Search for Articles:
Title / Keyword
Author / Affiliation / Email
Journal
Article Type
 
 
Advanced Search
 
Section
Special Issue
Volume
Issue
Number
Page
 
3.8
2.0
Journals
Risks
Special Issues
Financial Analysis, Corporate Finance and Risk Management
share announcement

Financial Analysis, Corporate Finance and Risk Management

A special issue of Risks (ISSN 2227-9091).

Deadline for manuscript submissions: 31 January 2025 | Viewed by 22692

Special Issue Editors

Prof. Dr. Eulália Mota Santos

E-Mail Website
Guest Editor
Higher School of Education and Social Sciences, CI&DEI, Polytechnic of Leiria, Leiria, Portugal
Interests: statistical analysis; data analysis; financial analysis; risk management; marketing; tourism
Dr. Margarida Freitas Oliveira

E-Mail Website
Co-Guest Editor
Coimbra Business School | ISCAC – Instituto Superior de Contabilidade e Administração de Coimbra, Politécnico de Coimbra, Coimbra, Portugal
Interests: statistical analysis; data analysis; financial analysis; risk management; marketing; tourism

Special Issue Information

Dear Colleagues,

This Special Issue aims to contribute to research on the topics of financial analysis, corporate finance and risk management. It is imperative to explore cutting-edge methodologies and techniques involving the financial assessment of companies, the strategic planning of corporate finances, and the identification as well as control of risks that may affect companies, thereby ensuring sound and sustainable financial decision making. We invite researchers and professionals from both academia and industry to contribute to this Special Issue by sharing their creative and innovative approaches. The scope of this Special Issue encompasses various aspects, including, but not limited to, the following:

  • Financial analysis.
  • Corporate finance strategies.
  • Risk management frameworks.
  • Financial risk mitigation.
  • Capital structure optimization.
  • Financial market volatility.
  • Sustainable finance practices.

We welcome contributions that offer practical insights derived from real-world applications, as well as theoretical studies that advance the understanding of financial analysis and risk management in companies. Your expertise and research are very important for advancing the fields of financial analysis, corporate finance and risk management. We eagerly anticipate your contributions to this Special Issue.

Prof. Dr. Eulália Mota Santos
Dr. Margarida Freitas Oliveira
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. Risks 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 1800 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

  • financial analysis
  • corporate finance
  • risk management
  • strategic planning
  • risk identification
  • risk control
  • financial decision making
  • innovative practices
  • financial sustainability

Benefits of Publishing in a Special Issue

  • Ease of navigation: Grouping papers by topic helps scholars navigate broad scope journals more efficiently.
  • Greater discoverability: Special Issues support the reach and impact of scientific research. Articles in Special Issues are more discoverable and cited more frequently.
  • Expansion of research network: Special Issues facilitate connections among authors, fostering scientific collaborations.
  • External promotion: Articles in Special Issues are often promoted through the journal's social media, increasing their visibility.
  • e-Book format: Special Issues with more than 10 articles can be published as dedicated e-books, ensuring wide and rapid dissemination.

Further information on MDPI's Special Issue polices can be found here.

Published Papers (16 papers)

Download All Papers
Order results
Result details
Show export options expand_more Show export options expand_less
Select all
Export citation of selected articles as:

Research

40 pages, 3639 KiB  
Article
Nonparametric Testing for Information Asymmetry in the Mortgage Servicing Market
by Helmi Jedidi and Georges Dionne
Risks 2024, 12(12), 192; https://doi.org/10.3390/risks12120192 - 29 Nov 2024
Viewed by 366
Abstract
Our objective is to test for evidence of information asymmetry in the mortgage servicing market. Does the sale of mortgage servicing rights (MSR) by the initial lender to a second servicing institution unveil any residual asymmetric information? We are the first to analyze [...] Read more.
Our objective is to test for evidence of information asymmetry in the mortgage servicing market. Does the sale of mortgage servicing rights (MSR) by the initial lender to a second servicing institution unveil any residual asymmetric information? We are the first to analyze the originator’s selling choice of MSR. We use a large sample of U.S. mortgages that were securitized through the private-label channel during the period of January 2000 to December 2013 (more than 5 million observations). We propose a new nonparametric instrumental variable testing procedure to account for potential endogeneity. For robustness, we present parametric analyses to corroborate our results using instrumental variables. Our empirical results provide strong support for the presence of second-stage asymmetric information in the mortgage servicing market during the period of analysis and before the risk retention reform of 2014. Full article
(This article belongs to the Special Issue Financial Analysis, Corporate Finance and Risk Management)
►▼ Show Figures

