Pub Date : 2025-02-01DOI: 10.1016/j.ribaf.2024.102707
Feng Cao , Haitong Li , Xueyan Zhang , Zixi Zhang
This paper examines how foreign residency rights (FRRs) of controlling shareholders affect stock price crash risk in emerging financial markets. Using a unique sample of Chinese privately-owned firms, we find that FRRs significantly increase crash risk. This effect is stronger for firms that are less conservative in accounting, more fraudulent, and more litigious. Furthermore, we find that the FRRs-crash risk effect is more pronounced when controlling shareholders face original sin suspicion, obtain FRRs directly or indirectly control the listed firm. We also identify several mitigating factors, and our findings suggest that more independent directors, stronger audit supervision, and better legal system can reduce the positive effect of FRRs on crash risk.
{"title":"Controlling shareholder’s escape threat: Foreign residency rights and stock price crash risk","authors":"Feng Cao , Haitong Li , Xueyan Zhang , Zixi Zhang","doi":"10.1016/j.ribaf.2024.102707","DOIUrl":"10.1016/j.ribaf.2024.102707","url":null,"abstract":"<div><div>This paper examines how foreign residency rights (FRRs) of controlling shareholders affect stock price crash risk in emerging financial markets. Using a unique sample of Chinese privately-owned firms, we find that FRRs significantly increase crash risk. This effect is stronger for firms that are less conservative in accounting, more fraudulent, and more litigious. Furthermore, we find that the FRRs-crash risk effect is more pronounced when controlling shareholders face original sin suspicion, obtain FRRs directly or indirectly control the listed firm. We also identify several mitigating factors, and our findings suggest that more independent directors, stronger audit supervision, and better legal system can reduce the positive effect of FRRs on crash risk.</div></div>","PeriodicalId":51430,"journal":{"name":"Research in International Business and Finance","volume":"74 ","pages":"Article 102707"},"PeriodicalIF":6.3,"publicationDate":"2025-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143100957","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 : 2025-02-01DOI: 10.1016/j.ribaf.2024.102711
Catarina Proença, Mário Augusto, José Murteira
This study examines the effect of political connections on earnings management in banks supervised by the European Central Bank (ECB). The study analyses panel data on 58 banks supervised by the European Central Bank (ECB) from 2012 to 2019, using generalized method moment (GMM). Our results suggest a non-linear U-inverted relationship between political connections and earnings management practices. When political connections are low or moderate, they tend to favor earnings management, evidencing the opportunism of politically connected directors, with reflections on discretionary earnings management. However, in boards whose members have strong political connections, this effect is negative, suggesting that directors in this situation will not resort to discretionary practices, as they consider that they will be subject to greater scrutiny and oversight. These results are generally robust when we consider alternative earnings management measures.
{"title":"The effect of political connections on earnings management: Evidence from ECB-supervised banks","authors":"Catarina Proença, Mário Augusto, José Murteira","doi":"10.1016/j.ribaf.2024.102711","DOIUrl":"10.1016/j.ribaf.2024.102711","url":null,"abstract":"<div><div>This study examines the effect of political connections on earnings management in banks supervised by the European Central Bank (ECB). The study analyses panel data on 58 banks supervised by the European Central Bank (ECB) from 2012 to 2019, using generalized method moment (GMM). Our results suggest a non-linear U-inverted relationship between political connections and earnings management practices. When political connections are low or moderate, they tend to favor earnings management, evidencing the opportunism of politically connected directors, with reflections on discretionary earnings management. However, in boards whose members have strong political connections, this effect is negative, suggesting that directors in this situation will not resort to discretionary practices, as they consider that they will be subject to greater scrutiny and oversight. These results are generally robust when we consider alternative earnings management measures.</div></div>","PeriodicalId":51430,"journal":{"name":"Research in International Business and Finance","volume":"74 ","pages":"Article 102711"},"PeriodicalIF":6.3,"publicationDate":"2025-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143100958","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}
We study the effect of a key external governance mechanism – the takeover market – on dividend policy. We employ a unique measure to assess vulnerability to corporate takeovers derived from the varied enactment of legislation across different states. Using an extensive dataset spanning half a century and all state regulations, we demonstrate that firms more susceptible to takeover threats pay significantly higher dividends. Our results support agency theory, which postulates that the takeover market compels self-serving managers to return more cash to shareholders through higher dividends.
