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

Deadline for manuscript submissions: closed (28 February 2022) | Viewed by 34677

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Prof. Dr. Alexandra Horobet

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Department of International Business and Economics, Faculty of International Business and Economics, Bucharest University of Economic Studies, 6 Piata Romana, Bucharest 1, Romania
Interests: currency risk management; corporate finance; international investments; risk analysis for corporate investment projects; international financial markets; risk analysis for international portfolios; international financial management; dynamic analysis of corporate performance
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Special Issue Information

Dear Colleagues,

The Special Issue on “Risk Analysis for Corporate Finance” addresses the complexity of risk assessment and mitigation for corporate finance decisions (capital budgeting, capital structure, dividend distribution, strategic investments and projects, etc.).

Risk analysis is essential in producing the best possible results for corporations, and its importance is even higher for industries where risk incidence and potential impact are high. Consequently, corporations that adopt risk assessment as an optimization tool and implement novel risk analysis models are better prepared to cope with financial crises, heightened market volatility, or operational uncertainty. At the same time, new computational approaches proposed by data scientists have opened the way towards improved risk measurement methods and practices. We welcome theoretical and empirical research papers that explore risk integration into corporate finance decisions and provide insight into the relevance of risk interdependencies for corporate risk modeling. Of particular interest are papers on the application of machine learning algorithms and techniques for risk analysis and corporate decision-making processes. Additionally, we encourage submissions of contributions that highlight systematic approaches and remarkable corporate practices of risk assessment.

Prof. Alexandra Horobet
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 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

risk analysis
risk interdependencies
machine learning techniques
risk integration
corporate risk modeling
corporate risk assessment

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Published Papers (6 papers)

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Research

25 pages, 1287 KiB

Open AccessArticle

Measuring the Financial Liberalization Index for Pakistan

by Muhammad Idrees, Umar Hayat, Magdalena Radulescu, Md Shabbir Alam, Abdul Rehman and Mirela Panait

J. Risk Financial Manag. 2022, 15(2), 57; https://doi.org/10.3390/jrfm15020057 - 26 Jan 2022

Cited by 8 | Viewed by 4319

Abstract

This paper aims to construct a bi-directional, financial liberalization index for Pakistan by considering various financial policy indicators (reforms). This study, by employing the principal component analysis method over a period of 1980–2018 (39 years), aims to determine the composite outcome in the case of developing a financial index. This study uses 14 financial policy indicators to investigate the degree of financial liberalization over a specified time period. The present study suggests a financial liberalization index for Pakistan considering the real-time change in the implementation process. The formulated index revealed that the recorded profitability of financial reforms was consistently high until 1998. Meanwhile, in the period from 1997 to 2003, the outcomes of financial reforms were surprisingly strong. Beyond 2004 and for the rest of the remaining years until 2018, the liberalization process recorded was comparatively slow. Thus, it was witnessed that all the key indicators, in the sense of regulation and liberalization, included determining the degree of financial liberalization. The consistency track of a liberalization index is a major focus of attention for policy makers, in order to capture the efficiency outcomes from various financial policy indicators, which were implemented beyond 2004. Furthermore, corporate risk in terms of better access to finance is also raised as a consequence of financial liberalization. Financial liberalization also resulted in a decrease in the cost of capital and improved the corporate governance. Full article

(This article belongs to the Special Issue Risk Analysis for Corporate Finance)

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18 pages, 850 KiB

Open AccessArticle

Post-Acquisition Performance of Emerging Market Firms: A Multi-Dimensional Analysis of Acquisitions in India

by Arindam Das

J. Risk Financial Manag. 2021, 14(12), 567; https://doi.org/10.3390/jrfm14120567 - 24 Nov 2021

Cited by 3 | Viewed by 4891

Abstract

M&A performance is a multifaceted, compound construct with no overarching factor that captures all different dimensions. This paper examines the concept of acquisition performance and proposes a model that links firm-level factors and transaction parameters with firms’ short-term and long-term performance, extending to financial-, market- and innovation measures. Building on past empirical studies on the influence of various factors on M&A performance, a multi-dimensional structural equation model has been developed and it has been tested with a dataset on acquisitions in the Indian technology sector over a period of ten years. The results suggest that: (a) smaller acquirers with higher book value and leveraged firms demonstrate better long-term performance; (b) contrary to established understanding, short-term market returns are not influenced by deal parameters; (c) majority stake purchases show relatively lesser gains—suggesting the possible presence of post-acquisition integration issues and, (d) acquirers with high intangible assets continue to do well on innovation performance post-acquisition. By indicating situations and conditions under which an acquisition would potentially lead to a performance gain for the acquirer, these results provide significant insight to practitioners pursuing M&As for growth opportunities. Full article

(This article belongs to the Special Issue Risk Analysis for Corporate Finance)

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21 pages, 1969 KiB

Open AccessArticle

An Empirical Investigation into Alarming Signals Ignored by the U.S. Multi-Brand Retailer J. Crew Incorporation during COVID-19 Pandemic

