Journal of Risk and Financial Management

21 pages, 410 KiB

Open AccessArticle

Growth of Venture Firms under State Capitalism with Chinese Characteristics: Qualitative Comparative Analysis of Fuzzy Set

by Kyung Hwan Yun and Chenguang Hu

J. Risk Financial Manag. 2023, 16(2), 138; https://doi.org/10.3390/jrfm16020138 - 18 Feb 2023

Cited by 1 | Viewed by 1786

Abstract

This study builds upon the venture growth literature and venture legitimation mechanisms and investigates how venture firms in China can acquire legitimacy and necessary resources from state stakeholders for venture growth during the COVID-19 pandemic. To offer a context-specific perspective of Chinese ventures’ [...] Read more.

This study builds upon the venture growth literature and venture legitimation mechanisms and investigates how venture firms in China can acquire legitimacy and necessary resources from state stakeholders for venture growth during the COVID-19 pandemic. To offer a context-specific perspective of Chinese ventures’ legitimation strategies, we discuss that under Chinese state capitalism, these ventures need to follow lingering socialist values, such as equality and social stability, to be recognized as appropriate business operations by state audiences. Furthermore, we discuss that access to necessary resources for venture growth is limited during crises. Based on the understanding of particular contexts of Chinese state capitalism and the COVID-19 pandemic, we examine how various sets of a venture’s identity, associative, and organizational mechanisms influence venture growth during crises in China. In addition, we consider serial entrepreneurship as a contextual factor affecting the effectiveness of causal effects. This study applies the fuzzy-set qualitative comparative analysis method to take a configurational approach and identify multiple concurrent causality of legitimacy mechanisms on venture growth. We conduct a survey and analyze data from 107 entrepreneurs of Chinese technology ventures during the COVID-19 pandemic. Findings show that Chinese ventures with or without repeat entrepreneurs can actively utilize various sets of legitimation mechanisms to acquire legitimacy and necessary resources from Chinese state audiences for venture growth during adversity. This study provides comprehensive understanding and practical implications on Chinese ventures’ legitimation strategies for venture growth during crises. Full article

(This article belongs to the Special Issue The Impact of COVID-19 on Economy, Energy, and Environment)

18 pages, 5195 KiB

Open AccessArticle

The Moderating Effect of Financial Knowledge on Financial Risk Tolerance

by John E. Grable and Abed Rabbani

J. Risk Financial Manag. 2023, 16(2), 137; https://doi.org/10.3390/jrfm16020137 - 17 Feb 2023

Cited by 2 | Viewed by 3494

Abstract

The purpose of this paper is to describe a study that was designed to determine to what extent subjective and objective measures of financial knowledge moderate the relationship between an investor’s financial risk tolerance and demographic factors thought to be important descriptors of [...] Read more.

The purpose of this paper is to describe a study that was designed to determine to what extent subjective and objective measures of financial knowledge moderate the relationship between an investor’s financial risk tolerance and demographic factors thought to be important descriptors of an investor’s willingness to take a financial risk. It was determined that those who identified as male, and those with more attained education and income, exhibited higher investment risk tolerance (IRT). Subjective financial knowledge (SFK) was positively associated with IRT. The relationship between gender and IRT was moderated by SFK, whereas the relationship between IRT and age was moderated by objective financial knowledge (OFK). A positive relationship between education and IRT was noted, but the relationship was moderated by OFK, whereas the association between IRT and household income was moderated by SFK. Findings from this study indicate that while SFK and OFK are positively correlated, they are not measuring the same underlying construct, and as such, each moderates IRT relationships differently. Full article

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

16 pages, 1210 KiB

Open AccessArticle

Demystifying the Effect of the News (Shocks) on Crypto Market Volatility

by Mukul Bhatnagar, Sanjay Taneja and Ramona Rupeika-Apoga

J. Risk Financial Manag. 2023, 16(2), 136; https://doi.org/10.3390/jrfm16020136 - 17 Feb 2023

Cited by 47 | Viewed by 4478

Abstract

The cryptocurrency market has enormous growth potential. In this study, the aim is to investigate how the news (shocks) affects cryptocurrency market volatility. This is significant because, while cryptocurrencies are gaining popularity among investors, the market’s extreme volatility discourages some prospective buyers, while [...] Read more.

The cryptocurrency market has enormous growth potential. In this study, the aim is to investigate how the news (shocks) affects cryptocurrency market volatility. This is significant because, while cryptocurrencies are gaining popularity among investors, the market’s extreme volatility discourages some prospective buyers, while also causing large losses for inexperienced investors. From 8 March 2019 to 30 November 2022, data from Bitcoin, Binance Coin, Ethereum, Dogecoin, and XRP were collected for the current study. The E-GARCH model was applied to the framed dataset to achieve the research aim. We discovered that the value of the size factor for all currencies was statistically significant, indicating that the news (shocks) significantly impacts volatility. Furthermore, volatility persistence in all cryptocurrencies is found to be very high and statistically significant. These study findings can help investors understand the impact of the news (shocks) on volatility in cryptocurrency returns. Full article

(This article belongs to the Special Issue The Future of Money: Central Bank Digital Currencies, Cryptocurrencies and Stablecoins)

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19 pages, 929 KiB

Open AccessArticle

Pre-IPO Financial Performance and Offer Price Estimation: Evidence from India

by Ajay Yadav, Jaya Mamta Prosad and Sumanjeet Singh

J. Risk Financial Manag. 2023, 16(2), 135; https://doi.org/10.3390/jrfm16020135 - 17 Feb 2023

Viewed by 2396

Abstract

The primary focus of this paper is to develop an empirical model to study the relationship between key Financial Performance Indicators and IPO Offer Prices. It seeks to assist Indian IPO investors to make more informed decisions by advancing their knowledge about relevant [...] Read more.

