Top PDF Does Foreign Ownership Matter? Russian Experience

Does Foreign Ownership Matter? Russian Experience

Does Foreign Ownership Matter? Russian Experience

specific fixed effect. The results are presented in column (1) of Table 3-1. The spillover coefficient is negative and significant, which is consistent with the results of Aitken and Harrison (1999), and Konings (1999). However, this specification can be incorrect in the Russian case. During the period under study industrial output was declining. On the other hand, firms used a labor hoarding strategy, so labor productivity, measured by the output to employment ratio, was declining as well. At the same time, the share of output of the foreign- owned firms in the industry was increasing in most of the industries (see Figure 2). Therefore, instead of reflecting the effect of the presence of foreign firms on domestic firms' productivity, the negative sign at our proxy for spillovers can pick up the downward productivity time trend. To correct this misspecification, we reestimated equation (2) controlling not only for the firm fixed effect, but also for the time-specific fixed effect. Column (2) of Table 3-1 reports these results. The coefficients at the year dummies are negative and significant. The absolute size of the year dummies coefficients increases over time, which reflect the downward trend in productivity. On the over hand, the spillover coefficient became positive but insignificant. Insignificance of the coefficient can be justified in two ways. First of all, it is conceivable that there were no spillovers from foreign-owned to domestic firms in Russia. The inflow of FDI was rather modest, so it is not impossible that it did not affect the behavior of domestic firms. However, it is also possible that foreign entry had positive influence on some firms and negative influence on others, while the average effect on all firms was insignificant. To test for such possibility, we divided the sample into two groups of firms: small firms with less than 200 employees, and other firms, with employment between 200 and 1000 people. We chose these two groups for the following reasons. First of all, privatization and control over firms with less than 200 employees was usually performed by the local administrations. On the other hand, foreign-owned firms are usually rather small ( see Table 4-1 which presents summary statistics for the three groups of
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Structural Change and the Efficiency of Banking In Turkey: Does Ownership Matter?

Structural Change and the Efficiency of Banking In Turkey: Does Ownership Matter?

Another study for the transition countries is Bonin et al. (2005) which examines the effect of ownership on bank efficiency over the period 1996-2000 using stochastic frontier estimation procedure. They find that government owned banks are not significantly less efficient than privately held banks, and that foreign owned banks are more cost efficient than other banks and provide better service. They suggest, therefore, that privatization on its own is not sufficient to enhance the efficiency of the banking sector. However, in the Gilbert and Wilson (1998) study, which analyze the effects of deregulation and privatization on the productivity of Korean banking sector in the late 1980s, the productivity values are found to have increased during this period. They suggest the reason as Korean banks’ altering their input & output mix during this period.
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Determinants of bank interest margins in Russia: Does bank ownership matter?

Determinants of bank interest margins in Russia: Does bank ownership matter?

The trends for the most common interest margin determinants during the observation pe- riod suggest they had an important impact on margins. Specifically, risk aversion measured by the capitalization ratio exhibits a downward trend, which suggests falling risk aversion may have con- tributed to the declining pattern of the interest margins in Russia. At the same time, the size of banks and liquidity risk rise during the period under consideration, and operational expenses fluctu- ate around the same level. Credit risk measured by the ratio of non-performing loans to total loans declines in the aftermath of the Russian crisis, but then remains constant during 2002 − 2007. Market concentration of the banking sector does not change much in the 1999 − 2005 period, although it does increase slightly towards the end of the period.
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Conditions of development of rural territories: Russian and foreign experience

Conditions of development of rural territories: Russian and foreign experience

According to the results of a sociological study, the Department of Rural Development of the Ministry of Agriculture of Russia revealed that middle-aged people do not want to live in the village due to the poor development of social infrastructure (lack and remoteness of medical facilities in general and preschool educational institutions, etc.); lack of a job in accordance with available qualifications; low wages, which in 2017 in agriculture and forestry on average per employee per month amounted to 22542 rubles, which is 42% lower than the national average. In almost all Russian regions (districts), residents note that the situation does not change, which means that the current program- oriented approach to managing rural development in the country has problems and disadvantages (Table 2).
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Audit Exemption for Malaysian SMEs: Does Ownership Matter?

Audit Exemption for Malaysian SMEs: Does Ownership Matter?

