Methods for multicountry studies of corporate governance: Evidence from the BRIKT countries

Black, Bernard S.; Carvalho, Antônio Gledson de; Khanna, Vikramaditya S.; Kim, Woochan; Yurtoğlu, B. Burçin

doi:10.1016/j.jeconom.2014.05.013

Cited by 68 publications

(30 citation statements)

References 28 publications

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“…Instrumental variables might also be used to control for endogeneity. Nevertheless, in a multi-country setting like this study, it is difficult to find out a free of endogeneity or purely exogenous shock that affects all the countries in our sample to the same extent as stated by Black et al (2014). Likewise, Larcker and Rusticus (2010) indicate that when the instrument is only weakly correlated with the regressor, the instrumental variable methods can produce highly biased estimates when the instrumental variable is even slightly endogenous.…”

Section: Resultsmentioning

confidence: 73%

Real earnings management and corporate governance: a study of Latin America

Mellado

Saona

2019

Economic Research-Ekonomska Istraživanja

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This article analyses the impact of ownership structure features and institutional settings on real activities manipulation. The analysis is based on a sample of listed companies in the underexplored Latin American market for the period of 2004-2016. Paneldata-based G.M.M. System Estimation is used in the empirical analysis. The results confirm that the monitoring role of the majority owner is crucial in mitigating managerial opportunistic behaviour. Here, opportunistic behaviour refers to engaging in real activities manipulation that reduces the informative content of financial statements. However, analysis of insider ownership revealed that managers had a negative impact on transparency. We observed that as insider ownership increases, managers engage more actively in real earnings management. We also find that the institutional ownership and the quality of the regulatory system proved to be effective mechanisms in reducing real activities manipulation. ARTICLE HISTORY

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Section: Resultsmentioning

confidence: 73%

Real earnings management and corporate governance: a study of Latin America

Mellado

Saona

2019

Economic Research-Ekonomska Istraživanja

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“…Leuz, Nanda, & Wysocki, ), exploring legal origins and other factors to understand the differences that exist. However, Black, De Carvalho, Khanna, Kim, and Yurtoglu () identify three limitations in multi‐country studies: construct validity, lack of time series data and endogeneity. We resolve construct validity by designing our study to examine one country from two contrasting markets, developed and emerging.…”

Section: Choice Of a Two‐country Settingmentioning

confidence: 99%

How Does Regulation Affect the Relation Between Family Control and Reported Cash Flows? Comparative Evidence from India and the United States

Nagar¹,

Sen²

2016

Corporate Governance

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Manuscript Type Empirical. Research Question/Issue We conduct a two‐country study to understand (i) how family and non‐family firms engage in classification shifting to manage reported operating cash flows in each country; (ii) how this behavior varies between the two countries; and (iii) how corporate governance regulation introduced independently in each country moderates the observed behavior. Research Findings/Insights We find that family ownership has different effects on quality of cash flow reporting in the two countries. Furthermore, country‐level regulation moderates these effects differently. In particular, (i) firms in both countries engage in manipulating operating cash flows, but the evidence is stronger in the United States; (ii) family firms in India engage in more shifting than non‐family firms, but this is not observed in the United States; and (iii) family (non‐family) firms in India increase (reduce) shifting, whereas only non‐family firms in the United States increase shifting after regulation. Since non‐family firms in India raise more external capital than family firms after regulation, we infer that family firms in India reacted to this competition for capital and resorted to shifting. Theoretical/Academic Implications Most studies assume that the incentives for family firm behavior are the same in different market settings. However, factors such as efficiency of public capital markets, enforcement of corporate laws and regulations, and other institutional practices can cause differences in family firm behavior across different market settings. We investigate the behavior of family and non‐family firms in each of these markets and study how a feature of the national governance system, regulatory design, moderates this behavior. Practitioner/Policy Implications Our findings should be useful to global investors and regulators in both emerging and developed markets. The results indicate how similar regulation in the two different settings can trigger differences in the behavior of firms.

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“…However, finance literature has still faced difficulties to assess which variables affect the development of CG in firms. Black et al (2014) discussed the difficulty of finding country-level variables common to all countries, analysing the BRIKTs (Brazil, Russia, India, Korea and Turkey). Black et al (2014) pointed out how specific country-level variables can predict firm value, but they highlighted how difficult it is to obtain elements common to all.…”

Section: Introductionmentioning

confidence: 99%

“…Black et al (2014) discussed the difficulty of finding country-level variables common to all countries, analysing the BRIKTs (Brazil, Russia, India, Korea and Turkey). Black et al (2014) pointed out how specific country-level variables can predict firm value, but they highlighted how difficult it is to obtain elements common to all. Hofstede proposed a model that assigns values to cultural dimensions, which enabled the development of several quantitative studies involving countries' cultural aspects.…”

Section: Introductionmentioning

confidence: 99%

Cultural Determinants of Corporate Governance: A Multi-Country Study

et al. 2020

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Double Blind Review System Scientific Editor Ilan AvrichirPurpose: The purpose of this study was to investigate if the culture of countries influences earnings management practices. Earnings management (EM) was chosen as a Corporate Governance mechanism. Methodology: We selected the Earnings Management proxies from Leuz et al. (2003). We adopted Hosftede´s cultural dimensions: power distance, individualism, uncertainty avoidance and long term orientation. The sample comprised companies listed in 2016 in the stock markets of Brazil, Argentina, Mexico, Chile, Colombia, Peru, and the United States. This work involved regression analysis to associate the dimensions of culture with the practice of EM of the firms. Findings: The results showed a positive relationship between EM and power distance and between EM and uncertainty avoidance. On the other hand, the results showed a negative relationship between EM and individualism and between EM and long term orientation. Overall, our results suggest that culture influences firms' earnings management. Originality/value: Finance literature has had difficulty in assessing which variables can affect the development of CG in companies and its peculiarities in each country. It is also difficult to find country-level variables that are common to all countries. This paper breaks new ground by developing culture indicators of the countries and aggregating legal and firm-level variables to these indicators to advance the understanding of CG in the firms and nations. Theoretical and methodological contributions: studying culture at a multi-country level is important to improve the understanding of common aspects and the countries' particularities that may affect the relationship between corporate governance and performance around the world.

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Methods for multicountry studies of corporate governance: Evidence from the BRIKT countries

Cited by 68 publications

References 28 publications

Real earnings management and corporate governance: a study of Latin America

Real earnings management and corporate governance: a study of Latin America

How Does Regulation Affect the Relation Between Family Control and Reported Cash Flows? Comparative Evidence from India and the United States

Cultural Determinants of Corporate Governance: A Multi-Country Study

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