Journal of Risk and Financial Management

10 pages, 304 KiB

Open AccessArticle

Performance Evaluation of Utility Exchange-Traded Funds: A Super-Efficiency Approach

by Ioannis E. Tsolas

J. Risk Financial Manag. 2022, 15(7), 318; https://doi.org/10.3390/jrfm15070318 - 21 Jul 2022

Cited by 5 | Viewed by 2311

Choosing funds is a general issue for investors, with the aim of balancing potential risks and returns. The aim of this article is to use a super-efficiency approach to analyze and rank exchange-traded funds (ETFs) in order to find the best utility ETFs. [...] Read more.

Choosing funds is a general issue for investors, with the aim of balancing potential risks and returns. The aim of this article is to use a super-efficiency approach to analyze and rank exchange-traded funds (ETFs) in order to find the best utility ETFs. The range-adjusted measure (RAM)-based data envelopment analysis (DEA) model is used in this work to evaluate a set of utility ETFs and rank inefficient funds, while the super-efficiency RAM model is used to fully rank RAM-based efficient funds. Other slack-based selected DEA models are also used to analyze the ETFs. The results show that the suggested approach delivers the same efficient funds as other slack-based selected DEA models; hence, it appears to be useful as a fund selection tool. Full article

(This article belongs to the Special Issue Mathematical and Empirical Finance)

13 pages, 1309 KiB

Open AccessArticle

Is Bitcoin a Safe Haven for Indian Investors? A GARCH Volatility Analysis

by Sarika Murty, Vijay Victor and Maria Fekete-Farkas

J. Risk Financial Manag. 2022, 15(7), 317; https://doi.org/10.3390/jrfm15070317 - 21 Jul 2022

Cited by 9 | Viewed by 3573

Abstract

This paper attempts to understand the dynamic interrelationships and financial asset capabilities of Bitcoin by analysing several aspects of its volatility vis-a-vis other asset classes. This study aims to analyse the volatility dynamics of the returns of Bitcoin. An asymmetric GARCH model (EGARCH) [...] Read more.

This paper attempts to understand the dynamic interrelationships and financial asset capabilities of Bitcoin by analysing several aspects of its volatility vis-a-vis other asset classes. This study aims to analyse the volatility dynamics of the returns of Bitcoin. An asymmetric GARCH model (EGARCH) is used to investigate whether Bitcoin may be useful in risk management and ideal for risk-averse investors in anticipation of negative shocks to the market (leverage effect). This paper also examines Bitcoin as an investment and hedge alternative to gold as well as NSE NIFTY using a multivariate DCC GARCH model. DCC GARCH models are also used to check whether correlation (co-movement) between the markets is time-varying, examine returns and volatility spillovers between markets and the effect of the outbreak of COVID-19 in India on the investigated markets. The results show that given the supply of Bitcoin is fixed, low returns realisation is equivalent to excess supply over demand wherein investors are selling off Bitcoin during bad times. The positive co-movement between Bitcoin and gold during the COVID-19 outbreak shows that investors perceived Bitcoin as a relatively safe investment. However, overall analysis shows that Bitcoin was not considered a safe hedge and an investment option by Indian investors during the study period. Full article

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18 pages, 654 KiB

Open AccessArticle

The Effects of ESG Activity Recognition of Corporate Employees on Job Performance: The Case of South Korea

by Minsuck Jin and Boyoung Kim

J. Risk Financial Manag. 2022, 15(7), 316; https://doi.org/10.3390/jrfm15070316 - 21 Jul 2022

Cited by 17 | Viewed by 7196

Abstract

Corporate environment, society, and governance (ESG) management activities have recently been consolidated in the business ecosystem, and many firms are considering their employees’ recognition and job changes according to organizational ESG strategy. This study aims to verify the effects of ESG activity recognition [...] Read more.

Corporate environment, society, and governance (ESG) management activities have recently been consolidated in the business ecosystem, and many firms are considering their employees’ recognition and job changes according to organizational ESG strategy. This study aims to verify the effects of ESG activity recognition of corporate employees on job performance by mediating change support behavior, innovative organization culture, and job crafting. This study designs a structural equation model with a hypotheses based on previous studies. A questionnaire survey was carried out targeting large Korean manufacturing companies, and an analysis of 329 response copies was performed. As a result, ESG activity recognition did not directly affect job crafting, but it affected job crafting with the mediation of innovative organizational culture and change support behavior. ESG activity recognition also positively affected job crafting and job performance by mediating change support behavior and an innovative organization culture. Hence, the research shows that an innovative culture and change support behavior within an organization should be considered to improve ESG management performance. Full article

(This article belongs to the Special Issue Sustainable Development and CSR – Perfect Match?)

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19 pages, 1083 KiB

Open AccessArticle

The Impact of Vertical Theories of Harm on Investor Returns: An Event Study of US Vertical Mergers

by Ralph Sonenshine and Seyni Da

J. Risk Financial Manag. 2022, 15(7), 315; https://doi.org/10.3390/jrfm15070315 - 20 Jul 2022

Viewed by 2573

Abstract

The welfare implications of vertical mergers have been a subject of disagreement for decades. Similar to horizontal mergers, economists need to weigh the efficiency gains relative to the market power concerns when considering the competitive effects of vertical mergers. However, in vertical mergers, [...] Read more.