The primary focus of this paper is to develop an empirical model to study the relationship between key Financial Performance Indicators and IPO Offer Prices. It seeks to assist Indian IPO investors to make more informed decisions by advancing their knowledge about relevant Pre-IPO Financial Performance Indicators that are effective predictors of Offer Price. The purpose is this study is to provide all the stakeholders with an approach to evaluate the Offer Price of IPOs. This will help the stakeholders to overcome pricing anomalies. The companies listed in the National Stock Exchange of India between the financial years 2015–2016 to 2020–2021 are taken as the sample of the study. The secondary data are analyzed by constructing a multiple linear regression model. This study uses a range of fundamental factors related to financial performance in a single framework to demonstrate that an IPO Offer Price can be assessed by its Pre-IPO Financial Performance. The findings of this study validate the objectives of the model constructed. This research shows that the Pre-IPO Financial Performance has an influential role in explaining the IPO offering price. The results of the study show that variables such as Net Asset Value (NAV), Return on Assets (ROA), Profit after Tax (PAT), and Return on Net Worth (RONW) have a substantial impact on IPO Offering Price. The findings of the research will assist IPO issuers in pricing their offerings better and more competitively. Furthermore, this study will also minimize the gap between offering and listing prices to prevent speculative failure. The study will help investors with minimal resources to evaluate the value of any IPO issue. An IPO’s value can be fairly estimated, and investors can decide whether the issue is worth investing in or not. Full article

(This article belongs to the Special Issue Advances in Corporate Finance and Financial Management)

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2 pages, 413 KiB

Open AccessCorrection

Correction: Hamin et al. (2022). Understanding Organisational Risks and Opportunities Associated with Implementing Australia’s National Disability Insurance Scheme from the Nonprofit Service Provider Perspective—Findings from Quantitative Research. Journal of Risk and Financial Management 15: 614

by Hamin Hamin, David Rosenbaum and Elizabeth More

J. Risk Financial Manag. 2023, 16(2), 134; https://doi.org/10.3390/jrfm16020134 - 17 Feb 2023

Viewed by 761

Abstract

In our original publication (Hamin et al [...] Full article

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19 pages, 355 KiB

Open AccessArticle

The Relationship between Changes in Corporate Governance Characteristics and Intellectual Capital

by Farzaneh Nassirzadeh, Davood Askarany and Solmaz Arefi-Asl

J. Risk Financial Manag. 2023, 16(2), 133; https://doi.org/10.3390/jrfm16020133 - 16 Feb 2023

Cited by 1 | Viewed by 1737

Abstract

The primary goal of this study was to investigate the effects of changes in corporate governance elements on a company’s valuable resources (such as intellectual capital and its components). Previous studies have examined the impacts of some corporate governance characteristics on intellectual capital [...] Read more.

The primary goal of this study was to investigate the effects of changes in corporate governance elements on a company’s valuable resources (such as intellectual capital and its components). Previous studies have examined the impacts of some corporate governance characteristics on intellectual capital performance as a whole and they have produced inconclusive and different results. This paper examines the effects of some corporate governance characteristics (i.e., the change in CEO, the evolution of auditor, the change in board independence, and the change in institutional ownership) on intellectual capital and its components (i.e., capital employed, human capital, and structural capital). This research is based on a quantitative study and the selected sample contains 1170 observations from 220 companies listed on the Middle East Stock Exchange from 2011 to 2018. The research findings show a positive and significant relationship between an increase in institutional ownership and intellectual capital and its two components (human capital and structural capital). The results support the relationship between a change in auditor and intellectual capital and human capital efficiency. Further, a positive and significant association was found between an increase in board independence and human capital. However, no relationship was found between a change of CEO and intellectual capital or any of its components. This study extends the research field of corporate governance by studying the effects of changes in corporate governance characteristics on intellectual capital for the first time. Given the significant role of intellectual capital in the performance of firms, this study provides essential information to organisations’ decision makers. Full article

(This article belongs to the Section Business and Entrepreneurship)

13 pages, 291 KiB

Open AccessArticle

Managing Household Finances: How Engaging in Financial Management Activities Relates to the Experiential Well-Being of Americans

by Thomas Korankye and Blain Pearson

J. Risk Financial Manag. 2023, 16(2), 132; https://doi.org/10.3390/jrfm16020132 - 16 Feb 2023

Cited by 1 | Viewed by 1521

Abstract

This study examines how engagement in financial management activities influences well-being using nationally representative data (N = approximately 30,000) from the U.S. Bureau of Labor Statistics’ American Time Use Survey and its associated Well-Being Modules. The current study estimates ordered probit models [...] Read more.

This study examines how engagement in financial management activities influences well-being using nationally representative data (N = approximately 30,000) from the U.S. Bureau of Labor Statistics’ American Time Use Survey and its associated Well-Being Modules. The current study estimates ordered probit models for several measures of experiential well-being, which consider how meaningful an activity is for a household and how happy, sad, tired, in pain, and stressed respondents felt during the activity. Controlling for a standard set of demographic and socioeconomic factors, the econometric results indicate that households report lower utility gains (lower happiness, greater sadness, and higher stress) when engaging in financial management activities relative to other activities. Furthermore, the results suggest increases in household time allocated toward performing financial management activities is associated with a lower (higher) likelihood of being very happy (very stressed) compared to other activities. The findings strongly indicate that households perceive financial management activities as vexing, reinforcing the need for financial stewardship support to promote household well-being. Full article

(This article belongs to the Section Applied Economics and Finance)

23 pages, 992 KiB

Open AccessArticle

Board Gender Diversity and Carbon Proactivity: The Influence of Cultural Factors

by Haifei Wang, Qingliang Tang and Ting Guo

J. Risk Financial Manag. 2023, 16(2), 131; https://doi.org/10.3390/jrfm16020131 - 16 Feb 2023

Viewed by 1626

Abstract

Due to inadequate studies, our knowledge of the effect of female directors and national culture on the corporate response to climate change is still limited. To address this gap, the purpose of this paper is to investigate the dynamic relationship between gender diversity [...] Read more.