Figure 1

29 pages, 2944 KiB  
Article
The Role of Credit Consortia in the Financial Structure of Sardinian Companies During the SARS-CoV-2 Crisis
by Marco Desogus, Enrico Sergi and Stefano Zedda
Risks 2024, 12(12), 190; https://doi.org/10.3390/risks12120190 - 28 Nov 2024
Viewed by 346
Abstract
In this paper, we analyzed the role of credit consortia in supporting SMEs of the Italian region of Sardinia around and during the SARS-CoV-2 pandemic crisis. Credit consortia (or credit guarantee schemes) are financial companies whose institutional role is to support small firms [...] Read more.
In this paper, we analyzed the role of credit consortia in supporting SMEs of the Italian region of Sardinia around and during the SARS-CoV-2 pandemic crisis. Credit consortia (or credit guarantee schemes) are financial companies whose institutional role is to support small firms needing bank lending who are individually weak in the bank–firm relationship. Credit consortia are particularly relevant in Italy, where they mitigate credit restrictions for SMEs by supplying guarantees to the bank, allowing for partial coverage of potential losses, providing peer-monitoring activity, and collectively negotiating more favorable interest rates and other conditions with banks. During the SARS-CoV-2 pandemic, credit consortia had a crucial role in supporting Sardinian SMEs with guarantees and obtaining government financial support. The evolution of Sardinian companies’ financial structures during the SARS-CoV-2 pandemic shows that the confidi-supported firms have low capitalization and are financially fragile yet capable of good returns. The liquidity provided by the government during the pandemic loosened these constraints, boosting the available liquidity, which translated, in short, into higher investment and higher sales. The demographics of Sardinian companies in 2019–2022 and the volumes of loans and savings showed a strengthening of debt capital payments, increased collections, and a progressive improvement of the Sardinian companies’ net financial positions. Full article
(This article belongs to the Special Issue Financial Analysis, Corporate Finance and Risk Management)
►▼ Show Figures

Figure 1

23 pages, 2182 KiB  
Article
The Role of Personal Remittances in Economic Development: A Comparative Analysis with Foreign Direct Investment in Lebanon
by Samar F. Abou Ltaif, Simona Mihai-Yiannaki and Alkis Thrassou
Risks 2024, 12(11), 176; https://doi.org/10.3390/risks12110176 - 7 Nov 2024
Viewed by 669
Abstract
Understanding the role of personal remittances in economic development is crucial, particularly for countries like Lebanon, where these inflows play a significant role in economic stability. This study investigates the impact of personal remittances on Lebanon’s economic development over the period from 2002 [...] Read more.
Understanding the role of personal remittances in economic development is crucial, particularly for countries like Lebanon, where these inflows play a significant role in economic stability. This study investigates the impact of personal remittances on Lebanon’s economic development over the period from 2002 to 2022, employing a mixed-methods approach that combines quantitative regression analyses and qualitative data from surveys. The research finds that personal remittances have a more substantial effect on Lebanon’s GDP compared to foreign direct investment (FDI), with positive correlations observed between remittances and key economic indicators such as GDP, public debt, and unemployment rates. Additionally, qualitative findings reveal that remittances are vital for addressing basic living expenses, education, and healthcare needs, illustrating their multifaceted influence on household well-being. This study contributes to the existing literature by providing a nuanced understanding of how remittances impact economic development in Lebanon and highlights the need for policy interventions aimed at enhancing financial literacy and promoting productive investments. The findings offer valuable implications for policymakers and stakeholders, suggesting that improving the management and utilization of remittances could significantly bolster Lebanon’s economic resilience and growth prospects. Full article
(This article belongs to the Special Issue Financial Analysis, Corporate Finance and Risk Management)
►▼ Show Figures

