Journal of Risk and Financial Management

14 pages, 1123 KiB

Open AccessArticle

Incorporating Artificial Intelligence into Finance: A Bibliometric Analysis

by Antonio Carlos Alcázar-Blanco, José Francisco Rangel-Preciado and Fiama Portillo-Santos

J. Risk Financial Manag. 2024, 17(12), 556; https://doi.org/10.3390/jrfm17120556 - 11 Dec 2024

Viewed by 216

The aim of this study is to carry out an analysis of the intellectual structure of the introduction of AI into finance, in the period from 1995 to 2023, using SciMAT v.1.1.04 software. The results indicate how research on the incorporation of AI [...] Read more.

The aim of this study is to carry out an analysis of the intellectual structure of the introduction of AI into finance, in the period from 1995 to 2023, using SciMAT v.1.1.04 software. The results indicate how research on the incorporation of AI in finance has grown significantly, which shows the evolution and importance of this area of research. Eight main topics were obtained in this area: bank, prediction, impact, decision, valuesstock, genetic algorithm, big data analysis, and social data analysis. This study shows us how the incorporation of AI can strongly support the analysis of different financial situations such as decision making or the prediction of movements. Full article

(This article belongs to the Section Financial Technology and Innovation)

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19 pages, 977 KiB

Open AccessArticle

Reinforcement Learning Pair Trading: A Dynamic Scaling Approach

by Hongshen Yang and Avinash Malik

J. Risk Financial Manag. 2024, 17(12), 555; https://doi.org/10.3390/jrfm17120555 - 11 Dec 2024

Viewed by 215

Abstract

Cryptocurrency is a cryptography-based digital asset with extremely volatile prices. Around USD 70 billion worth of cryptocurrency is traded daily on exchanges. Trading cryptocurrency is difficult due to the inherent volatility of the crypto market. This study investigates whether Reinforcement Learning (RL) can [...] Read more.

Cryptocurrency is a cryptography-based digital asset with extremely volatile prices. Around USD 70 billion worth of cryptocurrency is traded daily on exchanges. Trading cryptocurrency is difficult due to the inherent volatility of the crypto market. This study investigates whether Reinforcement Learning (RL) can enhance decision-making in cryptocurrency algorithmic trading compared to traditional methods. In order to address this question, we combined reinforcement learning with a statistical arbitrage trading technique, pair trading, which exploits the price difference between statistically correlated assets. We constructed RL environments and trained RL agents to determine when and how to trade pairs of cryptocurrencies. We developed new reward shaping and observation/action spaces for reinforcement learning. We performed experiments with the developed reinforcement learner on pairs of BTC-GBP and BTC-EUR data separated by 1 min intervals (n = 263,520). The traditional non-RL pair trading technique achieved an annualized profit of 8.33%, while the proposed RL-based pair trading technique achieved annualized profits from 9.94% to 31.53%, depending upon the RL learner. Our results show that RL can significantly outperform manual and traditional pair trading techniques when applied to volatile markets such as cryptocurrencies. Full article

(This article belongs to the Special Issue Financial Technologies (Fintech) in Finance and Economics)

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19 pages, 2836 KiB

Open AccessArticle

The Application of Machine Learning Techniques to Predict Stock Market Crises in Africa

by Muhammad Naeem, Hothefa Shaker Jassim and David Korsah

J. Risk Financial Manag. 2024, 17(12), 554; https://doi.org/10.3390/jrfm17120554 - 10 Dec 2024

Viewed by 336

Abstract

This study sought to ascertain a machine learning algorithm capable of predicting crises in the African stock market with the highest accuracy. Seven different machine-learning algorithms were employed on historical stock prices of the eight stock markets, three main sentiment indicators, and the [...] Read more.

This study sought to ascertain a machine learning algorithm capable of predicting crises in the African stock market with the highest accuracy. Seven different machine-learning algorithms were employed on historical stock prices of the eight stock markets, three main sentiment indicators, and the exchange rate of the respective countries’ currencies against the US dollar, each spanning from 1 May 2007 to 1 April 2023. It was revealed that extreme gradient boosting (XGBoost) emerged as the most effective way of predicting crises. Historical stock prices and exchange rates were found to be the most important features, exerting strong influences on stock market crises. Regarding the sentiment front, investors’ perceptions of possible volatility on the S&P 500 (Chicago Board Options Exchange (CBOE) VIX) and the Daily News Sentiment Index were identified as influential predictors. The study advances an understanding of market sentiment and emphasizes the importance of employing advanced computational techniques for risk management and market stability. Full article

(This article belongs to the Special Issue Investment Management in the Age of AI)

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23 pages, 867 KiB

Open AccessArticle

Bachelier’s Market Model for ESG Asset Pricing

by Svetlozar Rachev, Nancy Asare Nyarko, Blessing Omotade and Peter Yegon

J. Risk Financial Manag. 2024, 17(12), 553; https://doi.org/10.3390/jrfm17120553 - 10 Dec 2024

Viewed by 248

Abstract

Environmental, Social, and Governance (ESG) finance is a cornerstone of modern finance and investment, as it changes the classical return-risk view of investment by incorporating an additional dimension to investment performance: the ESG score of the investment. We define the ESG price process [...] Read more.

Environmental, Social, and Governance (ESG) finance is a cornerstone of modern finance and investment, as it changes the classical return-risk view of investment by incorporating an additional dimension to investment performance: the ESG score of the investment. We define the ESG price process and include it in an extension of Bachelier’s market model in both discrete and continuous time, enabling option pricing valuation. Full article

(This article belongs to the Section Economics and Finance)

29 pages, 1079 KiB

Open AccessArticle

Large Drawdowns and Long-Term Asset Management

by Eric Jondeau and Alexandre Pauli

J. Risk Financial Manag. 2024, 17(12), 552; https://doi.org/10.3390/jrfm17120552 - 10 Dec 2024

Viewed by 288

Abstract

Long-term investors are often hesitant to invest in assets or strategies prone to significant drawdowns, primarily due to the challenge of predicting these drawdowns. This study presents a multivariate Markov-switching model for small- and large-cap returns in the U.S. equity markets, demonstrating that [...] Read more.

