Search Results (234)

Here, changes in sustainability are assessed using statistical data for all countries between 1990 and 2015, with a focus on the fifteen most populous countries. The indicators used cover GDP for the economy; poverty, education, and health for human capabilities; as well as environmental impacts on water, climate, air, and bioresources. An authoritative model is used to describe the environmental impacts, resulting from pressures driven by population and affluence; and responses, through decreasing resource intensity, measured by the resource use per GDP, and improving environmental efficiency, defined as emissions per resource use. Resource intensity decreases in most countries. Environmental efficiency improves for wastewater and NOx, hardly changes for CO₂, and increases in nature protection areas, but this rarely compensates for deforestation. The combination of pressures and responses reduced water pollution and air pollution, and mitigated climate change in high-income countries, but did not reduce the degradation of biodiversity. While the pressures, responses, and environmental impacts of economic growth vary across all countries, twenty-five growing economies have reduced those environmental impacts. Changes toward sustainability are discussed with regard to the growing share of services in economies in the ‘EKC hypothesis’, innovation for achieving higher value at lower impact in the ‘green growth’ idea, and regulations that lead to profitable environmental investments in the ‘Porter hypothesis’. Combined, they only partially explain the changes because they ignore the low prices of natural resources and high shareholder consumption. Additionally, regulations are needed that increase the price of environmental impacts relative to the price of man-made resources and enforce high-quality performance standards. Full article

Corporate bankruptcy early warning has often been treated as a binary classification task, yet financial distress is better understood as the outcome of interacting financial conditions that must be interpreted within practical risk-management contexts. To address this issue, this study proposes a systems-oriented explainable artificial intelligence framework for corporate bankruptcy early warning. The framework implements a Hierarchical LFRM-MACI architecture in which the Local Feature Refinement Module (LFRM) refines representations within profitability, solvency, liquidity, efficiency, and growth/shareholder performance subsystems, and cross-subsystem attention models their interactions. The framework is evaluated on the public UCI Taiwanese Bankruptcy Prediction dataset under balanced and moderately imbalanced training settings. For reporting clarity, the benchmark methods are classified into traditional machine learning methods and deep learning methods; traditional tabular learners are included in the formal single-split empirical comparison, while the proposed method’s contribution is positioned as a structured deep representation with an attribution workflow rather than as an overall superiority claim over traditional machine learning models. In the single 70%/30% validation split, the proposed model obtains ROC-AUC values of 0.9286 and 0.9269 under the 1:1.0 and 1:2.5 settings, respectively. In repeated 5-fold cross-validation with five repetitions, its ROC-AUC is 0.8940 [0.8777, 0.9103] under 1:1.0 and 0.9135 [0.9001, 0.9269] under 1:2.5. To examine the interpretability of the predictions, Permutation Feature Importance (PFI) and SHAP are applied to identify subsystem-level attribution patterns across major financial subsystems. The explanation results highlight influential predictors associated with leverage pressure, profitability and asset structure, liquidity, operating efficiency, and growth/shareholder performance. These findings indicate that explainable AI can support corporate bankruptcy early warning when predictive benchmarking is combined with transparent and auditable attribution analysis for financial decision-making. Full article

The compatibility between economic profitability and environmental commitment remains key in sustainable entrepreneurship research. This study presents a 20-year longitudinal case (2006–2026) of INAMSOS, S.A., a small Spanish environmental enterprise (31 shareholders; initial valuation of €262,500, i.e., the total nominal share capital contributed by shareholders between 2006 and 2009) promoted by an ecological restoration NGO (FIRE) and linked to the University of Alcalá (UAH). The aim is to assess whether a sustainability-inspired business model can simultaneously generate economic, social, and environmental value over time. Data include corporate records, shareholder information, project documentation, and institutional linkages. Economic performance is measured through valuation changes, inflation-adjusted returns, and total shareholder return (TSR). Social and environmental dimensions are assessed via stakeholder engagement, agroecological product distribution, and support for ecological restoration. Results show an accumulated revaluation of 41.4%, above cumulative inflation (~35%), indicating a positive real return. TSR reached 59.5% nominally. Additionally, shareholders received agroecological products valued at €37,495.25 and supported €9812.5 for ecological restoration via FIRE. The case suggests that such hybrid firms can strengthen interactions among the private sector, civil society, and academia, although academic links were weaker than expected. Findings suggest that small hybrid enterprises can create multiple value forms beyond financial metrics and support sustainability transitions. Diversified investments may enhance long-term financial resilience. Evidence supports the feasibility of sustainability-oriented entrepreneurship aligned with European and global ecological restoration targets. Full article

This study examines whether corporate governance helps explain cross-sectional stock return variation on the Tokyo Stock Exchange. We construct 32 portfolios sorted by firm size, book-to-market equity, profitability, investment, and a governance indicator distinguishing institutional and participatory structures. Using monthly data from 2010–2017, we estimate Fama–French five-, six-, and seven-factor models with ARIMAX specifications to address serial correlation. Unlike most existing Japan-focused studies that examine corporate governance primarily through firm-level regressions or simple portfolio sorts without incorporating it as a risk factor, this study adopts a more comprehensive approach by constructing governance-sorted portfolios and including a governance-mimicking factor (IMP) as an additional risk factor within multi-factor asset pricing models. We find governance has strong explanatory power, second only to market risk, and is associated with lower returns for firms with greater shareholder participation. Furthermore, governance alters size and value effects, while momentum is largely insignificant. In sum, the findings provide valuable information that portfolio managers, analysts, and investors may use for optimizing portfolio choices. Full article