by Ganga Bhavani, Reena Agrawal, Suhan Mendon, Cristi Spulbar and Ramona Birau

J. Risk Financial Manag. 2021, 14(11), 539; https://doi.org/10.3390/jrfm14110539 - 9 Nov 2021

Cited by 4 | Viewed by 3984

Abstract

This study investigated the financial signals that have been ignored or have failed to be controlled by J. Crew Inc. from 2013 until 2019. Exploratory research is carried out with the help of secondary data which was collected from the downloaded formal documents submitted by J. Crew Inc. to the Securities Exchange Commission (SEC). Researchers analyzed these documents and prepared statements on vertical income statement, vertical balance sheet, horizontal income statement, horizontal balance sheet, trend analysis of income statement, and trend analysis of balance sheet, as well as ratio analysis on liquidity, long-term solvency, profitability, and turnover ratios with the help of excel. This paper has identified total of 15 alarming signs that companies either ignored, could not control, or did not act with alertness towards to stop the business being taken out of hands. In this research paper, the establishment of J. Crew Inc. was presented in four sections: Crew Retail Stores, Crew Factory Stores, Crew Mercantile Stores, and Crew Madewell Stores. The results of this study show that it was not the COVID-19 pandemic that pushed this retail giant into bankruptcy, but numerous reasons and financial turbulences. J. Crew’s financial performance gave plenty of alarming signals that the showed the company was not on track, but these were ignored by the company. Right from net profit, operating expenses, total revenue, goodwill, return on assets, liquidity, and solvency, all 15 indicators were not meeting the industry ideal standard for a continuous period of 5 years. Whether or not the organization can rebuild and contend in a post-pandemic world, is not yet clear. Full article

(This article belongs to the Special Issue Risk Analysis for Corporate Finance)

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16 pages, 802 KiB

Open AccessArticle

Can Sustainable Corporate Governance Enhance Internal Audit Function? Evidence from Omani Public Listed Companies

by Ali Rehman

J. Risk Financial Manag. 2021, 14(11), 537; https://doi.org/10.3390/jrfm14110537 - 9 Nov 2021

Cited by 7 | Viewed by 3342

Abstract

With the application of the agency theory and institutional theory, this study is intended towards the measurement of sustainable corporate governance (SCG) impact on internal audit function (IA) within Omani public listed companies. This study will also theoretically consider the Chinese investment in Oman and its potential impact on Oman’s corporate governance. For this study, SCG is an independent variable and IA is the dependent variable. This study used a descriptive cross-sectional survey design. Data is collected by an internet-based tool and analyzed via PLS-SEM and SPSS. Result suggests that SCG has a significant and direct relationship with IA. In order to attract and sustain Chinese investment and to achieve SCG, this study can assist regulators, professional bodies, and organizations in amending their codes of corporate governance and organizational policies by introducing SCG clauses into their policies and codes with emphasis on the protection of foreign investors. To the best of the knowledge of the researcher, this study is unique, as previous studies demonstrate the IA on SCG, whereas this study emphasizes that SCG can impact the control functions within organizations that also include IA. Full article

(This article belongs to the Special Issue Risk Analysis for Corporate Finance)

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34 pages, 4092 KiB

Open AccessArticle

Solvency Risk and Corporate Performance: A Case Study on European Retailers

by Alexandra Horobet, Stefania Cristina Curea, Alexandra Smedoiu Popoviciu, Cosmin-Alin Botoroga, Lucian Belascu and Dan Gabriel Dumitrescu

J. Risk Financial Manag. 2021, 14(11), 536; https://doi.org/10.3390/jrfm14110536 - 9 Nov 2021

Cited by 17 | Viewed by 12410

Abstract

This paper proposes a new approach toward understanding the financial performance dynamics in the EU retail sector (pre-pandemic); we focus on the connection between indebtedness and solvency risk and other areas of corporate performance (e.g., liquidity, assets efficiency, and profitability). Its contribution resides in identifying the drivers behind solvency risk in a sector that went through significant transformations in recent decades, as well as the links between the various areas of performance of retailers, and their impacts on solvency risk, using the machine-learning random forest methodology. The results indicate a declining trend for solvency risk of EU food retailers after the global financial crisis and up until the beginning of the pandemic, which may reflect their maturity on the market, but also an adjustment to legal changes in the EU, meant to equalize the tax advantages of debt versus equity financing. Solvency risk accompanied by liquidity risk is a mark of the retail sector, and our results indicate that the most critical trade that EU retailers face is between solvency risk and liquidity, but is fading over time. The volatility of liquidity levels is an important predictor of solvency risk; hence, sustaining a stable and good level of liquidity supports lower risks of financial distress, and may mitigate the shock impacts for EU retailers. A higher solvency risk was accompanied by increased efficiency of asset use, but reduced profitability levels, which led to higher returns available to shareholders for high solvency risk retailers. Overall, retailers should focus on operational performance evidenced by financial indicator levels than on the volatility of these indicators as predictors of solvency risk. Full article

(This article belongs to the Special Issue Risk Analysis for Corporate Finance)

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17 pages, 303 KiB

Open AccessArticle

Women’s Economic Empowerment in Vietnam: Performance and Constraints of Female-Led Manufacturing SMEs

by MinhTam Bui and Trinh Q. Long

J. Risk Financial Manag. 2021, 14(6), 255; https://doi.org/10.3390/jrfm14060255 - 7 Jun 2021

Cited by 3 | Viewed by 4000

Abstract

This paper identifies whether there was a performance difference among micro, small and medium enterprises (MSMEs) led by men and by women in Vietnam during the period 2005–2013 and aims to provide explanations for the differences, if any, in various performance indicators. The paper adopts a quantitative approach using a firm-level panel dataset in the manufacturing sector in 10 provinces/cities in Vietnam in five waves from 2005 to 2013. Fixed effect models are estimated to examine the influence of firm variables and demographic, human capital characteristics of owners/managers on firms’ value added, labor productivity and employment creation. We found that men led MSMEs did not outperform those led by women on average. Although the average value added was lower for female-led firms in the informal sector, the opposite was true in the formal sector where women tend to lead medium-size firms with higher value added and labor productivity. The performance disparity was more envisaged across levels of formality and less clear from a gender perspective. Moreover, while firms owned by businessmen seemed to create more jobs, firms owned by women had a higher share of female employees. No significant difference in business constraints faced by women and by men was found. Full article

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