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Article
Publication date: 19 December 2024

Hasan Tekin and Ali Yavuz Polat

This study assesses the impact of environmental, social and governance (ESG) certification on capital structure decisions considering the COVID-19 pandemic.

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Abstract

Purpose

This study assesses the impact of environmental, social and governance (ESG) certification on capital structure decisions considering the COVID-19 pandemic.

Design/methodology/approach

The study utilizes the annual Asset-4 and Datastream data of Thomson Reuters Eikon for non-financial firms in member states of the Organization of Islamic Cooperation (OIC). Firm-fixed effects are used to avoid unobserved heterogeneity.

Findings

Firms with higher corporate sustainability have a higher leverage ratio. The positive impact of ESG scores on book leverage became more significant during the COVID-19 pandemic. These findings imply that ESG activities might serve as a signalling tool, especially considering the pandemic: ESG activities mitigate financial constraints when they are most pronounced and impactful.

Practical implications

Firms should invest in ESG activities to alleviate financial constraints. Researchers and practitioners are encouraged to explore how ESG and macro-specific factors jointly affect debt financing. Policymakers should incentivize ESG investment to reduce agency conflicts. Regulators in OIC countries should support firms that are encountering obstacles in obtaining ESG certification.

Originality/value

To date, the role of ESG investing in capital structure policy by considering the recent pandemic has not been assessed in OIC countries.

Details

Journal of Asian Business and Economic Studies, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2515-964X

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Article
Publication date: 29 November 2022

Ali Yavuz Polat

This study proposes a framework based on salience theory and shows that focusing on one type of risk (idiosyncratic or systemic) can explain overpricing of securities ex ante, and…

203

Abstract

Purpose

This study proposes a framework based on salience theory and shows that focusing on one type of risk (idiosyncratic or systemic) can explain overpricing of securities ex ante, and resales at low prices during crisis periods.

Design/methodology/approach

The author consider an overlapping generations (OLG) model where each generation lives for two periods and there is no population growth. Agents (investors) start their lives with an endowment W > 0 and have mean-variance utility. They invest their endowment when young and consume when old. Each period, the young investors optimally choose their portfolio from different risky assets acquired from the old generation, all assumed to be in fixed supply.

Findings

The author show that investor salience bias can explain excess volatility of asset prices and the resulting fire-sales in periods of financial turmoil. A change in salience – from one component (idiosyncratic) to the other (systemic) – will generate excess volatility. Interestingly, higher risk aversion generally exacerbates the excess volatility of prices. Moreover, the model predicts that if a big systemic shock hits the financial system, due to salience bias the price of systemic assets falls sharply. This relates to the observed fire-sales of assets during the global financial crisis.

Practical implications

The proposed model and results suggest that there may be a scope for intervention in financial markets during turbulences. In terms of ex ante policies the study suggests that investors and regulator should use better risk assessment technologies.

Originality/value

This is the first study constructing a tractable model based on the argument that investor salience may exacerbate the excess volatility of prices during financial downturns. The author relate salience to two types of risk; idiosyncratic and systemic and assume that investors' risk perception is biased towards the type of risk that is currently salient based on prior beliefs or past data. The author show that the diversification fallacy of the precrisis period, where seemingly safe assets were overpriced, can be explained by agents overweighing idiosyncratic risk and ignoring systemic risk.

Details

Journal of Economic Studies, vol. 50 no. 7
Type: Research Article
ISSN: 0144-3585

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Article
Publication date: 1 June 2021

Hasan Tekin and Ali Yavuz Polat

The authors investigate the impact of governance on the leverage of East Asian firms in the financial crisis context, in order to understand the puzzle whether debt acts as a…

468

Abstract

Purpose

The authors investigate the impact of governance on the leverage of East Asian firms in the financial crisis context, in order to understand the puzzle whether debt acts as a substitute for governance or an outcome of the governance mechanism.

Design/methodology/approach

The authors use 86,030 firm-years and the country-level governance data from eight East Asian countries over the period 1996–2017. The authors employ the fixed effects (FE) model, in the main analysis and the weighted least squares model, as a robustness check in order to compare the two competing hypotheses of agency theory, substitute and outcome models.