The welfare implications of vertical mergers have been a subject of disagreement for decades. Similar to horizontal mergers, economists need to weigh the efficiency gains relative to the market power concerns when considering the competitive effects of vertical mergers. However, in vertical mergers, regulators are also concerned with other potential harmful effects, such as input and customer foreclosure. Using an event style technique, this paper explores these vertical theories of harm by comparing the abnormal returns of acquirers, targets, and the two combined in vertical and horizontal mergers that were challenged by regulators as potentially anticompetitive. Our results indicate that abnormal returns to targets were similar between vertical and horizontal mergers, but the gains to targets relative to acquirers were far higher in vertical versus horizontal mergers (53.6% versus 39.5%). In addition, we found that exclusionary effects have a positive impact (0.24% of the dollar abnormal return) on the bargaining position of targets. In contrast, acquirers gain 0.45% and 0.39% of the dollar abnormal return relative to targets when the antitrust concern entails collusive effects or elimination of potential competition, respectively. Full article

(This article belongs to the Section Economics and Finance)

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24 pages, 929 KiB

Open AccessArticle

Investigating and Predicting Intentions to Continue Using Mobile Payment Platforms after the COVID-19 Pandemic: An Empirical Study among Retailers in India

by Rabindra Kumar Jena

J. Risk Financial Manag. 2022, 15(7), 314; https://doi.org/10.3390/jrfm15070314 - 18 Jul 2022

Cited by 5 | Viewed by 2956

Abstract

The Indian retail industry has registered tremendous growth recently. The sudden emergence of Coronavirus Disease 2019 (COVID-19) and the related measures that were taken by the authorities to curb the pandemic have compelled retailers and their consumers to transact using digital platforms. This [...] Read more.

The Indian retail industry has registered tremendous growth recently. The sudden emergence of Coronavirus Disease 2019 (COVID-19) and the related measures that were taken by the authorities to curb the pandemic have compelled retailers and their consumers to transact using digital platforms. This study investigates the critical precursors to retailers’ behavioral intention to use mobile platforms for their business transactions in the post-pandemic era. This study adopted a framework that combined the theory of planned behavior (TPB) and self-determination theory (SDT) to predict behavioral intentions. A hybrid approach combining partial least squares structural equation modeling (PLS-SEM) and artificial neural network (ANN) techniques was used to test and validate the proposed framework. Four hundred and ninety-six participants from different central Indian cities participated in the study. PLS-SEM results confirmed that the motivational factors (need satisfaction [NS] and need frustration [NF]) significantly influence the attitude (AT), subjective norms (SN), perceived behavioral control (PBC), and behavioral intention (BI). Furthermore, the findings also established the partial mediating effect of AT, SN, and PBC on the relationship between motivational construct (NS and NF) and BI. Finally, the relationship established by SEM was successfully validated by ANN in the existence of a nonlinear relationship in the data. The findings may help retail stakeholders to support retail owners in their pursuit to continue using mobile payment systems in the post-COVID-19 world. Full article

(This article belongs to the Section Banking and Finance)

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16 pages, 526 KiB

Open AccessArticle

Global Top E-Commerce Companies: Transparency Analysis Based on Annual Reports

by Ionel Bostan, Alic Bîrcă, Aliona Bîrcă and Christiana Brigitte Sandu

J. Risk Financial Manag. 2022, 15(7), 313; https://doi.org/10.3390/jrfm15070313 - 17 Jul 2022

Cited by 1 | Viewed by 2809

Abstract

This paper analyzes the transparency of reporting in e-commerce companies, which has a high impact on decision making. Stakeholders make sure that companies are as transparent as possible in their actions, and the information disclosed in annual reports is very credible. In this [...] Read more.

This paper analyzes the transparency of reporting in e-commerce companies, which has a high impact on decision making. Stakeholders make sure that companies are as transparent as possible in their actions, and the information disclosed in annual reports is very credible. In this context, the highly asked for information refers to the structure of corporate governance, the activity of committees set by the board of directors, managerial strategies, human resource and sustainability policies, risks, financial reporting, financial and non-financial performance, etc. To test and validate the results of our research, we identified the 31 most efficient global e-commerce companies. For this purpose, 31 annual corporate reports were analyzed for 2019 and 2020 by extracting several independent variables: corporate governance, human resource policies, sustainable development, performance, risks and financial reporting. The results of the analysis were validated by using SmartPLS (v. 3.3.3) software. Full article

(This article belongs to the Special Issue Advances in Corporate Governance, Accounting and Financial Management)

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12 pages, 331 KiB

Open AccessArticle

Predicting Innovation Capability through Knowledge Management in the Banking Sector

by Friday Ogbu Edeh, Nurul Mohammad Zayed, Vitalii Nitsenko, Olha Brezhnieva-Yermolenko, Julia Negovska and Maryna Shtan

J. Risk Financial Manag. 2022, 15(7), 312; https://doi.org/10.3390/jrfm15070312 - 17 Jul 2022

Cited by 21 | Viewed by 4386

Abstract

Purpose: The purpose of this study was to investigate the effects of knowledge management on innovation capability in the banking sector. Research methodology: Cross-sectional research design was employed in this study as it supports the use of questionnaire for data collection. Fifteen deposit [...] Read more.

Purpose: The purpose of this study was to investigate the effects of knowledge management on innovation capability in the banking sector. Research methodology: Cross-sectional research design was employed in this study as it supports the use of questionnaire for data collection. Fifteen deposit money banks constitute the accessible population. Questionnaire was used as an instrument for data collection. A sample size of 272 was drawn from the overall population of 920. Overall, 259 staff participated in the study. Demographic characteristics of participants were analysed with frequency distribution while linear regression was used to analyse formulated hypotheses with the aid SPSS. Findings: This study found that knowledge management has significant positive effects on innovation capability. Research limitations: The research limitation is associated with cross-sectional survey and geographical scope. Future studies should employ longitudinal survey that support data collection for a year. Secondly, future studies should be carried out in other countries other than Africa. Practical implications: The implication of the finding is that managers and directors of banks should encourage knowledge management practices in their workplaces as this has proven by this study to improve innovation capability in terms of marketing innovation capability, product innovation capability and process innovation capability. Originality/Value: There is no research that has investigated the effects of knowledge management on innovation capability. Thus, this study provides new insight on promoting innovation capability through knowledge management. Full article

(This article belongs to the Collection Business Performance)

15 pages, 1232 KiB

Open AccessArticle

Financial Technology and Its Impact on Digital Literacy in India: Using Poverty as a Moderating Variable

by Rahul Singh Gautam, Shailesh Rastogi, Aashi Rawal, Venkata Mrudula Bhimavarapu, Jagjeevan Kanoujiya and Samaksh Rastogi

J. Risk Financial Manag. 2022, 15(7), 311; https://doi.org/10.3390/jrfm15070311 - 15 Jul 2022

Cited by 21 | Viewed by 7436

Abstract

Financial technology is a powerful tool in financial infrastructure, used to strengthen and smooth the delivery of financial services into the broader space. Financial technology involves software, applications, and other technologies designed to improve and automate traditional forms of financial services for [...] Read more.

