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A special issue of Sustainability (ISSN 2071-1050). This special issue belongs to the section "Sustainable Management".

Deadline for manuscript submissions: closed (31 July 2022) | Viewed by 56740

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Special Issue Editors

Dr. María Antonia García-Benau

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Guest Editor

Department of Accounting, Facultad de Economía, Universitat de València, Spain
Interests: sustainability; auditing; financial/non-financial reporting; higher education

Dr. Nicolás Gambetta

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Guest Editor

Facultad de Administración y Ciencias Sociales, Universidad ORT Uruguay, Uruguay
Interests: sustainability; auditing; financial/non-financial reporting; higher education

Dr. Laura Sierra-García

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Guest Editor

Departamento de Economía Financiera y Contabilidad, Facultad de Ciencias Empresariales, Universidad Pablo de Olavide, Spain
Interests: sustainability; auditing; financial/non-financial reporting; higher education

Special Issue Information

Dear Colleagues,

In the last decades, the studies that analyze the link between corporate social responsibility and financial performance in developed countries show mixed and inconclusive results, so additional research is required. Additionally, the appearance of new factors change their relationship making it more complex. In 2015, the introduction of the Sustainable Development Goals (SDGs) brings a new scenario for the nexus between financial risk and sustainability, but the impact is not obvious. These new factors related to sustainability must be captured by an entity’s risk management system, so they should be considered when managing financial risk. This financial risk management could take place in different scenarios: either in an emerging economy or in a developed country and where the sustainability mandate comes from society or where it is imposed by a regulatory body. The financial risk management performed in these environments differs due to its particularities and the different risk sources they bring.

This Special Issue on “Financial Risk Management and Sustainability” is aimed at filling an important gap in literature by exploring the relationship and the complex dynamics between financial risk management and sustainability. In this sense, we encourage original submissions, as well as review articles, theoretical and empirical contributions or perspective pieces. We welcome papers that relate to, but are not limited to, the following themes:

The impact of social and environmental factors on:
- Cost of capital
- Capital structure
- Financial performance
- Market risk
- Operational Risk
- Credit risk management
- Economic performance
- Investment decisions
- Information asymmetry
The role of the Sustainable Development Goals in financial risk management and sustainability dynamics
The impact of social and environmental factors throughout the financial risk management process: identification, measurement and assessment, mitigation and control, review and report.
The effect of social and environmental information on financial disclosures
The link between financial information audit and non-financial information assurance.
Responsible management.

Dr. María Antonia García-Benau
Dr. Nicolás Gambetta
Dr. Laura Sierra-García
Guest Editors

Manuscript Submission Information

Manuscripts should be submitted online at www.mdpi.com by registering and logging in to this website. Once you are registered, click here to go to the submission form. Manuscripts can be submitted until the deadline. All submissions that pass pre-check are peer-reviewed. Accepted papers will be published continuously in the journal (as soon as accepted) and will be listed together on the special issue website. Research articles, review articles as well as short communications are invited. For planned papers, a title and short abstract (about 100 words) can be sent to the Editorial Office for announcement on this website.

Submitted manuscripts should not have been published previously, nor be under consideration for publication elsewhere (except conference proceedings papers). All manuscripts are thoroughly refereed through a single-blind peer-review process. A guide for authors and other relevant information for submission of manuscripts is available on the Instructions for Authors page. Sustainability is an international peer-reviewed open access semimonthly journal published by MDPI.

Please visit the Instructions for Authors page before submitting a manuscript. The Article Processing Charge (APC) for publication in this open access journal is 2400 CHF (Swiss Francs). Submitted papers should be well formatted and use good English. Authors may use MDPI's English editing service prior to publication or during author revisions.

