School of Management (SoM)

Permanent URI for this community

https://dspace.lib.cranfield.ac.uk/handle/1826/25

Browse

Now showing 1 - 8 of 8

Open Access
Does religiosity and trust affect financing activities? Evidence from Indonesia.
(Cranfield University, 2020-12) Wijaya, Ibrahim Fatwa; Moro, Andrea; Belghitar, Yacine
Islam religiosity and trust are inextricable linked since Islamic teachings promote trustworthy behaviour. Existing literature has shown that perceived trustworthiness of a party has positive impacts on the business-to-business relationship, especially in financing relationships. So far, however, there has been limited discussion on the role of religiosity and trust to support financing activities in the Islamic context. Empirical paper number 1 examines the impact of Islam religiosity on financing availability and non- performing financing in both Islamic and conventional banks. I contribute to the literature by using more suitable Islam religiosity proxies at province level, namely Islamic school, Islamic seminary school, mosque, Hajj application, and halal certificate and by finding that Islamic and conventional banks in stronger Islam religiosity areas provide more financing and have less non-performing financing. Empirical paper number 2 explores the magnitude of values-based trust vis-à-vis competence-based trust on financing availability in the context of Islamic culture, an issue that has limited discussion in current literature. I find that values-based trust plays stronger role than competence-based trust in Islamic culture. Finally, existing literature on trust and bank lending has not taken into account the characteristics of financing products in their studies. The third empirical paper discusses the role of trust on financing availability in three different Islamic financing products, i.e., Murabaha, Ijara, and Profit-loss sharing. I find that values-based trust is more important than competence-based trust in Ijara, but competence-based trust plays stronger role than values-based trust in both Murabaha and Profit-loss sharing.
Open Access
The effect of a curruption scandal, recession and legislation on voluntary disclosure, reporting quality, and governance, compliance and control: the case of Brazil.
(Cranfield University, 2019-08) Whitehead, Martin; Belghitar, Yacine
This thesis sets out the results of a mixed methods research project comprising three separate studies that look to address the overarching research question: how do trigger events in the form of crises and legislation affect (i) corporate reporting, i.e. through voluntary disclosure and earnings management, and (ii) governance, compliance and internal controls? This important topic, which sits at the intersection of three research domains - crisis management; corporate control and governance; and financial reporting quality - has not been targeted in a holistic way in prior studies. This thesis aims to shed new light on the topic by addressing this gap. Paper 1 comprises a systematic literature review (SLR) which is motivated by the research question: - how do crisis trigger events (corruption scandal, transparency legislation, and recession) impact corporate responses in the form of management actions, and their reporting choices around voluntary disclosure and earnings management? Adopting established SLR methodology, the review identifies 91 articles from research domains across management, accounting and finance. The study synthesizes key findings from the sample, identifies emergent themes, and constructs a conceptual crisis response framework centred on dynamic stakeholder management for determining action and reporting choices, which must be navigated within a control and regulatory environment that chiefly influences reporting response options. The paper also sets out implications for practitioners and policy makers, makes the case for Brazil as a fruitful location for relevant and interesting studies, and presents a tangible research agenda which is used to inform Papers 2 and 3. Paper 2 is a case study which examines how Petrobras responded to a major corruption scandal in the period 2010-2017 through (i) disclosures in its annual report (AR), sustainability report (SR), and press releases; and (ii) organizational restructuring changes made to strengthen governance and controls in response to the crisis. We find evidence in support a legitimacy theory explanation of a strategy to repair trust with key stakeholders through (i) enhanced disclosure and (ii) an evolving sequence of actions to regain control and restructure the organization, pursuant to trust repair models. In addition, we obtained new insights into how a company uses the AR and SR to target different stakeholder groups and communicate differently with them to manage their respective legitimacy concerns, findings which support stakeholder theory and organizational façade theory explanations. Finally, our review of actions taken by management shows that these align well with models of trust repair and legitimacy management, and appear to have resulted in Petrobras successfully regaining legitimacy by 2017. Paper 3 is a quantitative study which assesses how three major external events influenced earnings management in Brazil during the period 2000 – 2017. We consider the effect of the Petrobras corruption crisis, recession, and the introduction of a new transparency law (the Brazil Clean Company Act (BCCA)). We find that the corruption crisis affecting Petrobras in 2014 and 2015 (and the resulting external scrutiny from regulators, media and the public associated with it), was of such an intensity that it had an impact similar to that of legislation elsewhere, such as Sarbanes-Oxley: - i.e. in Brazil during the corruption crisis the level of accruals-based earnings management (AEM) decreased and real earnings management (REM) increased as the two were used as substitutes. During recession, firms reduced the level of REM they use, which is consistent with an interpretation that this costly form of manipulation is not required when all firms are facing unfavourable reporting. BCCA, which was introduced in 2014 to improve transparency and reduce corruption, has had the effect of reducing real earnings management, which we interpret as being due to an increased focus on compliance and governance with improved tone at the top. This study is the first to consider the impact of both a corruption crisis and transparency legislation on earnings management behaviour, and adds to extant knowledge on what influences REM usage, the results of which widen our understanding of how management weighs the costs and benefits of its manipulation options, dependent on external scrutiny and the quality of internal governance mechanisms Overall, the results from the three papers enable us to contribute to the research literature in a number of ways in respect of the influence specific crisis and exogenous shock events have on management decision making related to (i) its responsive actions to ensure the adequacy of its governance and controls environment, and (ii) in the reporting and communication choices it makes around earnings management and voluntary disclosure; findings which have relevance beyond the Brazilian environment.
Open Access
Essays on contemporary issues in the South Korean economy
(Cranfield University, 2023-02) Saade, Ahmed J.; Alexiou, Constantinos; Belghitar, Yacine
This doctoral thesis sheds light on some issues that are characteristic of the South Korean socioeconomic landscape today. In a series of three papers, I empirically address important questions faced by policy makers of this country, whilst also contributing to major debates currently taking place within the Economics discipline. In the first chapter, I investigate the effects of robotization on Korean workers’ labor supply from the lens of dynamic monopsony. I show that an increase in the density of industrial robots is associated with manufacturing workers becoming more responsive to a change in wages in their decision to quit to non-employment, and that the opposite is true for non-manufacturing workers. The second chapter contributes to the discussion on youth unemployment in South Korea, in tandem with the question of the high turnover rate within the nation’s Nursing profession. I find that the unemployment rate at time of graduation has scarring effects on Nurses’ wages, workhours, and subjective wellbeing. The final chapter of this dissertation tackles the problem of social isolation among Korean elders and contributes to the very small literature on the economic determinants of this phenomenon. I offer the first set of causal evidence linking the social isolation of elders with their adult children’s inheritance expectations.
Open Access
Narrative Finance - The use of narrative to inform investment judgement. How stories move markets - the system behind the Boeing 737 MAX shock news.
(Cranfield University, 2023-07) Harris, Richard; Moro, Andrea; Belghitar, Yacine
NARRATIVE FINANCE: The use of narrative to inform investment judgement Narrative Finance is the term coined for research into this new sub-discipline of financial economics - for it is the “voice of the market.” The information embedded within text and speech is pervasive in determining asset prices. This contribution to financial research highlights ways to use financial narratives to inform investment judgement. Financial narrative is modelled as a disruptive force by uniquely applying General System Theory to illustrate the complex architecture of the financial system. The energy budget of a material narrative is seen to be expended in the work carried out to adjust asset prices. Investors can use the departure and recovery of prices from the dynamic equilibrium upon the receipt of news as an investment indicator; described herein as Decoupling Theory. The signal of a narrative is mapped as it travels through the non- linear financial system (and back as feedback). Narrative nomenclature is devised to describe dominant, dormant, and legacy narratives, the Narrative Cycle, Narrative Signal, Narrative Phases, and the Narrative Tree. This theory was tested against the shock news of the two Boeing 737 MAX 8 accidents, which provided two proxy narrative signals and investment outcomes from a single event cause. The empirical output includes the proof of theory for the narrative morphology and phases, the extraction of fast and frugal investment narrative indicators, the importance of feedback, and the matching of narrative frequency to market movements. These metrics can help investors make better judgements and decisions by narrowing the probabilities in nowcasting and forecasting models. Narrative Finance is an intellectual descendant of classical finance and behavioural economics and contributes an alternative method of valuing investments to the toolbox of investors, academics, and securities regulators.
Open Access
Narratives in corporate annual reports: the drivers and impacts of narrative's readability and tone.
