Search Results (729)

High-dimensional prediction problems with complex non-linear feature interactions present significant algorithmic challenges in machine learning, particularly when dealing with imbalanced datasets and multicollinearity issues. This study proposes an innovative Shapley Additive Explanations (SHAP)-enhanced machine learning framework that integrates SHAP with advanced ensemble methods for interpretable financialization prediction. The methodology simultaneously addresses high-dimensional feature selection using 40 independent variables (19 CSR-related and 21 financialization-related), multicollinearity issues, and model interpretability requirements. Using a comprehensive dataset of 25,642 observations from 3776 Chinese A-share companies (2011–2022), we implement nine optimized machine learning algorithms with hyperparameter tuning via the Hippopotamus Optimization algorithm and five-fold cross-validation. XGBoost demonstrates superior performance with 99.34% explained variance, achieving an RMSE of 0.082 and R² of 0.299. SHAP analysis reveals non-linear U-shaped relationships between key predictors and financialization outcomes, with critical thresholds at approximately 10 for CSR_SocR, 1.5 for CSR_S, and 5 for CSR_CV. SOE status, EPU, ownership concentration, firm size, and housing prices emerge as the most influential predictors. Notable shifts in factor importance occur during the COVID-19 pandemic period (2020–2022). This work contributes a scalable, interpretable machine learning architecture for high-dimensional financial prediction problems, with applications in risk assessment, portfolio optimization, and regulatory monitoring systems. Full article

In the context of the GCC, the adoption of integrated reporting (IR) remains limited, due in part to weak regulatory enforcement, a lack of awareness of the strategic benefits of IR, and a strong focus on short-term financial results. This limited reporting context presents a significant challenge for firms to credibly demonstrate their value to the market and attract potential investors, thus communicating long-term value. Given these limitations, this study considers how IR contributes to firm value, but also examines the mediating role that firm image (FI) plays in this relationship as a reputational construct representing stakeholder perspectives of a firm’s transparency and accountability. The research employs a quantitative methodology, analysing secondary data from corporate governance and integrated reports spanning 2017–2018 to 2022–2023. Findings indicate a positive and robust relationship between integrated reporting and the firm’s value, which was assessed using Tobin’s Q. The findings highlight the significant mediating role of firm image, illustrating how IR practices, via increased transparency, accountability, and sustainability, enhance firm value. This study provides significant insights for researchers, policymakers, and corporate managers, highlighting the strategic relevance of IR in the GCC region. The findings demonstrate that integrated reporting improves transparency, accountability, and sustainability, thereby assisting corporate managers in utilising IR to enhance firm image and facilitate value creation. Policymakers can utilise these insights to develop regulatory frameworks that promote integrated reporting practices, thereby enhancing transparency and sustainable growth within the corporate sector. Full article

This study uses financial data from 872 Chinese listed companies (2018–2022). It tests the triple dividend effect and threshold effect of China’s environmental protection tax (EPT) using high-dimensional fixed effects models and panel threshold models. We document that (1) EPT creates an environmental dividend for Chinese listed companies. It significantly reduces pollution emissions. A 1-unit tax increase reduces LnTPPE by 2.5%. (2) EPT creates a significant innovation dividend. It forces enterprises to improve the quality of authorized patents. A 1-unit tax increase raises patent technological complexity by 0.79%. (3) EPT creates an economic dividend. It significantly improves firm performance. A 1-unit tax increase raises relative corporate revenue by 38.1%. (4) EPT exerts significant threshold effects on micro-level triple dividend outcomes among Chinese listed companies. A heterogeneity analysis shows significant differences in threshold effects between non-heavily polluting and heavily polluting industries. This study confirms that China’s EPT generates a micro-level triple dividend effect alongside coexisting threshold effects for listed companies. This provides literature references for China to design and implement differentiated policies and offers a quantitative empirical case for implementing globally sustainable EPT strategies. Full article

