Jing-Hui Kwan , Wee-Yeap Lau (2019). The Effects of Country-Level Governance and Corporate Cash Holdings: Evidence from Hospitality Firms in ASEAN-5. Humanities and Social Sciences Letters, 7(3): 123-140. DOI: 10.18488/journal.73.2019.73.123.140
Despite the proliferation of research on cash holdings, the effects of external factors on corporate cash policy are little known. There are only a handful of studies have examined the relationship between issues related to institutional factors and cash holdings to date. Many studies have examined the effects of internal, as opposed to external factors on firms’ cash holdings behaviours. External factors, such as institutional environment have mostly been neglected in the extant literature, despite the fact that institutional factors have a direct effect on firms’ behaviours and strategic choices. This paper inspects the relationships between country governance and corporate cash holdings. This paper presents a cross-country study using 1274 firm-year observations from 2001 to 2013 from public listed hospitality firms in ASEAN-5 to test the impact of corporate governance on cash holdings. The relationship between external governance mechanism and cash holdings behaviour of firms at country-level are studied. The results show positive and significant relationship between the country-level control of corruption, regulatory quality, the rule of law, and corporate liquidity. However, there is no significant relationship between country-level political stability, voice and accountability and corporate liquidity. Further investigation was carried out to test the effect of tourism crisis and corporate liquidity. The results shall benefit various parties including the legislators and policy makers. Not only it serves as a strategic deterrence, but also helps firms to gauge opportunities.
This study contributes to a growing body of cash literature by demonstrating how corporate cash holdings are influenced by country governance. Although enhancing governance mechanisms at the firm level is important in alleviating agency problems within the firm, improving the governance mechanism at the country-level first can be equally important.
Governance-Led Intellectual Capital Disclosure: Empirical Evidence from Pakistan
Shujaat Mubarik , Navaz Naghavi , Muhammad Faraz Mubarik (2019). Governance-Led Intellectual Capital Disclosure: Empirical Evidence from Pakistan. Humanities and Social Sciences Letters, 7(3): 141-155. DOI: 10.18488/journal.73.2019.73.141.155
The study objective is to empirically examine the relationship between intellectual capital disclosure (ICD) and corporate governance with a specific focus on the role of family ownership. Secondary data of 99 Pakistan Stock Exchange listed manufacturing firms pertaining to the 2008?2017 period were obtained from the annual statements of these companies. Owing to the non-linear role of family ownership in corporate governance, quadratic regression was employed to estimate the relationship between the degree of IC disclosure and various attributes of corporate governance. Study findings confirm that the relationship between ICD and family ownership follows the familiar inverted U-shaped curve, whereby the degree of IC disclosure tends to decrease once family ownership exceeds 22.64%. Moreover, analysis results depict a significantly positive impact of board independence, presence of an audit committee, and foreign ownership on ICD. Conversely, CEO duality was found to be negatively associated with the degree of ICD. In further analyses, IC disclosure was disaggregated into three major dimensions, namely internal capital, external capital, and human capital, yielding congruent findings. Thus, for effective IC disclosure, the study findings indicate that it is necessary to improve the governance mechanisms. It would also be beneficial for firms to restrict the family ownership to a certain level in order keep the information disclosure optimal. Since these recommendations are based on analyses of secondary data pertaining to a limited number of indicators of corporate governance pertaining to Pakistani manufacturing firms, any generalizations should be attempted with care.
This study contributes to the existing literature by finding the threshold level of family ownership through a quadratic regression which provides unique insight for the relationship between corporate governance and ICD.