Keywords

financial risk management
sustainability
corporate social responsibility
SDGs
assurance
financial information
non-financial information
emerging economies
developed countries
regulation

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Published Papers (12 papers)

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Editorial

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4 pages, 199 KiB

Open AccessEditor’s ChoiceEditorial

Financial Risk Management and Sustainability

by María Antonia García-Benau, Nicolás Gambetta and Laura Sierra-García

Sustainability 2021, 13(15), 8300; https://doi.org/10.3390/su13158300 - 25 Jul 2021

Cited by 7 | Viewed by 5606

Abstract

In the last decades, the studies that analyze the links between corporate social responsibility and financial performance in developed countries show mixed and inconclusive results, so additional research is required [...] Full article

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

Research

Jump to: Editorial

9 pages, 2034 KiB

Open AccessArticle

Risk Management of Fuel Hedging Strategy Based on CVaR and Markov Switching GARCH in Airline Company

by Shuang Lin, Minke Wang, Zhihong Cheng, Fan He, Jiuhao Chen, Chuanhui Liao and Shengda Zhang

Sustainability 2022, 14(22), 15264; https://doi.org/10.3390/su142215264 - 17 Nov 2022

Cited by 1 | Viewed by 1786

Abstract

Using a hedging strategy to stabilize fuel price is very important for airline companies in order to reduce the cost of their main business. In this paper, we construct models for managing the risk of the hedging strategy. First, we use conditional value at risk (CVaR) to measure the risk of an airline company’s hedging strategy. Compared with the value at risk (VaR), CVaR satisfies subadditivity, positive homogeneity, monotonicity, and transfer invariance. Therefore, CVaR is a consistent method of risk measurement. Second, time-varying state transition probability is introduced into our model in order to build a Markov Switching-GARCH (MS-GARCH). MS-GARCH takes dynamic changes of market state into account, a feature which has obvious advantages over the traditional constant state model. Additionally, we use a Markov chain Monte Carlo (MCMC) algorithm to estimate the parameters of MS-GARCH based on Gibbs sampling. We use fuel oil futures data from the Shanghai Futures Stock Exchange to implement and evaluate our model. In this paper, we empirically estimate the risk of airlines’ hedging strategy and draw the conclusion that our model is obviously effective in terms of the risk management of hedging, a use which has a certain guiding significance for reality. Full article

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

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15 pages, 334 KiB

Open AccessArticle

Financial Institutions’ Risk Profile and Contribution to the Sustainable Development Goals

by Nicolás Gambetta, Fernando Azcárate-Llanes, Laura Sierra-García and María Antonia García-Benau

Sustainability 2021, 13(14), 7738; https://doi.org/10.3390/su13147738 - 11 Jul 2021

Cited by 28 | Viewed by 5316

Abstract

This study analyses the impact of Spanish financial institutions’ risk profile on their contribution to the 2030 Agenda. Financial institutions play a significant role in ensuring financial inclusion and sustainable economic growth and usually incorporate environmental and social considerations into their risk management systems. The results show that financial institutions with less capital risk, with lower management efficiency and with higher market risk usually make higher contributions to the Sustainable Development Goals (SDGs), according to their sustainability reports. The novel aspect of the present study is that it identifies the risk profile of financial institutions that incorporate sustainability into their business operations and measure the impact generated in the environment and in society. The study findings have important implications for shareholders, investors and analysts, according to the view that sustainability reporting is a vehicle that financial institutions use to express their commitment to the 2030 Agenda and to higher quality corporate reporting. Full article

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

19 pages, 470 KiB

Open AccessArticle

Scoring Sufficiency Economy Philosophy through GRI Standards and Firm Risk: A Case Study of Thai Listed Companies

by Veerawin Korphaibool, Pattanaporn Chatjuthamard and Sirimon Treepongkaruna

Sustainability 2021, 13(4), 2321; https://doi.org/10.3390/su13042321 - 20 Feb 2021

Cited by 8 | Viewed by 3546

Abstract

The purpose of this study is to evaluate sufficiency economy philosophy (SEP) performance through annual reports and voluntary sustainable development reports and examines the relationship between SEP performance and firm-specific risk of Thai listed companies from 2013 to 2018. Based on global reporting initiative (GRI) standards, the SEP performance was measured by aligning each GRI topic with each of the SEP elements to create an SEP scoring system. The scoring system was applied and tested by evaluating 34 firms for six years. The outcome scores were recorded in panel data structure and used to test two competing hypotheses of risk reduction and managerial opportunism. The regression results supported the risk reduction hypothesis and thus practicing SEP reduced firm-specific risk. Since our sample was limited to 34 firms, a two-stage least squares instrumental variable (2SLS-IV) analysis was performed to estimate the causal relationship between SEP performance and firm-specific risk. The result remained negatively and significantly correlated, indicating that SEP practice stimulated business sustainability. The finding suggested that the SEP scoring system was able to capture SEP performance and practicing SEP appeared to reduce firm-specific risk, which was consistent with the risk reduction hypothesis of the stakeholder theory. Full article

