Pub Date : 2024-12-09DOI: 10.1016/j.frl.2024.106584
Ou Wang, Hao Wu, Chang Li
Litigation risk not only raises a company's operational costs but also can result in potential losses. This paper investigates the impact of corporate social responsibility (CSR) performance on litigation risk, using non-financial and non-insurance companies listed on the Shanghai and Shenzhen A-share markets as the research sample. The study's findings indicate that higher CSR performance effectively reduces litigation risk. Further analysis suggests that the reduction in litigation risk is achieved through the enhancement of corporate reputation. Group tests reveal that this mitigating effect of CSR performance on litigation risk is more significant in companies with low levels of internal control.
{"title":"Corporate social responsibility performance and litigation risk","authors":"Ou Wang, Hao Wu, Chang Li","doi":"10.1016/j.frl.2024.106584","DOIUrl":"https://doi.org/10.1016/j.frl.2024.106584","url":null,"abstract":"Litigation risk not only raises a company's operational costs but also can result in potential losses. This paper investigates the impact of corporate social responsibility (CSR) performance on litigation risk, using non-financial and non-insurance companies listed on the Shanghai and Shenzhen A-share markets as the research sample. The study's findings indicate that higher CSR performance effectively reduces litigation risk. Further analysis suggests that the reduction in litigation risk is achieved through the enhancement of corporate reputation. Group tests reveal that this mitigating effect of CSR performance on litigation risk is more significant in companies with low levels of internal control.","PeriodicalId":12167,"journal":{"name":"Finance Research Letters","volume":"19 1","pages":""},"PeriodicalIF":10.4,"publicationDate":"2024-12-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142805324","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 : 2024-12-09DOI: 10.1016/j.frl.2024.106626
Mingrui Zhang, Danni Zheng
This paper introduces the perspective of red culture to examine its governance effect on corporate excess leverage. We robustly find that red culture significantly curbs corporate excess leverage. The primary mechanisms are the enhancement of corporate social responsibility and the strengthening of organizational discipline. Furthermore, the effect is more pronounced in state-owned enterprises and firms located in regions with a higher degree of openness. We provide a new perspective on the role of cultural governance in corporate financial management and offers practical guidance for both corporate management and policy-making.
{"title":"The power of cultural governance: The red prescription for corporate excess leverage","authors":"Mingrui Zhang, Danni Zheng","doi":"10.1016/j.frl.2024.106626","DOIUrl":"https://doi.org/10.1016/j.frl.2024.106626","url":null,"abstract":"This paper introduces the perspective of red culture to examine its governance effect on corporate excess leverage. We robustly find that red culture significantly curbs corporate excess leverage. The primary mechanisms are the enhancement of corporate social responsibility and the strengthening of organizational discipline. Furthermore, the effect is more pronounced in state-owned enterprises and firms located in regions with a higher degree of openness. We provide a new perspective on the role of cultural governance in corporate financial management and offers practical guidance for both corporate management and policy-making.","PeriodicalId":12167,"journal":{"name":"Finance Research Letters","volume":"20 1","pages":""},"PeriodicalIF":10.4,"publicationDate":"2024-12-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142841963","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 : 2024-12-09DOI: 10.1016/j.frl.2024.106599
Yuanqiong He, Linfei Zhong
This study is based on data from Shanghai and Shenzhen A-share listed companies from 2011 to 2022, exploring the relationship between rookie CEOs and enterprise earnings management and its mechanism of action. The results show that the rookie CEOs have a significantly positive impact on enterprise earnings management. The quality of internal controls plays a negative moderating role in the relationship between rookie CEOs and corporate earnings management. Product market competition plays a positive moderating role in the relationship between rookie CEOs and corporate earnings management. The research results provide important research value for further improving corporate governance.
