International Journal of Financial Studies

22 pages, 5282 KB

Open AccessArticle

Uncertainty and Innovation Markets: Horizon-Dependent Connectedness Under Market and Geopolitical Risk

by Huthaifa Alqaralleh

Int. J. Financial Stud. 2026, 14(5), 131; https://doi.org/10.3390/ijfs14050131 - 12 May 2026

This paper examines how market-based and geopolitical uncertainty relate to volatility dynamics in innovation-focused equity portfolios across investment horizons. Using daily data from mid-2015 to early-2025 for the VIX, a geopolitical risk index (GPR), and four innovation benchmarks (MSCI Digital Economy, S&P Kensho [...] Read more.

This paper examines how market-based and geopolitical uncertainty relate to volatility dynamics in innovation-focused equity portfolios across investment horizons. Using daily data from mid-2015 to early-2025 for the VIX, a geopolitical risk index (GPR), and four innovation benchmarks (MSCI Digital Economy, S&P Kensho Moonshots, QQQ, and ARKK), we implement a GARCH–wavelet–VAR connectedness framework, complemented by wavelet coherence evidence. The results show that uncertainty–market dependence is regime dependent and becomes more pronounced at medium and long horizons. Market-based uncertainty (VIX) remains the central contributor to system-wide variance sharing across horizons, while geopolitical risk is comparatively muted in the short run but becomes more relevant over longer horizons. Innovation portfolios are highly exposed to these uncertainty dynamics, with the strongest vulnerability concentrated in the innovation-heavy indices, particularly at longer horizons. Dynamic connectedness further indicates substantial time variation, with persistent connectedness strengthening during major stress episodes. Overall, the findings support frequency-aware risk management and macro-financial monitoring of innovation allocations. Full article

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28 pages, 10243 KB

Open AccessArticle

Development of a Predictive Tool for Real Estate Analysis Using Machine Learning Techniques

by Ricardo Francisco Reier Forradellas and Gregorio Acedo Benítez

Int. J. Financial Stud. 2026, 14(5), 130; https://doi.org/10.3390/ijfs14050130 - 11 May 2026

Abstract

The real estate market is a complex and dynamic sector that plays a key role in economic stability and wealth generation. In many regions, real estate assets represent around 80% of household wealth, while rising housing prices have turned access to housing into [...] Read more.

The real estate market is a complex and dynamic sector that plays a key role in economic stability and wealth generation. In many regions, real estate assets represent around 80% of household wealth, while rising housing prices have turned access to housing into a major social and economic challenge. In this context, the availability of accurate and accessible information is essential for decision-making by buyers, investors, and public administrations. This study proposes the development of an advanced technological tool based on Artificial Intelligence and Machine Learning techniques to predict and analyze real estate market dynamics within a specific geographic area. Using the city of Madrid as a case study, the research presents a digital application capable of estimating the market value of a property by analyzing comparable recently sold properties and incorporating key housing characteristics. By entering an address and a set of property features, the system generates a precise and data-driven valuation. The results demonstrate that AI-based approaches can significantly improve the accuracy and accessibility of real estate valuation processes. The proposed methodology enables real-time price estimation, graphical comparisons, and dynamic market analysis. Furthermore, the framework is scalable and can be extended to other geographic areas where relevant data are available, providing valuable insights for both academic research and practical decision-making in the real estate sector. Full article

(This article belongs to the Special Issue Machine Learning Applications in Computational Finance)

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14 pages, 413 KB

Open AccessArticle

Corporate Financial Distress and Equity Market Contagion: Evidence from Energy Sector Collapses in the U.S. Stock Market

by Salem Hadi Al Mustanyir

Int. J. Financial Stud. 2026, 14(5), 129; https://doi.org/10.3390/ijfs14050129 - 11 May 2026

Abstract

This study provides the first empirical analysis of how energy-sector corporate filing events transmit to financial markets, bridging a critical gap between corporate financial distress literature and commodity market dynamics. The analysis employs an event study methodology with Wilcoxon signed-rank tests and panel [...] Read more.

