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Article
Publication date: 15 May 2017

Thomas Kaspereit, Kerstin Lopatta, Suren Pakhchanyan and Jörg Prokop

The aim of this paper is to study the information content of operational loss events occurring at European financial institutions with respect to the announcing bank’s industry…

2026

Abstract

Purpose

The aim of this paper is to study the information content of operational loss events occurring at European financial institutions with respect to the announcing bank’s industry rivals from an equity investor’s perspective.

Design/methodology/approach

The authors conduct an event study to identify spillover effects of operational loss events using the Carhart (1997) four-factor model as a benchmark model. In addition, they conduct multiple regression analyses to investigate the extent to which firm-specific factors or the market environment affect abnormal returns.

Findings

They observe significant negative abnormal returns following operational loss announcements exceeding € 50 million for both the announcing firms and their competitors. In addition, they find that stock market reactions occur only within a very small event window around the announcement date, indicating a high degree of market efficiency. Finally, abnormal returns tend to be insignificant for smaller loss amounts.

Originality/value

While operational risk is often believed to be strictly firm-specific, the results show that large operational risk events are not purely idiosyncratic; rather, they are systemic in the sense that they have contagious effects on non-event banks. Thus, the authors shed new light on how operational risk affects equity investors’ investment behaviour in an opaque and highly interconnected banking market.

Details

The Journal of Risk Finance, vol. 18 no. 3
Type: Research Article
ISSN: 1526-5943

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Article
Publication date: 3 June 2020

Pedram Fardnia, Thomas Kaspereit, Thomas Walker and Sizhe Xu

This paper investigates whether financial factors, which are presumed to influence an airline's maintenance, purchasing, and training policies, are associated with the air…

1365

Abstract

Purpose

This paper investigates whether financial factors, which are presumed to influence an airline's maintenance, purchasing, and training policies, are associated with the air carrier's safety performance.

Design/methodology/approach

In this paper, we employ a series of univariate and multivariate tests (OLS and Poisson regressions) to examine whether an airline's financial well-being as well as a country's legal and economic environment affect the airline's accident rate. Our study is the first to employ an international sample that covers 110 airlines in 26 countries over the period 1990–2009.

Findings

We document an inverse relationship between the profitability of air carriers and their accident propensity. Other financial variables such as liquidity, asset utilization, and financial leverage also appear to affect an airline's safety record, although these findings do not reach significance in all models. Flight equipment maintenance and overhaul expenditures are negatively related to accident rates. In addition, our results show that country-level variables related to the legal and economic environment have a significant effect on airline safety. Specifically, airlines in countries with strong law enforcement, more stringent regulatory systems, and better economic performance have superior safety performance. A series of robustness tests confirms our results.

Originality/value

The unique contributions of the study are (1) that it is the first to explore the drivers of safety performance in a cross-country context and (2) that it introduces a novel index of capacity when computing accident rates. By using data from 110 airlines in 26 countries, the study does not only provide insights into the firm-level but also the country-level determinants of an airline’s safety performance. The results of this research should be of interest both to academics and to regulators who develop, oversee, and implement policies targeted at improving aviation safety on a national and supranational level.

Details

International Journal of Managerial Finance, vol. 17 no. 1
Type: Research Article
ISSN: 1743-9132

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Article
Publication date: 18 May 2015

Thomas Kaspereit, Kerstin Lopatta and Jochen Zimmermann

This paper aims to empirically investigate the relationship between the level of compliance with the German Corporate Governance Code’s (GCGC) recommendations and the implied cost…

1595

Abstract

Purpose

This paper aims to empirically investigate the relationship between the level of compliance with the German Corporate Governance Code’s (GCGC) recommendations and the implied cost of equity capital (ICC). German listed companies are required by law to annually disclose their compliance with the recommendations of the GCGC. Whether the GCGC achieves its aim to promote the trust of stakeholders in the management and supervision is still an open question.

Design/methodology/approach

ICC is regressed on a score that captures compliance with the GCGC and several control variables. The dataset covers the period of 2003-2012 with declarations of compliance from 447 companies. ICC is chosen as an outcome variable, as it captures general investment risk as well as risk arising from asymmetric information and mistrust of investors in management.

Findings

The results of the empirical analysis demonstrate that a higher level of GCGC compliance is associated with lower ICC.

