Working capital management and profitability of UK firms: a contingency theory approach.

While the direct impact of working capital management (WCM) and its components (accounts receivable in days (AR), accounts payable in days (AP) and inventory holding period (INV)) on firms’ profitability has been examined in the previous literature, the underlying channels of influence have remained largely unexplored. This study adopts a contingency theory approach to investigate the relationship between WCM and profitability controlling for selected corporate governance and company characteristics. The study has three main objectives. The first objective is to determine the relationship between working capital management and its components (AR, AP and INV) and profitability as per extant research. The second objective of the research is to determine whether the effect of working capital management on profitability of UK firms is contingent on the interaction of environmental (E), resource (R) and management (M) variables. The final objective is to determine whether the effect of the components of working capital management (AR, AP and INV) on profitability of UK firms is contingent on the interaction of ERM variables. These three objectives were met by the use of a panel data methodology on a series of interactive models. The data for the study is based on the annual financial reports of 225 London Stock Exchange listed firms for the period 2001-2011. In terms of the first objective, the study found a significant relationship between WCM and two of its components (AR and AP) and profitability. However, no relationship was found between WCM component (INV) and profitability. In terms of the second objective, the results indicate that the effect of WCM on profitability is significantly moderated by the interaction with ERM variables of the firm. Finally, the results of the third objective indicate that the effect of WCM components (AR, AP and INV) on profitability is significantly moderated by the interaction with ERM of the firm. In terms of the control variables, the study found a statistically significant relationship between the corporate governance factors (Chief Executive Officer (CEO) tenure and board size) and profitability. On the other hand, company specific characteristics variables (company size, financial leverage, assets tangibility liquidity ratio, cash flow and sales growth) were also found to have statistically significant effect on the profitability of firms. On the basis of this, the study concludes that firms can maximise the benefits and minimise the cost of investment in working capital by aligning their working capital management policies with their environment and also arrange their resources internally to support such alignment as postulated in the contingency framework as any misalignment could significantly affect the firms’ performance. As a result, the study suggests the need for policy makers to match organisational resources with opportunities and threats in the general business environment in order to improve their financial performance

Towards a Decentralized Autonomous Governance Model to Improve Governance of Charities

Applying Decentralized Autonomous Organizations (DAOs), a participative-based technology in the charity sector, enables donors to manage donations collectively, vote, and release donations when conditions are met. This approach empowers donors’ decision-making and improves transparency. This systematic literature review (SLR) assesses the integration of DAO as a new way of managing charity projects through decentralized governance and smart contracts (SCs). Our analysis covered 29 studies in the literature, from which we identified key dimensions and top-level functions constituting the state-of-art in integrating DAO in charity organizations. Our review reveals the potential of DAO in improving charity organization practices and decisions by way of utilizing SCs that create dynamic control environments. The review develops a step-by-step decentralized charity governance project (DCGP) model to automate donations and improve transparency

Fiscal policy, government size and EMU business cycle synchronization

We provide new evidence on the effects of fiscal policy and government size on pairwise business cycle synchronisation in EMU. A novel time-varying framework is employed to estimate business cycle synchronisation and subsequently a panel approach is used to establish the role of fiscal variables in determining the pairwise synchronisation observations across time. The findings suggest similarities in the size of the public sector, yet divergence in fiscal policy stance, matter for the determination of business cycle synchronisation. Hence, increased fiscal federalism in EMU will contribute to increased business cycle synchronisation. Our results remain robust to different specifications and sub-periods

Board Gender diversity, Environmental Committee and Greenhouse Gas Voluntary Disclosures

We highlight the interrelations between board gender diversity, environmental committees and greenhouse gas (GHC) voluntary disclosures on a sample of 215 firms listed on the London Stock Exchange (LSE). Evidence from the study indicates significantly positive association gender diversity. Our findings suggests that a more diverse board can serve a diverse range of stakeholder demands and hence legitimise its green credentials and gain trust from a broad range of stakeholders. These findings have implications for policy formulation for firms

Corporate voluntary greenhouse gas reporting: Stakeholder pressure and the mediating role of the chief executive officer