Financial technology is a powerful tool in financial infrastructure, used to strengthen and smooth the delivery of financial services into the broader space. Financial technology involves software, applications, and other technologies designed to improve and automate traditional forms of financial services for businesses established in different areas. The authors aimed to explore the impact of financial technology on the digital literacy rate in India, by utilizing the poverty score as a moderating variable. The panel data analysis (PDA) has been employed in the current study. Data from 29 states and two union territories (UTs) of India were considered for three financial years, i.e., 2017–2018 to 2019–2020. The study’s findings reveal that Kisan Credit Cards (KCCs), both in terms of numbers and amount, are positively associated with the literacy rate. However, ATMs are negatively significant in association with literacy rate. Furthermore, the study’s empirical results show that KCCs and ATMs positively impact literacy when interacting with poverty scores. The study’s findings bring noteworthy implications for the government and other officials to understand the situation at the ground level of Indian states and UTs while forming new rules and policies for society’s betterment, particularly in finance and digital literacy. Additionally, the findings imply that ordinary people living in urban and rural areas of India should take advantage of financial technology and get motivated towards digital literacy. Full article

(This article belongs to the Special Issue International Finance)

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13 pages, 2463 KiB

Open AccessArticle

Are Banks Still a Risk Source for Stock Market? Some Empirical Evidences

by Michele Anelli, Michele Patanè and Stefano Zedda

J. Risk Financial Manag. 2022, 15(7), 310; https://doi.org/10.3390/jrfm15070310 - 15 Jul 2022

Viewed by 1614

Abstract

The global financial crisis of 2008 proved that what initially appeared to be relatively small losses in the financial system can be magnified to systemic ones. The European Union debt crisis has thus revived interest in the interdependence across different markets, especially sovereign [...] Read more.

The global financial crisis of 2008 proved that what initially appeared to be relatively small losses in the financial system can be magnified to systemic ones. The European Union debt crisis has thus revived interest in the interdependence across different markets, especially sovereign debt markets and the banking sector, and in the interlinkages among idiosyncratic and common shocks. This paper analyzes the evolution over time of the incidence of common shocks on the main Italian banking groups starting from the period of European Central Bank’s Quantitative Easing program. Results show that the banking sector is no longer perceived by the markets as a common risk source, overcoming the negative picture coming from the financial crisis of 2008–2009. The analysis also suggests that the common risk is broadly affected by the ECB monetary policy, and the idiosyncratic risk is linked to the recapitalization processes. Full article

(This article belongs to the Special Issue The Future of Banking Risk and Regulation)

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19 pages, 4299 KiB

Open AccessArticle

The Effects of National Fundamental Factors on Regional House Prices: A Factor-Augmented VAR Analysis

by Xiang Gao, Wen Kong and Zhijun Hu

J. Risk Financial Manag. 2022, 15(7), 309; https://doi.org/10.3390/jrfm15070309 - 15 Jul 2022

Cited by 1 | Viewed by 1808

Abstract

Using panel data from 30 regions in China during the period 1999:01–2020:12, this paper evaluates the effects of national fundamentals affecting the movement of regional house prices by estimating a factor-augmented VAR model. We construct and examine a hypothesis that national fundamentals affecting [...] Read more.

Using panel data from 30 regions in China during the period 1999:01–2020:12, this paper evaluates the effects of national fundamentals affecting the movement of regional house prices by estimating a factor-augmented VAR model. We construct and examine a hypothesis that national fundamentals affecting regional house prices, such as monetary policy (short-term interest rate and M2), real output, and inflation rate, may affect regional house prices through their impacts on common factors. The empirical results show that monetary shocks (both interest rate and M2) can significantly affect regional house prices, but the effects are pretty different across regions. However, the effects of the real output and inflation rate are less important. Therefore, this study offers valuable information for regulators to improve the effectiveness of monetary policy to stabilize house markets from a regional perspective. Full article

(This article belongs to the Special Issue Financial Econometrics and Models)

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29 pages, 1256 KiB

Open AccessArticle

Market Quality and Short-Selling Ban during the COVID-19 Pandemic: A High-Frequency Data Approach

by Sandra Ferreruela and Daniel Martín

J. Risk Financial Manag. 2022, 15(7), 308; https://doi.org/10.3390/jrfm15070308 - 14 Jul 2022

Cited by 3 | Viewed by 2905

Abstract

The recent emergence of COVID-19 and the subsequent short-selling restriction (SSR) imposed on some equity markets provide us with a unique framework to analyze the effects of this kind of measure on market quality in the context of increasingly automated equity markets. We [...] Read more.

The recent emergence of COVID-19 and the subsequent short-selling restriction (SSR) imposed on some equity markets provide us with a unique framework to analyze the effects of this kind of measure on market quality in the context of increasingly automated equity markets. We contribute to the literature by analyzing the microstructure and quality parameters of the Spanish equity market during COVID-19 and SSR. We study four subperiods, namely pre-crisis, turmoil, SSR, and first de-escalation periods, by means of a tick-by-tick dataset and the complete limit order book (LOB). We observe the following impact of the SSR on the constituents of IBEX 35: (1) the SSR did comply partially with its aim at an intraday level regarding volatility, but liquidity was reduced; (2) liquidity deterioration affected more the sell than the buy side of the LOB; (3) high-frequency activity (HFT) diminished during SSR, reinforcing volatility; (4) negative effects on liquidity and HFT diminished and disappeared as the ban was lifted; (5) HFT unidirectionally Granger causes 1 min realized volatility while the natural logarithm of the slope of the LOB bidirectionally Granger causes 1 min realized volatility. Full article

(This article belongs to the Special Issue Infectious Disease Outbreaks, Uncertainties, Firms, and Financial Markets)

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26 pages, 544 KiB

Open AccessArticle

Mapping the Sustainable Human-Resource Challenges in Southeast Asia’s FinTech Sector

by An-Chi Wu and Duc-Dinh Kao

J. Risk Financial Manag. 2022, 15(7), 307; https://doi.org/10.3390/jrfm15070307 - 13 Jul 2022

Cited by 16 | Viewed by 7037

Abstract

The significance of human resources (HRs) has increased with the increasing awareness of sustainability issues and corporate social responsibility. However, the rapidly emerging financial technology (FinTech) sector still presents an HR challenge. Southeast Asia, which accounts for the highest adoption rate of mobile [...] Read more.