Due to inadequate studies, our knowledge of the effect of female directors and national culture on the corporate response to climate change is still limited. To address this gap, the purpose of this paper is to investigate the dynamic relationship between gender diversity on the board of directors and corporate carbon proactivity and how two dimensions of national culture (individualism and indulgence) moderate this relationship. This study focuses on large companies that disclosed carbon-related information via the CDP survey in 2011–2017. Our findings show that gender diversity promotes corporate carbon proactivity. Furthermore, the positive effect of gender diversity on carbon proactivity is weaker when firms are in countries marked by a higher level of individualism and indulgence. As far as we know, this study is the first to explore and document the empirical evidence on the dynamic impact of gender diversity in the corporate governance body and national culture on managers’ climate change behaviors in terms of green proactivity. Full article

(This article belongs to the Special Issue Corporate Governance and Carbon Accounting)

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34 pages, 2013 KiB

Open AccessArticle

Performance of US and European Exchange Traded Funds: A Base Point-Slack-Based Measure Approach

by Carla O. Henriques, Maria E. Neves, Jeremias A. Conceição and Elisabete S. Vieira

J. Risk Financial Manag. 2023, 16(2), 130; https://doi.org/10.3390/jrfm16020130 - 16 Feb 2023

Cited by 2 | Viewed by 1304

Abstract

This study evaluates the performance of United States (US) and European Exchange Traded Funds (ETFs) using the non-oriented version of the base point-slack-based measure (BP-SBM) Data Envelopment Analysis (DEA) model, which allows for handling negative data that can arise in some of the [...] Read more.

This study evaluates the performance of United States (US) and European Exchange Traded Funds (ETFs) using the non-oriented version of the base point-slack-based measure (BP-SBM) Data Envelopment Analysis (DEA) model, which allows for handling negative data that can arise in some of the metrics traditionally used in this type of analysis. Our findings show that US efficient ETFs are considered benchmarks more often than European efficient ETFs. Nonetheless, it was possible to conclude that European inefficient ETFs were generally less inefficient than US ETFs. Our findings also show that ETFs’ efficiency (particularly for US ETFs) in the short run is more related to risk than to profitability factors. This implies that as the time horizon lengthens, the importance of profitability factors for the ETFs’ financial performance grows. Full article

(This article belongs to the Special Issue Accounting and Information Management)

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12 pages, 292 KiB

Open AccessArticle

The AGP Model for Risk Management in Agile I.T. Projects

by Sanjeet Singh, Geetika Madaan, Amrinder Singh, Kiran Sood, Simon Grima and Ramona Rupeika-Apoga

J. Risk Financial Manag. 2023, 16(2), 129; https://doi.org/10.3390/jrfm16020129 - 16 Feb 2023

Cited by 1 | Viewed by 2765

Abstract

The vast majority of articles on risk in agile-managed projects fail to adequately address the interplay between the agile methodology, the risk management process, and the elements that ultimately determine the success or failure of the project. Too frequently, processes and models are [...] Read more.

The vast majority of articles on risk in agile-managed projects fail to adequately address the interplay between the agile methodology, the risk management process, and the elements that ultimately determine the success or failure of the project. Too frequently, processes and models are given undue priority over the human element. The aim of this article is to create a risk management model for agile I.T. projects (AGP model). The study sample consists of 1868 valid survey responses from European and Asian countries received between February 2022 and January 2023. We subjected the data to Exploratory Factor Analysis (EFA) and Cronbach’s alpha to identify four key factors for dealing with risks in I.T. projects and create the AGP model. The proposed AGP model outlines up to 76% variability in the potential risks that could arise during an I.T. project’s deployment. The findings of this study are critical for project managers, I.T. professionals, developers, and system architects involved in I.T. projects. Other stakeholders may be interested in understanding the risks associated with the project and developing strategies to mitigate these risks. Full article

(This article belongs to the Special Issue Organizational Innovation, Financial Technology and Technology Management)

17 pages, 2371 KiB

Open AccessArticle

Development of the Financial Flow Model for the Sustainable Development of an Industrial Enterprise

by Farida F. Galimulina, Marina V. Shinkevich and Naira V. Barsegyan

J. Risk Financial Manag. 2023, 16(2), 128; https://doi.org/10.3390/jrfm16020128 - 16 Feb 2023

Cited by 1 | Viewed by 1405

Abstract

The review of modern methodological approaches to assessing the sustainable development of an industrial enterprise revealed the absence of generally accepted integral tools and the connection sustainable development trends with financial flows. To fill this gap this, taking into account the principle of [...] Read more.

The review of modern methodological approaches to assessing the sustainable development of an industrial enterprise revealed the absence of generally accepted integral tools and the connection sustainable development trends with financial flows. To fill this gap this, taking into account the principle of balanced development economic, environmental and social components aimed. The purpose of the study is the development of a financial flow management model for the sustainable development of an industrial enterprise (using the example of a large Russian petrochemical enterprise). To achieve the goal of the purpose, the following methods implemented systematic approach, analysis and synthesis, comparative analysis, analysis of dynamics series, correlation analysis, regression analysis, solving the linear programming problem. As a result of the study, we came to conclusion about the shift of the enterprise’s focus on environmental issues; the growth of the integral indicator of sustainable development of an industrial enterprise; the negative impact of credit resources on the aggregate indicator. The novelty of the study lies in the development of a new methodological solution, which is the basis of the financial management model for the sustainable development of the enterprise: it is adequate to the level of microeconomic system; covers three ways of measuring sustainable development and the possibility of choosing the best quality; allows to implement a proactive approach to managing financial flows with the principles of sustainable development of the enterprise (existing approaches either represent only a set of indicators or addressed the diagnosis of a specific subsystem, either do not consider the relationship between financial flows and the aggregated indicator of sustainable development of the enterprise). Full article

(This article belongs to the Section Financial Technology and Innovation)

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14 pages, 327 KiB

Open AccessArticle

Herding Trend in Working Capital Management Practices: Evidence from the Non-Financial Sector of Pakistan

by Umar Farooq, Mosab I. Tabash, Ahmad A. Al-Naimi, Linda Nalini Daniel and Mohammad Ahmad Al-Omari

J. Risk Financial Manag. 2023, 16(2), 127; https://doi.org/10.3390/jrfm16020127 - 16 Feb 2023

Cited by 2 | Viewed by 2804

Abstract

Working capital management requires careful attention from corporate managers because it plays an important role in corporate stability. The social belongingness of managers induced them to learn from their society, colleagues, and overall industrial movement. They also learn from their peers that have [...] Read more.

