Purpose The purpose of this paper is to examine whether any specific informal corporate governance mechanisms under consideration in this study, namely, political connection, business group affiliation and ownership concentration, are able to mitigate the diversification discount for emerging-market diversified firms using Malaysia as an examination lab. Design/methodology/approach The study uses a sample data of the entire non-financial public-listed firms in Malaysia over a 12-year period from 2001 to 2012. The generalized method of moments estimators are employed to account for the endogeneity of both corporate governance and diversification. Findings This study finds that business group affiliation particularly with large size can help to mitigate the diversification discount whereby political connection and ownership concentration magnify the discount. The finding is robust to alternative diversification measurements, to alternative methods and to endogeneity bias. Research limitations/implications This result implies that diversified firms with affiliation to large business groups are able to reduce the magnitude of the discounted value of diversification. Practical implications This study helps managers, shareholders and investors to evaluate their current/future investments related to firms with diversified business segments. This study also provides implications for policymakers and regulatory bodies to assess the adequacy and competency of the current corporate governance frameworks in place. Originality/value This study incorporates the country-specific institutional dimension in designing a research framework that is more relevant in examining the influential effect of governance-related characteristics on the diversification-firm value relationship in an emerging market.

PurposeThis manuscript reports evidence on how debt-taking decisions of top management in a multi-country setting do affect credit rating scores assigned by credit rating agencies (CRAs) as global monitors of creditworthiness of borrowers. This aspect has been long ignored by researchers in the literature. The purpose of this paper is twofold. A test model is specified first using theories to connect debt-taking behavior to credit rating scores. Once that model helps to identify a number of statistically significant factors, the next step helps to identify threshold values at which the variables driving debt-taking behavior would worsen the credit rating scores as turning points of the thresholds.Design/methodology/approachThe study identifies factors driving creditworthiness scores due to debt-taking behavior of countries and develops a correct research design to identify a model that explains (1) credit rating scores and the factors driving the scores and runs (2) panel-type regressions to test model fit. Having found factors driving debt-taking behavior by observed units, the next step identifies threshold values of factors at which point further debt-taking is likely to worsen credit rating risk of the observed units. This is a robustness test of the methodology used. The observed units are 20 countries with data series across 14 years.FindingsFirst, new findings suggest there are about six major factors associated with debt-taking behavior and credit rating changes. Second, the model developed in this study is able to account for substantial variability while the identified factors are statistically significant within the normal p-values for acceptance of hypotheses. Finally, the threshold values of factors identified are likely to be useful for managerial decisions to judge the levels at which further debt-taking would worsen the credit rating scores of the observed units.Research limitations/implicationsThe observed units are from 20 countries over 14 years of annual data available on credit rating scores (privately obtained from Standard and Poor [S&P]). The sample represents major economies but did not include emerging countries. In that regard, it will be worthwhile to explore the debt-taking behavior of emerging economies in a future study using the methodology verified in this study.Practical implicationsThe findings help add few useful guidelines for top management decisions. (1) There are actually factors that are associated with debt-taking behavior, so the authors now know these factors as guides for managerial actions. (2) The authors are free to state that the credit rating changes occur on objective changes in the factors found as significantly related to the debt-taking behavior. (3) The threshold values of key factors are known, so top management could use these threshold values of named factors to monitor if a debt-taking decision is going to push the credit rating to a worse score.Social implicationsThere are society-wide implications. Knowing that the world's debt level is high at US$2.2 for each gross domestic product (GDP) dollar across almost 200 countries, any knowledge on what factors help drive creditworthiness scores, thus credit riskiness, is revealed in this paper. Knowing those factors and also knowing the turning points of the factors – the threshold values – likely to worsen creditworthiness scores is a powerful tool for controlling excessive debt-taking by an observation unit included in this study (The dataset in this research can also be used to see inter-temporal movement on debt-taking in a future study).Originality/valueIn the authors' view, there are many studies on debt-taking behavior. But none has connected debt-taking on how (1) named factors are observable to management that affect credit rating changes and (2) if a factor affects creditworthiness, at which point of the factor value, the creditworthiness will flip to worsen the score. These aspects are seldom found in the literature. Hence, the paper is original with practical value at the global level.

This study examines the nexus between four electronic payment channels’ transaction values and bank performance of Malaysia, Singapore and Thailand for 2010–2020. We find that, the impact of credit and charge card’s transaction value on banks’ return on equity (ROE) is significantly positive across various econometric specifications, including firm fixed effect panel regression, two-way clustering method and generalised method of moment. Instead, the impacts of the other three payment channels (e-money, debit card and internet and mobile banking) are negative but not significance across all econometric specification. These suggest that only the credit and charge card is economically relevant to the banks’ shareholders. We further add that only credit and charge card significantly improves banks’ operating income, while all four payment channels are not significantly related to revenue growth of the banks. In the additional analysis, we find that e-money, debit card, internet and mobile banking are negatively influencing the relationship between banks’ operating income and ROE. In summary, our study implies that majority of the electronic payment services offered by banks are not economically sustainable in the long run.