Pub Date : 2025-03-11DOI: 10.1016/j.frl.2025.107136
Ernest N. Biktimirov, Moyosore J. Babalola
This study examines the impact of the Russia-Ukraine conflict on oil markets by analyzing the sentiment and intensity of Russia-related discussions in business media. Using topic modeling, we identify 12 distinct topics of articles published in The Wall Street Journal during the 2014–2024 period and compute their sentiment and hype scores. The sentiment and hype of these topics exhibit varying relations with oil returns under different market conditions. Notably, the Global Economy and Oil topics show the strongest positive association with oil returns in both sentiment and hype, particularly during bullish oil markets.
{"title":"From headlines to pipelines: Unpacking the impact of the Russia-Ukraine conflict through sentiment and topics","authors":"Ernest N. Biktimirov, Moyosore J. Babalola","doi":"10.1016/j.frl.2025.107136","DOIUrl":"10.1016/j.frl.2025.107136","url":null,"abstract":"<div><div>This study examines the impact of the Russia-Ukraine conflict on oil markets by analyzing the sentiment and intensity of Russia-related discussions in business media. Using topic modeling, we identify 12 distinct topics of articles published in <em>The Wall Street Journal</em> during the 2014–2024 period and compute their sentiment and hype scores. The sentiment and hype of these topics exhibit varying relations with oil returns under different market conditions. Notably, the <em>Global Economy</em> and <em>Oil</em> topics show the strongest positive association with oil returns in both sentiment and hype, particularly during bullish oil markets.</div></div>","PeriodicalId":12167,"journal":{"name":"Finance Research Letters","volume":"78 ","pages":"Article 107136"},"PeriodicalIF":7.4,"publicationDate":"2025-03-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143593860","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-03-11DOI: 10.1016/j.frl.2025.107190
Jinghao Ma , Yujie Shang , Zhenghan Liang
This research focuses on examining the connection between digital transformation (DT) and enterprise innovation performance (EIP). It uncovers that DT plays a crucial role in enhancing EIP, with artificial intelligence (AI) serving as a significant intermediary in this process. When comparing enterprises based on their ownership, it is observed that DT has a more profound effect on the EIP of state-owned enterprises than on non-state-owned ones. The findings of this study offer valuable theoretical foundations and practical guidance for developing digital business strategies, advancing DT, and boosting EIP.
{"title":"Digital transformation, artificial intelligence and enterprise innovation performance","authors":"Jinghao Ma , Yujie Shang , Zhenghan Liang","doi":"10.1016/j.frl.2025.107190","DOIUrl":"10.1016/j.frl.2025.107190","url":null,"abstract":"<div><div>This research focuses on examining the connection between digital transformation (DT) and enterprise innovation performance (EIP). It uncovers that DT plays a crucial role in enhancing EIP, with artificial intelligence (AI) serving as a significant intermediary in this process. When comparing enterprises based on their ownership, it is observed that DT has a more profound effect on the EIP of state-owned enterprises than on non-state-owned ones. The findings of this study offer valuable theoretical foundations and practical guidance for developing digital business strategies, advancing DT, and boosting EIP.</div></div>","PeriodicalId":12167,"journal":{"name":"Finance Research Letters","volume":"78 ","pages":"Article 107190"},"PeriodicalIF":7.4,"publicationDate":"2025-03-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143628486","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-03-11DOI: 10.1016/j.frl.2025.107126
Marcelo S. Perlin, Cristian R. Foguesatto, Fernanda M. Müller, Marcelo B. Righi
Using anonymized data from the United States (U.S.) market, we evaluate the performance of Google’s main LLM (Large Language Model) Gemini 1.5 Flash in making investment decisions. Unlike other studies, we query the LLM for different investment horizons (1 to 36 months) and types of financial information (financial data, price data, and a combination of both). Running a total of 30,000 simulations for 1,522 companies over 20 years of data, we find that Gemini does not consistently outperform a naive portfolio and the S&P 500 index in terms of returns and Sharpe ratios. Additionally, our findings indicate a decline in risk adjusted investment performance as the investment horizon extends.