Working capital management requires careful attention from corporate managers because it plays an important role in corporate stability. The social belongingness of managers induced them to learn from their society, colleagues, and overall industrial movement. They also learn from their peers that have more strategic efficiency. In line with these arguments, the objective of the current study is to explore the peer influence on corporate working capital management practices. For regression analysis, we utilized ten years of data (2009–2018) of non-financial publicly listed firms at PSX (Pakistan Stock Exchange). We used the cash conversion cycle (CCC) as a proxy variable to measure working capital management (WCM). We employed panel fixed effect and system GMM (generalized method of moments) models to estimate regression between the variables of the study. The empirical findings suggest the significant impact of peer WCM on corporate WCM. They also suggest the significant impact of other variables that determine the WCM. This study recommends social learning policy for corporate managers. They can learn from their peers to manage the working capital. Most previous studies discuss peer influence on investment decisions, corporate cash holding, financing policy, etc., but no study explores such a relationship specifically in the case of Pakistan. Full article

16 pages, 361 KiB

Open AccessArticle

Better Not Forget: On the Memory of S&P 500 Survivor Stock Companies

by Klaus Grobys, Yao Han and James W. Kolari

J. Risk Financial Manag. 2023, 16(2), 126; https://doi.org/10.3390/jrfm16020126 - 15 Feb 2023

Cited by 2 | Viewed by 1112

Abstract

This study explores the dependency structure of S&P 500 survivor stocks. Using a hand-collected sample of stocks that survived in the S&P 500 since March 1957, we employ rescaled/range analysis to investigate survivors. First, we find nonlinearities in the return processes of survivor [...] Read more.

This study explores the dependency structure of S&P 500 survivor stocks. Using a hand-collected sample of stocks that survived in the S&P 500 since March 1957, we employ rescaled/range analysis to investigate survivors. First, we find nonlinearities in the return processes of survivor stocks due to Paretian tails. Second, the return processes of very long-lived outliers exhibit long-term memories with Hurst exponents that significantly exceed one half on average. Third, sample-split tests reveal that the memory on average has virtually not changed over time—that is, survivor stocks do not forget. Fourth, and last, the long-term memory of survivor stocks appears to be unrelated to their exposures to traditional asset pricing risk factors. Full article

(This article belongs to the Special Issue Theoretical, Empirical, and Experimental Aspects of Market Microstructure II)

11 pages, 310 KiB

Open AccessArticle

Capabilities and Reputation Risks Towards Firm Performance

by Noraznira Abd Razak, Najihah Hanisah Marmaya, Mohd Zailani Othman, Idris Osman, Suhailah Kassim, Fatin Aqilah Maskuri and Nik Kutina Mat Tahir

J. Risk Financial Manag. 2023, 16(2), 125; https://doi.org/10.3390/jrfm16020125 - 15 Feb 2023

Viewed by 1327

Abstract

The effects of firm-specific resources on firm performance has been a quest of many and widely studied worldwide. In today’s business environment, arguments suggesting the relative importance of firm-specific resources in explaining firm performance variation are said to be of the greatest influence [...] Read more.

The effects of firm-specific resources on firm performance has been a quest of many and widely studied worldwide. In today’s business environment, arguments suggesting the relative importance of firm-specific resources in explaining firm performance variation are said to be of the greatest influence on the study of firm behavior. On the other hand, firms with strong, positive reputations can attract and retain crucial talent and often have loyal customers likely to buy a broader range of products and services. It can lead to higher sales generated by satisfied customers and their referrals and can potentially raise capital and share price, and improve the firm performance. An empirical study such as this attempts to investigate the combinations of resources of the firm and focus on reputational risk management concerning firm performance. As such, this study involves variables partially adopted from Donabedian Theory, such as intangible resources, namely capability as an exogenous construct towards endogenous construct and firm performance, as well as proposing a mediation model to analyze the mediated relationship of reputational risk in accelerating the relationship between capabilities and firm performance. This study applies variance-based structural equation modeling via Smart PLS to a sample of 161 listed firms in Malaysia as respondents. A judgment purposive sampling technique has been adopted as the respondents are derived from listed firms under Malaysian Bourse. Overall, the findings of this study reveal how firms may gain competitive advantages in terms of their reputation and eventually be able to sustain their firm’s performances by implementing an integrative model of intangible resources such as capabilities and in their routines and processes within the firms. Full article

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

38 pages, 432 KiB

Open AccessArticle

Retirement Income Sufficiency: A Comparison Study in Australia and New Zealand

by Xiaobo Xu, Martin Young, Liping Zou and Jiali Fang

J. Risk Financial Manag. 2023, 16(2), 124; https://doi.org/10.3390/jrfm16020124 - 15 Feb 2023

Viewed by 1275

Abstract

We use the 2018 survey data from the Household, Income, and Labour Dynamic (HILDA) in Australia and the Household Economic Survey (HES) in New Zealand to investigate the retirement income sufficiency in Australia and New Zealand. Our baseline results indicate that the annuitized [...] Read more.

We use the 2018 survey data from the Household, Income, and Labour Dynamic (HILDA) in Australia and the Household Economic Survey (HES) in New Zealand to investigate the retirement income sufficiency in Australia and New Zealand. Our baseline results indicate that the annuitized net wealth is greater for Australian retirees than for New Zealand retirees. However, New Zealand retirees enjoy a higher level of life satisfaction than Australian retirees. Further analysis reveals a significant greater pre- and postretirement income for the top 10% of wealthy Australian retirees, mainly due to the higher level of homeownership in Australia within this group. Our study fills the gap in the existing literature, which studies the macro- and microlevel influences on Australia and New Zealand retirees, and it also offers important policy implications. Full article

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

11 pages, 569 KiB

Open AccessArticle

Predicting Explicit and Valuing Tacit Synergies of High-Tech Based Transactions: Amazon.com’s Acquisition of Dubai-Based Souq.com

by Andrejs Čirjevskis

J. Risk Financial Manag. 2023, 16(2), 123; https://doi.org/10.3390/jrfm16020123 - 15 Feb 2023

Cited by 1 | Viewed by 1558

Abstract

Although the interdependence between the core competencies of the collaborating partners and synergy as an important consideration when companies decide to go for a merger is theoretically understood and evident, further empirical research is needed to integrate two concepts into a coherent empirical [...] Read more.

