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1 – 10 of over 11000The purpose of this study is to empirically examine the extent to which volatility associated with corporate performance could be attributed to specific adverse macroeconomic…
Abstract
Purpose
The purpose of this study is to empirically examine the extent to which volatility associated with corporate performance could be attributed to specific adverse macroeconomic conditions in a bivariate causality analysis.
Design/methodology/approach
The study uses the Toda–Yamamoto Wald test approach to Granger causality analysis in verifying significant causal interactions if any, between corporate performance volatility and seven macroeconomic conditions or variables.
Findings
This study finds that economic policy uncertainty and macroeconomic uncertainty tend to have bidirectional causal interaction with corporate performance volatility. In addition, estimated results further suggest significant unidirectional causal interaction between corporate performance volatility and inflation expectations, exchange rate volatility, inflation and inflation uncertainty, with direction of causality running from the macroeconomic variables toward corporate performance volatility. This study, however, found no significant causal interaction between corporate performance volatility and recessionary probability or likelihood of recession.
Practical implications
This study’s conclusions could have significant and critical policy implications for key corporate policymakers responsible for corporate performance strategy. Various causal interactions identified could inform policy framework and, subsequently, strategies geared toward minimizing volatility associated with performance during episodes of any of the various macroeconomic conditions examined in this study.
Originality/value
The uniqueness of this study stems from its focus on corporate performance volatility instead of corporate performance and potential causal interactions it might have with key adverse macroeconomic conditions, some of which have not been examined in previous studies according to reviewed literature.
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Rexford Abaidoo and Elvis Kwame Agyapong
This study examines how specific micro-level macroeconomic indicators influence corporate performance volatility among US corporate bodies in the short run.
Abstract
Purpose
This study examines how specific micro-level macroeconomic indicators influence corporate performance volatility among US corporate bodies in the short run.
Design/methodology/approach
The study employs error correction autoregressive distributed lagged (ARDL) model (ECM) to examine how micro-level variables influence volatility associated with corporate performance in the short run.
Findings
This paper finds that disaggregated or micro-level variables examined, tend to exhibit features that are not readily apparent from the aggregate variable from which such variables are derived. For instance, reported empirical estimate suggests that, growth in expenditures on services and nondurable goods tend to lower volatility associated with corporate performance, whereas government expenditures and expenditures on durable goods rather worsens volatility associated with corporate performance, all things being equal. Additionally, presented empirical estimates further provide evidence suggesting that macroeconomic uncertainty and inflation uncertainty significantly moderate or influence the extent to which disaggregated variables impact corporate performance volatility.
Originality/value
Compared to related studies in the reviewed literature, this study rather examines volatility associated with corporate performance instead of the corporate performance indicator itself. Additionally, this paper also examines how disaggregated variable instead of aggregate variables impact such volatility. Finally, the moderating role of key macroeconomic conditions in such a relationship is also examined.
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We investigate the link between firm volatility and risk-taking (RT) among 4232 institutions across 11 countries during the period of 2000–2017 and find RT is negatively…
Abstract
We investigate the link between firm volatility and risk-taking (RT) among 4232 institutions across 11 countries during the period of 2000–2017 and find RT is negatively correlated with volatility measures. Second, a decomposition of the primary risk measure, the Z score and Merton distance-to-default, reveals that high RT contributed to lower stock return volatility mainly through better corporate governance, firm size, higher information efficiency, and strong BOD. Third, Australia firms engage in more RT compared to other countries. Finally, majority of the selected countries show the negative impact of RT in firm volatility in the pre-crises period (2002–2006) and during the crises period (2007–2009) but not in the post-crises period (2010–2014).
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Sudhi Sharma, Vaibhav Aggarwal, Reepu and Gitanjali Kaur Mehta
This study aims to investigate into the dynamic connection between ESG scores and the volatility term structure for Indian companies listed BSE. The study divides the BSE-100…
Abstract
Purpose
This study aims to investigate into the dynamic connection between ESG scores and the volatility term structure for Indian companies listed BSE. The study divides the BSE-100 listed companies into two panels based on their median ESG scores in 2022, creating high and low ESG scoring groups to capture volatility structure.
Design/methodology/approach
The study employs time-varying symmetric and asymmetric GARCH models and followed by continuous Wavelet to capture volatility structure and explore comparative resilience behavior.
Findings
The study found similar volatility patterns regardless of ESG scores, nudging doubt on the direct impact of ESG on volatility. Additionally, both high- and low-ESG-scored companies displayed high vulnerabilities during the pandemic, raising questions about the effectiveness of ESG frameworks in capturing risks. Finally, by examining the resilience behavior of ESG-scored companies during the pandemic, our study contributes to the evolving understanding of the intersection between ESG performance and crisis response.