This study provides the first empirical analysis of how energy-sector corporate filing events transmit to financial markets, bridging a critical gap between corporate financial distress literature and commodity market dynamics. The analysis employs an event study methodology with Wilcoxon signed-rank tests and panel regression models to examine 51 U.S. energy firms that experienced financial distress (2015–2021) across the NYSE and NASDAQ. Post-announcement cumulative abnormal returns (CARs) show positive median values (WSR: 40.5 for NYSE in 10-day window, p < 0.10; 97.8 for NASDAQ in 10-day window, p < 0.05; 36.24 for NASDAQ in 5-day window, p < 0.10). Panel regression results show significant differences in post-announcement CARs relative to the event day for both indices (NYSE: 10-day window coefficient = 117.1, p < 0.05; NASDAQ: 10-day = 199.6, p < 0.01; 5-day = 150.8, p < 0.05), as well as in pre-announcement windows for NYSE (5-day coefficient = 93.5, p < 0.10; 10-day = 86.6, p < 0.10). The findings suggest that markets respond to energy-sector corporate distress events without broad-based disruption, likely due to early signals of financial distress, clarified expectations regarding recovery paths under Chapter 11 restructuring, and reduced information asymmetry through disclosures. Policymakers can leverage these insights to refine corporate filing frameworks for commodity-dependent sectors. Full article

(This article belongs to the Special Issue Advances in Financial Risk Management)

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19 pages, 1472 KB

Open AccessArticle

Volatility Spillovers and Interdependencies: The Nexus of Biofuel, Food, and Crude Oil Prices During the COVID-19 Pandemic-A VECM-CCC-GARCH

by Caner Özdurak

Int. J. Financial Stud. 2026, 14(5), 128; https://doi.org/10.3390/ijfs14050128 - 9 May 2026

Abstract

This paper investigates the dynamic linkages and volatility transmission among global food prices, biofuel commodity prices, and crude oil prices, with a focus on the profound disruptions caused by the COVID-19 pandemic. While interdependencies between energy and agricultural markets are well-studied, the specific [...] Read more.

This paper investigates the dynamic linkages and volatility transmission among global food prices, biofuel commodity prices, and crude oil prices, with a focus on the profound disruptions caused by the COVID-19 pandemic. While interdependencies between energy and agricultural markets are well-studied, the specific role of biofuels as a transmission channel and the exacerbating effects of the crisis remain underexplored, especially through a robust multivariate volatility framework. Utilizing A VECM-CCC-GARCH models, this study captures both mean and conditional variance dynamics, allowing for the examination of asymmetric news impacts and volatility spillovers. The analysis employs a comprehensive dataset including the FAO Food Price Index, key biofuel, ethanol, biodiesel, and crude oil prices (Brent and WTI), alongside proxies for the pandemic’s severity. The research hypothesizes that the COVID-19 pandemic significantly amplified the volatility and strengthened the price transmission channels. We expect to find increased co-movement and volatility spillovers, reflecting reduced demand for transport fuels, agricultural supply chain disruptions, and shifting biofuel production incentives. The TARCH component will discern if negative news (e.g., sharp drops in oil demand) had a disproportionately larger impact on volatility than positive news. By providing a nuanced understanding of these complex interdependencies, this study offers valuable insights for policymakers addressing food security, energy transition strategies, and macroeconomic stability in the post-pandemic world, particularly concerning the strategic role of biofuels. Full article

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34 pages, 594 KB

Open AccessArticle

Integrated Reporting Quality, Tax Avoidance, and Sustainable Development: Evidence from South Africa

by Sarah Yasser Abdel-Fattah and Tânia Menezes Montenegro

Int. J. Financial Stud. 2026, 14(5), 127; https://doi.org/10.3390/ijfs14050127 - 9 May 2026

Abstract

This study examines the association between Integrated Reporting (IR) quality and tax avoidance among South African listed firms from 2012 to 2021, and whether this relationship differs across the highest and lowest levels of IR quality. The extent to which the adoption of [...] Read more.