Australia deregulated its audit requirement as early as 1971 when the Australian Uniform Companies Act 1961 was amended to exempt a small private company from compulsory audit provided that all its shareholders consent thereto. The Companies Act has since been repealed, and, now, under the Corporations Act 2001, a small company is even excused from having to prepare a financial report, and, thus, is exempted from having to appoint an auditor unless, first, it is controlled by a foreign company that has not lodged its consolidated account with the Australian Securities and Investments Commission (ASIC); second, its shareholders, who are holding at least 5 per cent of its voting shares, require it; and, third, the ASIC requires it (section 292 of the Australian Corporations Act 2001). In Singapore, in 2000, the Institute of Certified Public Accountants of Singapore (ICPAS) conducted a survey concerning the issue of audit exemption. The findings indicated that audit exemption was undesirable (ICPAS, 2000). However, despite the findings of the survey, the legislature amended its Companies Act in 2003 to exempt dormant and private companies from audit requirements. The threshold was set at S$2.5 million, and was subsequently increased to S$5 million in May 2004. As in Australia, shareholders holding at least 5 per cent of the company’s issued shares, or the regulator, may require the company’s accounts to be audited (section 205B, 205C and 205D of the Singapore’s Companies Act).
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Chinese FDI in Latin America: Does Ownership Matter?

Chinese FDI in Latin America: Does Ownership Matter?

Particularly since the second half of the 1980’s and into the 1990’s, the Chinese public sector offered huge incentives to foreign companies, favoring them by way of lowered taxes and a diverse array of policy instruments designed to advance their operations in China. Companies run with 100 percent foreign capital, however, were not permitted unless they allowed their products to be exported and/or they developed advanced technology (Ali and Wei 2005; Guoqiang 2005). In the case of FDI, specific requirements were set in place regarding the transfer of technology - particularly in import industries (such as the automotive industry) - from which exports were exempt (Yan 2009). China’s adherence to the WTO at the end of 2001, however, entailed the gradual dismantling of instruments such as varying tax rates and project evaluation criteria based on investment nationality and saw increased openings for a growing number of FDI sectors (OECD 2003; WB 2004).
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Risk-taking by Russian banks: Do location, ownership and size matter?

Risk-taking by Russian banks: Do location, ownership and size matter?

The Russian banking sector has experienced enormous growth rates during the last 6-7 years. The rapid growth of assets has, however, contributed to a decrease in the capital adequacy ratio, thus influencing the ability of banks to cope with risk. Using quarterly data spanning from 1999 to 2007 on all Russian banks, we investigate the relationship between bank characteristics and risk-taking by Russian banks. The analysis of financial ratios re- veals that, on average, the risk levels are still below those observed in Central and Eastern Europe. Combining the group-wise comparisons of financial ratios and the results of insol- vency risk analysis based on fixed effects vector decomposition, three main conclusions emerge. First, controlling for bank characteristics, large banks have higher insolvency risk than small ones. Second, foreign-owned banks exhibit higher insolvency risk than domes- tic banks and large state-controlled banks are, unlike other state-controlled banks, more stable. Third, we find that the regional banks engage in significantly more risk-taking than their counterparts in Moscow.
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Efficiency and Ranking of Indian Pharmaceutical Industry: Does Type of Ownership Matter?

Efficiency and Ranking of Indian Pharmaceutical Industry: Does Type of Ownership Matter?

This paper measures the technical efficiency, super-efficiency, slacks, and input/output targets for large Indian pharmaceutical firms according to ownership by applying Data Envelopment Analysis (DEA) approach. The paper uses raw material, salaries & wages, advertisement & marketing and capital usage cost as input variables and net sales revenue as output variable. The super-efficiency model is applied to rank firms on the basis of efficiency scores. The paper finds that mean overall technical efficiency scores of Private Indian and Private Foreign are higher than Group-owned firms, suggesting that type of ownership affects the performance of a given firm. Further, foreign firms were found to have minimum slacks in inputs, evidently owing to their superior technology, better engineering skills and managerial practices. The study suggests that the inputs, such as, advertisement & marketing expenditure, and also the usage of labour and capital are required to be utilized far more productively in order to improve efficiency.
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The Effects Of Foreign Strategic Investors On Pricing Of Wealth Management Products Of Commercial Banks In China: Does Ownership Structure Matter?

