International Research Journal of Finance and Economics
 Issue 178
 March, 2020
The Role of Board of Directors in Constraining Earnings Management in Nonfinancial Listed Firms: Evidence from Jordan
Rana Dayak and Yahia Al-Mughrabi

This paper investigates the determinants of earnings management in Jordan. It addresses mainly the question of whether or not board of director’s size and role duality affect discretionary accruals, using the modified Jones model (1995) for estimating discretionary accruals. It applies an Ordinary Least Squares regression model on Amman Stock Exchange annual data for a sample of 55 nonfinancial listed firms during the period of 2011-2017. The empirical results provided evidence that a Chief Executive Officer who also serves as the Chairman of the board of directors has no influence on earnings management, it also fails to connect board of director’s size with earnings management. We find a conclusive evidence that larger firms are less involved in earnings management practices compared to smaller firms. In addition, we find that, on average, industrial firms have less discretionary accruals than services firms. Moreover, the analysis in this paper indicates that firm’s growth and leverage are positively and significantly associated with discretionary accruals.< /br>
Keywords: Earnings Management, Discretionary Accruals, Modified Jones Model, Corporate Governance, Role Duality
A Contribution on Relationship Banking Economic, Anthropological and Mathematical Reasoning, Empirical Evidence from Italy
Marco Desogus and Elisa Casu

This research concerns the tightness of the economy and demonstrates the need for procedural reforms between banks and companies for more relational and infra-cooperative structures. Among these corrections, we suggest that banks and companies be considered as unicum bank-enterprises and monetary-financial and productive activity as two faces of the same coin, rather than distinct functions of separate entities.
With the rapid and increasingly “liquid” evolution—to put it in the Bauman (2000) context—of financial intermediation in large groups and fintech, it is with a certain audacity that we propose more “solid” action.
Following an anthropological and economic-behavioral survey on the inherent human qualities of cooperation and relationality, we situate these two qualities in economic actions and particularly in the relationship between financing institutions and producers.
This heterodox notion is supported by an analysis of Italian performance data on financing trends, bank non-performing loans and the number of companies in the production sector, which reflects the progressive deterioration of the economy. From there, we apply a mathematical model to finalize our hypothetical reform.
We finally recommend a strategy for the gradual implementation of our conclusions, based on an examination of existing cooperative banking intermediation practices.
Keywords: Cooperative Credit, SME Lending, Relationship Banking, Economic Systems, Financial Stability, Credit Market Structure.
JEL Classification: C73; E71; G41; O16; P43
Do Macroeconomic Policies Mitigate Citizens’ Misery in a Developing Economy? Empirical Evidence from Nigeria
Okey O. Ovat

Arising from the ranking of Nigeria as the 6th most miserable country in the World, by the Hanke’s 2018 annual misery index, the paper investigated the economic well-being of the average Nigerian and by extension the overall health of the Nigerian economy via the misery index, in the face of economic policies formulated and implemented in the country. The essence of this is to ascertain the veracity or otherwise of Hanke’s ranking and draw implications for economic development in Nigeria. The paper adopted both descriptive and econometric methods in its analysis. The econometric method employed the Auto-regressive Distributed Lag (ARDL) model. The findings showed that real GDP (proxy for economic growth) and fiscal policy, failed to mitigate citizens’ misery in Nigeria; thus overweighing the significant impact of monetary and trade policies in alleviating the misery of the Nigerian citizens. The descriptive analysis which compares the standard of living in Nigeria with that of Malaysia and Singapore also indicated that while the standard of living in Malaysia and Singapore witnessed remarkable improvement, the one for Nigeria deteriorated especially from 2015 to 2018, thus confirming Hanke’s ranking. The paper therefore concluded by proffering recommendations geared towards enhancing citizens’ welfare and happiness in Nigeria.
Keywords:Misery index, Well-being, Macroeconomic policies, Economic Development, and Nigeria
JEL Classification: E24, E31, E51, E52, E62, F13 and I31.
The Interrelationship between Capital Structure and Corporate Payout Policy
Ahmed Sakr and Amina Bedeir

This paper is concerned with studying the association between capital structure and corporate payout policy; capital structure or leverage representing the independent variable once and once as the dependent variable. Same as for corporate payout; representing the dependent variable once and once as the independent variable. The investigation has been performed using a data of 62 listed non-financial Egyptian firms over a period of fourteen years from 2003-2016. The results show that the interrelationship between capital structure and the payouts of the firm is statistically significant with a positive sign from both directions.
The Emigration Plans of the Legal Foreign Born
Claudia Smith Kelly and Leslie Muller

