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Since the introduction of VIX to measure the spot volatility in the stock market, VIX and its futures have been widely considered to be the standard of underlying investor sentiment. This study aims to examine how the magnitude of contango or backwardation (MCB volatility risk factor) derived from VIX and VIX3M may affect the pricing of assets.

This paper focuses on the statistical inference of three defined MCB risk factors when cross-examined with Fama–French’s five factors: the market factor R_m–R_f, the size factor SMB (small minus big), the value factor HML (high minus low B/M), the profitability factor RMW (robust minus weak) and the investing factor CMA (conservative minus aggressive). Robustness checks are performed with the revised HML-Dev factor, as well as with daily data sets.

The inclusions of the MCB volatility risk factor, either defined as a spread of monthly VIX3M/VIX and its monthly MA(20), or as a monthly net return of VIX3M/VIX, generally enhance the explanatory power of all factors in the Fama and French’s model, in particular the market factor R_m–R_f and the value factor HML, and the investing factor CMA also displays a significant and positive correlation with the MCB risk factor. When the more in-time adjusted HML-Dev factor, suggested by Asness (2014), replaces the original HML factor, results are generally better and more intuitive, with a higher R² for the market factor and more explanatory power with HML-Dev.

This paper introduces the term structure of VIX to Fama–French’s asset pricing model. The MCB risk factor identifies underlying configurations of investor sentiment. The sensitivities to this timing indicator will significantly relate to returns across individual stocks or portfolios.

The purpose of the instrument is to favour and strengthen, in a timely and relevant manner, the processes of design, planning, investment, execution and evaluation of various public and private initiatives in the territory, thereby strengthening the preventive, responsive and adaptive capacities of the communities, institutions and territory. The instrument allows the generation of a single single-community diagnosis, a definition of a baseline which leads to progress assessment at different levels and provides specific risk management recommendations to municipalities.

The definition of the purpose and design of this tool was the result of the work in a year by a group of national experts from the public, private, organised civil society and academia members of the National Platform for Disaster Risk Reduction. This initial stage has sought to capture the different sectoral visions with a multidimensional approach that considers the territorial differences cautioning that local governments are key actors to achieve risk reduction, and they are also the first respondents and responsible for managing their territory and community. In order to help local governments, to understand their situation, the experts’ group established that the assessment should consist of a guided self-diagnosis using a survey. The dimensions considered are as follows: governance, territorial planning, socio-economic and demographic conditions and climate change and natural resources. The four dimensions encompass in total 41 variables that are considered relevant for the disaster risk management discipline.

The rural to semiurban municipalities classified as medium or low development, according to the national standard, present a high-risk level in the dimension of territorial ordering. The municipalities that show a moderate to low dependence on the common municipal fund have a low risk in all the evaluated dimensions, related to greater financial autonomy and own or self-management of resources. The municipalities with low percentage of poverty by income are better evaluated in all the dimensions showing a low level of the Communal Underlying Risk Factors Index (CURFI). A high percentage of communes with a low level of the CURFI have low-urban growth in the last 15 years.

One of the main difficulties was raising awareness amongst the mayors that the reduction of the underlying factors does not necessarily imply monetary investment, understanding the scarcity of local government resources. The important thing was to sensitise them that the diagnosis per se was already a result to manage risk in their community.

To be able to count for the first time in Chile with a methodology that allows diagnosing risk-based conditions and to target structural and non-structural measures aimed at reducing these factors in local governments. Additionally, it will be possible to monitor the reduction of the underlying risk factors (URF), for accompanying the work of the municipalities in terms of knowing if they have been able to implement the individualised recommendations that are provided.

The methodology was formulated by reviewing and considering the methodologies applied in different regions of the world, which generally coincide in the dimensions that group the main underlying factors of disaster risk. However, the numerical treatment of the variables obeys to novel statistical processing (multicriteria method), which provides robustness to the model and, therefore, to the results obtained.

The purpose of this paper was to examine the transformation of fire prevention processes via improved targeting of fire prevention interventions over a four-year period.

A four-year case study of the transformation of fire prevention processes involving a UK fire and rescue service, local council, National Health Service primary care trust and a police force was undertaken.

Understanding the socio-economic causal factors underlying unintentional dwelling fires, and the need to work in collaborative partnerships to achieve change in such factors can support more targeted and effective fire prevention activities.

Analysis of underlying causal factors and their relationships, together with population segmentation and working in coordinated collaborative partnerships, can support enhanced fire risk assessment and community safety. This supported more pro-active early intervention fire risk management.

Analysis of socio-economic causal factors and socio-economic groups associated with unintentional dwelling fires can assist in targeting fire prevention activities in a more effective and efficient manner. This enabled the fire and rescue service to target fire prevention to social groups most at risk of dwelling fires and the types of fires (for example, kitchen fires) relevant to the different social groups.

