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The purpose of this paper is to test if building reputation capital through environmental, social and governance (ESG) investing can mitigate the negative effect of economic policy uncertainty (EPU) on firms’ valuation.

This study uses an unbalanced panel of 591 financial firms between 2005 and 2021 from Canada, France, Germany, Italy, Japan, the United Kingdom (UK) and the USA. Ordinary least square method is used in the empirical tests. To alleviate a potential endogeneity problem, robustness tests are performed using the two-stage least square approach with instrumental variables.

The results of this paper show that sustainable reporting can offset the negative effect of EPU on the valuation of financial firms. Consistent with the stakeholder-based reputation-building hypothesis, sustainability performance may have an insurance-like impact on firms’ valuation during periods of high uncertainty.

According to the findings, during high policy uncertainty periods, investors accept to pay a premium for the stocks of the firms which built social capital through environmental and social investments. Accordingly, it is suggested that regulatory bodies and governments motivate firms to increase their stakeholder orientation to attain higher reputation capital.

Managers can mitigate the negative impact of policy uncertainty on the value of their firms via building social capital, which will increase financial market stability in return, and portfolio investors may use such firms for portfolio optimization decisions.

To the best of the authors’ knowledge, this paper is one of the first to examine the mitigating role of ESG investing on EPU and firm valuation relationships for financial firms. Thus, this study provides new insights related to the impact of ESG performance on valuation during uncertain times.

Purpose: Innovation is a multi-dimensional phenomenon influenced at the organisational level by internal and external factors that can determine how innovative an organisation can be, determining a firm’s business performance. This chapter measures and predicts how innovative a company can be, considering key internal factors using modern data analytics/science.

Need for Study: The increasing challenge of modern business operations is affected by how quickly, sustainably, effectively, and efficiently companies can innovate to mitigate the dynamic challenges of current business environments and evolving customer needs. The ability to predict, measure, and manage innovation becomes necessary to ensure that businesses are fit for purpose.

Methodology: A model was designed following the study hypotheses and statistically tested. A historical data sample from the OECD global industry dataset for eight years was used for the analysis. The ordinary least square method was used to test for model fit. Also, in machine learning engineering, predictive analysis using the multivariate linear regression analysis method was carried out.

Findings: The results support the hypotheses that an organisation’s capacity to be innovative can be measured and predicted, and it is influenced by a good number of internal factors or independent variables at various degrees.

Practical Implications: Managers must understand how to measure and predict innovation metrics to manage innovation better, ultimately leading to better business outcomes and performance. Also proposed are new measurement matrices for innovation management: innovation capacity (I_C), business innovation value (BIV), innovation creation factor (ICF), and a practical data-driven innovation management and prediction system.

This paper aims to examine how the diversity of educational levels within bank boards influences the efficiency and stability of banks operating in the Middle East and North Africa (MENA) region. Unlike previous studies, this analysis also investigates the role of board gender diversity in moderating the relationship between board educational level diversity and bank efficiency and financial stability in MENA.

In this study, a sample of 77 banks in the MENA region spanning the years 2011 to 2018 is used. The relationship between the presence of highly educated directors on the board, bank efficiency and stability is assessed using the ordinary least squares method. Additionally, the authors use the Generalized Method of Moments technique to correct endogeneity problem.

This study establishes a positive association between the presence of directors with advanced educational backgrounds on bank boards and bank efficiency and stability. Furthermore, the inclusion of women on the board strengthens this relationship.

These findings have important implications for policymakers and regulators in the MENA region, suggesting that promoting diversity policies that encourage the participation of highly educated directors on bank boards can contribute to enhanced efficiency and financial stability. Policymakers may also consider implementing quotas or guidelines to improve gender diversity in board appointments, thereby fostering bank performance in the region.

This study stands out for its innovation and distinctiveness, as it delves into the connection between board educational level diversity and bank efficiency in the MENA region. Notably, it surpasses previous research by investigating the moderating role of board gender diversity, thus offering valuable insights into the complex interplay between these two facets of board diversity. This contribution enriches the existing literature by providing novel perspectives on board composition dynamics and its influence on bank efficiency and stability.

