Pub Date : 2025-11-03DOI: 10.1016/j.intfin.2025.102247
Maoyong Cheng , Huiqin Duan , Liuchuang Li
We investigate how political uncertainty influences equity market performance by leveraging the temporary absences of municipal political leaders in China, which serve as plausibly exogenous variations in political uncertainty. We find that the absence of Secretaries of Municipal Party Committees (SMPCs) and Mayors is largely uncorrelated with local economic and social development indicators, supporting their exogeneity. Our results show that stock returns decline significantly following SMPC absences, particularly in the first month. Further analysis suggests that this effect does not stem from changes in cash flows, consistent with a discount rate channel. Cross-sectional analysis shows that the decline in stock returns is more pronounced among firms in economically advanced cities, with greater political or international exposure, and among non-state-owned enterprises (non-SOEs). Overall, our findings underscore the role of unexpected political disruptions in financial markets.
{"title":"Political leaders’ absences and equity market returns: Evidence from a novel uncertainty in China","authors":"Maoyong Cheng , Huiqin Duan , Liuchuang Li","doi":"10.1016/j.intfin.2025.102247","DOIUrl":"10.1016/j.intfin.2025.102247","url":null,"abstract":"<div><div>We investigate how political uncertainty influences equity market performance by leveraging the temporary absences of municipal political leaders in China, which serve as plausibly exogenous variations in political uncertainty. We find that the absence of Secretaries of Municipal Party Committees (SMPCs) and Mayors is largely uncorrelated with local economic and social development indicators, supporting their exogeneity. Our results show that stock returns decline significantly following SMPC absences, particularly in the first month. Further analysis suggests that this effect does not stem from changes in cash flows, consistent with a discount rate channel. Cross-sectional analysis shows that the decline in stock returns is more pronounced among firms in economically advanced cities, with greater political or international exposure, and among non-state-owned enterprises (non-SOEs). Overall, our findings underscore the role of unexpected political disruptions in financial markets.</div></div>","PeriodicalId":48119,"journal":{"name":"Journal of International Financial Markets Institutions & Money","volume":"106 ","pages":"Article 102247"},"PeriodicalIF":6.1,"publicationDate":"2025-11-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145468181","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 : 2025-11-01DOI: 10.1016/j.intfin.2025.102245
Olakunle Olaboopo , Evans O. Boamah
We examine the effect of climate change news risk on corporate advertising spending. Using a novel measure of media-driven climate risk matched to firm-level advertising data, we find a robust negative relationship between climate news risk and advertising spending. Mechanism tests show that financial constraints mediate this relationship. The effect is stronger for firms with low stock market liquidity and high cash-flow volatility. We also find that domestic firms reduce their advertising spending relative to their multinational counterparts, which aligns with the idea that international operations provide diversification and stronger cash flow benefits that enhance firms’ resilience to the effects of domestic climate risk shocks. The results remain consistent across different advertising measures, and after correcting for selection bias with a Heckman two-step method. We address endogeneity concerns through instrumental variable estimation. Our findings support the risk management hypothesis that firms proactively adjust their financial policies to mitigate the negative effects of rising climate risk exposure.