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

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29 pages, 673 KiB

Open AccessArticle

Determinants of Overfunding in Equity Crowdfunding: An Empirical Study in the UK and Spain

by Cristina Martínez-Gómez, Francisca Jiménez-Jiménez and M. Virtudes Alba-Fernández

Sustainability 2020, 12(23), 10054; https://doi.org/10.3390/su122310054 - 2 Dec 2020

Cited by 13 | Viewed by 3200

Abstract

Crowdfunding constitutes one of the financial solutions to achieve the sustainable development goals, by fostering innovation and economic growth. This paper conducts an empirical two-country analysis (the UK and Spain) of characteristics of successful offerings to assess the distribution of overfunding in equity crowdfunding. Unlike previous research, which has usually comprised campaigns posted on single-country portals, our study is based on an international leading platform operating with country-differentiated websites, Crowdcube. Such an approach allows us to identify influential factors which are dependent on country and, simultaneously, to control for those platform-related factors. To focus on the overfunding distribution, a quantile regression methodology is adopted for a total sample of 299 overfunded campaigns from 2015 to 2018. Overall, empirical results show that the effects of key campaign features (equity, voting rights and social capital) are stronger and more significant at the 75th and 90th quantiles for the overfunding level and the number of investors. Furthermore, we find significant differences across countries, which persist along the distributions of overfunding. Yet, interestingly, between-country differences in overfunding level vanish for the technological sector. Our research provides further insights into the relation between equity crowdfunding and sustainable finance. Full article

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

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22 pages, 603 KiB

Open AccessArticle

Corporate Social Responsibility and Maturity Mismatch of Investment and Financing: Evidence from Polluting and Non-Polluting Companies

by Xiaolan Bao, Qiaosheng Luo, Sicheng Li, M. James C. Crabbe and XiaoGuang Yue

Sustainability 2020, 12(12), 4972; https://doi.org/10.3390/su12124972 - 18 Jun 2020

Cited by 22 | Viewed by 3799

Abstract

We investigate the influence of corporate social responsibility (CSR) on the maturity mismatch of investment and financing from the perspective of both polluting and non-polluting companies. The results reveal that CSR performance can aggravate the maturity mismatch of investment and financing; and the effect can be more serious in the polluting companies. At the same time, we find that CSR makes companies obtain more short-term debt. What is more, polluting companies perform more environmental responsibilities in the form of long-term investments than non-polluting companies. These phenomena exacerbate the maturity mismatch of investment and financing; and this effect is only significant when polluting companies choose CSR mandatory disclosure. The impact of CSR on the maturity mismatch of investment and financing is more apparent in companies with lower value and at smaller scales. We show that companies should not only perform their CSR to maintain a balanced economic and ecological development, but also pay attention to the aggravation of the maturity mismatch of investment and financing. Full article

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

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19 pages, 1163 KiB

Open AccessArticle

Unraveling the Bankruptcy Risk‒Return Paradox across the Corporate Life Cycle

by Minhas Akbar, Ahsan Akbar, Petra Maresova, Minghui Yang and Hafiz Muhammad Arshad

Sustainability 2020, 12(9), 3547; https://doi.org/10.3390/su12093547 - 27 Apr 2020

