Pub Date : 2025-11-30DOI: 10.1016/j.econlet.2025.112753
Mohammed Alzarah , Apostolos Kourtis , Raphael N. Markellos
We study whether firm-specific climate change exposure affects environmental disclosure and how CEO traits influence this relationship. Using data from STOXX Europe 600 firms, we find that higher climate risk leads to higher-quality disclosure. A one-standard-deviation increase in climate change exposure is associated with up to a 28% increase in the disclosure score, relative to the sample average. This effect is stronger for firms with longer-tenured or younger CEOs. Our findings highlight that firm-level climate risk and CEO experience drive environmental transparency, even under Europe’s rigid reporting standards.
{"title":"When climate speaks, who answers? Climate change exposure, environmental disclosure and CEO characteristics in Europe","authors":"Mohammed Alzarah , Apostolos Kourtis , Raphael N. Markellos","doi":"10.1016/j.econlet.2025.112753","DOIUrl":"10.1016/j.econlet.2025.112753","url":null,"abstract":"<div><div>We study whether firm-specific climate change exposure affects environmental disclosure and how CEO traits influence this relationship. Using data from STOXX Europe 600 firms, we find that higher climate risk leads to higher-quality disclosure. A one-standard-deviation increase in climate change exposure is associated with up to a 28% increase in the disclosure score, relative to the sample average. This effect is stronger for firms with longer-tenured or younger CEOs. Our findings highlight that firm-level climate risk and CEO experience drive environmental transparency, even under Europe’s rigid reporting standards.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"258 ","pages":"Article 112753"},"PeriodicalIF":1.8,"publicationDate":"2025-11-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145681700","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-11-29DOI: 10.1016/j.econlet.2025.112749
Ryan Elmore , Jack Strauss
(Kelly et al., 2024) show that increasing complexity in linear models, with potentially thousands of predictors, is “virtuous”. Their work contradicts the dogma of model selection, including the Principles of Parsimony and Occam’s Razor. They find that when the number of predictors far exceeds the number of observations, the bias–variance trade-off breaks down, the variance declines, and the Sharpe ratio increases. In the context of ridge regression, we find that very high complexity coupled with large penalty terms (excessive shrinkage) generate forecasts that converge to a rolling window of past returns. For example, we show the past twelve-month moving average of actual returns is 97.5% correlated to the forecasts from a twelve-month rolling window of random Fourier features with a large penalty. This finding is consistent with the theory of ridge regression. As the penalty term increases, the forecasts closely approximate the mean, and ignore the explanatory variables. Thus, increasing complexity does not outperform the standard ridge regression, and increasing complexity does not generate high Sharpe ratios, abnormal returns, utility gains or profitable investment strategies.
（Kelly et al., 2024）表明，线性模型的复杂性增加，可能有数千个预测器，是“良性的”。他们的工作与模式选择的教条相矛盾，包括节俭原则和奥卡姆剃刀。他们发现，当预测因子的数量远远超过观测值的数量时，偏差-方差权衡就会被打破，方差下降，夏普比率上升。在岭回归的背景下，我们发现非常高的复杂性加上大的惩罚项（过度收缩）产生的预测收敛于过去回报的滚动窗口。例如，我们展示了过去12个月的实际收益移动平均值与来自随机傅立叶特征的12个月滚动窗口的预测有97.5%的相关性。这一发现与脊回归理论相一致。随着惩罚期的增加，预测结果接近均值，忽略解释变量。因此，增加复杂性并不优于标准岭回归，并且增加复杂性不会产生高夏普比率，异常回报，效用收益或有利可图的投资策略。
{"title":"Is complexity virtuous?","authors":"Ryan Elmore , Jack Strauss","doi":"10.1016/j.econlet.2025.112749","DOIUrl":"10.1016/j.econlet.2025.112749","url":null,"abstract":"<div><div>(Kelly et al., 2024) show that increasing complexity in linear models, with potentially thousands of predictors, is “virtuous”. Their work contradicts the dogma of model selection, including the Principles of Parsimony and Occam’s Razor. They find that when the number of predictors far exceeds the number of observations, the bias–variance trade-off breaks down, the variance declines, and the Sharpe ratio increases. In the context of ridge regression, we find that very high complexity coupled with large penalty terms (excessive shrinkage) generate forecasts that converge to a rolling window of past returns. For example, we show the past twelve-month moving average of actual returns is 97.5% correlated to the forecasts from a twelve-month rolling window of random Fourier features with a large penalty. This finding is consistent with the theory of ridge regression. As the penalty term increases, the forecasts closely approximate the mean, and ignore the explanatory variables. Thus, increasing complexity does not outperform the standard ridge regression, and increasing complexity does not generate high Sharpe ratios, abnormal returns, utility gains or profitable investment strategies.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"258 ","pages":"Article 112749"},"PeriodicalIF":1.8,"publicationDate":"2025-11-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145681701","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-11-27DOI: 10.1016/j.econlet.2025.112752
Luis Frones
This paper studies a dynamic cheap talk model in which the sender chooses both the content and timing of messages, and the receiver can delay her irreversible action. Partially informative equilibria arise even with state-independent preferences. The prospect of future public information induces more information transmission in equilibrium, and the probability of revelation increases with the signal’s precision. Comparing the most preferred equilibria across environments, both players strictly prefer the setting with public information. The results highlight a novel mechanism for strategic communication based on timing frictions and credible delay.