Although the interdependence between the core competencies of the collaborating partners and synergy as an important consideration when companies decide to go for a merger is theoretically understood and evident, further empirical research is needed to integrate two concepts into a coherent empirical construct. The paper aims to develop an empirical framework useful for scholars and practitioners to incorporate real options theory into resource-based views (RBV) to measure collaborative synergies of M&As. Having done the empirical research on the case study of the Souq.com acquisition by Amazon.com as one of “the biggest-ever technology M&A transactions in the Arabic world”, the paper provides a conceptual construct of research that encompasses not only Amazon.com and Souq.com but can be useful to other companies pursuing strategic growth by M&As. Full article

(This article belongs to the Special Issue Business Performance)

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12 pages, 681 KiB

Open AccessArticle

The Impact of Fintech and Digital Financial Services on Financial Inclusion in India

by Mohammad Asif, Mohd Naved Khan, Sadhana Tiwari, Showkat K. Wani and Firoz Alam

J. Risk Financial Manag. 2023, 16(2), 122; https://doi.org/10.3390/jrfm16020122 - 15 Feb 2023

Cited by 14 | Viewed by 26201

Abstract

India’s financial inclusion has significantly improved during the last several years. In recent years, there has been a rise in the number of Indians who have bank accounts, with this figure believed to be close to 80% at present. Fintech businesses in India [...] Read more.

India’s financial inclusion has significantly improved during the last several years. In recent years, there has been a rise in the number of Indians who have bank accounts, with this figure believed to be close to 80% at present. Fintech businesses in India are progressively becoming more noticeable as the Government of India (GoI) continues to strive for expanding financial services to the underbanked sector of the population. To reach the underbanked segments of the population and provide a stable operating environment for fintech businesses, India must seek to increase financial inclusion. In this study, regression and correlation were employed, together with secondary data gathered from the RBI, to analyze this influence. The aim was to determine the impact of fintech and digital financial services on financial inclusion in India. According to the results, fintech businesses have significantly aided financial inclusion in this nation, especially for the middle class. These findings will be helpful for policy-makers working hard to bring every individual in this country into an organized financial system. Full article

(This article belongs to the Special Issue FinTech, Islamic Banking & Finance, Corporate Governance & Sustainability)

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19 pages, 2014 KiB

Open AccessArticle

Assessment of Project Management Maturity Models Strengths and Weaknesses

by Valentin Nikolaenko and Anatoly Sidorov

J. Risk Financial Manag. 2023, 16(2), 121; https://doi.org/10.3390/jrfm16020121 - 14 Feb 2023

Cited by 3 | Viewed by 4272

Abstract

The purpose of this article is to analyze the most popular maturity models in order to identify their strengths and weaknesses. Research conducted by international project management communities such as Software Engineering Institute (SEI), Project Management Institute (PMI), International Project Management Association (IPMA), [...] Read more.

The purpose of this article is to analyze the most popular maturity models in order to identify their strengths and weaknesses. Research conducted by international project management communities such as Software Engineering Institute (SEI), Project Management Institute (PMI), International Project Management Association (IPMA), Office of Government Commerce (OGC) and International Organization for Standardization (ISO) showed that organizations with high managerial maturity are more likely to achieve their planned project goals than those that do not identify and standardize their best management practices. This circumstance has encouraged scientists from all over the world to start developing various models that can measure and evaluate managerial maturity in projects. Nowadays, the variety of models created has led to considerable difficulty in understanding the strengths and weaknesses of each model. To solve this problem, the article authors conducted a critical analysis to identify the strengths and weaknesses of the most popular project management maturity models. The results obtained will be of interest to project managers, members of project teams, heads of organizations, project offices and everyone involved in the development of project activities. Based on the analysis, it was found that the most developed maturity models are based on international codes of knowledge of project management. Most maturity models ignore the presence of structural and infrastructural elements, such as a workplace, the necessary equipment and software, the availability of professional standards, instructions, regulations, etc. It was also revealed that there are no processes for assessing the effectiveness and efficiency of using the best practices in the maturity models. Full article

(This article belongs to the Section Business and Entrepreneurship)

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21 pages, 338 KiB

Open AccessArticle

Institutional Investors’ Distraction and Executive Compensation Stickiness Based on Multiple Regression Analysis

by Yizhao Hong and Chongyan Cao

J. Risk Financial Manag. 2023, 16(2), 120; https://doi.org/10.3390/jrfm16020120 - 14 Feb 2023

Cited by 2 | Viewed by 1522

Abstract

Based on the impact of industry extreme return on the attention of institutional investors, taking Chinese A-share listed companies from 2011 to 2020 as a sample, this paper empirically tests the relationship between institutional investors’ distraction and executive compensation stickiness based on multiple [...] Read more.

Based on the impact of industry extreme return on the attention of institutional investors, taking Chinese A-share listed companies from 2011 to 2020 as a sample, this paper empirically tests the relationship between institutional investors’ distraction and executive compensation stickiness based on multiple regression analysis. The study finds that institutional investors’ distraction promotes the executive compensation stickiness, which is more significant in the group of pressure-resistant institutional investors. The mechanism test finds that based on the governance effect, information effect and psychological effect, corporate external governance, stock price information content and management anxiety play a partial intermediary role between institutional investors’ distraction and executive compensation stickiness. The moderating effect finds that the level of corporate internal governance and managerial overconfidence will weaken the impact of institutional investors’ distraction on executive compensation stickiness. In addition, the distraction behavior in non-state-owned and western companies has a more significant economic impact. Full article

22 pages, 425 KiB

Open AccessArticle

The Effect of Social Capital on Auditor’s Performance

by Maryamalsadat Mousavi Azghandi, Sahar Jabbari, Hossien Rezaei Ranjbar and Ahmed Al-janabi

J. Risk Financial Manag. 2023, 16(2), 119; https://doi.org/10.3390/jrfm16020119 - 13 Feb 2023

Viewed by 1206

Abstract

This paper investigates the relationship between social capital and auditor’s performance in Iranian listed firms. The sample included 128 firms on the Tehran Stock Exchange from 2014 to 2020. The research method was descriptive-correlational, and the relationship between research variables was explained using [...] Read more.