Research limitations/implications

It is expected that the results of this study will strengthen acceptance of the GCGC and empirically support the work of the government commission that is responsible for it. It has not been analyzed yet whether the firms cite good reasons why they do not adhere to certain items.

Originality/value

This empirical analysis is the first to provide statistically reliable evidence on how compliance with the GCGC affects ICC and whether the work of the government commission reflects good corporate governance as perceived by capital markets.

Details

The Journal of Risk Finance, vol. 16 no. 3
Type: Research Article
ISSN: 1526-5943

Keywords

Available. Content available
Article
Publication date: 21 November 2014

24

Abstract

Details

The Journal of Risk Finance, vol. 15 no. 5
Type: Research Article
ISSN: 1526-5943

Available. Content available
Article
Publication date: 18 May 2015

Bonnie G Buchanan

174

Abstract

Details

The Journal of Risk Finance, vol. 16 no. 3
Type: Research Article
ISSN: 1526-5943

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Article
Publication date: 8 February 2016

Natalia Semenova and Lars G. Hassel

Industries differ in their environmental impacts, such as emissions, water and energy use, fuel consumption and hazardous wastes, which will have implications for how…

2037

Abstract

Purpose

Industries differ in their environmental impacts, such as emissions, water and energy use, fuel consumption and hazardous wastes, which will have implications for how environmental performance translates to operating performance and market value at company level. By incorporating industry-specific differences of environmental impacts, this paper includes industry-level environmental risk as a moderating factor on the relationship between two indicators of corporate environmental performance (CEP) (management and policy) and corporate financial performance (profitability and market value). The paper aims to discuss these issues.

Design/methodology/approach

Using panel data of US companies across all industries, the paper empirically tests a regression model, which includes an interaction effect representing both the form and strength of dependency of CEP on the environmental risk of the industry. The paper adopts the natural resource based theory to argue that financial returns are a decreasing function of CEP in high environmental impact industries, where environmental spending beyond compliance is costly and there is not much opportunity for consumer orientation.

Findings

The results show that environmental management has different impacts on operating performance at high and low environmental risk of the industry (form of relationship) while environmental policy (reporting) has a stronger signal on market premium in industries with low rather than high environmental risk (strength of relationship). Differences in both form and strength of moderating effects are demonstrated.

Research limitations/implications

Further research can introduce other industry-specific moderating factors, such as the disclosure maturity of the industry and the institutionalization of environmental disclosures across boarders in the industries, in order to explore the complexity of the relationship.

Practical implications

The results of the paper are relevant to investors, company managers and a broad group of stakeholders when considering both industry- and company-level environmental risks.

Originality/value

Previous studies have relied on controlling for industry membership. This paper uses an industry-specific environmental variable, environmental risk of the industry, to examine the form and strength of moderating effects.

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Article
Publication date: 22 February 2022

Ephraim Kwashie Thompson, Olivier Ashimwe, Samuel Buertey and So-Yeun Kim

This paper aims to investigate the relationship between sustainability reporting and firm value, and subsequently, ascertains the moderating effect of assurance and the type of…

2101

Abstract

Purpose

This paper aims to investigate the relationship between sustainability reporting and firm value, and subsequently, ascertains the moderating effect of assurance and the type of assurer on the sustainability reporting–firm value nexus.

Design/methodology/approach

The study is based on sample firms from the Johannesburg Stock Exchange (JSE) in South Africa. The fixed‐effect panel data analysis method is used to estimate the coefficients of the variables.

Findings

A significant positive relationship is found between sustainability reporting and firm value. The results also suggest that sustainability assurance has significant explanatory power on firm value. Furthermore, the authors found that the market is unable to distinguish between sustainability assurance services provided by Big 4 audit firms and specialist consultant firms.

Practical implications

The authors expect managers will see sustainability reporting and assurance as a business strategy with incremental market value. The study should also serve as a reference for stakeholders engaged in the advocacy for the adoption of sustainability assurance practices on the JSE and other emerging markets.

Social implications

The study finds that the South African market rewards firms that purchase third-party assurance to guarantee the integrity of their corporate social responsibility reports. This understanding could help encourage more firms to embrace the concept of sustainability assurance.

Originality/value

The study offers a first-hand information on how market participants in Johannesburg, an emerging economy, view sustainability assurance and the services provided by the different assurers.