(Cranfield University, 2019-09) Alrefaei, Hessa; Belghitar, Yacine; Nnadi, Matthias
Corporate annual reports have increased in size over time, not only to contain financial data but a plethora of narrative explanations concerning the firm’s current performance and their prospects. This thesis attempts to fill the gaps presented in the field of research of narrative disclosure in corporate reports by conducting three interconnected studies presented in a journal article manuscript form. The first paper provides an understanding of the drivers and consequences of narrative disclosure in corporate reports by conducting a systematic literature review of existing studies. The aim is to get a full understanding behind the intentions and consequences of narrative disclosures, to identify the gaps in research, and to provide recommendations for future research. The second paper focuses on the consequences of the readability of narratives, as an impression management technique in corporate annual reports. This study expands existing literature by not only analysing the reading difficulty of narratives but also touching on the use of ambiguous. It is found that readability (using both readability and ambiguity measures) are negatively associated with firm performance, indicating management’s use of impression management to obfuscate adverse performance, resulting in the reduction of performance persistence and firm value. The third paper focuses on earnings management as the driver of the tone of narratives. The study aims to find that relationship between earnings management (using accruals-based and real activities-based earnings management) and the tone of narratives, during two different strategic incentives that drive managers to manipulate earnings (meeting or beating prior year’s earnings and leverage increase). It is found that when managers practice income-increasing (decreasing) earnings management the tone is positive (negative). The findings signify that whether the intention is beneficial or harmful to investors, the tone of narratives is biased towards management’s intentions of earnings management practices.
Open Access
Risk Governance: Examining its Impact Upon Bank Performance and Risk
(2017-04) Gontarek, Walter; Belghitar, Yacine
This study examines the emergence of risk governance arrangements in US bank holding companies (BHCs) and tests for their impact upon performance and risk profiles. Following the financial crisis, regulators introduced several new risk governance processes, including the adoption of Risk Appetite arrangements and the establishment of Risk Committees, both board level features. In this study, a research gap is unearthed with respect to risk governance practices and their impact upon BHC performance and risk measures. The motivation of this research is to validate the adoption of these board-level practices in an evidence-based framework. The empirical research method relies on the collection of a unique data set. The sample covers a significant dollar-weighted portion of the US banking system. Multivariate analysis facilitates the testing of risk governance mechanisms to outcome variables, while controlling for firm-specific and standard corporate governance variables. The practical implication of this study with respect to Risk Appetite is clear. BHCs that practice Risk Appetite arrangements exhibit improved performance and lower realised loan losses. In contrast, while some limited evidence is presented that the marketplace may reward BHCs for certain composition aspects of the Risk Committee, the overall results suggest that the requirement for a Risk Committee has little impact to BHC’s operating performance and risk measures. In terms of academic contribution, this study examines two major risk governance mechanisms within a common framework, presenting evidence of a significant and positive impact of the board level articulation of Risk Appetite arrangements to a suite of BHC performance measures and a negative association to loan losses. As the first known empirical research study of Risk Appetite, it confirms that this board level mechanism should be included as an explanatory variable in bank or risk governance related empirical research studies. These findings provide industry practitioners (including BHC chief executive officers and board members) convincing arguments for the immediate adoption of Risk Appetite arrangements. US Regulators, who introduced Risk Appetite requirements in 2014 for larger BHCs, are presented with validation by this study for wider adoption of this risk governance mechanism, even if such practices are voluntarily adopted by BHCs. As signs begin to emerge in the United States of the possible relaxation of the regulatory requirements of certain aspects of the Dodd-Frank Act, this study contributes to this debate in a timely fashion by testing the veracity of two key supervisory-driven risk governance practices aimed at the boardroom in an evidence-based evaluation.
Open Access
The role of entrepreneurial activity in economic catch-up.
(2017-12) Zawwar, Imran; Burke, Andrew; Belghitar, Yacine; Hussels, Stephanie