Findings

The authors’ results show that debt acts as a substitute for governance before the GFC, but during and after the GFC the picture changes. Namely, debt acts as an outcome of the governance mechanism during the GFC and its aftermath. Since during financial downturns both agency costs increase, and information asymmetry widens, firms in poor-governed countries may be reluctant to increase their leverage in order not to face financial distress and additional restrictions. Thus, the results imply that the use of debt as a tool to mitigate agency conflicts and a substitute for governance strongly depends on the environment that the firms operate and the general macroeconomic conditions, such as facing a financial crisis or not.

Research limitations/implications

This study provides an interesting case of the firms' capacity to raise money during a crisis and that governance plays an important role in borrowing activities of firms. This will undoubtedly help motivating owners and policymakers for improving governance. The authors’ findings may be useful for policymakers to develop policies considering the adverse effects caused by exogenous shocks. This is crucial because the severity of GFC as a shock seems to change the macro and institutional environment that firms operate. While the authors properly address the research hypotheses using country governance data, future research may employ corporate governance data to attain firm-level results by testing two competing hypotheses.

Originality/value

There are several important areas where this study makes original contributions. First, while Tsoy and Heshmati (2019) focus on the dynamics of capital structure for only Korean firms, the authors extend the sample including eight East Asian countries considering the impact of country governance on capital structure policy. Specifically, this study is the first in using the robust country governance data, which differs by country and year, in the crisis context. Next, the authors investigate both the AFC and GFC to compare whether these two crises have different effects on capital structure policy of East Asian firms. Finally, the authors aim to understand whether leverage is used as a substitute for governance or an outcome of governance mechanism considering recessions.

Details

International Journal of Emerging Markets, vol. 18 no. 4
Type: Research Article
ISSN: 1746-8809

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Article
Publication date: 21 June 2021

Erhan Mugaloglu, Ali Yavuz Polat, Hasan Tekin and Edanur Kılıç

This study aims to measure economic uncertainty in Turkey by a novel economic uncertainty index (EUI) employing principal component analysis (PCA). We assess the impact of…

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Abstract

Purpose

This study aims to measure economic uncertainty in Turkey by a novel economic uncertainty index (EUI) employing principal component analysis (PCA). We assess the impact of Covid-19 pandemic in Turkey with our constructed uncertainty index.

Design/methodology/approach

In order to obtain the EUI, this study employs a dimension reduction method of PCA using 14 macroeconomic indicators that spans from January 2011 to July 2020. The first principal component is picked as a proxy for the economic uncertainty in Turkey which explains 52% of total variation in entire sample. In the second part of our analysis, with our constructed EUI we conduct a structural vector autoregressions (SVAR) analysis simulating the Covid-19-induced uncertainty shock to the real economy.

Findings

Our EUI sensitively detects important economic/political events in Turkey as well as Covid-19-induced uncertainty rising to extremely high levels during the outbreak. Our SVAR results imply a significant decline in economic activity and in the sub-indices as well. Namely, industrial production drops immediately by 8.2% and cumulative loss over 8 months will be 15% on average. The losses in the capital and intermediate goods are estimated to be 18 and 25% respectively. Forecast error variance decomposition results imply that uncertainty shocks preserve its explanatory power in the long run, and intermediate goods production is more vulnerable to uncertainty shocks than overall industrial production and capital goods production.

Practical implications

The results indicate that monetary and fiscal policy should aim to decrease uncertainty during Covid-19. Moreover, since investment expenditures are affected severely during the outbreak, policymakers should impose investment subsidies.

Originality/value

This is the first study constructing a novel EUI which sensitively captures the critical economic/political events in Turkey. Moreover, we assess the impact of Covid-19-driven uncertainty on Turkish Economy with a SVAR model.

Details

Journal of Economic Studies, vol. 49 no. 5
Type: Research Article
ISSN: 0144-3585

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Article
Publication date: 22 September 2021

Ali Yavuz Polat, Ahmet Faruk Aysan, Hasan Tekin and Ahmet Semih Tunali

This study aims to investigate the effect of fear sentiment with a novel data set on Bitcoin’s (BTC) return, volatility and transaction volume. The authors divide the sample into…

248

Abstract

Purpose

This study aims to investigate the effect of fear sentiment with a novel data set on Bitcoin’s (BTC) return, volatility and transaction volume. The authors divide the sample into two subperiods to capture the changing dynamics during the COVID-19 pandemic.

