Global Finance Journal最新文献

This paper explores the determinants of banks' investment in fintech innovation, deepening the role of the board of directors and country home bias. Using board data of the listed banks in the US, EU and UK and fintech companies' investment rounds, we create the home bias variable by measuring the distance in kilometres separating the bank and fintech's headquarters. We find two main results. First, boards with higher female presence, higher members' network and younger directors are more likely to invest in fintech companies. Second, banks tend to invest in fintech companies that are geographically closer to them, showing the existence of the home bias in the fintech innovation investment. Overall, the paper suggests that bank board structure and geographic position of target companies are relevant factors of fintech investments.

This paper analyzes the impact of corporate social responsibility (CSR) on the total provision of public goods in a framework in which consumers who may make such voluntary contributions to public goods via CSR are also voters who decide on the level of taxes to finance publicly provided public goods. The main result indicates that, relative to an economy in which all public goods are publicly financed, the introduction of CSR lowers the total amount of public goods, as voters rationally anticipate that higher CSR will partially offset the consequences of lower public funding. The results offer a cautionary tale about the promotion of CSR in an economy with heterogeneous preferences for the public good.

This study explores the corporate social responsibility (CSR) reporting initiatives of Chinese non-state-owned enterprises (non-SOEs) after losing their political connections due to exposure of corruption scandals. Using difference-in-differences estimation, we show that firms are more likely to issue CSR reports voluntarily after losing their political connections. This phenomenon is more prevalent for firms facing severe financial constraints, those located in provinces with low marketisation, and those in industries with high competition. Our mediation analysis suggests that a reduction in profitability serves as a channel through which the loss of political connections influences firms' decision to disclose CSR. Furthermore, we find that the loss of political connections reduces economic benefits for corruption-related firms. These results imply that non-SOEs voluntarily disclose their CSR reports to build political legitimacy, which is valuable capital for firms to maintain their competitiveness in the market. Our results are robust to alternative measurements of the key variables and rule out several alternative explanations.

The rising CSR awareness globally has influence CSR development in China but unlike anywhere in the world, the central government is always the main driver of CSR here, making it a unique case study. Under this political state, this study examines how a firm's political connections and foreign ownership affects its CSR reporting. We study a long sample over 4 different stages of CSR development in China between 2006 and 2019 with panel regression analysis. Our results show that CSR reporting and participation have increased over the sample period, but firms with political connection and foreign ownership are associated with lower levels of CSR reporting. The findings contradict theories of political cost theory that fit well in other countries. We propose crony relationship to explain the phenomena of low CSR compliance in the political linked firms in China. We further study Xi Jinping (XJP) regime and find that CSR reporting in China improved significantly in this regime but XJP regime moderates the state and foreign owned firms differently. Under XJP government, crony relationship has reduced following improved CSR reporting in politically connected firms, but CSR score has declined in foreign owned firms, implying they have become more opportunistic in cutting business cost and seeking profit.

In this study, we investigate the divergence in market quality between high-ESG (Environmental, Social, and Governance) and low-ESG firms in response to the Russia-Ukraine conflict. With an event-study approach, we find that better CSR (Corporate Social Responsibility) performance alleviates the market quality deterioration following the outbreak of the war for US-listed foreign firms. Such an effect is insignificant for US domestic firms. We also find that foreign firms experience more pronounced market quality deterioration compared to their US counterparts. Our findings align with the resiliency hypothesis regarding the link between CSR and financial performance, supporting that better CSR performance is associated with improved information transparency.

We investigate the association between firm-level political risk and environmental performance in U.S. firms during the period 2004–2018. We find a negative impact of political risk on overall environmental performance and its three components (a) carbon emissions reduction; (b) production innovation; and (c) resource reduction. Our findings remain robust when we employ firm fixed-effects, propensity score-matching estimates and the instrumental variable approach to address potential endogeneity concerns. The channel analysis shows that firms with high political risk face higher cash flow volatility and higher default risk, which lead to lower environmental performance.

This study aims to analyze the determinants of sustainability disclosures. We hypothesize that good corporate governance is associated with better sustainability disclosures, as indicated by compliance with Global Reporting Initiative (GRI) standards. Using a sample from the French SBF 120 index for the period 2006–2017, we find that well-governed firms are more likely to provide sustainability reports consistent with the GRI guidelines. These reports are also more informative. In addition, we show that the effect of corporate governance is enhanced by the firm's size and mitigated by the firm's leverage. This suggests that good governance might not be sufficient to ensure greater accountability. The results have implications for the ability of financial markets to steer capital towards more sustainable enterprises.

This special issue on corporate social responsibility (CSR) presents a series of papers that examine the complex interplay between political institutions and various aspects of CSR, along with the potential impact on the political economy. Encompassing diverse international perspectives, the special issue explores the repercussions of CSR in the context of recent geopolitical events in Russian–Ukraine relations. Other contributions include a wide range of datasets, as well as novel findings that offer valuable insights on a global scale and into key countries and regions such as the United States, China, and Europe.

We examine whether environmental costs impact the profitability of insider trading. We use a sample of 3189 purchase transactions and 10,200 sales transactions from 31 countries over 2011–2018. We uncover evidence that insiders sell their stocks profitably based on public environmental cost information. Further analysis indicates that these results become more pronounced in contexts of high investor inattention to environmental information, as measured by lower Google search frequencies for environmental information and the presence of right-leaning governments. Our findings demonstrate that insiders can benefit from publicly available environmental information and suggest that investor inattention to this information is a key driver of insider trading performance.

This study proposes a measure of the risk appetite of a bank's ownership structure and investigates whether ownership risk propensity is related to performance and default risk. Our indicator, the Risk-Weighted Ownership (RWO), assumes that credit risk is a proxy for shareholders' risk appetite and assigns risk weights based on the Basel standard approach to the stakes held by the top 5, 10, and 20 controlling shareholders. We calculate the RWO index using a sample of 76 listed banks from the Eurozone and the United Kingdom from 2008 to 2017. The RWO correlates with bank fundamentals when we regress it with accounting- and market-based performance and risk measures. We present two major findings. First, the RWO index incorporates the risk appetite of controlling shareholders, and its variance is affected by the ownership structure. Second, a higher risk appetite among shareholders is associated with higher profitability but lower bank capitalization, implying a trade-off between performance and default risk. Overall, we find that the risk appetite of the ownership structure is an important driver of bank performance and risk.