The effect of managers’ optimism on competitive strategy and final cost models

Currently, competition in the global economy is the most complex issue that gives organizations a lot of opportunities and threats. Therefore, the manager of the organization should be able to enhance the organization's performance in this competitive environment. So the recognition of the behavioral components of managers and their impact on the performance of the organization in this competition is necessary. In this regard, the present study aims to investigate the effect of managers' optimism on competitive strategy and price leadership in the market. This research is a descriptive-correlation type and a questionnaire was used to collect information. In this research, sampling was done in a simple random that the number is 348 people. In order to investigate the research hypotheses, structural equation modeling has been used. Findings of the research showed that the correlation coefficient between managers 'optimism and competitive strategy is significant; that's mean, there is a significant and direct relationship between managers' optimism and competitive strategy; also, there is a significant relationship between managers 'optimism and employee cost leadership; that's mean, there is a significant and direct relationship between managers' optimism and employee cost leadership

Book review: Zhang, X., Yang, E., & Thomas, N: Enterprise Management Control Systems in China

Book review of Zhang, X., Yang, E., & Thomas, N: Enterprise Management Control Systems in China, 2014, Berlin, Heidelberg: Springer, 352 pp., €152,59 (hardback), ISBN: 9783642547140

Financing behavior of R&D investments in the emerging markets : the role of alliance and financial system

This paper examines the financing behaviour of R&D investments in emerging markets. Drawing on institutional theory and using panel data of generalized methods of moment (GMM) estimation for a sample of 302 firms from 20 countries during the period 2003-2015, we find that emerging market firms tend to use internal funds for financing R&D investments. Interesting results emerged when the sample was divided as alliance and non-alliance firms, and bank-based and market-based financial systems. The results show that R&D financing behaves differently for alliance and non-alliance firms. Alliance firms use both internal and external funds for R&D investments, while non-alliance firms do not use external funds. We also document that a country’s financial system influences the choice of available sources of finance. Firms from countries that follow a bank-based financial system tend to rely on external funds while firms from countries that follow a market-based financial system depend more on internal funds for financing R&D investments. This study is important as it provides new evidence on financing R&D investments in emerging countries taking into account the institutional arguments of financing choices, and so should guide stakeholders about appropriate sources of R&D financing

Corporate reporting on the Sustainable Development Goals: A structured literature review and research agenda

Purpose – The SDGs framework emerged as a guidepost for the transition to sustainable development. To achieve this transition, companies are encouraged to integrate these goals into their business strategies, processes, and corporate reporting cycle. The purpose of this paper is to review and critique the corporate SDGs reporting literature, develop insights into the state of this research field and identify a future research agenda. Design/methodology/approach – Using a structured literature review methodology, the paper reviews 65 empirical papers published in this field to identify how the current research is developing, offers a critique, and identifies future research avenues to advance this field. Findings – Corporate SDGs reporting is developing as a research area of great importance. The findings reveal that current SDGs reporting literature lacks theorisation, overly focuses on publicly listed companies and succinctly describes organisations’ engagement with the SDGs as superficial. Surprisingly, regions such as North America, the United Kingdom, and other emerging economies have received less attention from scholars. Further, only a few authors have specialised in this field and there currently exists low levels of international collaborations among authors as well as practitioners. Originality – The paper offers a comprehensive structured review of the empirical papers published on corporate SDGs reporting. It contributes to deepening this nascent research field by identifying five distinct areas where accounting and business scholars may focus to advance the field further and contribute to achieving the SDGs agenda

Bank Failure prediction: corporate governance and financial indicators

Most failure prediction studies have relied on using financial ratios as predictors. The most suitable financial predictors for banks are financial ratios following the CAMEL rating system. Also, corporate governance has been proven to be an important aspect of banks, especially after the financial crisis. Given its importance, we test the ability of corporate governance to enhance the prediction of bank failure. While there are only few studies that examine efficiency of corporate governance as a failure predictor, there are scarcely any studies that examine it as predictor of US banks failure. Using discriminant analysis, we predict the failure of banks insured by the Federal Deposit Insurance Corporation during the period from 2010 to 2018 using financial and non-financial predictors. We find that combining CAMEL ratios with corporate governance variables not only enhances the accuracy of prediction but also extends the time horizon of prediction to three years before failure. We also show that the earnings of banks are more significant in predicting bank failure than the capital structure and asset quality. The results further reveal that the CEO compensation, voting rights and institutional ownership are more significant predictors than the board characteristics. These results are robust when using logit regression. This paper provides insight to banks, regulators and shareholders by showing that corporate governance and banks earnings are strong predictors of bank failure