{"title":"Dividend policy and the takeover market: Half a century of evidence","authors":"Pandej Chintrakarn , Pattanaporn Chatjuthamard , Pornsit Jiraporn , Khine Kyaw","doi":"10.1016/j.ribaf.2025.102774","DOIUrl":"10.1016/j.ribaf.2025.102774","url":null,"abstract":"<div><div>We study the effect of a key external governance mechanism – the takeover market – on dividend policy. We employ a unique measure to assess vulnerability to corporate takeovers derived from the varied enactment of legislation across different states. Using an extensive dataset spanning half a century and all state regulations, we demonstrate that firms more susceptible to takeover threats pay significantly higher dividends. Our results support agency theory, which postulates that the takeover market compels self-serving managers to return more cash to shareholders through higher dividends.</div></div>","PeriodicalId":51430,"journal":{"name":"Research in International Business and Finance","volume":"75 ","pages":"Article 102774"},"PeriodicalIF":6.3,"publicationDate":"2025-01-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143164370","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 : 2025-01-30DOI: 10.1016/j.ribaf.2025.102780
Zhengxu Shi , Yufei Xia , Lingyun He , Naili Sun , Qiong Zheng
We empirically investigate the impact of internal RegTech on bank credit risk with panel data from 141 Chinese banks from 2011 to 2022. We initially constructed a bank-level RegTech index by mining banks' annual reports. We reveal that internal RegTech can significantly mitigate bank credit risk. Concretely, a one-standard-deviation increase in internal RegTech level leads to a 7.39–11.90 % decrease in bank credit risk. Regulatory intensity, income diversification, and charter value are identified as potential channels. The cross-sectional analysis demonstrates that the credit risk mitigation effect of internal RegTech is more pronounced in non-listed and low administrative-expense banks. Our main conclusions remain robust after addressing potential endogeneity issues, ruling out the potential effect of bank financial technology, alternative proxies for the dependent variable, alternative sample periods, and clustering of standard errors. In further analysis, we show the influential roles of the compliance application and technological foundation in the internal RegTech subindices and reveal the de-branching effect of internal RegTech.
{"title":"Can internal regulatory technology (RegTech) mitigate bank credit risk? Evidence from the banking sector in China","authors":"Zhengxu Shi , Yufei Xia , Lingyun He , Naili Sun , Qiong Zheng","doi":"10.1016/j.ribaf.2025.102780","DOIUrl":"10.1016/j.ribaf.2025.102780","url":null,"abstract":"<div><div>We empirically investigate the impact of internal RegTech on bank credit risk with panel data from 141 Chinese banks from 2011 to 2022. We initially constructed a bank-level RegTech index by mining banks' annual reports. We reveal that internal RegTech can significantly mitigate bank credit risk. Concretely, a one-standard-deviation increase in internal RegTech level leads to a 7.39–11.90 % decrease in bank credit risk. Regulatory intensity, income diversification, and charter value are identified as potential channels. The cross-sectional analysis demonstrates that the credit risk mitigation effect of internal RegTech is more pronounced in non-listed and low administrative-expense banks. Our main conclusions remain robust after addressing potential endogeneity issues, ruling out the potential effect of bank financial technology, alternative proxies for the dependent variable, alternative sample periods, and clustering of standard errors. In further analysis, we show the influential roles of the compliance application and technological foundation in the internal RegTech subindices and reveal the de-branching effect of internal RegTech.</div></div>","PeriodicalId":51430,"journal":{"name":"Research in International Business and Finance","volume":"75 ","pages":"Article 102780"},"PeriodicalIF":6.3,"publicationDate":"2025-01-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143165446","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 : 2025-01-30DOI: 10.1016/j.ribaf.2025.102789
Dehua Shen , Yize Wu
This study examines the influence of Twitter sentiment on Bitcoin price movements by distinguishing between "Gurus" (influential users) and regular users in the Bitcoin market. We analyze over 26 million Tweets collected from September 2006 to March 2023 to derive sentiment data, then employ Kolmogorov-Arnold Networks (KAN) to compare the predictive effectiveness of follower-weighted sentiment versus unweighted sentiment. Our results indicate that follower-weighted sentiment significantly enhances prediction accuracy, with Guru sentiments consistently showing stronger predictive power than regular user sentiment. These findings are robust to alternative measurement of sentiment, alternative definition of Guru investor, and subperiod analysis.