{"title":"How rookie CEOs influence earnings management in enterprises: An analysis based on the perspective of corporate governance","authors":"Yuanqiong He, Linfei Zhong","doi":"10.1016/j.frl.2024.106599","DOIUrl":"https://doi.org/10.1016/j.frl.2024.106599","url":null,"abstract":"This study is based on data from Shanghai and Shenzhen A-share listed companies from 2011 to 2022, exploring the relationship between rookie CEOs and enterprise earnings management and its mechanism of action. The results show that the rookie CEOs have a significantly positive impact on enterprise earnings management. The quality of internal controls plays a negative moderating role in the relationship between rookie CEOs and corporate earnings management. Product market competition plays a positive moderating role in the relationship between rookie CEOs and corporate earnings management. The research results provide important research value for further improving corporate governance.","PeriodicalId":12167,"journal":{"name":"Finance Research Letters","volume":"19 1","pages":""},"PeriodicalIF":10.4,"publicationDate":"2024-12-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142841965","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 : 2024-12-09DOI: 10.1016/j.frl.2024.106622
Xuedong Zhang, Jinwei Li
This paper delves into the effects of innovative monetary policy instruments on the liquidity creation capabilities of listed commercial banks, utilizing comprehensive data spanning the years 2014 to 2022. The research uncovers a significant insight: lending facility tools have a positive impact on enhancing the ability of commercial banks to generate liquidity. Furthermore, the provision coverage ratio emerges as a partial mediator in this process, influencing how effectively these tools translate into increased liquidity creation by the banks. This revelation adds depth to our understanding of the intricate relationship between monetary policy and banking liquidity.
{"title":"The impact of monetary policy instrument innovation on commercial banks' liquidity creation","authors":"Xuedong Zhang, Jinwei Li","doi":"10.1016/j.frl.2024.106622","DOIUrl":"https://doi.org/10.1016/j.frl.2024.106622","url":null,"abstract":"This paper delves into the effects of innovative monetary policy instruments on the liquidity creation capabilities of listed commercial banks, utilizing comprehensive data spanning the years 2014 to 2022. The research uncovers a significant insight: lending facility tools have a positive impact on enhancing the ability of commercial banks to generate liquidity. Furthermore, the provision coverage ratio emerges as a partial mediator in this process, influencing how effectively these tools translate into increased liquidity creation by the banks. This revelation adds depth to our understanding of the intricate relationship between monetary policy and banking liquidity.","PeriodicalId":12167,"journal":{"name":"Finance Research Letters","volume":"20 1","pages":""},"PeriodicalIF":10.4,"publicationDate":"2024-12-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142884069","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 : 2024-12-09DOI: 10.1016/j.frl.2024.106608
Marta Vidal, Javier Vidal-García, Stelios Bekiros, Juan Evangelista Trinidad Segovia
In recent years, the investment fund industry has had a strong boost around the world, both in assets under management and in the number of funds and participants. This growth in supply and demand could be described as spectacular despite several crises in the financial markets during the last two decades. In this study, we examine and compare a sample of mutual funds across 35 countries for the 1990–2023 time period. The application of the efficiency ratios shows significant differences in efficiency among the evidence offered by the best-performing countries compared to those countries with the worst results. The fact that mutual funds obtain lower yield premiums compared to free-risk assets has originated a common situation of loss of performance efficiency at a global level. This phenomenon is shown by the three proposed indicators.
{"title":"A comparison of international mutual funds efficiency","authors":"Marta Vidal, Javier Vidal-García, Stelios Bekiros, Juan Evangelista Trinidad Segovia","doi":"10.1016/j.frl.2024.106608","DOIUrl":"https://doi.org/10.1016/j.frl.2024.106608","url":null,"abstract":"In recent years, the investment fund industry has had a strong boost around the world, both in assets under management and in the number of funds and participants. This growth in supply and demand could be described as spectacular despite several crises in the financial markets during the last two decades. In this study, we examine and compare a sample of mutual funds across 35 countries for the 1990–2023 time period. The application of the efficiency ratios shows significant differences in efficiency among the evidence offered by the best-performing countries compared to those countries with the worst results. The fact that mutual funds obtain lower yield premiums compared to free-risk assets has originated a common situation of loss of performance efficiency at a global level. This phenomenon is shown by the three proposed indicators.","PeriodicalId":12167,"journal":{"name":"Finance Research Letters","volume":"1 1","pages":""},"PeriodicalIF":10.4,"publicationDate":"2024-12-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142841964","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 : 2024-12-09DOI: 10.1016/j.frl.2024.106601
Zihan Zhou, Shaolin Wang, Hongxia Wang
This study uses a stochastic dominance approach to investigate portfolio performance based on Environmental, Social and Governance (ESG) criteria. Specifically, we conduct a series of stochastic dominance tests to determine whether high-ESG portfolios outperform low-ESG and market portfolios. The results reveal that, in the short term, no significant dominance relationships exist between high- and low-ESG portfolios. However, in the long term, high-ESG portfolios significantly dominate both low-ESG and market portfolios in terms of second- and third-degree stochastic dominance. Our findings offer valuable insights into integrating ESG considerations into investment decisions.