Practical implications
The study carries vital implications for investors and policymakers. It highlights the urgent need to strengthen the ESG framework and scores to shield investors from short- and long-term volatilities and economic vulnerabilities.
Originality/value
To the best of the authors’ knowledge, this is the first study investigating the Indian market by examining the volatility structure and resilience behavior of high- and low-ESG-scored companies during the pandemic.
Peer review
The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-02-2024-0113
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Multinational structure has been linked to operational flexibilities that can improve corporate adaptability and a knowledge‐based view suggests that multinational resource…
Abstract
Purpose
Multinational structure has been linked to operational flexibilities that can improve corporate adaptability and a knowledge‐based view suggests that multinational resource diversity can facilitate responsive opportunities. The enhanced maneuverability from this can reduce earnings volatility and hence the corporate performance risk. But, the internationalization process may also require irreversible investments that increase corporate exposures and leave the risk implications of multinational enterprize somewhat ambiguous. Hence, the purpose of the paper is to present an empirical study of the implied relationships between the degree of multinationality and various risk measures including downside risk, upside potential, and performance risk.
Design/methodology/approach
The paper provides a brief literature review, develops hypotheses, and tests them in two‐stage least square regressions on archival data to control for pre‐selection biases.
Findings
The analyses indicate that multinationality is associated with lower downside risk as well as higher upside potential and leads to reduced performance risk. The study finds no trace of diminishing effects from higher degrees of multinationality.
Research limitations/implications
The empirical study uses a sample of large US‐based corporations, which could affect the generalizability of results. However, this is consistent with other studies and eases comparability of findings.
Practical implications
The findings add to the ongoing debate about the risk effects of a multinational corporate structure and confirms that a diverse multinational presence is associated with positive risk outcomes.
Originality/value
The paper complements a limited number of studies with equivocal results and adopts alternative risk outcome measures. The study extends the industry scope by introducing a comprehensive sample of firms operating in different manufacturing and service businesses.
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Wanyi Chen, Kang He and Lanfang Wang
In addition to leading a new tide of global financial technology, blockchain delivers advantages in terms of risk control compared to traditional financial systems. By exploring…
Abstract
Purpose
In addition to leading a new tide of global financial technology, blockchain delivers advantages in terms of risk control compared to traditional financial systems. By exploring the relationship between blockchain technology and macroeconomic uncertainty, this study aims to identify the hedge risk attribute of blockchain technology.
Design/methodology/approach
From a data set comprising 6,323 Chinese firms with A-shares listed on the Shenzhen and Shanghai Stock Exchanges in 2015–2018, the authors obtain the use of blockchain technology by listed companies on the basis of annual reports, news reports, search engines and prospectuses. These documents are then subjected to text analyses based on computer technology. Cross-sectional and propensity score matching analyses are used to ensure robustness.
Findings
The empirical results show that with an increase in macroeconomic uncertainty, blockchain technology can potentially enable companies to reduce their systemic risks and enhance their investment efficiency.
Originality/value
This study expands the literature on the application of blockchain technology, offers references for enterprises to address future risks based on specific macroeconomically uncertain environments and provides guidelines for governments to maintain financial market stability.
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Rexford Abaidoo and Elvis Kwame Agyapong
The study examines the effect of macroeconomic risk, inflation uncertainty and instability associated with key macroeconomic indicators on the efficiency of financial institutions…
Abstract
Purpose
The study examines the effect of macroeconomic risk, inflation uncertainty and instability associated with key macroeconomic indicators on the efficiency of financial institutions among economies in sub-Saharan Africa (SSA).
Design/methodology/approach
Data for the empirical inquiry were compiled from 35 SSA economies from 1996 to 2019. The empirical estimates were carried out using pooled ordinary least squares (POLS) with Driscoll and Kraay’s (1998) standard errors.
Findings
Reported empirical estimates show that macroeconomic risk and exchange rate volatility constrain the efficiency of financial institutions. Further results suggest that inflation uncertainty has a significant influence on the efficiency of financial institutions among economies in the subregion. Additionally, reviewed empirical estimates show that institutional quality positively moderates the nexus between inflation uncertainty and financial institution efficiency. At the same time, political instability is found to worsen the adverse effect of macroeconomic risk on the efficiency of financial institutions.
Practical implications
For policymakers and governments, improved institutional structures are recommended to ensure the operational efficiency of financial institutions, especially during an inflationary period. For decision-makers among financial institutions, the study recommends policies that have the potential to make their institutions less vulnerable to macroeconomic risk and exchange rate fluctuations.
Originality/value
The approach adopted in this study differs significantly from related studies in that the study examines and reviews interactions and relationships not readily found in the reviewed literature.