Figure 1

19 pages, 1774 KiB  
Article
Effective Machine Learning Techniques for Dealing with Poor Credit Data
by Dumisani Selby Nkambule, Bhekisipho Twala and Jan Harm Christiaan Pretorius
Risks 2024, 12(11), 172; https://doi.org/10.3390/risks12110172 - 30 Oct 2024
Viewed by 696
Abstract
Credit risk is a crucial component of daily financial services operations; it measures the likelihood that a borrower will default on a loan, incurring an economic loss. By analysing historical data for assessment of the creditworthiness of a borrower, lenders can reduce credit [...] Read more.
Credit risk is a crucial component of daily financial services operations; it measures the likelihood that a borrower will default on a loan, incurring an economic loss. By analysing historical data for assessment of the creditworthiness of a borrower, lenders can reduce credit risk. Data are vital at the core of the credit decision-making processes. Decision-making depends heavily on accurate, complete data, and failure to harness high-quality data would impact credit lenders when assessing the loan applicants’ risk profiles. In this paper, an empirical comparison of the robustness of seven machine learning algorithms to credit risk, namely support vector machines (SVMs), naïve base, decision trees (DT), random forest (RF), gradient boosting (GB), K-nearest neighbour (K-NN), and logistic regression (LR), is carried out using the Lending Club credit data from Kaggle. This task uses seven performance measures, including the F1 Score (recall, accuracy, and precision), ROC-AUC, and HL and MCC metrics. Then, the harnessing of generative adversarial networks (GANs) simulation to enhance the robustness of the single machine learning classifiers for predicting credit risk is proposed. The results show that when GANs imputation is incorporated, the decision tree is the best-performing classifier with an accuracy rate of 93.01%, followed by random forest (92.92%), gradient boosting (92.33%), support vector machine (90.83%), logistic regression (90.76%), and naïve Bayes (89.29%), respectively. The classifier is the worst-performing method with a k-NN (88.68%) accuracy rate. Subsequently, when GANs are optimised, the accuracy rate of the naïve Bayes classifier improves significantly to (90%) accuracy rate. Additionally, the average error rate for these classifiers is over 9%, which implies that the estimates are not far from the actual values. In summary, most individual classifiers are more robust to missing data when GANs are used as an imputation technique. The differences in performance of all seven machine learning algorithms are significant at the 95% level. Full article
(This article belongs to the Special Issue Financial Analysis, Corporate Finance and Risk Management)
►▼ Show Figures

Figure 1

21 pages, 763 KiB  
Article
Risk Management in Product Diversification: The Role of Managerial Overconfidence in Cost Stickiness—Evidence from Iran
by Mona Parsaei, Davood Askarany, Mahtab Maleki and Ali Rahmani
Risks 2024, 12(10), 150; https://doi.org/10.3390/risks12100150 - 24 Sep 2024
Viewed by 1001
Abstract
Purpose: This study investigates the relationship between product diversification strategy and cost stickiness, focusing on managerial overconfidence as a moderating factor. It aims to address a critical gap in the literature by providing empirical insights grounded in the Resource-Based View (RBV) theory, specifically [...] Read more.
Purpose: This study investigates the relationship between product diversification strategy and cost stickiness, focusing on managerial overconfidence as a moderating factor. It aims to address a critical gap in the literature by providing empirical insights grounded in the Resource-Based View (RBV) theory, specifically examining firms listed on the Tehran Stock Exchange. Methodology: Utilizing a sample of 149 companies from the Tehran Stock Exchange in Iran spanning from 2015 to 2021, this study tests two hypotheses: (1) a positive relationship between product diversification and cost stickiness and (2) the amplification of this relationship by managerial overconfidence. Product diversification is quantified using the Herfindahl Index, while managerial overconfidence is measured through an investment-based index derived from capital expenditures. Cost stickiness is assessed by analysing the asymmetric behaviour of costs in response to changes in sales, focusing on how costs tend to remain high even when sales decrease. Findings: The empirical results substantiate both hypotheses, demonstrating a significant positive relationship between product diversification strategy and cost stickiness. Furthermore, managerial overconfidence amplifies this relationship, highlighting the role of internal resources and managerial perceptions in shaping cost behaviour. Originality: This study contributes substantially to the literature by being among the first to empirically examine the interplay between product diversification strategy, cost stickiness, and managerial overconfidence. Extending the RBV theory to cost behaviour and strategic management provides novel insights for scholars and practitioners in entrepreneurship, corporate strategy, and organizational behaviour. The findings underscore the importance of strategic choices and managerial traits in determining cost stickiness, offering valuable implications for financial analysts, auditors, and stakeholders. Full article
(This article belongs to the Special Issue Financial Analysis, Corporate Finance and Risk Management)
►▼ Show Figures