This study investigates the influence of corporate governance on reducing financial statement fraud (FSF) in Jordanian service and industrial companies listed on the Amman Stock Exchange from 2018 to 2022. To achieve this, the study employed the Beneish M-score model to assess the likelihood of FSF and logistic regression to examine the influence of corporate governance structure on fraud mitigation. The study identified 13 independent variables, including board size, board director’s independence, board director’s compensation, non-duality of CEO and chairman positions, board diversity, audit committee size, audit committee accounting background, number of annual audit committee meetings, external audit fees, board family business, the presence of women on the board of directors, firm size, and market listing on FSF. The study included 74 companies from both sectors—33 from the industrial sector and 41 from the service sector. Primary data was collected from financial statements and other information published in annual reports between 2018 and 2022. The results of the study revealed a total of 295 cases of fraud during the examined period. Out of the 59 companies analyzed, 21.4% demonstrated a low probability of fraud, while the remaining 78.6% (232 observations) showed a high probability of fraud. The results indicate that the following corporate governance factors significantly impact the mitigation of financial statement fraud (FSF): independent board directors, board diversity, audit committee accounting backgrounds, the number of audit committee meetings, family business involvement on the board, and firm characteristics. The study provides several recommendations, highlighting the importance for companies to diversify their boards of directors by incorporating different perspectives and experiences. Full article

This study explores how corporate governance reforms can enhance financial reporting quality and organizational transparency, focusing on Greece’s transition from Law 3016/2002 to Law 4706/2020. The legislative reform aimed to modernize governance structures, align national practices with international standards, and strengthen investor protection in a post-crisis economic environment. Moving beyond a simple legal comparison, the study examines how Law 3016/2002’s formal compliance model contrasts with Law 4706/2020’s more substantive accountability framework. We hypothesize that Law 4706/2020 introduces substantively stronger governance mechanisms than its predecessor, thereby improving transparency and investor protection, while compliance with the new law imposes materially greater administrative and financial burdens, especially on small- and mid-cap firms. Methodologically, the research employs a narrative literature review and a structured comparative legal analysis to assess the administrative and financial implications of the new law for publicly listed companies, focusing on board composition and diversity, internal controls, suitability policies, and disclosure requirements. Drawing on prior comparative evidence, we posit that Law 4706/2020 will foster governance and disclosure improvements, enhanced oversight, and clearer board roles. However, these measures also impose compliance burdens. Due to the heterogeneity of listed companies and the lack of firm-level data following Law 4706/2020’s implementation, the findings are neither fully generalizable nor quantifiable; future quantitative research using event studies or panel data is required to validate the hypotheses. We conclude that Greece’s new framework is a critical step toward sustainable corporate governance and more transparent financial reporting, offering regulators, practitioners, and scholars examining legal reform’s impact on governance effectiveness and financial reporting integrity. Full article

Based on firm-level data of Japanese listed companies for the period of 2013–2022, this study conducts an empirical analysis to investigate how the issuance of green bonds influences corporate environmental and financial performance. The results show that the green bond issuance demonstrates a reduction in corporate greenhouse gas emission intensity and energy consumption intensity in the long term. Moreover, the issuance of green bonds enhances the financial performance of firms in the long run. However, the positive effect of green bond issuance on corporate environmental and financial performance is significant only among firms that have set specific quantitative environmental targets. In addition, for manufacturing and transportation green bond issuers that have set specific quantitative environmental targets, the improvement in environmental performance is evident in both the long and short term. Full article

Amid intensifying global ESG regulations and the expanding influence of green finance, China’s digital economy policies have emerged as key institutional instruments for promoting corporate sustainability. Leveraging the implementation of the National Big Data Comprehensive Pilot Zone as a quasi-natural experiment, this study utilizes panel data of Chinese listed firms from 2009 to 2023 and applies multi-period Difference-in-Differences (DID) and Spatial DID models to rigorously identify the policy’s effects on corporate ESG performance. Empirical results indicate that the impact of digital economy policy is not exerted through a direct linear pathway but operates via three institutional mechanisms, enhanced information transparency, eased financing constraints, and expanded fiscal support, collectively constructing a logic of “institutional embedding–governance restructuring.” Moreover, disruptive technological innovation significantly amplifies the effects of the transparency and fiscal mechanisms, but exhibits no statistically significant moderating effect on the financing constraint pathway, suggesting a misalignment between innovation heterogeneity and financial responsiveness. Further heterogeneity analysis confirms that the policy effect is concentrated among firms characterized by robust governance structures, high levels of property rights marketization, and greater digital maturity. This study contributes to the literature by developing an integrated moderated mediation framework rooted in institutional theory, agency theory, and dynamic capabilities theory. The findings advance the theoretical understanding of ESG policy transmission by unpacking the micro-foundations of institutional response under digital policy regimes, while offering actionable insights into the strategic alignment of digital transformation and sustainability-oriented governance. Full article