The Effects Of Foreign Strategic Investors On Pricing Of Wealth Management Products Of Commercial Banks In China: Does Ownership Structure Matter?

As shown in column 5, only FSI_T_CITY is significant at 10% level, which means, the ownership nature of the city commercial banks will have a negative effect on FSIs’ improving AER of WMPs. This is due to the market structure view. City commercial banks have inherent disadvantage in non-income activities market in China. In order to compete for market share, the city commercial banks tend to issue WMPs with higher ER than the other banks. But after FSIs’ acquisitions, pricing rationality is important either. Chinese city commercial banks will price WMPs more carefully. FSI_T_CITY and FSI_T_JIO are not significant with AER, but their coefficients are positive, indicating that SOBs and joint-stock banks have positive impact on the relationship between FSIs and AER of WMPs.
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Does corruption matter for sources of foreign direct investment?

Does corruption matter for sources of foreign direct investment?

Consistent with this view, Mauro (1995) shows that corruption has a pronounced negative effects on long-term growth by deterring investment. Wei (2000) further found a negative effect of corruption on FDI in a sample of 12 source countries and 45 host countries (mostly OECD members). Wei (1997) finds that corruption-induced uncertainty also has a negative impact on FDI (the uncertainty is captured by variability of responses to the questions about the level of corruption in the 1997 Competitiveness Report Survey). Javorcik and Wei (2009) find that corruption decreases the likelihood of FDI taking place and increases the likelihood of a foreign investor teaming up with a local investor rather than establishing a fully owned subsidiary. This is because local partners may have advantages in dealing with corrupt officials even though dilution of ownership and potential leakages of knowledge and technology often entail substantial costs. Kinda (2010) shows that poor business environment negatively affects FDI inflows. Globerman and Shapiro (2002) show that the overall quality of economic institutions (or governance infrastructure) is an important determinant of both FDI inflows and outward FDI flows.
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Bank Risk in Central and Eastern European Countries: Does Ownership Matter?

Bank Risk in Central and Eastern European Countries: Does Ownership Matter?

28 significant (FOR and PRIV) for Distance to Default measures and Zscore1. Foreign and domestic private banks are perceived by the market as being less risky than state-owned institutions, and foreign banks are the least risky. The ownership effect is not only statistically significant but also economically considerable. Indeed, the Distance to Default of these banks is with 1.5 points higher for the KMV estimates and approximately with 1.2 points higher for the Duan estimates in comparison with those of state-owned institutions. The domestic private banks show a Distance to Default that is higher with 1.2 points for the KMV results and with 0.7 points for the Duan results. Similar figures are obtained for Zscore1. As expected, Zscore3 does not make any difference in the risk profile of banks in terms of their ownership structure. Thus, the regression results show that ownership is relevant to market perceptions of bank risk and that state-owned banks are considered most vulnerable. Despite the implicit provision of insurance from the government, their non-commercial and policy-oriented practices make the market “worry”. Additionally, it is not always evident that this insurance could be provided when the economic environment – and the government– are in turmoil. Moreover, Zscore1 also shows that the state-owned banks are riskiest; more precisely, they are less capitalised with respect to their 𝑅𝑅𝑅𝑅𝑅𝑅 distribution. Contrary to the previous point, the isolation of the ownership effects from the effects of other variables permits to reveal clear ownership effects on risk profile of CEE banks.
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Does corruption matter for sources of foreign direct investment?

Does corruption matter for sources of foreign direct investment?

Consistent with this view, Mauro (1995) shows that corruption has a pronounced negative effects on long-term growth by deterring investment. Wei (2000) further found a negative effect of corruption on FDI in a sample of 12 source countries and 45 host countries (mostly OECD members). Wei (1997) finds that corruption-induced uncertainty also has a negative impact on FDI (the uncertainty is captured by variability of responses to the questions about the level of corruption in the 1997 Competitiveness Report Survey). Javorcik and Wei (2009) find that corruption decreases the likelihood of FDI taking place and increases the likelihood of a foreign investor teaming up with a local investor rather than establishing a fully owned subsidiary. This is because local partners may have advantages in dealing with corrupt officials even though dilution of ownership and potential leakages of knowledge and technology often entail substantial costs. Kinda (2010) shows that poor business environment negatively affects FDI inflows. Globerman and Shapiro (2002) show that the overall quality of economic institutions (or governance infrastructure) is an important determinant of both FDI inflows and outward FDI flows.
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Investment liberalisation, technology take off and export market entry: does foreign ownership structure matter?