Figure 1

25 pages, 968 KiB  
Article
A Financial Stability Model for Iraqi Companies
by Narjis Abdlkareem Ibrahim, Mahdi Salehi, Hussen Amran Naji Al-Refiay and Mahmoud Lari Dashtbayaz
Risks 2024, 12(9), 140; https://doi.org/10.3390/risks12090140 - 4 Sep 2024
Viewed by 918
Abstract
The current study aims to develop a financial stability model in Iraq; after reviewing the relevant literature and sources related to financial stability and considering Iraq’s social, economic, political, and cultural conditions, a conceptual model and a research questionnaire have been developed. Based [...] Read more.
The current study aims to develop a financial stability model in Iraq; after reviewing the relevant literature and sources related to financial stability and considering Iraq’s social, economic, political, and cultural conditions, a conceptual model and a research questionnaire have been developed. Based on the developed conceptual model, macro variables at the level of the economy, micro variables at the level of companies, the environmental variables of companies, and corporate governance have been selected as model dimensions. Each dimension has several components, including several indicators; 39 indicators were measured through questions in 2024. The research questionnaire was subjected to the opinion of 21 experts with sufficient experimental and academic records on this subject, and by using the Analytic Hierarchy Process (AHP) and Technique for Order of Preference by Similarity to Ideal Solution (TOPSIS) methods, the results were analyzed, and the final model was extracted. In this model, the scientific method used to analyze the results determines the weight of each dimension, component, and indicator. The results of this research show that the dimensions of corporate governance, the variables of the company environment, micro variables at the company level, and macro variables at the economic level with coefficients of 0.345, 0.251, 0.236, and 0.168, respectively, have the most significant impact on the ranking of the company’s financial stability. So far, research has yet to be conducted to present the financial stability model of Iraqi companies. Therefore, the present research is one of the first studies in this respect, which presents a model both qualitatively (by designing a questionnaire and conceptual model) and quantitatively (through a mathematical model) to measure financial stability that can help the development of science and knowledge in this field. Full article
(This article belongs to the Special Issue Financial Analysis, Corporate Finance and Risk Management)
►▼ Show Figures

Figure 1

38 pages, 9435 KiB  
Article
Mapping the Landscape of Key Performance and Key Risk Indicators in Business: A Comprehensive Bibliometric Analysis
by Ștefan Ionescu, Gabriel Dumitrescu, Corina Ioanăș and Camelia Delcea
Risks 2024, 12(8), 125; https://doi.org/10.3390/risks12080125 - 6 Aug 2024
Viewed by 1698
Abstract
Our study investigates the relevance and application of key performance indicators (KPIs) and key risk indicators (KRIs) in business management from 1992 to 2023 through a comprehensive bibliometric analysis performed in RStudio using the Bibliometrix platform and in VOSviewer. Utilizing data from the [...] Read more.
Our study investigates the relevance and application of key performance indicators (KPIs) and key risk indicators (KRIs) in business management from 1992 to 2023 through a comprehensive bibliometric analysis performed in RStudio using the Bibliometrix platform and in VOSviewer. Utilizing data from the Web of Science database, we identify trends, key themes, and influential research in this domain, observing an annual growth rate of 17.76%. Our analyses include the top 10 most globally cited documents, word clouds based on authors’ keywords and Keywords Plus, clustering by coupling, co-occurrence networks, and factorial analysis. Our findings reveal a significant increase in research interest post-2004, with sustainability and corporate social responsibility emerging as central themes. We confirm positive correlations between KPIs, improved organizational performance, and effective risk management via KRIs. This research underscores the importance of international collaboration and diverse thematic exploration in advancing the field. Full article
(This article belongs to the Special Issue Financial Analysis, Corporate Finance and Risk Management)
►▼ Show Figures

