Journal of Risk and Financial Management

36 pages, 2903 KiB

Open AccessArticle

Effect of Structural Economic Vulnerability on the Participation in International Trade

by Sena Kimm Gnangnon

J. Risk Financial Manag. 2022, 15(9), 417; https://doi.org/10.3390/jrfm15090417 - 19 Sep 2022

Viewed by 1914

This paper investigates the effect of countries’ structural economic vulnerability (EVI) on their participation in international trade using an unbalanced panel dataset of 118 countries from 1996 to 2018 and the two-step system generalized method of moments estimator. It has revealed several findings. [...] Read more.

This paper investigates the effect of countries’ structural economic vulnerability (EVI) on their participation in international trade using an unbalanced panel dataset of 118 countries from 1996 to 2018 and the two-step system generalized method of moments estimator. It has revealed several findings. Higher EVI leads to lower participation in international trade, and this negative effect is more pronounced in countries that face higher trade costs. This is particularly the case for landlocked developing countries and the least developed countries. Development aid contributes to dampening the negative effect of EVI on countries’ participation in international trade. Moreover, this negative impact may turn out to be positive for high amounts of development aid. The policy implications of this analysis have been discussed. Full article

(This article belongs to the Special Issue Managing Sustainability Risk)

► Show Figures

Figure 1

19 pages, 712 KiB

Open AccessArticle

Tracing the Optimal Level of Political and Social Change under Risks and Uncertainties: Some Lessons from Ancient Sparta and Athens

by George E. Halkos, Emmanouil M. L. Economou and Nicholas C. Kyriazis

J. Risk Financial Manag. 2022, 15(9), 416; https://doi.org/10.3390/jrfm15090416 - 19 Sep 2022

Cited by 2 | Viewed by 2113

Abstract

The present paper is inspired by the notions of “financial risk” and “financial uncertainties” and transfers their basic reasoning to social science analysis; that is, it develops a theoretical analysis in order to explain social and political change. We know that the degree [...] Read more.

The present paper is inspired by the notions of “financial risk” and “financial uncertainties” and transfers their basic reasoning to social science analysis; that is, it develops a theoretical analysis in order to explain social and political change. We know that the degree of social and political change depends on the set of established institutions in a society. Societies can face two extremes: volatility, e.g., rapid changes that lead to instability, which increases the risk of a system or regime collapsing, or rigidity, which does not permit necessary adaptation and change and thus may again increase the risk of the regime collapsing. Thus, an optimal (or ideal) point of change is between the two extremes, permitting change that is neither too sudden and fast nor too slow and inflexible. To illustrate this, we analyze two cases from ancient Greece: Sparta, as a society and state with too many institutional checks and balances that led to rigidity and collapse, and Athens, which in the 5th century BCE had an institutional setting with very limited checks and balances, which again led to near collapse until the late 5th century BCE, when new institutions that were related to some efficient checks and balances were introduced that enabled the state to survive in a world of changing circumstances and balances of power. Full article

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

► Show Figures

Figure 1

15 pages, 628 KiB

Open AccessArticle

Does FDI Promote the Resource Curse in Nigeria?

by Olatunji Abdul Shobande

J. Risk Financial Manag. 2022, 15(9), 415; https://doi.org/10.3390/jrfm15090415 - 19 Sep 2022

Cited by 2 | Viewed by 1471

Abstract

This study investigated whether Foreign Direct Investment (FDI) supported the resource curse hypothesis in Nigeria. The precise methodological contribution was based on the Vector Error Correction and Granger causality test. The finding showed cointegration among the variables, whereas the speed of adjustment was [...] Read more.

This study investigated whether Foreign Direct Investment (FDI) supported the resource curse hypothesis in Nigeria. The precise methodological contribution was based on the Vector Error Correction and Granger causality test. The finding showed cointegration among the variables, whereas the speed of adjustment was slightly low. Similarly, natural resource to gross domestic product, FDI, and exchange rate unidirectionally Granger cause economic welfare, whereas bidirectional Granger causality is observed between indicators of natural resources to export, trade, and economic welfare. The results clearly indicate that FDI and natural resource management could improve economic wellbeing, although with a cost of volatility in the exchange rate and utilisation of resources. Thus, the study recommends the urgent need for effective and efficient management of the country’s natural resources to attract foreign direct investment and generate growth that can contribute meaningfully to the welfare of the citizens. Likewise, there is a need to diversify oil resources to other non-natural resources for the economy to stimulate growth and reduce the vulnerability of the economy to external shocks. Full article

(This article belongs to the Special Issue Foreign Direct Investment and International Trade)

► Show Figures

Figure A1

25 pages, 1663 KiB

Open AccessArticle

Direct and Indirect Implications of the COVID-19 Pandemic on Amazon’s Financial Situation

by Zixuan Qin, Abeer Hassan and Mahalaxmi Adhikariparajuli

J. Risk Financial Manag. 2022, 15(9), 414; https://doi.org/10.3390/jrfm15090414 - 19 Sep 2022

Cited by 3 | Viewed by 7756

Abstract

We provide theoretical and empirical insights into the impact of COVID-19 on Amazon’s financial position. A longitudinal case study of Amazon’s financial situation during the 2016–2020 period, and time-series analysis, ratio analysis, and DuPont analysis, are employed as a quantitative methodology to explore [...] Read more.