Long-term investors are often hesitant to invest in assets or strategies prone to significant drawdowns, primarily due to the challenge of predicting these drawdowns. This study presents a multivariate Markov-switching model for small- and large-cap returns in the U.S. equity markets, demonstrating that three distinct regimes are necessary to capture the negative trends in expected returns during financial crises. Our findings indicate that this framework enhances the prediction of conditional drawdowns compared to standard alternative models of financial returns. Furthermore, out-of-sample analysis shows that investment strategies based on these predictions outperform those relying on models with one or two regimes. Full article

(This article belongs to the Special Issue Featured Papers in Mathematics and Finance)

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33 pages, 3351 KiB

Open AccessArticle

Risk-Averse, Integrated Contract, and Open Market Procurement with Quantity Adjustment Costs

by Santosh Mahapatra, Santosh Kar and Shlomo Levental

J. Risk Financial Manag. 2024, 17(12), 551; https://doi.org/10.3390/jrfm17120551 - 9 Dec 2024

Viewed by 292

Abstract

This paper examines the issue cost-effective procurement of a commodity product when its spot (open) market prices are stochastic, contract prices are previously determined, and there are costs associated with adjusting (i.e., switching) the procurement quantities from an alternative. Spot (open) market and [...] Read more.

This paper examines the issue cost-effective procurement of a commodity product when its spot (open) market prices are stochastic, contract prices are previously determined, and there are costs associated with adjusting (i.e., switching) the procurement quantities from an alternative. Spot (open) market and contract as sole modes of procurement could present risks of high magnitude and uncertainty of expenses for the buyer. To address these risks, a risk-averse buyer may consider simultaneous use of both alternatives with adjustment of the purchase quantities from both the alternatives over time. Scenarios when the switching costs depend on the relative prices of the two alternatives are considered. The problem being analytically intractable, a mixed method decision model combining analytical and computational techniques to analyze the problem is proposed. The model helps identify expected optimal contract and spot market procurement quantities with respect to unknown spot prices and known contract prices over the planned procurement horizon when procurement quantity adjustment costs are influenced by the spends. The analysis reveals that it is cost-effective to continue purchasing with an existing pattern of procurement from the two alternatives until the contract to spot market price ratio reaches a threshold level and then to change the proportion of quantity purchased from the two alternatives. Using numerical analysis, we illustrate the theoretical and managerial significance of this stickiness to continue with an existing pattern until an adjustment. Full article

(This article belongs to the Collection Business Performance)

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31 pages, 1616 KiB

Open AccessArticle

Conceptualizing an Institutional Framework to Mitigate Crypto-Assets’ Operational Risk

by Deepankar Roy, Ashutosh Dubey and Daitri Tiwary

J. Risk Financial Manag. 2024, 17(12), 550; https://doi.org/10.3390/jrfm17120550 - 9 Dec 2024

Viewed by 472

Abstract

Extent ecosystems of crypto financial assets (crypto-assets) lack parity and coherence across the globe. This asymmetry is further heightened with a knowledge gap in operational risk management, wherein the global landscape of crypto-assets is characterized by unprecedented external risks and internal vulnerabilities. In [...] Read more.

Extent ecosystems of crypto financial assets (crypto-assets) lack parity and coherence across the globe. This asymmetry is further heightened with a knowledge gap in operational risk management, wherein the global landscape of crypto-assets is characterized by unprecedented external risks and internal vulnerabilities. In this study, we present a critical examination and comprehensive analysis of current crypto-asset operational guidelines across geographies. We benchmark these guidelines to the Basel Committee for Banking Supervision (BCBS) risk classification framework for crypto-assets, identifying gaps in the operations across organizations. We, hence, conceptualize a novel institutional framework which may help in understanding and mitigating the gaps in operational risks’ regulation of crypto-assets. Our proposed Crypto-asset Operational Risk Management (CORM) framework determines how operational risk associated with crypto-assets of financial institutions can be mitigated to respond to the increasing demand for crypto-assets, cross border payments, electronic money, and cryptocurrencies, across countries. Applicable to firms irrespective of their size and scale of operations, CORM aligns with global regulatory initiatives, facilitating compliance and fostering trust among stakeholders. Strengthening our argument of CORM’s applicability, we present its efficacy in the form of alternate hypothetical outcomes in two distinct real-life cases wherein crypto-asset exchanges succumbed to either external risks, such as hacking, or internal vulnerabilities. It paves the way for future regulatory response with a structured approach to addressing the unique operational risks associated with crypto-assets. The framework advocates for collaborative efforts among industry stakeholders, ensuring its adaptability to the rapidly evolving crypto landscape. It further contributes to the establishment of a more resilient and regulated financial ecosystem, inclusive of crypto-assets. By implementing CORM, institutions can navigate the complexities of crypto-assets while safeguarding their interests and promoting sustainable growth in the digital asset market. Full article

(This article belongs to the Special Issue The Future of Money: Central Bank Digital Currencies, Cryptocurrencies and Stablecoins)

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20 pages, 699 KiB

Open AccessArticle

Evaluating Financial Inclusion in Peru: A Cluster Analysis Using Self-Organizing Maps

by Alvaro Talavera, Rocío Maehara, Luis Benites, Benjamin Arriaga and Alejandro Aybar-Flores

J. Risk Financial Manag. 2024, 17(12), 549; https://doi.org/10.3390/jrfm17120549 - 4 Dec 2024

Viewed by 516

Abstract

This study evaluates financial inclusion in Peru through self-organizing maps. Financial inclusion is a multidimensional issue of great importance on the global agenda and continues to concern various actors internationally. In this context, the objective is to assess the financial inclusion situation in [...] Read more.

This study evaluates financial inclusion in Peru through self-organizing maps. Financial inclusion is a multidimensional issue of great importance on the global agenda and continues to concern various actors internationally. In this context, the objective is to assess the financial inclusion situation in the country and determine how self-organizing maps can complement standard models for this purpose. The empirical aim is to demonstrate how this technique can help identify priority areas and vulnerable groups, thus facilitating decision-making and policy design to improve the access to and use of financial services among Peruvian consumers by finding clearly defined profiles that allow the identification of potential problems within each category. This makes it possible to create customized strategies for each group, such as addressing the financial inclusion barriers faced by rural residents, compounded by low income and educational levels. Full article

(This article belongs to the Special Issue Applied Statistics and Big Data Analysis in Finance: Exploring Emerging Trends and Opportunities)

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22 pages, 1429 KiB

Open AccessArticle

Determinants of Sustainable Entrepreneurship in Morocco: The Role of Entrepreneurial Orientation, Financial Literacy, and Inclusion

by Ikram Zouitini, Hamza El Hafdaoui, Hajar Chetioui, Pierre-Martin Tardif and Mohamed Makhtari

J. Risk Financial Manag. 2024, 17(12), 548; https://doi.org/10.3390/jrfm17120548 - 30 Nov 2024

Viewed by 519

Abstract

This paper investigates the relationship between sustainable entrepreneurship and financial inclusion, financial literacy, and entrepreneurial orientation. As sustainable entrepreneurship gains academic and practical interest, understanding factors that enable entrepreneurs to operate sustainably is fundamental. The manuscript uses an electronic questionnaire distributed to key [...] Read more.