Figure 1

22 pages, 813 KiB  
Article
Impact of Audit Fees on Earnings Management and Financial Risk: An Analysis of Corporate Finance Practices
by Abbas Ali Daryaei, Davood Askarany and Yasin Fattahi
Risks 2024, 12(8), 123; https://doi.org/10.3390/risks12080123 - 2 Aug 2024
Viewed by 1316
Abstract
This study employs a robust quantitative ex post facto research design to investigate the complex relationship between audit fees and earnings management. The financial information of 164 firms admitted to the Tehran Stock Exchange (TSE) was used from 2010 to 2019 (pre-COVID period) [...] Read more.
This study employs a robust quantitative ex post facto research design to investigate the complex relationship between audit fees and earnings management. The financial information of 164 firms admitted to the Tehran Stock Exchange (TSE) was used from 2010 to 2019 (pre-COVID period) to achieve the research goal. Analysing data from the Tehran Stock Exchange firms, the study uncovers an inverted U-shaped relationship between audit fees and earnings management. This suggests that moderate audit fees can lead to higher earnings management. Key contributions of this paper include highlighting the role of audit fees in influencing financial reporting quality and risk management, providing empirical evidence on the asymmetric effects of normal and abnormal audit fees on earnings management, and emphasising the need for balanced audit fee structures to ensure financial transparency and mitigate risk. The findings offer valuable insights for academics, practitioners, and policymakers in understanding the nuances of audit fees and their impact on corporate financial practices. This study advances the literature on financial risk management and corporate finance. It emphasises the importance of balanced audit fee structures for management teams, auditors, and policymakers to ensure transparent financial reporting practices. Full article
(This article belongs to the Special Issue Financial Analysis, Corporate Finance and Risk Management)
►▼ Show Figures

Figure 1

21 pages, 3328 KiB  
Article
Lebanon’s Economic Development Risk: Global Factors and Local Realities of the Shadow Economy Amid Financial Crisis
by Samar F. Abou Ltaif, Simona Mihai-Yiannaki and Alkis Thrassou
Risks 2024, 12(8), 122; https://doi.org/10.3390/risks12080122 - 31 Jul 2024
Viewed by 1235
Abstract
The shadow economy’s size and impact remain subjects of extensive research and debate, holding significant implications for economic policy and social welfare. In Lebanon, the ongoing crisis since 2019 has exacerbated severe economic challenges, with the national currency’s collapse, bank crisis, and foreign [...] Read more.
The shadow economy’s size and impact remain subjects of extensive research and debate, holding significant implications for economic policy and social welfare. In Lebanon, the ongoing crisis since 2019 has exacerbated severe economic challenges, with the national currency’s collapse, bank crisis, and foreign reserve deficits. The World Bank reports Lebanon’s financial deficit surpassed $72 billion, three times the GDP in 2021. Despite a drastic decline in GDP, imports have surged to near-pre-crisis levels, exacerbating economic woes and indicating a constant outflow of foreign currencies. Considering such contracting facts, this paper aims to investigate global factors influencing the shadow economy and discern their manifestations in Lebanon during financial crises. Our methodology involves a comprehensive literature review, alongside a case study approach specific to Lebanon. This dual-method strategy ensures a detailed understanding of the shadow economy’s impact and the development of actionable insights for policy and economic reform. Through this approach, we seek to contribute to a nuanced understanding of Lebanon’s economic landscape and provide valuable guidance for policy decisions aimed at reducing corruption, promoting transparency, and fostering a robust formal economy. The increase in the shadow economy raises the formal economy risk, as resources and activities diverted to informal channels hinder the growth and stability of the official economic sector. Although focusing on Lebanon, this analysis deepens the comprehension of the economic landscape and provides valuable guidance for policymakers, researchers, and stakeholders, aiming to address the root causes of informal economic activities and promote sustainable growth in developing countries in general. Full article
(This article belongs to the Special Issue Financial Analysis, Corporate Finance and Risk Management)
►▼ Show Figures

