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The purpose of this paper is to identify firms in the UK adopting a policy of high cash and low leverage and investigate how executive ownership contributes to this decision.

Firms following this policy are identified both by using a fixed classification approach and the analysis of the distribution of cash and leverage. Logit analysis is then used to estimate the probability of adopting the policy as a function of executive ownership.

Extreme financial policies are suboptimal as firms adopting these policies tend to undershoot (overshoot) their target leverage (cash holdings) ratios. The impact of the executive ownership on the probability of adopting this policy is U-shaped, in line with the alignment–entrenchment hypothesis.

Despite the substantial presence of non-executive directors in the boards and a significant amount of shareholdings by executive directors, the firms under analysis have adopted suboptimal financial policies possibly because poorly governed or because executive ownership is the range where entrenchment is feasible.

This is the first attempt at recognising policies of high cash and low leverage as being explicitly interdependent. It is also the first study focussing on the UK, a country of interest, because ownership structure is relatively dispersed. Moreover, instead of choosing fixed threshold levels of the variable in defining the extreme financial policy, this paper proposes the analysis of the distribution of cash holdings and leverage and accounts for target levels of cash and leverage.

The purpose of this study is to investigate the relationship between financial decisions and ownership structure by using the control contests on a sample of Italian listed companies.

The analysis adopts a balanced panel data set of 984 firm-year observations for the period of 2002-2013, with estimation using a generalized method of moments.

The results appear to confirm both the hypotheses of the alignment of interests and the entrenchment effect. The entrenchment and alignment effects are not found to be alternatives but rather are found to co-exist. The presence of a coalition of minority shareholders acts as a tool to control agency costs, particularly when the coalition is instrumental in the contestability of corporate control.

These findings suggest that minority shareholders may have a larger impact than previously identified by strategically aligning with other shareholders to form coalitions. This study provides several practical implications. First, dividend payout is not necessarily a good instrument to control and monitor agency costs. This is because the payout can be used to expropriate benefits from the minority shareholders. Second, high ownership concentration does not always reduce agency costs. Third, a non-collusive coalition can be more useful in the monitoring of agency costs than other tools, such as the debt level.

This study shows that there is considerable value to the firm when individual blockholders come together in a contestable environment and become instrumental in making business decisions. The results support the contention that contestability is an excellent deterrent to dampen the expropriation of benefits to minority shareholders. This study also provides evidence that cash holding can be a good substitute for dividends and debt in the effort to limit agency costs.

Contemporary literature reveals that, to date, the poultry livestock sector has not received sufficient research attention. This particular industry suffers from unstructured supply chain practices, lack of awareness of the implications of the sustainability concept and failure to recycle poultry wastes. The current research thus attempts to develop an integrated supply chain model in the context of poultry industry in Bangladesh. The study considers both sustainability and supply chain issues in order to incorporate them in the poultry supply chain. By placing the forward and reverse supply chains in a single framework, existing problems can be resolved to gain economic, social and environmental benefits, which will be more sustainable than the present practices.

The theoretical underpinning of this research is ‘sustainability’ and the ‘supply chain processes’ in order to examine possible improvements in the poultry production process along with waste management. The research adopts the positivist paradigm and ‘design science’ methods with the support of system dynamics (SD) and the case study methods. Initially, a mental model is developed followed by the causal loop diagram based on in-depth interviews, focus group discussions and observation techniques. The causal model helps to understand the linkages between the associated variables for each issue. Finally, the causal loop diagram is transformed into a stock and flow (quantitative) model, which is a prerequisite for SD-based simulation modelling. A decision support system (DSS) is then developed to analyse the complex decision-making process along the supply chains.

The findings reveal that integration of the supply chain can bring economic, social and environmental sustainability along with a structured production process. It is also observed that the poultry industry can apply the model outcomes in the real-life practices with minor adjustments. This present research has both theoretical and practical implications. The proposed model’s unique characteristics in mitigating the existing problems are supported by the sustainability and supply chain theories. As for practical implications, the poultry industry in Bangladesh can follow the proposed supply chain structure (as par the research model) and test various policies via simulation prior to its application. Positive outcomes of the simulation study may provide enough confidence to implement the desired changes within the industry and their supply chain networks.