The digital business environment is rapidly evolving with advancements in information technology (IT), increasing the risk of information security incidents. Grounded in the resource-based view and in contingency theory, this study adopts a different approach from prior research by conceptualizing security management activities not as mere risk control mechanisms, but as strategic innovation drivers that can enhance corporate performance (sales revenue and operating profit). The authors develop a research model with six independent variables, including internal and external security management activities, CISO role configuration (independent or dual-role with CIO), and investment levels in IT and information security. The dependent variables include sales revenue and operating profit, with ISMS or ISO certification as a moderating variable. Using information security (IS) disclosures and financial data from 545 Korean firms that have reported their security management activities to the Ministry of Science and ICT, multiple regression and moderation analyses reveal that high IT investment negatively impacts performance, but this effect is mitigated when formal security systems, like ISMS or ISO, are in place. The results suggest that integrating recognized security frameworks into management strategies can enhance both innovation and financial outcomes, encouraging a proactive approach to security management. Full article

From the perspective of credit ratings, this paper studies the impact of air pollution on corporate credit costs and the impact mechanism. Based on 2007–2022 data on A-share listed companies in the Chinese capital market, this paper uses a two-way fixed effects model to examine the impact of air pollution on corporate credit costs and the impact mechanism. The results show that air pollution increases the credit costs for enterprises because air pollution affects the sentiment of rating analysts, leading them to give more pessimistic credit ratings to enterprises located in areas with severe air pollution. The moderating effect analysis reveals that the effect of air pollution on the increase in corporate credit costs is more pronounced for high-polluting industries, manufacturing industries, and regions with weaker bank competition. Further analysis reveals that in the face of rising credit costs caused by air pollution, enterprises tend to adopt a combination strategy of increasing commercial credit financing and reducing the commercial credit supply to cope. Although this response behavior alleviates corporations’ own financial pressure, it may have a negative effect on supply chain stability. This paper provides new evidence that reveals that air pollution is an implicit cost in the capital market, enriching research in the fields of environmental governance and capital markets. Full article

Promoting social equity is a global issue, and common prosperity is an important goal for human society’s sustainable development. This study is the first to examine climate risks’ impacts on common prosperity from the perspective of corporate employees, providing micro-level evidence for the coordinated development of climate governance and social equity. Employing data from companies listed on the Shanghai and Shenzhen stock exchanges from 2016 to 2023, a fixed-effects model analysis was conducted, and the results showed the following: (1) Climate risks are positively associated with the common prosperity of corporate employees in a significant way, and this effect is mainly achieved through employee guarantees, rather than employee remuneration or employment. (2) Climate risk will increase corporate financing constraints, but it will also force companies to improve their ESG performance. (3) The mechanism tests show that climate risks indirectly promote improvements in employee rights and interests by forcing companies to improve the quality of internal controls and audits. (4) The results of the moderating effect analysis show that corporate size and performance have a positive moderating effect on the relationship between climate risk and the common prosperity of corporate employees. This finding may indicate the transmission path of “climate pressure—governance upgrade—social equity” and suggest that climate governance may be transformed into social value through institutional changes in enterprises. This study breaks through the limitations of traditional research on the financial perspective of the economic consequences of climate risks, incorporates employee welfare into the climate governance assessment framework for the first time, expands the micro research dimension of common prosperity, provides a new paradigm for cross-research on ESG and social equity, and offers recommendations and references for different stakeholders. Full article

As sustainability becomes a strategic priority across global financial services, its implementation in emerging insurance markets remains insufficiently understood. This study explores the integration of environmental, social, and governance (ESG) principles within Saudi Arabia’s insurance sector, combining content analysis of corporate disclosures with qualitative insights from industry stakeholders. The research investigates how insurers embed ESG principles into their operations, the development of sustainable insurance products, and their perceived financial and regulatory implications. The findings reveal gradual progress in ESG integration, primarily driven by governance reforms aligned with national development agendas, while social and environmental dimensions remain comparatively underdeveloped. Stakeholders identify regulatory ambiguity, data limitations, and technical capacity as persistent barriers, but also point to increasing investor and consumer interest in sustainability-aligned offerings. This study offers policy and managerial recommendations to advance ESG principle adoption, emphasizing standardized disclosures, capacity-building, and product innovation. It contributes to the limited empirical literature on ESG principles in Middle Eastern insurance markets and highlights the sector’s potential role in promoting inclusive and sustainable finance. Full article