{"title":"Can AI beat a naive portfolio? An experiment with anonymized data","authors":"Marcelo S. Perlin, Cristian R. Foguesatto, Fernanda M. Müller, Marcelo B. Righi","doi":"10.1016/j.frl.2025.107126","DOIUrl":"10.1016/j.frl.2025.107126","url":null,"abstract":"<div><div>Using anonymized data from the United States (U.S.) market, we evaluate the performance of Google’s main LLM (Large Language Model) Gemini 1.5 Flash in making investment decisions. Unlike other studies, we query the LLM for different investment horizons (1 to 36 months) and types of financial information (financial data, price data, and a combination of both). Running a total of 30,000 simulations for 1,522 companies over 20 years of data, we find that Gemini does not consistently outperform a naive portfolio and the S&P 500 index in terms of returns and Sharpe ratios. Additionally, our findings indicate a decline in risk adjusted investment performance as the investment horizon extends.</div></div>","PeriodicalId":12167,"journal":{"name":"Finance Research Letters","volume":"78 ","pages":"Article 107126"},"PeriodicalIF":7.4,"publicationDate":"2025-03-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143620037","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-03-11DOI: 10.1016/j.frl.2025.107144
Qingqing Cao , Raoul Minetti , Nicholas Rowe
We investigate the impact of inflation on banking stability. Using granular U.S. data from 1997 to 2014, we show that higher inflation induces a significant deterioration of banks’ capital position because of the maturity mismatch of banks’ assets and liabilities. Quantitative analysis reveals that the elasticity of banking capital to long-term inflation expectations is high, as a 1% increase to long-term inflation expectations leads to a 15% decrease in banks’ Tier 1 capital. The analysis suggests that the use of inflation to reduce sovereigns’ real debt burden could aggravate the sovereign-bank loop during debt crises.
{"title":"Macro-banking stability, sovereign debt and the inflation channel","authors":"Qingqing Cao , Raoul Minetti , Nicholas Rowe","doi":"10.1016/j.frl.2025.107144","DOIUrl":"10.1016/j.frl.2025.107144","url":null,"abstract":"<div><div>We investigate the impact of inflation on banking stability. Using granular U.S. data from 1997 to 2014, we show that higher inflation induces a significant deterioration of banks’ capital position because of the maturity mismatch of banks’ assets and liabilities. Quantitative analysis reveals that the elasticity of banking capital to long-term inflation expectations is high, as a 1% increase to long-term inflation expectations leads to a 15% decrease in banks’ Tier 1 capital. The analysis suggests that the use of inflation to reduce sovereigns’ real debt burden could aggravate the sovereign-bank loop during debt crises.</div></div>","PeriodicalId":12167,"journal":{"name":"Finance Research Letters","volume":"78 ","pages":"Article 107144"},"PeriodicalIF":7.4,"publicationDate":"2025-03-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143620035","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-03-11DOI: 10.1016/j.frl.2025.107187
Chuanpeng Wang , Chunlei Li , Yuanlun Wang
This study reports whether population ageing and unemployment rates have an impact on regional innovation outputs. Based on empirical analyses with relevant data for 2010 and 2020, the study finds that an increase in population ageing leads to an increase in regional innovation output, which is partly mediated by the unemployment rate, population ageing contributes indirectly to an increase in regional innovation output by reducing the unemployment rate. The study also shows the heterogeneity of this effect across regions.
{"title":"Population aging, unemployment rate and regional innovation","authors":"Chuanpeng Wang , Chunlei Li , Yuanlun Wang","doi":"10.1016/j.frl.2025.107187","DOIUrl":"10.1016/j.frl.2025.107187","url":null,"abstract":"<div><div>This study reports whether population ageing and unemployment rates have an impact on regional innovation outputs. Based on empirical analyses with relevant data for 2010 and 2020, the study finds that an increase in population ageing leads to an increase in regional innovation output, which is partly mediated by the unemployment rate, population ageing contributes indirectly to an increase in regional innovation output by reducing the unemployment rate. The study also shows the heterogeneity of this effect across regions.</div></div>","PeriodicalId":12167,"journal":{"name":"Finance Research Letters","volume":"78 ","pages":"Article 107187"},"PeriodicalIF":7.4,"publicationDate":"2025-03-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143644881","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-03-11DOI: 10.1016/j.frl.2025.107178
Zhijiu Yang , Fengyi You , Yanfang Qin , Ge Wu
This study identifies the impact of environmental taxes on firm financialization. Using a triple-differences (DDD) strategy, we find that the enactment of the Environmental Protection Tax Law significantly inhibits firm financialization, which is primarily driven by firms with political connections. The decline in firm financialization can be attributed to increased investments in R&D and environmental protection, especially for politically connected firms. Further analyses suggest that environmental enforcement and legal environments amplify the inhibitory effect. We argue that the fee-to-tax reform leads environmental protection to the rule of law and reduces potential government-business collusion, which is conducive to long-term environmental governance.
