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Publication date: 9 February 2021

Rehana Naheed, Bushra Sarwar and Rukhsana Naheed

Many scholars have developed several theories and empirics to study issues related to investment policy. However, there are still some unexplored issues in the field of finance…

327

Abstract

Purpose

Many scholars have developed several theories and empirics to study issues related to investment policy. However, there are still some unexplored issues in the field of finance that require further analysis and investigation, particularly in the corporate governance literature such as the role of managerial talent in the firms. This study investigated the impact of managerial ability on investment decisions of the firms.

Design/methodology/approach

The study first uses firm efficiency and managerial ability by using data envelope analysis (DEA) proposed by Demerjian, Lev and McVay, 2012. Data is collected for the firms listed in Shenzhen and Shanghai stock exchange for an emerging market of China during the crisis period with 1,640 number of observations.

Findings

The study reveals that the presence of more managerial talent in a firm is significant for the strategic decisions of the firms. Findings follow a resource-based view and identify that more talented managers help the firms in the acquisition of resources specifically during financial distress. The study subdivides the firms based on: ownership structures and financial constraints. Results generated from propensity score matching imply that the role of high-talented managers is significantly different from that of low-talented managers.

Originality/value

The study reveals managerial ability as a determinant of investment policy. To the researchers’ best knowledge, none of the previous studies have been conducted in emerging market literature during the crisis period.

Details

Journal of Chinese Economic and Foreign Trade Studies, vol. 14 no. 2
Type: Research Article
ISSN: 1754-4408

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Article
Publication date: 10 February 2021

Rehana Naheed, Aws AlHares, Yasir Shahab and Rukhsana Naheed

This study aims to investigate the impact of the board’s financial expertise (BFE) on corporate social responsibility (CSR) disclosure in China.

1307

Abstract

Purpose

This study aims to investigate the impact of the board’s financial expertise (BFE) on corporate social responsibility (CSR) disclosure in China.

Design/methodology/approach

Using a sample of Chinese listed firms from 2009-2016 (making 3272 firm-year observations), this study uses the generalized method of moments (GMM) and panel data estimation techniques.

Findings

Using the resource dependence theory, the findings of this study are twofold. First, the is positively associated with the disclosure level of CSR. Second, this positive impact is more pronounced in firms with female CEO and state ownership. The findings are robust to the potential issues of endogeneity and sensitivity analyses.

Practical implications

Practically, the findings hold value for the senior management of Chinese firms to ensure the presence of financial experts in boards to yield both financial and non-financial outcomes.

Social implications

This study points out how financial experts on boards influence the societal outcomes via disclosure of CSR. Financial experts encourage participation in social and sustainable practices which creates a positive image of the firm not only in the eyes of society but also for investors.

Originality/value

This study is unique and contributes to the extant literature by examining the impact of a new attribute, i.e. the BFE on the level of CSR disclosure in China.

Details

Corporate Governance: The International Journal of Business in Society, vol. 21 no. 4
Type: Research Article
ISSN: 1472-0701

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Article
Publication date: 2 May 2018

Bushra Sarwar, Ming Xiao, Muhammad Husnain and Rehana Naheed

Numerous researchers have developed theories and studies to uncover the issues pertinent to dividend policy dynamics, but it is still one of the unresolved problems of finance…

1596

Abstract

Purpose

Numerous researchers have developed theories and studies to uncover the issues pertinent to dividend policy dynamics, but it is still one of the unresolved problems of finance. The purpose of this paper is to focus on a new dimension, i.e., financial expertise on the corporate board for explaining the dividend policy dynamics in the emerging equity markets of China and Pakistan.

Design/methodology/approach

The study employs static (fixed effect (FE) and random effect (RE)) and dynamic models – two-step generalized method of moments (GMM) estimation techniques by Arellano and Bond (1991) and Arellano and Bover (1995) – during the timespan from 2009 to 2014. Further, this study re-estimated FE, RE and GMM two-step estimation techniques by excluding the non-dividend-paying companies, and also employed instrumental variable regressing by using two instrumental variables – industry average financial expertise of the board and board size – as proxies for board financial expertise to control the possible endogeneity.

Findings

The study reveals that Chinese firms having more financial expertise on the board do not take dividends as a control mechanism (substitution hypothesis), while Pakistani firms support the compliment hypothesis and use dividends as a control mechanism to mitigate agency conflict to protect shareholders’ interests and keep additional funds from the manager’s opportunism. Further robustness models also confirm the presence of a significant association between dividend policy and board financial expertise in both equity markets.

Originality/value

This study introduces the financial expertise on a board as a determinant of dividend policy. To the best of the authors’ knowledge, no previous studies have focused on board-level financial expertise as a contributing factor toward dividend policy.

Details

Management Decision, vol. 56 no. 9
Type: Research Article
ISSN: 0025-1747

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