Figure 1

16 pages, 711 KiB  
Article
Government Borrowing and South African Banks’ Capital Structure: A System GMM Approach
by Ndonwabile Zimasa Mabandla and Godfrey Marozva
Risks 2024, 12(7), 112; https://doi.org/10.3390/risks12070112 - 16 Jul 2024
Viewed by 947
Abstract
This paper aimed to investigate the effects of government borrowing banks’ capital structure using a sample of banks registered in South Africa from 2012 to 2021. Despite the extensive literature on this association, few prominent researchers have studied this phenomenon in the banking [...] Read more.
This paper aimed to investigate the effects of government borrowing banks’ capital structure using a sample of banks registered in South Africa from 2012 to 2021. Despite the extensive literature on this association, few prominent researchers have studied this phenomenon in the banking sector. Applying the generalised method of moments (GMM) model, the study established a positive but significant effect on the South African banks’ capital structure from total government borrowing, local government borrowing and foreign government borrowing, and capital structure. Contrary to the crowding-out effects detected, the results revealed a positive and significant relationship between government borrowing and banks’ capital structure. The crowding-in effect better explains these results, where government borrowing stimulates the local market for goods and services, motivating banks to borrow more in order to meet the demand for loans. Future research should test the cointegrating and causality relationship between government borrowing and bank capital structure. Also, given that the banking sector is constrained by Basel III’s capital adequacy requirement, controlling for this factor is critical in future research. Full article
(This article belongs to the Special Issue Financial Analysis, Corporate Finance and Risk Management)
►▼ Show Figures

Figure 1

20 pages, 870 KiB  
Article
Determinants of Corporate Indebtedness in Portugal: An Analysis of Financial Behaviour Clusters
by Fernando Tavares, Eulália Santos, Margarida Freitas Oliveira and Luís Almeida
Risks 2024, 12(6), 91; https://doi.org/10.3390/risks12060091 - 31 May 2024
Cited by 3 | Viewed by 788
Abstract
Corporate indebtedness is a powerful tool in determining a company’s financial health with impacts on its image and reputation. The main objective of this research is to study the determining factors in corporate indebtedness in Portugal. It also has the secondary objectives of [...] Read more.
Corporate indebtedness is a powerful tool in determining a company’s financial health with impacts on its image and reputation. The main objective of this research is to study the determining factors in corporate indebtedness in Portugal. It also has the secondary objectives of creating clusters of companies’ behaviour in relation to the use of credit and verifying their differences in relation to the characteristics of the companies. It uses a quantitative methodology based on a questionnaire survey of 1957 Portuguese companies. The results of the factor analysis show the formation of six determining factors in corporate indebtedness, namely the negotiating relationship with banks, financing, cycle and indebtedness, company operating performance, guarantees used to obtain bank financing and financing risk analysis as well as secondary forms of bank financing. The application of cluster analysis to the six factors formed led to the classification of companies into three clusters: the resilient financial cluster, the operational excellence cluster and the strategic financial cluster. There are several statistically significant differences in the corporate financing factors in relation to the clusters to which they belong. The evidence of the factors and clusters explaining company financing provides insights for improving credit access practices and for implementing public policies that facilitate access to credit and promote economic development. Full article
(This article belongs to the Special Issue Financial Analysis, Corporate Finance and Risk Management)
►▼ Show Figures

