International Journal of Finance & Economics最新文献

Using A-share listed companies in 2011–2022 as a research sample, this study manually calculates and constructs Environment, Social and Government (ESG) rating uncertainty at the level of Chinese listed companies and examines whether and how ESG rating uncertainty affects firms' cost of debt financing. The empirical results demonstrate that ESG rating uncertainty raises firms' debt financing costs. After a string of robustness tests, the results are still robust. Mechanism analysis identifies credit risk and corporate reputation as the primary channels driving this relationship. Furthermore, high levels of firm's internal control, region's public environmental concerns and the level of financial agglomeration are conducive to mitigating the adverse effects of ESG rating uncertainty. This article enriches the research on the impact of ESG rating uncertainty on microeconomic agents in emerging markets and provides new perspectives to alleviate corporate financing constraints.

Digitalisation and sustainability are not just critical business notions; they are also interdependent drivers of future business success. By employing digital tools, firms can improve their environmental, social, and governance (ESG) performance, increase transparency, and maintain stakeholders' accountability. This increasing significance has elevated the value of examining the impact of digitalisation on firm-level ESG performance and disclosures. This study explores this relationship by synthesising 199 relevant research records published during 2019–2024, obtained from Web of Science and Scopus, using a bibliometric and systematic literature review approach. Our descriptive analysis reveals exponential growth in publications on this relationship during the study period, focusing predominantly on quantitative research leveraging secondary data. Regression analysis emerged as the most popular analytical technique, followed by structural equation modelling. The theoretical foundations of this research are based on the resource-based view and dynamic capabilities view. The Co-occurrence analysis identifies China, Italy, and England as the leading contributors, with research hot spots centring around concepts such as ‘Industry 4.0’, ‘sustainability performance’, ‘sustainable development’, and ‘sustainability reporting’. Co-citation analysis highlights the leading journals, authors, and documents, emphasising the scholarly foundations of this field. Further, thematic analysis uncovers the benefits of digitalisation across four dominant dimensions: sustainability performance, supply chain sustainability, sustainability assessment, and sustainability accounting and reporting. Finally, we discuss critical knowledge gaps and propose future research questions to advance understanding of this emerging field.

The paper examines how climate risk impacts the strategic entry mode choices—between greenfield investments and cross-border mergers and acquisitions (M&As)—of multinational enterprises (MNEs) into foreign markets. Our study adds to existing literature through a cross-countries empirical analysis and uses a newly developed dataset, the Multinational Revenue, Employment, and Investment Database (MREID), that accounts for how both physical and transition risks of climate change affect MNEs' entry mode choice. Physical risk refers to the tangible impacts of climate change such as extreme weather events, while transition risk involves regulatory and policy changes associated with moving towards a low-carbon economy. Using data for 139 source countries and 134 destination countries over the period from 2010 to 2021, we find that an increase in the physical risk of climate change leads to MNEs choosing greenfield investment when entering a new market while a higher level of transition risk discourages greenfield investment. Physical risk has a negative and significant influence on MNEs' entry choice of using cross-border M&A. There is a positive and significant correlation between transition risk and cross-border M&A though such a relationship is not robust. Industrial-level evidence shows a similar pattern in the majority of the industries. Our findings provide policymakers with guidelines helping to mitigate the negative impact of climate change on business decisions at the global level.

Corporate environmental, social, and governance (ESG) disclosure is often a superficial signal rather than something of substance and is an easily negligible form of greenwashing. Here, we explore the relationship between corporate disclosure greenwashing and institutional investors using data from Chinese listed heavily polluting firms from 2012 to 2021. We hypothesise and discover that while institutional investors encourage firms to publish social responsibility reports, they may actually discourage the use of sustainability-related phrases in these reports. The findings hold even after performing several endogeneity and robustness tests. We also identify three mechanisms through which institutional investors influence corporate greenwashing: corporate governance, information transparency, and corporate operations. Additionally, pressure-sensitive institutional investors are more likely to facilitate corporate greenwashing than pressure-insensitive and pressure-uncertain investors. However, after the Guidance on Building Green Financial System's implementation in 2016, the positive relationship between disclosure greenwashing and institutional investors has rapidly declined. The promotional effect of institutional investor-induced greenwashing is also lower in state-owned enterprises. Overall, our findings not only enrich the literature on institutional investors and corporate information disclosure but also have implications for improving the green financial system.

