Search results

The purpose of this study is to evaluate whether a diversification by grape varieties may help wine producers reduce uncertainty in quantity and quality variations due to increasingly erratic climate conditions.

This study hand-collects granular quantity and quality data from wine harvest reports for vintages 2003 to 2017 for the Valais region in Switzerland. The data allows us to obtain detailed data on harvested kilograms/liters and Oechsle/Brix degrees. It is then merged with precise meteorological data over the same sample period. The authors use this data set to capture weather conditions and their impact on harvested quantities and quality. Finally, they build portfolios including different grape varieties to evaluate whether this reduces variations in quality and quantity over vintages.

The findings highlight that the weather varies relatively strongly over the sample period and that climate hazards such as hail, frost or ensuing vine diseases effectively occur. These strongly impact the harvested quantities but less the quality of the wine. The authors further show that planting different grape varieties allows for a significant reduction in the variation of harvested quantities over time and thus acts as a good solution against climate risk.

The effect of climate change on viticulture is becoming increasingly important and felt and bears real economic and social consequences. This study transposes portfolio diversification which is central to reducing risk in the finance industry, into the wine industry and shows that the same principle holds. The authors thus propose a novel idea on how to mitigate climate risk.

This paper aims at theoretical exploration of price and quantity setting behaviors of a monopolist encountering uncertain product demand within the mean‐risk frameworks. In the microeconomic literature, the relationships between price and quantity have been traditionally studied using the expected utility approach. This paper moves away from the traditional assumptions and compares various types of risk‐return approaches and explains why most of the monopoly firms follow pricing strategy instead of quantity setting strategy.

Price setting behavior and quantity setting behavior monopoly firms were examined with endogenous target value and comparative statics were used.

Comparison of various approaches reveals that risk‐averse customers might decrease purchases because of the price uncertainty or shift to other suppliers, which may explain why monopoly firms prefer their power over price setting rather than quantity setting.

The present study has introduced some testable propositions by comparing different behavioral models of price and quantity setting behaviors of a monopolist facing uncertain product demand.

This study contributes to understanding of firm's behavior in the face of uncertainty.

The conceptual nature of the paper makes the paper original in its contribution to the existing literature of the theory of firm.

The purpose of this paper is to determine the extent of risk rationing among potential rural borrowers in Mexico and China.

Using primary survey data from 730 farm households in the Shaanxi province of China and from 372 farmers in northeastern Mexico, the authors investigate factors associated with risk rationed, price rationed and quantity rationed farmers. The survey was instrumented to self-identify borrower typologies. In addition the authors created within the survey a discrete-choice credit demand build to determine borrower credit demand elasticities. The analysis applies a linear probability which the authors found to be consistent with multinomial and binary logit models.

The authors find in China the incidence of risk rationing in farmers to be 6.5, 14 percent for quantity rationed and 80 percent for price rationed. In Mexico, 35 percent of the sample is risk rationed, 10 percent quantity rationed and 55 percent price rationed. The results from China support the hypothesis that the financially poor are more likely to be quantity rationed; in Mexico, however, the level of education is found to be important in determining quantity rationed. In both countries, asset wealthy farmers are less likely to be risk rationed; however, income does not appear to have an impact. The paper provides evidence that the elasticity of demand for credit is different among the three credit rationed groups: risk rationed, price rationed and quantity rationed. Risk aversion and prudence are significantly correlated with risk rationing in China, while only risk aversion is significant in Mexico. The results suggest that efforts to enhance credit access must also deal with risk and risk perceptions.

Risk rationing is an important concept in the understanding of rural credit markets. The findings that only 6.5 and 35 percent of Chinese and Mexican farmers are in stark contrast to each other. For agricultural economies such as Mexico with a significant number of farmers being risk rationing, more effort should be put into financial education and financial practices, including perhaps the use of risk-contingent credit to remove collateral risk. As property rights in China evolve, and new laws are promulgated to permit borrowing against land use rights, the collateralization issue will become much more important in rural credit markets.

This paper is the first to investigate risk rationing in China and Mexico and one of the few research studies empirically investigating risk rationing. A comparative analysis of Mexico and China is enlightening because of the structural differences in the respective agricultural economies. The use of a credit demand build and the enumeration of individual credit demand elasticities is an original contribution to this literature.