Cited by 19 | Viewed by 3982

Abstract

Bankruptcy risk is a fundamental factor affecting the financial sustainability and smooth functioning of an enterprise. The corporate bankruptcy risk‒return association is well founded in the literature. However, there is a dearth of empirical research on how this association prevails at different stages of the corporate life cycle. The present study aims to investigate the bankruptcy‒risk relationship at different stages of corporate life cycle by employing Hierarchical Linear Mixed Model (HLMM) regression estimation on the data of listed non-financial Pakistani firms from 12 diverse industrial segments. We grouped the firms into introduction, growth, mature, shake-out, and decline stages of the life cycle using Dickinson’s model. Empirical results assert that corporate risk-taking at the introduction stage yields superior financial performance in the future, while risk at the growth stage positively contributes to a firm’s current performance. Moreover, because of risk-averse and non-diversified managerial behavior, bankruptcy risk at the mature stage is negatively associated with both current and future performance. Likewise, risk-taking at the decline stage has significant negative implications for firm performance as the managers of such firms undertake heavy investments in a turnaround attempt; however, owing to the risk-averse behavior, they may indulge in negative net present value (NPV) projects. The study findings imply that managers synchronize a firm’s risk exposure with the corresponding life cycle stage to avoid going bankrupt. Moreover, excessive risk-taking during the mature and decline stages can considerably harm the financial sustainability of an enterprise. Hence, investors should exercise a degree of caution when investing in highly indebted later-stage (mature and decline) firms. Overall, bankruptcy risk‒return resembles an inverted U-shaped relationship. Our results are robust and can apply to various econometric specifications. Full article

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

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12 pages, 249 KiB

Open AccessArticle

Can ESG Performance Affect Bond Default Rate? Evidence from China

by Peixin Li, Rongxi Zhou and Yahui Xiong

Sustainability 2020, 12(7), 2954; https://doi.org/10.3390/su12072954 - 7 Apr 2020

Cited by 31 | Viewed by 8590

Abstract

Capturing determinants of bond default risks has aroused heated discussions ever since the “rigid payment” system collapsed in China. Within this context; this paper aims to clarify the relation between an issuer’s environmental; social; and corporate (ESG) performance and its bond default rate. We developed an ESG factors-embedded Logistic Regression model to empirically examine Chinese default bonds and outstanding industrial bonds from 2014 to 2019. Results indicate that the bond default rate is positively correlated with the company’s energy consumption and negatively correlated with its attention to social responsibilities; and corporate governance; in addition to its financial performances. In conclusion; to fully take ESG factors into consideration during the decision-making process and daily operations might improve stability and credibility of corporations in modern Chinese national context. Full article

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

22 pages, 545 KiB

Open AccessArticle

Executive Incentives Matter for Corporate Social Responsibility under Earnings Pressure and Institutional Investors Supervision

by Lili Ding, Zhongchao Zhao and Lei Wang

Sustainability 2020, 12(6), 2492; https://doi.org/10.3390/su12062492 - 22 Mar 2020

Cited by 11 | Viewed by 3901

Abstract

This paper theoretically explores the impact of the incentive preferences of executives (i.e., short-term incentives and long-term incentives) on corporate social responsibility (CSR) decisions (i.e., institutional CSR and technical CSR). Further, the paper presents the mechanism through which executives influence CSR activities by the pressures from financial analysts and institutional investors supervision. Using a large sample of China-listed firms over 2007–2017, we achieve some helpful empirical results. The executives with short-term incentives tend to implement technical CSR strategy, while those with long-term incentives tend to implement institutional CSR strategy. Executives with short-term incentives, compared with those with long-term incentives, show stronger inter-temporal tradeoffs behaviors in the earnings pressure context. Furthermore, dedicated institutional investors can effectively attenuate the hypocritical behaviors of executives, and the effectiveness of governance shows a positive relationship with investors’ horizon. Our findings enrich the understanding on the relationship between the executives and CSR decisions in the earnings pressure context and further helps to perfect the institutional design in China’s listed companies. Full article

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

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13 pages, 553 KiB

Open AccessArticle

Performance of Alternative Estimation Procedures of the Implied Equity Duration in a Small Stock Market

by Olga Fullana and David Toscano

Sustainability 2020, 12(5), 1886; https://doi.org/10.3390/su12051886 - 2 Mar 2020

