• The Journal of Asian Finance, Economics and Business
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• 제3권4호
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• pp.67-79
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• 2016

Prior literature expects a lower marginal cash value for weaker governance firms. We test this empirical hypothesis by using the sample of publicly traded Korean firms from 2005 to 2013. To measure the quality of governance structures, we employ the corporate governance scores provided by Korean Corporate Governance Services. The empirical model of Faulkender and Wang (2006) is adopted to estimate the marginal value of cash. Our empirical analysis shows a higher marginal value of cash for the good governance firms in the examination of the total governance score. This finding is consistent to the agency view of cash policy predicting a larger marginal value of cash for the firms with higher governance scores. However, this positive relationship is not robust for a subset of detailed governance scores; a lower marginal cash value is observed for the firms with better qualities of board structure, auditing, dividend policies. Moreover, our empirical analysis verifies a quite low level of marginal cash value for Korean firms, which supports the existence of severe agency conflicts in Korean corporations. Our results verify the significant role of agency conflicts between a manager and shareholders in the determination of marginal cash values in the Korean firms.

• The Journal of Asian Finance, Economics and Business
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• 제5권4호
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• pp.127-133
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• 2018

Corporate social responsibility (CSR) is one of the strategies for managing firms' business activities but may have heterogeneity depending on ownership structures. This study investigates the association between group-affiliation and CSR activities. Drawing on a theory from the prior research, this study predicts that group-affiliated firms are less likely to invest on CSR activities. For instance, prior research finds that controlling shareholders expropriate the values of minority shareholders. As one of the motivations of investing on CSR activities is the harmonization among the stakeholders, it leads to the prediction that firms controlled by large shareholders are less likely to engage in CSR activities. Second, group-affiliated firms under poor financial performance benefit from other group members through sharing their financial resources. Thus, there is less incentive for managers of group-affiliated firms to increase their financial performance by conducting CSR. By leveraging firms listed in Korean stock market and CSR score from Korea Economic Justice Institute, the result shows that the group-affiliation is negatively related to CSR activities. The result is consistent in case of applying propensity score-matched sample. Based on the findings of this study, this paper contributes to the related literature by showing the significant association between group-affiliation and CSR decisions.

• The Journal of Asian Finance, Economics and Business
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• 제7권2호
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• pp.89-97
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• 2020

This study was conducted to examine how independent audit firms in Vietnam understand and use risk based audit approach (RBAA) in audit practice. To answer the research questions, the researchers used primary and secondary data collected from 2018 to 2019. The results from the interview survey showed that audit firms were aware of the advantages of adopting RBAA. However, RBAA is practiced to a moderate extent by audit firms in Vietnam. Big 4 audit firms use RBAA more popularly than Non-Big 4 audit firms. The causes of the difference are the disadvantages of adopting RBAA and client's characteristics such as relevant guideline, audit fees, auditors' knowledge and experience. Besides, the study investigated factors impacting on the RBAA adoption by distributing a questionnaire to 246 auditors of 126 audit firms in Vietnam. A set of statistical appropriate methods where used through SPSS software version 22.0. The results indicated that there were six factors influencing RBAA adoption including: Auditor's ability, Technological development, Audit fees, auditors' motivation, Audit time and client's risk. Of which, auditor's ability and technological development are factors that have the most significant and positive impacts on the adoption of RBAA. Additional implications were argued in the final section of this study.

• The Journal of Asian Finance, Economics and Business
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• 제7권2호
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• pp.9-20
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• 2020

The study investigates a recent surge of cash literature by using a sample of hospitality firms to gain a new understanding of corporate cash holdings. Past literature states that there is a substantial variation of liquidity across industry groups. Existing literature predominantly refers to US-listed firms and focus on either hotels or restaurants and not the hospitality industry as a whole. Therefore, we provide a comparative study of cash holdings behaviour between hospitality and non-hospitality firms from an emerging market context. Using a sample of public listed hospitality firms from 2002 to 2013, dynamic panel regression techniques are used to study the relationships between firm characteristics and cash levels. Also, the non-parametric Wilcoxon-Mann-Whitney test was carried out to examine the time and sectoral differences in cash holdings. In addition, the panel regression techniques are used to investigate the relationships between firm characteristics and level of corporate cash holdings. The results reveal that firm characteristics do matter in hospitality firms. We find that firm size, capital expenditures, and liquid assets substitutes are negatively related to cash level. The results support trade-off theory and the pecking order theory. This study incrementally explains the cash holdings behaviour of hospitality firms in emerging market.

• The Journal of Asian Finance, Economics and Business
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• 제7권11호
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• pp.357-366
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• 2020

The purpose of this study is to investigate the impact of internationalization on the business performance of firms in Laos as a transition economy. Using a panel dataset collected by the World Bank for 285 firms during the period 2009, 2012, and 2016 in the service and manufacturing industries, the two-steps Heckman regression results found robust evidence for the fact that the S-curve tie exists between the degree of internationalization and business performance of firms in Laos while controlling other factors. Specifically, if firms have a degree of internationalization lower than 0.4374, they will suffer losses due to the high cost of preparing for phase 1 which is market penetration. Then, when the degree of internationalization continues to increase from 0.4374 to 0.9131, firms will gain benefits from internationalization (phase 2), however, these benefits will deteriorate when the degree of internationalization is greater than 0.9131 (phase 3), meaning that firms will no longer be able to exploit economies of scale or advantages in target markets, or product cycles will fall into a state of decline. Interestingly, we also found that firms with a high concentration level of ownership and internationalization activities may achieve better performance than those with a low concentration of ownership and one which carried out internationalization activities.