Investment liberalisation, technology take off and export market entry: does foreign ownership structure matter?

Secondly, we look specifically at whether the degree of foreign ownership (or ownership structure) matters for technology upgrading and exports. This has, to the best of our knowledge, not received much attention in the literature. An exception is Thomas et al. (2008), who provide a descriptive analysis showing that foreign owners forming contractual agreements with local partners through joint ventures, equity joint ventures and joint stock enterprises are more successful in inducing new product developments than wholly owned firms. However, in their empirical approach they cannot claim to establish causal relationships. Another related paper is Guadalupe et al. (2012), who investigate the link between foreign acquisition and innovation activity using firm level data for Spain. They also use a propensity score reweighting estimator, though not a doubly-robust estimator. Also, in contrast to our paper, they do not investigate whether ownership structure matters.
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Enterprise Risk Management In Private Firms: Does Ownership Structure Matter?

Enterprise Risk Management In Private Firms: Does Ownership Structure Matter?

We developed a questionnaire considering the experience of previous surveys documented in the literature and the COSO Framework, and considering the specific circumstance that the analysis was going to involve unlisted firms. The questionnaire consists of 16 questions, split into two sections. The main purpose of Section One (two questions) was to identify the respondents’ characteristics. Section Two (14 questions) addressed the degree of implementation of ERM practices within the firm. The calculation of our dependent variable is summarized in two stages: in the beginning, we considered the answers, each of which was based on a binary system (zero-one). After that, we summed each categorical variable to obtain a score (from zero to 14), which was used to define our dependent count non-negative integer variable, called ERM, which measures the extent to which the firms in our sample adopt ERM practices. Our ERM index can be considered a reliable measurement scale, given its high Cronbach’s alpha value (0.939).
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Local finance-growth nexus: Does bank ownership matter?

Local finance-growth nexus: Does bank ownership matter?

To test this hypothesis, we focus on a single advanced country, which has been unified from a legal, a regulatory, and an institutional point of view, Japan. The reason why we study the case of Japan is its experience of the so-called lost decade in the 1990s, which is characterized by difficult and chaotic economic conditions. In those days, bank failures were pervasive throughout the country. As Table 1 shows, 173 banks in total failed during FY 1992–FY 2001 and the financial assistance provided to failed banks by the Deposit Insurance Corporation of Japan (DICJ) amounted to 21.9 trillion yen. 1 The level of financial integration within Japan, as well as other advanced economies, would probably be higher than the level of integration across countries. 2 Hence, if we find the
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Does foreign ownership matter for survival and growth? Dynamics of competition and foreign direct investment

Does foreign ownership matter for survival and growth? Dynamics of competition and foreign direct investment

Most new entrants are small and they never overcome the competitive pressures: entrants suffer from high mortality rate, and there seems to be a strong positive correlation between entry size and the survival probability. However, as in many other aspects of firm dynamics, the literature does not offer much about the impact of (foreign) ownership on survival probability. On the one hand, it is suggested that foreign firms are “footloose”, because they can easily re-allocate their resources to other countries as a reaction to adverse changes in the host country (Gibson and Harris, 1996; Görg and Strobl, 2001b). In other words, foreign firms may have lower exit cost that makes exit probability higher. On the other hand, foreign firms on average may have superior technological and managerial skills that enable them to develop successful entry strategies. Therefore, self-selection before entry may increase the survival probability of foreign firms.
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Corporate performance: does ownership matter? A comparison of foreign - and domestic - owned firms in Greece and Portugal

Corporate performance: does ownership matter? A comparison of foreign - and domestic - owned firms in Greece and Portugal