The significance of human resources (HRs) has increased with the increasing awareness of sustainability issues and corporate social responsibility. However, the rapidly emerging financial technology (FinTech) sector still presents an HR challenge. Southeast Asia, which accounts for the highest adoption rate of mobile banking, has set new records regarding the number of transactions, as well as funding amount, in recent years. Moreover, borderless financial cooperation, coupled with in-demand tech talents, will rapidly boost the development of the region. Thus, this study explored the new opportunities as well as challenges of a new business model, FinTech, in Southeast Asia’s banking and enterprise sector in the post-COVID-19 era. It also examined how organizations can achieve sustainable development via the interaction of the new operating model with existing ones by developing relevant strategies in the context of the “new normal” working condition. By reviewing the literature on HR management (HRM), we proposed how banking and FinTech companies could supply tech talent with the relevant experience or engage in training projects before recruiting. Additionally, since organizations desire sustainability-minded employees, they offer flexible working arrangements and well-established reward policies that can create remote work performance and retention rates. Being committed to upskilling and reskilling global talent by offering talent mobility opportunities across the organization, as well as by fully embracing the creation of value for cross-cultural talent, companies can support their employees’ long-term career goals and maintain competitive strength. Finally, organizations must focus more on flexible adjustments and cross-domain communication for global talent. Forming strategic alliances with FinTech companies would be an alternative conduit that can ensure that regional laws comply with the local culture and national law, for bias and conflict reduction. Full article

(This article belongs to the Special Issue Effect of New Service Modes on Banks)

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19 pages, 367 KiB

Open AccessArticle

Does Board Gender Diversity Really Improve Firm Performance? Evidence from Greek Listed Firms

by Stavros E. Arvanitis, Evangelos G. Varouchas and George M. Agiomirgianakis

J. Risk Financial Manag. 2022, 15(7), 306; https://doi.org/10.3390/jrfm15070306 - 13 Jul 2022

Cited by 24 | Viewed by 7413

Abstract

In recent decades, the contribution of board gender diversity to corporate performance has drawn the interest of researchers, politicians and regulators. This paper examines whether board gender diversity affected the financial performance of 111 Greek listed firms from 2008 to 2020. We use [...] Read more.

In recent decades, the contribution of board gender diversity to corporate performance has drawn the interest of researchers, politicians and regulators. This paper examines whether board gender diversity affected the financial performance of 111 Greek listed firms from 2008 to 2020. We use the two-step system GMM estimator to address the endogeneity problem, which is the appropriate method used in governance literature. Our main empirical finding supports the existence of a positive relation between board gender diversity and firm performance. This finding remains robust to three different proxies of gender diversity and under two alternative performance measures, i.e., return on assets and Tobin’s Q. We also find that there is an inverted U-shaped relation between the proportion of female directors and firm performance (measured by Tobin’s Q). Moreover, we find that gender diversity could lead to maximization of corporate performance when female participation in the boardroom reaches 33%. Thus, the imposition of an ad-hoc 25% female representation in corporate boardrooms, dictated by the new Law 4706/2020 on corporate governance, could most probably be an underproductive policy. Our findings have practical implications for Greek regulators and legislators and contribute to the governance literature for the case of companies that operate in a small open economy. Full article

(This article belongs to the Special Issue Recent Developments in Risk and Financial Management, Economic Methods, Financialization and Commercialization of Risk)

18 pages, 490 KiB

Open AccessArticle

A Discourse on Foresight and the Valuation of Explicit and Tacit Synergies in Strategic Collaborations

by Andrejs Čirjevskis

J. Risk Financial Manag. 2022, 15(7), 305; https://doi.org/10.3390/jrfm15070305 - 12 Jul 2022

Cited by 4 | Viewed by 3006

Abstract

One of the most important questions in business partners’ collaboration is whether their strategies create a collaborative synergy and thus add market value. This paper aims to develop a conceptual framework that will be useful for scholars and practitioners in developing foresight for [...] Read more.

One of the most important questions in business partners’ collaboration is whether their strategies create a collaborative synergy and thus add market value. This paper aims to develop a conceptual framework that will be useful for scholars and practitioners in developing foresight for explicit synergies and valuing tacit synergy in strategic collaborative ventures. The paper comprises a novel theoretical and empirical contribution to the foresight that is required for an explicit competence-based synergy in collaborative ventures from a resource-based view. It employs the ARCTIC framework and values a tacit competence-based synergy using simple and compound real options. Moreover, the paper makes several theoretical and empirical contributions to the study of strategic management, international business, and corporate finance disciplines. Finally, the paper discusses research limitations and future work. Full article

(This article belongs to the Collection Business Performance)

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34 pages, 516 KiB

Open AccessArticle

Crypto-Coins and Credit Risk: Modelling and Forecasting Their Probability of Death

by Dean Fantazzini

J. Risk Financial Manag. 2022, 15(7), 304; https://doi.org/10.3390/jrfm15070304 - 11 Jul 2022

Cited by 7 | Viewed by 5263

Abstract

This paper examined a set of over two thousand crypto-coins observed between 2015 and 2020 to estimate their credit risk by computing their probability of death. We employed different definitions of dead coins, ranging from academic literature to professional practice; alternative forecasting models, [...] Read more.