We provide theoretical and empirical insights into the impact of COVID-19 on Amazon’s financial position. A longitudinal case study of Amazon’s financial situation during the 2016–2020 period, and time-series analysis, ratio analysis, and DuPont analysis, are employed as a quantitative methodology to explore Amazon’s financial situation changes before and after the COVID-19 pandemic. As for the robustness of the in-depth analysis, we compare Amazon’s financial performance and position with Walmart. The result shows that the COVID-19 pandemic did not have a huge negative impact on the companies’ financial performance because of its promotion of their development. However, this study provides an in-depth analysis of the influence of COVID-19 on Amazon’s financial situation, which financial aspects are most affected by COVID-19, which are not, and the company’s response to COVID-19. Therefore, this study sheds light on the accounting literature to demonstrate the impact of COVID-19 on Internet companies’ financial performance and provides some reference values for subsequent academic research. Full article

(This article belongs to the Special Issue Business Performance)

► Show Figures

Figure 1

18 pages, 383 KiB

Open AccessArticle

Accounting Conservatism and Earnings Quality

by Farzaneh Nassir Zadeh, Davood Askarany and Solmaz Arefi Asl

J. Risk Financial Manag. 2022, 15(9), 413; https://doi.org/10.3390/jrfm15090413 - 19 Sep 2022

Cited by 11 | Viewed by 3683

Abstract

Purpose—The study on the relationship between accounting conservatism and earnings quality is not new. However, the results are inconsistent and mixed, and to some degree, even contradictory, which represents a gap in the literature. The purpose of this study is to provide [...] Read more.

Purpose—The study on the relationship between accounting conservatism and earnings quality is not new. However, the results are inconsistent and mixed, and to some degree, even contradictory, which represents a gap in the literature. The purpose of this study is to provide some explanations for these mixed results in the literature by investigating the effect of corporate governance mechanisms, as a moderator variable (which has not been considered in the literature before), on the relationship between accounting conservatism and earnings quality based on the Dechow and Dichev model and the modified Jones model. Design/methodology/approach—The statistical model used in this study is a multivariate regression model; furthermore, the statistical technique used to test the hypotheses is panel data. Findings—The findings reveal that the adopted models (Dechow and Dichev) and the corporate governance mechanisms (such as board independence, large shareholders, and institutional ownership) can have a moderating effect on the relationship between accounting conservatism and earnings quality. These findings are exciting, contribute to the current literature, and explain some of the reasons for mixed results. Practical implications—The findings of the current study provide an important guideline for firms to consider the impact of adopted models (Dechow and Dichev), as well as the corporate governance mechanisms (such as board independence, large shareholders, and institutional ownership) on the relationship between accounting conservatism and earnings quality. Originality/value—Examining the impact of Dechow and Dichev models as well as the corporate governance mechanisms on the relationship between accounting conservatism and earnings quality is new in this paper. It can explain part of the reasons for the mixed and inconsistent results in the literature. Full article

(This article belongs to the Section Business and Entrepreneurship)

20 pages, 7535 KiB

Open AccessArticle

Fractile Graphical Analysis in Finance: A New Perspective with Applications

by Anil K. Bera and Aurobindo Ghosh

J. Risk Financial Manag. 2022, 15(9), 412; https://doi.org/10.3390/jrfm15090412 - 19 Sep 2022

Viewed by 1543

Abstract

Fractile Graphical Analysis (FGA) was proposed by Prasanta Chandra Mahalanobis in 1961 as a method for comparing two distributions at two different points (of time or space) controlling for the rank of a covariate through fractile groups. We use bootstrap techniques to formalize [...] Read more.

Fractile Graphical Analysis (FGA) was proposed by Prasanta Chandra Mahalanobis in 1961 as a method for comparing two distributions at two different points (of time or space) controlling for the rank of a covariate through fractile groups. We use bootstrap techniques to formalize the heuristic method used by Mahalanobis for approximating the standard error of the dependent variable using fractile graphs from two independently selected “interpenetrating network of subsamples.” We highlight the potential and revisit this underutilized technique of FGA with a historical perspective. We explore a new non-parametric regression method called Fractile Regression where we condition on the ranks of the covariate and compare it with existing regression techniques. We apply this method to compare mutual fund inflow distributions after conditioning on ranks or fractiles of pre-tax and post-tax returns and compare distributions of private and public equity returns after controlling for fractiles of assets under management size using the two sample smooth test. Full article

(This article belongs to the Special Issue A Commemorative Issue in Honor of Professor Michael McAleer, 1952–2021)

► Show Figures

Figure 1

12 pages, 754 KiB

Open AccessArticle

Exploring Coupled Open Innovation for Digital Servitization in Grocery Retail: From Digital Dynamic Capabilities Perspective

by Andrejs Čirjevskis

J. Risk Financial Manag. 2022, 15(9), 411; https://doi.org/10.3390/jrfm15090411 - 16 Sep 2022

Cited by 7 | Viewed by 3397

Abstract

Open innovation and digital servitization have been hot topics in existing research. Moreover, the latest research in entrepreneurship and general management justifies that the performance results of specific innovation strategies are usually influenced by dynamic capabilities. However, there is little empirical research on [...] Read more.

Open innovation and digital servitization have been hot topics in existing research. Moreover, the latest research in entrepreneurship and general management justifies that the performance results of specific innovation strategies are usually influenced by dynamic capabilities. However, there is little empirical research on the linkage of open innovation, digital servitization, and micro-foundations of digital dynamic capabilities that affect alliance performance. The emerging literature on open innovation provides partial insight into the micro-foundations of digital dynamic capabilities. Based on it, from a dynamic capability perspective, this paper constructs a conceptual model of research including coupled open innovation of collaborative partners, alliance’s formation phases, and dynamic digital capabilities and their micro-foundations which impact alliance performance in grocery retail. The paper aims to provide an overarching view of the digital servitization process of grocery retailers and unpack the micro-foundations of the digital transformation of their business models to sustain advantages. Thus, the paper contributes to the research on open innovation, blockchain technology, artificial intelligence, and dynamic capabilities and provides two theoretical propositions. Then, having employed two illustrative case studies, this paper empirically tests theoretical propositions and justifies the role of coupled open innovation strategies for digital servitization and its micro-foundations. Full article

(This article belongs to the Special Issue Trends in Information Technology)

► Show Figures

Figure 1

12 pages, 648 KiB

Open AccessArticle

Does the Impact of Transparency and Disclosure on the Firm’s Valuation Depend on the ESG?

by Venkata Mrudula Bhimavarapu, Shailesh Rastogi, Rajani Gupte, Geetanjali Pinto and Sudam Shingade

J. Risk Financial Manag. 2022, 15(9), 410; https://doi.org/10.3390/jrfm15090410 - 15 Sep 2022

Cited by 4 | Viewed by 3679

Abstract

The global economic crisis in 1997 significantly impacted all corporate firms. Measuring valuation is becoming increasingly important in corporate firm analysis. Transparency in disclosures enables a company to meet market expectations while also adhering to regulatory requirements. The study’s primary purpose is to [...] Read more.