{"title":"Environmental taxes, political connections, and firm financialization: Evidence from China's environmental tax reform","authors":"Zhijiu Yang , Fengyi You , Yanfang Qin , Ge Wu","doi":"10.1016/j.frl.2025.107178","DOIUrl":"10.1016/j.frl.2025.107178","url":null,"abstract":"<div><div>This study identifies the impact of environmental taxes on firm financialization. Using a triple-differences (DDD) strategy, we find that the enactment of the Environmental Protection Tax Law significantly inhibits firm financialization, which is primarily driven by firms with political connections. The decline in firm financialization can be attributed to increased investments in R&D and environmental protection, especially for politically connected firms. Further analyses suggest that environmental enforcement and legal environments amplify the inhibitory effect. We argue that the fee-to-tax reform leads environmental protection to the rule of law and reduces potential government-business collusion, which is conducive to long-term environmental governance.</div></div>","PeriodicalId":12167,"journal":{"name":"Finance Research Letters","volume":"78 ","pages":"Article 107178"},"PeriodicalIF":7.4,"publicationDate":"2025-03-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143637136","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-03-11DOI: 10.1016/j.frl.2025.107153
Ying Chen , Yuqiao Bu , Libing Fang , Yuanchu Xu
Owing to potential financial fraud by companies, we propose a new quality factor that is mitigated by the probability of financial fraud. We estimate fraud probability using a bivariate probit model that allows for unobservable companies that actually committed fraud but were not detected. Our empirical results show that the fraud-mitigated quality-minus-junk (fmQMJ) portfolio earns significant average excess returns in both China and the United States. Furthermore, it outperforms the original quality factor within the quintile groups of low size and low book-to-market ratio. A series of Fama–MacBeth regressions show that fmQMJ contributes a new pricing factor to the value-investing strategy widely advocated in practice and academia.
{"title":"A new quality factor adjusted by fraud probability","authors":"Ying Chen , Yuqiao Bu , Libing Fang , Yuanchu Xu","doi":"10.1016/j.frl.2025.107153","DOIUrl":"10.1016/j.frl.2025.107153","url":null,"abstract":"<div><div>Owing to potential financial fraud by companies, we propose a new quality factor that is mitigated by the probability of financial fraud. We estimate fraud probability using a bivariate probit model that allows for unobservable companies that actually committed fraud but were not detected. Our empirical results show that the fraud-mitigated quality-minus-junk (<em>fmQMJ</em>) portfolio earns significant average excess returns in both China and the United States. Furthermore, it outperforms the original quality factor within the quintile groups of low size and low book-to-market ratio. A series of Fama–MacBeth regressions show that <em>fmQMJ</em> contributes a new pricing factor to the value-investing strategy widely advocated in practice and academia.</div></div>","PeriodicalId":12167,"journal":{"name":"Finance Research Letters","volume":"78 ","pages":"Article 107153"},"PeriodicalIF":7.4,"publicationDate":"2025-03-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143628487","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-03-11DOI: 10.1016/j.frl.2025.107186
Yi Xu , Jiajun Qi , Jilong Chen , Lingbing Feng
This paper investigates the impact of cryptocurrency bans on company legal risks using a Difference-in-Differences framework. We find that such bans significantly reduce both the frequency and monetary value of lawsuits, lowering companies' legal exposure. Additionally, our analysis reveals that employees with financial backgrounds play a crucial role in helping companies mitigate legal risks in response to the ban's impact. However, as cryptocurrency-related financial activities are gradually phased out, the importance of these financially-skilled employees diminishes. Consequently, companies tend to "kick down the ladder" by dismissing these employees, highlighting an unintended consequence of the regulatory shift.