• The Journal of Asian Finance, Economics and Business
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• 제7권10호
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• pp.707-716
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• 2020

The study investigates the relationship between broad-scope management accounting information usage, market orientation, and the firm performance. This study employs a survey data of 149 top-level and mid-level managers working in Vietnamese tourism enterprises. To analyze research data, we employ SmartPLS 3 software. The analytical process include measurement model evaluation (evaluate the scale's validity and reliability) and structural model evaluation (test research hypotheses). The results reveal that broad-scope management accounting information usage has a positive direct effect on market orientation dimensions (include information generation, information dissemination, and responsiveness). Then, market orientation dimensions also have positive direct effects on the performance of Vietnamese tourism firms, excluding information dissemination. Moreover, this study also reveals that the market orientation dimensions mediate the relationship between broad-scope management accounting information usage and firm performance. The findings of this study suggest that tourism firms should pay more attention to the use of management accounting information in decision-making. With the increasingly fierce competition of the tourism firms today, capturing and meeting the needs of the market is a prerequisite to help firms enhance their competitiveness and improve their performance. To do that, Vietnamese tourism firms need to consider pursuing market orientation and enhancing broad-scope management accounting information usage.

• The Journal of Asian Finance, Economics and Business
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• 제7권8호
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• pp.69-76
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• 2020

The study examines lagged economic effects of research and development (R&D) investment on the market value of manufacturing firms listed on the Shanghai Stock Exchange or the Shenzhen Stock Exchange in China. This study applies panel data analysis methods to address the following issues: 1) There might be an adjustment lag in the impact of R&D investment on corporate market value, and 2) Unobserved firm effects must be taken into account. The balanced panel data includes a total of 1,462 observations with 34 cross-sections of manufacturing firms listed on Chinese stock markets and with 27 time-specific quarterly periods from 2007 to 2017. The results indicate that the R&D investment of Chinese manufacturing firms tends to yield favorable market value of the firm with some adjustments to time. The results show that R&D investment exhibits a strong positive impact on their market value of manufacturing firms in Chinese stock markets. Moreover, R&D investment has a positive time-lag effect on the market value of the firm. Interestingly, the R&D investment of Chinese manufacturing firms generate a relatively constant positive effect on their market value, supporting the notion that the corresponding returns of R&D investment for such firms yield lagged but added market values.

• The Journal of Asian Finance, Economics and Business
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• 제8권10호
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• pp.305-315
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• 2021

This study aims to investigate the relationship between the difference in gender of top executives and corporate investment. In addition, this study also extends to how the sensitivity of investment to cash flow varies with the gender of leaders. Finally, the effect of the gender of leaders on firm investment is also tested across firm types (state firms vs. private firms and high-growth firms vs. low-growth firms). Based on the dataset of Vietnamese listed firms over 2007-2017, the fixed-effect model is used to test the hypotheses. The results show that women as chairs of the board tend to lower corporate investment, whereas the gender of CEOs (Chief Executive Officers) does not influence the investment level. Moreover, top female executives are associated with a decrease in the sensitivity of investment to cash flow. These regression results also show that top female executives only have an impact on the rate of investment in private and low-growth firms. The findings of this study are useful for the board of directors in selecting a chairperson in line with the firm's strategies. Furthermore, the findings of this study are also meaningful for policymakers who should monitor the separate role of the CEO and chair of the board in a company.

• The Journal of Asian Finance, Economics and Business
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• 제8권12호
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• pp.129-139
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• 2021

The aim of this study is to provide insight into tax avoidance through planning and management, and its investment consequences in financially constrained and unconstrained firms, as well as to empirically examine the interrelationships between the variables studied. Data was extracted from the financial statement analysis of non-financial companies listed on the Pakistan stock exchange (PSX) published by the State Bank of Pakistan, covering ten major manufacturing sectors. KZ index and WW index are used to identify financially constrained and unconstrained firms. Tax avoidance is measured by using GETR and LETR. All the equations are estimated through panel data regression models using common, fixed, and random effects. The empirical investigation of the role of tax avoidance in all firms collectively and constrained and unconstrained firms separately showed that the tax avoidance behavior of these firms is translated into investments by these firms. The study will help policymakers in strategy formulation and implementation related to tax planning and investment decisions in constrained and unconstrained firms to overcome their financial constraints and to optimize their investment decisions for value maximization. This will substantially increase the investment in the country by providing growth opportunities and lowering the tax rates.

• The Journal of Asian Finance, Economics and Business
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• 제8권4호
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• pp.289-306
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• 2021

This paper aims to investigate how and to what extent FDI impacts the relative demand for skilled labor within firms in the case of developing countries. The analysis uses a sizeable micro-level dataset for Malaysian manufacturing industries using the System-GMM estimators to control the estimations' endogeneity problems. For this purpose, the study uses foreign equity share at the firm level to investigate foreign ownership effects at the firm level and the Horizontal FDI index by Smarzynska Javorcik (2004) to analyze FDI intra-industry linkages influence on the structure of labor demand for Malaysian domestic firms. Our findings indicate that foreign ownership increases the skilled demand within Malaysian manufacturing through the learning process, exclusively for small- and medium-sized firms (SMEs). Conversely for foreign-owned firms, changes in their skilled-labor share do not associate with changes in firm-level foreign equity share. We conclude that foreign ownership per se is not the major contributing factor for skill upgrading in Malaysian manufacturing firms. Furthermore, the competitive pressures caused by foreign firms' presence within the same industry - namely horizontal FDI - has a significant negative spillover effect on the level of skilled-labor share for domestic firms in the Malaysian manufacturing sector within periods of the understudies.