The Impacts of FDI Inflows on Carbon Emissions: Economic Development and Regulatory Quality as Moderators

With the accelerated development of the global economy, environmental issues have gradually become prominent, which in turn hinders further high-quality economic development. As one of the important driving factors, cross-border flowing foreign direct investment (FDI) has played a vital role in promoting economic development, but has also caused environmental degradation in most host countries. Utilizing panel data for the G20 economies from 1996 to 2018, the purpose of this study is to investigate the impacts of FDI inflows on carbon emissions, and further explore the influence channels through the moderating effects of economic development and regulatory quality. To produce more robust and accurate results in this study, the approach of the feasible generalized least squares (FGLS) is utilized. Meanwhile, this study also specifies the heteroscedasticity and correlated errors due to the large differences and serial correlations among the G20 economies. The results indicate that FDI inflows are positively associated with carbon emissions, as well as both economic development and regulatory quality negatively contribute to the impacts of FDI inflows on carbon emissions. It implies that although FDI inflows tend to increase the emissions of carbon dioxide, they are more likely to mitigate carbon emissions in countries with higher levels of economic development and regulatory quality. Therefore, the findings are informative for policymakers to formulate effective policies to help mitigate carbon emissions and eliminate environmental degradation.

Mediating role of trust in the relationship between public governance quality and tax compliance

This paper examined the mediating role of trust in government on the influence of public governance quality indicators (accountability, political stability, government effectiveness, regulatory quality, rule of law, and control of corruption) on tax compliance in Africa. Cross-country data obtained from 38 African countries for 2015 was used and analyzed using Ordinary Least Squares (OLS) regression analysis. The study found that accountability, political stability, control of corruption, and trust have a significant influence on tax compliance among the sampled African countries, but government effectiveness, regulatory quality, and the rule of law and have insignificant influence on tax compliance. The result of the mediating effects revealed that trust mediates the influence of accountability and political stability on tax compliance in Africa. However, it failed to mediate the influence of government effectiveness, regulatory quality, rule of law, and control of corruption on tax compliance among sample African countries. The study offers theoretical insights on the role of trust as a mediator on social exchange relationships from the context of public governance quality on tax compliance. It also implies to the policymakers that building trust is an important mechanism through which the impact of public governance on tax compliance would be more pronounced. The study further calls for replication of its findings in other continents such as the Americas, Asia, and Europe.

Assessing the impact of institutions on economic growth in the BRICS countries

This study examines the impact of institutional quality on economic performance in the BRICS countries for the period from 2002 to 2019. The panel data study was estimated using pooled OLS and a fixed effect model. The study employed six institutional quality indicators (Worldwide Governance Indicators) which included voice and accountability, political stability and absence of violence/terrorism, government effectiveness, regulatory quality, rule of law, and control of corruption. The study also controlled for conventional sources of growth, i.e. human capital, physical capital, government expenditure, and inflation. All of these factors were positive and significant in our study. The findings also reveal that government effectiveness, regulatory quality and control of corruption had a positive and significant impact on economic growth in the BRICS countries, whereas other institutional variables turned out to be insignificant.

Stock market development: a reflection of governance regulatory framework in Nigeria

PurposeThe article examines the possible long-run and short-run impact of regulatory quality on stock market performance in Nigeria for 1996–2019 period.Design/methodology/approachThe study adopts autoregressive distributed lag (ARDL) bounds test and cointegrating regression techniques.FindingsFindings reveal that regulatory quality positively and significantly influences the performance of stock market, which strengthens the view that market-enhancing governance can engender an improvement in stock market performance. The study further demonstrates that quality of the regulatory environment is a critical component of market operations, since the improvement of the operation of stock market performance depends on appropriate policy measures, which could be the outcome of improved governance.Practical implicationsIt is suggested that, while improving the institutional environment is a challenge to regulators, there is need for strong and effective regulatory mechanism to enhance the development of stock market in the country.Originality/valueBased on the two competing hypotheses and limited attention, previous studies accorded the role of regulatory quality in the performance of stock market in the context of Nigeria. This study assessed the gap in the literature by taking the task of validating the impact of regulatory quality on stock market development.

Determinants of Bank M&As in Central and Eastern Europe

This paper analyzes the determinants of bank mergers and acquisitions (M&As) from a bank-level perspective. The main objective of the study is to identify those mutual characteristics of all banking institutions from Central and Eastern Europe that are prone to be acquired versus acquirer, or national versus cross-border. Using a database of more than 200 M&As transactions between 2000 and 2018 within Central and Eastern Europe, we document the main characteristics that influence the decision of merging, including the size of the bank, profitability, lending activities, liquidity, bank concentration, banking system stability, government effectiveness, regulatory quality, and the level of inflation. Higher effective average tax rate, which is associated with reduced tax avoidance, influences banks in a positive manner to be involved in the M&A process, findings that hold for targeted banks and domestic transactions. Furthermore, the analysis highlights the changes the financial crisis has projected on investors’ behavior.

