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This paper aims to examine the contemporary association between accounting information and a number of measures of systematic (beta) risk that incorporate dynamic market features. The goal is to determine the fundamental accounting drivers of beta and to assess whether their explanatory variable power has changed or declined over time.

Beta estimates are calculated using adjustments for thin‐trading, central tendency, leverage, and time variance. Accounting risk variables are derived from theoretical foundations and prior empirical research, and classified as operating, financial or growth.

Results show a strong association between accounting variables (operating and growth) and systematic risk that is consistent over time, but with some industry and size differences and possible country effects. Accounting variables are able to capture dynamic risk shifts and generally are able to outperform naïve M‐GARCH and industry betas in predicting next year's systematic risk.

Internal management and external decision making enable the development of more efficient ex‐post risk measures, isolating actual risk determinants rather than just determining the level of risk, overcoming the problem that conventional ex‐post measures cannot be used for non‐listed entities, initial public offering firms, or those that do not have sufficient trading history, reduces the noise found in traditional risk estimates that rely on historical security returns, and the development of trading and valuation strategies.

This is the first paper that assesses the association between a range of dynamic risk measures and accounting variables and tests whether this long‐run association has changed over time.

In the Indian manufacturing SMEs context, supply chains have a complex structure having multiple echelons, multiple partners and multiple locations. Due to these complexities, most of the Indian manufacturing SMEs face several types of supply chain risks. This paper aims to identify the dominant risk variables and to develop the interrelationship among these risk variables.

Based on the literature review and experts’ opinion, nine dominant risk variables faced by an Indian manufacturing SMEs have been identified. An interpretive structural modelling (ISM) approach has been adopted to establish the interrelationship among the risk variables. These risk variables have been classified by using MICMAC analysis. Based on ISM-MICMAC approach, a case study on three Indian manufacturing SMEs has been carried out.

This study would help the supply chain managers to understand and prioritize the significant risk variables. Nine significant risks variables of Indian manufacturing small and medium enterprises (SMEs) have been studied. External risk, information technology risk and financial risk have identified as most influencing risk variables, while delay risk and market risk have emerged as the most dependent risk variables. These results will provide a guideline to supply chain managers for implementation of supply chain risk management (SCRM).

In this study, an ISM-based model is developed based on the opinion of experts from a group of Indian manufacturing SMEs; as such, this model may be biased and limited to a selected company. This framework can be extended further by adding more risk variables and sub-risk variables from the other sectors/organizations.

Many SCRM models are available in past literature, but no model has been proposed for the Indian Manufacturing SMEs. This research finding can be useful for managers to understand the characteristics and interrelationships among the risk variables for building a robust supply chain. These results will also help the supply chain managers in making proactive plans for SCRM, especially in the Indian SMEs context.

The purpose of this paper is to examine the effect of bank consolidation and foreign ownership on bank risk taking in the Egyptian banking sector.

Following prior studies (e.g. Yeyati and Micco, 2007; Barry et al., 2011), this study uses pooled Ordinary Least Squares regression models under two main analyses to test the relation between concentration and foreign ownership on one hand and bank risk-taking behavior on the other hand, where observations are pooled across banks and years for the 2000-2011 period. The reform plan was launched in 2004 and resulted in various restructuring activities in the banking system. Thus, to control for the effect of implementing the financial sector reform plan on bank insolvency and credit risk, this study includes a reform dummy variable (RFM) for the post-reform period in models testing the association between consolidation, foreign ownership and bank risk. Therefore, this categorical variable identifies whether bank risk is related to the reform activities that have been observed during the post-restructuring period, 2005-2011. Moreover, to accommodate the possibility that effects of bank concentration and foreign ownership on bank risk differ due to the implementation of the reform plan, the author create two interaction terms: one uses the product of the reform dummy variable and concentration measures, while the other uses the product of the reform dummy and foreign ownership variables to capture interactions. These interaction terms and the dummy variable provide ample room to capture the effect of bank concentration and foreign ownership on bank risks during the post-reform period.