This paper investigates the relationship between sustainable entrepreneurship and financial inclusion, financial literacy, and entrepreneurial orientation. As sustainable entrepreneurship gains academic and practical interest, understanding factors that enable entrepreneurs to operate sustainably is fundamental. The manuscript uses an electronic questionnaire distributed to key economic stakeholders and performs partial least squares structural equation modeling on data from 169 respondents. The results show that entrepreneurial orientation has a positive and significant impact on sustainable entrepreneurship, with a beta coefficient of 0.878 and a probability value of less than 0.01. Financial literacy significantly influences sustainable entrepreneurship, with a beta coefficient of 0.389 and a probability value of less than 0.001, and it partially mediates its relationship with financial inclusion, showing a beta coefficient of 0.3 and a probability value of 0.013. Financial literacy and financial inclusion are positively correlated, with a beta coefficient of 0.771 and a probability value of less than 0.05. However, the impact of financial inclusion on sustainable entrepreneurship is negative and insignificant, with a beta coefficient of −0.392, and there is no evidence that entrepreneurial orientation moderates the link between financial literacy and sustainable entrepreneurship. The findings provide valuable insights for Moroccan policymakers to promote entrepreneurship, suggesting that financial literacy plays a crucial role in enhancing sustainable business practices. The study emphasizes the need for Morocco to adapt to current programs and create a supportive financial environment for entrepreneurs. Due to a lack of comprehensive datasets, the study’s conclusions are limited and might not accurately reflect the entire landscape. Full article

(This article belongs to the Special Issue The New Horizons of Global Financial Literacy)

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27 pages, 458 KiB

Open AccessArticle

Inflation _targeting with an Optimal Nonlinear Monetary Rule—The Case Study of Colombia

by Martha Misas, Edgar Villa and Andres Giraldo

J. Risk Financial Manag. 2024, 17(12), 547; https://doi.org/10.3390/jrfm17120547 - 30 Nov 2024

Viewed by 400

Abstract

This article examines whether Banco de la República (Banrep), Colombia’s central bank, has operated under a dual-regime policy framework—one for recessionary periods and another for periods of economic overheating—since adopting inflation _targeting (IT) from Q4 2000 to Q4 2019. We modify the canonical [...] Read more.

This article examines whether Banco de la República (Banrep), Colombia’s central bank, has operated under a dual-regime policy framework—one for recessionary periods and another for periods of economic overheating—since adopting inflation _targeting (IT) from Q4 2000 to Q4 2019. We modify the canonical New Keynesian inflation model to accommodate an optimal nonlinear monetary rule aligned with a two-regime policy framework. Using a LSTAR model estimated over the study period, with the output gap lagged by three periods as the transition variable, we identify two distinct monetary regimes. Our findings reveal that the smooth transitions between regimes were driven by shifts in Banrep’s preferences related to its loss function, alongside adjustments in the parameters of the aggregate demand and supply curves within the Colombian economy. Notably, we observe that a modified Taylor principle is not met in either identified monetary regime. This suggests that, in this context, IT has been a successful policy framework even without requiring the policy interest rate to respond aggressively to inflation gaps, as the Taylor principle would otherwise dictate. Full article

(This article belongs to the Special Issue Open Economy Macroeconomics)

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19 pages, 1931 KiB

Open AccessArticle

Researching the Impact of Corporate Social Responsibility on Economic Growth and Inequality: Methodological Aspects

by Mihail Chipriyanov, Galina Chipriyanova, Radosveta Krasteva-Hristova, Atanas Atanasov and Kiril Luchkov

J. Risk Financial Manag. 2024, 17(12), 546; https://doi.org/10.3390/jrfm17120546 - 30 Nov 2024

Viewed by 461

Abstract

The study focuses on analyzing the impact of corporate social responsibility (CSR) on economic growth and reducing inequality, highlighting the importance of CSR in achieving sustainable development and social justice. The main aim is to analyze how different CSR initiatives contribute to economic [...] Read more.

The study focuses on analyzing the impact of corporate social responsibility (CSR) on economic growth and reducing inequality, highlighting the importance of CSR in achieving sustainable development and social justice. The main aim is to analyze how different CSR initiatives contribute to economic development, social prosperity, and the reduction in inequality by reviewing the methods used to assess their impact. The research methodology includes a detailed literature review, bibliometric analysis and scientific mapping, surveys of various business organizations, and a gap analysis regarding the identification of gaps between the current state of CSR activities and the expected outcomes. The research shows that companies perceive CSR as a key tool for improving corporate image, responding to stakeholder expectations, and investing in social justice. Despite positive intentions, challenges include the lack of clearly defined methodologies for measuring the impact on economic inequality, as well as difficulties in assessing the long-term effects of CSR initiatives. Key conclusions highlight the need for more structured approaches to assessing the social and economic effects of CSR, recommending that companies improve their transparency and accountability and implement clear indicators of success to achieve sustainable economic and social outcomes. Full article

(This article belongs to the Special Issue Research on Economic Growth and Inequality)

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21 pages, 3180 KiB

Open AccessArticle

Trends in the Literature About the Adoption of Digital Banking in Emerging Economies: A Bibliometric Analysis

by Julio César Acosta-Prado, Joan Sebastián Rojas Rincón, Andrés Mauricio Mejía Martínez and Andrés Ricardo Riveros Tarazona

J. Risk Financial Manag. 2024, 17(12), 545; https://doi.org/10.3390/jrfm17120545 - 29 Nov 2024

Viewed by 548

Abstract

This study examines the trends in the literature about adopting digital banking in emerging economies. It is based on the concepts of digital transformation and technological adoption, which significantly impact the development of the banking industry. A quantitative approach was used through a [...] Read more.