This study examines the association between Integrated Reporting (IR) quality and tax avoidance among South African listed firms from 2012 to 2021, and whether this relationship differs across the highest and lowest levels of IR quality. The extent to which the adoption of a Combined Assurance (CA) model strengthens the IR monitoring role in reducing tax avoidance, as well as the IR quality link with ESG-related implications of tax avoidance, are also explored. IR quality is directly derived from the EY Excellence in Integrated Reporting Awards ranking. This ranking evaluates firms’ adherence to the IR framework and is thus employed as a comprehensive proxy for IR quality. Tax avoidance is captured through multiple proxies. The main findings reveal no significant overall association between IR quality and tax avoidance, suggesting a decoupling between IR and tax behavior. However, when examining firms at the highest and lowest levels of IR quality, a significant negative relationship emerges only for the top performers (highest IR quality), indicating that IR constrains tax avoidance only when supported by a strong ethical corporate culture. Firms adopting CA exhibit higher tax avoidance, suggesting that IR and CA may be constrained by underlying corporate culture and used symbolically. Higher IR quality is also associated with lower tax avoidance relative to GDP and reduced potential revenue losses relative to government expenditures on education, health, and environmental protection. These findings contribute to the literature on IR, corporate governance, and tax avoidance, while also informing policymakers and regulators on the need to strengthen IR and CA frameworks through enhanced tax transparency requirements, thereby supporting equitable resource mobilization, institutional trust, and long-term sustainable development. Full article

22 pages, 435 KB

Open AccessArticle

Preparing Financial Reporting Professionals for Virtual Asset Disclosure and Assurance: Stakeholder Readiness for Metaverse-Based Accounting Systems

by Rabindra Kumar Jena

Int. J. Financial Stud. 2026, 14(5), 126; https://doi.org/10.3390/ijfs14050126 - 8 May 2026

Abstract

The rapid emergence of virtual assets, blockchain-based transactions, and immersive digital economies presents major challenges to financial reporting processes (recognition, measurement, disclosure, and assurance). This study aims to investigate stakeholder readiness for digital financial reporting in the context of virtual assets, focusing on [...] Read more.

The rapid emergence of virtual assets, blockchain-based transactions, and immersive digital economies presents major challenges to financial reporting processes (recognition, measurement, disclosure, and assurance). This study aims to investigate stakeholder readiness for digital financial reporting in the context of virtual assets, focusing on the human capital dimension, which was often overlooked in prior research. A mixed-methods design was employed to obtain comprehensive insights from both experts and students. Qualitative interviews with 16 academics and practitioners were conducted to capture expert perspectives on the inclusion of metaverse-related courses in accounting curricula. Furthermore, a survey of 438 accounting students was analyzed to examine the determinants of Digital Financial Reporting Readiness (DFRR) using the Stimulus–Organism–Response (S-O-R) framework. Experts highlighted opportunities for enhanced professional judgment but raised concerns about automation risks and institutional capacity. Quantitative results indicated that perceived importance and usefulness significantly increased student interest, which strongly predicted DFRR, while perceived difficulty reduced student interest. By interpreting the findings through the lens of Experiential Learning Theory (ELT), this study provides a process-oriented explanation of how cognitive evaluations translate into professional preparedness. This study contributes by conceptualizing DFRR as a human capital construct and offering a multi-stakeholder perspective by integrating student readiness with expert insights to inform the adoption of the metaverse in accounting education. Full article

(This article belongs to the Special Issue Accounting and Financial/Non-financial Reporting Developments)

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13 pages, 835 KB

Open AccessArticle

Financial Development, Income Inequality, and Business Environments: A Nonlinear Analysis Across Country Income Groups

by Ebrahim Merza and Mohammad Alawin

Int. J. Financial Stud. 2026, 14(5), 125; https://doi.org/10.3390/ijfs14050125 - 8 May 2026

Abstract

This paper explores how financial development and income inequality interact across different country income groups and what this means for business environments and market participation in both emerging and advanced economies. Using an Unobserved Components Model (UCM) with time-series data covering 1990–2023, the [...] Read more.

This paper explores how financial development and income inequality interact across different country income groups and what this means for business environments and market participation in both emerging and advanced economies. Using an Unobserved Components Model (UCM) with time-series data covering 1990–2023, the analysis shows that the link between finance and inequality varies markedly with the level of economic development. An inverted U-shaped relationship appears only in high-income and upper-middle-income countries, suggesting that once financial systems reach a certain level of maturity, further deepening tends to support more inclusive outcomes. By contrast, in lower-middle-income countries, financial development is associated with a positive and monotonic increase in inequality, while in low-income countries, the relationship remains weak, unstable, and statistically insignificant. A closer breakdown indicates that financial markets, rather than financial institutions, play a stronger role in influencing inequality in higher-income economies. Overall, the findings highlight that the distributional impact of financial development—and its implications for business conditions, market access, and investment incentives—is strongly income-dependent, reinforcing the need for financial frameworks that align with countries’ stages of development. Full article

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19 pages, 708 KB

Open AccessArticle

The Conduit, Constraint, and Containment: A Framework for Analyzing Global Stablecoin Risk Transmission and China’s Regulatory Response

by Tian Meng, Gaojin Yu and Minfeng Lu

Int. J. Financial Stud. 2026, 14(5), 124; https://doi.org/10.3390/ijfs14050124 - 7 May 2026

Abstract

The rapid expansion of global stablecoins is generating new challenges for monetary sovereignty, financial stability, and cross-border regulatory governance. This paper develops an integrated analytical framework of “risk transmission–institutional constraints–compliance response–dynamic monitoring” to examine how stablecoin-related risks may be transmitted into China’s financial [...] Read more.

