Suresh Ramakrishnan

An interactive environmental model for economic growth: evidence from a panel of countries

This study aims to determine an interactive environmental model for economic growth that would be supported by the “sustainability principles” across the globe. The study examines the relationship between environmental pollutants (i.e., carbon dioxide emission, sulfur dioxide emission, mono-nitrogen oxide, and nitrous oxide emission); population growth; energy use; trade openness; per capita food production; and it’s resulting impact on the real per capita GDP and sectoral growth (i.e., share of agriculture, industry, and services in GDP) in a panel of 34 high-income OECD, high-income non-OECD, and Europe and Central Asian countries, for the period of 1995–2014. The results of the panel fixed effect regression show that per capita GDP are influenced by sulfur dioxide emission, population growth, and per capita food production variability, while energy and trade openness significantly increases per capita income of the region. The results of the panel Seemingly Unrelated Regression (SUR) show that carbon dioxide emission significantly decreases the share of agriculture and industry in GDP, while it further supports the share of services sector to GDP. Both the sulfur dioxide and mono-nitrogen oxide emission decreases the share of services in GDP; nitrous oxide decreases the share of industry in GDP; while mono-nitrogen oxide supports the industrial activities. The following key growth-specific results has been obtained from the panel SUR estimation, i.e., (i) Both the food production per capita and trade openness significantly associated with the increasing share of agriculture, (ii) food production and energy use significantly increases the service sectors’ productivity; (iii) food production decreases the industrial activities; (iv) trade openness decreases the share of services to GDP while it supports the industrial share to GDP; and finally, (v) energy demand decreases along with the increase agricultural share in the region. The results emphasize the need for an interactive environmental model that facilitates the process of sustainable development across the globe.

The dynamic linkage among the Asian REITS market

This paper investigates the long-run relationship and short-term linkage among the Asian REIT markets before, during and after global financial crisis through the combination of Johansen Cointegration Test and Granger Causality Test. The results indicate that the existence of cross-border diversification opportunities remain even though the markets were cointegrated since the global financial crisis. Short-run causality tests show that the number of causality relationships decrease over the time. Overall, the results suggest that domestic REIT investors can achieve diversification benefits by incorporating certain international REITs into the domestic portfolio, but they need to review their portfolios periodically as the linkages among markets could change from time-to-time.

Factors affecting speed of adjustment under different economic conditions: Dynamic capital structure sensitivity analysis

Purpose - – This study aims to examine the existence of capital structure dynamics and speed of adjustment during different economic periods. This study adds to the existing body of literature by investigating the factors influencing adjustment process toward target debt in developing economies. Design/methodology/approach - – By employing two-step generalized method of moment (GMM) and sensitivity analysis, the study highlights critical factors which affect firms’ adjustment mechanism for target debt. Findings - – Dynamic GMM estimations confirm the substance of past leverage on current debt, which recognizes the existence of dynamic capital structure. The findings corroborate that adjustment process is subject to trade-off between convergence rate and cost of being off-target. The fraction of financing of Pakistani firms confirms the pattern of pecking order hypothesis. The outcome of study clearly validates the significance of dynamic trade-off modeling for optimal capital structure. Research limitations/implications - – As more data become available, the authors would extend this study to investigate the sectoral analysis to find how capital structure dynamics are different across sectors and how distinctive behavior of each sector differently affects the adjustment process toward target debt across each sector. In addition, sector-level and macro-economic factors could be incorporated to examine how external factors affect the firm’s speed of adjustment across sectors. Practical implications - – The present study provides valuable insights for banking and corporate sector, mainly in Pakistan. The companies could take into consideration the firm-level factors which affect the adjustment process toward target debt. Likewise, the borrowing and lending procedures could be advanced by complying with dynamic mechanism of speed of adjustment. Furthermore, the findings of this research provide obstinate grounds for future research. Originality/value - – Both the use of dynamic GMM adjustment model and sensitivity analysis along with Sargan test validate the health of instruments and values.

Modeling the volatility of Asian REIT markets

Abstract This paper analyzed the volatility behavior of Asian real estate investment trust (REIT) markets. The autoregressive conditional heteroscedasticity (ARCH)-family models were applied for the purpose of conducting the in-sample fitting test and out-of-sample forecasting test. Results showed that the fractional integrated EGARCH model was the best model in forecasting the volatility for most of the Asian REIT markets. The outcome of this study would be useful for REIT investors in understanding the volatility of the Asian REIT markets. Similarly, policy-makers can also make use of this information to create derivate pricing for the future.

Integration between the Asian REIT markets and macroeconomic variables

Purpose - – The purpose of this paper is to examine the long-run relationship and short-term linkage between the Asian REIT markets and their respective macroeconomic variables. Design/methodology/approach - – The data collected comprised total return REIT Index from Japan, Hong Kong, Singapore, Malaysia, Thailand, Taiwan and South Korea and their macroeconomic variables from the date of availability of the data until December 2014. The macroeconomic variables are either available in monthly or quarterly basis, they will be separately tested with REIT Index respectively to their frequency. All the variables are tested for its stationarity prior to the investigation of their long-run relationship and short-term linkage using Johansen cointegration test and Granger causality test. Findings - – The results showed that certain of the emerging REIT markets show a higher degree of integration with macroeconomic variables in the long run. This implies that the emerging REIT markets are more sensitive towards the change in macroeconomic environment in relative to the developed REIT markets. Practical implications - – The paper implied that the distinction of each market structure and their unique way of policy implementation. The findings can assists policy makers to understand about the significance of policy implementation on the Asian REIT markets prior to decision making and also for the portfolio management my asset managers. Originality/value - – The paper is one of the few attempts at assessing the long-term relationship and short term linkage between the Asian REIT markets and the macroeconomic variables.