This study examines the trends in the literature about adopting digital banking in emerging economies. It is based on the concepts of digital transformation and technological adoption, which significantly impact the development of the banking industry. A quantitative approach was used through a bibliometric analysis using data from Scopus to achieve the objective. The search equation allowed 118 publications to be extracted and analyzed. The results show that digital banking in emerging countries is a growing field of research that has driven the introduction of new information technologies. The perceived usefulness of digital banking is a key factor in promoting its adoption in the market. Attributes such as security and trust were identified as affecting the level of user satisfaction. Most studies are based on technological adoption, where perceived risk, usefulness, and ease of use are key to understanding the intention to use these technologies. Some countries’ concerns about financial inclusion, cyber security, and trust in financial technology are evident. While digital banking has the potential to increase the coverage of financial services, there are concerns about cybersecurity risks and user data protection. Full article

(This article belongs to the Special Issue Financial Technology (Fintech) and Sustainable Financing, 3rd Edition)

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20 pages, 288 KiB

Open AccessArticle

The Relationship Between Sociodemographic Attributes and Financial Well-Being of Low-Income Urban Families Amid the COVID-19 Pandemic: A Case Study of Malaysia

by Abdullah Sallehhuddin Abdullah Salim, Norzarina Md Yatim and Al Mansor Abu Said

J. Risk Financial Manag. 2024, 17(12), 544; https://doi.org/10.3390/jrfm17120544 - 29 Nov 2024

Viewed by 472

Abstract

The COVID-19 pandemic and the Movement Control Order (MCO) have had a negative impact on the financial well-being of low-income families in urban areas. This study involved respondents living in the public housing project (PPR) residential areas in Kuala Lumpur—the capital of Malaysia. [...] Read more.

The COVID-19 pandemic and the Movement Control Order (MCO) have had a negative impact on the financial well-being of low-income families in urban areas. This study involved respondents living in the public housing project (PPR) residential areas in Kuala Lumpur—the capital of Malaysia. The key finding is that the financial well-being of low-income urban families was negatively impacted due to the COVID-19 pandemic and the MCO implementation. Furthermore, the impact on the financial well-being of low-income urban families is significantly different in terms of types of families, type and sector of employment, type of home ownership, household monthly income, and education level. Reforms to the financial assistance system and the community empowerment of low-income urban families are necessary to increase the community’s preparedness and resilience in the face of new shocks in the future. Full article

(This article belongs to the Special Issue Featured Papers in Finance and Society Wellbeing—in Honor of Professors Joe Gani and Chris Heyde)

28 pages, 803 KiB

Open AccessArticle

Impact of International Oil Price Shocks and Inflation on Bank Efficiency and Financial Stability: Evidence from Saudi Arabian Banking Sector

by Fathi Mohamed Bouzidi, Aida Arbi Nefzi and Mohammed Al Yousif

J. Risk Financial Manag. 2024, 17(12), 543; https://doi.org/10.3390/jrfm17120543 - 29 Nov 2024

Viewed by 535

Abstract

This study examines the short-run and long-run equilibrium relationship between the banking sector’s efficiency and stability and its endogenous and exogenous determinants, such as inflation and international oil price shocks in Saudi Arabia from 2004 to 2022. This study differentiates between the direct [...] Read more.

This study examines the short-run and long-run equilibrium relationship between the banking sector’s efficiency and stability and its endogenous and exogenous determinants, such as inflation and international oil price shocks in Saudi Arabia from 2004 to 2022. This study differentiates between the direct and indirect effects of international oil price changes on bank efficiency and stability and investigates how these changes can affect the banking sector through inflation. The first stage uses a panel Autoregressive Distributive Lag (ARDL). The empirical result confirms a long/short-run relationship between oil price shocks and the stability and efficiency of banks. In the long run, the relationship is statistically significant and positive, and it is negative in the short run. On the other hand, this study finds that oil price shocks directly affect the stability and efficiency of banks. In the second stage, this study uses a nonlinear ARD (NARD) to examine the short- and long-run asymmetric impacts of oil price shocks on the stability and efficiency of banks by decomposing the oil price index into positive and negative changes. The findings confirm an asymmetric relationship between oil prices and the stability and efficiency of banks in Saudi Arabia. In addition, a positive change in oil price can affect the stability and efficiency of banks more than a negative one. Overall, the findings highlight the need for policymakers in Saudi Arabia to be vigilant in addressing potential risks arising from oil price fluctuations and to adopt appropriate policy measures to maintain stability and efficiency in the banking sector. Full article

(This article belongs to the Section Economics and Finance)

24 pages, 4901 KiB

Open AccessArticle

Compliance Behavior in Environmental Tax Policy

by Suci Lestari Hakam, Agus Rahayu, Lili Adi Wibowo, Lazuardi Imani Hakam, Muhamad Adhi Nugroho and Siti Sarah Fuadi

J. Risk Financial Manag. 2024, 17(12), 542; https://doi.org/10.3390/jrfm17120542 - 29 Nov 2024

Viewed by 568

Abstract

This study examines compliance behavior in the context of environmental tax policies, highlighting the essential role that these policies play in achieving the objectives of the Sustainable Development Goals (SDGs). Environmental taxes are crucial instruments for reducing environmental damage and increasing energy efficiency. [...] Read more.

This study examines compliance behavior in the context of environmental tax policies, highlighting the essential role that these policies play in achieving the objectives of the Sustainable Development Goals (SDGs). Environmental taxes are crucial instruments for reducing environmental damage and increasing energy efficiency. Nevertheless, taxpayer compliance, which is impacted by several variables, including social acceptability, regulatory quality, and perceptions of fairness, is a key component of these policies’ efficacy. In contrast to earlier research, which frequently concentrated on certain kinds of tax or discrete policy mechanisms, this study takes a broad approach, looking at a range of environmental taxation instruments. Emerging trends, significant factors influencing compliance behavior, and noteworthy contributions from eminent authors and organizations are all identified via bibliometric and scientometric analyses. To create fair and effective environmental tax policies, interdisciplinary approaches and international collaboration are required. Along with presenting policies to improve environmental regulation compliance, this study offers insightful advice for businesses that can help them innovate toward sustainability and adjust to shifting policy. It also provides a solid theoretical base for future researchers by highlighting important areas that require more investigation, especially when it comes to the wider effects of environmental taxes on various industries. Full article

(This article belongs to the Special Issue Sustainable Tax and Accounting Reporting in Building a New Tax Culture)

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21 pages, 2096 KiB

Open AccessArticle

The Determinants and Growth Effects of Foreign Direct Investment: A Comparative Study

by Sheng-Ping Yang

J. Risk Financial Manag. 2024, 17(12), 541; https://doi.org/10.3390/jrfm17120541 - 29 Nov 2024

Viewed by 573

Abstract

This study examines the factors determining inward foreign direct investment (FDI) and its effects on productivity, ultimately contributing to economic growth. Using a two-step generalized method of moments (GMM) approach, we analyzed a panel of 84 countries, comprising 34 OECD and 50 non-OECD [...] Read more.