The emphasis on firm-specific assets as the main source of firms’ heterogeneity with respect to conduct and performance has stimulated many studies that seek to investigate whether multinational firms (MNCs), or their subsidiaries, perform better than domestically controlled firms. The international business literature has well established that a reason why firms invest abroad is that they possess firm-specific advantages, not available to domestic firms in the host country. Such advantages may compensate for the costs of doing business abroad relative to domestically-owned firms and, hence, assist MNCs to display superior performance (cf., among others, Dunning (1993), Markusen (1995), Caves (1996)). MNCs' advantages may comprise financial advantages, product differentiation and marketing advantages, advantages arising from superior governance or from the ability to exploit economies of scale (Dunning, 1993, p. 162-163). The Industrial Organization (IO) paradigm applied to MNCs also emphasises the possession of "nontangible productive assets, such as technological know-how, marketing and managing skills, export contacts, coordinated relationships with suppliers and customers, and reputation" (Aitken and Harrison, 1999, p. 606-607) as competitive advantages that can be transferred across space and enable MNCs to successfully compete with firms that know the modus operandi of local markets. Empirical results have largely been interpreted in the light of the firm-specific advantages argument. Nonetheless, previous empirical evidence on MNCs performance compared with domestically owned firms is somewhat ambiguous, though it tends to suggest on balance that foreign ownership impacts positively on firms’ performance.
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Does state ownership of banks matter?

Does state ownership of banks matter?

Apart from concentration of the banking sector, all commercial banks in Russia experienced significant difficulties during the financial crisis of 2008-2010. Formal indicators of the crisis first started to appear on the capital side of banks. Expecting and preparing for the possibility of bank runs, many financial institutions preferred to transfer their assets into more liquid instruments, which significantly distressed profitability and consequently negatively affected capital ratios. In addition, financial difficulties of borrowers forced many banks to increase their reserves and loan loss provisions. As a result, some banks ended up with negative capital. But in contrast to the Russian crisis of 1998, Russian banking sector managed to avoid massive bank runs and bankruptcies largely due to the extensive government support. While developed countries had to initiate exceptional monetary policies and force significant nationalization of financial institutions (Laeven and Valencia, 2010; Lenza et al., 2010), Russian government stepped in with capital injections, preferential loans on favorable terms, and long term deposits to state-owned banks. To a large extent, these actions allowed Russian banking sector to avoid a collapse.
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Does Board Experience Matter? Evidence from Foreign Direct Investment

Does Board Experience Matter? Evidence from Foreign Direct Investment

Overall, findings of the present study confirm the value of director experiences in firms’ FDI undertakings. Our empirical analyses yield a consistent pattern of results that suggest that director experience particular to an entry mode (host country) significantly enhances a firm’s FDI performance in that specific mode (country). This sug- gests that directors’ FDI expertise accumulated from ex- perience is desirable, because it forms tacit knowledge to assist managers more accurately and efficiently seize future strategic opportunities. The favorable impact from director specific experience takes on increased impor- tance when the experience gap between directors and executives is larger, suggesting that executives’ lack of specific experience can be supplemented by expertise from FDI-experienced directors. We further find that director FDI experience not specific to the host country also positively influences firms’ FDI performance. Since directors are not limited to ratifying executives’ propos- als passively, but also vigorously render advice regarding the feasibility of strategic options [36], their dissimilar FDI experience may provide managers with insightful comparisons to select a well suited host country. The advantage of directors’ heterogeneous experience can be salient in a FDI scenario because of the high environ- mental uncertainty surrounding it, augmenting the bene- fits of more thorough assessments of strategic alterna- tives to support a choice that better fits the focal condi- tion.
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Foreign Investor Participation in Privatizations: does the Institutional Environment Matter?

Foreign Investor Participation in Privatizations: does the Institutional Environment Matter?

Along this evidence, several studies have recognized the impact of cross-country institutional differences on foreign direct investment flows. In the specific case of privatization, we conjecture that the institutional framework is particularly important for the following reasons: First, in the case of privatized firms, the institutional environment has been shown to be a significant determinant of performance improvements and efficiency gains in state-owned enterprises after divestiture (e.g., Boubakri, Cosset and Guedhami 2001). Thus, through their role in establishing expectations about the rights to use resources and repatriate gains (Chhibber and Majumdar 1999), institutions become particularly important to foreign investors involved in privatization. Second, the legal system affects both the ownership structure and the ex-ante decision to participate. For example, LLSV (1998) show that corporate ownership structure
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