Editorial

Citation

Gale, C. and Dobson, A. (2015), "Editorial", International Journal of Law and Management, Vol. 57 No. 5. https://doi.org/10.1108/IJLMA-07-2015-0038

Editorial

Article Type: Editorial From: International Journal of Law and Management, Volume 57, Issue 5

We are pleased that the Journal has received so many high-quality submissions in recent months. This means that a backlog has built up and, recently, there has been a period of over a year from the acceptance of an article to publication. The publishers have, therefore, agreed that both this issue and the next will carry 11 articles and, from the beginning of Edition 58, each issue will normally carry six articles – thus time from acceptance to publication should be radically reduced. Thank you for all your contributions and to the publishers for their help.

In this issue, the first article, “Corporate tax in emerging countries: some aspects of India” sees George et al. from India discussing the fact that emerging countries play an important role in the world economy. India is undeniably rising as an important and vital country, not only among emerging countries but also in the global economy. The tax environment in India is often seen as a complex system with the multiplicity of indirect taxes, overburdening litigations and lack of certainty. Tax policies can be an effective mechanism to promote investments, both international and domestic, which India needs in abundance, they suggest. The existing high fiscal deficit in the country necessitates the need to make revenue increase a primary concern of tax policy. Although indirect taxes have become an important source of development funds in developing countries due to their wide coverage, the authors argue that corporate tax can become a potential source of revenue in the future. A clear bridge exists in this first article between our “law” readers and our “management” readers.

Second, and again from India, Sharma et al. have a paper entitled “Corporate social responsibility of mining industries”. It outlines some of the reasons why, the authors believe, less-developed countries (LDCs) experience under-development and detrimental effects as a result of their linkages with industrialized countries. Among other things, it is suggested that LDCs are not able to take advantage of advanced technology and management skills due to them being relatively poor in capital and skills, and foreign technologies compete unfairly with and destroy local production techniques, creating a pool of unemployable “marginalized” people. Added to this the argument goes, holders of investments in LDCs demand annual returns for continued support – profits are taken out of the country or guaranteed by tax concessions. There is also, it is argued, the unwillingness of foreign firms to train local people to take over management positions.

Third, completing our papers from India for this edition, Aggerwal et al. address “Director’s remuneration and correlation on firm’s performance: A study from the Indian corporate”. The study provides what is claimed to be a unique examination of remuneration of the board of directors and a firm’s performance. It studies the impact of the directors’ remuneration and its impact on the firm’s performance. The study encompasses an exhaustive analysis for India. The research studies 40 companies, which are different from each other, and explores the relationships where appropriate. It explores four parameters studying both the intrinsic and extrinsic values of the firm.

Next, writing from Ghana, Bopkin et al. present a paper entitled “Corporate Disclosure and Foreign Share Ownership: Empirical Evidence from African Countries”. The authors contend that the consistent results in their study are that foreign share ownership is positively related to firm size. They do find a negative relation between foreign share ownership and corporate disclosure, but this turns out to be related to disclosures about ownership, while disclosures on financial reporting and board management have a positive and insignificant statistical relation, taking into account unobserved country, time and firm effects. Further analysis shows that corporate disclosures are very persistent and negatively related to lag foreign share ownership. They do not find a consistent statistical relation between disclosure and market-to-book values as a proxy for investment opportunities. Ultimately, they recommend African listed firms to pursue adoption of high-quality financial reporting standards and to increase their reporting on board management. The study also recommends that African governments weigh the benefits of detailed ownership disclosures.

Arthur et al., again from Ghana (and the UK), have published a literature review entitled “Predicting Corporate Failure: A Systematic Literature Review of Methodological Issues”. This paper presented a systematic review of 83 articles reporting 137 prediction failure models published within 1966-2012 in scholarly reviewed journals in four main disciplines, namely, accounting, finance, banking and economics. The authors performed the systematic literature review with six main sources, namely, Science Direct, Google Scholar, Wiley Interscience, Metalib, Web of Science and Business Source Complete of the Social Sciences.

