Tarek Eldomiaty, Ibrahim Safwat Lotfy, Mohamed Rashwan and Mohamed Bahaa El Din
The uncertainty that surrounds oil and gas exploration environments call for an examination at different angles. In terms of robustness, the purpose of this paper is to focus on…
Abstract
Purpose
The uncertainty that surrounds oil and gas exploration environments call for an examination at different angles. In terms of robustness, the purpose of this paper is to focus on three performance measurements: the amount of exploration investments, the growth rate of exploration investments, and the value at risk (VaR) of exploration investments.
Design/methodology/approach
The study utilizes the properties of discriminant analysis for deriving Z-score models that can be used for monitoring firms’ performance. A cointegration analysis is utilized as well in order to examine the level of cointegration between predictors of each performance measure. The sample includes annual data for 41 firms (local and multinational) working in the oil and gas industry in Egypt for the period 2009-2014.
Findings
The results show that amount and growth of exploration investment are quite robust performance measures in the oil and gas industry; VaR of exploration investment is sporadic as it firm-specific; and GDP, capital expenditure and operating expenditure are quite relevant for managing and monitoring growth of exploration investments.
Originality/value
The study offers robust evidence that amount and growth of exploration investment are quiet relevant for measuring firm performance in the oil and gas industry.
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Tarek Ibrahim Eldomiaty and Chong Ju Choi
This paper aims at discussing the determinants of strategic transparency and the governance structure of the East Asian firms. The relatively weak institutional infrastructure in…
Abstract
Purpose
This paper aims at discussing the determinants of strategic transparency and the governance structure of the East Asian firms. The relatively weak institutional infrastructure in East Asia raises the question about the adaptable governance structure and transparency in the East Asian firms.
Design/methodology/approach
The paper presents theoretical underpinnings of the literature on corporate governance, corporate strategy and international business. This paper argues that one of the common factors that determine the success of corporate governance structure is the extent to which it is transparent to the market forces within particular institutional arrangements.
Findings
When the institutional arrangements favor mandatory versus voluntary corporate disclosure, this study suggests a reform measure for the East Asian corporate governance system that relies, inter alia, on the percentages of long‐term and short‐term financing to total financing. The higher the percentage of long‐term financing, the more we can infer the extent of outside investors' confidence in the future of the East Asian firms. When more active role of banks involvements with the firms' business is permitted and an effective banks' and firms' strategic transparency can be assured, the East Asian banks and stock market can both lead firms to long‐term favorable achievements. This study also suggests that the protection of both shareholder's rights and creditors' rights can go in parallel lines with the latter is to be given first priority until the investors' confidence in the near and far future of East Asia corporate governance system is built.
Originality/value
This paper extends the value of corporate governance structure to the East Asian firms through advocating the determinants of strategic transparency in East Asia.
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Tarek Ibrahim Eldomiaty, Panagiotis Andrikopoulos and Mina K. Bishara
Purpose: In reality, financial decisions are made under conditions of asymmetric information that results in either favorable or adverse selection. As far as financial decisions…
Abstract
Purpose: In reality, financial decisions are made under conditions of asymmetric information that results in either favorable or adverse selection. As far as financial decisions affect growth of the firm, the latter must also be affected by either favorable or adverse selection. Therefore, the core objective of this chapter is to examine the determinants of each financial decision and the effects on growth of the firm under conditions of information asymmetry.
Design/Methodology/Approach: This chapter uses data for the non-financial firms listed in S&P 500. The data cover quarterly periods from 1989 to 2014. The statistical tests include linearity, fixed, and random effects and normality. The generalized method of moments estimation method is employed in order to examine the relative significance and contribution of each financial decision on growth of the firm, respectively. Standard and proposed proxies of information asymmetry are discussed.
