PurposeThis paper tests for a positive, a negative and a nonlinear relationship between the share of ownership controlled by firm managers and the management decision to invest in research and development (R&D). Likewise, it examines whether or not institutional investors induce corporate managers with ownership stakes to spend on R&D.Design/methodology/approachIt examines a sample of the United Kingdom (UK) Financial Times Stock Exchange (FTSE) all-shares firms over a longitudinal period from 2009 to 2018. The R&D is measured by the natural logarithm of a firm's R&D spending and a firm's R&D expenditure scaled by its total assets at the end of the year. The results are estimated using the year/industry fixed effects as well as the firm fixed effects.FindingsThe results show a positive effect on R&D spending at a lower level of managerial ownership, and a negative impact at a higher managerial ownership level. The findings jointly suggest an inverse U-shaped nonlinear relationship between ownership by firm managers and management decisions on R&D spending. The results also demonstrate that the effect of institutional investors' ownership on R&D spending decisions is observable only at a lower level of managerial ownership and disappears at a higher level.Practical implicationsThe results shed the light on the role of managerial ownership in promoting firm innovation. They suggest an optimal level of equity ownership by corporate managers that maximizes R&D spending, implying that firms can effectively manage their R&D spending by restructuring their managerial ownership to maintain an appropriate level of managerial ownership to align managerial interests with shareholder interests by either increasing it to the optimal level or decreasing it when it becomes above this level. The findings also support the limited degree of monitoring and the long-term perspective offered by institutional investors in the UKOriginality/valueThe study provides new evidence on the non-monotonic effect of the share of ownership controlled by firm managers on R&D spending decisions. It also expands the growing body of literature and contributes to the debate on the effectiveness of institutional investors in the UK.

PurposeKuwait has taken significant steps to reform its corporate governance (CG) by introducing the New Company Law (NCL) in 2013. This study investigates how this reform of CG mechanisms affects the disclosure of future-oriented information. Likewise, it explores how CG mechanisms affect the informativeness of this disclosure.Design/methodology/approachThe sample comprises the nonfinancial firms listed on the Boursa Kuwait from 2014 to 2018. The study uses an automated textual analysis to measure the level of future-oriented disclosure in the annual reports of these firms. The informativeness of disclosure is proxied by firm value at three months of the date of the annual report.FindingsThe study finds that Kuwaiti firms with larger board sizes and substantial ownership by institutional investors are less likely to disseminate future-oriented information. Conversely, firms with more independent directors and larger audit committees are more inclined to provide future-oriented disclosure. Furthermore, the disclosure of future-oriented information carries contents that enhance investors' valuations of Kuwaiti firms, especially in firms with fewer institutional ownership and more prominent audit committees.Research limitations/implicationsIt focuses on management decisions to disclose information in the annual reports. Examining other channels of disseminating information, such as social media disclosure, provides avenues for future research.Practical implicationsPolicy setters in Kuwait should consider the importance of some CG mechanisms to improve the transparency of Kuwaiti firms, as suggested by the NCL. Likewise, investors should rely on such specific CG mechanisms to build their prospects about the firm's value.Originality/valueApart from developed countries, the current study is the first evidence on how CG mechanisms could affect the informativeness of future-oriented disclosure in a developing economy. It is also the first to investigate the new CG mechanism introduced by Kuwait NCL in 2013.

The major objective of this study is to explore the moderating role of credit risk and liquidity risk on business diversification and banks' performance relationship, i.e., investigating the interaction relationship between banks' risks and business diversification on banks' performance. In light of this, the study also aims to examine the impact of credit risk and liquidity risk on banks' performance, especially in emerging countries like Egypt. Moreover, it seeks to test the effect of business diversification, through revenue diversification, asset diversification, and funding diversification, on banks' performance. This study depends on a sample consisting of 10 banks over the period from 2012 to 2021. The findings indicate that credit risk has a negative impact on banks' performance, whereas liquidity risk has a positive impact on banks' performance. Also, revenue diversification and asset diversification have a positive effect on credit risk, and only asset diversification has a positive effect on liquidity risk. Furthermore, all activities of diversification have an insignificant impact on banks' performance. The most important result is that credit risk and liquidity risk moderate business diversification and banks' performance relationship as credit risk changes the effect from an insignificant negative impact to a significant positive effect. Also, credit risk adjusts the impact of asset diversification from an insignificant positive impact on banks' performance to a significant positive impact. Furthermore, liquidity risk is able to convert the impact of revenue diversification on banks' performance from an insignificant negative impact to a significant negative impact.

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