Design/methodology/approach

The authors retrieve the novel fear sentiment data from Thomson Reuters MarketPsych Indices (TRMI). The authors denote the subperiods as pre- and post-COVID-19 considering January 13, 2020, when the first COVID-19 confirmed case was reported outside China. The authors use bivariate vector autoregressive models given below with lag-length k, to investigate the dynamics between BTC variables and fear sentiment.

Findings

BTC market measures have dissimilar dynamics before and after the Coronavirus outbreak. The results reveal that due to the excessive uncertainty led by the outbreak, an increase in fear sentiment negatively affects the BTC returns more persistently and significantly. For the post-COVID-19 period, an increase in fear also results in more fluctuations in transaction volume while its initial and cumulative effects are both negative. Due to extreme uncertainty caused by the COVID-19 pandemic, investors may trade more aggressively in the initial phases of the shock.

Practical implications

The authors are convinced that the results in this paper have more far-reaching implications for other markets regulated by the states. BTC provides a natural benchmark to understand how fear sentiment drives and impacts the markets isolated from any interventions. Hence, the results show that in the absence of regulatory frameworks, market dynamics are likely to be more volatile and the fear sentiment has more persistent impacts. The authors also highlight the importance of using micro, asset-specific sentiment measures to capture market dynamics better.

Originality/value

BTC is not associated with any regulatory authority and is not produced by the governments and central banks. COVID-19 as a natural experiment provides an opportunity to explore the pure effects of market sentiment on BTC considering its decentralized and unregulated features. The paper has two main contributions. First, the authors use BTC-specific fear sentiment novel data set of TRMI instead of more general market sentiments used in the existing studies. Next, this is the first study to examine the association between fear and BTC before and after COVID-19.

Details

Studies in Economics and Finance, vol. 39 no. 1
Type: Research Article
ISSN: 1086-7376

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Article
Publication date: 13 September 2022

Mustafa Turkyilmazoglu

The classical integer derivative diffusionmodels for fluid flow within a channel of parallel walls, for heat transfer within a rectangular fin and for impulsive acceleration of a…

170

Abstract

Purpose

The classical integer derivative diffusionmodels for fluid flow within a channel of parallel walls, for heat transfer within a rectangular fin and for impulsive acceleration of a quiescent Newtonian fluid within a circular pipe are initially generalized by introducing fractional derivatives. The purpose of this paper is to represent solutions as steady and transient parts. Afterward, making use of separation of variables, a fractional Sturm–Liouville eigenvalue task is posed whose eigenvalues and eigenfunctions enable us to write down the transient solution in the Fourier series involving also Mittag–Leffler function. An alternative solution based on the Laplace transform method is also provided.

Design/methodology/approach

In this work, an analytical formulation is presented concerning the transient and passage to steady state in fluid flow and heat transfer within the diffusion fractional models.

Findings

From the closed-form solutions, it is clear to visualize the start-up process of physical diffusion phenomena in fractional order models. In particular, impacts of fractional derivative in different time regimes are clarified, namely, the early time zone of acceleration, the transition zone and the late time regime of deceleration.

Originality/value

With the newly developing field of fractional calculus, the classical heat and mass transfer analysis has been modified to account for the fractional order derivative concept.

Details

International Journal of Numerical Methods for Heat & Fluid Flow, vol. 33 no. 2
Type: Research Article
ISSN: 0961-5539

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Article
Publication date: 28 June 2024

Gharib Hashem

Based on a quantitative investigation, this paper endeavors to examine Industry 4.0 (I4.0) adoption process by studying the impacts of absorptive capacity (AC) and innovative…

312

Abstract

Purpose

Based on a quantitative investigation, this paper endeavors to examine Industry 4.0 (I4.0) adoption process by studying the impacts of absorptive capacity (AC) and innovative ambidexterity (exploration, exploitation), while also considering the moderating influence of learning capability (LC).

Design/methodology/approach

Data has been gathered through administering questionnaire to 468 managers representing 175 manufacturing firms. Subsequently, PLS-SEM technique has been employed to verify the research hypotheses.

Findings

Study findings reveal that AC is significantly associated with I4.0 adoption and innovation ambidexterity. However, innovation ambidexterity demonstrates partial (only exploration) significant association with the adoption of I4.0. Similarly, the findings indicate that LC acts as a partial moderator between innovation ambidexterity (exploration) and I4.0 adoption.