Findings: The results conclude that there is a variation in the impact of financial variables on growth of the firm at high and low levels of information asymmetry especially regarding investment and financing decisions. A similar picture emerges in the cases of firm size and industry effects. In addition, corporate dividen d policy has a similar effect on firm growth across all asymmetric levels. These findings prove that information asymmetry plays a vital role in the relationship between corporate financial decisions and growth of the firm. Finally, the results contribute to the vast literature on the estimation of information asymmetry by demonstrating that the classical and standard proxies for information asymmetry are not consistent in terms of the ability to differentiate between favorable or adverse selection (which corresponds to low and high level of information asymmetry).
Originality/Value: This chapter contributes to the related literature in two ways. First, this chapter offers updated empirical evidence on the way that financing, investment, and dividends decisions are made under conditions of favorable and adverse selection. Other related studies deal with each decision separately. Second, the study offers new proxies for measuring information asymmetry in order to reach robust estimates of the effects of financial decisions on growth of the firm under conditions of agency problems.
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Philip Cheng, Chong Ju Choi, Stephen Chen, Tarek Ibrahim Eldomiaty and Carla C.J.M. Millar
Suggests another dimension of research in, and application of, knowledge management. This theoretical paper adopts a conceptual, multi‐disciplinary approach. First, knowledge can…
Abstract
Suggests another dimension of research in, and application of, knowledge management. This theoretical paper adopts a conceptual, multi‐disciplinary approach. First, knowledge can be stored and transmitted via institutions. Second, knowledge “subnetworks” or smaller groupings within larger networks can become key repositories of knowledge. The concept of knowledge “subnetworks” needs to be tested against empirical evidence, which should include a cross‐national comparison of knowledge‐based cities. The paper provides some insights to policy makers in designing or developing global cities. It is one of the few papers that discusses the connection between knowledge management and growth of global cities.
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Tarek Ibrahim Eldomiaty, Islam Azzam, Mohamed Bahaa El Din, Wael Mostafa and Zahraa Mohamed
The main objective of this study is to examine whether firms follow the financing hierarchy as suggested by the Pecking Order Theory (POT). The External Funds Needed (EFN) model…
Abstract
The main objective of this study is to examine whether firms follow the financing hierarchy as suggested by the Pecking Order Theory (POT). The External Funds Needed (EFN) model offers a financing hierarchy that can be used for examining the POT. As far as the EFN considers growth of sales as a driver for changing capital structure, it follows that shall firms plan for a sustainable growth of sales, a sustainable financing can be reached and maintained. This study uses data about the firms listed in two indexes: Dow Jones Industrial Average (DJIA30) and NASDAQ100. The data cover quarterly periods from June 30, 1999, to March 31, 2012. The methodology includes (a) cointegration analysis in order to test for model specification and (b) causality analysis in order to show the generic and mutual associations between the components of EFN. The results conclude that (a) in the majority of the cases, firms plan for an increase in growth sales but not necessarily to approach sustainable rate; (b) in cases of observed and sustainable growth of sales, firms reduce debt financing persistently; (c) firms use equity financing to finance sustainable growth of sales in the long run only, while in the short run, firms use internal financing, that is, retained earnings as a flexible source of financing; and (d) the EFN model is quite useful for examining the hierarchy of financing. This study contributes to the related literature in terms of utilizing the properties of the EFN model in order to examine the practical aspects of the POT. These practical considerations are extended to examine the use of the POT in cases of observed and sustainable growth rates. The findings contribute to the current literature that there is a need to offer an adjustment to the financing order suggested by the POT. Equity financing is the first source of financing current and sustainable growth of sales, followed by retained earnings, and debt financing is the last resort.
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Mohamed H. Behery and Tarek Ibrahim Eldomiaty
This research paper aims at examining the relationship between the relatively strong banking industries and the values of stakeholder systems. The authors compare international…
Abstract
Purpose
This research paper aims at examining the relationship between the relatively strong banking industries and the values of stakeholder systems. The authors compare international successful stock markets systems such as the US and the UK with successful stakeholder systems such as Japan, Germany, and most of continental Europe.
Design/methodology/approach
The issue of the banks' compatibility to support the stakeholder's interests is examined by two separate questionnaires designed and tested for the issues of reliability and validity. The questionnaires are addressed to two groups in the banking industry: corporate loan managers; and finance directors.
