Asis Kumar Sahu and Byomakesh Debata
This study examines the impact of firm-level climate risk exposure (FCRE) on firm stock liquidity by using a sample of Indian-listed firms from the financial years 2003–2004 to…
Abstract
Purpose
This study examines the impact of firm-level climate risk exposure (FCRE) on firm stock liquidity by using a sample of Indian-listed firms from the financial years 2003–2004 to 2022–2023. Further, it endeavors to investigate the moderating role of environmental, social and governance (ESG) disclosure in this relationship.
Design/methodology/approach
A novel text-based FCRE metric is introduced using a sophisticated Word2Vec model through a Python-generated algorithm for each firm and year based on the management discussions and analysis (MD&A) reports. The panel fixed effect model is used to study how FCRE affects stock liquidity.
Findings
The result shows that FCRE negatively affects firms’ stock liquidity, and the effect remains robust after addressing endogeneity concerns. In addition, we find that a high ESG disclosure rating significantly moderated the adverse effect of FCRE. Furthermore, our analysis reveals that investor sentiment, information quality, corporate life cycle and institutional holdings moderate the impact of FCRE on liquidity.
Practical implications
The study offers valuable insights for investors, managers and policymakers on integrating climate risk into investment strategies, improving corporate climate governance and shaping policies that incentivize sustainable corporate behavior.
Originality/value
To the best of our knowledge, this study is an early study to explore the relationship between firm-specific climate risk exposure and stock liquidity using advanced machine learning techniques. It contributes to the existing literature by illustrating how climate risk can lead to adverse market reactions while highlighting the critical roles of corporate ESG practices, investor sentiment and disclosure quality in influencing this relationship.
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Sakti Ranjan Dash and Maheswar Sethi
This study aims to examine the investment-cash flow sensitivity (ICFS) and the impact of environmental, social and governance (ESG) on ICFS of manufacturing firms in India…
Abstract
Purpose
This study aims to examine the investment-cash flow sensitivity (ICFS) and the impact of environmental, social and governance (ESG) on ICFS of manufacturing firms in India. Furthermore, it explores the role of group affiliation in such ESG–ICFS nexus.
Design/methodology/approach
The paper uses the generalized method of moments regression to analyze the data with a sample of 222 manufacturing firms from 2012 to 2022.
Findings
The paper reveals that Indian manufacturing firms mainly depend on internal cash flow for their investment decision, and ESG footprint reduces such sensitivity of investment-cash flow. Furthermore, group-affiliated firms have greater ICFS, and the impact of ESG on ICFS is more noticeable in group-affiliated firms than in standalone counterparts.
Originality/value
This paper provides valuable insights into current literature, with implications that extend to economies, firms, managers and investors. To the authors’ knowledge, this paper examining the impact of ESG on ICFS amidst group affiliation is first-of-its-kind.
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This paper aims to define hybrid reality (HyR) as an ongoing process in which artificial intelligence (AI) technology is gradually introduced as an active stakeholder by using…
Abstract
Purpose
This paper aims to define hybrid reality (HyR) as an ongoing process in which artificial intelligence (AI) technology is gradually introduced as an active stakeholder by using reasoning to execute real-life activities. Also, to examine the implications of social responsibility (SR) concepts as featured in the HyR underlying common framework to progress towards the redefinition of global society.
Design/methodology/approach
A combination of systemic tools is used to examine and assess the development of HyR. The research is based on evolutionary and learning concepts, leading to the new meta-system development. It also builds upon the viable system model and AI, invoking SR as a conceptual framework. The research is conducted by using a new approach: using system dynamics based interactions modelling, the following two models have been proposed. The state-of-the-art HyR interactions model, examined using SR concepts; and a SR concept-based HyR model, examined using a smart vehicle case.
Findings
In the HyR model, interaction asymmetry between stakeholders is identified, possibly leading to pathological behaviour and AI technology learning corruption. To resolve these asymmetry issues, an interaction model based on SR concepts is proposed and examined on the example of an autonomous vehicle transport service. The examination results display significant changes in the conceptual understanding of transport services, their utilisation and data-sharing concepts.
Research limitations/implications
As the research proposal is theoretical in nature, the projection may not display a fully holistic perspective and can/should be complemented with empirical research results.
Practical implications
For researchers, HyR provides a new paradigm and can thereby articulate potential research frameworks. HyR designers can recognise projected development paths and the resources required for the implication of SR concepts. Individuals and organisations should be aware of their not necessarily passive role in HyR and can therefore use the necessary social force to activate their status.
Originality/value
For the first time, to the best of the author’s knowledge, the term HyR is openly elaborated and systemically examined by invoking concepts of SR. The proposed model provides an overview of the current and potential states of HyR and examines the gap between them.