The rapid expansion of global stablecoins is generating new challenges for monetary sovereignty, financial stability, and cross-border regulatory governance. This paper develops an integrated analytical framework of “risk transmission–institutional constraints–compliance response–dynamic monitoring” to examine how stablecoin-related risks may be transmitted into China’s financial system. Drawing on financial risk theory, institutional analysis, and comparative regulatory perspectives, the study identifies three major channels of risk transmission: monetary sovereignty erosion, financial stability shocks, and regulatory arbitrage accompanied by legal and data-governance challenges. It argues that the actual impact of these risks is shaped by China’s specific institutional and technological conditions, including cross-border jurisdictional frictions, technical standard barriers, coordination difficulties under “one country, two systems”, and limitations in regulatory technology capacity. On this basis, the paper proposes a multi-layered compliance response system centered on risk-based penetrative supervision, strict corporate compliance boundaries, and the digital renminbi (e-CNY) as core infrastructure, while emphasizing the need for stronger international regulatory coordination. It further introduces a dynamic monitoring perspective to evaluate regulatory effectiveness, risk suppression, and the substitution effect of the e-CNY ecosystem. The paper contributes a structured and policy-oriented framework for understanding and containing external stablecoin risks in China’s institutional context. Full article

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19 pages, 322 KB

Open AccessArticle

The Impact of Climate Change Disclosure on Cost of Debt: The Moderating Effect of Political Connections and ESG Disclosure

by Abdullah Almutairi

Int. J. Financial Stud. 2026, 14(5), 123; https://doi.org/10.3390/ijfs14050123 - 7 May 2026

Abstract

This study was conducted to investigate the impact of climate change disclosure on the cost of debt and gain deep insight into the usefulness of political connections and ESG disclosure for reducing the cost of debt. A sample of 83 listed firms in [...] Read more.

This study was conducted to investigate the impact of climate change disclosure on the cost of debt and gain deep insight into the usefulness of political connections and ESG disclosure for reducing the cost of debt. A sample of 83 listed firms in the Egyptian context, spanning 498 observations over 6 years from 2018 to 2023, was used. A quantitative approach was adopted to examine the key hypotheses. This research reveals that climate change disclosure decreases the cost of debt. Furthermore, political connections and ESG disclosure moderate the main nexus. Multiple robustness checks were conducted to confirm these findings. Crucial policy implications for regulators, investors, and sustainability experts were developed by highlighting the latest practices of corporations aligned with achieving Sustainable Development Goals. The significance of this study lies in filling several gaps in the literature regarding climate change disclosure, political connections, and ESG disclosure and how a company’s strategic approach can impact the cost of capital. Full article

31 pages, 879 KB

Open AccessSystematic Review

Designing Retail Central Bank Digital Currencies: A Systematic Literature Review of Trade-Offs Between Security, Privacy, and Financial Stability

by Jwa Emma Said and Jan Lánský

Int. J. Financial Stud. 2026, 14(5), 122; https://doi.org/10.3390/ijfs14050122 - 7 May 2026

Abstract

This paper proposes a CBDC design trilemma, the claim that central banks cannot simultaneously maximize privacy, financial stability, and regulatory compliance when designing retail central bank digital currencies and finds the existing literature consistent with this proposition. Through a systematic review of 140 [...] Read more.

