Risks

Research

17 pages, 440 KiB

Open AccessArticle

The Impact of Value-Added Intellectual Capital on Corporate Performance: Cross-Sector Evidence

by Darya Dancaková and Jozef Glova

Risks 2024, 12(10), 151; https://doi.org/10.3390/risks12100151 - 25 Sep 2024

Viewed by 2195

This study explores the relationship between intellectual capital (IC) and the financial performance of 250 publicly traded companies in France, Germany, and Switzerland from 2009 to 2018, addressing the gaps in prior research regarding the differential impacts of IC components across countries and [...] Read more.

This study explores the relationship between intellectual capital (IC) and the financial performance of 250 publicly traded companies in France, Germany, and Switzerland from 2009 to 2018, addressing the gaps in prior research regarding the differential impacts of IC components across countries and industries in Western and Central Europe. Using the Value-Added Intellectual Coefficient (VAIC™) approach, this study evaluates human capital efficiency (HCE), structural capital efficiency (SCE), and capital employed efficiency (CEE). Panel regression analyses at the country and industry levels were conducted to assess their effects on financial metrics, such as return on equity (ROE), return on assets (ROA), and asset turnover ratio (ATO). The findings reveal a significant positive association between SCE, CEE, and firm performance, with CEE showing the most substantial effect, while HCE had a relatively weaker impact. Additionally, the study uncovers a trade-off between the accumulation of patents and trademarks and short-term financial performance, raising new considerations for intellectual property management. This research contributes to the literature by providing a nuanced understanding of how IC components influence financial outcomes across different contexts and offers practical insights for firms aiming to optimize structural capital and capital-employed strategies for improved financial performance while acknowledging the limitations regarding the sample of publicly traded firms. Full article

(This article belongs to the Special Issue Corporate Finance and Intellectual Capital Management)

22 pages, 510 KiB

Open AccessArticle

Corporate Governance and Capital Structure Decisions: Moderating Role of inside Ownership

by Suman Paul Chowdhury, Riyashad Ahmed, Nitai Chandra Debnath, Nafisa Ali and Roni Bhowmik

Risks 2024, 12(9), 144; https://doi.org/10.3390/risks12090144 - 10 Sep 2024

Viewed by 961

Abstract

This study empirically investigates the association between board attributes and capital structure decisions of non-financial listed firms in Bangladesh. This study also investigates how this association is shaped and moderated by the level of insider ownership. The current study takes 3096 firm-year observations [...] Read more.

This study empirically investigates the association between board attributes and capital structure decisions of non-financial listed firms in Bangladesh. This study also investigates how this association is shaped and moderated by the level of insider ownership. The current study takes 3096 firm-year observations of firms that are listed on the Dhaka Stock Exchange from 2004 to 2023. Multiple regression analysis on panel data was used, and pooled OLS was selected by resolving stationary issues. Moreover, this study used lagged variables and a GMM estimator to address endogeneity. The results show that both board size and board independence are more positively correlated with a firm’s leverage under conditions of a high level of inside ownership. On the other hand, without the moderating effect of inside ownership, gender diversity on the board does not have any significant impact on a firm’s leverage, and it turns into a positive association due to the moderating effect of inside ownership. This result is consistent with the existing theory and previous findings. After the introduction of corporate governance guidelines, the inside owners’ effect on board size and board independence became substantial, indicating that corporate governance guidelines with the moderating role of inside ownership play a significant role in capital structure decisions in Bangladeshi listed firms. Full article

(This article belongs to the Special Issue Corporate Finance and Intellectual Capital Management)

16 pages, 390 KiB

Open AccessArticle

Intellectual Capital, Political Connection, and Firm Performance: Exploring from Indonesia

by Suham Cahyono and Ardianto Ardianto

Risks 2024, 12(7), 105; https://doi.org/10.3390/risks12070105 - 24 Jun 2024

Viewed by 1391

Abstract

The relationship between intellectual capital and firm performance represents a critical facet of corporate governance, warranting comprehensive investigation. By analyzing data from 1151 non-financial firms listed on the Indonesia Stock Exchange over the period from 2018 to 2022, the authors utilize fixed effect [...] Read more.

