private information. Informed traders were drawn to the options market for its leverage effect and relatively low transaction costs. Informed traders use different intervals of option moneyness to execute their strategies. The question is which types of option moneyness were traded by informed traders and what information was reflected in the market. In this study, the authors focused on this question and constructed a method for capturing the activity of informed traders in the options and stock markets. The authors constructed the daily measure, moneyness option trading volume to stock trading volume ratio (MOS), to capture the activity of informed traders in the market. The authors formed quintile portfolios sorted with respect to the moneyness option to stock trading volume ratio and provided the capital asset pricing model and Fama–French five-factor alphas. To determine whether MOS had predictive ability on future stock returns after controlling for company characteristic effects, the authors formed double-sorted portfolios and performed Fama–Macbeth regressions. The authors found that the firms in the lowest moneyness option trading volume to stock trading volume ratio for put quintile outperform the highest quintile by 0.698% per week (approximately 36% per year). The firms in the highest moneyness option trading volume to stock trading volume ratio for call quintile outperform the lowest quintile by 0.575% per week (approximately 30% per year). The authors first propose the measures, moneyness option trading volume to stock trading volume ratio, that combined with the trading volume and option moneyness. The authors provide evidence that the measures have the predictive ability to the future stock returns.Activity of informed traders and stock returns
CheChun Hsu
Managerial Finance, Vol. ahead-of-print, No. ahead-of-print, pp.-

Recent studies suggested the ratio of option to stock volume reflected the private information. Informed traders were drawn to the options market for its leverage effect and relatively low transaction costs. Informed traders use different intervals of option moneyness to execute their strategies. The question is which types of option moneyness were traded by informed traders and what information was reflected in the market. In this study, the authors focused on this question and constructed a method for capturing the activity of informed traders in the options and stock markets.

The authors constructed the daily measure, moneyness option trading volume to stock trading volume ratio (MOS), to capture the activity of informed traders in the market. The authors formed quintile portfolios sorted with respect to the moneyness option to stock trading volume ratio and provided the capital asset pricing model and Fama–French five-factor alphas. To determine whether MOS had predictive ability on future stock returns after controlling for company characteristic effects, the authors formed double-sorted portfolios and performed Fama–Macbeth regressions.

The authors found that the firms in the lowest moneyness option trading volume to stock trading volume ratio for put quintile outperform the highest quintile by 0.698% per week (approximately 36% per year). The firms in the highest moneyness option trading volume to stock trading volume ratio for call quintile outperform the lowest quintile by 0.575% per week (approximately 30% per year).

The authors first propose the measures, moneyness option trading volume to stock trading volume ratio, that combined with the trading volume and option moneyness. The authors provide evidence that the measures have the predictive ability to the future stock returns.

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Activity of informed traders and stock returns10.1108/MF-10-2023-0613Managerial Finance2023-12-06© 2023 Emerald Publishing LimitedCheChun HsuManagerial Financeahead-of-printahead-of-print2023-12-0610.1108/MF-10-2023-0613https://www.emerald.com/insight/content/doi/10.1108/MF-10-2023-0613/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Can common institutional ownership inhibit corporate over-financialization? Evidence from Chinahttps://www.emerald.com/insight/content/doi/10.1108/MF-10-2023-0677/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestCommon institutional ownership is a phenomenon that has extended throughout the capital markets in recent years and has a significant impact on business strategy decisions. The study intends to investigate the effect of common institutional ownership on corporate over-financialization and potential functioning mechanisms. Using panel data from Chinese-listed companies over the period of 2003–2021, the authors conduct regression models which controlled year-, industry- and regional fixed effects to explore the impact of common institutional ownership on corporate over-financialization. This study concludes that corporate over-financialization may be prevented via common institutional ownership. The mechanism test suggests that common institutional ownership inhibits corporate over-financialization by improving internal control quality and enhancing financial flexibility. Besides, heterogeneity analysis shows that the inhibiting effect of common institutional ownership on corporate over-financialization is more pronounced in stability-oriented institutional investors and high financing constraints firms. This paper makes a valuable contribution to the current studies on effective strategies to prevent enterprises from becoming overly financialized by recognizing common institutional ownership. Furthermore, this paper adds to the research on common institutional ownership’s economic consequences. Finally, this study provides management implications for how to optimize corporate governance structures, curb the financialization of entities in practice and promote the development of the real economy.Can common institutional ownership inhibit corporate over-financialization? Evidence from China
Hao Ding
Managerial Finance, Vol. ahead-of-print, No. ahead-of-print, pp.-

