Journal of Economics, Finance and Administrative Science

Editorial: 60th issue of the Journal of Economics, Finance and Administrative Science

Luis Chavez-Bedoya — Mon, 01 Dec 2025 00:00:00 +0000

Welcome to the 60th issue of the Journal of Economics, Finance and Administrative Science (JEFAS). This issue showcases groundbreaking research across finance and economics. Every paper has passed our rigorous double-blind peer review, guaranteeing academic excellence while delivering actionable insights for practitioners and policymakers.

In their article, Osorio-Barreto et al. (2025) investigate the factors influencing inflation expectations in Colombia using a vector autoregression model with exogenous variables and quarterly data from 2005 to 2022. The key findings reveal that inflation expectations exhibit significant inertia and respond positively to real exchange rate shocks, indicating a pass-through effect. While a short-term positive response to interest rate hikes was observed – attributed to monetary policy transmission lags and potential imperfect knowledge among economic agents – robustness tests using a vector error correction model confirmed that higher interest rates negatively affect inflation expectations in the long run. The research contributes to the literature by incorporating novel exogenous supply shocks, such as social protests and global supply chain pressures, highlighting the importance of these factors and the need for more high-frequency, household-level data to better understand expectation formation in emerging economies.

Determinants of inflation expectations in Colombia: a VAR-X analysis

Daniel Osorio-Barreto, Jose Mora, Lya Paola Sierra-Suárez — Mon, 01 Dec 2025 00:00:00 +0000

Purpose

This study aims to investigate the determinants of inflation expectations in Colombia through a vector autoregression model with exogenous variables (VAR-X) and uses quarterly data for survey-based inflation expectations and different supply shocks.

Design/methodology/approach

We propose a VAR-X model. Despite data unavailability, we gathered quarterly data for the period 2005–2022 for the following variables: oil price, real exchange rate, headline inflation, output gap, policy interest rate and inflation expectations.

Findings

We identified significant responses to inflation expectations in the first quarter. Although we found a positive response of inflation expectations to the interest rate, the robustness tests show that the interest rate negatively affects inflation expectations in the long run. Additionally, we detected a pass-through effect regarding the positive response of inflation expectations to a real exchange rate shock and the inertia of inflation expectations to their own innovations.

Research limitations/implications

We must emphasize that reliable data from households would be preferred to follow the trend in international research and thus make feasible comparisons.

Practical implications

Inflation expectations play an important role in an inflation targeting scheme. Specifically, this scheme allows monitoring of how those approach the proposed target and how they change in the face of changes in total inflation, demand and supply shocks.

Originality/value

The inclusion of exogenous variables contributed to the stability of the model specification by capturing supply shocks not previously considered in the literature.

DOI: https://doi.org/10.1108/JEFAS-01-2024-0017

Private equity activity and corporate governance’s spillover

Hernán Herrera-Echeverri, Diego Cueto, Sandra Gaitan, Daniel Fragua — Mon, 01 Dec 2025 00:00:00 +0000

Purpose

We examine the impact of private equity on corporate governance across industries and countries.

Design/methodology/approach

We gathered data from 15 countries and 16 industries spanning the period from 2005 to 2015 to construct an average corporate governance index and track private equity deals across both industries and countries. We analyze a country-industry-year panel dataset and address endogeneity issues.

Findings

The results indicate a strong and significant relationship between private equity activity and corporate governance quality. When the private equity investment begins earlier, it is more relevant to the corporate governance quality. Foreign private equity investment seems to complement domestic private equity to improve corporate governance in settings with low domestic private equity activity. The experience of the fund that originates the private equity activity is also a determinant of the quality of the corporate governance spillover.

Practical implications

Governments and institutions should promote private equity by creating a regulatory environment that attracts investment funds to countries or sectors that lack robust governance frameworks. Investors can design more effective governance practices according to the specific needs of their industries and countries. Shareholders would better understand how private equity corporate governance practices complement the company’s long-term strategies. Finally, the market would benefit from the confidence in private equity investors that promote international corporate governance practices that are valuable to the stakeholders.

Originality/value

This research expands our understanding of the benefits of private equity activity on corporate governance quality across industries. We posit the importance of foreign private equity investors complementing domestic private equity activity and fund characteristics such as their experience in boosting corporate governance.

DOI: https://doi.org/10.1108/JEFAS-03-2024-0075

Service quality and earnings management in Brazilian electricity distributors

Paulo Vitor Souza de Souza, Edilson Paulo — Mon, 01 Dec 2025 00:00:00 +0000

Purpose

This article examines the relationship between service quality and earnings management in Brazilian electricity distributors.