This paper proposes a CBDC design trilemma, the claim that central banks cannot simultaneously maximize privacy, financial stability, and regulatory compliance when designing retail central bank digital currencies and finds the existing literature consistent with this proposition. Through a systematic review of 140 peer-reviewed articles (Web of Science SCIE/SSCI indexes, 2014–2026, supplemented by Scopus and SSRN), evidence is synthesized across four thematic dimensions: design frameworks and architecture, financial stability and banking risk, privacy and security trade-offs, and user adoption and institutional quality. Cross-tabulation of coded data supports all three pairwise tensions: privacy-enhancing designs weaken AML/CFT enforcement, anonymous holdings amplify bank-run risk, and stringent prudential safeguards constrain transaction monitoring. The literature converges on two-tier, hybrid architectures with tiered privacy as the dominant compromise a “zone of feasible design”, that sacrifices full optimality on each vertex. Nine research gaps are identified, most critically the scarcity of empirical evidence from live deployments, the neglect of wholesale CBDC, and insufficient analysis of cross-border interoperability. The framework offers policymakers a structured lens for evaluating retail CBDC design trade-offs and researchers a testable proposition for future empirical work. Full article

(This article belongs to the Special Issue Cryptocurrency and Blockchain: Opportunities and Challenges for Financial Systems)

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Graphical abstract

26 pages, 8340 KB

Open AccessArticle

Greenwashing as a Corporate Strategy: A Bibliometric Analysis of Risks, Governance, and Heterogeneity

by Fukai Wang, Wei Zhou and Zhen Zhang

Int. J. Financial Stud. 2026, 14(5), 121; https://doi.org/10.3390/ijfs14050121 - 6 May 2026

Abstract

The persistence of greenwashing as a strategic corporate behavior reflects a financial tradeoff between risk and return. Current literature lacks an integrative framework explaining how these risks and institutional arrangements vary across distinct contexts. This study maps the intellectual structure and contextual heterogeneity [...] Read more.

The persistence of greenwashing as a strategic corporate behavior reflects a financial tradeoff between risk and return. Current literature lacks an integrative framework explaining how these risks and institutional arrangements vary across distinct contexts. This study maps the intellectual structure and contextual heterogeneity of corporate greenwashing research through a bibliometric analysis of 818 publications indexed in the Web of Science Core Collection from 2000 to 2025. The results indicate an evolutionary shift in research focus from early ethical and reputational debates toward empirical investigations of capital market consequences, ESG controversies, and the dark side of corporate sustainability. This transition is accompanied by thematic movement from voluntary disclosure and legitimacy concerns toward mandatory compliance, sustainable finance, green bond pricing, and digital detection using artificial intelligence and natural language processing. The analysis reveals substantial structural heterogeneity. Heavy-asset industries are closely associated with technological decoupling under physical and compliance constraints, whereas financial and service sectors rely heavily on information asymmetry, green label arbitrage, and greenhushing. These sectoral patterns intersect with regional governance trajectories shaped by market-driven, regulation-oriented, and state-led contexts, generating distinct incentive structures and risk conditions, while firm-level governance further moderates these behaviors. The findings position greenwashing as a context-dependent corporate strategy and provide a structured synthesis for future research and differentiated regulatory responses. Full article

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26 pages, 1228 KB

Open AccessArticle

Inclusive Growth of Russian Companies as a Driver of Socio-Economic Development: Insights from the Metallurgical Sector

by Irina Ivashkovskaya, Sergei Grishunin, Elena Makeeva and Egor Pashkov

Int. J. Financial Stud. 2026, 14(5), 120; https://doi.org/10.3390/ijfs14050120 - 6 May 2026

Abstract

Inclusive growth has increasingly emerged as a central framework for understanding how firms can align economic performance with social inclusion and environmental responsibility, particularly in emerging markets characterized by institutional volatility. In the context of geopolitical shocks and economic sanctions, such as those [...] Read more.

Inclusive growth has increasingly emerged as a central framework for understanding how firms can align economic performance with social inclusion and environmental responsibility, particularly in emerging markets characterized by institutional volatility. In the context of geopolitical shocks and economic sanctions, such as those faced by Russia during 2022–2023, the normative meaning of inclusive growth is redefined toward prioritizing employment stability, industrial continuity, and strategic resilience at the firm level. This study aims to develop a systematic and transparent firm-level measure of inclusive growth that integrates strategic resilience with long-term business model potential. It further seeks to empirically assess cross-firm heterogeneity in inclusive growth performance within the Russian metallurgical and mining sector under geopolitical disruption conditions. This study constructs a composite Inclusive Growth Index using publicly available financial and non-financial disclosures, combining indicator normalization, variance-based weighting, and geometric aggregation. The index is applied to a panel of major Russian metallurgical and mining companies for the period 2021–2024 to evaluate their strategic resilience, business model potential, and industry-level dynamics under sanctions. The results reveal substantial heterogeneity in inclusive growth performance across firms, with higher index values being associated with stronger strategic resilience and more stable operational outcomes. The analysis further identifies a divergence between improving resilience and declining business model potential during 2022–2024, indicating a trade-off between short-term stabilization and long-term inclusive growth capabilities under the geopolitical stress. The findings suggest that inclusive growth at the firm level in a sanctioned emerging market context follows a distinct sovereignty-oriented logic in which employment stability and operational continuity take precedence over long-term innovation and governance enhancement. Overall, the proposed Inclusive Growth Index provides a robust analytical framework for assessing corporate adaptation to structural shocks and informing managerial and policy decisions in emerging market economies. Full article