The global economic crisis in 1997 significantly impacted all corporate firms. Measuring valuation is becoming increasingly important in corporate firm analysis. Transparency in disclosures enables a company to meet market expectations while also adhering to regulatory requirements. The study’s primary purpose is to measure the impact of transparency and disclosures on the valuation of non-financial firms in India and explore the role of Environmental, social and Governance (ESG) as a moderator variable in determining the firm’s value. Panel data regression is the methodology adopted for the data analysis in the study. Panel Data of seventy-six non-financial firms was collected for ten years (2011–2020). Market capitalization is considered as a proxy variable for the valuation. The study results indicate that transparency and disclosures (TD) have a negative and significant influence on the value of the firms. Inferring that a higher degree of TD reduces the firm value. At the same time, the interaction term of TD and ESG show a positive significant association. This finding implies that high ESG reduces the negative impact of high TD on the valuation. Full article

(This article belongs to the Special Issue International Finance)

► Show Figures

Figure 1

39 pages, 379 KiB

Open AccessArticle

Volatility Spillovers between Stock Market and Hedge Funds: Evidence from Asia Pacific Region

by Sameen Fatima, Christopher Gan and Baiding Hu

J. Risk Financial Manag. 2022, 15(9), 409; https://doi.org/10.3390/jrfm15090409 - 14 Sep 2022

Viewed by 1546

Abstract

This paper investigates the nature of volatility spillovers between stock returns and hedge funds returns in twelve Asia Pacific countries in the 1997–2018 period. The sample period encompasses sub periods, 1997 Asia financial crisis, 2008 Global financial crisis and 2010 Eurozone crisis; these [...] Read more.

This paper investigates the nature of volatility spillovers between stock returns and hedge funds returns in twelve Asia Pacific countries in the 1997–2018 period. The sample period encompasses sub periods, 1997 Asia financial crisis, 2008 Global financial crisis and 2010 Eurozone crisis; these sub periods were characterised by financial upheavals. We apply the EGARCH methodology to model volatility and volatility spillovers in and between the markets. Our results show that the volatility of stock returns does not affect the volatility of hedge funds returns; however, there are inconsistent evidence of unidirectional volatility spillover from hedge funds to stock market returns. Full article

(This article belongs to the Section Mathematics and Finance)

18 pages, 1339 KiB

Open AccessArticle

Target Date Funds, Drawdown Risk, and Central Bank Intervention: Evidence during the COVID-19 Pandemic

by Arjun K. Iyer, Seth A. Hoelscher and Cédric L. Mbanga

J. Risk Financial Manag. 2022, 15(9), 408; https://doi.org/10.3390/jrfm15090408 - 13 Sep 2022

Cited by 2 | Viewed by 1648

Abstract

Target Date Funds (TDFs) have become the default investment choice in retirement accounts for most households. Later-dated TDFs (e.g., further away from the present day) allocate a more significant percentage of each dollar invested into equities relative to fixed income. As the TDF [...] Read more.

Target Date Funds (TDFs) have become the default investment choice in retirement accounts for most households. Later-dated TDFs (e.g., further away from the present day) allocate a more significant percentage of each dollar invested into equities relative to fixed income. As the TDF moves closer to the designated retirement date, the TDF embarks on its’ glide path. We study the impact of the COVID-19 Pandemic and Federal Reserve intervention on the max drawdowns experienced by TDFs during 2020. Later-dated funds experienced more significant drawdowns relative to near-dated funds. Moving out one target date fund increased the drawdown by approximately 1.90%. Approximately 80% of TDFs experienced their max drawdown on 23 March 2020. The max drawdowns of the TDFs are then studied in the following three sub-periods: (1) before the first Federal Reserve Intervention (2 March 2020), (2) after the first intervention and before the second intervention (16 March 2020), and (3) the period after the second intervention. TDFs experienced the greatest drawdowns after the first intervention by the Federal Reserve (approximately 19%) relative to the other two periods (approximately 7%). Fees associated with the TDFs tend not to influence the drawdowns except for the near-dated funds, where the low-fee funds performed better. Finally, near-dated funds recovered from their max drawdowns around September 2020, whereas later-dated funds did not fully recover until December 2020. Full article

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

► Show Figures

Figure 1

15 pages, 1074 KiB

Open AccessArticle

The Effect of Tax Fairness, Peer Influence, and Moral Obligation on Sales Tax Evasion among Jordanian SMEs

by Nayef Mohammad Al-Rahamneh and Zainol Bidin

J. Risk Financial Manag. 2022, 15(9), 407; https://doi.org/10.3390/jrfm15090407 - 13 Sep 2022

Cited by 7 | Viewed by 5365

Abstract

Tax evasion remains a complex issue for tax authorities, policymakers, and researchers. While socio-psychological factors have been researched, their impact on tax evasion among SMEs has not yet been determined. This paper empirically analyses the effects of tax fairness, peer influence and moral [...] Read more.