{"title":"The role of Guru investor in Bitcoin: Evidence from Kolmogorov-Arnold Networks","authors":"Dehua Shen , Yize Wu","doi":"10.1016/j.ribaf.2025.102789","DOIUrl":"10.1016/j.ribaf.2025.102789","url":null,"abstract":"<div><div>This study examines the influence of Twitter sentiment on Bitcoin price movements by distinguishing between \"Gurus\" (influential users) and regular users in the Bitcoin market. We analyze over 26 million Tweets collected from September 2006 to March 2023 to derive sentiment data, then employ Kolmogorov-Arnold Networks (KAN) to compare the predictive effectiveness of follower-weighted sentiment versus unweighted sentiment. Our results indicate that follower-weighted sentiment significantly enhances prediction accuracy, with Guru sentiments consistently showing stronger predictive power than regular user sentiment. These findings are robust to alternative measurement of sentiment, alternative definition of Guru investor, and subperiod analysis.</div></div>","PeriodicalId":51430,"journal":{"name":"Research in International Business and Finance","volume":"75 ","pages":"Article 102789"},"PeriodicalIF":6.3,"publicationDate":"2025-01-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143230170","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 : 2025-01-30DOI: 10.1016/j.ribaf.2025.102773
Saad Alshammari , Vanessa Serret , Sunil Tiwari , Kamel Si Mohammed
This research examines the dynamic relationships among three distinct asset categories within the context of economic policy uncertainty (EPU). The first category encompasses Industry 4.0 assets related to artificial intelligence (AI) and ESG circular economies (ESGCE). In contrast, the second category focuses on environmentally sustainable markets, specifically green bonds (SPGB) and carbon trading (ICI). Utilizing daily data from December 20, 2017, to September 06, 2023, our innovative R2 decomposed connectedness and portfolio analysis reveal a notably elevated average Total Connectedness Index (TCI), averaging about 60 %. Upon decomposing this measure into contemporaneous and lagged components, we observe that AI and ESG circular indices are primarily influenced by lagged and contemporary spillover. At the same time, EPU and traditional energy are the primary recipients. These findings suggest that investing in Industry 4.0 assets and eco-friendly options consistently yields the highest profits, serving as a reliable hedge against conventional assets.