Design/methodology/approach

Service quality was measured using the Global Continuity Performance Indicator, as released by the Brazilian Electricity Regulatory Agency (ANEEL). To measure earnings management, the models by Dechow et al. (1995), Kothari et al. (2005), and Pae (2005) were used.

Findings

The results show that lower service quality is related to greater opportunism in management through earnings management. Furthermore, the study shows that managing earnings can distort the true economic and financial position of companies with low operational performance.

Research limitations/implications

The research enhances comprehension regarding the correlation between service quality, measured by the Global Continuity Performance Indicator, and earnings management within a distinct industrial and regulatory framework. This could establish a foundation for prospective studies delving into analogous relationships across diverse sectors or regions.

Practical implications

The findings offer insights for regulatory authorities to promote higher standards in the generation of informational quality, which can impact the quality of services.

Social implications

Enhancing the quality of electrical service through more responsible management practices leads to increased consumer satisfaction, driven by improvements in the continuity of energy supply.

Originality/value

A gap exists in the literature due to the lack of studies examining the relationship between the quality of electrical service, measured by the continuity index, and opportunistic management practices through earnings management.

DOI: https://doi.org/10.1108/JEFAS-02-2024-0047

Optimal selling time in livestock production

Mon, 01 Dec 2025 00:00:00 +0000

Purpose

This paper analyzes the application of real options to livestock production. It evaluates the strategic flexibility in determining the optimal selling time for livestock, considering the technological and market risks involved in its production.

Design/methodology/approach

Based on a data sample of 300 records collected over the past 15 years, a biophysical-economic model was developed and simulated using an iterative stochastic procedure.

Findings

The alternatives that provide the highest profit growth are identified by quantifying their risk parameters and yielding strategies for enhancing the value of livestock companies.

Originality/value

This research aims to understand how to improve decision-making in companies managing biological assets under conditions of risk and uncertainty, using the case of livestock systems in Argentina as a basis. This case can be easily adapted to similar cases in other countries.

DOI: https://doi.org/10.1108/JEFAS-06-2024-0185

Factors that influence value creation and value capture in companies – evidence in an emerging market

Jhony Ostos, Manuel-Fernando Montoya-Ramírez — Mon, 01 Dec 2025 00:00:00 +0000

Purpose

The objective of this study is to analyze the influence of the following variables – technological innovation, creativity and innovation management and business model innovation – on two variables: value creation in companies and value capture in companies.

Design/methodology/approach

The sample consisted of 222 informants employed by companies listed in the Top 1,000 in the city of Lima. A questionnaire was designed to examine the five variables under study (three independent variables and two dependent variables). Confirmatory and structural factor analyses were performed using structural equations with the SPSS AMOS software.

Findings

The study shows that value capture is influenced by technological innovation, creativity and innovation management, as well as business model innovation, while value creation is influenced only by technological innovation and business model innovation.

Research limitations/implications

One limitation of this study is that its results are generalized for companies from different business sectors, so its conclusions cannot be associated with specific business sectors. Another limitation of the study is that the data from this research are cross-sectional, so the relationships found between the study variables are not sufficient to establish a definitive causal relationship.

Practical implications

For executives, this study offers valuable insights into the significance of their management roles in driving innovation, particularly concerning the dual objectives of value creation and capture within their organizations.

Originality/value

A research model is proposed to identify the factors that influence value creation and value capture in companies in a developing country, where consumers have different purchasing power and purchasing preferences compared to consumers in developed countries. Executives focus their efforts on creating and implementing innovative ideas only if they perceive that doing so will achieve monetary results, and it is necessary to emphasize the innovation of internal processes to create value in a way customers will perceive.

DOI: https://doi.org/10.1108/JEFAS-08-2023-0223

Leveraging interest-growth differentials: hidden effects of government financial assets in the European Union

Clarisse Wagner, José Alves — Mon, 01 Dec 2025 00:00:00 +0000

Purpose

Given that government financial assets represent a large proportion of gross debt accumulation, this study examines their impact on debt leveraging and potential returns on the gap between interest rates and economic growth (r-g).

Design/methodology/approach

This research focuses on the co-movements of r-g differentials, government financial assets and the primary deficit through a channel of gross debt, investment, external balance and ratings, using a sample of 27 European Union economies from 2000 to 2022. The following co-integration methods were estimated: (1) for the aggregate, panel quantile autoregressive distributed lags (QARDL), ARDL- pooled mean group (PMG) for panel data, implemented with a (PMG) and (2) ARDL-error correction (EC) for individual countries at a granular level.