Findings
The findings show that finance directors share with the corporate loan managers the concerns of corporate stakeholders' interests and the importance of shareholders and creditors as complementary sources of financing. Regarding the stakeholders' effects on banks performance, the results show that: banks' support to shareholders interests is positively associated with banks profitability and liquidity, banks support to suppliers' interest is positively associated with banks' profitability, capital adequacy, and asset quality, banks' support to the creditors' interest is positively associated with bank's liquidity. Banks' support to unions, suppliers, and government relations is positively associated with bank's liquidity, and banks' support to corporate employees and managers is positively associated with bank's asset quality. Overall, the results conclude that banks' performance is positively associated with their orientations toward fulfilling corporate stakeholders' interests.
Research limitations/implications
The findings are limited to the banking industry in the UK only.
Originality/value
This research paper contributes to the literature in terms of presenting empirical evidence that the theoretical relationships of stakeholder management are supported by the banking industry as viable financial institutions.
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Tarek Ibrahim Eldomiaty, Ola Atia, Ahmad Badawy and Hassan Hafez
The literature on the relation between dividends and stock risks include mixed results. The related studies have reached either insignificant, or positive, or negative results…
Abstract
Purpose
The literature on the relation between dividends and stock risks include mixed results. The related studies have reached either insignificant, or positive, or negative results. The authors offer a mathematical structure that addresses potential mutual benefits of dividends signaling under conditions of stock risks (systematic and unsystematic). The mathematical structure demonstrates explicitly a case of risk transfer. The purpose of this paper is to examine the potential benefits to firms and stockholders when financial managers adjust dividends per share (DPS) using percentage change in the explanatory power of systematic and unsystematic risks. This perspective is derived from a practical consideration that dividends are part of stock returns that can be adjusted to take stock risks into account.
Design/methodology/approach
The paper utilizes the specifications of the two-stage (simultaneous) regression and partial adjustment model. The sample includes quarterly data for firms listed in the Dow Jones Industrial Average and NASDAQ for the period December 31, 1989-March 31, 2011.
Findings
The authors have reached general results based on hypotheses developed from related literature. The results show that: first, benefits of risk transfer can be realized. That is, firms as well as stockholders achieve benefits when the DPS are adjusted using percentage change in the explanatory power of systematic risk only; second, dividend growth rates are affected positively by changes in systematic risks; third, the highest stock returns in the market are reached with sharp decreases in dividend growth rates; fourth, in the highest returns quartile, firm size and time do not matter but the industry type does; and fifth, the associations between dividend growth rates, systematic, unsystematic risks, and stock returns are intrinsically nonlinear.
Originality/value
The study contributes to the literature in terms of first, providing practical insights on the financial strategies that help in the use of dividends to convey the right signals to stockholders, and second, empirically show the potential benefits of adjusting dividends growth rates according to systematic and unsystematic stock risks in a unified mathematical structure that adds to the current literature.
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Tarek Eldomiaty, Rasha Hammam and Rawan El Bakry
Financial inclusion is an approach for mobilizing saving and facilitating investments that help promote economic development and pave the way for sustainable development. This…
Abstract
Purpose
Financial inclusion is an approach for mobilizing saving and facilitating investments that help promote economic development and pave the way for sustainable development. This paper aims to examine the impact of world governance indicators (WGIs) on the improvement of financial inclusion across world economies.
Design/methodology/approach
This paper uses the global database of financial inclusion indicators (global findex) for the years 2011, 2014 and 2017. The WGIs are used as proxies for the effects of governmental institutional arrangements. Using panel data analysis, a fixed generalized linear model is estimated for four common financial indicators; namely, borrowed from a financial institution, saved at a financial institution, credit card and debit card ownership.
Findings
The empirical results reveal that control of corruption, government effectiveness, political stability and voice and accountability are the significant WGIs that influence financial inclusion significantly.
Originality/value
This paper contributes to the literature in two ways. First, this paper offers validating the results previously reported in related studies. Second, this paper offers robust estimates of the effects of the institutional WGIs on the promotion of financial inclusion.