Details

Sustainability Accounting, Management and Policy Journal, vol. 13 no. 4
Type: Research Article
ISSN: 2040-8021

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Article
Publication date: 26 July 2023

Ahmed Elsayed Awad Bakry, Zubir Azhar and K. Kishan

To assist Malaysian public-listed companies (PLCs) in preparing corporate social responsibility (CSR) reports, Bursa Malaysia Berhad (BMB) launched the second edition of the…

652

Abstract

Purpose

To assist Malaysian public-listed companies (PLCs) in preparing corporate social responsibility (CSR) reports, Bursa Malaysia Berhad (BMB) launched the second edition of the Sustainability Reporting Guide (SRG) in 2018. This new SRG edition has several additional requirements for CSR reporting (CSRR), the most important of which is a chapter on assurance which provides detailed guidance on how it may be carried out. This study aims to determine whether the new SRG edition influences the extent of CSRR, and whether such effect is moderated by the provision of assurance on CSRR. It also aims to identify whether amending CSRR regulations and providing assurance on such reporting indirectly influences firm value through the possible improvement in the extent of CSRR.

Design/methodology/approach

This study performed a content analysis of the CSRR of a sample of Malaysian PLCs that maintained their positions among the top 100 companies by market capitalization between 2017 and 2020 to determine the extent of CSRR for the two years before and two years after the implementation of the new edition of SRG. This study conducted different statistical analyses to indicate whether the implementation of the second edition of SRG has an effect on enhancing the extent of CSRR, and whether the provision of assurance on such reporting moderates such an effect. This study then used instrumental variable regressions to examine the influence of the predicted extent of CSRR on firms’ value measured by Tobin’s Q.

Findings

This study found that the implementation of the second edition of SRG has a positive and significant influence on the extent of CSRR. This effect is strengthened by the provision of assurance on CSRR. Instrumental variable regressions also indicate that enhancing the extent of CSRR affected by the second edition of SRG is linked to higher firm value.

Originality/value

To the best of the authors’ knowledge, this study is one of the first to assess the determinants and implications of CSRR among Malaysian companies after adopting the second edition of SRG.

Details

Journal of Financial Reporting and Accounting, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1985-2517

Keywords

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Article
Publication date: 15 April 2024

Hamed Khadivar, Miles Murphy and Thomas Walker

This study investigates the impact of financial health and corporate governance on aviation safety, aiming to fill a critical gap in existing research. The purpose of this study…

162

Abstract

Purpose

This study investigates the impact of financial health and corporate governance on aviation safety, aiming to fill a critical gap in existing research. The purpose of this study is to identify how these factors influence the safety records of airlines and provide insights for regulators, airlines and stakeholders to enhance aviation safety.

Design/methodology/approach

Using a comprehensive international sample spanning 1950–2009 and later, this empirical analysis draws on diverse databases. The authors examine 372 airlines across 70 countries from 1990 to 2016. The research uses statistical models to analyze the relationship between financial indicators, corporate governance quality and aviation safety, addressing limitations of prior single-country studies.

Findings

The findings reveal a significant inverse relationship between financial health and accident propensity, with profitable airlines exhibiting lower accident rates. Additionally, airlines with higher corporate governance quality, characterized by qualified directors and stable leadership, experience fewer accidents. The study identifies key factors such as pilot errors, mechanical failures and adverse weather, contributing to approximately 75% of accidents, emphasizing the importance of organizational control.

Practical implications

This research has crucial implications for aviation safety policies and practices. Regulators and international organizations, such as International Civil Aviation Organization and International Air Transport Association, should allocate resources to supervise financially vulnerable airlines and those with lower governance quality. Governments might consider incentivizing safety practices through tax deductibility for relevant expenses. Shareholders are encouraged to prioritize qualified, younger and less busy directors, recognizing their impact on safety performance.

Originality/value

This study contributes to existing literature by addressing methodological biases and offering a comprehensive international perspective. The identification of a link between financial health, corporate governance and accident rates in the aviation industry provides valuable insights. The research informs policymakers, regulators and industry stakeholders on effective strategies to improve safety by considering financial and governance factors under their control.

Details

Aircraft Engineering and Aerospace Technology, vol. 96 no. 4
Type: Research Article
ISSN: 1748-8842

Keywords

Available. Content available
Article
Publication date: 16 January 2017

Anshu Saxena Arora and Nicole Hartley

879

Abstract

Details

International Journal of Emerging Markets, vol. 12 no. 1
Type: Research Article
ISSN: 1746-8809

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