Findings

While government financial assets drive short- and long-run debt trajectories, granular country heterogeneities reveal differentiated results for financial assets leveraging potential returns on the differential between interest rates and output growth (r-g). Government financial assets may enhance r-g, but may risk even undermining gains from primary deficit consolidation efforts. By comparing aggregate estimations with country granular approaches, outliers from non-statistically significant estimations reveal the epistemological limits of aggregation, statistics and probability theory, warning against overconfidence in such mere guidance tools, which are not safeguarding guarantees.

Research limitations/implications

Statistical asymptotics and instability of non-independent and identical distributions may underestimate variance. Furthermore, skewness and leptokurtosis may benefit from extreme value theory. In addition, technological changes, policy regimes, geopolitical events and economic crises can change in-built long-run relationships.

Practical implications

Heterogeneity of government financial assets effects depend on socio and macrofinance conditions, advocating the principle of subsidiarity. Financial assets, such as sovereign wealth funds linked to natural resources, oil in Norway, copper in Chile, may benefit from financial assets assessments. The strengthening of democratic accountability calls for transparency about financial assets contribution to debt trajectories, r-g effects and risks of potential undermining primary deficit consolidations. Accounting reporting should appropriately disclose changes in assets value from exposition to market volatility, accumulation of holding costs due to constraints to asset liquidation, due to non-active secondary markets, or long investment horizons.

Social implications

To strengthen democratic accountability, there should be transparency about their contribution to debt trajectories, r-g effects and risks to potential undermining primary deficit consolidation. Their performance depends on financial markets and socio- and macro-finance conditions, calling for the principle of subsidiarity.

Originality/value

Rather than the traditional emphasis on government debt, this study examines the leverage effect on the gap between interest rates and economic growth (r-g differential). While the literature primarily addresses stock-flow adjustments (SFAs), the focus is narrowed to financial assets underlying government interventions on the supply side of the economy. Evidence is provided on the risks of financial assets undermining primary deficit consolidation efforts. While the literature highlights the short and medium terms, estimates are divided into short-term dynamics and hypothetical in-built long-run cointegrations. Panel aggregation is compared with granular estimates, uncovering heterogeneities and supporting governance subsidiarity. Support for statistical pluralism is provided by comparing results and methodological limitations.

DOI: https://doi.org/10.1108/JEFAS-03-2024-0090

Do intellectual capital efficiency and institutional quality influence a firm’s capital structure? Evidence from India

Ahmed Mohamed Habib, Tamanna Dalwai, Gaitri Chugh, Syeeda Shafiya Mohammadi — Mon, 01 Dec 2025 00:00:00 +0000

Purpose

This research explores the influence of intellectual capital (IC) efficiency (ICE) and institutional quality (IQ) on a firm’s capital structure (CS) in Indian firms.

Design/methodology/approach

The analysis was conducted on a sample of Indian companies from 2015 to 2019. Data were collected from the S&P database, and regression and additional analyses were performed to achieve the objectives of this research.

Findings

The findings show a significant positive effect of ICE on a firm’s CS from debt (CSD) and an insignificant positive effect of IQ on CSD and CS from equity (CSE). The findings also indicate that human-capital efficiency (HCE) and capital-employed efficiency (CEE) are the main IC sub-dimensions influencing a firm’s CS, compared to the structural-capital efficiency (SCE) dimension.

Practical implications

The results of this study have several practical implications, as they examine the influence of ICE and IQ on CS as potential determinants, which could help business leaders adopt optimal CS strategies.

Originality/value

The results of this study offer several novel contributions to the existing literature on CS by examining unexplored factors, such as ICE as a knowledge management strategy, ICE sub-dimensions, and IQ in the context of CS.

DOI: https://doi.org/10.1108/JEFAS-02-2023-0039

Gender diversity and cost of equity capital: evidence from an emerging market

Luiz Eduardo Gaio, Nelson Oliveira Stefanelli — Mon, 01 Dec 2025 00:00:00 +0000

Purpose

This study examines the relationship between board gender diversity and the cost of equity among publicly traded Brazilian companies.

Design/methodology/approach

The sample includes Brazilian firms listed on B3 from 2010 to 2023. This study estimated linear and nonlinear regression models using the two-step generalized method of moments (GMM). It measured gender diversity through board composition metrics and diversity indices, while it calculated the cost of equity using the Fama–French five-factor model.

Findings

The results obtained suggest that increased board gender diversity is associated with a lower cost of equity, with a nonlinear effect indicating that progressive diversity improvements yield more significant reductions in capital costs.