Climate and environment-related financial risks could significantly and negatively impact the financial sector in future, particularly its financing to those sectors adversely impacted by the climate-related risks, low-carbon policies and the transition from traditional energy sources-based economy to a more sustainable system with alternative energy sources. The participatory countries of the Paris Agreement agreed to align finance flows with a low-emission, low-carbon and climate-resilient growth, in order to facilitate achieving the long-term climate goals. The financial sector, therefore, needs to play a proactive role in aligning financial flows. It is, therefore, of utmost importance to study low-carbon finance and climate-related financial risks. This chapter examine how climate change can affect the financial sector. It discusses the concept, nature, measurement of climate risks and climate-related financial risks and associated prospects and challenges in the assessment and the measurement of these risks. It also presents the green financing initiatives and role of central banks and supervisory authorities and their monetary and financial policies in enhancing green financing and redirecting finance to low-carbon activities. In the financial sector, the insurance industry is highly vulnerable to such risks. The banking sector is yet to witness the serious impact of these risks. With the slowing of global economic growth, appropriate policies are needed to encourage banks to provide increased green finance with an adequate profitability. Studies recommend that climate-related risk has a strong potential impact on banks’ loan default rate as well as on the financial stability, there is hence a need to incorporate climate-related criteria and the systemic risk arising out of climate change into banks’ decision-making process and risk modelling and management. There is a need for developing an appropriate methodology for assessing and reducing these risks. Moreover, observers also anticipate a need for cooperation between banking regulators and banks to develop and adopt best practices in the management of environmental risks. The environment-related risks will call forth a multi-country, or regional, research office to collect and compile the required data and undertake analysis to enhance the banking sectors’ understanding of, and capacity to address, potential systemic environmental risks. What is needed is to test the feasibility of incorporating forward-looking scenarios for assessing potential impacts of providing credit to environmentally unsustainable or sustainable activities on financial stability.

Hyperinflation is a rare form of macroeconomic crisis that often results from extreme political events, such as revolution or regime change. The 1989–1990 Argentine hyperinflation is puzzling because it occurred in the absence of such an event. Moreover, conventional fiscal mechanisms linking political processes to hyperinflation do not sufficiently explain the Argentine case. Previous theories emphasizing distributional conflict and institutional weakness contain key elements of an explanation of the Argentine hyperinflation but do not capture the range of mechanisms that produced extreme financial instability. This chapter offers an elite theory approach that subsumes elements of these approaches within a broader theory of elite fragmentation, competition, and conflict. Elite fragmentation inhibits collective action in both economic and state elites, resulting in deficits in policymaking capacity. Fragmentation among state policy elites leads to policy volatility and incoherence, while fragmentation among politically mobilized economic elites results in elite stalemates constraining the options of policy elites. These policymaking patterns lead to prolonged delays in the adjustment of unsustainable organizational structures, resulting in explosive forms of crises.

This analysis attempts a comparative specification of certain aspects of the country studies contained in this volume. The point of departure is the banking crises of the early 1990s (deep in Finland, Norway and Sweden, mini-crisis in Denmark and absent in Iceland) and the contrast to Iceland's financial meltdown in 2007/2008 (no crisis in the three, a new mini-crisis in Denmark). Detailed process tracing of the Icelandic crisis is provided. The case account is then used to shed light on the different roles of neoliberalism, economics expert knowledge and populist right-wing party formation in the five Nordic political economies.

Considering the frequency of extreme events, enhancing the global financial system's stability has become crucial. This study aims to investigate the contagion effects of extreme risk events in the international commodity market on China's financial industry. It highlights the significance of comprehending the origins, severity and potential impacts of extreme risks within China's financial market.

This study uses the tail-event driven network risk (TENET) model to construct a tail risk spillover network between China's financial market and the international commodity market. Combining with the characteristics of the network, this study employs an autoregressive distributed lag (ARDL) model to examine the factors influencing systemic risks in China's financial market and to explore the early identification of indicators for systemic risks in China's financial market.

The research reveals a strong tail risk contagion effect between China's financial market and the international commodity market, with a more pronounced impact from the latter to the former. Industrial raw materials, food, metals, oils, livestock and textiles notably influence China's currency market. The systemic risk in China's financial market is driven by systemic risks in the international commodity market and network centrality and can be accurately predicted with the ARDL-error correction model (ECM) model. Based on these, Chinese regulatory authorities can establish a monitoring and early warning mechanism to promptly identify contagion signs, issue timely warnings and adjust regulatory measures.