Predicting Audit Opinion by a new Metaheuristic Algorithm: Water Cycle Algorithm

An auditor evaluates if financial statements which the firms issue in public, present fairly and are free from material misstatement. The audit report is a written letter containing independent verification of the quality of financial statements used for making economic decisions. Hence, the issuance of such a report can lead to the transmission news and information about the firm and to enhance the degree of confidence in the financial statements. This study predicts audit opinion of the firms listed in Tehran Stock Exchange during 2018-2020 by a new metaheuristic algorithm named Water Cycle Algorithm (WCA) and compares its results with one of the most popular methods called logistic regression (LG). 24 variables were extracted from the literature and used for this prediction. 4 evaluating criteria were used to compare the predictions of two methods. According to findings, the superiority of the criteria in the WCA was confirmed in comparison to LG. Since WCA was more appropriate, users of financial reports can use it to predict the type of audit opinion in the unaudited interim financial statements, and also, auditors can use it while evaluating and accepting clients and achieving an acceptable level of audit risk, as a quality control tool

Evaluation of corporate governance practices in emerging markets (A case study of Nigerian Banking industry)

This study explores corporate governance practices within the context of the Nigerian banking industry using instances of corporate governance lapses that resulted in part to the Nigerian banking crises. We present multiple case analysis of publicly available documents and court papers (in the United Kingdom and Nigeria) to document instances of breach and areas of weakness in the existing Nigerian code of corporate governance. We supported these with data obtained from multiple sources (using semi-structured interviews, observation and further documentary analysis) to explain and yield insight to the motivation behind these corporate governance practices. The research’s theoretical framework adopts theoretical triangulation and is designed to extend the present application of institutional theories and legitimacy theories to include roles of external and internal institutions, power blocks, and the role of legitimacy seeking acts in influencing corporate governance practices. From the case analysis, we suggest multiple actors and influences exist to shape the corporate governance practices within most commercial banks. These lapses make it possible for dominant actors within the organisation to exhibit symbolic compliance while taking advantage of these lapses to shareholders detriment

IPO valuation in an emerging market – a study in Iran

Purpose: This study aims to highlight the accuracy, performance and selection of the IPO valuation methods in the Islamic Republic of Iran's emerging market. Design/methodology/approach: We performed accurate ex-ante evaluations based on a pre-IPO dataset obtained from valuation institutions. We considered valuation methods through correlations, Mann-Whitney U tests and regression analysis, using a sample of 83 IPOs from January 2017 to March 2021. Findings: We found that the Dividend Discount Model (DDM) was the most popular in Iran. Even after controlling firm characteristics and market circumstances, the IPO price was highly correlated to pre-IPO reports' estimates. The results showed that firms' age, size and profitability affected the selection of valuation methods. The valuers did not apply forward P/E in a volatile market. Firm size affected the weights assigned to Free Cash Flow to the Firm (FCFF), and the valuers considered the Asset-in-Place (AIP) intensity to determine the weights of DDM, P/E and Net Asset Value (NAV), and they mainly employed the P/E to value old firms. Finally, this study estimated the accuracy of the pre-IPO report at 61% and found the highest accuracy to be associated with DDM. Originality/Value: IPO pricing in emerging markets constitutes a more significant dilemma than in developed markets. This paper provides empirical evidence of IPO pricing focusing on valuation methods used in the context of an emerging market – the Islamic Republic of Iran

Impact of the shadow banking system on monetary policy in China

The shadow banking system in China has its own characteristics compared to conventional commercial banks and the foreign shadow banking system. Its emergence is important to the economic development and financial system in China. However, it also challenges the implementation of monetary policy and regulation. China is in the economic shunt period and their monetary policy system is somewhat lagging behind the advanced economic system. This paper is therefore designed to figure out the impacts of the shadow banking system on monetary policy. After analysis of SVAR model, OLS regression, trend graph and correlation coefficient, results show that an increase in the growth rate of the shadow banking system would affect the monetary policy by increasing money supply and the value of CPI. Moreover, the implementation of easy or tight monetary policy by increasing or decreasing the benchmark interest rate would not be able to achieve the original goals due to the activities of the shadow banking system. It is suggested that the Chinese authorities should follow the market requirement to improve the monetary policy system by means of supervision and regulation on the shadow banking system which would the monetary policy effect

Non-traditional banking: Current state of knowledge and future research directions

The collapse of Silicon Valley Bank and First Republic Bank has raised many concerns over the overall strength of the banking system, one of which is the operational and market risk banks take through their non-traditional banking activities (NTBAs). This paper uses bibliometric citation analysis and content analysis to examine the literature on non-traditional banking activities (NTBA), focusing on its evolution, current influence, and future research directions. The analysis covers 309 articles published between 1986 and 2024 collected from the Web of Science database. The findings reveal two dominant research clusters: studies on the Glass-Steagall Act and universal banking and the post-Gramm–Leach–Bliley Act era. Within the latter cluster, seven sub-clusters are identified: profitability and insolvency risk, systemic risk, efficiency, market valuation, lending behaviour and liquidity creation, monetary policy, and digitalisation and fintech adoption. Despite the lessons learned from the Global Financial Crisis, the shift away from the traditional banking model has significantly increased banks' risk exposure. However, the recent hikes in interest rates to stem inflation may force banks to change their investment strategies. We argue that banks will need to transform in the next decade. This study provides the regulators, practitioners, and academics with an in-depth understanding of the NTBA research field