The relationship between intellectual capital and firm performance represents a critical facet of corporate governance, warranting comprehensive investigation. By analyzing data from 1151 non-financial firms listed on the Indonesia Stock Exchange over the period from 2018 to 2022, the authors utilize fixed effect regression analysis to test their hypothesis. This study’s findings reveal a positive and significant relationship between intellectual capital and firm performance. Additionally, the interaction model incorporating political connections yields statistically significant results, indicating that political connections can moderate the relationship between intellectual capital and firm performance. This study makes a substantial contribution to the literature, particularly by advancing the understanding of corporate governance through the lens of intellectual capital’s influence on firm performance. It offers both theoretical and practical insights into the Indonesian context, highlighting the moderating role of political connections. Notably, this study is the first to incorporate interaction models to assess the impact of political connections on this relationship. Full article

(This article belongs to the Special Issue Corporate Finance and Intellectual Capital Management)

28 pages, 476 KiB

Open AccessArticle

Cross-Sectional Determinants of Analyst Coverage for R&D Firms

by Ashraf Khallaf, Feras M. Salama, Musa Darayseh and Eid Alotaibi

Risks 2024, 12(6), 98; https://doi.org/10.3390/risks12060098 - 18 Jun 2024

Viewed by 898

Abstract

Prior research document a positive association between analyst coverage and R&D. However, they do not investigate what particular attribute of R&D leads to this positive association. In this study we aim to fill the gap in the extant literature and explore the cross-sectional [...] Read more.

Prior research document a positive association between analyst coverage and R&D. However, they do not investigate what particular attribute of R&D leads to this positive association. In this study we aim to fill the gap in the extant literature and explore the cross-sectional determinants of the association between R&D and analyst coverage. We investigate four cross-sectional determinants: reporting biases arising from expensing of R&D compared to capitalization of R&D, uncertainty associated with R&D, investors’ attention, and scale effects of R&D. We find that while reporting biases and uncertainty decrease analyst coverage for R&D firms, investors’ attention and scale effects of R&D increase analyst coverage. Furthermore, we find that the positive association between R&D and analyst coverage documented by Barth et al. is fully explained by scale effects of R&D. Full article

(This article belongs to the Special Issue Corporate Finance and Intellectual Capital Management)

15 pages, 721 KiB

Open AccessArticle

Effect of Capital Structure on the Financial Performance of Ethiopian Commercial Banks

by Seid Muhammed, Goshu Desalegn and Prihoda Emese

Risks 2024, 12(4), 69; https://doi.org/10.3390/risks12040069 - 18 Apr 2024

Cited by 3 | Viewed by 3882

Abstract

This study aimed to examine the effects of capital structure on the financial performance of Ethiopian commercial banks. The dependent variable, financial performance, is measured by Return on Assets (ROA), while factors such as loan-to-deposit ratio (LDR), asset-to-total equity ratio (ATER), total deposit-to-total [...] Read more.

This study aimed to examine the effects of capital structure on the financial performance of Ethiopian commercial banks. The dependent variable, financial performance, is measured by Return on Assets (ROA), while factors such as loan-to-deposit ratio (LDR), asset-to-total equity ratio (ATER), total deposit-to-total asset ratio (TDTAR), capital adequacy ratio (CAD), and asset growth ratio (GA) were used as proxy independent variables to gauge capital structure. Using a quantitative approach and an explanatory research design, this study analyzes 6 years of audited financial reports from 14 commercial banks in Ethiopia. This investigation employs a random effect regression model and Stata 14 software package to explore the relationships among these variables. The result revealed that both the loan-to-deposit ratio and the total deposit-to-total asset ratio have a positive and significant impact on financial performance, while the asset growth ratio showed a negative effect. Based on these findings, this study recommends that bank authorities concentrate on bolstering their deposit base, managing asset growth efficiently, maintaining adequate capital levels, and optimizing leverage levels to improve financial performance and ensure long-term sustainability in the banking sector. Additionally, this research is anticipated to inform policymakers about regulatory frameworks for banks and assist banking managers in formulating effective capital financing strategies within the Ethiopian commercial banking sector, thus enriching the existing literature on the relationship between capital structure and financial performance. Full article

(This article belongs to the Special Issue Corporate Finance and Intellectual Capital Management)

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19 pages, 774 KiB

Open AccessArticle

Unveiling the Role of Investment Tangibility on Financial Leverage: Insights from African-Listed Firms

by Edson Vengesai

Risks 2023, 11(11), 192; https://doi.org/10.3390/risks11110192 - 1 Nov 2023

Cited by 1 | Viewed by 3516

Abstract

The asset structure of a firm plays a pivotal role in determining its leverage. A higher proportion of physical assets is often associated with high debt ratios. This study explores the impact of investment tangibility on financial leverage, examining both tangible and intangible [...] Read more.