This study provides new insights into predicting systemic risk in China's financial market by revealing the tail risk spillover network structure between China's financial and international commodity markets.

Might the impact of the financial stress on exchange markets be asymmetric and exposed to regime changes? Departing from the existing literature, highlighting that the domestic and foreign financial stress in terms of money market have substantial effects on exchange market, this paper aims to investigate the impacts of the bond yield spreads of three emerging countries (Mexico, Russia, and South Korea) on their exchange market pressure indices using monthly observations for the period 2010:01–2019:12. Additionally, the paper analyses the impact of bond yield spread of the US on the exchange market pressure indices of the three mentioned emerging countries. The authors hypothesized whether the negative and positive changes in the bond yield spreads have varying effects on exchange market pressure indices.

To address the research question, we measure the bond yield spread of the selected countries by using the interest rate spread between 10-year and 3-month treasury bills. At the same time, the exchange market pressure index is proxied by the index introduced by Desai et al. (2017). We base the empirical analysis on nonlinear vector autoregression (VAR) models and an asymmetric quantile-based approach.

The results of the impulse response functions indicate that increases/decreases in the bond yield spreads of Mexico, Russia and South Korea raise/lower their exchange market pressure, and the effects of shocks in the bond yield spreads of the US also lead to depreciation/appreciation pressures in the local currencies of the emerging countries. The quantile connectedness analysis, which allows for the role of regimes, reveals that the weights of the domestic and foreign bond yield spread in explaining variations of exchange market pressure indices are higher when exchange market pressure indices are not in a normal regime, indicating the role of extreme development conditions in the exchange market. The quantile regression model underlines that an increase in the domestic bond yield spread leads to a rise in its exchange market pressure index during all exchange market pressure periods in Mexico, and the relevant effects are valid during periods of high exchange market pressure in Russia. Our results also show that Russia differs from Mexico and South Korea in terms of the factors influencing the demand for domestic currency, and we have demonstrated the role of domestic macroeconomic and financial conditions in surpassing the effects of US financial stress. More specifically, the impacts of the domestic and foreign financial stress vary across regimes and are asymmetric.

This study enriches the literature on factors affecting the exchange market pressure of emerging countries. The results have significant economic implications for policymakers, indicating that the exchange market pressure index may trigger a financial crisis and economic recession.

This study examines the effect of dividend policy on the ex ante probability of stock price crash and the ex ante probability stock price jump.

We use the data of publicly listed non-financial firms from France and the ex ante measures of crash and jump probabilities (based on the Flexible Quadrants Copulas) to test our hypothesis during the period between 1997 and 2019.

Our results show that dividend payments are negatively associated with the ex ante probability of crash and positively associated with the ex ante probability of jump. Our results are robust across various sub-samples and across different proxies of dividend policy. Our findings also hold when we use ex-post measures of crash and jump probabilities.

Unlike prior literature, we use ex ante measures of crash and jump probabilities. The main advantage of this forward looking measure is that it allows for more flexibility by modeling the dependence between market returns and stock returns as functions of their actual state. Our measure is also consistent with the behavior of investors and market participants in a way that the market participants do not know the future outcome with certainty, but rather they are anticipating the future.

New Zealand is widely recognised as extreme in its New Public Financial Management reforms. Scrutiny of the reformed financial management system reveals its consistency with a controversial political agenda: trade liberalisation of even core social services such as social welfare, health and education. Further, the detailed requirements are systematically biased towards withdrawing from government services (by running them down) and/or privatising them (by artificially inflating reported costs, thus projecting an appearance of inefficiency). The legislation underpinning the New Zealand model was shepherded through parliament by a Minister of Finance who publicly opposed exposing social services to market forces. Drawing on archival records, this article provides a historical account of how this legislation came into being. The legislation handed key levers of power to extend the reforms to the Treasury. Particular attention is paid to the friction within the government of the time over extending the reforms to social policy, and the role of the Treasury. Possibly, some ministers who drove the reforms through did not appreciate their nature. Alternatively, the handover of the levers of power could be perceived as an attempt to avoid blame.