Collaborative public sector partnerships can achieve change in the socio-economic circumstances of at-risk individuals to support fire prevention. This enables the social- and health-related factors underlying fire risk to be addressed by the relevant partner health or social services agencies.

The detailed analysis of the transformation of fire prevention activities that led to an implemented approach to enhance community safety. In particular, the analysis and evaluation of the move to collaborative multi-agency partnerships to support and improve fire prevention activities.

The purpose of this paper is to discuss the findings from the body of case studies offered in the issue, combined with three external perspectives on local voices and action.

Using as its basis the eight key case studies and three external contributions to the special issue, the paper offers a theoretical framework as a basis for discussion of this material. Through this, it identifies possible modes of action understood through the theoretical framework and elaborated through the specific cases. It concludes with proposals for further work.

The discussion finds that from a local perspective, the ambitions of local populations and local NGOs to achieve emancipatory change depend on the scope for local collaboration and partnerships to exercise influence on underlying risk factors. It resolves the suggested tension between operating within, and outside the system through the concept of “legitimate subversion”.

It is felt that the original recording of case studies of local level action combined with the process of iterative critical reflection on the part of the contributors offers a novel approach to knowledge creation from practice, and offers insights bridging theoretical and practitioner perspectives into means of addressing underlying risk factors affecting local populations.

In today's increasingly globalized world, foreign direct investment (FDI) is a hotbed for discussion. Numerous studies have been undertaken regarding FDI, its determinants and benefits, but very few works provide importance to the effect of political risk on the inflow of FDI. Some papers introduce institutional or governance issues in determining FDI inflow, but a comprehensive framework in this respect is non-existent. With this end in view, the authors take 146 countries worldwide over a period of 1984-2009 and then classify countries as OECD or non-OECD members to see whether there is any difference in the nature of the effect. The study keeps other possible determinants of FDI – market size, growth rate of real GDP, trade openness, infrastructural facilities as control variables while considering the effect of underlying political risk factors in deterring the FDI.

This paper looks at the effect of political risk on FDI by using a systematic approach of factor analysis, in reducing the number of variables into their underlying factors and then generating factor scores. Then it uses a panel regression approach combined with factor analysis to examine which particular aspect of political risk contributes more towards deterring FDI inflow.

The empirical results of this study refute the conventional notion that government failure is the primary contributing factor for poor FDI inflow. Rather, cultural conflict and the attitude of the partner country towards the host country are found to be mostly responsible for deterring FDI inflow. The result holds significantly even after controlling for traditional determinants regardless of whether it is an OECD member country or not.

It is not just governance failure but the cultural factors and development partners' attitude about the country which mostly determines FDI inflow.

This is the first paper which combines the factor analysis in a panel regression framework to examine the impact of political risk on FDI inflow.

The purpose of this paper is to individually examine the findings from eight case studies presented in this special issue and comparatively identify the findings regarding local learning and action.

Underlying research questions regarding power and powerlessness in regard to addressing underlying risk factors affecting local populations form the basis for the discussion. Proceedings of a collaborative workshop conducted with the contributing authors are analysed qualitatively to identify learning relating to the research questions emerging from the case studies individually and collectively.

A number of strategies and tactics for addressing underlying risk factors affecting local populations were identified from the case studies, including collaboration and cohesion. Campaigning, lobbying, communications and social mobilisation in an attempt to bridge the gap between local concerns and the decision-making of government and other powerful actors. Innovation and local mobilisation to address shortcomings in government support for disaster reduction and development. Communications as a first base to influence behaviour of both communities and government. Social change through empowerment of women to act in disaster reduction and development.

The outcomes of the action research conducted by the authors individually and collectively highlight the necessity for bridging different scales of action through a range of strategies and tactics to move beyond local self-reliance to influence on underlying risk factors. The action research process employed may have wider applications in gathering and formalising local-level experience and knowledge.

The case studies and their analysis present a range of practical strategies and tactics to strengthen local resilience and address underlying risk factors which are replicable in other contexts.

Practitioners are activists and do not often engage in critical reflection and analysis. The method presented here offers a means of achieving this in order to generate learning from local-level experience. The findings contribute to the consideration of cross-scale action to address underlying risk factors which impact local communities.

This paper aims to analyse various failures that Indian innovative start-ups (ISs) are exposed to and proposes interventions from management accounting tools (MATs) that can tackle their failure-causing risks. This paper justifies the applicability of contingency theory (CT) for applying MATs for failure prevention and risk management.

This paper uses multimethod research while undertaking two sequential studies. The methods include a Survey via semi-structured interviews of 51 specialists and media reports and the Delphi method.

