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This study aims to examine whether insourcing of processes pays off and verifies key hypotheses regarding the financial ratios of organisations.

This paper randomly selects and then surveys 1996 organisations, of which 9.5% (190) stated that they used insourcing, 1.9% (37) made a decision to implement insourcing in the near future and 88.6% did not use insourcing. Then, for available firm data (100 insourcing firms and 100 firms without it), the financial statements of the surveyed companies were obtained to compare the most important financial ratios. The financial situation was compared at four-time points. The mean and median values of individual indicators were compared with the significance of relevant statistical tests.

A U-shaped curve of financial results in the time of enterprises that implemented insourcing and reverse U-shaped curve for enterprises that did not have insourcing are seen. Thus, the insourcing of processes pays off in the long run.

Limitations exist in the generalisation of the results obtained, due to the limited number of samples qualified for analyses (limited reliable financial data).

The research highlights the importance of effective insourcing projects in the long term.

This study is the first to quantify the financial performance of companies that have used insourcing in comparison with a reference group. This paper defines insourcing and contributes to the growing number of studies on insourcing by bringing attention to the financial outcomes in the long run.

Changes in food retailing (globalization, concentration) have negative impacts on smaller, “traditional” food retail businesses. Their market share decreasing year by year. The purpose of this study is to examine and compare the financial performances of these businesses under the given circumstances and current economic environment in a Hungarian and a Romanian county.

The study is based on two complete databases, including all companies that behoove retail food activity (considering the NACE cod) in the counties of Hajdu-Bihar (Hungary) and Cluj (Romania). The database analyzed contains the financial statements for five consecutive years for 212 and 690 businesses. Databases were examined by the most typical financial indicators using the multivariate and univariate analysis of variance and the k-medoid cluster analysis methods.

The results of the analysis have shown that there are differences in the number of retail food companies in the case of two counties, both in number and in financial performance. Companies in Hajdú-Bihar county perform better in terms of financial ratios than those in Cluj county. The groups created by k-medoids cluster analysis are relatively well distinguished in the case of Hajdú-Bihar county, while the picture is much more mixed in the case of Kolozs county. However, it is also important to note that the companies analyzed should generally perform better to survive.

Among the limitations of the study, it is important to note that the findings are relevant only to the two counties examined. Another limiting factor is that quite several companies had to be excluded from the analysis due to missing data or outliers.

The study presents for the corporate decision-makers the current performance of the companies of the sector examined in the two counties. The results of the study highlight the business areas of concern in management. The findings show that they need to change this performance to strengthen their market position. We believe that it is not enough to complain about the expansion of the supermarket chains, but they should take appropriate actions to improve their situation. Based on the results of the study, it can be concluded that there is a need to improve the financial efficiency of retail food companies in both counties to survive in the long run. This improvement is essential because retailers can play an important role in smaller settlements and narrower residential environments.

Comparative analysis of retail food companies in similar counties in these two neighboring countries has not been conducted using complex financial analysis. The study revealed the common and/or individual characteristics of these companies.

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 authors explore the hypothesis that some movements in commodity prices are anticipated (news shocks) and can trigger aggregate fluctuations in small open emerging economies. This paper aims to discuss the aforementioned objective.

The authors build a multi-sector dynamic stochastic general equilibrium model with endogenous commodity production. There are five exogenous processes: a country-specific interest rate shock that responds to commodity price fluctuations, a productivity (TFP) shock for each sector and a commodity price shock. Both TFP and commodity price shocks are composed of unanticipated and anticipated components.

The authors show that news shocks to commodity prices lead to higher output, investment and consumption, and a countercyclical movement in the trade-balance-to-output ratio. The authors also show that commodity price news shocks explain about 24% of output aggregate fluctuations in the small open economy.

Given the importance of both anticipated and unanticipated commodity price shocks, policymakers should pay attention to developments in commodity markets when designing policies to attenuate the business cycles. Future research should investigate the design of optimal fiscal and monetary policies in SOE subject to news shocks in commodity prices.

This paper contributes to the knowledge of the sources of fluctuations in emerging economies highlighting the importance of a new source: news shocks in commodity prices.

The present study examines the initial working capital policy (WCP) and its evolution for newly established manufacturing firms.

Using panel data of 162 firms over a period of 10 years, the study analyses the persistence-cum-convergence in WCP over the subsequent years through descriptive analysis and difference of means test. Further, the prevalence of ß – convergence, and σ-convergence has been examined using standard least squares regression, dynamic panel analysis and the Wald test.

The results indicate that sample firms continue to follow the initial WCP in the subsequent years with a gradual convergence in the WCP. Alternatively, the firms with aggressive (conservative) WCP at the time of incorporation will continue following it. Further, the firms with aggressive initial WCP have witnessed higher growth than those with conservative initial WCP.

Findings will assist managers and practitioners to understand the dynamics of WCP over the life cycle of the firm and select appropriate WCP as certain policies lead to certain growth paths.