This paper investigates the relationship between social capital and auditor’s performance in Iranian listed firms. The sample included 128 firms on the Tehran Stock Exchange from 2014 to 2020. The research method was descriptive-correlational, and the relationship between research variables was explained using regression models based on the panel data. The results illustrated that social capital positively correlates with auditor performance and Audit report quality. In other words, social capital decreases audit opinion shopping, audit expectation gap, internal control weakness, and audit report lag. Therefore, society’s influential assets, social capital, and audit report quality strongly influence the auditor’s performance. The auditor’s performance affects the probability of discovery and reporting material errors and misstatements. Therefore, recognizing influential factors on auditors’ performance can improve the quality of audit reports. Full article

(This article belongs to the Special Issue Accounting and Auditing during the World Crisis)

17 pages, 1355 KiB

Open AccessArticle

Development of Approaches and Organizational Models for the Mass Implementation of Information Modeling Technologies in the Investment and Construction Sphere

by Anatoly Platonov, Viola Larionova and Yury Davy

J. Risk Financial Manag. 2023, 16(2), 118; https://doi.org/10.3390/jrfm16020118 - 12 Feb 2023

Cited by 2 | Viewed by 2914

Abstract

The rapidly increasing use of building information modeling (BIM) technologies in the world is highly relevant to the search for new approaches and managerial models for enterprises in the construction sphere. As shown in the study of several developing countries, there is a [...] Read more.

The rapidly increasing use of building information modeling (BIM) technologies in the world is highly relevant to the search for new approaches and managerial models for enterprises in the construction sphere. As shown in the study of several developing countries, there is a certain lag in this area compared with highly industrialized countries. A comparative analysis of countries in terms of the level of spread of BIM technologies was made using open data from job search Internet sites. In this regard, the urgency of the research is due to the need to develop appropriate approaches to intensify the implementation of BIM technologies in the construction and operation of buildings. The purpose of the study is the development of methodological foundations and applied models of functional interaction between participants of construction projects based on BIM. As a working hypothesis, the authors assume that the mass application of BIM technologies is possible in providing a set of measures of different nature: market, non-market, legal, economic, and organizational. The main results of the study provided a solution to the problem of a significant expansion of the scope of BIM technologies in the construction sector through the formation of an information eco-environment for interaction of participants in the project management system. Full article

(This article belongs to the Special Issue Firms’ Behavior, Productivity and Economics of Innovation)

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31 pages, 1966 KiB

Open AccessArticle

Spot–Futures Price Adjustments in the Nikkei 225: Linear or Smooth Transition? Financial Centre Leadership or Home Bias?

by Jieye Qin, Christopher J. Green and Kavita Sirichand

J. Risk Financial Manag. 2023, 16(2), 117; https://doi.org/10.3390/jrfm16020117 - 12 Feb 2023

Cited by 2 | Viewed by 1407

Abstract

This paper studies price discovery in Nikkei 225 markets through the nonlinear smooth transition price adjustments between spot and future prices and across all three futures markets. We test for smooth transition nonlinearity and employ an exponential smooth transition error correction model (ESTECM) [...] Read more.

This paper studies price discovery in Nikkei 225 markets through the nonlinear smooth transition price adjustments between spot and future prices and across all three futures markets. We test for smooth transition nonlinearity and employ an exponential smooth transition error correction model (ESTECM) with exponential generalised autoregressive conditional heteroscedasticity (EGARCH), allowing for the effects of transaction costs, heterogeneity, and asymmetry in Nikkei price adjustments. We show that the ESTECM-EGARCH is the appropriate model as it offers new insights into Nikkei price dynamics and information transmission across international markets. For spot–futures price dynamics, we find that futures led spot prices before the crisis, but spot prices led afterwards. This can be explained by the lower level of heterogeneity in the underlying spot transaction costs after the crisis. For cross-border futures prices, the foreign exchanges (Chicago and Singapore) lead in price discovery, which can be attributed to their roles as global information centres and their flexible trading conditions, such as a more heterogeneous structure of transaction costs. The foreign leadership is robust to the use of linear or nonlinear models, the time differences between Chicago and the other markets, and the long-run liquidity conditions of the Nikkei futures markets, and strongly supports the international centre hypothesis. Full article

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

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17 pages, 339 KiB

Open AccessArticle

A Statistical Analysis of Companies’ Financing Strategies in Portugal during the COVID-19 Pandemic

by Fernando Tavares, Eulália Santos, Mafalda Venâncio de Vasconcelos and Vasco Capela Tavares

J. Risk Financial Manag. 2023, 16(2), 116; https://doi.org/10.3390/jrfm16020116 - 11 Feb 2023

Cited by 1 | Viewed by 1362

Abstract

This study aims to establish which sources of financing were used and the relevance of different banking products for Portuguese companies during the pandemic. We also intend to understand the determinants of companies’ financing options and what lies behind their decisions concerning the [...] Read more.