Reasons for the failures of Indian ISs have been identified and grouped based on eight broad underlying risk factors. Appropriate MATs relevant to ISs have been identified and examined by relating them with the risk factors underlying failure. Applicability of CT is shown while using the MATs for failure prevention and risk management of ISs.

This study is limited to the Indian context. Empirical validation of the applicability of MATs for each type of failure along the lifecycle stages of ISs needs to be undertaken.

Founders/owners of ISs can use this conceptual framework to tackle the risks underlying the failure of their firms. Policymakers can introduce appropriate policies to enhance the survival of ISs. Researchers can further explore the application of CT for failure prevention and risk management of ISs.

A conceptual framework has been developed relating failure-causing risk factors relevant to ISs and appropriate MATs, which justifies the applicability of CT.

The purpose of this paper is to examine whether Fama–French common risk-factor portfolio investors herd on a daily basis for five developed markets, namely, Europe, Japan, Asia Pacific ex Japan, North America and Globe.

To examine the herd behavior of common risk-factor portfolio investors, this paper utilizes the cross-sectional absolute deviations (CSAD) methodology, covering a daily data sampling period of July 1990 to January 2019 from Kenneth R. French-Data Library. CSAD driven by fundamental and non-fundamental information is assessed using Fama–French five-factor model.

The results do not provide evidence for herding under normal market conditions, either when reacting to fundamental information or non-fundamental information, for any region under consideration. However, Fama–French common risk-factor portfolio investors mimic the underlying risk factors in returns related to size and book-to-market value, size and operating profitability, size and investment and size and momentum of the equity stocks in European and Japanese markets during crisis period. Also, no considerable evidence is found for herding (on fundamental information) under crisis and up-market conditions except for Japan. Ancillary findings are discussed under conclusion.

Further research on new risk factors explaining stock return variation may help improve the model performance. The performance can be improved by adding new risk factors that are free from behavioral bias but significant in explaining common stock return variation. Also, it is necessary to revisit the existing common risk factors in order to understand behavioral aspects that may affect cost of capital calculations (e.g. pricing errors) and valuation of investment portfolios.

This is the first paper that examines the herd behavior (fundamental and non-fundamental) of Fama–French common risk-factor investors using five-factor model.

This paper aims to examine the impact of the return differential between the domestic and foreign markets on the risk exposure of country mutual funds (CMFs). It is argued that when US market returns are higher than the foreign market returns, the returns chasing investors will tilt their portfolio toward the US market assets, increasing the co-movement between the US market and CMF return.

The sample includes 19 exchange traded funds (ETFs) and 18 closed-end mutual funds (CEFs) over the period between 2001 and 2011. A static two-factor model is used to get the benchmark results. On the other hand, a conditional specification is used, with the return differential as the information variable, to capture the variation in the exposure of the country funds to their underlying risks.

Empirically, the authors find results that partially support their argument. The results of the static two-factor model indicate that the CMFs are exposed to the foreign market risks, whereas the local (US) market risk is not generally priced. The results obtained from the conditional specification, however, shows that the estimated US betas are significant for a number of CMFs.

A possible interpretation of this finding is that the return differential encourages return chasing behavior of the US investors documented in the international investment literature. This, in turn, may contribute to the time-varying exposure of the CMF return to their underlying risk factors. The findings of the paper have important implications for the investors as the time variation in risk exposure of CMFs causes fluctuation in diversification benefits over time.

To the best of the authors’ knowledge, this is the first paper that uses return differential as the information variable in a conditional factor model.

This paper investigates the motivations and practice of nonfinancial firms with regard to using options in their risk management activities.

The paper provides a comprehensive account of the existing empirical evidence and analyzes data on the use of derivatives in general and options in particular by nonfinancial corporations across different underlyings and countries.

Overall, a significant number of 15‐25 per cent of the firms outside the financial sector use options. This reflects the fact that options are very versatile risk management instruments that can be used to hedge various types of exposures, linear as well as nonlinear. In particular, options are a useful component of corporate risk management if exposures are uncertain, e.g. due to price and quantity risk. Depending on the correlation between price and quantity risk, the optimal hedge portfolio consists of a varying combination of linear and nonlinear risk management instruments. Moreover, the accounting treatment as well as liquidity effects can impact the choice of derivative. At the same time, there may be agency‐related incentives to use options because of their role to present dual bets on both direction as well as future volatility of the underlying.

The findings are important with regards to assessing whether the full potential of derivative financial instruments is being realized, since not all firms use these instruments and not all of them use all types and, more importantly, whether they are used appropriately.

The paper provides an up‐to‐date analysis of the motivations for nonfinancial firms to use financial derivatives in general and options in particular as well as comprehensively characterizes the extent of their use in practice.