© 2020 The Authors. Business Strategy and The Environment published by ERP Environment and John Wiley & Sons Ltd The study sheds light on the extent to which various stakeholder pressures influence voluntary disclosure of greenhouse gas (GHG) emissions and how the impact is explained and moderated chief executive officer (CEO) characteristics of 215 FTSE 350 listed U.K. companies for the year 2011. The study developed a classification of GHG emission disclosure based on the guidelines of GHG Protocol, Department for Environment, Food and Rural Affairs, and Global Framework for Climate Risk Disclosure using content analysis. Evidence from the study suggests that some stakeholder pressure (regulatory, creditor, supplier, customer, and board control) positively impacts on GHG disclosure information by firms. We found that stakeholder pressure in the form of regulatory, mimetic, and shareholders pressure positively influenced the disclosure of GHG information. We also found that creditor pressure also had a significant negative relationship with GHG disclosure. Although CEO age had a direct negative effect on GHG voluntary disclosure, its moderation effect on stakeholder pressure influence on GHG disclosure was only significant on regulatory pressure

Is microfinance for women empowerment a zero sum game?

Microfinance interventions are often hailed to have significant positive consequences for women empowerment. However, in the last decade, the significance of microfinance has been contested due to unintended consequences that undermine women’s wellbeing. This paper sets out to examine whether microfinance empowers women or is it a zero-sum game. The paper deploys a participatory mixed-method approach including household questionnaire surveys, focus group discussions and key informant interviews to investigate the dynamics of microfinance effects on women in communities of different vulnerability status in Ghana. The results of hierarchical regression, triadic closure and thematic analyses demonstrate that the economic benefits of microfinance for women is also directly associated with conflicts amongst spouses, girl child labour, polygyny and the neglect of perceived female-domestic responsibilities due to women’s devotion to their enterprises. In the light of limited empirical evidence on potentially negative impacts of women empowerment interventions in Africa, this paper fills a critical gap in knowledge that will enable NGOs, MFI’s, policy makers and other stakeholders to design and implement more effective interventions that mitigate undesirable consequences

The impact of trade facilitation on African SMEs’ performance

Whilst contemporary literature indicates that the business environment (BE) impacts almost all entrepreneurial activities, there are indications that the unique business and institutional setting in Africa (with its challenges and opportunities) and the nature of SMEs (their strengths and weaknesses), among other factors, lead to the context-specific impact of regulations on the performance of African SMEs. Using regressions and propensity score matching methods on a panel of 39,461 firm observations (27 African countries) from the World Bank Enterprise Surveys, we unearthed evidence to suggest that whilst enabling tax administration and business licensing regulations improve SMEs’ performance, trade facilitation impedes African SMEs’ performance. Furthermore, the institutional context of competition (from foreign firms) worsens trade facilitation’s negative impact on African SMEs’ performance. These findings suggest a fine-tuning of BE regulations in African countries. Trade facilitation, for example, must be carefully thought through and implemented in a way to benefit SMEs

The impact of regulatory business environment on SME's funding choices in developing countries - evidence from Africa

While it is known that some elements of the business environment (BE), such as macroeconomic conditions, impact access to finance and the funding choices of SMEs, very little is known whether other elements of the BE – such as the institutional setting and the regulatory business environment (RBE) – influence access to (or supply of) finance and the funding choices of SMEs. Using a World Bank Enterprise Surveys panel sample (2003-2020) from 30 African countries and employing Propensity Score Matching (PSM) methods, it is noted that while an enabling institutional setting and RBE in Africa increases access to external finance for SMEs, SMEs still opt for retained earnings over funding from banking and non-banking financial institutions for their working capital. This funding behaviour can be explained by that SMEs located in enabling RBEs have increased productivity and financial performance and so can employ larger amounts of retained earnings for their operations. Furthermore, even though more accessible in enabling RBEs, external finance remains unaffordable for most SMEs in Africa. These findings indicate the need to tailor interventions to make varied finance more accessible and affordable for SMEs in developing countries

Environmental Tax, SME Financing Constraint and Innovation. Evidence from OECD Countries

This paper examines the impact of environmental tax on SME innovation and how SME financing constraint moderates this relationship. Given the paucity of research on the implications of financing constraints on SMEs’ green innovative activities, the study adopts cross-country panel data to investigate the impact of environmental tax on SME’s innovative activities across 24 OECD countries for the period 2000-2019. Results from our study indicate that an increase in environmental tax leads to a decrease in SME innovation. Further, we also find that financing constraint positively moderates the relationship between environmental tax and SME innovation. Our findings shed new light on the theoretical and practical implications of financing constraints on SMEs’ green innovative activities