Though working capital management has been recognized as a critical managerial decision, limited research is available on its evolution, especially for newly established manufacturing companies in an emerging economy. Current research attempts to fill this gap and provide valuable insights for the effective management of liquidity.

This study aims to analyze the effect of change in trading volume on the short-term mean reversion of the stock price in the Korean stock market. Through the variance ratio test, this paper finds that the market shows the mean reversion pattern after 2000, but not before. This study also confirms that the mean reversion property is significantly reduced if the effect of change in trading volume is excluded from the return of a stock with a significant contemporaneous correlation between return and change in trading volume in the post-2000 market. The results appear in both the Korea Composite Stock Price Index and Korea Securities Dealers Automated Quotation. This phenomenon stems from the significance of the return response to change in trading volume per se and not the sign of the response. Additionally, the findings imply that the trading volume has a term structure because of the mean reversion of the trading volume and the return also has a partial term structure because of the contemporaneous correlation between return and change in trading volume. This conclusion suggests that considering the short-term impact of change in trading volume enables a more efficient observation of the market and avoidance of asset misallocation.

This paper examines whether there are differences in the nature of the price discovery process across established versus emerging stock markets using a twenty-country sample.

The authors analyse security returns for traces of predictability or non-randomness using variance ratio tests, Granger-Causality models and runs tests.

The findings pinpoint at predictabilities which seem inconsistent with market efficiency, and they suggest that the inherent cause of predictability differs across groups.

The authors present empirical evidence which may be used to attain a deeper understanding of the links between predictability and market efficiency, in view of the conflicting evidence in prior literature.

Whilst the pricing process in emerging markets may be hindered by delayed adjustments, in case of established markets it seems that there is a higher tendency for price reversals which could be due to prior over-reactions.

This study presents evidence of substantial differences in predictability across developed and emerging markets which was gleaned through the rigorous application of different empirical tests.

The paper aims to identify the differences between developed and developing country firms with respect to firm-specific and country-level determinants of their capital structure. For this purpose, all constituent firms in one of the oldest Islamic equity indices, Dow Jones Islamic Market World Index (DJIM), are considered and the Muslim-majority status of each firm's domicile country is recognized.

The study employs Hausman–Taylor random effects regression with endogenous covariates to explain the debt ratios of firms in DJIM by separating them into developed and developing country subsamples in an unbalanced panel data setting. Developing country subsample is further split into two based on the Muslim-majority status of each firm's domicile country.

Consistent with the previous literature, this study finds that firm-specific characteristics are the main determinants of their capital structure. Additionally, the paper shows that country-level characteristics have an impact on the debt ratio, however, the types of factors vary across developed and developing countries. Debt ratios in developing country firms are lower than those in developed country firms, largely due to the significantly smaller leverage ratios of firms in Muslim-majority countries. Although the debt ratios of DJIM firms are higher in “non-Muslim” countries, the set of firm-level capital structure determinants are not statistically explained by operating in a “Muslim” country. The study also documents that, before the global financial crisis of 2008, companies in developing countries have gradually become less leveraged worldwide.

This paper provides a new perspective into the differences between developed and developing country firms' capital structures by focusing on a relatively homogeneous data set restricted by leverage screening rules of an Islamic equity index and recognizing the Muslim-majority status of each firm's domicile country.

This study investigates the influence of corporate culture on financial reporting transparency within Iranian firms.

Leveraging a dataset of 1,480 firm-year observations from the Tehran Stock Exchange spanning from 2013 to 2022, the study employs text mining to quantify linguistic features of corporate culture and transparency, specifically readability and tone, within annual financial statements and Management Discussion and Analysis (MD&A) reports.

Our results confirm a positive and significant relationship between corporate culture and financial reporting transparency. The distinct dimensions of corporate culture — Creativity, Competition, Control, and Collaboration — each uniquely enhance financial transparency. Robustness tests including firm fixed-effects, entropy balancing, Generalized Method of Moments (GMM), and Propensity Score Matching (PSM) validate the profound influence of corporate culture on transparency. Additionally, our analysis shows that corporate culture significantly affects the disclosure of business, operational, and financial risks, with varying impacts across risk categories. Cross-sectional analysis further reveals how the impact of corporate culture on transparency varies significantly across different industries and firm sizes.

The study’s scope, while focused on Iran, opens avenues for comparative research in different cultural and regulatory environments. Its reliance on text mining could be complemented by qualitative methods to capture more nuanced linguistic subtleties.

Findings underscore the strategic importance of cultivating a transparent corporate culture for enhancing financial reporting practices and stakeholder trust, particularly in emerging economies with similar dynamics to Iran.

This research is pioneering in its quantitative analysis of the textual features of corporate culture and its impact on transparency within Iranian corporate reports, integrating foundational theoretical perspectives with empirical evidence.