This study aims to establish which sources of financing were used and the relevance of different banking products for Portuguese companies during the pandemic. We also intend to understand the determinants of companies’ financing options and what lies behind their decisions concerning the appropriate level of debt. A quantitative methodology was used, based on a questionnaire given to Portuguese companies to analyse different financing issues. The sample was composed of 1957 companies with a business volume of more than EUR 500,000 per year. The results show that Portuguese companies focused on managing liquidity and corporate risk. We found evidence that companies kept financing themselves by banking products such as in the pre-pandemic period, although 29.6% resorted to the LAE-COVID economy support line. Companies decide on the appropriate amount of debt based on the nature of the business, the phase of the life cycle in which the company is, the cash flows’ volatility, accounting results, credit rating, and fiscal benefits. Academicians and companies should master the concept of company financing and adopt strategies to consider the level of debt and refine the banking products to be used. Although the literature on business financial management usually claims that all crises are the same, the COVID-19 pandemic not only caused a recession but also forced people and companies to adapt to a new environment. Portuguese companies have shown resilience and focus on their adoption of good financing practices. Full article

12 pages, 1116 KiB

Open AccessArticle

Threshold of Depression Measure in the Framework of Sentiment Analysis of Tweets: Managing Risk during a Crisis Period Like the COVID-19 Pandemic

by Jules Clement Mba and Mduduzi Biyase

J. Risk Financial Manag. 2023, 16(2), 115; https://doi.org/10.3390/jrfm16020115 - 11 Feb 2023

Cited by 2 | Viewed by 1163

Abstract

The COVID-19 pandemic has had a devastating impact on the world. The surge in the number of daily new cases and deaths around the world and in South Africa, in particular, has increased fear, psychological breakdown, and uncertainty among the population during the [...] Read more.

The COVID-19 pandemic has had a devastating impact on the world. The surge in the number of daily new cases and deaths around the world and in South Africa, in particular, has increased fear, psychological breakdown, and uncertainty among the population during the COVID-19 pandemic period, leading many to resort to prayer, meditation, and the consumption of religious media as coping measures. This study analyzes social media data to examine the perceptions and attitudes of the South African community toward religion as well as their well-being appreciation during the COVID-19 period. We extract four sets of tweets related to COVID-19, religion, life purpose, and life experience, respectively, by users within the geographical area of South Africa and compute their sentiment scores. Then, a Granger causality test is conducted to assess the causal relationship between the four time series. While the findings reveal that religious sentiment scores Granger-causes life experience, COVID-19 similarly Granger-causes life experience, illustrating some shifts experienced within the community during the crisis. This study further introduces for the first time a Threshold of Depression measure in the sentiment analysis framework to assist in managing the risk induced by extremely negative sentiment scores. Risk management during a period of crisis can be a hectic task, especially the level of distress or depression the community is experiencing in order to offer adequate mental support. This can be assessed through the Conditional Threshold of Depression which quantifies the threshold of depression of a community conditional on a given variable being at its Threshold of Depression. The findings indicate that the well-being indicators (life purpose and life experience) provide the highest values of this threshold and could be used to monitor the emotions of the population during periods of crisis to support the community in crisis management. Full article

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24 pages, 8003 KiB

Open AccessArticle

Portfolio Volatility Estimation Relative to Stock Market Cross-Sectional Intrinsic Entropy

by Claudiu Vințe and Marcel Ausloos

J. Risk Financial Manag. 2023, 16(2), 114; https://doi.org/10.3390/jrfm16020114 - 11 Feb 2023

Viewed by 2075

Abstract

Selecting stock portfolios and assessing their relative volatility risk compared to the market as a whole, market indices, or other portfolios is of great importance to professional fund managers and individual investors alike. Our research uses the cross-sectional intrinsic entropy (CSIE) [...] Read more.

Selecting stock portfolios and assessing their relative volatility risk compared to the market as a whole, market indices, or other portfolios is of great importance to professional fund managers and individual investors alike. Our research uses the cross-sectional intrinsic entropy (CSIE) model to estimate the cross-sectional volatility of the stock groups that can be considered together as portfolio constituents. The CSIE market volatility estimate is based on daily traded prices—open, high, low, and close (OHLC)—along with the daily traded volume for symbols listed on the considered market. In our study, we benchmark portfolio volatility risks against the volatility of the entire market provided by the CSIE and the volatility of market indices computed using longitudinal data. This article introduces CSIE-based betas to characterise the relative volatility risk of the portfolio against market indices and the market as a whole. We empirically prove that, through CSIE-based betas, multiple sets of symbols that outperform the market indices in terms of rate of return while maintaining the same level of risk or even lower than the one exhibited by the market index can be discovered, for any given time interval. These sets of symbols can be used as constituent stock portfolios and, in connection with the perspective provided by the CSIE volatility estimates, to hierarchically assess their relative volatility risk within the broader context of the overall volatility of the stock market. Full article

(This article belongs to the Special Issue Macroeconomic Modelling)

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19 pages, 976 KiB

Open AccessArticle

Value and Contrarian Investment Strategies: Evidence from Indian Stock Market

by Sharneet Singh Jagirdar and Pradeep Kumar Gupta

J. Risk Financial Manag. 2023, 16(2), 113; https://doi.org/10.3390/jrfm16020113 - 10 Feb 2023

Cited by 2 | Viewed by 2820

Abstract

Value and contrarian investment strategies are two basic approaches which are widely used by investors worldwide. Both value and contrarian investment strategies are assumed to pick the same stocks even though the approach to picking the stocks is different. Furthermore, both investment strategies [...] Read more.

Value and contrarian investment strategies are two basic approaches which are widely used by investors worldwide. Both value and contrarian investment strategies are assumed to pick the same stocks even though the approach to picking the stocks is different. Furthermore, both investment strategies are supposed to work in various forms of market efficiency. The present study aims to empirically review and analyze the investment strategies, value and contrarian, by creating a portfolio of returns of listed stocks in India’s Bombay Stock Exchange (BSE) over a period from 1990–91 to 2018–19. A Venn diagram is used to explain the selection of stocks under both investment strategies with analysts’ forecast recommendations. The findings show that value and contrarian investment strategies essentially select different stocks at any given point in time. Moreover, the study finds that both investment strategies can work in the same form of market efficiency. This study brings new insights to scholars, analysts, and investors for analyzing investment strategies and their portfolio composition. Full article

(This article belongs to the Special Issue Recent Research on Behavioral and Experimental Finance)

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18 pages, 1156 KiB

Open AccessArticle

On the Measurement of Hedging Effectiveness for Long-Term Investment Guarantees

by Maciej Augustyniak, Alexandru Badescu and Mathieu Boudreault

J. Risk Financial Manag. 2023, 16(2), 112; https://doi.org/10.3390/jrfm16020112 - 10 Feb 2023

Viewed by 1981

Abstract

Although the finance literature has devoted a lot of research into the development of advanced models for improving the pricing and hedging performance, there has been much less emphasis on approaches to measure dynamic hedging effectiveness. This article discusses a statistical framework based [...] Read more.