{"title":"Industry 4.0 and AI amid economic uncertainty: Implications for sustainable markets","authors":"Saad Alshammari , Vanessa Serret , Sunil Tiwari , Kamel Si Mohammed","doi":"10.1016/j.ribaf.2025.102773","DOIUrl":"10.1016/j.ribaf.2025.102773","url":null,"abstract":"<div><div>This research examines the dynamic relationships among three distinct asset categories within the context of economic policy uncertainty (EPU). The first category encompasses Industry 4.0 assets related to artificial intelligence (AI) and ESG circular economies (ESGCE). In contrast, the second category focuses on environmentally sustainable markets, specifically green bonds (SPGB) and carbon trading (ICI). Utilizing daily data from December 20, 2017, to September 06, 2023, our innovative R2 decomposed connectedness and portfolio analysis reveal a notably elevated average Total Connectedness Index (TCI), averaging about 60 %. Upon decomposing this measure into contemporaneous and lagged components, we observe that AI and ESG circular indices are primarily influenced by lagged and contemporary spillover. At the same time, EPU and traditional energy are the primary recipients. These findings suggest that investing in Industry 4.0 assets and eco-friendly options consistently yields the highest profits, serving as a reliable hedge against conventional assets.</div></div>","PeriodicalId":51430,"journal":{"name":"Research in International Business and Finance","volume":"75 ","pages":"Article 102773"},"PeriodicalIF":6.3,"publicationDate":"2025-01-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143230171","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 : 2025-01-30DOI: 10.1016/j.ribaf.2024.102725
Xinyu Liu , Shuanping Gao , Lijing Tong , Jiyuan Li
{"title":"Corrigendum to “Multiple large shareholders and pay-performance sensitivity: Evidence from China” [Res. Int. Bus. Financ. 73 (2025) 102597]","authors":"Xinyu Liu , Shuanping Gao , Lijing Tong , Jiyuan Li","doi":"10.1016/j.ribaf.2024.102725","DOIUrl":"10.1016/j.ribaf.2024.102725","url":null,"abstract":"","PeriodicalId":51430,"journal":{"name":"Research in International Business and Finance","volume":"75 ","pages":"Article 102725"},"PeriodicalIF":6.3,"publicationDate":"2025-01-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143478557","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 : 2025-01-29DOI: 10.1016/j.ribaf.2025.102788
Wenjing Xiong , Pingheng Zhu , Fenghua Wen
This study investigates the impact of the China Securities Investor Services Center (CSISC) exercising minority shareholder rights on corporate bank loans, revealing that CSISC actions have spillover effects on firm financing. Using a staggered difference-in-differences approach and analyzing data from Chinese listed companies between 2013 and 2021, we find that the CSISC exercises minority shareholder rights, reducing bank loans for the companies affected. This effect is more pronounced in firms with weaker corporate governance structures and higher reputational risks. Further analysis shows that disclosures by the CSISC involving corporate finance or corporate governance structures shrink enterprises’ access to bank loans and change the structure of corporate bank loans. Our findings have valuable policy implications for emerging markets, highlighting the need for enhanced regulatory frameworks to protect minority shareholders and mitigate corporate governance risks.
{"title":"The signalling role of a regulatory minority shareholder exercising rights: Evidence from firm’s bank loans","authors":"Wenjing Xiong , Pingheng Zhu , Fenghua Wen","doi":"10.1016/j.ribaf.2025.102788","DOIUrl":"10.1016/j.ribaf.2025.102788","url":null,"abstract":"<div><div>This study investigates the impact of the China Securities Investor Services Center (CSISC) exercising minority shareholder rights on corporate bank loans, revealing that CSISC actions have spillover effects on firm financing. Using a staggered difference-in-differences approach and analyzing data from Chinese listed companies between 2013 and 2021, we find that the CSISC exercises minority shareholder rights, reducing bank loans for the companies affected. This effect is more pronounced in firms with weaker corporate governance structures and higher reputational risks. Further analysis shows that disclosures by the CSISC involving corporate finance or corporate governance structures shrink enterprises’ access to bank loans and change the structure of corporate bank loans. Our findings have valuable policy implications for emerging markets, highlighting the need for enhanced regulatory frameworks to protect minority shareholders and mitigate corporate governance risks.</div></div>","PeriodicalId":51430,"journal":{"name":"Research in International Business and Finance","volume":"75 ","pages":"Article 102788"},"PeriodicalIF":6.3,"publicationDate":"2025-01-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143372771","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 : 2025-01-28DOI: 10.1016/j.ribaf.2025.102786
Greg Filbeck , Xin Zhao
Since 1998, Leger has published its “Most Reputable Companies in Canada” rankings. The survey is unique in that rankings are based on the views of customers who respond to factors that include the quality of products and services and customer service. This paper tests whether being listed in the rankings leads to enhanced performance. We find that portfolios of publicly traded Leger-ranked securities (of U.S.-based firms in the survey) produce statistically significant announcement window returns. On a long-term basis, a subset of the Canadian-based firms outperforms a matched sample on a raw and risk-adjusted returns basis. High-intensity capital firms listed in the survey outperform their counterparts overall, with results augmented when the industries of these firms are highly competitive. Like the Canadian sample, firms with higher capital intensity from more competitive industries exhibit greater accounting performance in the year following the survey release.