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Domenico Rocco Cambrea, Fabio Quarato, Giorgia Maria D'Allura and Francesco Paolone
The purpose of the paper is to examine the effect of chief executive officer (CEO) succession on environmental, social and governance (ESG) performance and whether the…
Abstract
Purpose
The purpose of the paper is to examine the effect of chief executive officer (CEO) succession on environmental, social and governance (ESG) performance and whether the characteristics of the incoming CEO, in terms of both gender and career horizon, are able to affect the relationship between CEO succession and ESG score.
Design/methodology/approach
The paper investigates a sample of European-listed companies between 2010 and 2021. Difference-in-difference and fixed-effects regressions are employed as the base empirical methodology. In addition, the robustness of the empirical findings is assessed by employing alternative methodologies and a different ESG proxy.
Findings
The empirical findings show the existence of a positive link between CEO succession and ESG performance and that this relationship is affected by two characteristics of the incoming CEO. Specifically, the empirical evidence indicates that the positive effect is magnified by the gender and the career horizon of the incoming CEO.
Originality/value
Considering the lack of research, this paper is the first one that opens a debate about the effects of CEO succession on corporate ESG performance in several European countries. By employing a unique sample of European listed firms, which has never been examined in other empirical research, this study highlights the importance of the demographic features of the incoming CEOs that should be taken into consideration during their selection process.
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This study aims to contribute to the academic disciplines of entrepreneurship and management by developing a new theory that explains Founder-CEOs’ succession in family and…
Abstract
Purpose
This study aims to contribute to the academic disciplines of entrepreneurship and management by developing a new theory that explains Founder-CEOs’ succession in family and non-family firms. Many scholars failed to generate a specific theory to describe the succession of Founder-CEOs. Family firms remain complex enterprises comprising interconnectedness of cultural interests in which corporate governance occurs by families, Founder-CEOs and sometimes a board of directors.
Design/methodology/approach
This study’s design/methodology/approach reflects post-modernist epistemological and ontological perspectives for conducting systematic literature reviews. To identify relevant studies in the review, the several databases (Australian Business Dean’s Council Journal Quality List; EBSCO Database, including PsycINFO and Psych studies; Web of Science) and a mix of ranked journals from entrepreneurship, management and psychology were used.
Findings
The findings and results in this paper reflect the purpose, methodology and literature analysis culminating in 1,582 peer-reviewed studies. A total of 182 peer-reviewed studies met the criterion for review. Throughout the research process, a systematic literature review uncovered management literature gaps overlooked for decades during the theory-building process. Hence, developing a theory of Founder-CEOs succession used a combination of systematic, inductive, comparative and interactive approaches.
Originality/value
A Theory of Founder-CEOs Succession explains the strategic process of replacing a founder systematically. The promotion of, and incentives for, internal executives have been topics of great interest and deliberation among scholars and practitioners for a long time. This study contributes research implications for theory building in the academic disciplines of entrepreneurship and management by offering scholars and practitioners a theory that does not exist to describe Founder-CEOs’ succession encompassing both strategic successes and failures. By incorporating successes and failures, this study provides realistic reflections of Founder-CEOs.
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Maryam Seifzadeh, Mahdi Salehi, Bizhan Abedini and Mohammad Hossien Ranjbar
The present study attempts to assess the relationship between management characteristics (managerial entrenchment, CEO narcissism and overconfidence, managers' myopia, real and…
Abstract
Purpose
The present study attempts to assess the relationship between management characteristics (managerial entrenchment, CEO narcissism and overconfidence, managers' myopia, real and accrual-based earnings management) and financial statement readability of listed firms on the Tehran Stock Exchange. In other words, this paper seeks to answer the question that “whether management characteristics have a favorable effect on financial statement readability or not.”
Design/methodology/approach
Multivariate regression model is used to meet the purpose of this study and research hypotheses are also examined using a sample of 1,050 listed observations on the Tehran Stock Exchange during 2012–2017 and by employing multiple regression patterns based on panel data technique and fixed effects model. Moreover, exploratory factor analysis of six variables (tenure, board independence, CEO duality, CEO ownership, board compensation and CEO change) is used for calculating managerial entrenchment and the FGO index is used for measuring readability.
Findings
The obtained results show that there is a negative and significant relationship between managerial entrenchment and accrual-based earnings management and a positive and significant relationship between real earnings management, managers' myopia, managers' narcissism and overconfidence and financial statement readability.
Originality/value
Since the present study is the first paper to investigate such a topic in the emerging markets, it provides useful information about intrinsic and acquisitive characteristics of management for accounting information users, analysts and legal institutions that contribute greatly to financial statement readability. Besides, the results of this study aid the development of science and knowledge in this field and fill the existing gap in the literature.
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