Tax evasion remains a complex issue for tax authorities, policymakers, and researchers. While socio-psychological factors have been researched, their impact on tax evasion among SMEs has not yet been determined. This paper empirically analyses the effects of tax fairness, peer influence and moral obligation, on sales tax evasion among Jordanian SME owners/managers. A survey was used to obtain data from three regions of Jordan (north, middle, south). Random sampling was utilized in selecting the prospective respondents from SMEs in three sectors (trade, service, manufacturing). A total of 212 usable questionnaires retrieved from the SMEs were analysed using Smart-PLS 3.0. The results revealed that tax fairness and moral obligation had a significant negative effect on sales tax evasion behaviour among SME owner-managers. On the other hand, peer influence positively and significantly impacted sales tax evasion behaviour. Thus, policymakers and tax authorities should incorporate these factors in developing effective strategies to reduce tax evasion in Jordan, which could result in an improvement in the country’s overall revenue collection. The findings also contribute to the scarcity of literature about the significance of socio-psychological factors in mitigating tax evasion by examining the effects of tax fairness, peer influence, and moral obligation on sales tax evasion. Full article

(This article belongs to the Special Issue The Impact of COVID-19 Outbreak on Business Sustainability & Financial Risk Analysis)

► Show Figures

Figure 1

23 pages, 2184 KiB

Open AccessReview

Mapping the Trend, Application and Forecasting Performance of Asymmetric GARCH Models: A Review Based on Bibliometric Analysis

by Neenu Chalissery, Suhaib Anagreh, Mohamed Nishad T. and Mosab I. Tabash

J. Risk Financial Manag. 2022, 15(9), 406; https://doi.org/10.3390/jrfm15090406 - 12 Sep 2022

Cited by 1 | Viewed by 1859

Abstract

The past few years have witnessed renewed interest in modelling and forecasting asymmetry in financial time series using a variety of approaches. The most intriguing of these strategies is the “asymmetric” or “leverage” volatility model. This study aims to conduct a review of [...] Read more.

The past few years have witnessed renewed interest in modelling and forecasting asymmetry in financial time series using a variety of approaches. The most intriguing of these strategies is the “asymmetric” or “leverage” volatility model. This study aims to conduct a review of asymmetric GARCH models using bibliometric analysis to identify their key intellectual foundations and evolution, and offers thematic and methodological recommendations for future research to advance the domain. Bibliometric analysis was used to identify patterns in and perform descriptive analysis of articles, including citation, co-authorship, bibliographic coupling, and co-occurrence analysis. The study located 856 research papers from the Scopus database between 1992 and 2021 using key phrase and reference search methods. Publication trends, most influential authors, leading countries, and top journals are described, along with a systematic review of highly cited articles. The study summarises the development, application, and performance evaluation of asymmetric GARCH models, which will help researchers and academicians significantly contribute to this literature by addressing gaps. Full article

(This article belongs to the Special Issue Financial Markets, Financial Volatility and Beyond)

► Show Figures

Figure 1

21 pages, 814 KiB

Open AccessArticle

An Alternative to Coping with COVID-19—Knowledge Management Applied to the Banking Industry in Taiwan

by Chih-Hsiung Chang, Wu-Hua Chang, Hsiu-Chin Hsieh and Yi-Yu Shih

J. Risk Financial Manag. 2022, 15(9), 405; https://doi.org/10.3390/jrfm15090405 - 12 Sep 2022

Viewed by 1559

Abstract

This study seeks to find an alternative strategy to cope with the impact of COVID-19. Though various measures have been adopted to respond to the threat of the pandemic, the problem remains unchanged. Undoubtedly, COVID-19 is also a crisis of knowledge, so this [...] Read more.

This study seeks to find an alternative strategy to cope with the impact of COVID-19. Though various measures have been adopted to respond to the threat of the pandemic, the problem remains unchanged. Undoubtedly, COVID-19 is also a crisis of knowledge, so this study explores whether the banking industry in Taiwan can apply knowledge management (KM) and fight the catastrophe of the century successfully and effectively. This study adopts an actual case to analyze the relationship between KM implementation and the banking industry; applies consistent fuzzy preference relations (CFPRs) to evaluate influential criteria including computational simplicity and guarantee the consistency of decision matrices; illustrates a decision-making model with seven criteria; and conducts pairwise comparisons, which are utilized to determine the priority weights of influential criteria amongst the outcome rankings and to formulate accurate KM strategies. The results show that predictions of success probabilities are higher than those of failure probabilities among the seven influential criteria and, in particular, the headquarters system and human resources are the most important priority indicators for implementing KM successfully during the pandemic or post-pandemic. The conclusion suggests significant policy implications for policymakers within other industries or countries in coping with COVID-19. Full article

(This article belongs to the Special Issue Predictive Modeling for Economic and Financial Data)

► Show Figures

Figure 1

17 pages, 729 KiB

Open AccessArticle

Emissions Reduction Policies and Their Effects on Economy

by Apoorva Gurtu, Vidhisha Vyas and Amulya Gurtu

J. Risk Financial Manag. 2022, 15(9), 404; https://doi.org/10.3390/jrfm15090404 - 11 Sep 2022

Cited by 3 | Viewed by 1820

Abstract

The two broad carbon-reducing policies, carbon tax and cap-and-trade, have been implemented at various national and sub-national levels. This paper examines the relationships between emissions-reducing policies and their effect on the country’s economic growth (GDP) using carbon tax and CO₂ emission as [...] Read more.

The two broad carbon-reducing policies, carbon tax and cap-and-trade, have been implemented at various national and sub-national levels. This paper examines the relationships between emissions-reducing policies and their effect on the country’s economic growth (GDP) using carbon tax and CO₂ emission as explanatory variables and population and R&D as control variables. The study employs Granger causality analysis (GCA) and panel data regression analysis to find the relationships between GDP, emissions, and carbon tax. GDP usually increases as a country’s carbon emissions, carbon tax, R&D, and population increase. The analysis of carbon reduction policies, especially carbon tax and their general impact on a country’s economy, is a unique contribution of this study. The applications of this study are to motivate governments to form a national carbon abatement policy and encourage corporate leaders to invest in clean technology to grow the economy. Full article

(This article belongs to the Special Issue Energy Finance and Sustainable Development)

► Show Figures

Figure 1

17 pages, 6999 KiB

Open AccessArticle

Interest Rates, House Prices, Fertility, and the Macroeconomy

by Ermanno Affuso, Khandokar Istiak and James Swofford

J. Risk Financial Manag. 2022, 15(9), 403; https://doi.org/10.3390/jrfm15090403 - 10 Sep 2022

Cited by 5 | Viewed by 2065

Abstract

This study differentiates between housing wealth and financial wealth and investigates whether changes in house prices and changes in interest rates have positive effects on the fertility rate. The study uses U.S. data between 1975–2020, a structural VAR model, and a Toda–Yamamoto causality [...] Read more.