{"title":"Climate change news risk and advertising spending","authors":"Olakunle Olaboopo , Evans O. Boamah","doi":"10.1016/j.intfin.2025.102245","DOIUrl":"10.1016/j.intfin.2025.102245","url":null,"abstract":"<div><div>We examine the effect of climate change news risk on corporate advertising spending. Using a novel measure of media-driven climate risk matched to firm-level advertising data, we find a robust negative relationship between climate news risk and advertising spending. Mechanism tests show that financial constraints mediate this relationship. The effect is stronger for firms with low stock market liquidity and high cash-flow volatility. We also find that domestic firms reduce their advertising spending relative to their multinational counterparts, which aligns with the idea that international operations provide diversification and stronger cash flow benefits that enhance firms’ resilience to the effects of domestic climate risk shocks. The results remain consistent across different advertising measures, and after correcting for selection bias with a Heckman two-step method. We address endogeneity concerns through instrumental variable estimation. Our findings support the risk management hypothesis that firms proactively adjust their financial policies to mitigate the negative effects of rising climate risk exposure.</div></div>","PeriodicalId":48119,"journal":{"name":"Journal of International Financial Markets Institutions & Money","volume":"106 ","pages":"Article 102245"},"PeriodicalIF":6.1,"publicationDate":"2025-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145468180","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 : 2025-10-30DOI: 10.1016/j.intfin.2025.102242
David G. McMillan
The stock and bond return correlation remains important given its central role in portfolio behaviour. Previous, primarily US, evidence indicates sign switching, which implies that bonds change between diversifying and hedging behaviour. This paper considers time-variation in the stock–bond correlation for the G7 markets, including the nature of its economic drivers. Using monthly data over a period spanning 1980 to 2023 evidence demonstrates that the correlation switches from positive to negative in the late 1990s for six of the seven markets (the switch for Japan occurs in the first half of the 1990s). A switch back to positive is observed towards the end of the sample for most markets but earlier for France and Italy. Evidence of time-variation within the correlation drivers is also noted. Nonetheless, results suggest that inflation and interest rates typically exhibit a positive effect on the correlation, consistent with previous work and theoretical underpinnings. That is, higher inflation and interest rates depress stock and bond prices due to higher discount rates and lower real cash flows, moving them in the same direction. Growth also largely imparts a positive effect on the correlation, but this contrasts with the prevailing view. This arises through portfolio considerations where higher growth leads to an increase in demand for all assets. Of importance for investors, the switch in correlation implies that a portfolio manager will need to alter asset weights to maintain a target value for returns or risk. A portfolio variance decomposition reveals that while the bond contribution remains broadly constant over the sample, that from stocks increases as the correlation contribution shifts from positive to negative. The results are of importance to investors and those engaged in modelling market behaviour.
{"title":"Stock-bond return correlation: Understanding the changing behaviour","authors":"David G. McMillan","doi":"10.1016/j.intfin.2025.102242","DOIUrl":"10.1016/j.intfin.2025.102242","url":null,"abstract":"<div><div>The stock and bond return correlation remains important given its central role in portfolio behaviour. Previous, primarily US, evidence indicates sign switching, which implies that bonds change between diversifying and hedging behaviour. This paper considers time-variation in the stock–bond correlation for the G7 markets, including the nature of its economic drivers. Using monthly data over a period spanning 1980 to 2023 evidence demonstrates that the correlation switches from positive to negative in the late 1990s for six of the seven markets (the switch for Japan occurs in the first half of the 1990s). A switch back to positive is observed towards the end of the sample for most markets but earlier for France and Italy. Evidence of time-variation within the correlation drivers is also noted. Nonetheless, results suggest that inflation and interest rates typically exhibit a positive effect on the correlation, consistent with previous work and theoretical underpinnings. That is, higher inflation and interest rates depress stock and bond prices due to higher discount rates and lower real cash flows, moving them in the same direction. Growth also largely imparts a positive effect on the correlation, but this contrasts with the prevailing view. This arises through portfolio considerations where higher growth leads to an increase in demand for all assets. Of importance for investors, the switch in correlation implies that a portfolio manager will need to alter asset weights to maintain a target value for returns or risk. A portfolio variance decomposition reveals that while the bond contribution remains broadly constant over the sample, that from stocks increases as the correlation contribution shifts from positive to negative. The results are of importance to investors and those engaged in modelling market behaviour.</div></div>","PeriodicalId":48119,"journal":{"name":"Journal of International Financial Markets Institutions & Money","volume":"106 ","pages":"Article 102242"},"PeriodicalIF":6.1,"publicationDate":"2025-10-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145419548","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 : 2025-10-29DOI: 10.1016/j.intfin.2025.102243
Xiaojun Chu , Haigang Zhou
We study whether and how investor attention to the U.S. Federal Reserve transmits to China’s A-share market through stock-price jumps. Using Baidu search volumes for Fed-related terms as an attention proxy, we show that greater attention is associated with both a higher probability and a larger magnitude of jumps. These effects are not confined to FOMC announcement days; they also arise on non-announcement days, consistent with the continuous flow of Fed communications and expectation updating. The impact is stronger for negative jumps and among smaller, riskier firms where retail investors are most active. Robustness checks that control for domestic monetary policy attention, U.S. macroeconomic news and equity market conditions, alternative jump-identification methods, and pre-announcement attention measures yield similar conclusions. Taken together, the findings highlight investor attention as a behavioral channel of U.S. monetary policy spillovers and indicate that attention amplifies – rather than resolves – market uncertainty.