Institutional Quality and Industrial Growth: A Causality Analysis

The research study investigates the causal links between institutional quality and industrial output growth in Nigeria for the periods 1996:Q1-2018:Q4. Institutional quality was delineated into three i.e. economic institution (government effectiveness, regulatory quality, rule of law, and control of corruption), financial institution (contract intensive money, lending rate, and financial deepening), and political institution (voice and accountability, and political stability and absence of violence). The study computed the Granger causality test using both the VECM and the Toda and Yamamoto [1] and Dolado and Lutkepohl [2] (TYDL) augmented VAR procedure. The causality result in the short run showed that none of the institutional quality variables have a causal effect on industrial output growth but the feedback was reported. In the long run, a bi-causal relationship was reported from government effectiveness, control of corruption, financial deepening, and voice and accountability to industrial growth, whereas, a one-way directional relation was found running from industrial growth to regulatory quality and political stability & absence of violence. Thus, there is a need for the government to intensify efforts towards improving the extent people can challenge her power and authority because these play significant roles in the development level of Nigerian industries.

Nexus between Governance Indicators & Sustainable Stock Market Development in Pakistan: Evidences from Symmetric and Asymmetric Analysis

The hidden non-linear association between governance indicators & stock market development (SMD) of Pakistan has been scrutinized in this study by using two comparative co-integrating techniques known as ARDL (Auto-regressive Distributed Lag) & NARDL (Non-linear ARDL). Empirical evidence suggests that misrepresented inferences arise by ignoring hidden non-linearity nexus between the variables. The ARDL results indicate that political stability & absence of violence/terrorism does not impact directly the SMD of Pakistan. Voice & accountability positively and significantly impact SMD, but rule of law does not impact SMD of Pakistan directly. The regulatory quality is highly significant and negatively impacts SMD. Contrarily, the NARDL frame indicates significant differences amid coefficients of components of governance index, denoting asymmetric links between variables. The Positive & Negative sums of partial decompositions of Rule of Law, Regulatory Quality, Political Stability & Absence of Violence/Terrorism (PS&AVT), and Voice & Accountability (V&A) significantly impact SMD. The impact of partial Negative multipliers of Regulatory Quality, and PS&AVT has a highly significant and negative impact, while V&A has a significant and positive impact on SMD. The impact of Positive partial multipliers of all variables is positive and significant except V&A. The comparative diagnostics extricate precariousness in policy moratorium. This study will add credence to the predictive power of governance indicators towards SMD of Pakistan by incorporating Positive and Negative decomposed multipliers.

Hybrid ownership structures and cross-border acquisition completion of emerging market firms: An institutional and signalling theory perspective

<p><b>Over the last decade, cross-border acquisitions (CBAs) have emerged as one of the most significant engines through which emerging market firms (EMFs) carry out foreign investments. Yet, emerging market acquirers (EMAs) terminate a significant percentage of initiated CBAs before completion. Compared to the 18 percent termination rate of CBAs involving acquirers from developed economies (DEs), CBAs by EMAs have a 33 percent termination rate. Scholars attribute the higher CBA termination by EMAs to the dual hurdle of 'liability of origin' and 'liability of foreignness' arising from direct government involvement and institutional voids in emerging economies. Although extant research provides in-depth insights into why EMAs have higher CBA termination rates than developed economies acquirers, they fall short in exploring how EMAs can navigate these challenges. Hence, in this study, I aim to investigate ownership based solutions to the institutional challenges affecting the CBA completion of EMAs.</b></p> <p>A striking phenomenon in the foreign investment of EMFs is that a firm's ownership matters. Pioneering ownership-based studies reveal that state-owned enterprises (SOEs) and private-owned enterprises (POEs) experience distinct interactions with home and host countries leading to diverse foreign investment challenges and strategies. Government regulatory discretion combined with capital market imperfection in emerging markets means that SOEs are privileged in accessing government support. In contrast, POEs lack direct government support and seek to establish and leverage political ties to survive. This need for sustained firm government relationships and the gradual pro-market reforms in many emerging economies catalyse hybrid ownership structures among EMFs where state and private owners coexist in one organization. However, this emergence of hybrid ownership structures and their implications for EMFs' foreign investment activities are under-investigated in the international business domain.</p> <p>Building on the new institutional theory and the signalling theory, I argue that hybrid ownership structures can act as signals through which external stakeholders evaluate and confer legitimacy on EMAs during the CBA process. My conceptualization emphasizes the mixture of unique resources brought into hybrid organizations by both SOEs and POEs. Accordingly, I assert that as hybrid organizations incorporate elements prescribed by both SOEs and POEs, they are likely to project at least partial appropriateness to a broader set of institutional referents. As a result, hybrid ownership structures confer legitimacy-enhancing benefits, resource-enhancing benefits, and operational autonomy benefits that position EMAs to simultaneously navigate the home and host institutional challenges in CBAs ultimately increasing the completion likelihood. In addition to proposing a direct effect of hybrid ownership on CBA completion, I develop novel varieties of hybrid ownership structures that categorize variations in the internal configurations of hybrid organizations as typology, degree, and nature of hybridization. I carry out further investigation on how the hybrid ownership effect might vary with these varieties of hybrid ownership structures. Subsequently, I identify top executives' political connection, target industry political sensitivity, and host country regulatory quality as contingences to the effect of hybrid ownership on CBA completion of EMAs.</p> <p>Analysing a dataset of 838 CBAs by Chinese firms between the years 2008 to 2017, the results from this study demonstrate that acquirers with hybrid ownership structures are more likely to complete CBAs than nonhybrid acquirers. Moreover, while the hybridization effect varied with the degree of hybridization, the results did not provide conclusive evidence for the nature of hybridization. The result also reveals that top executives' political connection and the host country regulatory quality present differing interactions with the hybrid ownership effect relative to the hybrid organization's typology. With these findings, I contribute to the literature on EMFs' CBA completion by demonstrating that hybrid ownership structures benefit from their different owners' resources to overcome challenges in CBAs. I also contribute to the conceptualization and implication of hybrid ownership for EMFs strategic outcomes. I find that the benefits of hybrid ownership differed with the controlling shareholder's identity and the degree of hybridization in a hybrid organization. Furthermore, by examining the boundary conditions of top executives' political connection, target industry political sensitivity, and host regulatory quality, I provide insights into how intra-organizational attributes and external factors shape the significance of ownershipstructures in EMFs foreign investment.</p>