Figure 1

12 pages, 1560 KiB  
Article
Uncertainty Reduction in Operational Risk Management Process
by Guy Burstein and Inon Zuckerman
Risks 2024, 12(5), 77; https://doi.org/10.3390/risks12050077 - 11 May 2024
Viewed by 1479
Abstract
This paper proposes a new framework to reduce the variance and uncertainty in the risk assessment process. Today, this process is susceptible to background noise from sources of human factor biases and erroneous measurements. Our new framework consists of deconstructing the likelihood of [...] Read more.
This paper proposes a new framework to reduce the variance and uncertainty in the risk assessment process. Today, this process is susceptible to background noise from sources of human factor biases and erroneous measurements. Our new framework consists of deconstructing the likelihood of failure function into its sub-factor and then reconstructing it in a formula that can reduce the variance and biases of a human auditor judgment. We tested our new framework on both a questionnaire study and a simulation of the risk assessment process, and the improvement in reducing the variance is significant. Full article
(This article belongs to the Special Issue Financial Analysis, Corporate Finance and Risk Management)
►▼ Show Figures

Figure 1

16 pages, 931 KiB  
Article
Shareholders in the Driver’s Seat: Unraveling the Impact on Financial Performance in Latvian Fintech Companies
by Ramona Rupeika-Apoga, Stefan Wendt and Victoria Geyfman
Risks 2024, 12(3), 54; https://doi.org/10.3390/risks12030054 - 18 Mar 2024
Cited by 1 | Viewed by 1740
Abstract
Fintech companies are relatively young and operate in a rapidly evolving and ever-changing industry, which makes it important to understand how different factors, including shareholder presence in management roles, affect their performance. This study investigates the impact of shareholder presence in director and [...] Read more.
Fintech companies are relatively young and operate in a rapidly evolving and ever-changing industry, which makes it important to understand how different factors, including shareholder presence in management roles, affect their performance. This study investigates the impact of shareholder presence in director and manager positions on the financial performance of Latvian fintechs. Our investigation centers on essential financial ratios, including Return on Assets, Return on Equity, Profit Margin, Liquidity Ratio, Current Ratio, and Solvency Ratio. Our findings suggest that the presence of shareholders in director and manager roles does not significantly affect the financial performance of fintech companies. Although the statistical analysis did not yield significant results, it is important to consider additional insights garnered from Cliff’s Delta effect sizes. Specifically, despite the lack of statistical significance, practical significance indicates that fintech companies in which directors and managers are shareholders show slightly better performance than other fintech companies. Beyond shedding light on the intricacies of corporate governance in the fintech sector, this research serves as a valuable resource for investors, stakeholders, and fellow researchers seeking to understand the impact of shareholder presence in director and manager roles on the financial performance of fintechs. Full article
(This article belongs to the Special Issue Financial Analysis, Corporate Finance and Risk Management)
►▼ Show Figures

Figure 1

29 pages, 780 KiB  
Article
Robust Portfolio Optimization with Environmental, Social, and Corporate Governance Preference
by Marcos Escobar-Anel and Yiyao Jiao
Risks 2024, 12(2), 33; https://doi.org/10.3390/risks12020033 - 5 Feb 2024
Cited by 1 | Viewed by 2364
Abstract
This study addresses the crucial but under-explored topic of ambiguity aversion, i.e., model misspecification, in the area of environmental, social, and corporate governance (ESG) within portfolio decisions. It considers a risk- and ambiguity-averse investor allocating resources to a risk-free asset, a market index, [...] Read more.
This study addresses the crucial but under-explored topic of ambiguity aversion, i.e., model misspecification, in the area of environmental, social, and corporate governance (ESG) within portfolio decisions. It considers a risk- and ambiguity-averse investor allocating resources to a risk-free asset, a market index, a green stock, and a brown stock. The study employs a robust control approach rooted in relative entropy to account for model misspecification and derive closed-form optimal investment strategies. The key contribution of this study includes demonstrating, using two sets of empirical data on asset returns and ESG ratings, the substantial influence of ambiguity on optimal trading strategies, particularly highlighting the differential effects of market, green, and brown ambiguities. As a by-product of our analytical solutions, the study contrasts ambiguity-averse investors with their non-ambiguity counterparts, revealing more cautious risk exposures with a reduction in short-selling positions for the former. Furthermore, three types of investors who employ popular suboptimal strategies are identified, together with two loss measures used to quantify their performance. The findings reveal that popular strategies, not accounting for ESG and misspecification in the model, could lead to significant financial costs, with the extent of loss varying depending on those two factors: investors’ ambiguity aversion profiles and ESG preferences. Full article
(This article belongs to the Special Issue Financial Analysis, Corporate Finance and Risk Management)
►▼ Show Figures