The main objective of this study is to analyse the relevance of financial performance as an accurate predictor of ESG scores for French companies from 2010 to 2022. To this end, Machine Learning techniques such as linear regression, polynomial regression, Random Forest, and Support Vector Regression (SVR) were employed to provide more accurate and reliable assessments, thus informing the ESG rating attribution process. The results obtained highlight the excellent performance of the Random Forest method in predicting ESG scores from company financial variables. In addition, the approach identified specific financial variables (operating income, market capitalisation, enterprise value, etc.) that act as powerful predictors of companies’ ESG scores. This modelling approach offers a robust tool for predicting companies’ ESG scores from financial data, which can be valuable for investors and decision-makers wishing to assess and understand the impact of financial variables on corporate sustainability. Also, this allows sustainability investors to diversify their portfolios by including companies that are not currently rated by ESG rating agencies, that do not produce sustainability reports, as well as newly listed companies. It also gives companies the opportunity to identify areas where improvements are needed to enhance their ESG performance. Finally, it facilitates access to ESG ratings for interested external stakeholders. Our study focuses on using advances in artificial intelligence, exploring machine learning techniques to develop a reliable predictive model of ESG scores, which is proving to be an original and promising area of research. Full article

Demands for companies to comply with environmental, social, and governance (ESG) requirements are growing, and companies are also expected to play a role in promoting sustainable development. For companies to achieve sustainable growth while addressing ESG, it must be understood whether ESG activities promote improved corporate financial performance. We conducted a five-year panel data analysis of 635 Japanese firms from FY 2019 to FY 2023, using the PBR, PER, and ROE financial indicators as the dependent variables and CSR ratings in the human resource utilization (HR), environment (E), governance (G), and social (S) categories as the independent variables. The results revealed that, depending on the combination of ESG field and financial indicators, companies with advanced ESG initiatives had greater financial performance, with some cases showing a nonlinear relationship; differences in the results between manufacturing and nonmanufacturing industries were also observed. For companies to effectively advance ESG activities, it is important to clarify the objectives and results for each ESG category. For policymakers to consider measures to encourage companies’ ESG activities, it is also important to design finely tuned regulations and incentives according to the ESG category and industry characteristics. Full article

This study examines the influence of ethical leadership on corporate sustainability and financial performance, highlighting the moderating effect of firms’ commitment to the United Nations Sustainable Development Goals (SDGs). Utilizing panel data from 420 automotive companies spanning 2015 to 2024, the analysis applies the System Generalized Method of Moments (GMM) to control for endogeneity and unobserved heterogeneity. All data were gathered from the Refinitiv Eikon Platform (LSEG) and annual reports. Panel GMM regression is used to estimate the relationship to deal with the endogeneity problem. The results reveal that ethical leadership significantly improves corporate sustainability performance—measured by ESG scores from Refinitiv Eikon and Bloomberg—as well as financial indicators like Return on Assets (ROA) and Tobin’s Q. Additionally, firms that demonstrate breadth (the range of SDG-related themes addressed), concentration (the distribution of non-financial disclosures across SDGs), and depth (the overall volume of SDG-related information) in their SDG disclosures gain greater advantages from ethical leadership, resulting in enhanced ESG performance and higher market valuation. This study offers valuable insights for corporate leaders, policymakers, and investors on how integrating ethical leadership with SDG alignment can drive sustainable and financial growth. Full article

This paper examines the moderating role of corporate social responsibility (CSR) on the relationship between environmental, social, and governance (ESG) dimensions and investor decision-making in Jordan. Data were collected using a structured questionnaire designed for institutional investors and financial analysts, capturing perceptions of ESG, CSR, and investment behavior. A stratified random sample of 350 professionals across the financial, industrial, and service sectors was surveyed. The data were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) with SmartPLS 4. The findings show that environmental and social dimensions have positive effects on investor decisions, with governance dimensions having a negative effect. Notably, CSR has a negative moderating effect on the governance dimensions and investor decision, with no observed statistical moderating effect for environmental or social dimensions. This research unravels the multidimensional role of CSR in building the ESG-investor decision interface and identifies a counterintuitive negative moderating impact of CSR on governance, contributing to the existing literature on sustainability alignment in emerging markets. The results offer practical implications for companies aiming to attract sustainability-oriented investors by indicating the necessity for an integrated and genuine CSR and ESG approach. Full article