Corporate Governance, Cash Flows, and Bank Performance: Developed and Developing Countries

Multinational Finance Journal, 2019, vol. 23, no. 1/2, pp. 1–36

                                                                           Fatima Faruqi, Air University, Pakistan

                                                                           Tanveer Ahsan, Rennes School of Business, France

                                                                           Sultan Sikandar Mirza, Zhejiang Gongshang University, China

                                                                           Zia-ur-Rehman Rao, Forman Christian College, Pakistan

Abstract:
The purpose of the study is to investigate the impact of corporate governance on bank performance and the mediating role of cash flows between corporate governance and bank performance in developed and developing countries. The study collects data for 2006-2015 for 30 commercial banks operating in five countries (Bangladesh, Malaysia, Pakistan, Australia, and the USA) and applies bank, time (year), and country fixed effects regression analysis to determine the direct impact of corporate governance and cash flows on bank performance. Structural equation modeling is employed to investigate the mediating role of cash flows between corporate governance and bank performance. The results suggest that the impact of corporate governance on bank performance is more significant in developed countries than in developing countries. The results also show that investment cash flows mediate the relationship between corporate governance and bank performance in developed as well as developing countries, while operating cash flows mediate the relationship between bank performance and corporate governance in developing countries only.

Keywords: corporate governance; cash flows; bank performance; panel data

Citation (Format 1)
Faruqi, Fatima, Tanveer Ahsan, Sultan S. Mirza, and Zia-ur-Rehman Rao, 2019, Corporate Governance, Cash Flows, and Bank Performance: Developed and Developing Countries, Multinational Finance Journal 23, 1-36.
Citation (Format 2)
Faruqi, F., Ahsan, T., Mirza, S., Rao, Z., 2019. Corporate Governance, Cash Flows, and Bank Performance: Developed and Developing Countries. Multinational Finance Journal 23, 1-36.

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Are Funds of Hedge Funds Efficient? An Empirical Analysis for North American, Asia Pacific, and European Long/Short Funds of Hedge Funds

Multinational Finance Journal, 2019, vol. 23, no. 1/2, pp. 37–64

                                                                           Lan T.P. Nguyen, Multimedia University, Malaysia

                                                                           Malick O. Sy, Royal Melbourne Institute of Technology (RMIT), Australia

                                                                           Cheng M. Yu, Universiti Tunku Abdul Rahman (UTAR), Malaysia

                                                                           Sayed Hossain, Cedar Valley College, USA

                                                                                                            Tan B. Chen, Multimedia University, Malaysia

Abstract:
This study aims to examine whether long/short funds of hedge funds truly provide better diversification benefits to hedge fund investors as compared to efficient portfolios of long/short hedge funds in North America, Europe, and Asia Pacific. Data of long/short hedge funds and long/short FOHFs are obtained from Eurekahedge databases from 1st January 2008 to 31st December 2016. Mean-variance optimization method is employed to construct efficient portfolios of 100 long/short hedge funds with highest Sharpe ratios for each of the selected regions. To ensure the robustness of our findings, two rolling windows of observation are set up for a comparative analysis. This study concludes that most of the single-region focused long/short FOHFs in the sample, did not outperform the constructed efficient portfolios of long/short hedge funds investing in the same region. In fact, many long/short FOHFs did not survive more than a period of six years as observed in this study.

Keywords: funds of hedge funds; long/short strategy; diversification; efficient portfolios; mean-variance method

Citation (Format 1)
Nguyen, Lan T.P., Malick O. Sy, Cheng M. Yu, Sayed Hossain, and Tan B. Chen, 2019, Are Funds of Hedge Funds Efficient? An Empirical Analysis for North American, Asia Pacific, and European Long/Short Funds of Hedge Funds, Multinational Finance Journal 23, 37-64.
Citation (Format 2)
Nguyen, L., Sy, M., Yu, C., Hossain, S., Chen, T., 2019. Are Funds of Hedge Funds Efficient? An Empirical Analysis for North American, Asia Pacific, and European Long/Short Funds of Hedge Funds. Multinational Finance Journal 23, 37-64.

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Working Capital Investment: A Comparative Study – Canada Versus the United States

Multinational Finance Journal, 2019, vol. 23, no. 1/2, pp. 65–102

                                                                           Abdul-Rahman Khokhar, Saint Mary’s University, Canada

                                                                           Abstract:

This study empirically compares the working capital investment of industrial firms and finds that Canadian firms invest less in working capital than their U.S. counterparts. Matched samples of 8,628 firm-year observations each from Canada and the U.S. are utilized covering the period 1988 to 2016. Compared to their U.S. counterparts, Canadian firms have a significantly lower cash conversion cycle, non-cash working capital to asset ratio and non-cash working capital to sales ratio. The difference in working capital investment is robust to variety of firm, industry and country controls as well as to year and industry fixed effects. The study also investigates the determinants of the lower investment in working capital by Canadian firms and finds that working capital investment is negatively moderated by short-term interest rates and positively associated with international operations.

Keywords: working capital management; cash conversion cycle; working capital investment; short-term financial policies.

Citation (Format 1)
Khokhar, Abdul-Rahman, 2019, Working Capital Investment: A Comparative Study – Canada Versus the United States, Multinational Finance Journal 23, 65-102.
Citation (Format 2)
Khokhar, A., 2019. Working Capital Investment: A Comparative Study – Canada Versus the United States. Multinational Finance Journal 23, 65-102.

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Examining Dynamic Interdependencies Among Major Global Financial Markets

Multinational Finance Journal, 2019, vol. 23, no. 1/2, pp. 103–139

                                                                           Sanjay Sehgal, University of Delhi, India

                                                                           Sakshi Sain, Institute of Economic Growth, India

                                                                           Florent Deisting, Groupe ESC Pau, France

                                                                           Abstract:

This paper investigates dynamic interdependencies among major global financial markets from January 1999 to April 2017 by examining their risk and return spillovers. Risk and return interactions are also analyzed within the sample markets. Using block-aggregation technique under the Diebold-Yilmaz framework, strong information linkages are observed among the global equity markets that intensify during the crisis period. Results establish the dominance of the US in the global financial system based on information linkages. Further, systematic factors are found to be more prevalent in spillovers among return and volatility as compared to idiosyncratic factors. With regards to interaction between risk and return, results reveal return spillovers of high magnitude onto risk and almost negligible risk spillovers onto return. These findings have important implications for international investors and policymakers.

Keywords: financial markets; Diebold and Yilmaz; spillovers; conditional volatility.

Citation (Format 1)
Sehgal, Sanjay, Sakshi Saini, and Florent Deisting, 2019, Examining Dynamic Interdependencies Among Major Global Financial Markets, Multinational Finance Journal 23, 103-139.
Citation (Format 2)
Sehgal, S., Saini, S., Deisting, F., 2019. Examining Dynamic Interdependencies Among Major Global Financial Markets. Multinational Finance Journal 23, 103-139.