This study differentiates between housing wealth and financial wealth and investigates whether changes in house prices and changes in interest rates have positive effects on the fertility rate. The study uses U.S. data between 1975–2020, a structural VAR model, and a Toda–Yamamoto causality test to perform the empirical investigation. The results show that changes in house prices and interest rates have a significant positive effect on changes in the fertility rate. The causality test finds that unidirectional causality exists between house prices and interest rates and fertility. The results indicate that children are consumer durable goods. The study predicts that a high fertility rate could be a by-product of an easy monetary policy through the channel of high house prices. Full article

(This article belongs to the Section Economics and Finance)

► Show Figures

Figure 1

12 pages, 431 KiB

Open AccessArticle

Human Resource Skill Adjustment in Service Sector: Predicting Dynamic Capability in Post COVID-19 Work Environment

by Nurul Mohammad Zayed, Friday Ogbu Edeh, Saad Darwish, K. M. Anwarul Islam, Halyna Kryshtal, Vitalii Nitsenko and Olena Stanislavyk

J. Risk Financial Manag. 2022, 15(9), 402; https://doi.org/10.3390/jrfm15090402 - 09 Sep 2022

Cited by 22 | Viewed by 4100

Abstract

The havoc caused by the COVID-19 pandemic on hospitality businesses across the world affected the human resource skills of the industry to the extent that managers and industry experts are still finding difficult how best to upgrade the skills of their workforce and [...] Read more.

The havoc caused by the COVID-19 pandemic on hospitality businesses across the world affected the human resource skills of the industry to the extent that managers and industry experts are still finding difficult how best to upgrade the skills of their workforce and enhance their capability to withstand future disruptions. It is based on this problem that this research investigated the effect of human resource skill adjustment on the dynamic capability of hospitality businesses in sub-Saharan Africa post the COVID-19 work environment. The study employed cross-sectional survey design with a total population of two hundred and twenty participants drawn from sixty hospitality businesses in the south-eastern part of Nigeria. Formulated research hypotheses were analysed with linear regression. The results of the research demonstrated that human resource skill adjustment predicted the dynamic capability of hospitality businesses. The study concludes that human resource skill adjustment measured with upskilling and reskilling methodologies predicted the dynamic capability. The implication of the finding is that managers and operators of hospitality businesses should implement human resource skill adjustment in all the functional areas of their management to enable each section or department to attain its goals equally, and enhance the dynamic capability of the industry. Full article

(This article belongs to the Special Issue Business Performance)

► Show Figures

Figure 1

14 pages, 321 KiB

Open AccessArticle

A Framework for Short- vs. Long-Term Risk Indicators for Outsourcing Potential for Enterprises Participating in Global Value Chains: Evidence from Western Balkan Countries

by Jolta Kacani, Lindita Mukli and Eglantina Hysa

J. Risk Financial Manag. 2022, 15(9), 401; https://doi.org/10.3390/jrfm15090401 - 09 Sep 2022

Cited by 7 | Viewed by 1746

Abstract

This paper aims to present a benchmarking framework for short- and long-term risk of enterprises in emerging markets that seek integration in global value chains. The benchmark instrument aims in particular to assess short- and long-term risk based on accounting data and estimations [...] Read more.

This paper aims to present a benchmarking framework for short- and long-term risk of enterprises in emerging markets that seek integration in global value chains. The benchmark instrument aims in particular to assess short- and long-term risk based on accounting data and estimations of key financial ratios for enterprises located in the Western Balkan region and operating in the materials, industrials, and customer-discretionary industries. In total, the paper considers 310 enterprises. Given the geographical proximity of the region, the benchmark instrument for short- and long-term risks serves to assess the outsourcing potential these enterprises have toward foreign enterprises dominating larger markets such as the European value chain. The framework is applicable to a large-scale annual data series collected on subindustry level in order to obtain a more granular analysis of a particular industry and its respective value chain. The benchmarking instrument indicates that those subindustries performing better both at short- and long-term risk display a higher outsourcing potential and more opportunities for integration in global value chains. Full article

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

12 pages, 717 KiB

Open AccessArticle

Herding Behavior in Developed, Emerging, and Frontier European Stock Markets during COVID-19 Pandemic

by Siniša Bogdan, Natali Suštar and Bojana Olgić Draženović

J. Risk Financial Manag. 2022, 15(9), 400; https://doi.org/10.3390/jrfm15090400 - 09 Sep 2022

Cited by 10 | Viewed by 4785

Abstract

The behavior of market participants often does not rely on market signals, but replicates the investment decisions of other parties. The convergence of their investment behavior leads to the emergence of herd behavior with negative implications for financial stability. Moreover, this phenomenon may [...] Read more.

The behavior of market participants often does not rely on market signals, but replicates the investment decisions of other parties. The convergence of their investment behavior leads to the emergence of herd behavior with negative implications for financial stability. Moreover, this phenomenon may be even more pronounced in times of crisis. Although herding is an interesting topic which invites the interest of academic researchers, it still has not been sufficiently studied in terms of comparing the herd effect between differently developed stock markets. The first objective of this research was to determine the herd behavior during the COVID-19 pandemic using static and rolling regression analysis. The second objective was to investigate whether the herd behavior was triggered by the pandemic, while the third objective was to compare the differences in herd behavior between differently developed European stock markets. The results show that this phenomenon is most pronounced in emerging markets, followed by frontier markets and developed markets. Therefore, the results of this study are of particular importance for individual and institutional investors to achieve efficient risk diversification and for financial authorities to establish rules and avoid an increase in herd behavior. Full article

(This article belongs to the Section Financial Markets)

► Show Figures

Figure 1

13 pages, 294 KiB

Open AccessArticle

Paradigm Shift in Finance: The Transformation of the Theory from Perfect to Imperfect Capital Markets Using the Example of Company Valuation

by Dietmar Ernst and Werner Gleißner

J. Risk Financial Manag. 2022, 15(9), 399; https://doi.org/10.3390/jrfm15090399 - 08 Sep 2022

Cited by 2 | Viewed by 2745

Abstract

In the capital market and financing theory, we are currently observing major upheavals. For decades, the neoclassical paradigm has dominated in science and practice. Triggered by economic and political crises, transformations, the COVID-19 pandemic, and political instabilities, a paradigm shift is currently occurring [...] Read more.

