Narrow Results

This study describes the impact of leverage on earnings management and determines varying relationships with the moderating effect of firm size in linear and nonlinear setting. Results from selected firms of members’ countries of Asia Pacific Trade Agreement (APTA) unequivocally revealed that in all countries the relationship between the leverage and earnings management is sigmoid in nature. Firms can limit the managers reporting of income-increasing accruals through debt creation up to a certain threshold after which further debt creation challenges the debt covenants. The firm size substantially moderates the relationship of leverage and earnings management and systematically converses the relationship through moderation. The relationship between accruals and firm size is also sigmoid in nature. The specific behavior is seen in Indian firms in which relationship between leverage and accruals is like Richard’s curve in nature due to higher agency cost issue. In Pakistan, firm size has been found as a major factor that guides the accrual due to higher political cost. Additionally, in the setting of comparative static analysis, at the first place, we examine cash flows-risk determining liquidity-risk position of the firms in Pakistan and Bangladesh. At the second place, in the case of China, India and Pakistan, this study reveals an increasing relationship between the effective tax rate and the probability of reporting negative accruals which may create attitude of tax evasion among the firms in these countries. In the third place, in the case of China, India and Bangladesh, sales growth depicts an increasing relationship with the likelihood of reporting positive accruals. However, decreasing relationship is observed for Pakistan and Sri Lanka between the sales growth and the possibility of positive accruals. This study has major implications for funding institutions, debt manager and regulatory bodies of Asian Economies.

The Paris Agreement signals increased climate awareness and potential changes in the business environment as an economy decarbonizes. Ratification of the Paris Agreement could heighten climate-related transition risks, especially for companies in high-emitting industries. This research analyzes the impact of Paris Agreement ratification on the debt financing decisions of publicly listed companies in Southeast Asian economies. Our empirical evidence shows that, after announcement of Paris Agreement ratification, firms in high-emitting industries have leverage and financial leverage that are an average of 1.8% and 4.2% lower, respectively, than firms in low-emitting industries. Firms in the region also witnessed higher risks 2 years after ratification, and these risks do not differ significantly between high- and low-emitting industries. This finding implies that firms become riskier under heightened transition risks, and this influences their financial decisions. Governments might thus consider introducing policies that facilitate their response to a low-carbon transition.

This paper begins by showing that even after conditioning for factors that might justifiably lead to a country having relatively high leverage, China remains a debt outlier. In this sense, China can be regarded as over-leveraged and its debt levels may present potential risks to growth and financial stability. The corporate sector is central to China’s debt story, accounting for two-thirds of the total. Moreover, the corporate sector has been mostly responsible for China’s leverage cycles, including the leveraging up since 2008 and an earlier deleveraging phase starting in 2003. Two major but under-appreciated drivers of Chinese corporate leverage cycles are then identified. The most important is the share of internally funded corporate capital expenditure, which is a combined consequence of evolving corporate earnings and capital expenditure. The second is the rising importance of real estate and construction firms as holders of corporate debt. China’s corporate leverage landscape is also shown to be more complex than a story of zombie state-owned enterprises in industrial segments with excess capacity being ever-greened with loans from state banks. A balanced mix of policy responses will be needed to manage a warranted and orderly deleveraging cycle in the years ahead.

We examine the determinants of bank capital structure using a large sample of banks in the world. We find that banks determine their capital structure in much the same way as non-financial firms, except for growth opportunities. We also provide evidence that country-level factors, such as the legal system, bank-specific factors and economic conditions influence banks’ capital decisions through their impacts on bankruptcy costs, agency costs, information asymmetry and liquidity creation. The results show that, besides the direct effects, there are indirect impacts of country-level factors on the decision of bank capital. Our results have potential policy implications for the on-going regulatory reform.

TELCO is the leading manufacturer of commercial vehicles (trucks) in India. In 1998, TELCO succeeded in manufacturing a small car of international standards without financial or technological collaboration with any leading foreign car manufacturer. This case deals with TELCO's success in its small car project and the challenges that lie ahead. It highlights the role played by creative resource leverage in the success of firms from developing countries in a global environment.

Purpose: Classify the characteristics of taxpayers in paying tax compliance based on financial performance, leverage, and tax reporting and analyze the relationship between financial performance and leverage on tax reporting and tax compliance companies.

Design/method: This research was conducted at the Office of the Foreign Investment Tax Service in the Six Regional Offices of the DJP Jakarta, especially the Directorate General of Taxes (KPP PMA ENAM). The population in this study were corporate taxpayers registered at KPP PMA ENAM 2015–2018, namely 750 taxpayers. Sampling using the purposive method obtained as many as 660 companies. Cluster analysis and cross-tabulation were used as analysis methods in this study.

Findings: In particular, corporate tax reporting depends on financial performance, but only on high-level corporate clusters that depend on leverage as well. While in the low company cluster (Cluster 1) tax compliance is influenced by these three variables, in the medium cluster (Cluster 2) tax compliance does not depend on these three variables, while in the high cluster (Cluster 3) tax compliance is only influenced by leverage.

Originality: The cluster analysis method and the cross-tabulation method are used to analyze the effect of the financial performance and leverage variables on the tax reporting and tax compliance variables.

This study aims to identify the role of contextual variables, especially the interest rate, in affecting the relationship between a firm’s capital structure and firm value. This study investigates the capital structure of Pakistani-listed firms in light of rising interest rates, declining “Domestic credit to the private sector” and emerging Islamic banking in the country. The study uses GMM (Two-Step) to examine the linear, and dynamic Panel threshold model to examine the quadratic relationship between leverage firm value and how other contextual variables affect this relationship. The study found that there is a negative relationship between leverage and firm value in the presence of the majority of contextual variables. Except for tax, depreciation, and free cash flow, leverage shows a negative relationship with firm value in presence of all other contextual variables. Further results show that there is a quadratic relationship present between leverage and firm value. Also, the interest rate and inflation has a negative effect on firm value in long term, while in short term this relationship is positive. The study supports the pecking order & Trade-off theory but does not support the agency theory. The study is using new methodologies, just as the panel threshold model which is never used before for Pakistani industries. The panel threshold model is using some variables for the first time in research. Previously only size and debt were used in panel threshold models, this time we used debt, firm value, profitability, tax, and tangibility, which will be a significant contribution to the literature.

Beijing’s recent peace initiatives in the Middle East have drawn growing scrutiny and generated heated debate over its role in the Global South. Learning from the West’s hitherto mixed record in the regional peace process, China attempts to improve the effectiveness of regional peace diplomacy by focusing on three important ingredients, namely, neutrality, leverage, and timing. While Beijing’s neutrality stems from the long-held principle of inviolability of sovereignty and territorial integrity, its leverage draws from extensive and robust economic ties with regional stakeholders. Moreover, Beijing offers its good offices at a time when both the Iranians and Saudis have become conflict-weary, believing that continued tensions go against their own interests. Recent breakthroughs in peace diplomacy may raise local actors’ expectations to such levels that Beijing may find difficult to meet because China still defines its role as one of a facilitator, not a security guarantor.