{"title":"The impact of investor attention to the federal reserve on jumps in China’s stock market","authors":"Xiaojun Chu , Haigang Zhou","doi":"10.1016/j.intfin.2025.102243","DOIUrl":"10.1016/j.intfin.2025.102243","url":null,"abstract":"<div><div>We study whether and how investor attention to the U.S. Federal Reserve transmits to China’s A-share market through stock-price jumps. Using Baidu search volumes for Fed-related terms as an attention proxy, we show that greater attention is associated with both a higher probability and a larger magnitude of jumps. These effects are not confined to FOMC announcement days; they also arise on non-announcement days, consistent with the continuous flow of Fed communications and expectation updating. The impact is stronger for negative jumps and among smaller, riskier firms where retail investors are most active. Robustness checks that control for domestic monetary policy attention, U.S. macroeconomic news and equity market conditions, alternative jump-identification methods, and pre-announcement attention measures yield similar conclusions. Taken together, the findings highlight investor attention as a behavioral channel of U.S. monetary policy spillovers and indicate that attention amplifies – rather than resolves – market uncertainty.</div></div>","PeriodicalId":48119,"journal":{"name":"Journal of International Financial Markets Institutions & Money","volume":"106 ","pages":"Article 102243"},"PeriodicalIF":6.1,"publicationDate":"2025-10-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145419549","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 : 2025-10-27DOI: 10.1016/j.intfin.2025.102241
Qi Gong , Zhaoyang Kong , Liang Li , Xiucheng Dong , Yang Li
Hypocrisy in environmental, social and governance (ESG) has become a growing concern in global capital markets. In the context of sustainable development, we examine whether and how corporate ESG greenwashing affects green total factor productivity (GTFP), a comprehensive indicator that captures both economic efficiency and environmental performance. Based on panel data comprising 7,755 firm-year observations from 705 Chinese listed firms over the period 2012–2022, we find that ESG greenwashing significantly undermines GTFP. Mechanism analysis reveals that this effect operates through tightened financing constraints and increased inefficient investment. The heterogeneity analysis reveals that the negative impact of ESG greenwashing on GTFP is particularly pronounced among cross-listed firms, highlighting the sustainability risks associated with symbolic ESG practices under multiple regulatory environments and underscoring the need for internationally harmonized ESG regulatory frameworks. Moreover, the detrimental effect is more severe among non-state-owned enterprises and firms with a higher proportion of negative media coverage. By linking ESG greenwashing with green productivity, this study contributes to the literature at the intersection of sustainability, corporate governance, and international securities markets. It offers practical implications for global investors, regulators, and firms, particularly in emerging markets, aiming to strengthen ESG accountability and reduce the sustainable development risks associated with superficial compliance.
{"title":"The consequences of hypocrisy: how ESG greenwashing undermines green total factor productivity","authors":"Qi Gong , Zhaoyang Kong , Liang Li , Xiucheng Dong , Yang Li","doi":"10.1016/j.intfin.2025.102241","DOIUrl":"10.1016/j.intfin.2025.102241","url":null,"abstract":"<div><div>Hypocrisy in environmental, social and governance (ESG) has become a growing concern in global capital markets. In the context of sustainable development, we examine whether and how corporate ESG greenwashing affects green total factor productivity (GTFP), a comprehensive indicator that captures both economic efficiency and environmental performance. Based on panel data comprising 7,755 firm-year observations from 705 Chinese listed firms over the period 2012–2022, we find that ESG greenwashing significantly undermines GTFP. Mechanism analysis reveals that this effect operates through tightened financing constraints and increased inefficient investment. The heterogeneity analysis reveals that the negative impact of ESG greenwashing on GTFP is particularly pronounced among cross-listed firms, highlighting the sustainability risks associated with symbolic ESG practices under multiple regulatory environments and underscoring the need for internationally harmonized ESG regulatory frameworks. Moreover, the detrimental effect is more severe among non-state-owned enterprises and firms with a higher proportion of negative media coverage. By linking ESG greenwashing with green productivity, this study contributes to the literature at the intersection of sustainability, corporate governance, and international securities markets. It offers practical implications for global investors, regulators, and firms, particularly in emerging markets, aiming to strengthen ESG accountability and reduce the sustainable development risks associated with superficial compliance.</div></div>","PeriodicalId":48119,"journal":{"name":"Journal of International Financial Markets Institutions & Money","volume":"106 ","pages":"Article 102241"},"PeriodicalIF":6.1,"publicationDate":"2025-10-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145371129","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}
This paper investigates the relationship between firms’ impact on biodiversity and its firm value and the economic and financial mechanisms underlying this link, filling a gap concerning the financial materiality of biodiversity loss. By analysing a global panel of 1,848 publicly listed companies across 49 countries from 2018 to 2022, this study highlights how the Corporate Biodiversity Footprint (CBF) influences not only firms’ market valuations (Tobin’s Q, Market-to-Book) but also their operating profitability as measured by Return on Assets (ROA). At the same time, the CBF affects firms’ cash generation capacity both decreasing the level and increasing the volatility of operating cash flows. Further heterogeneity analyses reveal that the effect of CBF on firm value is particularly strong for large firms, firms producing tangible goods, firms headquartered in megadiverse countries, and countries with a high level of biodiversity conservation. The erosion of ROA is especially evident in countries already severely affected by biodiversity loss. The results have important implications for investors, banks, corporate managers, and policymakers to improve risk pricing, forward-looking corporate governance, and realign corporate strategies and capital allocation with global biodiversity targets.