This research looks into hedge strategies to resolve foreign exchange-related risks, generated when investing in overseas financial assets, as an example of quantity risk. If an investor has information with no uncertainty over the volume and there is only a price risk he want to hedge, an investor will be able to reduce or eliminate risks by using relative derivative securities such as forwards or futures contracts. However, if there are uncertainties over the volume of hedging targets that is called quantity risk, it is impossible to set the optimal hedge ratio with the traditional method without considering the presence of quantity risk. In this paper, we theoretically draw an optimal hedge ratio which is estimated via minimal variance criterion under static hedge structure. We also analyze its hedge performance and the impact of change in covariance on the optimal hedge ratio and variance of investment return denominated as its own country currency. For theoretical approach, we review the impact that overseas financial assets’ yield and exchanges rates distribution will have on optimal hedge ratio through simple numerical analysis. Empirical analysis is carried out by using the stock indices of the U.S., Europe and Asian countries, and the results indicate that hedge strategies taken with quantity risk for all markets produced better hedging performance than the strategies taken without quantity risk. Since there is a need for systematic research on risks involving foreign exchanges that occur in the event of foreign investments aimed to develop the domestic financial industry, we hope that our research serve as a stepping-stone for further research.

The growing business complexity has caused many risks (e.g. operational, financial, reputational, cybersecurity, regulatory and compliance) that threaten companies' sustainability and have received attention from regulators, investors, and businesses. The authors present a model for assessing and reporting corporate risk by examining the indicators underlying corporate risk reporting.

A thorough review of the literature and semi-structured interviews with experts were conducted and the fuzzy Delphi technique was used to obtain consensus and screening of risks. The relationships between these risk indicators were recognized, weighted and prioritized by employing a hybrid Decision Making Trial and Evaluation Laboratory Model (DEMATEL) method integrated with Analytic Network Process (ANP) (DEMATEL-ANP [DANP]) approach. Finally, using the Iranian setting of corporate risk reporting, a model was developed to calculate the risk-reporting scores.

The results indicate that risk disclosure quality is more important than risk disclosures' textual properties and quantity. According to the experts, reporting the key risks that the company faces, management's approach to dealing with these risks and quantifying their impact are more important than the other indicators. The results also show that risk reporting in Iran lacks quantitative and specific information, and most risk disclosures are sticky.

The data have been prepared and analyzed according to the unique Iranian reporting environment, which should be considered when interpreting the results.

The results of this research can be used by the regulators of the Stock Exchange Organizations (SEO) to evaluate corporate risk reports and rank companies. Results are also relevant to investors and policymakers to identify companies with poor risk disclosure and to take necessary measures to improve their reporting practices.

This paper contributes to the social and governance literature by presenting the importance of risk reporting in corporate disclosures.

The unique Iranian setting of corporate risk reporting furthers the understanding of risk reporting and thus provides education, policy, practice and research implications for other emerging economies like Iran. Many prior studies focus mainly on the quality of risk disclosure, and other aspects of corporate risk disclosure presented in the study have remained largely overlooked. The corporate risk reporting attributes identified in the study are relevant to the rise of non-financial risks, the textual and qualitative nature of risk reporting and textual risk disclosures.

Agricultural risks will tend to increase in the future, but risk management instruments and techniques at the disposal of wine companies are relatively limited. This paper aims to present an original risk protection mechanism implemented by the federation of Côte du Rhône (Inter‐Rhône) wine producers to build up a wine stock, or “reserve”, so as to protect their incomes against fluctuation in prices and production.

Using the VaR (value‐at‐risk) methodology, the stock level that will protect producers against a fall in their incomes is determined. More specifically, the probability that a given producer's current income falls lower than a target minimum income must be inferior or equal to a given (small) wine stock level. An agricultural income depends on price and production, so the reserve amount is expressed according to price and production quantity risk (measured by standard deviation), and the correlation between the two. The wine stock reserve is compared with a reserve invested in financial assets.

A static comparative analysis is made using simulations of the two types of reserves (wine stock and financial assets) according to the various explanatory variables. Empirical study makes it possible to calculate reserve amounts for each category of wine managed by Inter‐Rhône. The study reveals a strong disparity in the amount of reserves of each wine.

The reserve system is considered by some to give to the producer federation the power to control supply below the equilibrium level in order to receive monopoly rents. To avoid this occurring the constitution of a mutual fund is recommended. This solution allows producers to profit from diversification gains and greater managerial flexibility.

This study aims to examine the effect of corporate risk disclosure on investment efficiency. This study also seeks to contribute to existing literature of corporate risk disclosure by investigating voluntary and mandatory risk disclosure and its effect on the investment efficiency.

This study used two measures of corporate risk disclosure, level and quantity of corporate risk disclosure. A content analysis approach is adopted for non-financial Malaysian firms over the period 2010–2018.

The empirical results show that level of corporate risk disclosure leads toward efficient investment, whereas quantity of corporate risk disclosure causes inefficient investment when firms disclose more voluntary risks. Further, categorizing corporate risk disclosure into mandatory and voluntary risk disclosure, this study finds that voluntary risk disclosure tends to have higher investment inefficiency, while no evidence was found for mandatory risk disclosure.

