Journal Article

This paper investigates the effect of political patronage on firms' capital structure. The evidence is from Malaysia, a country characterised by relationship-capitalism, and covers 1988 to 2009. Using a system GMM estimator we find firms set leverage targets and adjust towards them following deviations at the rate of 28% per annum. Next, we construct a natural experiment and use a difference-in-differences model to investigate if the strategic financing decisions of politically patronised firms differ from non-connected firms after an exogenous shock caused by the 1997 Asian crisis. Our results unambiguously demonstrate a significant difference in the capital structure of patronised firms relative to non-connected firms following the exogenous shock but only for the crisis period 1998–2001. After 2002 the capital structures of patronised and non-connected firms are statistically equivalent.

Studies have shown that natural disasters could pose a spectrum of challenges to human development, especially in developing countries. United Nations Development Programme (UNDP, 2004) estimates that low human development countries accounted for more than half of reported casualties due to natural disasters for the last two decades. The study also estimates that nearly 85 percent of the people exposed to natural disasters live in either medium or low human development countries. Other related studies have shown that corrupted officials in poor countries would increase the vulnerability of these countries to natural disasters. Thus, the purpose of the present study is to investigate the impact of human development indicators, such as income per capita and human capital development (education level), as well as corruption (a measure of governance) on fatalities and damages due to natural disasters in selected 77 developing countries. By employing the two-step system GMM estimators, we identified several economic variables that are significantly related to fatalities and property damages due to natural disasters, such as flood, storm, earthquake, landslides, drought, extreme temperature, wildfire, and volcanic eruption. By exploring the impact of economic development, population density, unemployment rate, investment, government consumption expenditure, education, openness, and corruption, on disaster preparedness, it would be useful for both government and international disaster risk reduction and mitigation agencies to re-evaluate their approach towards target recipients in the future.

Tax evasion is a crime. Recent estimates registered the loss of tax revenue amounting to USD3.1 trillion or 5.1% of world's GDP. Tax revenue losses have negative consequences to the government ability to fuelled economic growth by providing enough public infrastructure and other services. In this study we have estimated the share of shadow economy to the official economy for five ASEAN economies, namely; Indonesia, Malaysia, the Philippines, Singapore and Thailand for the period 1980-2013 using the MIMIC model. The indexes of the shadow economy from the MIMIC model were then used to calculate the loss in tax revenue as a result of the presence of the shadow economy. We then test the hypothesis that the level of economic development and tax burden play an important role in mitigating tax evasion. Our results indicate that increasing economic development and tax burden in all five ASEAN economies Malaysia increased tax evasion for the period 1980 to 2013.