This paper examined a set of over two thousand crypto-coins observed between 2015 and 2020 to estimate their credit risk by computing their probability of death. We employed different definitions of dead coins, ranging from academic literature to professional practice; alternative forecasting models, ranging from credit scoring models to machine learning and time-series-based models; and different forecasting horizons. We found that the choice of the coin-death definition affected the set of the best forecasting models to compute the probability of death. However, this choice was not critical, and the best models turned out to be the same in most cases. In general, we found that the cauchit and the zero-price-probability (ZPP) based on the random walk or the Markov Switching-GARCH(1,1) were the best models for newly established coins, whereas credit-scoring models and machine-learning methods using lagged trading volumes and online searches were better choices for older coins. These results also held after a set of robustness checks that considered different time samples and the coins’ market capitalization. Full article

(This article belongs to the Special Issue Advanced Portfolio Optimization and Management)

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19 pages, 657 KiB

Open AccessArticle

Board Characteristics and the Insolvency Risk of Non-Financial Firms

by Florian Maier and B. Burcin Yurtoglu

J. Risk Financial Manag. 2022, 15(7), 303; https://doi.org/10.3390/jrfm15070303 - 11 Jul 2022

Cited by 8 | Viewed by 3144

Abstract

How do board characteristics influence the risk of bankruptcy? We study this question by estimating classic Z-Score models using panel data comprising 2519 listed non-financial firms from 29 European countries over the 2012–2020 period. We found that board independence is associated with lower [...] Read more.

How do board characteristics influence the risk of bankruptcy? We study this question by estimating classic Z-Score models using panel data comprising 2519 listed non-financial firms from 29 European countries over the 2012–2020 period. We found that board independence is associated with lower risk of bankruptcy. In contrast, employee representatives have an adverse effect on board monitoring capacity and are predicted to increase bankruptcy risk. The presence of female directors and foreign directors on board—two indicators of board diversity—reduce bankruptcy risk. While board independence and diversity decrease bankruptcy risk in financially non-distressed firms, they have the opposite effect in financially distressed firms. These findings are statistically and economically significant and hold, at least in part, under alternative specifications. Our findings demonstrate the need for governance regulators, credit rating agencies, financial institutions, firms and investors to lend more weight to board composition, especially under the conditions of impending financial distress. Full article

(This article belongs to the Special Issue Corporate Finance, Governance, and Social Responsibility)

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20 pages, 1075 KiB

Open AccessArticle

Artificial Intelligence and Firm Performance: Does Machine Intelligence Shield Firms from Risks?

by Linh Tu Ho, Christopher Gan, Shan Jin and Bryan Le

J. Risk Financial Manag. 2022, 15(7), 302; https://doi.org/10.3390/jrfm15070302 - 10 Jul 2022

Cited by 12 | Viewed by 6561

Abstract

We estimate and compare the impact of the coronavirus pandemic (COVID-19) on the performance of Artificial Intelligence (AI) and conventional listed firms using stock market indices. The single-group and multiple-group Interrupted Time-Series Analyses (ITSA) with panel data were used with four interventions: when [...] Read more.

We estimate and compare the impact of the coronavirus pandemic (COVID-19) on the performance of Artificial Intelligence (AI) and conventional listed firms using stock market indices. The single-group and multiple-group Interrupted Time-Series Analyses (ITSA) with panel data were used with four interventions: when the news of COVID-19 spread and the pandemic entered the first, second, third, and fourth months (24 February 2020, 23 March 2020, 20 April 2020, and 18 May 2020, respectively). The results show that the negative impact of COVID-19 on the AI stock market was less severe than on the conventional stock market in the first month of the pandemic. The performance of the AI stock market recovered quicker than the conventional stock market when the pandemic went into its third month. The results suggest that the AI stocks were more resilient than conventional stocks when the financial market was exposed to uncertainty caused by the COVID-19 pandemic. The deployment of AI in firms serves as a resilient, crucial driver for sustainable performance in challenging environments. Observing the performance of AI-adopted firms is an interesting direction for technical and fundamental analysts. Investors and portfolio managers should consider an AI market index to minimize risk or invest in stocks of AI-adopted listed firms to maximize excess returns. Full article

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11 pages, 1185 KiB

Open AccessArticle

Zombie Firms during and after Crisis

by Ivana Blažková and Gabriela Chmelíková

J. Risk Financial Manag. 2022, 15(7), 301; https://doi.org/10.3390/jrfm15070301 - 8 Jul 2022

Cited by 5 | Viewed by 3130

Abstract

The phenomenon of zombie firms is gaining the attention of economists across different countries of the world; the increased interest is particularly evident after periods of economic crises. In our study, we focus on the development of zombie firms in the period before [...] Read more.

The phenomenon of zombie firms is gaining the attention of economists across different countries of the world; the increased interest is particularly evident after periods of economic crises. In our study, we focus on the development of zombie firms in the period before and after the 2008 crisis within two different economies, i.e., Germany and the Czech Republic, to provide insight into how different conditions and the overall economic context affect the fact that companies are more prone to becoming zombie firms. We implemented a difference-in-differences regression model to estimate the treatment effect by comparing the change (difference) in the differences in observed outcomes between these two countries. The data were obtained from two databases—the database Albertina by Bisnode a.s. providing financial statements of enterprises in the Czech Republic, and the database provided by Creditreform AG, which includes annual report data for a large sample of German companies. The dataset of German enterprises included 1,444,698 observations, i.e., 338,923 firms, and the dataset of Czech enterprises included 2,139,462 observations, i.e., 523,542 firms, both across the years 2000–2016, i.e., the data sample covered the period before and after the 2008 crisis. The different development of the share of zombie firms after the great financial crisis between Germany and the Czech Republic was proven as statistically significant. The findings confirm Germany is a country with a more stable economy and with a significantly lower risk of zombie firms’ persistence, while the Czech Republic is at the level of the European average in terms of zombie share. The results also suggest an influence of post-crisis monetary policy on companies and the possible link between low interest rates and a growing share of zombies. Full article

(This article belongs to the Special Issue Financial Markets—The Response in Crisis Moments)

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26 pages, 3367 KiB

Open AccessArticle

Crowd Reactions to Entrepreneurial Failure in Rewards-Based Crowdfunding: A Psychological Contract Theory Perspective

by Swati Oberoi, Smita Srivastava, Vishal K. Gupta, Rohit Joshi and Atul Mehta

J. Risk Financial Manag. 2022, 15(7), 300; https://doi.org/10.3390/jrfm15070300 - 8 Jul 2022

Cited by 5 | Viewed by 3046

Abstract

Rewards-based crowdfunding (RBC) has recently gained popularity as an alternative means of finance to help entrepreneurs bring novel projects to life. We theorize that crowdfunding backers perceive an implicit psychological contract with campaign creators. When promised rewards fail to materialize post fundraising, backers [...] Read more.