This study examines the factors determining inward foreign direct investment (FDI) and its effects on productivity, ultimately contributing to economic growth. Using a two-step generalized method of moments (GMM) approach, we analyzed a panel of 84 countries, comprising 34 OECD and 50 non-OECD countries, from 2010 to 2019. The findings suggest that FDI positively impacts productivity and benefits both OECD and non-OECD countries. Economic freedom plays a significant role in attracting FDI, particularly in OECD countries, and contributes to economic growth in non-OECD countries. However, economic freedom alone does not guarantee strong economic growth in OECD countries but significantly enhances growth in non-OECD countries. The results also highlight that only economies with robust economic infrastructure and development levels benefit more from FDI. It appears that FDI by itself has no direct effect on output growth. Instead, the impact of FDI is contingent on the level of economic freedom in the host countries. This paper presents a key finding on how policy decisions influence the effects of foreign capital investment on productivity and income. It indicates that countries promoting economic freedom can more effectively leverage productivity gains from FDI. Full article

(This article belongs to the Special Issue Globalization and Economic Integration)

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15 pages, 270 KiB

Open AccessArticle

The Impact of CEO Characteristics on Investment Efficiency in Jordan: The Moderating Role of Political Connections

by Loona Shaheen, Zakarya Alatyat, Qasem Aldabbas, Ruba Nimer Abu Shihab and Murad Abuaddous

J. Risk Financial Manag. 2024, 17(12), 540; https://doi.org/10.3390/jrfm17120540 - 29 Nov 2024

Viewed by 401

Abstract

This study investigates the impact of CEO characteristics—specifically CEO age, founder status, and family membership—on investment efficiency in Jordanian non-financial companies, with a focus on the moderating role of political connections. Drawing on the existing literature, we identify conflicting views regarding how these [...] Read more.

This study investigates the impact of CEO characteristics—specifically CEO age, founder status, and family membership—on investment efficiency in Jordanian non-financial companies, with a focus on the moderating role of political connections. Drawing on the existing literature, we identify conflicting views regarding how these characteristics influence investment decisions. Some studies suggest that younger CEOs may adopt more aggressive investment strategies, while older CEOs tend to be conservative, leading to balanced resource allocation. Similarly, CEOs with founder status and family membership are thought to have an emotional attachment to the company, theoretically resulting in cautious investment behavior. However, empirical evidence remains mixed. By using data from 62 non-financial firms listed on the Amman Stock Exchange (ASE) from 2019 to 2023, this study employs regression analysis to explore these relationships. The findings reveal that CEO age contributes to investment efficiency by mitigating both over- and under-investment. Contrary to expectations, CEO founder status shows no significant effect on investment efficiency. Additionally, family-member CEOs exhibit a tendency toward under-investment, driven by a desire to preserve family wealth. Political connections further complicate these dynamics, encouraging riskier investment strategies while diluting the positive effects of CEO characteristics. These results provide new insights into the intricate interplay between CEO traits and political networks, contributing to the discourse on corporate governance in emerging markets. The study concludes with practical implications for policymakers and company boards, emphasizing the need for balanced leadership selection strategies to optimize investment efficiency. Full article

(This article belongs to the Special Issue Featured Papers in Corporate Finance and Governance)

13 pages, 269 KiB

Open AccessArticle

Leveraging Corporate Assets and Talent to Attract Investors in Japan: A Country with an Innovation System Centered on Large Companies

by Ryo Okuyama

J. Risk Financial Manag. 2024, 17(12), 539; https://doi.org/10.3390/jrfm17120539 - 28 Nov 2024

Viewed by 454

Abstract

Drug discovery and development require significant costs and time, making investment acquisition crucial. However, there are few biopharmaceutical startups with high valuations in Japan. Unlike other countries, entrepreneurship in Japan is relatively inactive, and startups have a minimal presence in the drug-discovery field. [...] Read more.

Drug discovery and development require significant costs and time, making investment acquisition crucial. However, there are few biopharmaceutical startups with high valuations in Japan. Unlike other countries, entrepreneurship in Japan is relatively inactive, and startups have a minimal presence in the drug-discovery field. Instead, in Japan’s innovation system, research and development (R&D) has been led by large incumbent companies, which are believed to have a wealth of promising assets and talent. This study tested the hypothesis that biopharmaceutical startups leveraging these assets and talent might be more attractive to investors by regression analysis using a dataset of Japanese unlisted biopharmaceutical startups. The results demonstrated that Japanese biopharmaceutical startups showed significantly higher valuations and total funding amounts if they were corporate spin-offs (CSOs). Additionally, they achieved significantly higher valuations and total funding amounts if their R&D lead persons had corporate backgrounds. These findings suggest that in Japan’s innovation system, which is centered on large companies, CSOs and startups leveraging R&D talent with corporate experience may be more appealing to investors. Full article

(This article belongs to the Section Business and Entrepreneurship)

29 pages, 1411 KiB

Open AccessArticle

Optimizing Energy Storage Profits: A New Metric for Evaluating Price Forecasting Models

by Simone Sbaraglia, Alessandro Fiori Maccioni and Stefano Zedda

J. Risk Financial Manag. 2024, 17(12), 538; https://doi.org/10.3390/jrfm17120538 - 26 Nov 2024

Viewed by 444

Abstract

Storage profit maximization is based on buying energy at the lowest prices and selling it at the highest prices. The best strategy must thus be based on both accurately predicting the price peak hours and on rightly choosing when to buy and when [...] Read more.

Storage profit maximization is based on buying energy at the lowest prices and selling it at the highest prices. The best strategy must thus be based on both accurately predicting the price peak hours and on rightly choosing when to buy and when to sell the stored energy. In this aim, price prediction is crucial, but choosing the prediction model by means of the usual metrics, as the lowest mean squared error, is not an effective solution as the mean squared error computation equally weights the prediction error of all prices, while the focus must be on the higher and lower prices. In this paper, we propose a new metric focused on the correct forecasting of high and low prices so as to allow for a more effective choice among price forecasting models. Results show that the new metric outperforms the standard metrics, allowing for a more accurate estimation of the possible profit for storage (or other trading) activities. Full article

(This article belongs to the Special Issue Forecasting, Predictive Analytics and Econometrics in Business Research)

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21 pages, 2778 KiB

Open AccessArticle

Fin-ALICE: Artificial Linguistic Intelligence Causal Econometrics

by Shawn McCarthy and Gita Alaghband

J. Risk Financial Manag. 2024, 17(12), 537; https://doi.org/10.3390/jrfm17120537 - 26 Nov 2024

Viewed by 479

Abstract

This study introduces Fin-ALICE (Artificial Linguistic Intelligence Causal Econometrics), a framework designed to forecast financial time series by integrating multiple analytical approaches including co-occurrence networks, supply chain analysis, and emotional sentiment analysis to provide a comprehensive understanding of market dynamics. In our co-occurrence [...] Read more.