Hybrid ownership structures and cross-border acquisition completion of emerging market firms: An institutional and signalling theory perspective

<p><b>Over the last decade, cross-border acquisitions (CBAs) have emerged as one of the most significant engines through which emerging market firms (EMFs) carry out foreign investments. Yet, emerging market acquirers (EMAs) terminate a significant percentage of initiated CBAs before completion. Compared to the 18 percent termination rate of CBAs involving acquirers from developed economies (DEs), CBAs by EMAs have a 33 percent termination rate. Scholars attribute the higher CBA termination by EMAs to the dual hurdle of 'liability of origin' and 'liability of foreignness' arising from direct government involvement and institutional voids in emerging economies. Although extant research provides in-depth insights into why EMAs have higher CBA termination rates than developed economies acquirers, they fall short in exploring how EMAs can navigate these challenges. Hence, in this study, I aim to investigate ownership based solutions to the institutional challenges affecting the CBA completion of EMAs.</b></p> <p>A striking phenomenon in the foreign investment of EMFs is that a firm's ownership matters. Pioneering ownership-based studies reveal that state-owned enterprises (SOEs) and private-owned enterprises (POEs) experience distinct interactions with home and host countries leading to diverse foreign investment challenges and strategies. Government regulatory discretion combined with capital market imperfection in emerging markets means that SOEs are privileged in accessing government support. In contrast, POEs lack direct government support and seek to establish and leverage political ties to survive. This need for sustained firm government relationships and the gradual pro-market reforms in many emerging economies catalyse hybrid ownership structures among EMFs where state and private owners coexist in one organization. However, this emergence of hybrid ownership structures and their implications for EMFs' foreign investment activities are under-investigated in the international business domain.</p> <p>Building on the new institutional theory and the signalling theory, I argue that hybrid ownership structures can act as signals through which external stakeholders evaluate and confer legitimacy on EMAs during the CBA process. My conceptualization emphasizes the mixture of unique resources brought into hybrid organizations by both SOEs and POEs. Accordingly, I assert that as hybrid organizations incorporate elements prescribed by both SOEs and POEs, they are likely to project at least partial appropriateness to a broader set of institutional referents. As a result, hybrid ownership structures confer legitimacy-enhancing benefits, resource-enhancing benefits, and operational autonomy benefits that position EMAs to simultaneously navigate the home and host institutional challenges in CBAs ultimately increasing the completion likelihood. In addition to proposing a direct effect of hybrid ownership on CBA completion, I develop novel varieties of hybrid ownership structures that categorize variations in the internal configurations of hybrid organizations as typology, degree, and nature of hybridization. I carry out further investigation on how the hybrid ownership effect might vary with these varieties of hybrid ownership structures. Subsequently, I identify top executives' political connection, target industry political sensitivity, and host country regulatory quality as contingences to the effect of hybrid ownership on CBA completion of EMAs.</p> <p>Analysing a dataset of 838 CBAs by Chinese firms between the years 2008 to 2017, the results from this study demonstrate that acquirers with hybrid ownership structures are more likely to complete CBAs than nonhybrid acquirers. Moreover, while the hybridization effect varied with the degree of hybridization, the results did not provide conclusive evidence for the nature of hybridization. The result also reveals that top executives' political connection and the host country regulatory quality present differing interactions with the hybrid ownership effect relative to the hybrid organization's typology. With these findings, I contribute to the literature on EMFs' CBA completion by demonstrating that hybrid ownership structures benefit from their different owners' resources to overcome challenges in CBAs. I also contribute to the conceptualization and implication of hybrid ownership for EMFs strategic outcomes. I find that the benefits of hybrid ownership differed with the controlling shareholder's identity and the degree of hybridization in a hybrid organization. Furthermore, by examining the boundary conditions of top executives' political connection, target industry political sensitivity, and host regulatory quality, I provide insights into how intra-organizational attributes and external factors shape the significance of ownershipstructures in EMFs foreign investment.</p>