The next article is from Yeoh in the UK, entitled “The Imposing of Constraints on Capital Flows in Emerging Economies: An Emerging Economy Study”. The disdain over the use of capital controls by emerging economies such as Malaysia in the 1997 Asia Financial Crisis (AFC) by multilateral agencies like the Indian Monetary Fund (IMF) since then and particularly after the 2008 Global Financial Crisis (GFC) and the 2011/2012 European Financial Crisis (EFC) has been quietly and gradually transformed into a viable policy option under defined circumstances, the author argues, especially at the IMF and global forums like the G20. The 1997 AFC, in particular, induced East Asian economies and others to strengthen the macroeconomic and financial positions such that they were not only able to withstand the impacts of the 2008 GFC and the 2011/2012 EFC but also contributed to their gradual recoveries through their participation as net lenders to the IMF. The enhanced confidence of these emerging economies to use various capital controls without seeking IMF support spawned new thinking at the IMF to result in the introduction of policy guidelines sanctioning the use of capital controls under particular circumstances.

Nerantzidis et al., writing from Greece, entitle their article “The impact of the Combined Code in Greek soft law: Evidence from ‘comply or explain’disclosures”. Through analyzing the content of both codes, it was found that from the total 64 provisions of the SEV code (2011), 45 were matched to at least one of the combined codes (2010). From these 45 provisions, 26 were characterized as “in spirit” influence and 19 as “in letter”. Based on this evidence, 22 overlapping practices were selected to investigate the compliance, and a quite low rate was revealed, an average percentage of 30.46. These findings indicate that while exogenous forces trigger the development and adoption of a code in Greece, in line with the UK’s, the endogenous forces tend to avoid the compliance with those “exogenous practices”. Moreover, the results support the idea that the Greek national code should be reshaped, the authors suggest, to fit the different country’s characteristics.

Khlif and Achek writing from Tunisia next publish a literature review entitled “The determinants of tax evasion”. Tax evasion empirical research has been the subject of numerous studies during the past decade in developed and emerging economies. The purpose of this review is to:

• make a clear cut-distinction between tax evasion and neighbouring notions;

• present the theoretical justifications for the determinants of tax evasion;

• discuss some methodological issues related to the measurement of tax evasion; and

• finally, review the main results related to this topic and provide suggestions for future research.

In these fiscally aware times, this is full of international interest.

Next, Arruda, writing from the UK, talks about “Arctic Governance Regime: The Last Frontier for Hydrocarbons Exploitation”. The aim of this paper is to deepen our understanding on circumpolar current dynamics relating to oil and gas exploitation and the role of nations in the polar development process. Additionally, it is fundamental to raise the debate about the energy development in the Arctic, the author argues, and the fact that the exploration of oil and gas resources in the Arctic cannot be performed with the current governance regime, policies and legal framework. Arctic-specific natural ecosystems, the presence of indigenous communities and the commercial interest in the region will require an innovative model of development based on the highest level of responsible exploitation, diplomacy, regulation and policymaking. This is an interesting and thought-provoking article, slightly off the beat of our usual contributions, but very suitable to both our constituencies for all that.

Last but one, Bijan Bidabad, writing from Iran, brings us the latest of his articles on Sufi teachings: “A Convention for International Trade”. Trade is confronting various barriers in the present world, it is argued, and this is due to the policies of governments to protect interests of their own citizens. Experience shows that trade barriers end up with incurring losses for both sides (traders) in practice, but a look at the history of polemics on trade barriers' removal in WTO shows that countries are unable to overcome the obstacles they have created. Trade partners understand that removal of counter barriers is advantageous for both parties. In the meantime, being concerned about the other party’s response impedes the benefits of free trade for all parties.

Last (but by no means least), Li Sun and Harry Huang, writing from the USA, address” R&D Expenditures and Future Innovation: Evidence from the Chemical Industry”. This study should be of interest to financial accounting policymakers, R&D-intensive companies and investors. To policymakers, they may consider the possibility of permitting R&D-intensive companies to recognize R&D expenditures as assets. In other words, R&D-intensive companies can capitalize and amortize their R&D expenditures, as R&D expenditures can bring them future economic benefits. To R&D-intensive companies, the results may encourage them to keep up their R&D activities. Moreover, this study can increase individual investors’ confidence in investing companies with high-level R&D activities in an R&D-intense industry.

A bumper and wide-ranging issue, with something for everyone it is hoped. Certainly, more than enough for everyone to get their teeth into!

Happy Reading!

Christopher Gale, GSM London, London, UK

Alexandra Dobson, Faculty of Arts and Business, University of South Wales, Newport, Wales