Special Issue "Corporate Finance, Governance, and Social Responsibility"

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

Deadline for manuscript submissions: 31 October 2021.

Special Issue Editor

Dr. Ştefan Cristian Gherghina
E-Mail Website
Guest Editor
Department of Finance, Faculty of Finance and Banking, Bucharest University of Economic Studies, 6 Piata Romana, 1st district, Bucharest, Romania
Interests: corporate finance; corporate governance; quantitative finance; sustainable development
Special Issues and Collections in MDPI journals

Special Issue Information

Dear Colleagues,

Corporate finance is the fundamental basis for the whole financial decisions of a company. It deals with the operation of the firm, both the sources of funding and the investment decision, the main purpose being shareholder value maximization, while harmonizing risk and profitability. Every corporation makes decisions that trigger financial repercussions and any resolution that entails money is delineated as a corporate financial decision. Nevertheless, the separation of ownership and control may rise potential agency conflicts as managers will pursue their own interest at the expense of stockholders. Corporate governance refers to the structures by which companies are managed and supervised. Good governance implies better oversight and greater transparency, which increase investor trust and lessen directors’ discretion. Well governed corporations are rewarded with enhanced operating performance and higher market valuation attributable to reduced agency costs. Boards are accountable for the prosperity of the company, their essential role being to fulfill the best interests of stakeholders. A diverse boardroom, covering gender, racial, and ethnic balance, stimulates innovation on account of various skills and experiences. Therewith, corporate social responsibility promotes firm’s image and augment its reputation, thus fostering long lasting relations with the customers.

Wide-ranging topics of interest cover, even are not limited to:

  • Exploring the drivers of corporate default risk;
  • Evaluating the connection between economic policy uncertainty and stock price crash risk;
  • Analyzing the relationship among foreign ownership and company performance;
  • Investigating the impact of CEO remuneration on firm risk;
  • Examining the effect of board gender composition on dividend policy;
  • Assessing the impact of pollutant emissions on firm performance;
  • Inspecting the influence of corporate social responsibility on cash flow volatility.

Dr. Ştefan Cristian Gherghina
Guest Editor

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 papers will be 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 1200 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

  • Accounting and stock market performance
  • Capital structure decisions
  • Firm risk
  • Ownership concentration
  • Foreign ownership
  • State ownership
  • CEO characteristics
  • Executive compensation policy
  • Boardroom diversity
  • Board independence
  • Board size
  • Audit, remuneration, and nomination committees
  • Corporate social responsibility strategy

Published Papers (7 papers)

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Research

Article
Does a Board Characteristic Moderate the Relationship between CSR Practices and Financial Performance? Evidence from European ESG Firms
J. Risk Financial Manag. 2021, 14(8), 354; https://doi.org/10.3390/jrfm14080354 - 04 Aug 2021
Viewed by 414
Abstract
This study aims to examine the potential effect that corporate social responsibility practices (CSR) have on financial performance in ESG firms, using the moderating role of board characteristics. To test the moderating effect of the board characteristics in the relationship between CSR practices [...] Read more.
This study aims to examine the potential effect that corporate social responsibility practices (CSR) have on financial performance in ESG firms, using the moderating role of board characteristics. To test the moderating effect of the board characteristics in the relationship between CSR practices and financial performance, we applied linear regressions with panel data using the Thomson Reuters ASSET4 database from European countries in analyzing data of 225 listed companies between 2015 and 2019. The results show that board characteristics partially moderate the relationship between CSR practices and financial performance in European ESG firms. In addition, this study indicates that CSR practices affect the firm’s financial performance positively. The study findings appended a new dimension to governance research that could provide policymakers and regulators with a valuable source of information to strengthen governance mechanisms for better financial performance. Previous studies mostly investigate the direct effect of corporate governance on financial performance. A few studies examine the moderating effect of CSR practice. This paper contributes by investigating the moderating effect of governance mechanisms in the ESG context. Full article
(This article belongs to the Special Issue Corporate Finance, Governance, and Social Responsibility)
Article
COVID-19 Pandemic and Romanian Stock Market Volatility: A GARCH Approach
J. Risk Financial Manag. 2021, 14(8), 341; https://doi.org/10.3390/jrfm14080341 - 22 Jul 2021
Viewed by 594
Abstract
This paper investigates the volatility of daily returns on the Romanian stock market between January 2020 and April 2021. Volatility is analyzed by means of the representative index for Bucharest Stock Exchange (BSE), namely, the Bucharest Exchange Trading (BET) index, along with twelve [...] Read more.
This paper investigates the volatility of daily returns on the Romanian stock market between January 2020 and April 2021. Volatility is analyzed by means of the representative index for Bucharest Stock Exchange (BSE), namely, the Bucharest Exchange Trading (BET) index, along with twelve companies traded on BSE. The quantitative investigation was performed using GARCH approach. In the survey, the GARCH model (1,1) was applied to explore the volatility of the BET and BSE traded shares. Conditional volatility for the daily return series showed noticeable evidence of volatility that shifts over the explored period. In the first quarter of 2020, the Romanian equity market volatility increased to a level very close to that recorded during the global financial crisis of 2007–2009. Over the next two quarters, volatility had a downward trend. Besides, after VAR estimation, no causal connection was found among the COVID-19 variables and the BET index. Full article
(This article belongs to the Special Issue Corporate Finance, Governance, and Social Responsibility)
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Article
Performance Management for Growth: A Framework Based on EVA
J. Risk Financial Manag. 2021, 14(3), 102; https://doi.org/10.3390/jrfm14030102 - 04 Mar 2021
Viewed by 886
Abstract
Some of the constructs in the field of performance management are intuitive or not empirically validated. This study provides a data-driven framework for measuring and improving the performance through synchronized strategies. The ultimate goal was to provide support for increasing business performance. Empirical [...] Read more.
Some of the constructs in the field of performance management are intuitive or not empirically validated. This study provides a data-driven framework for measuring and improving the performance through synchronized strategies. The ultimate goal was to provide support for increasing business performance. Empirical research materializes in an exploratory case study and a statistical analysis with econometric models. The case study revealed that a company can improve its performance, even in periods of growth, being characterized by consistent investments. The statistical analysis, performed on a restricted sample of companies, confirmed the results that were provided by the case study. The measurement of performance was made by capitalizing on financial and non-financial data precisely to intensify the interest for corporate sustainability. The obtained results, contrary to previous research that showed that economic value added (EVA) is negatively influenced by the increase in invested capital, open up new research perspectives to find out whether, at the industry level, performance appraisal that is based on EVA stimulates the development of a business’s economic capital. The research has a double utility: scientific (by providing an overview of the state of the art in the field of performance management) and practical (by providing a reference model for measuring and monitoring performance). Full article
(This article belongs to the Special Issue Corporate Finance, Governance, and Social Responsibility)
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Article
Use of Derivative and Firm Performance: Evidence from the Chinese Shenzhen Stock Exchange
J. Risk Financial Manag. 2021, 14(2), 83; https://doi.org/10.3390/jrfm14020083 - 18 Feb 2021
Viewed by 599
Abstract
Financial derivatives have been increasingly used by firms to hedge against financial risks. However, it is still not clear what factors at the firm level lead to firms’ derivative use and whether derivative use can generate performance improvement, especially in the context of [...] Read more.
Financial derivatives have been increasingly used by firms to hedge against financial risks. However, it is still not clear what factors at the firm level lead to firms’ derivative use and whether derivative use can generate performance improvement, especially in the context of firms operating in emerging economies. Using the unbalanced panel data consisting of 2529 listed firms from China covering an 11-year period from 2005 to 2015, this study examines these two questions regarding firms’ use of financial derivatives. Based on results from the empirical analysis, this study identified operational cash flow, tax shield, R&D investment, and the possibility of bankruptcy, as the firm-level factors that enable firms’ decision to invest in financial derivatives. More importantly, empirical findings from this study suggest that a firm’s derivative use tends to negatively affect firm performance, rather than improve firm performance. The negative effect of derivative use on firm performance is not consistent between the two groups of the better performer and poorer performer firms. While the poorly performed firms are more likely to use financial derivatives for the purpose of performance improvement, their derivative use tends to further damage, rather than improve, performance. These research findings have theoretical and practical implications. Full article
(This article belongs to the Special Issue Corporate Finance, Governance, and Social Responsibility)
Article
Executive Compensation and Firm Performance in New Zealand: The Role of Employee Stock Option Plans
J. Risk Financial Manag. 2021, 14(1), 31; https://doi.org/10.3390/jrfm14010031 - 11 Jan 2021
Viewed by 1028
Abstract
We examine the role of employee stock option plans (ESOPs) in mitigating agency problems in New Zealand firms. We find that ESOPs have a significant and positive effect on firm performance relative to their non-ESOP counterparts. This relation appears within a year from [...] Read more.
We examine the role of employee stock option plans (ESOPs) in mitigating agency problems in New Zealand firms. We find that ESOPs have a significant and positive effect on firm performance relative to their non-ESOP counterparts. This relation appears within a year from the first ESOP announcement, and for two to four years after the announcement. Our results show that ESOPs improve corporate performance by 10 times the cost of the ESOPs’ adoption in the first year of issue. The improvement persists for four years after the first issuance. These findings confirm the effectiveness of employee stock option plans for companies issuing ESOPs compared with companies that do not issue ESOPs, and show how much the value creation of ESOPs contributes to these firms. Full article
(This article belongs to the Special Issue Corporate Finance, Governance, and Social Responsibility)
Article
The Impact of Working Capital Management on Firm Profitability: Empirical Evidence from the Polish Listed Firms
J. Risk Financial Manag. 2021, 14(1), 9; https://doi.org/10.3390/jrfm14010009 - 25 Dec 2020
Cited by 2 | Viewed by 1796
Abstract
The purpose of this study is to investigate the relationship between working capital and firm profitability for a sample of 719 Polish listed firms over the period of 2007–2016. The scarcity of empirical evidence for emerging economies and the importance of working capital [...] Read more.
The purpose of this study is to investigate the relationship between working capital and firm profitability for a sample of 719 Polish listed firms over the period of 2007–2016. The scarcity of empirical evidence for emerging economies and the importance of working capital efficiency motivate the research on the working capital–financial performance relationship. The paper adopts a quantitative approach using different panel data techniques (ordinary least squares, fixed effects, and panel-corrected standard errors models). The empirical results report an inverted U-shape relationship between working capital level and firm profitability, meaning that working capital has a positive effect on the profitability of Polish firms to a break-even point (optimum level). After the break-even point, working capital starts to negatively affect firm profitability. The study brings theoretical and practical contributions. It extends and complements the literature on the field by highlighting new evidence on the non-linear interrelation between working capital management (WCM) and corporate performance in Poland. From the practitioners’ perspective, the results highlight the importance of WCM for firm profitability. Full article
(This article belongs to the Special Issue Corporate Finance, Governance, and Social Responsibility)
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Article
Zero-Debt Policy under Asymmetric Information, Flexibility and Free Cash Flow Considerations
J. Risk Financial Manag. 2020, 13(12), 296; https://doi.org/10.3390/jrfm13120296 - 28 Nov 2020
Cited by 1 | Viewed by 790
Abstract
We build a model of debt for firms with investment projects, for which flexibility and free cash flow problems are important issues. We focus on the factors that lead the firm to select the zero-debt policy. Our model provides an explanation of the [...] Read more.
We build a model of debt for firms with investment projects, for which flexibility and free cash flow problems are important issues. We focus on the factors that lead the firm to select the zero-debt policy. Our model provides an explanation of the so-called “zero-leverage puzzle”. It also helps to explain why zero-debt firms often pay higher dividends when compared to other firms. In addition, the model generates new empirical predictions that have not yet been tested. For example, it predicts that firms with zero-debt policy should be influenced by free cash flow considerations more than by bankruptcy cost considerations. Additionally, the choice of zero-debt policy can be used by high-quality firms to signal their quality. This is in contrast to most traditional signalling literature where debt serves as a signal of quality. The model can explain why the probability of selecting the zero-debt policy is positively correlated with profitability and investment size and negatively correlated with the tax rate. It also predicts that firms that are farther away from their target capital structures are less likely to select the zero-debt policy when compared to firms that are close to their target levels. Full article
(This article belongs to the Special Issue Corporate Finance, Governance, and Social Responsibility)
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