(This article belongs to the Special Issue Emerging Trends in Corporate Finance: ESG, Climate Risk, and Other Contemporary Issues)

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17 pages, 307 KB

Open AccessArticle

Blockchain-Enabled Transparency and Organizational Value: Evidence from Chinese Firms Referencing DAO Concepts

by Chaoyang Chen and Ziting Wang

Int. J. Financial Stud. 2026, 14(5), 119; https://doi.org/10.3390/ijfs14050119 - 6 May 2026

Abstract

This study investigates how information transparency affects organizational value in the Chinese institutional setting, where firms operate under a heavily regulated disclosure regime while increasingly referencing Decentralized Autonomous Organization (DAO) or blockchain-based decentralized governance concepts. Using a panel of 10,029 firm-year observations from [...] Read more.

This study investigates how information transparency affects organizational value in the Chinese institutional setting, where firms operate under a heavily regulated disclosure regime while increasingly referencing Decentralized Autonomous Organization (DAO) or blockchain-based decentralized governance concepts. Using a panel of 10,029 firm-year observations from 1368 Shenzhen A-share listed firms over the period 2012–2022, we employ two-way fixed effects regressions and robustness tests, with information transparency proxied by Shenzhen Stock Exchange disclosure ratings. We find that higher transparency is positively and significantly associated with organizational value (measured by Tobin’s Q). Heterogeneity analyses show that this positive relationship is stronger among state-owned enterprises, firms with lower digital maturity, and firms led by innovation-oriented executives. Comparative tests further reveal that the transparency–value link holds primarily among DAO-referencing firms, whereas it turns negative (though marginally significant) for non-referencing firms. These results suggest that signaling interest in decentralized governance mechanisms can enhance the value relevance of disclosure in regulated emerging markets. Practical implications for managers and policymakers are discussed, along with limitations and directions for future research. Full article

(This article belongs to the Special Issue Cryptocurrency and Blockchain: Opportunities and Challenges for Financial Systems)

17 pages, 269 KB

Open AccessArticle

Audit Quality Characteristics and Financial Reporting Quality Among Jordanian Small and Medium Enterprises: A PLS-SEM Approach

by Ahmad Farhan Alshira’h

Int. J. Financial Stud. 2026, 14(5), 118; https://doi.org/10.3390/ijfs14050118 - 5 May 2026

Abstract

This study aims to examine the influence of geographical distance, social distance, auditor independence, technical quality, and process quality on the quality of financial reporting, providing a comprehensive understanding of the aspects that determine audit effectiveness. The research employs a quantitative technique, using [...] Read more.

This study aims to examine the influence of geographical distance, social distance, auditor independence, technical quality, and process quality on the quality of financial reporting, providing a comprehensive understanding of the aspects that determine audit effectiveness. The research employs a quantitative technique, using Partial Least Squares Structural Equation Modeling (PLS-SEM) with bootstrapping (5000 resamples) to assess hypotheses grounded on agency and signaling theories. Data was collected via a survey administered to managers and proprietors of small and medium-sized firms (SMEs). A total of 186 valid answers were gathered and examined to investigate the relationships among the variables. All five recommended parameters had a favorable and substantial influence on the quality of financial reporting. Spatial distance was recognized as the primary predictor, followed by process quality, social distance, technical quality, and auditor independence. The model explained 26% of the variance in financial reporting quality. This research is one of the first investigations to systematically analyze how certain variables of audit quality—specifically physical distance, social distance, auditor independence, technical competence, and process quality—affect financial reporting results. The main contribution is in the use of original survey data, which provides novel information about how organizations evaluate and choose audit service providers and how these decisions eventually affect reporting quality. The focus on small and medium-sized organizations enhances the importance, since these companies often encounter limitations that impede their capacity to uphold elevated reporting requirements. This research enhances the current literature by consolidating many dimensions of audit quality into a unified analytical framework, so providing a more thorough knowledge of the interrelated variables influencing financial reporting procedures, especially in emerging nations. The results provide pragmatic insights for regulators and practitioners aiming to bolster audit efficacy and improve the dependability of financial reporting in these circumstances. Full article

