Browsing by Author "Habib A"
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- ItemBusiness strategies and tournament incentives: Evidence from China(Elsevier, 2021) Huang J; Sun L; Habib AWe investigate the association between business strategy and firm-level tournament incentives in China and find that business strategy is associated with tournament incentives positively. We further find that this positive relationship manifests itself in local, but not central, state-owned enterprises (SOEs). In addition, we also offer some evidence that foreign institutional investors play a moderating role on the positive association between business strategy and tournament incentives. Our study fills a gap in the existing tournament literature by incorporating business strategy as an important determinant of tournament incentives in China.
- ItemBusiness strategy and strategic deviation in accounting, finance, and corporate governance: A review of the empirical literature(John Wiley and Sons Australia, Ltd on behalf of Accounting and Finance Association of Australia and New Zealand, 2024-03-21) Habib A; Ranasinghe D; Perera AWe review the empirical archival literature on the consequences of business strategy and strategic deviation on accounting, finance, and corporate governance outcomes. We use Miles and Snow's (Organizational strategy, structure, and process. McGraw-Hill, 1978; Organizational strategy, structure and process. Stanford University Press, 2003) strategy typology that has been quantified using financial statement data by Bentley et al. (Contemporary Accounting Research, 2013, 30, 780). Research has used this strategy score to investigate the consequences of firms following two distinct strategies namely, prospectors versus defenders, on various organisational outcomes. Our survey provides mixed evidence on the relationship between business strategy, financial reporting quality, finance outcomes, and corporate governance including corporate social responsibility (CSR) activities. We offer some suggestions for future research.
- ItemCorporate tax avoidance and trade credit(Taylor and Francis Group, 2023-05-05) Hasan MM; Habib AWe examine the relationship between corporate tax avoidance and reliance on trade credit. Using a sample of US listed firms during the period 1987–2017, we show that tax-avoiding firms rely more on supplier-provided trade credit as a source of financing. We take advantage of the ‘check-the-box’ regulation introduced in 1997 as an exogenous shock to firms’ tax strategies. The findings from the difference-in-differences design suggest a causal interpretation of our results. We also observe that the relationship between tax avoidance and trade credit is more salient for a sub-sample of firms with: (i) more information asymmetry; and (ii) more financing constraints. These findings remain robust to a battery of sensitivity analyses and endogeneity concerns. In an additional analysis, we find that corporate tax avoidance increases firms’ reliance on trade credit by reducing access to bank loans. Overall, we provide evidence that tax avoidance has important implications for a valuable alternative source of financing: trade credit.
- ItemCost stickiness and firm value(Springer-Verlag GmbH, 2023-08-14) Costa MD; Habib A; Verbeeten FIn this paper we explore the association between cost stickiness and firm value. Using a large sample of U.S. data, we find a robust negative relationship between cost stickiness and firm value. We then explore whether the resource adjustment, managerial expectations, and agency theories of cost stickiness affect the negative relation and find support for the managerial expectation and agency theories. Furthermore, we find evidence that the detrimental impact of cost stickiness on firm value is mediated partially through the cost of equity and cash flow channels. Further investigation suggests that the adverse effects of cost stickiness on firm value is stronger in the presence of high information asymmetry. We enrich the cost management literature by integrating cost stickiness with corporate finance.
- ItemLocal creative culture and firm value(Elsevier Inc, 2024-01) D’ Costa M; Habib AIn this paper we investigate the association between local creative culture, and firm value. Using data of US listed firms, we find strong evidence that firms headquartered in US counties with highly creative cultures generate higher firm value. We also find evidence that the positive association between creative culture and firm value is mediated partially through both the innovation and cash holding channels. Our results hold after controlling for endogeneity concerns. Our study contributes to the emerging literature on local creative culture by documenting that such a culture influences managers to undertake risky but profitable projects, thereby, increasing firm value.
- ItemOil Price Volatility, Organization Capital, and Firm Performance(Pompea College of Business, University of New Haven, 2022-11) Kamal JB; Costa MD; Habib AWe examine the relationship between oil price volatility and firm performance, and the moderating role of organization capital on this relationship. Using U.S. firm-level data during the period of 1986-2017, our analysis reveals several key findings. Consistent with the real option theory, we find that oil price volatility negatively affects firm performance. However, this adverse effect of oil price volatility is reduced for firms with high levels of organization capital. Interestingly, this moderating effect of organization capital is more pronounced for firms with large cash holdings. Overall, our findings substantiate the idea that firms with high levels of organization capital can hedge oil price related volatilities effectively. Findings from several robustness tests support our key results.
- ItemPolitical connections, political uncertainty and audit fees: Evidence from Pakistan(Emerald, 2021-12-02) Ahmad F; Bradbury M; Habib APurpose: This paper aims to examine the association between political connections, political uncertainty and audit fees. The authors use various measures of political connections and uncertainty: political connections (civil and military), political events (elections) and a general measure of political stability (i.e. a world bank index). Design/methodology/approach: The authors measure the association between political connections, political uncertainty and audit fees. Audit fees reflect auditors’ perceptions of risk. The authors examine auditors’ business risk, clients’ audit and business risk after controlling for the variables used in prior audit fee research. Findings: Results indicate that civil-connected firms pay significantly higher audit fees than non-connected firms owing to the instability of civil-political connections. Military-connected firms pay significantly lower audit fees than non-connected firms owing to the stable form of government. Furthermore, considering high leverage as a measure of clients’ high audit risk and high return-on-assets (ROA) as a measure of clients’ lower business risk, the authors interact leverage and ROA with civil and military connections. The results reveal that these risks moderate the relationship between political connection and audit fees. Election risk is independent of risk associated with political connections. General political stability reinforces the theme that a stable government results in lower risks. Originality/value: The authors combine cross-sectional measures of political uncertainty (civil or military connections) with time-dependent measures (general measures of political instability and elections).
- ItemRelated party transactions and cost of debt: Evidence from China(2020-12-22) Habib A; Huang HJ; Jia J
- ItemSales Order Backlog and Credit Ratings(Taylor and Francis Group on behalf of the European Accounting Association, 2024-05-05) Habib A; Ranasinghe D; Bhuiyan MBUThis study examines the association between sales order backlog and credit ratings. We posit that credit rating agencies consider order backlog as a positive signal about strong future demand and incorporate that into their rating decisions and provide higher ratings to firms with substantial order backlogs. However, being a non-GAAP, unaudited metric, order backlog could also reduce financial reporting quality and hence, credit ratings of firms. Using a sample of US firms from 1980 to 2017, we find a positive and significant association between order backlog and credit ratings, suggesting that order backlog serves as a valuable measure in credit rating assessment by providing positive signals about future earnings to rating agencies.