Rewards-based crowdfunding (RBC) has recently gained popularity as an alternative means of finance to help entrepreneurs bring novel projects to life. We theorize that crowdfunding backers perceive an implicit psychological contract with campaign creators. When promised rewards fail to materialize post fundraising, backers may perceive entrepreneurs’ failure to deliver rewards as a violation of their psychological contract with him or her. Drawing on psychological contract theory and using Eisenhardt’s comparative case methodology, we generate insights about crowd reactions to creators’ failure to deliver rewards to backers. Our research generates the novel insight that in the event of delivery failure, backers who perceive a transactional psychological contract with creators are more likely to display negative emotional reactions, while backers who perceive a relational psychological contract are more likely to display positive emotional reactions. Furthermore, we identify three progressive stages of backers’ interaction with creators in failed RBC campaigns, ‘committing’, ‘crisis handling’, and ‘coping-up’ and highlight the crowds’ emotional valence associated with each stage. Our analyses of the campaign comments reveal insights of interest to RBC players and hold implications for the future development of crowdfunding. Full article

(This article belongs to the Section Financial Markets)

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10 pages, 542 KiB

Open AccessArticle

Evidence of Abnormal Trading on COVID-19 Pfizer Vaccine Development Information

by Andrew N. Mason and Ahmed Elkassabgi

J. Risk Financial Manag. 2022, 15(7), 299; https://doi.org/10.3390/jrfm15070299 - 6 Jul 2022

Cited by 4 | Viewed by 2592

Abstract

The 2019 COVID-19 pandemic led to an economic slowdown worldwide and shook the investment world. Pharmaceutical investments were influenced by the anticipation of COVID-19 vaccine developments. Our study examines the real-time impact of public announcements concerning COVID-19 vaccine developments on stock returns and [...] Read more.

The 2019 COVID-19 pandemic led to an economic slowdown worldwide and shook the investment world. Pharmaceutical investments were influenced by the anticipation of COVID-19 vaccine developments. Our study examines the real-time impact of public announcements concerning COVID-19 vaccine developments on stock returns and volatilities for Pfizer, Moderna, and the S&P 500. Market Return and Information Event methodology were used to analyze stock activities immediately before important public COVID-19 vaccine development announcements related to Pfizer and Moderna vaccines. This methodology was employed for vaccine news announcements between 2 January 2020 and 4 March 2022. Stock returns and volatility were analyzed with time-series regression analysis. Findings demonstrated that increased trade volatilities occurred immediately prior to COVID-19 vaccine development news was made public. Specifically, Pfizer stock returns were significantly higher (above the mean) immediately before positive COVID-19 vaccine development information was made public. Also, increased volume volatility was observed for Pfizer, Moderna, and the S&P 500 index stocks immediately before positive vaccine development information concerning Pfizer and Moderna vaccines were made public. These findings suggest that the vaccine information may have been leaked before being made public. If so, the findings may indicate that investors were taking advantage of insider information while trying to mitigate the appearance that they engaged in insider trading. Full article

(This article belongs to the Special Issue Infectious Disease Outbreaks, Uncertainties, Firms, and Financial Markets)

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18 pages, 468 KiB

Open AccessArticle

Developing an Impact-Focused Typology of Socially Responsible Fund Providers

by Joel Diener and André Habisch

J. Risk Financial Manag. 2022, 15(7), 298; https://doi.org/10.3390/jrfm15070298 - 5 Jul 2022

Cited by 4 | Viewed by 2399

Abstract

The concept of investor impact of socially responsible investments is relatively new. Our article expands knowledge in this field by analyzing how investor impact is implemented in the ethical investment policies of 45 providers of publicly traded, socially responsible funds. Based on a [...] Read more.

The concept of investor impact of socially responsible investments is relatively new. Our article expands knowledge in this field by analyzing how investor impact is implemented in the ethical investment policies of 45 providers of publicly traded, socially responsible funds. Based on a typological content analysis, we first develop an impact-focused category system, which in the second step is used to distinguish three types of fund providers: ESG hermits, ESG ambassadors and ESG evangelists. Our results suggest that socially responsible fund providers with a stronger impact orientation, such as ESG evangelists, also employ strategies that are more likely to achieve investor impact. In contrast, fund providers with a weaker impact orientation, such as ESG hermits, focus more on purity aspects and therefore tend to utilize strategies that defend the purity claim but also show a weaker investor impact. Full article

(This article belongs to the Special Issue Green Marketing, Green Finance and Sustainable Development)

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8 pages, 1026 KiB

Open AccessArticle

A Procedure to Set Prices and Select Inventory in Thinly Traded Markets Using Data from eBay

by Xinbo Hu and Paul J. Zak

J. Risk Financial Manag. 2022, 15(7), 297; https://doi.org/10.3390/jrfm15070297 - 5 Jul 2022

Viewed by 1780

Abstract

Prices respond to equate supply and demand. However, price-setting in low-volume or “thin” markets is a challenge as is determining which items to carry. We present an algorithm that takes into account a store’s fixed costs, the cost of goods sold, prices, and [...] Read more.

Prices respond to equate supply and demand. However, price-setting in low-volume or “thin” markets is a challenge as is determining which items to carry. We present an algorithm that takes into account a store’s fixed costs, the cost of goods sold, prices, and listing duration to determine the portfolio of items to maximize profits. Prices can then be assigned as a mark-up over cost. The usefulness of this approach is demonstrated by applying it to a store on eBay in which the seller needs to meet a profit threshold. The findings identify how sellers of unusual items can effectively determine which items to list and how to set price to reach profit goals. Full article

(This article belongs to the Special Issue Frontiers of Asset Pricing)

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13 pages, 1489 KiB

Open AccessArticle

The Evolution of Job Lock in the U.S.: Evidence from the Affordable Care Act

by James Bailey, Gregory Colman and Dhaval Dave

J. Risk Financial Manag. 2022, 15(7), 296; https://doi.org/10.3390/jrfm15070296 - 3 Jul 2022

Cited by 3 | Viewed by 3744

Abstract

Since at least the early 1990s, economists have found substantial evidence of “job lock” in the United States: workers who get health insurance from their employer are less likely to switch jobs. Early work showed stronger job lock among groups that place a [...] Read more.