15 pages, 1453 KB

Open AccessFeature PaperArticle

Biodiversity Mutual Funds and ETFs: Characteristics, Performance, Risk, and Fees

by Fei Fang and Di Luo

Int. J. Financial Stud. 2026, 14(5), 117; https://doi.org/10.3390/ijfs14050117 - 5 May 2026

Abstract

This paper provides an exploratory analysis of biodiversity-themed funds and offers early evidence on their characteristics, performance, risk, fees, and sustainability metrics. Using a sample of 24 open-end biodiversity funds (18 mutual funds and 6 ETFs), we find that these funds are predominantly [...] Read more.

This paper provides an exploratory analysis of biodiversity-themed funds and offers early evidence on their characteristics, performance, risk, fees, and sustainability metrics. Using a sample of 24 open-end biodiversity funds (18 mutual funds and 6 ETFs), we find that these funds are predominantly European-domiciled equity funds, recently launched, small in size, and generally receive high sustainability ratings. However, both active and passive funds underperform their benchmarks over their short track records and charge higher fees than comparable funds, consistent with the early-stage development of this segment. We also examine fund manager characteristics and find no consistent relationship with performance. Our results highlight the need for greater fee transparency, and clearer communication of sustainability–return trade-offs. Full article

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27 pages, 670 KB

Open AccessArticle

From Enforcement to Capability: Tax Planning Capacity and Corporate Tax Compliance in Foreign Investment Enterprises in Azerbaijan

by Mubariz Mammadli, Natavan Namazova and Zivar Zeynalova

Int. J. Financial Stud. 2026, 14(5), 116; https://doi.org/10.3390/ijfs14050116 - 5 May 2026

Abstract

This study examines how external regulatory conditions and internal organizational capabilities shape corporate tax compliance among foreign investment enterprises (FIEs) in Azerbaijan. It develops an integrated framework that brings together enforcement-based factors, tax planning capacity, and institutional and governance quality. Using survey data [...] Read more.

This study examines how external regulatory conditions and internal organizational capabilities shape corporate tax compliance among foreign investment enterprises (FIEs) in Azerbaijan. It develops an integrated framework that brings together enforcement-based factors, tax planning capacity, and institutional and governance quality. Using survey data from 266 foreign-owned firms, the study applies structural equation modeling (SEM) to analyse direct, mediating, and moderating relationships. The results show that stronger enforcement is associated with higher levels of compliance and encourages firms to develop tax planning capabilities. In turn, these capabilities contribute positively to compliance behaviour. The findings also indicate that tax planning capacity partially mediates the relationship between enforcement and compliance. In addition, institutional and governance quality moderates the link between enforcement and tax planning capacity, with the effect varying across institutional environments. Overall, the results suggest that corporate tax compliance is influenced not only by external regulatory pressure but also by firms’ internal capabilities and the broader institutional context. The study provides useful insights for policymakers seeking to improve compliance through coordinated regulatory and institutional reforms. Full article

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23 pages, 626 KB

Open AccessArticle

Evidence-Based Analysis of Asset Profitability Drivers in the Automotive Sector

by Marius Sorin Dincă and Frank Akomeah

Int. J. Financial Stud. 2026, 14(5), 115; https://doi.org/10.3390/ijfs14050115 - 3 May 2026

Abstract

This study investigates the key determinants of firm profitability in the global automotive sector, examining whether superior returns on assets (ROA) stem from operational efficiency, strategic leverage, or innovation intensity, and highlighting the potential trade-off between efficiency and investment in capital-intensive industries. Analysing [...] Read more.