This study introduces Fin-ALICE (Artificial Linguistic Intelligence Causal Econometrics), a framework designed to forecast financial time series by integrating multiple analytical approaches including co-occurrence networks, supply chain analysis, and emotional sentiment analysis to provide a comprehensive understanding of market dynamics. In our co-occurrence analysis, we focus on companies that share the same emotion on the same day, using a much shorter horizon than our previous study of one month. This approach allows us to uncover short-term, emotion-driven correlations that traditional models might overlook. By analyzing these co-occurrence networks, Fin-ALICE identifies hidden connections between companies, sectors, and events. Supply chain analysis within Fin-ALICE will evaluate significant events in commodity-producing countries that impact their ability to supply key resources. This analysis captures the ripple effects of disruptions across industries and regions, offering a more nuanced prediction of market movements. Emotional sentiment analysis, powered by the Fin-Emotion library developed in our prior research, quantifies the emotional undertones in financial news through metrics like “emotion magnitude” and “emotion interaction”. These insights, when integrated with Temporal Convolutional Networks (TCNs), significantly enhance the accuracy of financial forecasts by capturing the emotional drivers of market sentiment. Key contributions of Fin-ALICE include its ability to perform month-by-month company correlation analysis, capturing short-term market fluctuations and seasonal patterns. We compare the performance of TCNs against advanced models such as LLMs and LSTMs, demonstrating that the Fin-ALICE model outperforms these models, particularly in sectors where emotional sentiment and supply chain dynamics are critical. Fin-ALICE provides decision-makers with predictive insights and a deeper understanding of the underlying emotional and supply chain factors that drive market behaviors. Full article

(This article belongs to the Section Financial Technology and Innovation)

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29 pages, 366 KiB

Open AccessArticle

Pension Risk and the Sustainable Cost of Capital

by Paul John Marcel Klumpes

J. Risk Financial Manag. 2024, 17(12), 536; https://doi.org/10.3390/jrfm17120536 - 25 Nov 2024

Viewed by 422

Abstract

Prior research empirically finds that the systematic equity risk for US firms as measured by beta reflects the risk of their defined benefit pension plans, despite opaque and complicated pension accounting rules. This paper re-examines this question in the context of subsequent clarification [...] Read more.

Prior research empirically finds that the systematic equity risk for US firms as measured by beta reflects the risk of their defined benefit pension plans, despite opaque and complicated pension accounting rules. This paper re-examines this question in the context of subsequent clarification of these rules, and the growing importance of non-defined benefit pension funds. This issue is examined by comparing standard equity-based models with a broader pre-existing shareholder model of the reporting entity to re-examine the relationship between firm equity risk and pension plan risk. The empirical tests are conducted on a sample of S&P 500 firms during the first three years of the introduction of the revised pension accounting rules (2006–2008), based on panel data regression relating firm risk to pension risk and controlling for other variables. In contrast to the prior findings of JMB, the estimated cost of capital is additionally sensitive to the following: (a) alternative explicit versus implicit definitions of pension liability; (b) the nature and scope of long-term deferred compensation arrangements; and (c) the scope and nature of investment-related risks through investment in sponsoring company stock that are associated with these pension arrangements. Full article

(This article belongs to the Special Issue Featured Papers in Corporate Finance and Governance)

19 pages, 355 KiB

Open AccessArticle

Evaluating the Impact of Geopolitical Risk on the Financial Distress of Indian Hospitality Firms

by Vandana Gupta

J. Risk Financial Manag. 2024, 17(12), 535; https://doi.org/10.3390/jrfm17120535 - 25 Nov 2024

Viewed by 469

Abstract

The study investigates the effect of geopolitical risk (GPR) on the financial distress of tourism & hospitality firms in India. Using two-step GMM, this study evaluates the impact of GPR, GPR Threat, GPR Action and GPR India on financial distress using [...] Read more.

The study investigates the effect of geopolitical risk (GPR) on the financial distress of tourism & hospitality firms in India. Using two-step GMM, this study evaluates the impact of GPR, GPR Threat, GPR Action and GPR India on financial distress using Altman score for emerging markets as proxy for financial distress. Further, robustness is checked using Żmijewski score and financial distress ratio as proxies for financial distress. The study is extended by examining the impact of GPR specifically on firm life cycle (age) and firm size and on private and public firms. Our empirical investigation demonstrates that all measures of geopolitical risk increase the chances of financial distress of hospitality firms and our findings are robust to alternative measures of financial distress. By considering GPR as an alternate measure of uncertainty in the hospitality industry, this study contributes to the emerging literature on the factors influencing financial distress of hospitality firms. The study also identifies three accounting measures for proxies of financial distress. Policymakers, regulators and management can pre-empt the impact of uncertain external factors by formulating suitable plans and measures as also for post recovery measures to safeguard firms against bankruptcy. Firms can plan their financing decisions and cash management proactively to reduce financial risk. Full article

(This article belongs to the Special Issue Tourism Management and Financial Development)

19 pages, 371 KiB

Open AccessArticle

Do Long-Term Institutional Shareholders Always Vote in Favour of Board Recommendations? The Moderating Effect of Cash Holdings

by Abdulaziz A. Alomran

J. Risk Financial Manag. 2024, 17(12), 534; https://doi.org/10.3390/jrfm17120534 - 25 Nov 2024

Viewed by 429

Abstract

This article aims to examine the voting behaviour of long-term institutional shareholders towards board recommendations on management proposals and resolutions and how the potential agency costs could moderate such voting behaviour. This study is conducted using all corporate capital proposals put to vote [...] Read more.