{"title":"Leger’s most reputable companies in Canada: Do customer views influence stock returns?","authors":"Greg Filbeck , Xin Zhao","doi":"10.1016/j.ribaf.2025.102786","DOIUrl":"10.1016/j.ribaf.2025.102786","url":null,"abstract":"<div><div>Since 1998, Leger has published its “Most Reputable Companies in Canada” rankings. The survey is unique in that rankings are based on the views of customers who respond to factors that include the quality of products and services and customer service. This paper tests whether being listed in the rankings leads to enhanced performance. We find that portfolios of publicly traded Leger-ranked securities (of U.S.-based firms in the survey) produce statistically significant announcement window returns. On a long-term basis, a subset of the Canadian-based firms outperforms a matched sample on a raw and risk-adjusted returns basis. High-intensity capital firms listed in the survey outperform their counterparts overall, with results augmented when the industries of these firms are highly competitive. Like the Canadian sample, firms with higher capital intensity from more competitive industries exhibit greater accounting performance in the year following the survey release.</div></div>","PeriodicalId":51430,"journal":{"name":"Research in International Business and Finance","volume":"75 ","pages":"Article 102786"},"PeriodicalIF":6.3,"publicationDate":"2025-01-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143164373","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 : 2025-01-28DOI: 10.1016/j.ribaf.2025.102787
Chao Zhou
This study investigates the effect of internationalization on the donations allocated to domestic markets in small and medium-sized enterprises (SMEs) from China. By adopting the resource dependence theory, we suggest that more internationalized firms are less dependent on the resources provided by stakeholders in the domestic market for survival, and therefore, are likely to donate less to domestic markets. Based on a sample of Chinese SMEs from 2008 to 2021, we find that internationalization negatively affects donations allocated to the domestic market, supporting the logic of the resource dependence theory. Moreover, our analysis reveals that host country characteristics, such as cultural distance, political risk, and economic growth, significantly strengthen this negative effect. This suggests that the host country context significantly impacts the relationship between internationalization and donations allocated to the domestic market among SMEs from emerging markets.
{"title":"Internationalization and donations allocated to domestic market: Evidence from emerging market SMEs","authors":"Chao Zhou","doi":"10.1016/j.ribaf.2025.102787","DOIUrl":"10.1016/j.ribaf.2025.102787","url":null,"abstract":"<div><div>This study investigates the effect of internationalization on the donations allocated to domestic markets in small and medium-sized enterprises (SMEs) from China. By adopting the resource dependence theory, we suggest that more internationalized firms are less dependent on the resources provided by stakeholders in the domestic market for survival, and therefore, are likely to donate less to domestic markets. Based on a sample of Chinese SMEs from 2008 to 2021, we find that internationalization negatively affects donations allocated to the domestic market, supporting the logic of the resource dependence theory. Moreover, our analysis reveals that host country characteristics, such as cultural distance, political risk, and economic growth, significantly strengthen this negative effect. This suggests that the host country context significantly impacts the relationship between internationalization and donations allocated to the domestic market among SMEs from emerging markets.</div></div>","PeriodicalId":51430,"journal":{"name":"Research in International Business and Finance","volume":"75 ","pages":"Article 102787"},"PeriodicalIF":6.3,"publicationDate":"2025-01-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143164372","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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