{"title":"Does biodiversity matter for firm value?","authors":"Simona Cosma , Stefano Cosma , Daniela Pennetta , Giuseppe Rimo","doi":"10.1016/j.intfin.2025.102240","DOIUrl":"10.1016/j.intfin.2025.102240","url":null,"abstract":"<div><div>This paper investigates the relationship between firms’ impact on biodiversity and its firm value and the economic and financial mechanisms underlying this link, filling a gap concerning the financial materiality of biodiversity loss. By analysing a global panel of 1,848 publicly listed companies across 49 countries from 2018 to 2022, this study highlights how the Corporate Biodiversity Footprint (CBF) influences not only firms’ market valuations (Tobin’s Q, Market-to-Book) but also their operating profitability as measured by Return on Assets (ROA). At the same time, the CBF affects firms’ cash generation capacity both decreasing the level and increasing the volatility of operating cash flows. Further heterogeneity analyses reveal that the effect of CBF on firm value is particularly strong for large firms, firms producing tangible goods, firms headquartered in megadiverse countries, and countries with a high level of biodiversity conservation. The erosion of ROA is especially evident in countries already severely affected by biodiversity loss. The results have important implications for investors, banks, corporate managers, and policymakers to improve risk pricing, forward-looking corporate governance, and realign corporate strategies and capital allocation with global biodiversity targets.</div></div>","PeriodicalId":48119,"journal":{"name":"Journal of International Financial Markets Institutions & Money","volume":"105 ","pages":"Article 102240"},"PeriodicalIF":6.1,"publicationDate":"2025-10-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145364598","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 : 2025-10-21DOI: 10.1016/j.intfin.2025.102239
Dezhong Xu , Bin Li , Tarlok Singh , Xiaoyue Chen , Jinze Li
We propose a new cross-market overnight momentum: the US stock market’s last half-hour return predicts the next day’s first half-hour stock returns in international markets. This predictability is statistically significant both in- and out-of-sample. The corresponding cross-market overnight time-series momentum (COTSM) strategy shows economic significance in international stock markets investments. The COTSM strategy remains profitable with the consideration of transaction costs, and the profitability is driven by some specific market characteristics. The COTSM is strong when international market spread is low, or information uncertainty is high.