Although the finance literature has devoted a lot of research into the development of advanced models for improving the pricing and hedging performance, there has been much less emphasis on approaches to measure dynamic hedging effectiveness. This article discusses a statistical framework based on regression analysis to measure the effectiveness of dynamic hedges for long-term investment guarantees. The importance of taking model risk into account is emphasized. The difficulties in reducing hedging risk to an appropriately low level lead us to propose a new perspective on hedging, and recognize it as a tool to modify the risk–reward relationship of the unhedged position. Full article

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

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19 pages, 2407 KiB

Open AccessArticle

Dynamic Conditional Correlation and Volatility Spillover between Conventional and Islamic Stock Markets: Evidence from Developed and Emerging Countries

by Mohammad Sahabuddin, Md. Aminul Islam, Mosab I. Tabash, Md. Kausar Alam, Linda Nalini Daniel and Imad Ibraheem Mostafa

J. Risk Financial Manag. 2023, 16(2), 111; https://doi.org/10.3390/jrfm16020111 - 10 Feb 2023

Cited by 2 | Viewed by 1733

Abstract

This study aims to investigate the dynamic conditional correlation and volatility spillover between the conventional and Islamic stock markets in developed and emerging countries in order to develop better portfolio and asset allocation strategies. We used both multivariate GARCH (MGARCH) and multi-scales-based maximal [...] Read more.

This study aims to investigate the dynamic conditional correlation and volatility spillover between the conventional and Islamic stock markets in developed and emerging countries in order to develop better portfolio and asset allocation strategies. We used both multivariate GARCH (MGARCH) and multi-scales-based maximal overlap discrete wavelet transform (MODWT) approaches to investigate dynamic conditional correlation and volatility spillover between conventional and Islamic stock markets in developed and emerging countries. The results show that conventional and Islamic markets move together in the long run for a specific time horizon and present time-varying volatility and dynamic conditional correlation, while volatility movement changes due to financial catastrophes and market conditions. Further, the findings point out that Chinese conventional and Islamic stock indexes showed higher volatility, whereas Malaysian conventional and Islamic stock indexes showed comparatively lower volatility during the global financial crisis. This study provides fresh insights and practical implications for risk management, asset allocation, and portfolio diversification strategies that evaluate stock market reactions to the crisis in the international avenues of finance literature. Full article

(This article belongs to the Special Issue Stability of Financial Markets and Sustainability Post-COVID-19)

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36 pages, 1998 KiB

Open AccessArticle

Effect of Aid-for-Trade Flows on Investment-Oriented Remittance Flows

by Sèna Kimm Gnangnon

J. Risk Financial Manag. 2023, 16(2), 110; https://doi.org/10.3390/jrfm16020110 - 10 Feb 2023

Viewed by 1157

Abstract

Despite the voluminous literature on the effect of aid-for-trade (AfT) flows on recipient countries’ trade performance, little is known about the relationship between AfT flows and other capital flows to developing countries. This paper contributes to the literature by exploring the effect of [...] Read more.

Despite the voluminous literature on the effect of aid-for-trade (AfT) flows on recipient countries’ trade performance, little is known about the relationship between AfT flows and other capital flows to developing countries. This paper contributes to the literature by exploring the effect of AfT inflows on investment-oriented remittance inflows, notably through the channel of trade costs. Using an unbalanced panel data set of 106 countries over the period 2002–2019 and the two-step system generalized method of moments, the empirical analysis establishes several outcomes. AfT flows exert a positive effect on investment-oriented remittance flows, where the magnitude of this positive effect is higher in least-developed countries and in remittance-dependent countries than in other countries. AfT flows stimulate investment-oriented remittance flows in countries that face higher trade costs. The analysis shows that AfT flows could be important leverages for stimulating investment-oriented remittance flows and could promote the development of the private sector in beneficiary countries. Full article

(This article belongs to the Special Issue International Trade, Finance, and Development)

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11 pages, 1051 KiB

Open AccessArticle

Impact of Environmental, Social, and Governance Activities on the Financial Performance of Indian Health Care Sector Firms: Using Competition as a Moderator

by Bhakti Agarwal, Rahul Singh Gautam, Pooja Jain, Shailesh Rastogi, Venkata Mrudula Bhimavarapu and Saumya Singh

J. Risk Financial Manag. 2023, 16(2), 109; https://doi.org/10.3390/jrfm16020109 - 10 Feb 2023

Cited by 9 | Viewed by 4018

Abstract

Environmental, social, and governance (ESG) activities have become essential and viable activities of corporations because of the increase in concern for environmental, social, and governance issues. The motive of this research is to measure the effect of ESG on the financial performance (FP) [...] Read more.

Environmental, social, and governance (ESG) activities have become essential and viable activities of corporations because of the increase in concern for environmental, social, and governance issues. The motive of this research is to measure the effect of ESG on the financial performance (FP) of healthcare corporations using the market-to-book value (MTB) ratio as a proxy of FP. A sample of 33 pharma companies in India from 2011 to 2020 has been considered. The study relies on the panel data method to assess the association between ESG and FP. The potential moderating role of competition has also been studied to simplify their relationship in this framework. The finding of this study is that there is a significant negative association between ESG and FP, and it is also found that when competition is used as a moderator, it results in a significantly positive impact on the ESG and FP of healthcare companies. This study increases the understanding of the association between ESG and FP and helps corporations to formulate corporate strategies and stakeholders to make investment decisions. The originality of this study is that it addresses the impact of competition on ESG and FP of the healthcare industry and will become foundational literature for future studies. Full article

(This article belongs to the Special Issue ESG-Investing and ESG-Finance)

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J. Risk Financial Manag., Volume 16, Issue 2 (February 2023) – 83 articles

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