Erwin Hansen and Jennifer Zegarra
The purpose of this paper is to explore the relationship between six different dimensions of political risk in a country and its spread for a sample of 12 Latin American countries.
Abstract
Purpose
The purpose of this paper is to explore the relationship between six different dimensions of political risk in a country and its spread for a sample of 12 Latin American countries.
Design/methodology/approach
The methodology applied consists of panel estimators with fixed effects. In addition, a panel data model with instrumental variables is considered to tackle with potential problems of endogeneity in the model.
Findings
The results show there is a strong positive relationship between political risk and sovereign spread in Latin America, i.e., greater political risk is associated with greater sovereign spread. This effect is particularly significant when the political risk is associated with a weak rule of law or low-quality regulation in the country.
Research limitations/implications
The main limitation of this study concerns the potential risks of endogeneity which might exist between sovereign risk and political risk measures, which may not have been completely eliminated with the econometric methodology used.
Originality/value
This paper contributes to the literature of sovereign risk by studying the dimension of political risk in detail. Specifically, six dimensions of political risk are studied. Additionally, it provides empirical evidence, including the 2008 financial crisis period, regarding the determinants of spreads on Latin American economies.
Propósito
En este trabajo se estudia la relación existente entre 6 diferentes dimensiones de riesgo político de un país y su spread soberano para una muestra de 12 países latinoamericanos.
Diseño/metodología/enfoque
La metodología utilizada corresponde a estimadores de panel con efectos fijos. Además, se considera un modelo de panel con variable instrumental para lidiar con posibles problemas de endogeneidad en el modelo.
Recomendaciones
Los resultados muestran que existe una fuerte relación positiva entre riesgo político y spread soberanos en América Latina, es decir, mayor riesgo político está asociado a mayor spread soberano. Este efecto es particularmente significativo cuando el riesgo político está asociado a un Estado de Derecho débil o a una baja calidad regulatoria en el país.
limitaciones de la investigación
La principal limitación de este estudio son los potenciales riesgos de endogeneidad que pudieran existir entre las medidas de riesgo político y riesgo soberano, y que no hayan sido eliminadas completamente con la metodología econométrica utilizada.
La originalidad/valor
este trabajo contribuye a la literatura de riesgo soberano estudiando la dimensión de riesgo político en detalle. En particular, se consideran 6 posibles dimensiones del riesgo político. Además, provee evidencia empírica reciente, incluyendo el período de crisis financiera del 2008, respecto a los determinantes de spread en economías latinoamericanas.
Details
Keywords
Zabihollah Rezaee, Saeid Homayoun, Nick J. Rezaee and Ehsan Poursoleyman
This paper aims to examine the association between sustainable development goals (SDGs) at the micro level and firms’ inclination to sustainability reporting and assurance (SRA).
Abstract
Purpose
This paper aims to examine the association between sustainable development goals (SDGs) at the micro level and firms’ inclination to sustainability reporting and assurance (SRA).
Design/methodology/approach
The authors use global data from 44 countries in the 2016–2021 period and perform the probit and logistic models in testing the hypotheses.
Findings
The results show that socially responsible firms adopting SDGs are more likely to issue sustainability reports and obtain assurance statements. The authors find that the link between firms’ compliance with SDGs and SRA is stronger for firms domiciled in stakeholder-oriented countries.
Originality/value
SRA issues are gaining the attention of regulators, investors, businesses and academics worldwide. Results pertaining to the relationship between SDGs and SRA are robust to alternative measures and several sensitivity tests and, thus, provide policy, practice and research implications.