{"title":"The performance of ESG portfolios: A stochastic dominance approach","authors":"Zihan Zhou, Shaolin Wang, Hongxia Wang","doi":"10.1016/j.frl.2024.106601","DOIUrl":"https://doi.org/10.1016/j.frl.2024.106601","url":null,"abstract":"This study uses a stochastic dominance approach to investigate portfolio performance based on Environmental, Social and Governance (ESG) criteria. Specifically, we conduct a series of stochastic dominance tests to determine whether high-ESG portfolios outperform low-ESG and market portfolios. The results reveal that, in the short term, no significant dominance relationships exist between high- and low-ESG portfolios. However, in the long term, high-ESG portfolios significantly dominate both low-ESG and market portfolios in terms of second- and third-degree stochastic dominance. Our findings offer valuable insights into integrating ESG considerations into investment decisions.","PeriodicalId":12167,"journal":{"name":"Finance Research Letters","volume":"228 1","pages":""},"PeriodicalIF":10.4,"publicationDate":"2024-12-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142805336","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}
Study explores CEO duality's impact on ESG-EM relationship in six emerging markets. Findings reveal that ESG disclosures constraints accrual earnings management; however, high ESG scores lead to higher real earnings management, indicating possible greenwashing behavior. For three pillars of ESG, we find that firms with environmental disclosures constrain EM, while social disclosures tend to enhance EM practices. Study reveals that ESG and its sub-pillars have a curvilinear relationship with EM. CEO duality moderates ESG-EM to provide a cushion for potential greenwashing. ESG impact is not limited to EM; consequently, it affects the firms’ market performance by mediating real earnings management.
{"title":"Does CEO duality moderate environmental, social, and governance performance-earnings management relationship? Evidence from emerging markets","authors":"Swati Mohapatra, Ashish Kumar, Malaya Ranjan Mohapatra, Vikas Srivastava","doi":"10.1016/j.frl.2024.106616","DOIUrl":"https://doi.org/10.1016/j.frl.2024.106616","url":null,"abstract":"Study explores CEO duality's impact on ESG-EM relationship in six emerging markets. Findings reveal that ESG disclosures constraints accrual earnings management; however, high ESG scores lead to higher real earnings management, indicating possible greenwashing behavior. For three pillars of ESG, we find that firms with environmental disclosures constrain EM, while social disclosures tend to enhance EM practices. Study reveals that ESG and its sub-pillars have a curvilinear relationship with EM. CEO duality moderates ESG-EM to provide a cushion for potential greenwashing. ESG impact is not limited to EM; consequently, it affects the firms’ market performance by mediating real earnings management.","PeriodicalId":12167,"journal":{"name":"Finance Research Letters","volume":"14 1","pages":""},"PeriodicalIF":10.4,"publicationDate":"2024-12-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142841973","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 : 2024-12-08DOI: 10.1016/j.frl.2024.106583
Alex A.T. Rathke
We propose a knowledge operator based on the agent’s possibility correspondence which preserves her non-trivial unawareness within the standard state-space model. Our approach may provide a solution to the classical impossibility result that ‘an unaware agent must be aware of everything’.