In the capital market and financing theory, we are currently observing major upheavals. For decades, the neoclassical paradigm has dominated in science and practice. Triggered by economic and political crises, transformations, the COVID-19 pandemic, and political instabilities, a paradigm shift is currently occurring in finance. This paradigm shift leads to models and theories that can explain imperfections in capital markets and provide decision support for managers. The aim of this article is to analyse the paradigm shift and to demonstrate it using an example of business valuation theory. We draw on the insights of the philosopher Thomas Samuel Kuhn. He vividly explains the paradigm shift in science in his major work “The Structure of Scientific Revolutions”. A paradigm shift in science always encounters resistance. The reasons for this include the strong neoclassical school in finance and the dependence on research funds. Funders expect the use of established methods and the simplicity and dissemination of the models that have prevailed so far. On the other hand, the neoclassical models are unsuitable to explain the transformation processes on financial markets. This fact has been empirically proven. We show a variety of arguments that speak clearly about this paradigm shift. Their importance clearly outweighs the reasons to continue subscribing to the old paradigm. Accordingly, new theories and models have been developed to better explain the changes in the markets. With the simulation-based business valuation, an approach has been developed that considers different degrees of market imperfections. The simulation-based valuation can also depict the special case of the neoclassical paradigm, so that all market constellations can be covered. Full article

(This article belongs to the Special Issue The Systematic Nature of COVID: A Journey towards a New Economic and Financial Paradigm)

22 pages, 438 KiB

Open AccessArticle

Corporate Governance and CSR Disclosure: International Evidence for the Period 2006–2016

by Zeynab Miniaoui, Faten Chibani and Khaled Hussainey

J. Risk Financial Manag. 2022, 15(9), 398; https://doi.org/10.3390/jrfm15090398 - 07 Sep 2022

Cited by 1 | Viewed by 2557

Abstract

In this paper, the authors examine the impact of corporate governance mechanisms on corporate social responsibility (CSR) disclosure in European and Anglo-Saxon contexts. The study is based on 324 Anglo-Saxon listed corporations and 310 European listed corporations for 11 years from 2006 to [...] Read more.

In this paper, the authors examine the impact of corporate governance mechanisms on corporate social responsibility (CSR) disclosure in European and Anglo-Saxon contexts. The study is based on 324 Anglo-Saxon listed corporations and 310 European listed corporations for 11 years from 2006 to 2016 (6813 year-observations). The regression analysis shows that board gender and board age affect CSR disclosure. This study also finds that CEO duality negatively affects CSR disclosure in both contexts. Finally, the study found that the existence of a CSR committee and CSR experts positively affect CSR disclosure in both contexts. Full article

(This article belongs to the Special Issue Business Performance)

11 pages, 324 KiB

Open AccessArticle

Carbon Futures and Clean Energy Stocks: Do They Hedge or Safe Haven against the Climate Policy Uncertainty?

by Mohammad Enamul Hoque and Sourav Batabyal

J. Risk Financial Manag. 2022, 15(9), 397; https://doi.org/10.3390/jrfm15090397 - 06 Sep 2022

Cited by 6 | Viewed by 1740

Abstract

Using the GARCH model and quantile regression with dummy variables, we investigate the hedging and safe haven properties of carbon futures and clean energy stocks against the U.S. climate policy uncertainty (CPU). We discover that carbon futures and clean energy stocks [...] Read more.

Using the GARCH model and quantile regression with dummy variables, we investigate the hedging and safe haven properties of carbon futures and clean energy stocks against the U.S. climate policy uncertainty (CPU). We discover that carbon futures and clean energy stocks have a weak hedge and a semi-strong safe haven in different market conditions. Carbon futures exhibit a strong safe haven in both bull and bear markets, depending on the degree of uncertainty. Clean energy stocks, on the other hand, possess a weak hedge across market conditions and a strong safe haven in bull markets. Sub-sample analyses of prior- and post-Paris Agreement of 2016 also exhibit consistent results for safe haven properties of carbon futures and clean energy stocks. Full article

(This article belongs to the Special Issue Financial Markets, Financial Volatility and Beyond)

9 pages, 297 KiB

Open AccessArticle

Saddlepoint Method for Pricing European Options under Markov-Switching Heston’s Stochastic Volatility Model

by Mengzhe Zhang and Leunglung Chan

J. Risk Financial Manag. 2022, 15(9), 396; https://doi.org/10.3390/jrfm15090396 - 06 Sep 2022

Viewed by 1394

Abstract

This paper evaluates the prices of European-style options when dynamics of the underlying asset is assumed to follow a Markov-switching Heston’s stochastic volatility model. Under this framework, the expected return and the long-term mean of the variance of the underlying asset rely on [...] Read more.

This paper evaluates the prices of European-style options when dynamics of the underlying asset is assumed to follow a Markov-switching Heston’s stochastic volatility model. Under this framework, the expected return and the long-term mean of the variance of the underlying asset rely on states of the economy modeled by a continuous-time Markov chain. There is evidence that the Markov-switching Heston’s stochastic volatility model performs well in capturing major events affecting price dynamics. However, due to the nature of the model, analytic solutions for the prices of options or other financial derivatives do not exist. By means of the saddlepoint method, an analytic approximation for European-style option price is presented. The saddlepoint method gives an effective approximation to option prices under the Markov-switching Heston’s stochastic volatility model. Full article

(This article belongs to the Special Issue A Commemorative Issue in Honor of Professor Michael McAleer, 1952–2021)

► Show Figures

Figure 1

16 pages, 296 KiB

Open AccessArticle

Board Characteristics and Earnings Management: Evidence from the Vietnamese Market

by Sangjun Cho and Chuneyoung Chung

J. Risk Financial Manag. 2022, 15(9), 395; https://doi.org/10.3390/jrfm15090395 - 05 Sep 2022

Cited by 4 | Viewed by 2081

Abstract

This study empirically analyzes the relationship between Vietnamese firms’ earnings management, board characteristics, and ownership structures. I use board size and the proportion of outside directors to reflect board characteristics, and the ownership percentages of the board of directors, outside directors, and the [...] Read more.