This article aims to examine the voting behaviour of long-term institutional shareholders towards board recommendations on management proposals and resolutions and how the potential agency costs could moderate such voting behaviour. This study is conducted using all corporate capital proposals put to vote by management during the annual general meetings (AGM) of publicly listed firms on the London Stock Exchange over a period of 17 years from 2000 to 2016. Building on agency theory and the concept of the monitoring function of institutional shareholders, this study finds that long-term institutional shareholders do support board recommendations on management proposals, but potential agency concerns linked to excess cash holding can negatively moderate this relationship. Additional analysis reveals that this moderating effect is observed only for management proposals related to cash inflows, specifically after the 2007–2009 financial crisis. This study highlights the importance of long-term institutional shareholders actively monitoring firms’ cash holdings and using voting to address agency concerns while advising corporate managers to optimise cash management and stay attuned to shareholder preferences. For policymakers, the research suggests promoting transparency in corporate governance and strengthening shareholder engagement to reduce agency problems and improve governance. Several robustness tests are conducted, and the results support our predictions. Full article

(This article belongs to the Special Issue Organizational Risk Management)

16 pages, 947 KiB

Open AccessArticle

The Impact of Rebalancing Strategies on ETF Portfolio Performance

by Attila Bányai, Tibor Tatay, Gergő Thalmeiner and László Pataki

J. Risk Financial Manag. 2024, 17(12), 533; https://doi.org/10.3390/jrfm17120533 - 24 Nov 2024

Viewed by 1293

Abstract

This research explores the efficacy of rebalancing strategies in a diversified portfolio constructed exclusively with exchange-traded funds (ETFs). We selected five ETF types: short-term U.S. Treasury bonds, U.S. equities, global commodities, U.S. real estate investment trusts (REITs), and a multi-strategy hedge fund. Using [...] Read more.

This research explores the efficacy of rebalancing strategies in a diversified portfolio constructed exclusively with exchange-traded funds (ETFs). We selected five ETF types: short-term U.S. Treasury bonds, U.S. equities, global commodities, U.S. real estate investment trusts (REITs), and a multi-strategy hedge fund. Using a 10-year historical period, we applied a unique simulation model to generate random portfolios with varying asset weights and rebalancing tolerance bands, assessing the impact of rebalancing premiums on portfolio performance. Our study reveals a significant positive correlation (r = 0.6492, p < 0.001) between rebalancing-weighted returns and the Sharpe ratio, indicating that effective rebalancing enhances risk-adjusted returns. Support vector regression (SVR) analysis shows that rebalancing premiums have diverse effects. Specifically, equities and commodities benefit from rebalancing with improved risk-adjusted returns, while bonds and REITs demonstrate a negative relationship, suggesting that rebalancing might be less effective or even detrimental for these assets. Our findings also indicate that negative portfolio rebalancing returns combined with positive rebalancing-weighted returns yield the highest average Sharpe ratio of 0.4328, highlighting a distinct and reciprocal relationship between rebalancing effects at the asset and portfolio levels. This research highlights that while rebalancing can enhance portfolio performance, its effectiveness varies by asset class and market conditions. Full article

(This article belongs to the Special Issue Financial Funds, Risk and Investment Strategies)

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50 pages, 1705 KiB

Open AccessArticle

Flourishing MSMEs: The Role of Innovation, Creative Compliance, and Tax Incentives

by Prianto Budi Saptono, Ismail Khozen, Gustofan Mahmud, Sabina Hodžić, Intan Pratiwi, Dwi Purwanto and Lambang Wiji Imantoro

J. Risk Financial Manag. 2024, 17(12), 532; https://doi.org/10.3390/jrfm17120532 - 22 Nov 2024

Viewed by 551

Abstract

This study explores the interplay between tax incentives, creative compliance, and innovation in enhancing business resilience and sustainability among micro, small, and medium enterprises (MSMEs) in Indonesia, addressing gaps in the existing literature regarding their interrelationships during crises. A cross-sectional survey of 360 [...] Read more.

This study explores the interplay between tax incentives, creative compliance, and innovation in enhancing business resilience and sustainability among micro, small, and medium enterprises (MSMEs) in Indonesia, addressing gaps in the existing literature regarding their interrelationships during crises. A cross-sectional survey of 360 MSMEs was conducted, utilizing the Partial Least Squares Structural Equation Modeling (PLS-SEM) approach to analyze complex relationships among variables. The findings reveal that creative compliance, including tax planning and avoidance, does not directly impact resilience or sustainability. While tax incentives did not significantly enhance resilience during crises, they contributed to long-term sustainability. Innovation emerged as a critical factor linking creative compliance to business success and fully mediating the effects of tax incentives on resilience. This study emphasizes the necessity for MSMEs to prioritize innovation in their strategies, particularly in conjunction with effective tax practices, and highlights the need for government support through simplified regulatory frameworks to foster an innovative business environment. Limitations include the challenges of incorporating control variables in SEM and the need for further research into the long-term effects of these factors on sustainable performance. Full article

(This article belongs to the Special Issue Sustainable Tax and Accounting Reporting in Building a New Tax Culture)

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29 pages, 2519 KiB

Open AccessArticle

Fitting the Seven-Parameter Generalized Tempered Stable Distribution to Financial Data

by Aubain Nzokem and Daniel Maposa

J. Risk Financial Manag. 2024, 17(12), 531; https://doi.org/10.3390/jrfm17120531 - 22 Nov 2024

Viewed by 365

Abstract

This paper proposes and implements a methodology to fit a seven-parameter Generalized Tempered Stable (GTS) distribution to financial data. The nonexistence of the mathematical expression of the GTS probability density function makes maximum-likelihood estimation (MLE) inadequate for providing parameter estimations. Based on the [...] Read more.

This paper proposes and implements a methodology to fit a seven-parameter Generalized Tempered Stable (GTS) distribution to financial data. The nonexistence of the mathematical expression of the GTS probability density function makes maximum-likelihood estimation (MLE) inadequate for providing parameter estimations. Based on the function characteristic and the fractional Fourier transform (FRFT), we provide a comprehensive approach to circumvent the problem and yield a good parameter estimation of the GTS probability. The methodology was applied to fit two heavy-tailed data (Bitcoin and Ethereum returns) and two peaked data (S&P 500 and SPY ETF returns). For each historical data, the estimation results show that six-parameter estimations are statistically significant except for the local parameter,

μ

. The goodness of fit was assessed through Kolmogorov–Smirnov, Anderson–Darling, and Pearson’s chi-squared statistics. While the two-parameter geometric Brownian motion (GBM) hypothesis is always rejected, the GTS distribution fits significantly with a very high p-value and outperforms the Kobol, Carr–Geman–Madan–Yor, and bilateral Gamma distributions. Full article

(This article belongs to the Special Issue Featured Papers in Mathematics and Finance)

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18 pages, 320 KiB

Open AccessArticle

Evaluation of the Resilience of Real Estate and Property Stocks to Inflation and Interest Rate Uncertainty: Implementation of Two Asset Pricing Models

by Nurdina Nurdina, Nurkholis Nurkholis, Noval Adib and Sari Atmini

J. Risk Financial Manag. 2024, 17(12), 530; https://doi.org/10.3390/jrfm17120530 - 22 Nov 2024

Viewed by 487

Abstract

Property stocks are an attractive alternative investment for investors who want passive income. Investors’ decisions focus not only on maximizing returns but also on reducing risk. This study examines the extent to which macroeconomic factors affect stock performance by comparing the effectiveness of [...] Read more.