As a kind of knowledge-intensive team coordinated across physical distance, it is necessary to construct a meta-knowledge driven transactive memory system (TMS) for the knowledge management of distributed agile team (DAT). This study aims to explore the comprehensive antecedents of TMS establishment in DATs and considers how TMS establishment is affected by herding behavior under the artificial intelligence (AI)-related knowledge work environment that emerges with technology penetration.

The data derived from 177 students of 52 DATs in a well-known Chinese business school, which were divided into 26 traditional knowledge work groups and 26 AI-related task groups to conduct a random comparative experiment. The ordinary least squares method was used to analyze the conceptual model and ANOVA was used to examine the differences in herding behavior between the control groups (traditional knowledge work DATs) and treatment groups (DATs engaged in AI-related knowledge work).

The results showed that knowledge diversity, professional knowledge, self-efficacy and social system use had significantly positive effects on the establishment of TMS. Interestingly, the authors also find that herding behavior may promote the process of establishing TMS of the new team, and this effect will be more significant when AI tasks are involved in team knowledge work.

By exploring the comprehensive antecedents of the establishment of TMS, this study provided a theoretical basis for knowledge management of DATs, especially in AI knowledge work teams. From a practical perspective, when the DAT is involved in AI-related knowledge works, managers should appropriately guide the convergence of employees’ behaviors and use the herding effects to accelerate the establishment of TMS, which will improve team knowledge sharing and innovation.

Servitization of products is becoming increasingly prevalent among manufacturing enterprises. Existing research has primarily focused on exploring whether the direct impact of servitization on manufacturer performance follows a linear or a curvilinear relationship. However, the understanding of the underlying mechanisms between servitization and manufacturer financial performance remains limited. This paper aims to examine the non-linear relationship between servitization and manufacturer performance as well as the mediating process and boundary condition associated with this relationship.

Drawing on resource-advantage theory, this paper proposes a theoretical model of the U-shaped relationship between servitization and the financial performance of equipment manufacturers. Panel data of 248 listed equipment manufacturers in China during the period of 2010–2020 are used to test each hypothesis through the ordinary least square method.

The empirical results indicate that servitization follows a U-shaped relationship with service business focus and the financial performance of equipment manufacturers. Service business focus mediates this U-shaped relationship between servitization and financial performance, and digital technology application moderates this relationship.

This paper pioneers the unraveling of the potential mechanism that can explain the curvilinear relationship between servitization of manufacturers and financial performance. This mechanism is the focus of the service business, which is theoretically delineated and empirically tested. Furthermore, digital technology application enables manufacturers to achieve service business focus more effectively in the process of servitization. Thus, this study addresses the call for research on digital servitization.

In this study, the authors investigate a pressing concern: how auditors react to their clients facing repercussions due to environmental violations. More specifically, this study aims to examine how environmental engagements, which carry potential risks and liabilities, influence auditors’ decision-making and fee structure.

This study uses unique, reliable and actual violation data from the United States Environmental Protection Agency (US-EPA) from 2000 to 2015, focusing on clients involved in environmental violations that led to legal prosecution and penalties and those who subsequently engaged in voluntary supplemental environmental projects (SEPs). The authors use the ordinary least squares method to test the authors’ main research question and later use propensity score matching and alternate data source (ASSET4) to check the robustness of the authors’ results.

The authors find that firms with environmental violations are more susceptible to auditor resignation. Moreover, the environmental violator firms that maintain their engagement with auditors pay significantly higher audit fees compared to non-environmental violator firms. Furthermore, these environmental violator firms also face extended audit report delays and take longer to appoint a new auditor.

This study provides an additional consequence of environmental violations, namely, increased chances of auditor resignation and higher audit fees, alongside the penalties imposed by the US-EPA. Moreover, the authors’ findings position environmental violations and participation in SEPs as important factors in auditors’ business risk assessment.

This study examined how economic freedom and its related components, such as open markets, regulatory efficiency, rule of law and the size of government, affect bank risk behavior, focusing on the Japanese context.

