The impact of international diversification on credit scores: Evidence from the UK

Halabi, Hussein; Alshehabi, Ahmad; Wood, Geoffrey; Khan, Zaheer; Afrifa, Godfred Adjapong

doi:10.1016/j.ibusrev.2021.101856

Cited by 6 publications

(3 citation statements)

References 128 publications

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“…Regarding the impact of firm size on diversification (SIZE), some authors consider larger firms often achieve greater diversification: economies of scale, economies of range, market power, learning, and experience effect. A firm's credit score is less dependent on international diversification for large firms, firms in the manufacturing sector, and firms distant from London (Halabi et al, 2021). In addition, these large firms have the means and capabilities to invest in the most efficient and sophisticated governance systems, since they have the significant resources to easily enter new markets.…”

Section: Results Of Estimates and Interpretationsmentioning

confidence: 99%

Corporate governance and its impact on strategy diversification and growth in the Saudi non-oil sector

Kouki¹,

Kachoukh²

2022

Int. j. adv. appl. sci.

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The purpose of this article is to study the influence of internal governance mechanisms on the diversification and growth strategy of Saudi firms in the non-oil sector. Considering a sample of 70 Saudi companies observed over the period 2006-2014 and using the Linear Regression method, correlated panels, corrected standard errors (PCSEs). Our empirical results show the structure of the board of directors that motivates Saudi firms to run less risk and diversify all activities rather than refocus the group's activity. We have shown that the presence of the largest shareholder has a positive effect on the diversification strategy. These results support our basic assumptions that firms with a high concentration of capital favor diversification rather than the risk that accompanies the growth of the firm's overall activities. In line with our reasoning and consistent with previous research, our main contribution is that the control mechanisms are not neutral with regard to the diversification strategy. The verification of these assumptions in the Saudi context makes it possible to enrich the verification of the positive relationship between governance and the diversification of firms.

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Section: Results Of Estimates and Interpretationsmentioning

confidence: 99%

Corporate governance and its impact on strategy diversification and growth in the Saudi non-oil sector

Kouki¹,

Kachoukh²

2022

Int. j. adv. appl. sci.

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“…Therefore, we run Equation (2) separately for exporting firms and non-exporting firms. Firms with foreign sales are categorized as exporting firms, while those without foreign sales are considered nonexporting firms (Halabi et al, 2021). The findings in columns 5 and 6 of Table 6 show that the interaction term between 𝐼𝑚𝑝𝑎𝑖𝑟𝑚𝑒𝑛𝑡 !"…”

Section: The Impact Of Firm-level Information Environmentmentioning

confidence: 99%

The Impact of Industry Competition on the Value Relevance of Goodwill Impairments Across Different Information Environments

Alshehabi,

Halabi,

Adwan

et al. 2023

SSRN Journal

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“…The new measure was calculated as goodwill at the end of the year plus goodwill impairment in the year minus goodwill at the beginning of the year. The results are essentially unchanged.20 Further, to control for international exposure, we repeated this analysis using a firm's level of international diversification (Int-Div), measured as a percentage of foreign sales to total sales (seeHalabi et al, 2021). In untabulated results, we found that the coefficient of Weak-FTR remains positive and significant while the interaction between Weak-FTR and Int-Div is negatively significant, indicating the impact of FTR on goodwill impairments is less pronounced for internationally diversified firms.…”

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confidence: 99%

The Effect of Time Orientation in Languages on the Recognition of Goodwill Impairment Losses

Alshehabi,

Halabi,

Afrifa

2023

Int. J. Acc.

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Synopsis The research problem In this study, we investigated the relationship between future-time reference (FTR) in languages and goodwill impairment. Motivation Previous studies on goodwill have focused mainly on firms’ economic and reporting incentives in single-country settings using economic theories. There have been recent calls for more research on goodwill accounting across countries (d’Arcy and Tarca, 2018), and greater use of behavioral theories in goodwill accounting studies (Amel-Zadeh et al., 2021). In response, we applied the linguistic relativity hypothesis to a new and highly significant area of future-oriented behavior (impairment decision) to explain cross-country variations in goodwill impairment reporting. The test hypotheses We hypothesized that firms in countries that use weak-FTR languages have higher levels of (and greater quality) goodwill impairment than those in countries that use strong-FTR languages. Target population We used a sample of 15,179 firm-year observations taken from firms reporting under IFRS across 21 countries for the fiscal years 2005–2018. Adopted methodology We used Tobit regressions, logit regressions, mixed-effects modeling, and propensity score-matching analyses for robustness. Analyses We tested the relationship between FTR in languages and (a) goodwill impairment decisions, (b) goodwill impairment amounts, and (c) abnormal goodwill impairments. We repeated our main analyses using several subsamples, different measures of FTR, and alternative regression specifications. Findings In line with the linguistic relativity hypothesis, our findings indicate that managers who speak weak-FTR languages are more willing to bear the costs of their impairment decisions in the present and are less motivated to shift current impairment into future accounting periods. In contrast, speakers of strong-FTR languages tend to delay the recognition of current impairments to future periods to reduce their anxiety about the negative effects of current impairment decisions. Findings from further analyses indicate that firms in weak-FTR countries report lower abnormal goodwill impairment, thereby bringing impairment levels closer to their normal optimal levels. Our inferences are robust to alternative samples, different measures of FTR, and alternative model specifications.

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The impact of international diversification on credit scores: Evidence from the UK

Cited by 6 publications

References 128 publications

Corporate governance and its impact on strategy diversification and growth in the Saudi non-oil sector

Corporate governance and its impact on strategy diversification and growth in the Saudi non-oil sector

The Impact of Industry Competition on the Value Relevance of Goodwill Impairments Across Different Information Environments

The Effect of Time Orientation in Languages on the Recognition of Goodwill Impairment Losses

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