This study uses a quasi-natural experiment of the Shanghai-Hong Kong and Shenzhen-Hong Kong Connect Trading Systems to investigate the role of the capital market opening in fostering corporate innovation. We use panel data for A-listed corporations covering 2009–2021 to construct empirical analysis, and corroborate that the capital market opening can exert significantly positive influences on corporate innovation. The robustness of the research is verified. Furthermore, we conduct quantile analysis to investigate asymmetric effects, and employ multi-phase difference-in-difference-in-difference model, which reveals that the positive effect of capital market opening is more distinctly potent among the heavy polluters and the new-high-tech corporations. Moreover, the results also reflect that the capital market opening can enhance ESG performance and ease financing constraints, which in turn enhances corporate innovation. This study extends the researches on the topic regarding the relationship between capital market opening and corporate innovation, and outlines the theoretical and practical implications of helping foster corporate innovation.

This paper examines the relationship between board co-option and managerial obfuscation captured through linguistic complexity of 10-K reports. Using 7912 US firm-year observations from 2003 to 2018, we find that firms with a higher proportion of co-opted directors obfuscate the readability of the 10-K reports. The findings are robust across various variable definitions, sample specifications and remain significant after addressing endogeneity concerns through multiple approaches, including lead-lag regression, entropy balancing, instrumental variable analysis, the system GMM, and difference-in-difference estimations. Further analysis reveals that our main finding is driven by firms with weak internal (i.e., those with high CEO power and low board meeting attendance) and external (i.e., those with low institutional ownership and less analyst following) monitoring. The paper provides useful policy insights and implications for investors, regulators, and policymakers.

We investigate the effects of the real exchange rate on the trade balance between the USA and China by using a median threshold in non-linear modelling, controlling for several factors. Non-linear autoregressive distributed lag (NARDL) models are estimated with zero threshold, as well as with median threshold, and this is the first time in the USA–China literature of balance of trade. Quarterly data are employed, and the examined sample covers the period 1995–2023. It appears that the threshold choice matters when it comes to policy implications. Specifically, NARDL with the conventional zero-threshold analysis could lead to misleading policy proposals, especially when there are strongly unequal probabilities in the USD appreciation and depreciation regime. In our case, the traditional analysis based on zero threshold leads to diametrically opposite policy suggestions of what the alternative methodology of median threshold would suggest. We find that a nominal USD appreciation suggests a perpetual improvement of the US trade balance, and such an improvement could be further magnified if the US prices increase more rapidly than China's prices (e.g., as in the period from 2020 onwards). Evidence also shows that the US balance of trade could be temporarily benefitted by medium or large USD depreciations in real terms, and such an improvement could be notably facilitated when the US–China prices’ differential is downward sloping (e.g., as in the 2006–2019 period).

Despite significant growth, green bonds comprise less than 1% of the conventional bonds market, and more research is needed to determine their role as diversifiers, hedges or safe havens. In compliance. This study examines the co-movement between green bonds and various financial markets (stocks, commodities, digital currencies, bonds and foreign exchange) before and during COVID-19, using daily data from 28/11/2008 to 21/3/2022 and using quantile-based analysis. The findings based on quantile-on-quantile regression confirm an asymmetric/non-linear association between green bonds and other financial markets before COVID-19, with the association varying depending on market conditions, such as bearish, normal and bullish. During the COVID-19 period, a robust negative correlation is identified between green bonds and other financial markets, affirming the safe-haven role of green bonds against broader financial markets. These findings have important policy implications for investors, fund managers and policymakers. For increased diversification, investors in conventional and Islamic equities, commodities, conventional bonds, Sukuk markets, virtual and foreign currency markets can find it advantageous to include green bonds as a protection to downside risk.

This paper employs a textual analysis approach to quantify financial constraints information from the narrative sections of annual reports in the UK firms. Then, the paper examines the impact of this information on the stock price crash risk in 250 firms from 2005 to 2021. The paper also analyses the moderating role of adopting the International Financial Reporting Standards (IFRS) on the impact of text-based financial constraints on stock price crash risk. It is found that text-based financial constraints are positively associated with stock crash risk measures. It is also observed that adopting the IFRS weakens the positive impact of financial constraints on stock price crash risk. These results are robust to several controls and model specifications. The findings also have several implications for investors and other market participants for seeking evidence of the credibility of annual reports in reflecting relevant information that highlights financial constraints.