Common institutional ownership is a phenomenon that has extended throughout the capital markets in recent years and has a significant impact on business strategy decisions. The study intends to investigate the effect of common institutional ownership on corporate over-financialization and potential functioning mechanisms.

Using panel data from Chinese-listed companies over the period of 2003–2021, the authors conduct regression models which controlled year-, industry- and regional fixed effects to explore the impact of common institutional ownership on corporate over-financialization.

This study concludes that corporate over-financialization may be prevented via common institutional ownership. The mechanism test suggests that common institutional ownership inhibits corporate over-financialization by improving internal control quality and enhancing financial flexibility. Besides, heterogeneity analysis shows that the inhibiting effect of common institutional ownership on corporate over-financialization is more pronounced in stability-oriented institutional investors and high financing constraints firms.

This paper makes a valuable contribution to the current studies on effective strategies to prevent enterprises from becoming overly financialized by recognizing common institutional ownership. Furthermore, this paper adds to the research on common institutional ownership’s economic consequences. Finally, this study provides management implications for how to optimize corporate governance structures, curb the financialization of entities in practice and promote the development of the real economy.

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Can common institutional ownership inhibit corporate over-financialization? Evidence from China10.1108/MF-10-2023-0677Managerial Finance2024-02-08© 2024 Emerald Publishing LimitedHao DingManagerial Financeahead-of-printahead-of-print2024-02-0810.1108/MF-10-2023-0677https://www.emerald.com/insight/content/doi/10.1108/MF-10-2023-0677/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2024 Emerald Publishing Limited
Transaction-based lending and real earnings managementhttps://www.emerald.com/insight/content/doi/10.1108/MF-12-2022-0581/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThe purpose of this study is to examine how lenders alter their behavior when faced with real earnings management. This study uses the incremental R-square approach as in Kim and Kross (2005) to examine how much lenders rely on income statement and balance sheet ratios as the degree of real earnings management increases. As real earnings management affects mostly the income statement, the authors find that lenders rely less on income statement ratios in making credit decisions in the presence of real earnings management. The authors also find that lenders do not alter their reliance on balance sheet ratios when faced with real earnings management. This paper is the first to study how lenders alter their reliance on financial statements in making credit decisions in the presence of real earnings management. The findings of this paper could help the regulators set standards to improve the usefulness of financial statements. The findings of this paper could also help practitioners (borrowers and lenders) understand how real earnings management affects credit decisions.Transaction-based lending and real earnings management
Stephen Gray, Arjan Premti
Managerial Finance, Vol. ahead-of-print, No. ahead-of-print, pp.-

The purpose of this study is to examine how lenders alter their behavior when faced with real earnings management.

This study uses the incremental R-square approach as in Kim and Kross (2005) to examine how much lenders rely on income statement and balance sheet ratios as the degree of real earnings management increases.

As real earnings management affects mostly the income statement, the authors find that lenders rely less on income statement ratios in making credit decisions in the presence of real earnings management. The authors also find that lenders do not alter their reliance on balance sheet ratios when faced with real earnings management.

This paper is the first to study how lenders alter their reliance on financial statements in making credit decisions in the presence of real earnings management. The findings of this paper could help the regulators set standards to improve the usefulness of financial statements. The findings of this paper could also help practitioners (borrowers and lenders) understand how real earnings management affects credit decisions.

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Transaction-based lending and real earnings management10.1108/MF-12-2022-0581Managerial Finance2023-12-20© 2023 Emerald Publishing LimitedStephen GrayArjan PremtiManagerial Financeahead-of-printahead-of-print2023-12-2010.1108/MF-12-2022-0581https://www.emerald.com/insight/content/doi/10.1108/MF-12-2022-0581/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited