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Financial Reporting Quality and Capital Markets Efficiency
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Financial Reporting Quality and Capital Markets Efficiency

A special issue of Journal of Risk and Financial Management (ISSN 1911-8074). This special issue belongs to the section "Applied Economics and Finance".

Deadline for manuscript submissions: 30 September 2025 | Viewed by 6623

Special Issue Editors

Dr. Sami Keskek

E-Mail Website
Guest Editor
Department of Accounting, Florida State University, Tallahassee, FL 32303, USA
Interests: capital markets; market efficiency; analyst forecasts; earnings management; institutional and insider trading
Dr. Abdullah Kumas

E-Mail Website
Guest Editor
Department of Accounting, University of Richmond, Richmond, VA 23173, USA
Interests: institutional investors’ trading; corporate disclosures; auditing; insider trading; trading volume; behavioral finance; international taxation; investment

Special Issue Information

Dear Colleagues,

In the evolving landscape of capital markets, understanding the dynamics that shape financial reporting quality and market efficiency is essential. This Special Issue invites research exploring the pivotal roles of factors such as corporate governance, managerial incentives, external monitoring, and investor sophistication in influencing both financial reporting quality and market efficiency. We aim to gather studies that examine how these elements impact investor decision making, institutional trading, and broader market dynamics.

We encourage submissions that delve into how managerial incentives and corporate governance elements—such as board characteristics and CEO attributes—affect financial reporting quality and market efficiency. Papers investigating the factors associated with the accuracy and efficiency of analyst forecasts and the use of financial information by institutional and individual investors are also highly relevant. Additionally, we welcome research on the integration of environmental, social, and governance (ESG) factors into financial reporting and how these dimensions influence capital markets and long-term sustainability.

Moreover, we are interested in studies that consider the effects of recent developments in data analysis and technology on financial reporting reliability and market behavior. As advancements in data processing, predictive tools, and technology become more accessible, understanding their role in shaping reporting standards and market responses remains crucial.

This Special Issue aims to provide fresh insights and practical guidance for academics, practitioners, and policymakers navigating today’s complex capital markets. We encourage submissions that offer forward-looking perspectives, rigorous methodologies, and actionable findings that deepen our understanding of the evolving relationships among capital markets, financial reporting quality, and market efficiency.

Dr. Sami Keskek
Dr. Abdullah Kumas
Guest Editors

Manuscript Submission Information

Manuscripts should be submitted online at www.mdpi.com by registering and logging in to this website. Once you are registered, click here to go to the submission form. Manuscripts can be submitted until the deadline. All submissions that pass pre-check are peer-reviewed. Accepted papers will be published continuously in the journal (as soon as accepted) and will be listed together on the special issue website. Research articles, review articles as well as short communications are invited. For planned papers, a title and short abstract (about 100 words) can be sent to the Editorial Office for announcement on this website.

Submitted manuscripts should not have been published previously, nor be under consideration for publication elsewhere (except conference proceedings papers). All manuscripts are thoroughly refereed through a single-blind peer-review process. A guide for authors and other relevant information for submission of manuscripts is available on the Instructions for Authors page. Journal of Risk and Financial Management is an international peer-reviewed open access monthly journal published by MDPI.

Please visit the Instructions for Authors page before submitting a manuscript. The Article Processing Charge (APC) for publication in this open access journal is 1400 CHF (Swiss Francs). Submitted papers should be well formatted and use good English. Authors may use MDPI's English editing service prior to publication or during author revisions.

Keywords

  • capital markets
  • market efficiency
  • financial reporting quality
  • earnings management
  • investor behavior
  • institutional trading
  • analyst forecasts
  • corporate governance
  • managerial incentives
  • environmental, social, and governance (ESG)

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Published Papers (4 papers)

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Research

21 pages, 356 KiB  
Article
Accrual vs. Real Earnings Management in Internationally Diversified Firms: The Role of Institutional Supervision
by Yan-Jie Yang, Yunsheng Hsu, Qian Long Kweh and Jawad Asif
J. Risk Financial Manag. 2025, 18(7), 404; https://doi.org/10.3390/jrfm18070404 - 21 Jul 2025
Viewed by 629
Abstract
This study investigates whether internationally diversified firms substitute between accrual-based and real earnings management and examines how institutional supervision moderates this relationship. Drawing on a sample of Taiwanese firms listed on the Taiwan Stock Exchange from 2003 to 2016, we conduct regression analyses [...] Read more.
This study investigates whether internationally diversified firms substitute between accrual-based and real earnings management and examines how institutional supervision moderates this relationship. Drawing on a sample of Taiwanese firms listed on the Taiwan Stock Exchange from 2003 to 2016, we conduct regression analyses to test our hypothesis. We find that internationally diversified firms actively shift between accrual and real earnings management strategies depending on the constraints they face. Specifically, firms tend to rely more on accrual-based manipulation when information asymmetry is high and switch to real earnings management when accruals are more easily detected. We also show that stronger institutional supervision—measured by information transparency and investor protection—significantly curbs accrual-based earnings management. These findings reflect the higher volatility and agency problems associated with international operations, such as exposure to foreign risks and the distance between parent and subsidiary firms. By highlighting the conditions under which firms manage earnings and the supervisory mechanisms that constrain such behavior, this study offers practical insights for managers seeking to smooth earnings, investors aiming to evaluate firm transparency, and policymakers designing regulations to deter opportunistic financial reporting. Full article
(This article belongs to the Special Issue Financial Reporting Quality and Capital Markets Efficiency)
28 pages, 1030 KiB  
Article
A Quantum Leap in Asset Pricing: Explaining Anomalous Returns
by James W. Kolari, Jianhua Huang, Wei Liu and Huiling Liao
J. Risk Financial Manag. 2025, 18(7), 362; https://doi.org/10.3390/jrfm18070362 - 1 Jul 2025
Cited by 1 | Viewed by 780
Abstract
This paper investigates the ability of asset pricing models to explain the cross-section of average stock returns of anomaly portfolios. A large sample of 286 anomaly portfolios are employed. We perform out-of-sample cross-sectional regression tests of both prominent asset pricing models and a [...] Read more.
This paper investigates the ability of asset pricing models to explain the cross-section of average stock returns of anomaly portfolios. A large sample of 286 anomaly portfolios are employed. We perform out-of-sample cross-sectional regression tests of both prominent asset pricing models and a relatively new model dubbed the ZCAPM. Empirical tests strongly support the lesser known ZCAPM but not other multifactor models. Further analyses of out-of-sample mispricing errors of the models reveal that the ZCAPM provides much more accurate pricing of anomaly portfolios than other models. We conclude that anomalies are anomalous to popular multifactor models but not the ZCAPM. By implication, the efficient market hypothesis is supported. Full article
(This article belongs to the Special Issue Financial Reporting Quality and Capital Markets Efficiency)
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19 pages, 320 KiB  
Article
Market Competition, Downward-Sticky Pay, and Stock Returns: Lessons from South Korea
by Jungho Cho, Daecheon Yang, Kyeongmin Baek and Yeju Bu
J. Risk Financial Manag. 2025, 18(5), 280; https://doi.org/10.3390/jrfm18050280 - 19 May 2025
Viewed by 946
Abstract
This study examines whether market competition reduces managerial slack under downward-sticky CEO pay schemes, thus mitigating the potentially negative link between downward-sticky pay and shareholder’s value. Using data on the Korean product market, which has been dominated by business conglomerates known as ‘chaebols’, [...] Read more.
This study examines whether market competition reduces managerial slack under downward-sticky CEO pay schemes, thus mitigating the potentially negative link between downward-sticky pay and shareholder’s value. Using data on the Korean product market, which has been dominated by business conglomerates known as ‘chaebols’, we first find that downward-sticky pay is prevalent in underperforming firms and affects shareholder value negatively. Then, we find that a higher level of market competition alleviates the value-deteriorating effect of downward-sticky pay. Overall, the findings from our study imply that market competition as an external mechanism of corporate governance threatens still highly paid CEOs with worsening performance and motivates them implicitly to work harder. Together with a need for shareholders’ influence on downward-sticky pay, this study sheds light on the importance of market competition regimes in developing countries where legal protection for shareholders and internal governance structures are weak. Full article
(This article belongs to the Special Issue Financial Reporting Quality and Capital Markets Efficiency)
14 pages, 3306 KiB  
Article
Is Bitcoin’s Market Maturing? Cumulative Abnormal Returns and Volatility in the 2024 Halving and Past Cycles
by Vinícius Veloso, Rafael Confetti Gatsios, Vinícius Medeiros Magnani and Fabiano Guasti Lima
J. Risk Financial Manag. 2025, 18(5), 242; https://doi.org/10.3390/jrfm18050242 - 1 May 2025
Viewed by 3828
Abstract
This study examines how cumulative abnormal returns (CARs, the sum of abnormal returns over a period) and volatility behave around Bitcoin halving events, focusing on whether these patterns have evolved as the cryptocurrency market matures. Halvings are periodic events defined by Bitcoin’s algorithm, [...] Read more.
This study examines how cumulative abnormal returns (CARs, the sum of abnormal returns over a period) and volatility behave around Bitcoin halving events, focusing on whether these patterns have evolved as the cryptocurrency market matures. Halvings are periodic events defined by Bitcoin’s algorithm, during which the reward—in the form of newly issued bitcoins—paid to miners for validating network transactions is reduced, impacting miners’ profitability and potentially influencing the asset’s price due to a decreased supply. To carry out the analysis, we collected data on returns and risk for the 2012, 2016, 2020, and 2024 halving events and compared abnormal returns before and around the event, focusing on the 2020 and 2024 halvings. The results reveal significant shifts in Bitcoin’s price behavior within the event window, with an increased occurrence of abnormal returns in 2020 and 2024, alongside variations in average return, volatility, and maximum drawdown across all events. These findings suggest that Bitcoin’s returns and volatility during halvings are decreasing as the cryptocurrency market becomes more regulated and attracts greater participation from institutional investors and governments. Full article
(This article belongs to the Special Issue Financial Reporting Quality and Capital Markets Efficiency)
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