{"title":"Speak or wait: Strategic delay and the value of public information","authors":"Luis Frones","doi":"10.1016/j.econlet.2025.112752","DOIUrl":"10.1016/j.econlet.2025.112752","url":null,"abstract":"<div><div>This paper studies a dynamic cheap talk model in which the sender chooses both the content and timing of messages, and the receiver can delay her irreversible action. Partially informative equilibria arise even with state-independent preferences. The prospect of future public information induces more information transmission in equilibrium, and the probability of revelation increases with the signal’s precision. Comparing the most preferred equilibria across environments, both players strictly prefer the setting with public information. The results highlight a novel mechanism for strategic communication based on timing frictions and credible delay.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"258 ","pages":"Article 112752"},"PeriodicalIF":1.8,"publicationDate":"2025-11-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145621315","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-11-25DOI: 10.1016/j.econlet.2025.112745
Reza Bradrania, Jose Francisco Veron , Winston Wu
We investigate the relationship between the trading behavior of different investor types and the beta anomaly. Our results show that foreign institutions trade against beta on average, increasing their holdings of low-beta stocks and reducing exposure to high-beta stocks. This effect is most pronounced in the post-GFC period and when the beta anomaly is strong. In contrast, local investors as a group tend to chase beta by favoring high-beta stocks even when these stocks underperform. While local individual investors generally purchase high-beta stocks, they shift toward low-beta stocks when the anomaly generates losses. Our findings highlight how heterogeneous trading behavior across investor types contributes to the persistence of the beta anomaly.
{"title":"Investor behavior and the beta anomaly: Who benefits from betting against beta?","authors":"Reza Bradrania, Jose Francisco Veron , Winston Wu","doi":"10.1016/j.econlet.2025.112745","DOIUrl":"10.1016/j.econlet.2025.112745","url":null,"abstract":"<div><div>We investigate the relationship between the trading behavior of different investor types and the beta anomaly. Our results show that foreign institutions trade against beta on average, increasing their holdings of low-beta stocks and reducing exposure to high-beta stocks. This effect is most pronounced in the post-GFC period and when the beta anomaly is strong. In contrast, local investors as a group tend to chase beta by favoring high-beta stocks even when these stocks underperform. While local individual investors generally purchase high-beta stocks, they shift toward low-beta stocks when the anomaly generates losses. Our findings highlight how heterogeneous trading behavior across investor types contributes to the persistence of the beta anomaly.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"258 ","pages":"Article 112745"},"PeriodicalIF":1.8,"publicationDate":"2025-11-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145681753","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-11-25DOI: 10.1016/j.econlet.2025.112750
Wisarut Suwanprasert
This paper examines the relationship between inflation perceptions during the 2022 inflationary period, often referred to as “Bidenflation”, and the 2024 US presidential election. Leveraging state-level variations in the Google Search Volume Index (GSVI) as a proxy for inflation awareness, the analysis finds that a one standard deviation increase in a state’s standardized GSVI in 2022 is associated with an 8.5 percentage point shift in vote margins between the 2020 and 2024 elections toward the Republican Party. This shift is driven by a 4.7 percentage point decline in Democratic vote shares and a corresponding 3.8 percentage point increase in Republican vote shares.