Cited by 1 | Viewed by 2386

Abstract

This paper is focused on the measurement of interest rate risk of nonfinancial firms. The measurement is the initial step in the risk management, which, in the context of financial risks, it is expected to lead to better levels of enterprises’ financial sustainability. Concretely, we checked the performance of alternative estimation procedures of the implied equity duration as a measure of the exposure to interest rate risk of firms listed on a small stock market. Previous evidence in the US stock market shows that when the implied equity duration is computed using industry-specific parameters instead of market parameters, significant differences arise in their absolute and relative values and even in their ranking. In this paper, we checked the robustness of these results when we moved to a smaller stock market. To do so, we replicated previous analyses carried out in the Spanish stock market but using alternative estimation procedures. We conclude that significant differences arise in the implied equity duration estimations when we consider industry-specific parameters instead of market parameters. This finding in a small stock market is in line with previous evidence found for the US stock market. Full article

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

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17 pages, 316 KiB

Open AccessArticle

Does CSR Moderate the Relationship between Corporate Governance and Chinese Firm’s Financial Performance? Evidence from the Shanghai Stock Exchange (SSE) Firms

by Rizwan Ali, Muhammad Safdar Sial, Talles Vianna Brugni, Jinsoo Hwang, Nguyen Vinh Khuong and Thai Hong Thuy Khanh

Sustainability 2020, 12(1), 149; https://doi.org/10.3390/su12010149 - 23 Dec 2019

Cited by 30 | Viewed by 7780

Abstract

We have performed a focalized investigation to explore how corporate social responsibility (CSR) moderates the relationship between corporate governance and firms’ financial performance. We applied a panel regression to examine this relationship from a sample of 3400 Shanghai Stock Exchange (SSE) listed firms, based on yearly observations from 2009 to 2018. Our results show that the presence of female directors on the board is associated with improved firms’ performance and that corporate social responsibility (CSR) moderates this relation, thus indicating that sharing strategic decision-making with female board members revealed a better relationship between CSR and firms’ financial performance. Our findings showed that foreign institutional investors positively influenced firms’ financial performance and that CSR moderates the relation between foreign institutional shareholders and the firm’s financial performance. Supported by corporate governance theories, such as resource dependence and stakeholder theory, our results help to better understand the nexus among corporate governance, firms’ performance and corporate social responsibility. These findings are advantageous to government departments in emerging countries in terms of encouraging marketing practitioners and participants to implement CSR practices and change the attitude associated with CSR implications. This study highlighted the problems of the foreign institutional investors’ scheme, which was the main contribution to the financial market reform of China after 2003. These findings offer significant implications to corporate affairs executives and managers, practitioners, academicians, state officials, and policy-makers, and might provide China with the opportunity to extend its market liberalization to the global markets. This research also contributes to the existing literature, which investigates how CSR moderates the relationship between corporate governance and firms’ financial performance in the Chinese market context. Full article

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

20 pages, 260 KiB

Open AccessArticle

Foreign Venture Capital Firms in a Cross-Border Context: Empirical Insights from India

by Kshitija Joshi, Deepak Chandrashekar, Alexander Brem and Kirankumar S. Momaya

Sustainability 2019, 11(22), 6265; https://doi.org/10.3390/su11226265 - 8 Nov 2019

Cited by 7 | Viewed by 3110

Abstract

Syndication or co-investment is a potent way of pooling resources among peer Venture Capital (VC) firms. This is even more vital for Foreign VC firms (FVCFs) when investing in destinations that are geographically distant from their countries of origin. Although FVCFs are relatively abundantly endowed in terms of financial capital, they are distinctly disadvantaged in terms of their social capital when investing in geographies that are distinctly different in terms of their institutions, norms, and culture from their own. One of the ways in which FVCFs overcome this impediment is by investing in human resources that serve as a bridge between their financial and social capital. Accordingly, the primary aim of this study is to investigate the relationship between the resources of FVCFs and their syndication intensity. Using the technique of logistic regression, we arrive at several interesting findings. FVCFs with a greater proportion of investment executives with prior founding experience in India and those with lower proportions of professionals of Indian origin demonstrate lower syndication intensity. Similarly, the syndication intensity diminishes with the increase in size of the investing team. FVCFs with greater fund size demonstrate a lower need for syndication. Greater endowment of social capital as proxied by the age of the VC firm is seen to enhance the syndication intensity. Full article

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

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