Originality/value

This study better provides a comprehension of gender diversity and financial performance in a Latin American emerging market, addressing a gap in research predominantly focused on developed economies. It is the first to use the Fama–French five-factor model to explore this relationship in emerging markets.

DOI: https://doi.org/10.1108/JEFAS-02-2024-0059

Impact of institutions on cross-border acquisitions and mergers by Latin American firms: a gravitational approach

Camilo Alberto Castro Gama, Andreas M. Hartmann, Miguel Flores — Mon, 01 Dec 2025 00:00:00 +0000

Purpose

This study examines how institutions in both home and host countries affect firms’ cross-border mergers and acquisitions (CBM&As) activity in the six most significant Latin American (LATAM) economies (1995–2018).

Design/methodology/approach

Data from 1,094 transactions by LATAM companies were used to develop two data panels to examine the impact of institutions on CBM&A activity. Additionally, the influence of the target industry on CBM&A activity is explored. And to operationalize the independent variables, concepts from economic institutionalism are applied.

Findings

The research findings indicate that the primary motive of acquirers for investing abroad is not to find better formal institutional conditions, but rather to pursue new markets. In contrast, the home country’s formal institutions motivate LATAM firms to invest overseas. Contrary to previously published studies, there is evidence of an inverted U-shaped relationship between institutional informal distance and CBM&A activity conducted by LATAM firms.

Originality/value

This study analyzes the impact of the formal institutional quality of home and host countries as well as formal and informal institutional distances, on the accumulated value of CBM&As from LATAM. These relationships are underexplored in the literature. This study uses a large and representative sample of complete CBM&As in the region.

DOI: https://doi.org/10.1108/JEFAS-06-2024-0192

Income smoothing through loan loss provisions in Asia–Pacific commercial banks: the role of managerial ability

Minh Duy Le, Thanh Nhan Dinh — Mon, 01 Dec 2025 00:00:00 +0000

Purpose

This research aims to answer the question of to what extent managerial ability (MA) impacts the level of employing income smoothing (IS) through loan loss provision (LLP) and how this influences the banks’ financial performance.

Design/methodology/approach

The research confirms LLPs used to smooth income through the relationship between LLPs and pre-provisioning income in Asia–Pacific banks from 2012 to 2021. Then, it explores the role of managerial ability in IS behavior by using a two-stage procedure: estimating the profit efficiency by employing a four-error stochastic frontier analysis (SFA) and generating MA by calculating residuals from regressing profit efficiency on bank-specific factors. Next, it explores the relationship between IS, managerial ability and banks’ performance.

Findings

There is IS through LLP among Asia–Pacific banks, and high-ability managers generally have no special taste in utilizing IS. However, these situations could be modified by contexts such as bank types, profitability levels, credit risk or economic conditions. Besides, talented managers are expected to propose a positive impact on performance in case they use discretionary LLP as a tool of IS.

Originality/value

This study is among the first to discover IS behavior and its association with MA and performance in the banking industry and Asia–Pacific region. Furthermore, a four-error SFA can solve the problems of inability and improve the measurement framework of managerial ability measurement. The research also enhances the understanding of upper echelon theory.

DOI: https://doi.org/10.1108/JEFAS-09-2024-0303

Non-financial determinants influencing Sustainable Development Goals disclosure in traditional banking institutions in Latin America

Pablo Raffaelli, Jaime Andr´´es Correa-García, Carmen Stella Verón — Mon, 01 Dec 2025 00:00:00 +0000

Purpose

This paper examines the non-financial determinants influencing Sustainable Development Goals (SDGs) disclosure among Latin American banks.

Design/methodology/approach

The study employs an explanatory methodological approach characterized by quantitative analysis and a longitudinal perspective. It applies a multiple linear regression model to examine the non-financial determinants influencing SDG compliance among banks listed on the national stock exchanges of the six Latin American countries with the highest nominal GDP in USD (World Bank, 2022). This group includes the four members of the Pacific Alliance (Chile, Colombia, Mexico, and Peru), along with Brazil—the only Latin American member of the BRICS—and Argentina, recognized for its significance in South America and its membership in the Group of Twenty (G-20).

Findings

The findings reveal a direct and significant relationship between three variables of interest and financial institutions' disclosure of priority SDGs: board member independence, adherence to International Integrated Reporting Council guidelines in reporting, and the audit of sustainability reports by one of the Big Four firms. The variables of board size and the proportion of female employees exhibited a notable inverse relationship.

Originality/value

This study provides empirical evidence from the Latin American context, advancing research on non-financial determinants in the sustainability reporting of financial services, and underscoring banks' commitment to sustainable development.

DOI: https://doi.org/10.1108/JEFAS-12-2024-0387