Property stocks are an attractive alternative investment for investors who want passive income. Investors’ decisions focus not only on maximizing returns but also on reducing risk. This study examines the extent to which macroeconomic factors affect stock performance by comparing the effectiveness of the Fama–French five-factor model (5FF) and Fama–French seven-factor model (7FF) in estimating returns. This study also verifies Fisher’s theory in the context of property and real estate stocks. The research data used are property and real estate stocks in the Indonesian capital market. The data are processed using the OLS estimation method, and Akaike’s Information Criterion (AIC) is used to choose the optimal model. The results show that property and real estate stocks in Indonesia with negative profitability at all quantiles can hedge inflation and interest rates. However, the interest rates are not the only factor affecting the market risk. The 7FF model is better at explaining the variability of stock portfolio returns. This research makes an essential contribution to the financial literature in Indonesia, particularly in the context of portfolio management in the property and real estate sector. Full article

(This article belongs to the Special Issue Advances in Macroeconomics and Financial Markets)

15 pages, 384 KiB

Open AccessArticle

From Traditional-Ritual Activities to Financial Report: Integrating Local Wisdom in Bantengan Financial Bookkeeping

by Ana Sopanah, Adya Hermawati, Syamsul Bahri and Imanita Septian Rusdianti

J. Risk Financial Manag. 2024, 17(12), 529; https://doi.org/10.3390/jrfm17120529 - 22 Nov 2024

Viewed by 380

Abstract

This study examined the integration of cultural accounting in the conservation of a traditional performing art called Bantengan in Malang Raya, Indonesia, that is rich in local wisdom and spiritual values. The study focused on exploring the values of local wisdom contained in [...] Read more.

This study examined the integration of cultural accounting in the conservation of a traditional performing art called Bantengan in Malang Raya, Indonesia, that is rich in local wisdom and spiritual values. The study focused on exploring the values of local wisdom contained in Bantengan and analyzing accounting records in its financing, especially post-COVID-19 pandemic. Using a qualitative approach with an ethnomethodological paradigm, data were collected through observation, in-depth interviews, and documentation from the Sukopuro Bantengan Association. This study revealed the importance of accountability in the management and conservation of traditional arts to ensure transparency, sustainability, and relevance of cultural values in an ever-evolving social context. Accounting, often associated with technical aspects, in this context also reflects humanistic and cultural values. The findings of this study are expected to provide a new perspective in the field of cultural accounting, especially related to the conservation and development of traditional arts in Indonesia, as well as provide a useful framework for the management of cultural assets in other regions that have similar contexts. Full article

(This article belongs to the Section Economics and Finance)

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23 pages, 1225 KiB

Open AccessArticle

Accounting Outsourcing in Tourism SMEs and Financial Risk Mitigation

by Ioulia Poulaki, Anna Kyriakaki and Eleni Mavragani

J. Risk Financial Manag. 2024, 17(12), 528; https://doi.org/10.3390/jrfm17120528 - 21 Nov 2024

Viewed by 740

Abstract

This paper aims to investigate the characteristics of outsourcing in accounting services for tourism SMEs as a choice to mitigate their financial risk. The research was carried out in summer 2022, during tourism recovery from the COVID-19 pandemic crisis, while the findings indicate [...] Read more.

This paper aims to investigate the characteristics of outsourcing in accounting services for tourism SMEs as a choice to mitigate their financial risk. The research was carried out in summer 2022, during tourism recovery from the COVID-19 pandemic crisis, while the findings indicate that the majority of tourism SMEs choose to outsource their accounting services in order to reduce operating costs; to save their funds by exploiting a partner’s information systems; to take advantage of a partner’s accounting knowledge; to achieve greater flexibility in their core activities; and to speed up the processing of the accounting tasks in order to deal with any arising problems and/or difficulties. Furthermore, it is evident that in a constantly changing and complex tax system and a changing economic landscape, accounting outsourcing provides tourism SMEs with advantages such as already established processes, expertise, technology, consulting support, and pathways for dealing with the various accounting issues that may arise. Full article

(This article belongs to the Special Issue Financial Accounting)

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28 pages, 1770 KiB

Open AccessArticle

Unlocking the Path to Sustainability: A Hierarchical Model for Understanding Corporate Barriers to ESG Reporting Adoption

by Paridhi, Ritika, Hitesh Arora, Padmasai Arora and Neha Saini

J. Risk Financial Manag. 2024, 17(12), 527; https://doi.org/10.3390/jrfm17120527 - 21 Nov 2024

Viewed by 946

Abstract

Environmental, social, and governance (ESG) reporting is a vital force behind the advancement of sustainable corporate practices and goes beyond simple compliance. In order to better understand the elements influencing this process, this study looks at the obstacles that prevent corporations from adopting [...] Read more.

Environmental, social, and governance (ESG) reporting is a vital force behind the advancement of sustainable corporate practices and goes beyond simple compliance. In order to better understand the elements influencing this process, this study looks at the obstacles that prevent corporations from adopting ESG reporting. Using total interpretive structural modeling (TISM), an empirical model was created to show the hierarchical relationships between the main obstacles found by a literature research and expert survey. We identified barriers at the strategic level, such as resource shortages, unclear stakeholder demand, and structural limits; at the functional level, such as governance issues and cultural resistance; and at the efficiency level, which directly impacted adoption. Matrice d’Impacts Croisés Multiplication Appliquée à un Classement (MICMAC) analysis clarified the driving and dependence relationships among these barriers. The findings contribute to refining theoretical perspectives on ESG adoption and offer practical insights for corporate managers, policymakers, and organizations striving for effective sustainability practices. Recommendations aim to enhance sustainability policy formulation, operational practices, and governance frameworks, ultimately supporting organizations in their efforts to adopt ESG reporting sustainably and resiliently. Full article

(This article belongs to the Special Issue Corporate Sustainability and Firm Performance: Models, Practices and Policy Perspective)

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J. Risk Financial Manag., Volume 17, Issue 12 (December 2024) – 30 articles

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