Since at least the early 1990s, economists have found substantial evidence of “job lock” in the United States: workers who get health insurance from their employer are less likely to switch jobs. Early work showed stronger job lock among groups that place a higher value on health insurance, whereas more recent work has focused on measuring the effect of specific policies on job lock. We combine these approaches by replicating some of the classic group comparisons (job switching among the more versus less healthy, and among those whose spouses do or do not have their own health insurance) over a much longer time period, using data from the Current Population Survey and the Medical Expenditure Panel Survey. This enables us to document the evolution of job lock over time, with a particular focus on how it changed when policies such as the Affordable Care Act (ACA) took effect. Estimates based on a difference-in-differences methodology indicate that job lock remains substantial, and that ACA has not significantly affected job mobility. Full article

(This article belongs to the Special Issue Health Economics and Insurance)

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15 pages, 327 KiB

Open AccessCommunication

Russia’s War in Ukraine: Consequences for European Countries’ Businesses and Economies

by Anatolijs Prohorovs

J. Risk Financial Manag. 2022, 15(7), 295; https://doi.org/10.3390/jrfm15070295 - 2 Jul 2022

Cited by 57 | Viewed by 16519

Abstract

Companies and countries have needed to adapt their activities to the consequences of the Russian war in Ukraine. The analysis in this article shows that both the Russian war in Ukraine and the subsequent trade restrictions have become a powerful trigger, significantly increasing [...] Read more.

Companies and countries have needed to adapt their activities to the consequences of the Russian war in Ukraine. The analysis in this article shows that both the Russian war in Ukraine and the subsequent trade restrictions have become a powerful trigger, significantly increasing the level of inflation and exacerbating the existing issues of economies. As a result, the confrontation between the West and Russia has greatly escalated, which will have a long-term, large-scale negative impact on most European companies and economies. There could also be a lasting restructuring of world trade. The article notes that not only the end date of the war in Ukraine may be important for business and economies, but also which of the trade and financial restrictions can be lifted from Russia, and when. The article also makes recommendations that may help company leaders plan, in a timelier and more accurate fashion, the changes necessary to maintain company sustainability. Full article

(This article belongs to the Special Issue Risk and Financial Consequences)

23 pages, 2281 KiB

Open AccessArticle

Waste Bank-Socio-Economic Empowerment Nexus in Indonesia: The Stance of Maqasid al-Shariʻah

by Miftahorrozi Miftahorrozi, Shabeer Khan and Muhammad Ishaq Bhatti

J. Risk Financial Manag. 2022, 15(7), 294; https://doi.org/10.3390/jrfm15070294 - 30 Jun 2022

Cited by 9 | Viewed by 4065

Abstract

With the rapid increase of waste throughout the country, the government of Indonesia has enacted regulations targeting waste reduction using religious sentiment. This is employed in Malang City’s “Waste Bank of Malang” (WBM). This study aims to analyze the impact of [...] Read more.

With the rapid increase of waste throughout the country, the government of Indonesia has enacted regulations targeting waste reduction using religious sentiment. This is employed in Malang City’s “Waste Bank of Malang” (WBM). This study aims to analyze the impact of waste banks on socio-economic progress, and to assess their efficacy in accomplishing this objective from the Maqasid al-Shariʻah perspective. The research employs a descriptive qualitative approach and uses both primary and secondary data sources. This study found that the operation of WBM contributes considerably to the community’s economic and social well-being. Likewise, the WBM has successfully managed waste by reducing, reusing, and recycling it as it is collected from customers. The customers receive financial incentives from the waste bank in return for providing recycled waste to a specialized firm under a profit-sharing (PLS) contract. As per the findings of the study, the rationale of the waste bank aligns with the Maqasid al-Shariʻah and the Islamic finance contract of PLS arrangements. Full article

(This article belongs to the Special Issue Islamic Finance II)

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15 pages, 338 KiB

Open AccessArticle

Parsimonious AHP-DEA Integrated Approach for Efficiency Evaluation of Production Processes

by Salvatore Ammirato, Gerarda Fattoruso and Antonio Violi

J. Risk Financial Manag. 2022, 15(7), 293; https://doi.org/10.3390/jrfm15070293 - 30 Jun 2022

Cited by 9 | Viewed by 1936

Abstract

This document proposes an innovative composite indicator to measure and control the performance of production processes. The aim is to provide a tool for controlling the efficiency of the processes, assessed in relation to the number and the impact of occurring “errors”, which [...] Read more.

This document proposes an innovative composite indicator to measure and control the performance of production processes. The aim is to provide a tool for controlling the efficiency of the processes, assessed in relation to the number and the impact of occurring “errors”, which can take into account the opinion of experts in the specific domain. This allows for the definition of a more realistic and effective decision support system. Our composite indicator is based on an integrated approach based on Data Envelopment Analysis (DEA), and a new multi-criteria method such as Parsimonious Analytical Hierarchy Process (PAHP). The results obtained on a real test case, based on the automotive production domain, show that the composite indicator built with PAHP-DEA allows us to have clear evidence of the efficiency level of each process and the overall impact of errors on all the processes under evaluation. From a methodological point of view, we have for the first time combined the new thrifty AHP with the DEA. From an application point of view, this work introduces a new tool capable of evaluating the efficiency of production processes in an extremely competitive sector, exploiting the knowledge of the experts in the domain of errors, internal processes and the dynamics that occur. Full article

(This article belongs to the Special Issue Entrepreneurship and Business Models in the Digital Era)

32 pages, 2971 KiB

Open AccessArticle

Financial Crises and Business Cycle Implications for Islamic and Non-Islamic Bank Lending in Indonesia

by Samar Issa

J. Risk Financial Manag. 2022, 15(7), 292; https://doi.org/10.3390/jrfm15070292 - 30 Jun 2022

Cited by 2 | Viewed by 1996

Abstract

This paper addresses if and how excess debt can be considered as an early warning signal for banks and takes an additional dimension by comparing the excess leverage between Islamic and conventional banks in Indonesia before, during, and after the Global Financial Crisis [...] Read more.