{"title":"Kick down the ladder? The impact of cryptocurrency bans on company legal risks and employee structure","authors":"Yi Xu , Jiajun Qi , Jilong Chen , Lingbing Feng","doi":"10.1016/j.frl.2025.107186","DOIUrl":"10.1016/j.frl.2025.107186","url":null,"abstract":"<div><div>This paper investigates the impact of cryptocurrency bans on company legal risks using a Difference-in-Differences framework. We find that such bans significantly reduce both the frequency and monetary value of lawsuits, lowering companies' legal exposure. Additionally, our analysis reveals that employees with financial backgrounds play a crucial role in helping companies mitigate legal risks in response to the ban's impact. However, as cryptocurrency-related financial activities are gradually phased out, the importance of these financially-skilled employees diminishes. Consequently, companies tend to \"kick down the ladder\" by dismissing these employees, highlighting an unintended consequence of the regulatory shift.</div></div>","PeriodicalId":12167,"journal":{"name":"Finance Research Letters","volume":"78 ","pages":"Article 107186"},"PeriodicalIF":7.4,"publicationDate":"2025-03-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143637692","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-03-10DOI: 10.1016/j.frl.2025.107184
Yubing Zhao , Zhe Yuan , Junting Jia
Organizational resilience is essential for firms navigating volatile business environments. This study examines the impact of labor productivity on resilience, emphasizing the moderating role of internal pay disparity. Using a panel dataset of Chinese listed firms (2010–2022), the results show that labor productivity enhances resilience, but excessive pay disparity weakens this effect by undermining employee morale. Heterogeneity analysis reveals that firm ownership, life cycle stage, and industry classification influence this relationship. These findings emphasize the need for balanced human capital management strategies to enhance resilience, providing valuable insights for managers and policymakers to optimize workforce efficiency and pay structures.
{"title":"Labor productivity, internal pay disparity, and organizational resilience","authors":"Yubing Zhao , Zhe Yuan , Junting Jia","doi":"10.1016/j.frl.2025.107184","DOIUrl":"10.1016/j.frl.2025.107184","url":null,"abstract":"<div><div>Organizational resilience is essential for firms navigating volatile business environments. This study examines the impact of labor productivity on resilience, emphasizing the moderating role of internal pay disparity. Using a panel dataset of Chinese listed firms (2010–2022), the results show that labor productivity enhances resilience, but excessive pay disparity weakens this effect by undermining employee morale. Heterogeneity analysis reveals that firm ownership, life cycle stage, and industry classification influence this relationship. These findings emphasize the need for balanced human capital management strategies to enhance resilience, providing valuable insights for managers and policymakers to optimize workforce efficiency and pay structures.</div></div>","PeriodicalId":12167,"journal":{"name":"Finance Research Letters","volume":"78 ","pages":"Article 107184"},"PeriodicalIF":7.4,"publicationDate":"2025-03-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143632088","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-03-10DOI: 10.1016/j.frl.2025.107183
Xue Wang , Jinlong Qiu , Zhaoxue Qiu , Wenshuang Bao
Inquiry letters serve as a nonadministrative regulatory measure employed by Chinese stock exchanges to oversee listed firms. This study examines the impact of inquiry letters related to green and environmental protection issues on the green transformation of heavily polluting firms, focusing on mergers and acquisitions (M&As). The findings indicate that inquiry letters addressing green concerns encourage heavily polluting firms to pursue green M&As, primarily driven by the spotlight effect and the governance effect. Further analysis reveals that stronger government environmental regulations and increased public environmental awareness amplify this positive relationship. Moreover, green M&As prompted by regulatory inquiries represent a strategic shift toward green transformation. This study offers new insights into the economic consequences of inquiry letters.
{"title":"Regulatory inquiry letters and green M&As of heavily polluting firms","authors":"Xue Wang , Jinlong Qiu , Zhaoxue Qiu , Wenshuang Bao","doi":"10.1016/j.frl.2025.107183","DOIUrl":"10.1016/j.frl.2025.107183","url":null,"abstract":"<div><div>Inquiry letters serve as a nonadministrative regulatory measure employed by Chinese stock exchanges to oversee listed firms. This study examines the impact of inquiry letters related to green and environmental protection issues on the green transformation of heavily polluting firms, focusing on mergers and acquisitions (M&As). The findings indicate that inquiry letters addressing green concerns encourage heavily polluting firms to pursue green M&As, primarily driven by the spotlight effect and the governance effect. Further analysis reveals that stronger government environmental regulations and increased public environmental awareness amplify this positive relationship. Moreover, green M&As prompted by regulatory inquiries represent a strategic shift toward green transformation. This study offers new insights into the economic consequences of inquiry letters.</div></div>","PeriodicalId":12167,"journal":{"name":"Finance Research Letters","volume":"78 ","pages":"Article 107183"},"PeriodicalIF":7.4,"publicationDate":"2025-03-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143620033","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"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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