This study provides empirical evidence that bank concentration is associated with low insolvency risk and credit risk as measured by loan loss provisions (LLP) in the post-reform period. These results are consistent with the “concentration-stability” view, suggesting that concentration of the banking sector will enhance stability. Moreover, evidence shows that while a higher presence of foreign banks reduces bank credit risk in the post-reform period, it appears to increase insolvency risk. These results are robust to using alternative measures. These findings imply that regulators in emerging countries should support foreign investments in banks to transfer better managerial skills and systems. However, government-owned banks are found to be more prone to insolvency and credit risks; thus, their ownership should not be encouraged. Finally, policy makers should reinforce bank consolidation, be prudent in determining the capital adequacy ratio (CAR) and monitor intensively less profitable, well-capitalized and small-sized banks.

Consolidation of the banking sector decreases insolvency risk and credit risk, as measured by LLP in the post-reform period. This study proposes that bank supervisors implement prudent polices in determining the bank CAR, and monitor intensively less profitable, well-capitalized and smaller banks, as they have incentives to increase risk. In addition, regulators should encourage foreign investment in the banking sector and facilitate their operations in Egypt.

Bank supervisors should intensely monitor banks with high-CARs that exceed mandatory requirements because they may be more likely to engage in more risk-taking activities.

It provides empirical evidence from a country-specific, emerging market perspective, in which restructuring events affect the national economy. Egypt, similar to other emerging countries in Africa, pursues an institutionally based (bank-based) system of corporate governance, where banks are the primary sources of finance for firms. Therefore, restructuring banks and other financial institutions and supervising their operations ensure the soundness and stability of these institutions, which represent the nerve of emerging economies. Because emerging countries tend to share common characteristics and economic conditions, and the reform of their financial systems is significant for economic development, the Egyptian banking reform and restructuring program should be of interest to other emerging countries to capitalize on this experiment. While international studies on these relationships are mostly cross-country or focus on US banks, firm-specific studies are scant. Furthermore, the findings of this study should be of interest to Egyptian regulators, bank supervisors and policy makers studying the implications of bank reforms.

Expert systems have come to the forefront in the modeling of problems. One of the major problems facing the expert system designers is to develop an accurate knowledge base and a meaningful model of uncertainty associated with complex models. Decision-making is based on knowledge, and decision system support needs a knowledge base as well. An adequate knowledge acquisition (KA) process leads to accurate knowledge and improves the decision-making process. To manage the risk of a medical service (twin pregnancy in this case) a knowledge management system was created. The captured knowledge may be associated with an uncertainty. This study aims to introduce a method for evaluating the reliability of a tacit KA model. It assisted engineering managers in assessing and prioritizing risks. The study tried to use this method in risk management and new case in the health domain.

In this study, relevant variables were identified in the knowledge management literature reviews and the domain of expertise management. They are validated by a group of domain experts. Kendall’s W indicator was used to assess the degree of consensus. On the basis of combined cognitive maps, a cognitive network was constructed. Using Bayesian belief networks and fuzzy cognitive maps, an uncertainty assessment method of tacit KA was introduced. To help managers focus on major variables, a sensitivity analysis was conducted. Reliability of model was calculated for optimistic and pessimistic values. The applicability and efficacy of the proposed method were verified and validated with data from a medical university.

Results show that tacit KA uncertainty can be defined by independent variables, including environmental factors, personality and acquisition process factors. The reliability value shows the accuracy of the captured knowledge and the effectiveness of the acquisition process. The proposed uncertainty assessment method provides the reliability value of the acquisition model for knowledge engineers, so it can be used to implement the project and prevent failures in vital factors through necessary actions. If there is not a satisficed level of reliability, the KA project reliability can be improved by risk factors. The sensitivity analysis can help to select proper factors based on the resources. This approach mitigated some of the disadvantages of other risk evaluation methods.

The contribution of this study is to combine the uncertainty assessment with tacit KA based on fuzzy cognitive maps and the Bayesian belief networks approach. This approach used the capabilities of both narrative and computational approaches.

The purpose of this study is to find out how corporate governance is interconnected with failure risk in case of small- and medium-sized enterprises (SMEs).

The study is based on Estonian whole population of SMEs, in total 67,058 observations, and data are obtained from Estonian Business Register. Failure risk (FR) is portrayed with a well-known Altman et al. (2017) model, while seven variables reflecting corporate governance (CG) based on previous studies have been selected. As the method, logistic regression (LR) is applied with FR in the binary form as a dependent variable and seven CG variables as independent. The effect of firm size and age is studied with two separate LR models.