This paper addresses if and how excess debt can be considered as an early warning signal for banks and takes an additional dimension by comparing the excess leverage between Islamic and conventional banks in Indonesia before, during, and after the Global Financial Crisis (GFC). To do so, this research develops an empirical model of banks’ capital structure and optimal and excess debt, and it conducts an empirical analysis on the overleveraging of eleven conventional and Islamic banks in Indonesia. Results show that all banks became vulnerable to the GFC in 2007–2009 while credit build-up, i.e., overleveraging, started in 2005. However, for most of the banks in the sample, Islamic banks performed better and leveraged less prior to the GFC, which made them more resilient to the crisis. Full article

(This article belongs to the Special Issue Islamic Banking and Shari`ah Governance)

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19 pages, 1663 KiB

Open AccessArticle

How Can European Regulation on ESG Impact Business Globally?

by Rocío Redondo Alamillos and Frédéric de Mariz

J. Risk Financial Manag. 2022, 15(7), 291; https://doi.org/10.3390/jrfm15070291 - 30 Jun 2022

Cited by 31 | Viewed by 14151

Abstract

The European Union (EU) has impacted regulation worldwide in areas ranging from data protection to trade or antitrust. In select fields, it has defined stringent standards and has had an impact on global business because of the size of its market and the [...] Read more.

The European Union (EU) has impacted regulation worldwide in areas ranging from data protection to trade or antitrust. In select fields, it has defined stringent standards and has had an impact on global business because of the size of its market and the price of participating in it. The purpose of this paper is to analyze the main provisions of the EU regulation on Environmental, Social, and Governance (ESG) and determine whether and how it will have an impact on business globally, including regulations around disclosure for companies, taxonomy for the asset management sector, supply chain due diligence requirements, new mechanisms such as carbon markets, or non-tariffs restrictions on international trade. For this, our analysis includes an in-depth review of the literature on EU regulation of the past 20 years, complemented with interviews with experts in the field, in order to understand the main tools used by European policymakers in ESG regulations to understand their effect. The analysis adds to the body of research pertaining to the impact of regulation on business and the growing body of research on sustainable finance. We find that the new ESG regulation impacts countries outside of the EU, influencing regulation worldwide, and raising the question of possible regulatory arbitrage. Full article

(This article belongs to the Special Issue Advances in Sustainable Accounting and Finance)

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17 pages, 327 KiB

Open AccessArticle

Institutional Ownership and Investment Efficiency: Evidence from Iran

by Mohammad Moradi, Hassan Yazdifar, Hoda Eskandar and Navid Reza Namazi

J. Risk Financial Manag. 2022, 15(7), 290; https://doi.org/10.3390/jrfm15070290 - 30 Jun 2022

Cited by 10 | Viewed by 5138

Abstract

Investment efficiency shows how well a company invests its assets. Although institutional shareholders play undeniable roles in companies, it is not clear whether they are able to monitor managers and make investment decisions or not. This study gives answers to stakeholders, addresses concerns [...] Read more.

Investment efficiency shows how well a company invests its assets. Although institutional shareholders play undeniable roles in companies, it is not clear whether they are able to monitor managers and make investment decisions or not. This study gives answers to stakeholders, addresses concerns about the effect of the owners on investment efficiency, and aims to add to the literature on emerging markets by investigating the relationship in Iran, a different environment from developed ones. Based on monitoring power, the shareholders are divided into two types: active and passive ones. Investment problems are classified into two types: over- and under-investment problems. The sample consists of 101 firms listed on the Tehran Stock Exchange between 2010 and 2016. Some regression models are used. The results illustrated that institutional owners have a positive effect on investment efficiency and decrease both over- and under-investment problems and so, the efficient monitoring school is approved. Additionally, active ones are positively correlated with investment efficiency and decrease both investment inefficiency problems. Institutional ownership is the cause of investment efficiency, not the reverse. Based on findings, in emerging markets like Iran’s market, investors are recommended to give notice to the level of active ownership in firms; ownership structure is a good sign of efficiency. Full article

(This article belongs to the Section Financial Markets)

18 pages, 876 KiB

Open AccessArticle

A Revised Technology–Organisation–Environment Framework for Brick-and-Mortar Retailers Adopting M-Commerce

by Mateus Vicente Justino, Robertson Khan Tengeh and Michael Twum-Darko

J. Risk Financial Manag. 2022, 15(7), 289; https://doi.org/10.3390/jrfm15070289 - 29 Jun 2022

Cited by 2 | Viewed by 3344

Abstract

This paper argues that brick-and-mortar retail Small and Medium Enterprises (SMEs) can benefit significantly from the capabilities of mobile commerce (m-commerce) to respond to the unpredictable changes in the business environment, accommodate new consumer experiences, boost sales of products/services, and achieve a competitive [...] Read more.

This paper argues that brick-and-mortar retail Small and Medium Enterprises (SMEs) can benefit significantly from the capabilities of mobile commerce (m-commerce) to respond to the unpredictable changes in the business environment, accommodate new consumer experiences, boost sales of products/services, and achieve a competitive advantage. Consequently, this study explored the potential application of the Technology–Organisation–Environment (TOE) framework for m-commerce by brick-and-mortar retail SMEs. The study adopted the positivist paradigm and followed a cross-sectional study design. A structured questionnaire was used to collect data from a sample of 263 retail business personnel. The Analysis of Moment Structures (AMOS) software was used to analyse the data. The findings unveil that all the proposed constructs associated with the organisational context and technological context are critical for the use of m-commerce. The proposed framework provides a fresh set of contextual variables which align with brick-and-mortar retailer operations and mobile commerce practices. It is envisaged that the extended framework may help conventional businesses to understand and identify the requisite factors in the adoption and use of m-commerce and assist business supporters in the process of technological innovation transfer. Full article

(This article belongs to the Collection Business Performance)

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J. Risk Financial Manag., Volume 15, Issue 7 (July 2022) – 46 articles

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