Output Collapse, Growth and Volatility in Sub-Saharan Africa: A Regime-Switching Approach

A Markov-switching model with time-varying transition probabilities is applied to sub- Saharan African data to examine the link between output collapses and growth. In the model, the growth rate moves discretely between two regimes; one characterised by a stable positive average growth rate, and a collapse regime characterised by negative and volatile growth rate. The aim is to derive plausible estimates of the transition probabilities for the Markov chain component. These estimates are then included in a vector of time-varying country-specific variables for the Markov-switching estimation. The results show that the probability of an economy remaining in a stable growth regime increases with institutional quality, education, improving terms of trade and increased concentration on manufacturing industries. The analysis takes into account the fact that the dynamics of output following a large collapse differs significantly from the dynamics of output during more stable time periods by taking a non-linear approach.

Efficient Estimation of the Non-linear Volatility and Growth Model

Econometrics, Macroeconomics, Growth, Volatility

Creditor rights, culture and dividend payout policy

We study how creditor rights and culture interact with one another to influence corporatedividend payout policy. Where creditor rights are strong, creditors accept the status quo,which are large dividends in individualist and small dividends in collectivist traditions,respectively. Culture influences dividend payout where creditor rights are weak. In collec-tivist countries where group cohesion among corporate stakeholders results in perceivedlower agency costs of debt and equity, creditors place few if any restrictions on dividendpayout given weak creditor rights. In contrast, in individualist traditions, creditors continueto restrict dividend payouts under weak creditor rights. Our findings emphasize the impor-tance of accounting for the interactions between creditor rights and culture in determiningdividend policy

Governance and the corporate life-cycle

Purpose – The purpose of this research is to examine whether corporate governance changes along the corporate life-cycle. Design/methodology/approach – In a sample of 205 firms from 21 emerging market countries and using a life-cycle proxy from the dividends literature, we use a governance-prediction model which examines whether corporate governance differs along the corporate life-cycle. Findings - Mature firms tend to practice better overall corporate governance. Discipline and independence improve as firms mature. Firms tend to be most transparent and accountable when they are young. These findings suggest that the resource/strategy and monitoring/control governance functions are relevant but at different life-cycle stages. Research limitations/implications – In the absence of longitudinal governance data with sufficient coverage to track within-firm changes in corporate governance along the corporate life-cycle, we analyze differences in corporate governance between-firms at different life-cycle stages. Originality/value – We use an alternative, yet new measure from the dividends literature to account for the firm’s position along the corporate life-cycle. With this new measure, our findings are in line with the predictions of Filatotchev et al. (2006)

Creditor rights, culture and dividend payout policy

We study how creditor rights and culture interact with one another to influence corporate dividend payout policy. Where creditor rights are strong, creditors accept the status quo, which are large dividends in individualist and small dividends in collectivist traditions, respectively. Culture influences dividend payout where creditor rights are weak. In collectivist countries where group cohesion among corporate stakeholders results in perceived lower agency costs of debt and equity, creditors place few if any restrictions on dividend payout given weak creditor rights. In contrast, in individualist traditions, creditors continue to restrict dividend payouts under weak creditor rights. Our findings emphasize the importance of accounting for the interactions between creditor rights and culture in determining dividend policy

How do creditors respond to disclosure quality? Evidence from corporate dividend payouts

Using a sample of 17,544 firms from 28 countries we explore how creditors influence dividend payouts in various disclosure regimes. Poorly-protected creditors do not restrict the practice by firms in opaque regimes of using large dividend payouts to build reputation capital, and place few restrictions on dividend payouts in transparent regimes. In intermediate disclosure regimes creditors place large restrictions on dividend payouts. Dividend payouts are always largest in transparent regimes. Our findings say that the disclosure standards versions of the outcome and substitution agency models of dividends are not mutually-exclusive, and are as effective under weak as they are under strong creditor rights

Which Factors Determine The Capital Structure of Non-financial Publicly Traded Irish Firms

In this paper, we trace the indebtedness of the non-financial corporate sector in Ireland over the period from 1980 to 2007. This period witnessed an episode of leveraging to 2001, following by a period of deleveraging to 2007. Our findings suggest that fundamentals can help explain why firms became more indebted between 1980 and 2001, but the deleveraging that took place after 2001 is due to factors other than the fundamentals included in our analysis. While we cannot say definitively, our findings may be in line with evidence which points to a concerted effort on the part of Irish firms to reduce their debt financing since 2001

Which Factors Determine The Capital Structure of Non-financial Publicly Traded Irish Firms

In this paper, we trace the indebtedness of the non-financial corporate sector in Ireland over the period from 1980 to 2007. This period witnessed an episode of leveraging to 2001, following by a period of deleveraging to 2007. Our findings suggest that fundamentals can help explain why firms became more indebted between 1980 and 2001, but the deleveraging that took place after 2001 is due to factors other than the fundamentals included in our analysis. While we cannot say definitively, our findings may be in line with evidence which points to a concerted effort on the part of Irish firms to reduce their debt financing since 2001