This research uses data from The New Immigrant Survey (NIS) to examine the determinants of an immigrant’s intent to emigrate from the U.S. Before the release of the NIS, there was no large comprehensive data set that simultaneously had a representative sample of immigrants and information from the respondents on intent to emigrate, class of immigrant admission, economic variables, social capital and family relationships, health and demographic variables. From a policy perspective, the rate of immigrants’ intent to emigrate may affect economic and social integration into the host country’s society. The results from our logistic regression indicate that the employed, those that own real estate abroad, and the elderly are more likely to have plans of emigration. In contrast, younger immigrants and immigrants in large households are more likely to have intentions of residing in the U.S. for the rest of their lives. We also find that immigrants who acquire a green card through employment are no more or less likely to plan for emigration than those who acquire their green card through a family member. However, immigrants obtaining their green cards through the diversity program, refugees, asylees, parolees and other programs are less likely to plan for emigration.
Keywords: Immigration, Emigration Plans, Class of Immigrant Admission - Pathways to Legal Permanent Residence
JEL Classification: J11, J10, J19
The Double-Edged Sword of the Effects of CEO Power on Value Creation of Corporate International Investments
Chi-Feng Wang

Although previous studies have attribute CEO’s demographic and psychological characteristics to corporate decision and performance, empirical evidence about the effect of CEO power is relatively limited. Grounded in agency theory, diversification-of-opinion view, stewardship theory and information-processing perspective, this study examines how CEO power affects the value of corporate foreign direct investments. We argue that CEO power have both positive and negative effects on FDI performance. This study uses the sample of Taiwan firms announcing cross-border acquisitions or greenfields to test the hypothesis. The result shows that the presence of powerful CEOs leads to poor FDI performance. The present study helps a better understanding of the factors influencing corporate FDI outcomes.
Keywords: CEO power, FDI performance, agency theory, stewardship theory
JEL Classification: M16
Electricity Consumption, Inward FDI, and Economic Development in Pakistan: VECM and Causality Analysis
Muhammad Uzair Ali, Zhimin Gong, Xiong wu and Muhammad Rizwanullah

Current study discussed the Inward FDI, Electricity consumption, and Economic development situation in the Pakistan and observed the causal relationships between under study variables for the period 1975-2014. ADF and NP Perron tests, Johnsen co-integration test, and VECM econometric techniques were used for experimental analysis. The trend of Inward FDI was fluctuating over the study period and a regular increase noted in Electricity consumption. New evidence discovered that Electricity consumption and FDI had a positive impact on GDP growth. Bidirectional associations between economic development & Inward FDI and Electricity consumption & Inward FDI were discovered, and confirmed the feedback hypothesis, “FDI-led growth hypothesis”, and "Market size hypothesis". Furthermore, GDP granger causes Electricity consumption in the short run and confirmed the conservation Hypothesis. FDI is essential for uplifting the economy of Pakistan and serve as an engine for the economic development. Pakistan is currently struggling to fulfill the demand for electricity to various sectors & industries and consequently negatively affecting Pakistan economy. Policy makers should focus on removing barrier that can hinder the inflow of FDI and new sources of electric power should be used such as hydro power energy production, solar energy, energy from biomass, and energy from the wind.
Keywords: Economic development; Inward FDI, Electricity consumption; VECM; Granger causality; Pakistan
JEL Classifications:
Modelling Inflation Dynamics in Mexico
Rim Ammar Lamouchi

This paper examines the dynamics of inflation in Mexico from January 1969 to March 2018. We discriminate between long memory and structural breaks in order to identify the process conducting prices in Mexico. The results show evidence for both the long memory and structural breakpoints that correspond to significant events in the Mexican economy. We find evidence in favor of long memory process.
Keywords: Inflation, Long memory, Structural breaks
JEL Classification: C22, C32, E31
Service Quality Mediate the Relationship between Education Training Cognition and Customer Satisfaction
Hsiu-Chuan Lin, Yuan-Duen Lee, Shun-Yu Chen, Tsai-Neng Ho and Chin-Lai Su

With the popularity of information and communication, drinking coffee has become a trend in Taiwan. With the booming coffee industry booming, many coffee chain operators are struggling to try to capture consumer preferences. Therefore, this study is to explore the relationship among education training cognition, service quality and customers satisfaction. A total of 310 valid questionnaires were collected from coffee chain restaurants in Tainan, Taiwan. The results indicate that employees’ education training cognition has a significant positive influence on customer satisfaction. In addition, service quality plays a mediation role between the relationship of education training cognition and customer satisfaction.
Keywords: Education Training Cognition, Service Quality, Customer Satisfaction
The Impact of using iT on the Quality of Auditing in Lebanon
Boutheina Hashem & Hiyam Sujud

This study aimed to identify the impact of the use of information technology (IT) on the quality of auditing in Lebanon. To achieve this, a questionnaire was distributed to a random sample of 130 accounting experts and auditors working in audit offices and audit companies in Lebanon. 100 questionnaires were analyzed using Statistical Package for Social Sciences (SPSS). One of the main findings of the study is the awareness of the auditors in Lebanon concerning the positive impact of the use of IT on the quality of the audit. This is because of its accuracy in the output and classification of data, and it improves the performance of audit work and documentation. In addition, it reduces working time and reduces the cost of completing the audit as well as improving the auditor's analytical procedures. The main obstacles facing the use of IT are the lack of sufficient experience of the auditor to use information technology in audits.
Keywords: audit process, auditors, Information Technology, quality
JEL Classification:M 42, M 43