On the Short-Term Persistence of Mutual Fund Performance in Europe

AI adoption rate and corporate green innovation efficiency: Evidence from Chinese energy companies

Following recent financial, health, and geopolitical events, concerns are growing regarding the systemic risk of global energy companies. We assess the impact of environmental, social, and governance (ESG) performance on the systemic risk of leading energy firms. For 158 energy firms from 16 countries for 2010–2021, we evidence that while ESG shows positive association with default risk, squared values of ESG performance are negatively significant, consistent with an inverted U-shaped association. Moreover, better ESG disclosure and carbon performance also reduce default risk. We interpret our results as the beneficial impact of ESG on lowering default risk depends on the threshold level of ESG investment. Results, holding only for the post GFC period, for firms with more than one environmental controversy, and for countries with higher levels of education, are consistent with an evolving need for energy firms to employ genuine ESG commitment to establish reputational capital towards enhancing resiliency. 

Does ESG impact systemic risk? Evidencing an inverted U-shape relationship for major energy firms

Trade matters except to war neighbors: The international stock market reaction to 2022 Russia’s invasion of Ukraine

Small family-owned companies are the most common type of European business structure and are characterised by their orientation to long-term goals. Therefore, they can play an important role in the launching of businesses related to sustainable growth. However, access to finance is difficult for start-ups. Mutual Guarantee Institutions (MGIs) mitigate this problem by facilitating long-term guaranteed loans, but they must assume responsibility for default losses. This paper analyses, as of the end of 2018, the loan default of the portfolio of guarantees formalised by Spanish MGIs with new companies between 2003 and 2012, a period including both economic growth and recession. The objective is to identify the annual evolution and the average global cost of default, as well as the differences in said portfolios according to the purpose of the loan, company size and economic activity. The analysis was developed while considering two scenarios: one determinist, using a ratio method and another stochastic, using an analysis of variance. We found differences in the distribution of defaults for the variables company size and sector of activity. The findings provide relevant information for managers and Public Administrations to improve the distribution of guarantees between Spanish MGIs and public institutions, and their coverage of Small and Medium Enterprise (SME) loan defaults.

https://www.mdpi.com/2071-1050/11/22/6409/pdf

The Role of Mutual Guarantee Institutions in the Financial Sustainability of New Family-Owned Small Businesses

Modern Pandemic Crises and Default Risk: A Worldwide Evidence

Asymmetric cost behavior or stickiness has drawn attention in recent years. Although studies have focused on the causes of and factors contributing to cost stickiness, few have investigated its economic consequences. This paper empirically examines how firms’ asymmetric behavior influences their research and development (R&D) investment. Because cost stickiness increases innovation failure cost, we expect cost stickiness to reduce R&D expenditure. By using data from Chinese listed manufacturing firms between 2007 and 2015, we empirically test and confirm this hypothesis. On average, with one standard deviation added to the mean, R&D expenditure over total asset and that over total sales are reduced by 2.7% and 2.2%, respectively. Furthermore, the dampening effect of cost stickiness on R&D investment becomes more prominent with increasing risks faced by firms. Only SG&A cost stickiness exerts a dampening effect on R&D, whereas cost of goods sold (COGS) and total cost stickiness demonstrate no significant effects.

https://www.mdpi.com/2071-1050/11/6/1785/pdf

Asymmetric Cost Behavior and Investment in R&D: Evidence from China’s Manufacturing Listed Companies

This study empirically investigates the impact of energy related public environmental concerns on the pay gap within polluting companies. It uses the extreme environmental event of the PM2.5 surge at the end of 2011, which led to an upsurge in energy related public environmental concerns in China, as a quasi-natural experiment. According to our findings, energy related public environmental concerns lead to a significant increase in the executive–employee pay gap of polluting companies compared to that of non-polluting companies, owing to a significant increase in executive compensation and no significant change in employee income. The effect of energy related public environmental concerns on increasing the pay gap within polluting companies is more significant in samples with high agency costs, poor information transparency, less analyst follow-up, and fewer institutional investors' shareholding. Furthermore, as energy related public environmental concerns exacerbate the polluting firms' internal pay gap, their total factor productivity and investment efficiency fall significantly. In summary, energy related public environmental concerns not only widen the wage gap within polluting enterprises but also worsen their operational and investment efficiency, which has important policy implications for emerging market economies seeking to balance environmental protection and economic development. 

Energy related public environmental concerns and intra-firm pay gap in polluting enterprises: Evidence from China

This study investigates peer effects in the online peer-to-peer (P2P) lending market using data from a Chinese online lending platform, Renrendai. The empirical results indicate that both the borrowers' success rate in obtaining loans and the default rate after loans are deemed non-coercive among their peers, referred to as the peer effects of lending and peer effects of default, respectively. The peer effect of lending is more pronounced in high-risk cities, whereas the peer effect of defaulting is more pronounced for borrowers with more difficulty obtaining loans, indicating ex-ante selection and ex-post learning mechanisms, respectively. The peer effects of lending promote P2P lending market efficiency, and the peer effects of defaulting inhibit market efficiency. Collectively, our results suggest that both lenders and borrowers follow peer effects to reduce information asymmetry in P2P lending markets. 

Peer effects in the online peer-to-peer lending market: Ex-ante selection and ex-post learning

This study discusses the impact of executives with foreign experience on decisions involving corporate capital structures. Based on a sample of Chinese A-share listed companies, this study finds that firms with (more) executives with foreign experience adjust to the optimal capital structure faster. The effect exists mainly for over-levered firms that need to deleverage. The empirical results remain robust when using alternative methods to estimate target leverage, excluding the effects of mechanical adjustments, controlling the impact of corporate governance, and using the full sample to test asymmetric effects. In addition, firms managed by executives with foreign experience tend to maintain low leverage for a long time. Overall, the results show that executives with foreign experience help companies adopt more efficient and conservative capital structure adjustment decisions. The results enrich the literature on the impact of foreign experience on corporate decision-making. 

The effects of executives with foreign experience on capital structure adjustments toward targets: Evidence from China

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