The results indicate that with the growth in manager’s age and the presence of managerial ownership, failure risk reduces. In turn, the presence of larger boards and managers having directorships in other firms leads to higher failure risk. Gender heterogeneity in the board, board tenure length and ownership concentration by means of having a majority owner are not associated with failure risk. The obtained results vary with firm size and age.

Unlike this study, research published on this topic earlier has used a much narrower definition of failure, mostly focused on large and listed companies, been sample based and information about corporate governance variables has often been obtained through questionnaires. All these limitations are relaxed in this population level study.

In most financial institutions, chief risk officers (CROs) and their risk management (RM) staff fulfill a role in managing risk exposures, yet their lack of involvement in the governance has been cited as an influential factor that contributed to the financial crisis of 2007-2008. Various legislative and regulatory bodies have pressured financial firms to improve their risk governance structures to better weather potential future crises. Assuming that CROs and risk committees are given sufficient power to influence the corporate governance of financial institutions, can CROs and risk committees protect financial institutions from violating litigable securities law? Can they improve bank performance? The paper aims to discuss these issues.

The authors employ a principal component analysis to construct a single measure that captures various aspects of RM in a firm. The authors compare the risk governance characteristics of sued firms with their non-sued peers and consider one of the final outcomes of risky behavior: shareholder litigation. The authors compute ROA and buy-and-hold abnormal returns to capture operating and stock performance and examine whether risk governance improves bank performance by reducing litigation risk.

Proper risk governance reduces a firm’s litigation probability. The addition of the RM factor to models that have been previously proposed in the literature improves the accuracy of those models in identifying companies that are most susceptible to class action lawsuits. Better RM improves the financial and stock price performance of financial institutions.

The data collection is laborious as the information about CRO governance has to be hand-collected from the 10-K report. A broader sample employing, e.g., non-US banks may provide additional insights into the relationship between RM practices, shareholder litigation, and bank performance.

The study shows that a bank’s RM functions play a critical role in improving bank and operating performance and in reducing shareholder litigation. Banks should emphasize the RM function.

This is the first study to examine the mechanism behind the positive association between RM and bank performance. The study shows that better RM improves overall bank performance by decreasing litigation risk.

Examines a study carried out on three large Swedish firms examining the effects of education, experience and the environment on ways in which decisions are made. Studies, in particular, purchasing behaviour in an international context with the central theme and analysis of how purchasers evaluate suppliers located in different countries. Acknowledges, surprisingly, both knowledge of foreign language and experience of foreign countries seemed to be unimportant. Concludes that the results are on a tentative level requiring further research.

This study aims to investigate the differences in the credit profiles of Islamic and conventional banks in the Gulf Cooperation Council (GCC) region and attempts to identify the factors responsible for those differences.

Financial data sourced from the Bankscope database for a sample of 25 Islamic and 56 conventional banks headquartered in the GCC region between 1987 and 2014 are used. The credit risk of Islamic versus conventional banks is compared using a variety of univariate (mean difference test and correlation analysis) and multivariate tests (pooled ordinary least squares (OLS) regressions with robust standard errors and year fixed effects, regressions with interaction variables and logistic regressions).

Pooled OLS regressions find that Islamic banks have lower credit risk than conventional banks. Robustness checks using logistic functions and interaction variables confirm this result. Using multiple econometric specifications, we also find that higher capitalization, greater liquidity and cost inefficiency contribute to the lower risk profile of Islamic banks.

The study is unable to disaggregate data for banks offering both Islamic and conventional banking services and hence does not include conventional banks with Islamic windows. In addition, there are differences across countries even within the GCC region as to what is considered Sharia’h-compliant and what is not.

The results are of potential interest to not only researchers, but also market participants, regulators and legislators. The methods used in this study could be extended to other two-tiered banking systems and, in the case of Islamic and conventional banking, to other markets.

The authors use a unique sample of banks headquartered in the GCC countries, whose banking markets are similar, if not homogeneous, thus excluding operations of multinational banks. By focusing on the Gulf region, differences in the credit profiles of Islamic and conventional banks can be examined without the confounding effects of unobserved factors like culture, accounting regime or regulatory environment.