According to an estimate, in the year 1820, the difference in per capita income between the richest and the poorest country was no more than 3:1. However, with the industrial revolution, some countries experienced a significant shift in their economic growth and the gap in per capita income between the countries started to widen up. This process resulted in increasing global inequality as some countries progressed rapidly, while others remained behind and could not catch-up with the developed world. Nevertheless, with the increase in productivity given the rapid advances in technology, the developing countries have started to catch-up and most of them are growing faster than their developed counterparts. The process of catching up by the individual countries implies a reduction in the gap in productivity and per capita income with the developed world and collectively if all the countries start to catch-up it is referred to as convergence. The phenomenon of convergence has received much attention in the literature on economic development and the potential causes of convergence have intrigued several debates. The neoclassical growth theory provides the theoretical construct to explain this process of convergence and the role of capital, labour and technology is argued to be fundamental. In this regard, the basic premise of this research is that although technology is an important determinant for economic convergence, it cannot be implemented without the entrepreneurs in the economy. The role of entrepreneurial activity is considered to be significant in economic growth, but it has not been explored in the models of economic convergence. Utilising the GEM data on total entrepreneurial activity this PhD thesis addresses this gap and building on the economic development and entrepreneurial literature it explores the role of entrepreneurial activity in economic convergence under varying business contexts. More importantly, it tries to ascertain what type of entrepreneurial activity assists the catching up countries to progress and reduce their gap in productivity and income with the developed world. As the first step in this research, a systematic review of the literature was conducted resulting in a theoretical framework which uncovered the gaps in the existing knowledge. This informed the respective research questions and provided the design for the empirical research that followed. The first empirical paper showed that the impact of entrepreneurial activity in catching up economies, is only significant in the presence of a feedback loop, i.e. as improved entrepreneurial activity from one year feeds into another, helping the catching up countries to grow faster and reduce the gap in productivity and income with the higher incumbent economies. The second empirical paper showed that in the presence of a feedback loop it is only the opportunity entrepreneurial activity that has a significant impact in reducing the GDP gap, while necessity entrepreneurial activity is insignificant. In a world which is characterised by resource constraints, the biggest public policy issue is effective utilisation of resources. To this end, this research has great insights for public policymakers who are interested in formulating policies for impactful entrepreneurship which can expedite the process of economic development. It shows the importance of entrepreneurial activity in economic catch-up, provides insights into entrepreneurial motivation and at the same time emphasise the value of a feedback loop.
Open Access
The social group and its impact on subjective well-being, performance and the research process.
(2019-06) Esch, Dennis Thorsten; Belghitar, Yacine; Maklan, Stan
Humans are social beings and throughout their life they self-categorise as members of many social groups, be it a member of the community they live in, the company they work for, or the sports club they root for. Across three papers, this thesis examines the impact of the performance of such social groups on individuals’ subjective well-being and performance as well as the research process. The first paper investigates the effects of the performance of social groups on individuals’ subjective well-being. An analysis of five quantitative studies shows that a victory (defeat) of a social group positively (negatively) affects individuals’ subjective well-being. The strength of this effect varies depending on individuals’ attachment to the group and the importance of the event in question. Changes in individuals’ self-esteem and self-efficacy are identified as the underlying mechanisms driving the detected changes in individuals’ subjective well-being. The second paper examines the influence of social group performance on individuals’ performance in an unrelated task, contingent on their psychological resilience. Evidence from two natural field experiments indicates that high-resilience supporters of the losing group outperform their counterparts supporting the winning group. For low-resilience individuals this effect switches, with victors performing significantly better than losers. The third paper provides evidence that randomised laboratory experiments as a stand-alone method are unsuitable to assess effects around the performance of social groups. Results from a natural experiment and two randomised laboratory experiments suggest that it is important for researchers to consider the ecological validity of their experiments during the research design phase to ensure the real-world applicability of their findings. Overall, the findings of this thesis have wider implications for the management of organisations in general, and for marketing and communications managers in particular, on how to positively leverage work- and brand-related social identities.

Browse

Browsing School of Management (SoM) by Supervisor "Belghitar, Yacine"

Results Per Page

Sort Options