This study empirically analyzes the relationship between Vietnamese firms’ earnings management, board characteristics, and ownership structures. I use board size and the proportion of outside directors to reflect board characteristics, and the ownership percentages of the board of directors, outside directors, and the chief executive officer (CEO) to reflect the ownership structures. I use discretionary accruals, measured by the modified Jones model, to proxy for earnings management. From analyzing firms listed on the Ho Chi Minh and Hanoi Stock Exchanges from 2012 to 2017, I find that board size and the ownership percentages of outside directors and CEOs are negatively related to earnings management, whereas the board of directors’ ownership percentage is positively related. The proportion of outside directors is not significantly associated with earnings management. This study provides policy insights for improving Vietnamese firms’ financial transparency. Specifically, corporate laws regulating board composition should be enacted to ensure that all firms meet a minimum number of board members. Moreover, a policy mandating boards to include independent outside directors is necessary, as establishing an independent outside director system within Vietnam’s corporate law can strengthen the sustainability of the board of directors. Full article

(This article belongs to the Section Business and Entrepreneurship)

25 pages, 402 KiB

Open AccessArticle

CO₂ Emissions in G20 Nations through the Three-Sector Model

by Kejia Yan, Rakesh Gupta and Victor Wong

J. Risk Financial Manag. 2022, 15(9), 394; https://doi.org/10.3390/jrfm15090394 - 05 Sep 2022

Cited by 1 | Viewed by 1859

Abstract

This paper examines the relationship between CO₂ emissions in three economic sectors of G20 member countries using the environmental IPAT model and STIRPAT model and validates the EKC hypothesis by comparing the results for developing and developed countries. The results confirm that [...] Read more.

This paper examines the relationship between CO₂ emissions in three economic sectors of G20 member countries using the environmental IPAT model and STIRPAT model and validates the EKC hypothesis by comparing the results for developing and developed countries. The results confirm that there is a significant long-run equilibrium relationship between the three sectors (primary, secondary, and tertiary) and CO₂ emissions across the panel. Furthermore, the long-run elasticities suggest that the primary sector (agriculture) positively and negatively affects the CO₂ emissions of developing and developed economies, respectively. This finding proves that the development of agriculture is in line with the EKC hypothesis that a more developed economy will instead improve environmental degradation. Based on the findings, for each sector, we provide policymakers with suggestions to potentially curb CO₂ emissions without significantly compromising economic growth. Full article

(This article belongs to the Special Issue Emerging Markets II)

13 pages, 325 KiB

Open AccessArticle

The Impact of Microfinance Institutions on Poverty Alleviation

by Collin Chikwira, Edson Vengesai and Petronella Mandude

J. Risk Financial Manag. 2022, 15(9), 393; https://doi.org/10.3390/jrfm15090393 - 05 Sep 2022

Cited by 10 | Viewed by 30450

Abstract

Microfinancing has been targeted as a tool to address Poverty through the provision of credit to the poor and marginalised economic functions. However, the main objective upon which these institutions are founded is yet to manifest primarily in developing economies. This study examined [...] Read more.

Microfinancing has been targeted as a tool to address Poverty through the provision of credit to the poor and marginalised economic functions. However, the main objective upon which these institutions are founded is yet to manifest primarily in developing economies. This study examined the role of microfinancing in poverty alleviation by employing a Vector Error Correction Model on quarterly time-series data. The results reveal a significant long-run relationship among the variables poverty, microfinancing, SMEs, and agricultural growth. Contrary to expectations, Microfinancing was found to increase poverty in the long run. SMEs and agricultural development were found to reduce the level of poverty in the long run. In the short run, regression results reveal that SMEs’ growth alleviates poverty, and poverty increases the growth of microfinance loans in the country. The increase in SMEs is a tool for alleviating poverty, and the growth in microfinance institutions is also being driven by poverty. This suggests that continued improper microfinancing can escalate the poverty levels to undesired heights. The findings imply that the growth of microfinance loans is not being put to its intended and efficient use. These findings bring to the fore that it is not only the provision of funds that matters. Full article

(This article belongs to the Section Banking and Finance)

18 pages, 330 KiB

Open AccessArticle

Season Ticketing as a Risk Management Tool in Professional Team Sports: A Pricing Analysis of German Soccer and Basketball

by Christopher Huth and Markus Kurscheidt

J. Risk Financial Manag. 2022, 15(9), 392; https://doi.org/10.3390/jrfm15090392 - 03 Sep 2022

Cited by 1 | Viewed by 1941

Abstract

Ticket sales remain a significant source of revenue in professional team sports. However, season ticket revenue, as an effective risk-reducing instrument, is rarely analyzed in the literature. This study aims to determine, from a price and product perspective, the extent to which different [...] Read more.

Ticket sales remain a significant source of revenue in professional team sports. However, season ticket revenue, as an effective risk-reducing instrument, is rarely analyzed in the literature. This study aims to determine, from a price and product perspective, the extent to which different factors affect season ticket prices. Using three different professional German sports leagues, a ticket-pricing model was developed as the empirical model. Consistent with other pricing studies, an ordinary least-squares (OLS) model and a Tobit model were fit. The results indicate that different season ticket rights, type of season ticket, club league membership, fan club membership, club stadium utilization rate, club sporting performance, and club market size have significant negative or positive impacts on season ticket price. Whereas, for example, a reserved seat in the stadium has a positive impact, the population of the club’s city has a negative impact. Based on the results, club managers should consider all traditional season ticket rights and season ticket discounts when calculating season ticket pricing. These and further implications are discussed with respect to the risk management issues of season ticket pricing in light of the COVID-19 pandemic and differences in local market constellations of professional team sports clubs. Full article

(This article belongs to the Special Issue Risk in Sports and Challenges for Sports Organizations)

18 pages, 981 KiB

Open AccessArticle

The Determinants of Immigrants’ Skill Composition

by Esra Karapınar Kocağ, Yutong Li and Cristina Raluca Gh. Popescu

J. Risk Financial Manag. 2022, 15(9), 391; https://doi.org/10.3390/jrfm15090391 - 02 Sep 2022

Cited by 1 | Viewed by 1415

Abstract

Movements of labor across the world is an ongoing debate in the literature in terms of its drivers and results in sending and receiving areas. Skill composition of immigrant labor has been discussed by several papers, although they generally focused on visa policies [...] Read more.