{"title":"Revisiting the state-space model of unawareness","authors":"Alex A.T. Rathke","doi":"10.1016/j.frl.2024.106583","DOIUrl":"https://doi.org/10.1016/j.frl.2024.106583","url":null,"abstract":"We propose a knowledge operator based on the agent’s possibility correspondence which preserves her non-trivial unawareness within the standard state-space model. Our approach may provide a solution to the classical impossibility result that ‘an unaware agent must be aware of everything’.","PeriodicalId":12167,"journal":{"name":"Finance Research Letters","volume":"61 1","pages":""},"PeriodicalIF":10.4,"publicationDate":"2024-12-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142805326","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 : 2024-12-07DOI: 10.1016/j.frl.2024.106508
Matthias Muck, Thomas Schmidl, Julian Wolf
This study investigates the efficiency of cryptocurrency markets by examining the presence and exploitability of arbitrage opportunities. Using high-frequency data from the Binance Exchange, we implement a triangular arbitrage strategy, considering Bitcoin, Litecoin, and the U.S. Dollar. We find 4,879 possible arbitrage opportunities. Although these findings suggest potential inefficiencies, transaction costs and limited trading volumes in the order book eliminate their profitability. Consequently, centralized cryptocurrency markets exhibit a high degree of efficiency. Moreover, our results suggest that the mere number of triangular arbitrage opportunities is not a reliable indicator of market inefficiency.
{"title":"Wish or reality? On the exploitability of triangular arbitrage in cryptocurrency markets","authors":"Matthias Muck, Thomas Schmidl, Julian Wolf","doi":"10.1016/j.frl.2024.106508","DOIUrl":"https://doi.org/10.1016/j.frl.2024.106508","url":null,"abstract":"This study investigates the efficiency of cryptocurrency markets by examining the presence and exploitability of arbitrage opportunities. Using high-frequency data from the Binance Exchange, we implement a triangular arbitrage strategy, considering Bitcoin, Litecoin, and the U.S. Dollar. We find 4,879 possible arbitrage opportunities. Although these findings suggest potential inefficiencies, transaction costs and limited trading volumes in the order book eliminate their profitability. Consequently, centralized cryptocurrency markets exhibit a high degree of efficiency. Moreover, our results suggest that the mere number of triangular arbitrage opportunities is not a reliable indicator of market inefficiency.","PeriodicalId":12167,"journal":{"name":"Finance Research Letters","volume":"257 1","pages":""},"PeriodicalIF":10.4,"publicationDate":"2024-12-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142841969","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 : 2024-12-07DOI: 10.1016/j.frl.2024.106602
Qingduo Zeng, Yang Xu, Mengshu Hao, Meiqi Gao
We present a rational expectation equilibrium model to explore how ESG rating disagreement impacts stock returns. Our findings reveal that high disagreement in ESG rating is associated with high return volatility risk, which potentially leads to increased stock returns. Our empirical results confirm a positive impact of ESG disagreement on stock returns, reinforcing our theoretical findings. The mechanism tests suggest that ESG disagreement enhances stock returns by amplifying idiosyncratic return volatility. Overall, our research sheds light on how ESG disagreement affects stock returns through market microstructure, and offers valuable insights into the role that ESG disagreement plays in ESG investing.
{"title":"ESG rating disagreement, volatility, and stock returns","authors":"Qingduo Zeng, Yang Xu, Mengshu Hao, Meiqi Gao","doi":"10.1016/j.frl.2024.106602","DOIUrl":"https://doi.org/10.1016/j.frl.2024.106602","url":null,"abstract":"We present a rational expectation equilibrium model to explore how ESG rating disagreement impacts stock returns. Our findings reveal that high disagreement in ESG rating is associated with high return volatility risk, which potentially leads to increased stock returns. Our empirical results confirm a positive impact of ESG disagreement on stock returns, reinforcing our theoretical findings. The mechanism tests suggest that ESG disagreement enhances stock returns by amplifying idiosyncratic return volatility. Overall, our research sheds light on how ESG disagreement affects stock returns through market microstructure, and offers valuable insights into the role that ESG disagreement plays in ESG investing.","PeriodicalId":12167,"journal":{"name":"Finance Research Letters","volume":"23 1","pages":""},"PeriodicalIF":10.4,"publicationDate":"2024-12-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142805325","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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