The study employs a two-step GMM framework on the annual data of Japanese banks ranging from 2005 to 2020 to empirically test the hypotheses. Furthermore, we also use the ordinary least square method to ensure the robustness of our mainline findings.

The finding suggests that economic freedom increases the banks' risk-taking, thus making them fragile. The results also highlight that out of the four main subcomponents of economic freedom, regulatory efficiency and government size increase bank risk-taking, while the rule of law and open markets decrease banks' risk-taking. Additionally, we examine how the banks' specific characteristics affect the results by creating a subsample based on capitalization and liquidity ratios. Overall, the results are consistent with the baseline findings. Moreover, the results are robust to alternative proxy measures of risk.

The study's findings have several implications for regulators and policymakers. The results suggest that regulators and policymakers should reconsider their strategies for economic freedom to ensure that they promote stability in the banking system and reduce banks' risk-taking inclinations.

Although previous studies have examined the impact of economic freedom on bank stability and risk-taking, this study is the first to do so in the Japanese context, contributing to the literature by providing new insights and empirical evidence.

Most emerging economies have made conscious efforts through policy initiatives to attract foreign direct investment (FDI). However, a significant obstacle to FDI inflow has been the prevalence of corruption in the host country. This study, therefore, aims to examine whether there is an optimum corruption value that results in threshold effects of corruption on FDI.

To achieve this objective, this study used Hansen’s (1999) panel threshold regression (PTR) model by using a panel data of 30 sub-Saharan African (SSA) countries from 2000 to 2021.

This study finds that the nexus between corruption and FDI has a single threshold effect, with a 5.37% optimum corruption threshold value. At this threshold value, corruption affects FDI negatively. Any corruption value that is below the threshold value also elicits a negative corruption–FDI relationship. Despite having a negative relationship when the corruption value is above the optimum corruption threshold, it is not statistically significant.

The implication of the results is that it is deleterious to use corrupt practices to draw FDI to SSA nations.

To the best of the authors’ knowledge, this study is one of the first in the corruption–FDI nexus literature to use Hansen’s PTR model to estimate an optimal corruption threshold. The authors recommend that policymakers in the selected SSA countries reconsider the use of corruption to attract FDI because there is an optimal corruption threshold that could impact FDI in the host country.

The objective of this study is to examine the moderating effect of microfinance on the digital divide in developing countries.

On the methodology, the econometric method employed to estimate the equation is based on the two-stage least squares (2SLS).

This study confirms that microfinance can play an important role in mitigating the adverse effect of digitalization on poverty.

Thus, governments should prioritize and encourage the integration of digital technologies with robust microfinance systems to effectively combat poverty, given the importance of microfinance.

Given the importance of digital technology to businesses and economic development, we need to search for a better solution that allows digital technology to be further developed but at the same time, is not harmful to the poor. The issue of the poor, either financially or technically can be partially resolved if the poor is given the necessary and sufficient assistance. Therefore, this paper examines whether microfinance can be part of solutions to the digital divide in developing countries.

The study aims to assess the effect of English and French language literacy on the welfare of Ghanaian women in trade. Also, this study analyses the geographical variations of such effects from rural to urban areas.

Using the latest living standards survey data, the standard two-stage least squares instrumental variable approach was used to estimate the causal effects.

The results show that Ghanaian women in trade who are both English and French literate or only English literate are able to improve their welfare significantly relative to their fellows who are illiterate in both English and French or only English, whilst those who are solely French literate do not experience any significant improvement in welfare from trade compared with their counterparts. From the heterogeneous analysis, the findings indicate that the effect is significantly concentrated amongst rural traders but insignificant amongst urban traders.

The findings of this study inform government and policymakers to consider the effectiveness of the free senior high school (SHS) education policy in improving English and French language literacy and the welfare of women in Ghana. It also informs educational institutions on the importance of adult education in English and French, especially amongst women.

The study quantitatively estimates the effect of English and French language literacy on the welfare of Ghanaian women in trade by employing an instrumental variable approach to assess the causal effect. Uniquely, the study finds that language literacy is a significant tool in improving the welfare of rural women engaged in trade in Ghana.