Figure 1

13 pages, 407 KiB  
Article
Features of the Association between Debt and Earnings Quality for Small and Medium-Sized Entities
by José Sequeira, Cláudia Pereira, Luís Gomes and Armindo Lima
Risks 2024, 12(2), 32; https://doi.org/10.3390/risks12020032 - 3 Feb 2024
Viewed by 2205
Abstract
The main source of financing is bank loans for Portuguese small and medium-sized entities (SMEs), which implies several constraints to obtaining additional funds. Relying on the argument of Positive Accounting Theory (PAT) that accounting choices are not neutral and on Agency Theory that [...] Read more.
The main source of financing is bank loans for Portuguese small and medium-sized entities (SMEs), which implies several constraints to obtaining additional funds. Relying on the argument of Positive Accounting Theory (PAT) that accounting choices are not neutral and on Agency Theory that information asymmetry prevails between insiders and outsiders, we analyzed the impacts of debt on earnings quality, focusing on its level, its increases, and its term of payment. We estimated econometric regressions using panel data with fixed effects over 2013–2019, using discretionary accruals as an inverse proxy of earnings quality. We found empirical evidence that the relationship between debt and earnings quality tends to vary in sign, as the quality of financial information deteriorates with debt, but as debt becomes high, firms tend to increase the quality of earnings. Furthermore, we found that short-term debt tends to decrease earnings quality more than long-term debt. This article aimed to contribute to the prior literature by collecting evidence that debt levels tend to be an incentive to increase earnings management and fill the gap by analyzing the influence of different debt features. This evidence is useful because earnings management may compromise both stakeholders’ confidence and the efficient allocation of capital. Full article
(This article belongs to the Special Issue Financial Analysis, Corporate Finance and Risk Management)
20 pages, 3130 KiB  
Article
Simulation of Dynamic Performance of DeFi Protocol Based on Historical Crypto Market Behavior
by Iveta Grigorova, Aleksandar Karamfilov, Radostin Merakov and Aleksandar Efremov
Risks 2024, 12(1), 3; https://doi.org/10.3390/risks12010003 - 25 Dec 2023
Viewed by 2408
Abstract
In a rapidly evolving and often volatile crypto market, the ability to use historical data for simulations provides a more realistic assessment of how decentralized finance (DeFi) protocols might perform. This insight is crucial for participants, developers, and investors seeking to make informed [...] Read more.
In a rapidly evolving and often volatile crypto market, the ability to use historical data for simulations provides a more realistic assessment of how decentralized finance (DeFi) protocols might perform. This insight is crucial for participants, developers, and investors seeking to make informed decisions. This paper presents a comprehensive study evaluating the dynamic performance of a newly developed DeFi protocol—NOLUS. The main objective of this paper is to present and analyze the built realistic model of the platform. This model could be successfully used to analyze the stability of the platform under different environmental influences by performing various simulations and conducting experiments with different parameters that could not be realized with the real platform. In the article, the key components of the platform are presented in detail and the main dependencies between them are clarified, in addition to the ways of forming multiple variables, and the complex relations between them in the real protocol are explained. The main finding from the experimental part of the study is that the performance of the protocol representation accounts for the expected system behavior. Hence the system simulation could be successfully used to reveal essential protocol behaviors resulting from potential shifts in the crypto market environment and to optimize the protocol’s hyper parameters. Full article
(This article belongs to the Special Issue Financial Analysis, Corporate Finance and Risk Management)
►▼ Show Figures

Figure 1

Show export options expand_more Show export options expand_less
Select all
Export citation of selected articles as:
 
Displaying articles 1-16
Back to TopTop