Corporate social responsibility practice of Malaysian public listed government-linked companies: A dimensional analysis

This paper examines the corporate social responsibility (CSR) practices of the Malaysian public-listed government-linked companies (GLCs) using a dimensional analysis. Four dimensions of CSR activities, namely community, employees, environment and governance, are investigated to study the latest CSR practice of GLCs in year 2016. Each dimension is divided into three subcat-egories to further examine the performance of GLCs on a particular CSR area. This is the first paper in Malaysia which uses CSR ratings (obtained from CSRHub database) to proxy for CSR practice. None of the past literature has been found to adopt this approach. The findings show that Malaysian public-listed GLCs performed better in community, employees and environment dimensions, whilst tend to underperform in governance dimension.

The impact of corporate social responsibility on financial performance: Evidence from Insurance firms

The field of Corporate Social Responsibility (CSR) has been growing very exponentially over the past decade. There are continuous opposing views of the role of the firms in society and disagreements as to whether wealth maximization should be the sole goal of any corporations out there. With Insurance companies facing and fulfilling in the intense demand of diverse stakeholders, this study explores the impact of CSR disclosures on Financial Performance among the listed domestic-owned companies in Malaysian insurance sector. Although CSR is a hot topic in Malaysia and throughout various industries, no detailed study has been conducted to ascertain whether Malaysian insurance companies derive any benefits therefrom. The study examines the impact of CSR on financial performance using an extensive content analysis method on annual reports from 13 domestic-owned Malaysian insurance companies over the past 9 years (2008-2017). The content analysis data is further transformed into GRI CSR Disclosure Index table before matching the findings against the Financial Performance indicators (return on assets (ROA), return on equities (ROE) and earnings per share (EPS)). The relationship between CSR and ROA, ROE and EPS is tested using correlation analysis. The results indicate significant relationship between CSR disclosure and Financial Performance; designates CSR has significant impact on ROA; whereas relationship between CSR and ROE & EPS is found to be insignificant. The study suggests and indicates that insurance companies in Malaysia ought to carry out efforts continually in a bigger scale so that their CSR activities are more aligned with the reporting regulatory standards as well as to bring a positive impact in the current prospect. In addition, the remedial action proposed by Bursa Malaysia from year 2016 is expected to improve the findings of this study and bring a tremendous improvement to the exiting regulatory guidelines.

Forecasting Malaysian exchange rate using machine learning techniques based on commodities prices

This article investigates the dynamic interactions between four commodities prices and the exchange rate for an emerging economy, Malaysia. The literature has identified a series of contradictory claims in the support and against the accurate prediction of the exchange rate. This article provides a new methodology to perform a comparative analysis of the three machine learning techniques, namely: Support Vector Machine, Neural Networks, and RandomForest. The experimental results demonstrate that the RandomForest is comparatively better than Support Vector Machine and Neural Networks, for accuracy and performance. This shows that the fluctuation in the Malaysian exchange rate can be evaluated accurately using RandomForest as compare to other techniques. Furthermore, this paper reveals that Malaysian specific commodities prices-crude oil, palm oil, rubber, and gold, are the strong dynamic parameters that influence Malaysian exchange rate. Hence, these results are beneficial for policy making, investment modeling, and corporate planning.

The Review of Corporate Social Responsibility (CSR) Literature in the New Millennium

Corporate Social responsibility (CSR) is one of the most researched topics ever since the first definition of CSR was given in 1953. CSR is a widely researched topic both by the academicians and the practitioners. Although there have been many literature reviews in this topic before, there has been very limited research on the literature review in this topic focusing only on the articles published after the year 2000. The main objective of the study is to review the literature related to CSR in the new millennium. The second objective of the study is to analyze the relationship of CSR and firm’s financial performance based on the literature review of the articles related to the relationship between CSR and firm’s financial performance from the year 2000. The study used a systematic way to review the past literature indexed in Web of Science (WOS) database, with a combination of both statistical and content analysis. The articles related to CSR were searched using the keyword CSR or Corporate Social Responsibility. Then the articles related to CSR performance were shortlisted for further analysis. The final analysis included 74 most relevant articles after eliminating those which are not directly related to the relationship between CSR and firm’s financial performance. The findings indicated that around 69.4% of the study related to CSR from the year 2000 onwards was related to CSR and firm’s performance. The findings also highlighted that around 57% of the study related to the CSR and firm’s financial performance shows a positive relationship. However, only 5% of the studies under this topic show a negative relationship, 20% show a mixed relationship and the balance 18% shows a neutral relationship. The study gives an understanding on the changing dynamics of the literature related to CSR. The positive relationship between CSR and firm’s financial performance is an encouraging signs for the corporations. The results of the studies should convince the managers that the companies with good CSR practices are likely to have a competitive edge over its competitors. Future study may increase the sample size of the articles related to the relationship between CSR and firm’s financial performance, or to identify the result differences across different countries and sectors.