This paper contributes to narrow stream of research investigating corporate risk disclosure through level and quantity contributing to the understanding of the level and quantity of risk disclosure in determining organizational investment efficiency.

This study aims to empirically investigate the effect of International Financial Reporting Standards (IFRS) convergence on corporate risk disclosure, with a particular emphasis on the quantity and coverage of risk information. The research also conducts economic benefit and cost analysis to investigate the economic implications that may arise from the transition to IFRS reporting.

A content analysis approach is used to measure two broader dimensions of risk disclosure, namely, risk disclosure quantity and risk topic coverage. Furthermore, using firm-fixed effect regression on a sample of 143 Indian-listed companies, this study investigates the variations in these risk disclosure dimensions before (2012–2016) and subsequent to (2017–2021) the convergence with IFRS.

The empirical results of this research demonstrate that IFRS convergence has led to a significant improvement in firms’ risk disclosure across several dimensions. Particularly, during the post-IFRS period, firms’ usage of risk-related words and sentences has considerably surged in MD&A, Notes and whole annual reports. In addition, upon IFRS convergence, firms’ risk descriptions have become more extensive and evenly distributed across risk topic categories. Moreover, the in-depth benefit and cost analysis revealed that firms reporting under IFRS benefit from decreased cost of equity capital, but they also incur a higher cost of audit fees.

This study contributes to the literature in two ways. First, this is the only study, to the best of the authors’ knowledge, to conduct a broader examination of the impact of mandatory IFRS convergence on corporate risk disclosure, with a major focus on quantity and coverage of risk information. Second, by conducting economic benefit and cost analysis, this study provides novel insights into the critical role of IFRS risk disclosures toward multiple economic outcomes.

The purpose of this paper is to better understand how mandatory risk categories are disclosed and to provide a better understanding of the reasons why risk disclosure looks less useful than it ought to be.

We analyze how Italian banks provide risk information, by focusing on its characteristics to find out any differences between the notes to the financial statements and the public report, both prepared in compliance with the instructions of the Bank of Italy. We assess the risk-related reporting practices of 66 Italian banks, based on a content analysis of the two mandatory reports, and verify whether bank-specific factors explain any differences.

Italian banks formally comply with the Bank of Italy’s instructions, but there is discretion to choose the characteristics of the information provided. Despite different risk categories to disclose in each report, disclosure is quite uniform, although banks tend to provide denser information in the notes to the financial statements and the difference in the economic signs between the two reports decreases as the level of risk increases.

The significance of this study goes beyond the debate taking place in the academic arena, as it can be largely relevant for preparers, those responsible for setting international and national accounting standards, the Basel Committee on Banking Supervision and the domestic supervisory authorities, particularly concerning the possible introduction of requirements that are more explicit than the existing ones.

The Italian setting is very relevant because unlike other countries, Italy adopts “interventionist enforcements”, which are regarded as a critical tool for achieving the minimum disclosure requirements. Moreover, the two sets of disclosure required by the Bank of Italy have never been investigated in a single data set.

Few studies have focused on emerging markets owing to difficulties in identifying the real effect of disclosures on these economies. To fill this gap, the purpose of this paper is to first: investigate the main drivers for risk disclosure quality for Chinese financial firms, second: further study the impact of such disclosure on market liquidity.

The sample comprises all financial firms listed in the Shanghai A-shares market for the period 2013–2015. By relying on manual content analysis of annual reports, the risk disclosure quality is measured through a multidimensional approach which encompasses three factors: quantity of disclosure, coverage of disclosure and the semantic properties of depth and outlook. The findings of this paper are based on ordinary least squares and fixed-effects estimations.

The findings suggest that firm characteristics (especially size) influence risk disclosure practices of Chinese financial companies. Furthermore, the authors found that risk disclosure quality has an impact on market liquidity, and when the authors analysed each year the authors noticed that the results were driven by the year 2013; moreover, the authors noticed no or little significance from the period of the emerging financial crisis.

The sample of this paper is limited to financial firms in China. The usage of manual content analysis limits the authors’ ability to investigate risk reporting drivers and its impact on market liquidity on a large scale.

The importance of this paper stems from documenting several reporting incentives concerning not only firms’ quantity, but also firms’ quality of risk reporting. Collectively, the findings support activism for reforms and the enhancement of regulations in China in order to make the market more efficient.

This paper provides new evidence for financial companies in China on the principal drivers for risk disclosure quality and highlights how the quality of such disclosure impacts market liquidity. Furthermore, this paper confirms previous findings on the Chinese market (Ball et al., 2000; Zou and Adams, 2008) in which, given a decreasing but still strong state presence, there is higher stock volatility and weak corporate governance.