{"title":"Cross-market overnight time-series momentum","authors":"Dezhong Xu , Bin Li , Tarlok Singh , Xiaoyue Chen , Jinze Li","doi":"10.1016/j.intfin.2025.102239","DOIUrl":"10.1016/j.intfin.2025.102239","url":null,"abstract":"<div><div>We propose a new cross-market overnight momentum: the US stock market’s last half-hour return predicts the next day’s first half-hour stock returns in international markets. This predictability is statistically significant both in- and out-of-sample. The corresponding cross-market overnight time-series momentum (COTSM) strategy shows economic significance in international stock markets investments. The COTSM strategy remains profitable with the consideration of transaction costs, and the profitability is driven by some specific market characteristics. The COTSM is strong when international market spread is low, or information uncertainty is high.</div></div>","PeriodicalId":48119,"journal":{"name":"Journal of International Financial Markets Institutions & Money","volume":"105 ","pages":"Article 102239"},"PeriodicalIF":6.1,"publicationDate":"2025-10-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145364599","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 : 2025-10-15DOI: 10.1016/j.intfin.2025.102236
Tony Cavoli , Isma Khan , G.M. Wali Ullah
FinTech credit has grown significantly in recent years and can have important economic and financial outcomes. Social capital can provide societal benefits which impact FinTech lending. There are three factors that influence this connection: the inequality of income, the prevalence of digital technology, and the quality of institutions. This paper examines the relationship between social capital and FinTech lending for a panel of 56 countries for 2013–19, focusing on these important conditioning factors. We find that that greater social capital results in higher levels of FinTech lending. These results are robust to different model specifications, after correcting for possible endogeneity issues, and over different indicators of social capital. This effect is more pronounced for countries with better institutions, higher internet penetration, and lower income inequality – highlighting the need for authorities to consider their impact when formulating policy.
{"title":"Social capital and FinTech lending: international evidence","authors":"Tony Cavoli , Isma Khan , G.M. Wali Ullah","doi":"10.1016/j.intfin.2025.102236","DOIUrl":"10.1016/j.intfin.2025.102236","url":null,"abstract":"<div><div>FinTech credit has grown significantly in recent years and can have important economic and financial outcomes. Social capital can provide societal benefits which impact FinTech lending. There are three factors that influence this connection: the inequality of income, the prevalence of digital technology, and the quality of institutions. This paper examines the relationship between social capital and FinTech lending for a panel of 56 countries for 2013–19, focusing on these important conditioning factors. We find that that greater social capital results in higher levels of FinTech lending. These results are robust to different model specifications, after correcting for possible endogeneity issues, and over different indicators of social capital. This effect is more pronounced for countries with better institutions, higher internet penetration, and lower income inequality – highlighting the need for authorities to consider their impact when formulating policy.</div></div>","PeriodicalId":48119,"journal":{"name":"Journal of International Financial Markets Institutions & Money","volume":"105 ","pages":"Article 102236"},"PeriodicalIF":6.1,"publicationDate":"2025-10-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145325873","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 : 2025-10-10DOI: 10.1016/j.intfin.2025.102237
Yang-Rong Mao , Huai-Long Shi , Huayi Chen , Yu-Lei Wan
Cross-firm momentum effects via shared analyst coverage are well-documented in developed markets, but their robustness remains unclear in emerging markets, where information diffusion is asymmetric and analyst coverage is highly concentrated. Our work revisits this effect in an environment of extreme informational frictions — the Chinese market. We reconstruct the information transmission channel within the analyst coverage network by introducing a novel weighting scheme based on strength centrality (). This measure identifies influential leader firms that command disproportionate attention from both analysts and the market. Our results demonstrate that -weighted connected-firm returns robustly predict cross-sectional stock returns, yielding significant and persistent profits even under a rigorous stock filter. This performance cannot be subsumed by strategies based on alternative weighting schemes or by explanations such as intra-industry cross-firm momentum and information discreteness. Further analysis reveals that the superiority of the -based approach stems from its ability to effectively identify firms with stronger cross-period fundamental linkages. In addition, high- stocks are characterized by higher investor attention, more efficient information processing, lower arbitrage costs, and greater international exposures. With this evidence, we further confirm a directional spillover: cross-firm momentum effects flow exclusively from these high- leaders to low- laggards, and there is no reverse spillover. Our findings suggest that cross-firm momentum may be systematically underestimated in many international markets due to methodological limitations rather than economic irrelevance. The -based framework therefore offers a portable tool for global investors and researchers operating in environments with asymmetric information.