This study investigates the key determinants of firm profitability in the global automotive sector, examining whether superior returns on assets (ROA) stem from operational efficiency, strategic leverage, or innovation intensity, and highlighting the potential trade-off between efficiency and investment in capital-intensive industries. Analysing a global panel dataset of 192 automotive firms from 38 countries/regions over 2010–2024, a fixed effects regression model with Driscoll–Kraay standard errors was applied to control for unobserved heterogeneity, heteroskedasticity, and cross-sectional dependence across 11 financial and strategic variables. The findings reveal that firm size and inventory turnover are significant positive drivers of profitability, while research and development (R&D) intensity exerts a strong negative impact. The positive association with the effective tax rate reflects reverse causality, where more profitable firms incur higher tax burdens, rather than a causal effect of taxation on performance. Notably, working capital management, leverage, sales growth, and capital expenditure showed no statistically significant effects after controlling for firm and time effects. Temporal fluctuations, including a marked profitability decline in 2024, underscore the sector’s sensitivity to macroeconomic shocks. This study contributes robust, large-scale empirical evidence on the short-term profitability trade-off associated with R&D intensity in a globally integrated industry, addressing cross-sectional dependence through its methodological approach. Full article

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21 pages, 637 KB

Open AccessFeature PaperArticle

A Risk Minimization Model for Capital Asset Portfolios

by Stoyan Zlatev, Milena Petkova, Mariyan Milev and Nadya Velinova-Sokolova

Int. J. Financial Stud. 2026, 14(5), 114; https://doi.org/10.3390/ijfs14050114 - 3 May 2026

Abstract

In 1952, Harry Markowitz established the foundations of Modern Portfolio Theory by introducing a mean–variance framework for constructing investment portfolios that optimize the trade-off between risk and expected return. Expanding upon this classical framework, this paper develops an analytical algorithm to determine optimal [...] Read more.

In 1952, Harry Markowitz established the foundations of Modern Portfolio Theory by introducing a mean–variance framework for constructing investment portfolios that optimize the trade-off between risk and expected return. Expanding upon this classical framework, this paper develops an analytical algorithm to determine optimal asset weights for long-only portfolios that minimize total risk. We derive the necessary and sufficient conditions through rigorous determinant-based identities, providing a closed-form solution for achieving the global minimum variance. The theoretical findings are demonstrated through three numerical examples: the first examines a standard six-asset portfolio using an admissible covariance matrix; the second serves as an algebraic cautionary case by identifying negative variance when the input matrix fails to satisfy the criteria for positive definiteness; and the third example validates the practical application of the proposed identities using empirical market data. Full article

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20 pages, 635 KB

Open AccessFeature PaperArticle

Are Female Leadership and Innovation Determinants of Tunisian Firms’ Participation in Global Value Chains?

by Mohamed Ilyes Gritli, Teheni El Ghak and Fatma Marrakchi Charfi

Int. J. Financial Stud. 2026, 14(5), 113; https://doi.org/10.3390/ijfs14050113 - 3 May 2026

Abstract

Nowadays, Global Value Chains (GVCs) play a vital role in job creation, income generation, knowledge diffusion, and productivity growth. However, significant disparities exist across countries in terms of their integration into GVCs, and Tunisia is no exception to this pattern. In this regard, [...] Read more.

Nowadays, Global Value Chains (GVCs) play a vital role in job creation, income generation, knowledge diffusion, and productivity growth. However, significant disparities exist across countries in terms of their integration into GVCs, and Tunisia is no exception to this pattern. In this regard, the question about factors that influence GVCs’ participation is yet to be discussed, to formulate and implement appropriate strategies and reforms. Thus, using firm-level data from the 2025 World Bank Enterprise Survey, this paper examines the role of female leadership and innovation in determining Tunisian firms’ participation in GVCs. Participation in GVCs is captured by a dummy variable indicating the firm’s export and import status. Estimation results from the logit model show that female representation in decision-making positions significantly increases the likelihood of firms’ participation in GVCs. The results also highlight the importance of process innovation in GVC participation, while product innovation appears to have no significant effect. Notably, when firms combine both types of innovation, their likelihood of joining GVCs increases further. Regarding control variables, firm size appears to be an important determinant, as larger firms display a greater tendency to participate in GVCs. The findings further indicate that firm certification and foreign equity participation significantly promote integration into GVCs, while corruption constitutes a major constraint on the integration of Tunisian firms. From a policy perspective, these findings highlight the need to rethink industrial policies, with a stronger focus on process innovation as a key lever of productive sector modernization. Achieving this transformation also requires the development of an inclusive policy ecosystem that supports meaningful and sustainable progress in female’s leadership representation. Full article

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International Journal of Financial Studies

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