{"title":"Did the 2022 inflation cost the Democratic Party the 2024 US presidential election?","authors":"Wisarut Suwanprasert","doi":"10.1016/j.econlet.2025.112750","DOIUrl":"10.1016/j.econlet.2025.112750","url":null,"abstract":"<div><div>This paper examines the relationship between inflation perceptions during the 2022 inflationary period, often referred to as “Bidenflation”, and the 2024 US presidential election. Leveraging state-level variations in the Google Search Volume Index (GSVI) as a proxy for inflation awareness, the analysis finds that a one standard deviation increase in a state’s standardized GSVI in 2022 is associated with an 8.5 percentage point shift in vote margins between the 2020 and 2024 elections toward the Republican Party. This shift is driven by a 4.7 percentage point decline in Democratic vote shares and a corresponding 3.8 percentage point increase in Republican vote shares.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"258 ","pages":"Article 112750"},"PeriodicalIF":1.8,"publicationDate":"2025-11-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145681684","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Drawing on data from developing countries, this study examines the roles of finance, international sanctions, and political regime types in shaping access to renewable energy. Findings reveal that access to finance significantly improves renewable energy, but its impact weakens under sanctions or in politically constrained environments. Democracies exhibit stronger linkages between finance and renewable energy access, whereas autocratic regimes show a weaker relationship. The findings have vital implications for shaping global renewable energy policies and investment frameworks.
{"title":"Bridging the energy divide: The impact of finance, political regimes, and international sanctions on renewable energy access","authors":"Rilwan Sakariyahu , Rodiat Lawal , Folorunsho Ajide , Sodiq Oladipupo","doi":"10.1016/j.econlet.2025.112747","DOIUrl":"10.1016/j.econlet.2025.112747","url":null,"abstract":"<div><div>Drawing on data from developing countries, this study examines the roles of finance, international sanctions, and political regime types in shaping access to renewable energy. Findings reveal that access to finance significantly improves renewable energy, but its impact weakens under sanctions or in politically constrained environments. Democracies exhibit stronger linkages between finance and renewable energy access, whereas autocratic regimes show a weaker relationship. The findings have vital implications for shaping global renewable energy policies and investment frameworks.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"258 ","pages":"Article 112747"},"PeriodicalIF":1.8,"publicationDate":"2025-11-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145621318","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-11-24DOI: 10.1016/j.econlet.2025.112748
Hao Yang , Jie Yang , Yun Feng
This paper focuses on the impacts of climate physical risks on crop prices and proposes a novel method to evaluate the vulnerability of five agricultural commodities, i.e., wheat, maize, soybean, rice, and barley. We identified the high vulnerability of maize and high resistance of rice to shocks of physical risks. During the period from 2020 to 2022, the vulnerability of global agricultural commodity markets sharply rose. The findings provide novel insight into the influence of climate change on agricultural sectors.
{"title":"Climate physical risks and the vulnerability of global agricultural commodities","authors":"Hao Yang , Jie Yang , Yun Feng","doi":"10.1016/j.econlet.2025.112748","DOIUrl":"10.1016/j.econlet.2025.112748","url":null,"abstract":"<div><div>This paper focuses on the impacts of climate physical risks on crop prices and proposes a novel method to evaluate the vulnerability of five agricultural commodities, i.e., wheat, maize, soybean, rice, and barley. We identified the high vulnerability of maize and high resistance of rice to shocks of physical risks. During the period from 2020 to 2022, the vulnerability of global agricultural commodity markets sharply rose. The findings provide novel insight into the influence of climate change on agricultural sectors.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"258 ","pages":"Article 112748"},"PeriodicalIF":1.8,"publicationDate":"2025-11-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145621314","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This study examines the impact of carbon risks on green investments in 1501 banks across 106 countries from 2002 to 2023. Building on previous studies examining the effects of carbon risks on financial decisions and portfolio strategies, this study investigates the impact of carbon risk exposure on sustainable lending practices. We find strong evidence that carbon risks are positively associated with banks' green investments. The heterogeneity analysis reveals that carbon risk drives an increase in green investment among banks, regardless of whether their R&D expenditure is high or low. Furthermore, we extend our analysis to five global regions and find that carbon risk significantly boosts green investment among banks. The results are robust to alternative estimation techniques and considering an alternative measure of carbon risk (e.g., Carbon intensity). The outcomes of this study offer unique and new insights for stakeholders and policymakers.