{"title":"Detecting cross-firm momentum effects via shared analyst coverage: The role of leaders","authors":"Yang-Rong Mao , Huai-Long Shi , Huayi Chen , Yu-Lei Wan","doi":"10.1016/j.intfin.2025.102237","DOIUrl":"10.1016/j.intfin.2025.102237","url":null,"abstract":"<div><div>Cross-firm momentum effects via shared analyst coverage are well-documented in developed markets, but their robustness remains unclear in emerging markets, where information diffusion is asymmetric and analyst coverage is highly concentrated. Our work revisits this effect in an environment of extreme informational frictions — the Chinese market. We reconstruct the information transmission channel within the analyst coverage network by introducing a novel weighting scheme based on strength centrality (<span><math><mrow><mi>S</mi><mi>C</mi></mrow></math></span>). This measure identifies influential leader firms that command disproportionate attention from both analysts and the market. Our results demonstrate that <span><math><mrow><mi>S</mi><mi>C</mi></mrow></math></span>-weighted connected-firm returns robustly predict cross-sectional stock returns, yielding significant and persistent profits even under a rigorous stock filter. This performance cannot be subsumed by strategies based on alternative weighting schemes or by explanations such as intra-industry cross-firm momentum and information discreteness. Further analysis reveals that the superiority of the <span><math><mrow><mi>S</mi><mi>C</mi></mrow></math></span>-based approach stems from its ability to effectively identify firms with stronger cross-period fundamental linkages. In addition, high-<span><math><mrow><mi>S</mi><mi>C</mi></mrow></math></span> stocks are characterized by higher investor attention, more efficient information processing, lower arbitrage costs, and greater international exposures. With this evidence, we further confirm a directional spillover: cross-firm momentum effects flow exclusively from these high-<span><math><mrow><mi>S</mi><mi>C</mi></mrow></math></span> leaders to low-<span><math><mrow><mi>S</mi><mi>C</mi></mrow></math></span> laggards, and there is no reverse spillover. Our findings suggest that cross-firm momentum may be systematically underestimated in many international markets due to methodological limitations rather than economic irrelevance. The <span><math><mrow><mi>S</mi><mi>C</mi></mrow></math></span>-based framework therefore offers a portable tool for global investors and researchers operating in environments with asymmetric information.</div></div>","PeriodicalId":48119,"journal":{"name":"Journal of International Financial Markets Institutions & Money","volume":"105 ","pages":"Article 102237"},"PeriodicalIF":6.1,"publicationDate":"2025-10-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145269870","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}
This study investigates how mergers and acquisitions (M&A) involving FinTech companies influence the Environmental, Social, and Governance (ESG) performance of acquiring banks. Using a global sample of 105 M&A deals completed by banks worldwide between 2009 and 2023, our findings indicate that FinTech acquisitions tend to enhance banks’ ESG performance. However, this effect is not immediately observable, manifesting only in the fifth year post-acquisition. To refine the analysis, we match banks that engaged in FinTech acquisitions with similar banks that did not, controlling for pre-acquisition characteristics. This approach reveals a positive and significant effect on environmental (E) and overall ESG scores starting from the third year, with social (S) scores showing significant improvement as early as the first year post-acquisition.
These findings contribute to the understanding of how FinTech M&As shape the ESG performance of traditional banks. The results also provide valuable insights for bank managers, policymakers, and financial regulators, emphasizing the role of FinTech acquisitions in advancing sustainability within the banking sector.
{"title":"Do FinTech Acquisitions Affect Banks' ESG Performance? Evidence from Global M&As","authors":"Antonella Francesca Cicchiello , Cristian Foroni , Stefano Monferrà , Giuseppe Torluccio","doi":"10.1016/j.intfin.2025.102229","DOIUrl":"10.1016/j.intfin.2025.102229","url":null,"abstract":"<div><div>This study investigates how mergers and acquisitions (M&A) involving FinTech companies influence the Environmental, Social, and Governance (ESG) performance of acquiring banks. Using a global sample of 105 M&A deals completed by banks worldwide between 2009 and 2023, our findings indicate that FinTech acquisitions tend to enhance banks’ ESG performance. However, this effect is not immediately observable, manifesting only in the fifth year post-acquisition. To refine the analysis, we match banks that engaged in FinTech acquisitions with similar banks that did not, controlling for pre-acquisition characteristics. This approach reveals a positive and significant effect on environmental (E) and overall ESG scores starting from the third year, with social (S) scores showing significant improvement as early as the first year post-acquisition.</div><div>These findings contribute to the understanding of how FinTech M&As shape the ESG performance of traditional banks. The results also provide valuable insights for bank managers, policymakers, and financial regulators, emphasizing the role of FinTech acquisitions in advancing sustainability within the banking sector.</div></div>","PeriodicalId":48119,"journal":{"name":"Journal of International Financial Markets Institutions & Money","volume":"105 ","pages":"Article 102229"},"PeriodicalIF":6.1,"publicationDate":"2025-10-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145269868","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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