Research limitations/implications

The study presents significant insights into I4.0 adoption process. The findings may support managers of manufacturing firms to understand and assess the influence of integrating contextual factors facilitating successful adoption of I4.0. The study emphasizes necessity of managers’ awareness regarding the importance of firm’s AC to transform smoothly to I4.0 technologies. In addition to, encouraging the innovation ambidexterity along with LC to enhance the adoption of I4.0.

Originality/value

While researchers demonstrate increasing interest in applying I4.0, concrete evidence to support the I4.0 adoption process is, still, insufficient due to ongoing challenges in digital transformation. Consequently, further research is needed, particularly in exploring how a firm’s ability to realize knowledge and foster innovation contributes to implementing I4.0. This paper seeks to tackle this lack of research by examining the connection between AC, innovation ambidexterity, and LC and the adoption of I4.0 in an emerging economy.

Details

Business Process Management Journal, vol. 30 no. 6
Type: Research Article
ISSN: 1463-7154

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Article
Publication date: 22 May 2020

Preeti Dwivedi, Vijit Chaturvedi and Jugal Kishore Vashist

This research focuses on suggesting an optimized model for selecting best employees using advanced multi-criteria decision making method to a supply chain firm, who is planning to…

555

Abstract

Purpose

This research focuses on suggesting an optimized model for selecting best employees using advanced multi-criteria decision making method to a supply chain firm, who is planning to start a new cold chain business vertical.

Design/methodology/approach

Study has been conducted in a supply chain firm in North India, who wants to expand its business with the help of efficient team members. In total 38 applicants were considered for the study, as selected by the firm after initial screening from pool of talent. AHP-LP and TOPSIS-LP integrated approach were applied separately for evaluation and implementation of personnel selection model. Further, both the approaches were compared to find the best fit and optimized model.

Findings

As per the findings, both AHP and TOPSIS can be used to select the best candidate among the alternatives available. TOPSIS was found easier to implement as it involves ranking of applicants with respect to each skills required for respective job profile only once, whereas AHP involves pair-wise comparison among candidates with respect to each skills required for respective job profile and normalization of each comparison, resulting in the formation of number of comparison matrices. However, AHP is more reliable as it considers consistency check for each level of pair-wise comparison. Hence, there is a chance to avoid or revise the human judgment error. Integrated ranking and optimization approach minimizes the cost by suggesting the relevant positions to be filed to make an efficient team.

Research limitations/implications

Group of interviewers are involved in the decision-making process, hence there are chances of biasness in ranking method which can influence the group decision. Research is limited to a particular geography of North India therefore needs to be tested for other regions also in order to generalize. The research will help the third party logistics (3PL) and other related firms in efficient team selection.

Originality/value

The researcher focuses on formalizing a method for potential candidate selection by considering the constraints of the organization. It has been observed that limited researches have been done on the application of AHP-LP or TOPSIS-LP integrated approach for selection process. Hence, this research proposes two integrated ranking-optimization method and suggests the best fit by comparing both the approaches.

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Article
Publication date: 24 September 2019

Madjid Tavana and Vahid Hajipour

Expert systems are computer-based systems that mimic the logical processes of human experts or organizations to give advice in a specific domain of knowledge. Fuzzy expert systems…

908

Abstract

Purpose

Expert systems are computer-based systems that mimic the logical processes of human experts or organizations to give advice in a specific domain of knowledge. Fuzzy expert systems use fuzzy logic to handle uncertainties generated by imprecise, incomplete and/or vague information. The purpose of this paper is to present a comprehensive review of the methods and applications in fuzzy expert systems.

Design/methodology/approach

The authors have carefully reviewed 281 journal publications and 149 conference proceedings published over the past 37 years since 1982. The authors grouped the journal publications and conference proceedings separately accordingly to the methods, application domains, tools and inference systems.

Findings

The authors have synthesized the findings and proposed useful suggestions for future research directions. The authors show that the most common use of fuzzy expert systems is in the medical field.

Originality/value

Fuzzy logic can be used to manage uncertainty in expert systems and solve problems that cannot be solved effectively with conventional methods. In this study, the authors present a comprehensive review of the methods and applications in fuzzy expert systems which could be useful for practicing managers developing expert systems under uncertainty.

Details

Benchmarking: An International Journal, vol. 27 no. 1
Type: Research Article
ISSN: 1463-5771

Keywords

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