Movements of labor across the world is an ongoing debate in the literature in terms of its drivers and results in sending and receiving areas. Skill composition of immigrant labor has been discussed by several papers, although they generally focused on visa policies or firm level productivity. However, this paper focuses on the relationship between immigrants’ educational attainment and government budgeting on research and development (R&D). Panel data analysis is applied for European countries, along with instrumental variable approach as a robustness check. Findings reveal that higher budget allocation for R&D is associated with higher skill level of immigrants within overall immigrant population. This finding is driven by young immigrants whose ages are between 25 and 34 and female immigrants in these countries, suggesting that this relationship varies among sub-groups of immigrants, which would have significant policy implications. Hence, the novel and original approach of the paper resides in the deciding factors of immigrants’ skill composition. Full article

(This article belongs to the Special Issue Business Performance)

► Show Figures

Figure 1

14 pages, 861 KiB

Open AccessArticle

An Extended Fama-French Multi-Factor Model in Direct Real Estate Investing

by Chung-Yim Yiu, Chuyi Xiong and Ka-Shing Cheung

J. Risk Financial Manag. 2022, 15(9), 390; https://doi.org/10.3390/jrfm15090390 - 02 Sep 2022

Cited by 1 | Viewed by 3096

Abstract

Understanding risk-adjusted returns in real estate investment are crucial, but little is known about the risk-adjusted returns for direct real estate. This paper examines risk-adjusted total returns by developing an extended capital asset pricing model (CAPM) to investigate whether direct real estate returns [...] Read more.

Understanding risk-adjusted returns in real estate investment are crucial, but little is known about the risk-adjusted returns for direct real estate. This paper examines risk-adjusted total returns by developing an extended capital asset pricing model (CAPM) to investigate whether direct real estate returns compensate for their risk levels. Based on a panel dataset of the residential property transaction in 62 Territorial Authorities of New Zealand from 2002Q1 to 2018Q4, a direct real estate portfolio performance in the single-factor CAPM model is compared with the national housing markets stock markets and REITs markets in New Zealand before the pandemic. The results demonstrate that the direct real estate returns outperform the market returns with a significant positive alpha and beta smaller than one but positive. The alpha is further evaluated by the five-factor CAPM model, which includes the factors of liquidity risk, value risk, time risk, credit-rating risk, and currency risk. The assessment shows that most of the excess return (alpha) can be attributed to direct real estate market risks. Full article

(This article belongs to the Section Financial Markets)

► Show Figures

Figure 1

17 pages, 1310 KiB

Open AccessArticle

Analysing Drivers of Knowledge Leakage in Collaborative Agreements: A Magnetic Processing Case Firm

by Samuel Foli and Susanne Durst

J. Risk Financial Manag. 2022, 15(9), 389; https://doi.org/10.3390/jrfm15090389 - 01 Sep 2022

Cited by 1 | Viewed by 1685

Abstract

Due to the embeddedness of organisations in networks, collaborations, and business relationships, knowledge leakage has become a common concern. In this regard, this paper aims to investigate drivers of knowledge leakage in collaborative agreements using an integrated ISM-MICMAC model. Based on insights from [...] Read more.

Due to the embeddedness of organisations in networks, collaborations, and business relationships, knowledge leakage has become a common concern. In this regard, this paper aims to investigate drivers of knowledge leakage in collaborative agreements using an integrated ISM-MICMAC model. Based on insights from employees including the CEO of a magnetic processing firm, we validate the proposed model. The findings of our study reveal nine key drivers that influence knowledge leakage in collaborative agreements. In terms of level of influence, incomplete contract is the most influential driver, followed by sub-contracting activities. Last, the nine drivers are classified into two main clusters: independency cluster—weak dependence power with high driving power—and linkage cluster—strong dependence and driving power. Full article

(This article belongs to the Special Issue Business Performance)

► Show Figures

Figure 1

32 pages, 1881 KiB

Open AccessArticle

A Fourier Interpolation Method for Numerical Solution of FBSDEs: Global Convergence, Stability, and Higher Order Discretizations

by Polynice Oyono Ngou and Cody Hyndman

J. Risk Financial Manag. 2022, 15(9), 388; https://doi.org/10.3390/jrfm15090388 - 31 Aug 2022

Cited by 2 | Viewed by 1549

Abstract

The convolution method for the numerical solution of forward-backward stochastic differential equations (FBSDEs) was originally formulated using Euler time discretizations and a uniform space grid. In this paper, we utilize a tree-like spatial discretization that approximates the BSDE on the tree, so that [...] Read more.

The convolution method for the numerical solution of forward-backward stochastic differential equations (FBSDEs) was originally formulated using Euler time discretizations and a uniform space grid. In this paper, we utilize a tree-like spatial discretization that approximates the BSDE on the tree, so that no spatial interpolation procedure is necessary. In addition to suppressing extrapolation error, leading to a globally convergent numerical solution for the FBSDE, we provide explicit convergence rates. On this alternative grid the conditional expectations involved in the time discretization of the BSDE are computed using Fourier analysis and the fast Fourier transform (FFT) algorithm. The method is then extended to higher-order time discretizations of FBSDEs. Numerical results demonstrating convergence are presented using a commodity price model, incorporating seasonality, and forward prices. Full article

(This article belongs to the Special Issue Risk Management and Forecasting Methods in Finance)

► Show Figures

Figure 1

Journal Menu

Journal Browser

J. Risk Financial Manag., Volume 15, Issue 9 (September 2022) – 46 articles

Further Information

Guidelines

MDPI Initiatives

Follow MDPI