{"title":"Going green or losing edge: A global investigation into the role of carbon risk on banks' green investments","authors":"Madiha Kiran , Faisal Alnori , Mustafa Raza Rabbani , Oguzhan Cepni","doi":"10.1016/j.econlet.2025.112746","DOIUrl":"10.1016/j.econlet.2025.112746","url":null,"abstract":"<div><div>This study examines the impact of carbon risks on green investments in 1501 banks across 106 countries from 2002 to 2023. Building on previous studies examining the effects of carbon risks on financial decisions and portfolio strategies, this study investigates the impact of carbon risk exposure on sustainable lending practices. We find strong evidence that carbon risks are positively associated with banks' green investments. The heterogeneity analysis reveals that carbon risk drives an increase in green investment among banks, regardless of whether their R&D expenditure is high or low. Furthermore, we extend our analysis to five global regions and find that carbon risk significantly boosts green investment among banks. The results are robust to alternative estimation techniques and considering an alternative measure of carbon risk (e.g., Carbon intensity). The outcomes of this study offer unique and new insights for stakeholders and policymakers.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"258 ","pages":"Article 112746"},"PeriodicalIF":1.8,"publicationDate":"2025-11-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145621316","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-11-24DOI: 10.1016/j.econlet.2025.112742
Georgii Kozin , Alex Suzdaltsev
We revisit Anderson and de Palma (2005)’s model of firm pricing when searching consumers follow simple reservation price rules. In this model, any pure-strategy equilibrium, if exists, features different prices set by identical firms, i.e., price dispersion may arise without randomization. However, the existence of such an equilibrium has not been established beyond simple examples as profit functions in this model are naturally not quasiconcave. We show that in a duopoly a (dispersed) pure-strategy equilibrium always exists—despite the non-quasiconcavity—under any reservation price distribution with monotone hazard rate. This may help explain persistent price dispersion.
{"title":"Price dispersion in pure strategies","authors":"Georgii Kozin , Alex Suzdaltsev","doi":"10.1016/j.econlet.2025.112742","DOIUrl":"10.1016/j.econlet.2025.112742","url":null,"abstract":"<div><div>We revisit Anderson and de Palma (2005)’s model of firm pricing when searching consumers follow simple reservation price rules. In this model, any pure-strategy equilibrium, if exists, features different prices set by identical firms, i.e., price dispersion may arise without randomization. However, the existence of such an equilibrium has not been established beyond simple examples as profit functions in this model are naturally not quasiconcave. We show that in a duopoly a (dispersed) pure-strategy equilibrium always exists—despite the non-quasiconcavity—under any reservation price distribution with monotone hazard rate. This may help explain persistent price dispersion.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"258 ","pages":"Article 112742"},"PeriodicalIF":1.8,"publicationDate":"2025-11-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145621317","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-11-21DOI: 10.1016/j.econlet.2025.112743
Carlos Carrillo-Tudela , Saman Darougheh , Ludo Visschers
We provide a detailed international comparison of the occupational mobility of employer switchers using the US Current Population Survey and Danish administrative data (2011–2019). Comparability and measurement issues have stood in the way of good comparisons of occupational mobility rates between the US and European countries more generally. Making progress towards addressing these, we find that the proportion of employer changers that switches occupations is about 20% lower in Denmark, but at occupation-level quite correlated across both countries. Net mobility rates are also positively correlated, but overall lower in Denmark than in the United States.
{"title":"Danish flexicurity and occupational mobility: A comparison with the United States","authors":"Carlos Carrillo-Tudela , Saman Darougheh , Ludo Visschers","doi":"10.1016/j.econlet.2025.112743","DOIUrl":"10.1016/j.econlet.2025.112743","url":null,"abstract":"<div><div>We provide a detailed international comparison of the occupational mobility of employer switchers using the US Current Population Survey and Danish administrative data (2011–2019). Comparability and measurement issues have stood in the way of good comparisons of occupational mobility rates between the US and European countries more generally. Making progress towards addressing these, we find that the proportion of employer changers that switches occupations is about 20% lower in Denmark, but at occupation-level quite correlated across both countries. Net mobility rates are also positively correlated, but overall lower in Denmark than in the United States.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"258 ","pages":"Article 112743"},"PeriodicalIF":1.8,"publicationDate":"2025-11-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145621312","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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