The asset structure of a firm plays a pivotal role in determining its leverage. A higher proportion of physical assets is often associated with high debt ratios. This study explores the impact of investment tangibility on financial leverage, examining both tangible and intangible investments. Using a dynamic panel data model estimated through the two-step system generalized method of moments (GMM), we analyse a dataset encompassing 815 non-financial listed firms from 22 African stock markets. The results show that African firms have higher inclinations to invest in physical assets. We found a statistically significant negative relationship between leverage and tangible and intangible investments. The findings indicate that African firms tend to maintain lower leverages regardless of whether they invest in tangible or intangible assets. The observed relationship aligns with the hypothesis that high-growth firms, in their expansion efforts, strategically tend to opt for low debt to mitigate the agency costs associated with debt and to help prevent underinvestment. This outcome underscores the interconnected nature of financing and investment decisions. This research contributes to the literature on financial leverage and investment by dissecting investments into tangible and non-tangible components and highlighting their distinct impacts on leverage. Moreover, it provides empirical evidence for previously unexplored African firms, shedding light on the reasons behind the relatively low leverage levels observed in African firms. Full article

(This article belongs to the Special Issue Corporate Finance and Intellectual Capital Management)

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13 pages, 547 KiB

Open AccessArticle

The Relationship between Innovation and Risk Taking: The Role of Firm Performance

by Yuni Pristiwati Noer Widianingsih, Doddy Setiawan, Y. Anni Aryani and Evi Gantyowati

Risks 2023, 11(8), 144; https://doi.org/10.3390/risks11080144 - 5 Aug 2023

Cited by 2 | Viewed by 6580

Abstract

One perspective suggests that firms heavily involved in innovation may face increased risks. It is essential to know the suitable proxies in measuring innovation related to risk taking. Many studies use research-and-development intensity (RDI) and research-and-development spending (RDS) as proxies for innovation related [...] Read more.

One perspective suggests that firms heavily involved in innovation may face increased risks. It is essential to know the suitable proxies in measuring innovation related to risk taking. Many studies use research-and-development intensity (RDI) and research-and-development spending (RDS) as proxies for innovation related to risk taking. However, little evidence shows that positive association with risk taking. This study addresses this gap by using RDI and RDS as metrics for measuring innovation and assessing innovation-related risks. This study incorporated performance as a potential factor affecting the interaction between these variables. It is essential to consider the risks associated with innovation and allocate the RDI and RDS effectively to maximize revenue. We used a dataset of 3955 firm-year observations obtained from 548 listed firms in the Indonesian stock exchange for 2012–2021. We found that RDI and RDS positively affect risk taking. The test results show that the interaction between innovation and firm performance negatively affects risk taking. Thus, firm performance may mitigate the risks associated with innovation. Therefore, firms must balance their innovation projects with improved performance to minimize risks and achieve long-term success. Full article

(This article belongs to the Special Issue Corporate Finance and Intellectual Capital Management)

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31 pages, 938 KiB

Open AccessArticle

Building a Macroeconomic Simulator with Multi-Layered Supplier–Customer Relationships

by Takahiro Obata, Jun Sakazaki and Setsuya Kurahashi

Risks 2023, 11(7), 128; https://doi.org/10.3390/risks11070128 - 12 Jul 2023

Cited by 2 | Viewed by 1452

Abstract

This study constructs an agent-based model suitable for analyzing the propagation of economic shocks based on a macroeconomic agent-based model structure that covers major economic entities. Instead of setting an upstream and downstream structure of firms in the inter-firm networks, our model includes [...] Read more.

This study constructs an agent-based model suitable for analyzing the propagation of economic shocks based on a macroeconomic agent-based model structure that covers major economic entities. Instead of setting an upstream and downstream structure of firms in the inter-firm networks, our model includes a mechanism that connects each firm through supplier–customer relationships and incorporates interactions between firms mutually buying and selling intermediate input materials. It is confirmed through the proposed model’s simulation analysis that, although a firm’s sales volume temporarily falls due to an economic shock of the type that causes a sharp decline in households’ final demand, the increase in assets held by households as they refrain from spending rather expands their capacity for consumption. As a result, after the economic shock ceases to exist, the firm’s sales volume tends to be even greater than that of the preceding periods of the shock. Furthermore, we found that when the sales volume of products in a final consumer goods sector falls during the shock, the falls in sales in the non-final consumer goods sectors are suppressed due to replacement demand, and the increase in sales volume for the non-final consumer goods sectors is moderated after the shock ceases to exist. Full article

(This article belongs to the Special Issue Corporate Finance and Intellectual Capital Management)

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