This study investigates whether shareholder value creation, defined as beta-adjusted outperformance relative to a market benchmark, can be effectively predicted in an emerging market using a sequential machine learning framework. While prior research has predominantly focused on profitability forecasting or stock return prediction, the prediction of risk-adjusted shareholder value creation remains relatively underexplored, particularly in emerging economies such as Morocco. To address this gap, the study develops a predictive framework that combines market-based indicators, macroeconomic variables, and accounting fundamentals using only information realistically available to investors at each decision date. These variables are organized into firm-level temporal sequences based on a monthly decision-date panel of non-financial firms listed on the Casablanca Stock Exchange over the period 2010–2024. To capture nonlinear relationships and temporal dependencies in financial data, the empirical analysis compares baseline models with deep learning architectures, including GRU, LSTM, and CNN1D. The results indicate that deep learning models consistently outperform naïve and linear benchmark models, suggesting that shareholder value creation exhibits a measurable degree of predictability. With an AUC of 0.700 and a PR-AUC of 0.727, CNN1D achieves the strongest performance in the final evaluation setting and ranks as the best-performing model according to the primary AUC criterion. The findings also reveal that macroeconomic variables generate the strongest standalone predictive signal, whereas market-based variables exhibit comparatively weaker predictive power when considered in isolation. By extending financial prediction toward a risk-adjusted, benchmark-based, and investor-oriented framework, and by providing new empirical evidence on the value of temporal modeling and multi-source financial information for forecasting shareholder value creation in an emerging market context, this study contributes to the growing literature at the intersection of financial forecasting and artificial intelligence. Full article

This article discusses the influence of carbon emissions, both direct and indirect, on firm value. It also takes into account the moderating variable of green investment and whether governance mechanisms—like external assurance of greenhouse gas (GHG) emissions and CSR/sustainability committees—affect these relationships. The hypotheses of the study were developed using the lens of the natural-resource-based view, legitimacy theory, and agency theory. This paper leverages panel data spanning 2017 to 2024 on firms in the UK FTSE 350 to examine the moderating role of green investment on the linkage between GHG emissions and firm value. We then conduct sub-sample analyses for firms with and without externally verified GHG disclosures and CSR/sustainability committees, respectively. Firm value is captured using enterprise value, shareholder value, and the price-to-book ratio as alternative proxies for robustness. The results reveal that GHG emissions have a significant negative impact on firm value, while green investment mitigates this adverse effect. This impact is driven by both Scope 1 and Scope 2 emissions. However, green investments are more likely to be interpreted as genuine, durable, and value-creating when (a) the firm’s emissions data are externally verified and (b) an active CSR/sustainability committee guides and monitors implementation. This study adds to the environmental accounting and corporate governance literature by providing empirical evidence that external assurance and internal sustainability oversight strengthen the relationship between environmental responsibility and firm value creation. Full article

This study addresses the critical question of when green investments pay off by investigating how firm size generates asymmetric threshold effects in the relationship between eco-innovation and corporate financial performance. While prior research reports mixed findings, most studies rely on linear specifications that overlook structural breaks across firm scales. Using a dynamic panel threshold regression model on a global sample of 383 non-financial firms (3830 firm-year observations) from 2013–2022, we endogenously identify divergent size thresholds for operational (ROA) and shareholder (ROE) performance. Our findings unveil a significant regime-switching dynamic: for ROA, the positive impact of eco-innovation is confined to firms below the 20.106 threshold, turning marginally negative at larger scales due to coordination and complexity costs. In striking contrast, for ROE, eco-innovation initially imposes a financial burden on smaller firms but becomes a significant value driver once the 21.497 ‘critical mass’ threshold is surpassed. These asymmetric thresholds reconcile prior contradictory evidence by demonstrating that financial outcomes are strictly regime-dependent. The study advances the Natural Resource-Based View by uncovering scale-dependent capability thresholds and provides size-contingent implications for managers and policymakers to mitigate the “liability of smallness” through targeted support and to maximize the financial viability of green transitions. Full article

Financial reporting integrity (FRI) plays a critical role in capital market efficiency, yet its determinants remain difficult to model due to nonlinear relationships, heterogeneous firm characteristics, and institutional differences across emerging markets. Prior research largely relies on linear econometric approaches, which may overlook threshold effects and complex governance dynamics. This study develops an explainable Optuna-optimized Extremely randomized trees (ET) ensemble framework to examine the association between controlling shareholders and FRI in Egypt and Saudi Arabia. Using a panel dataset of 1746 firm-year observations over the period 2014–2022, the model incorporates advanced preprocessing and mutual information-based feature selection to enhance predictive accuracy and robustness. The proposed model significantly outperforms regularized linear models, standalone machine learning models, and alternative ensemble techniques, achieving R² values of 0.7935 in Egypt and 0.9231 in Saudi Arabia, alongside substantial reductions in RMSE and MAE. Diebold–Mariano tests confirm that these performance gains are statistically significant (p < 0.01). Explainability analysis using SHAP reveals that firm size and market share are the dominant drivers of FRI, while blockholder ownership exhibits a nonlinear and context-dependent association. Partial dependence results show a complex, non-monotonic relationship in Egypt—consistent with a monitoring–entrenchment trade-off—contrasted with a predominantly positive and monotonic association in Saudi Arabia. Importantly, these nonlinear patterns are not detected in conventional panel fixed effects models, highlighting the limitations of standard econometric specifications in capturing complex ownership dynamics. The findings highlight the importance of institutional context in shaping governance outcomes and demonstrate how explainable ensemble learning can uncover hidden nonlinearities in financial reporting behavior. This study contributes by identifying nonlinear thresholds and cross-country variation in ownership effects while integrating predictive performance with interpretability, offering a robust framework for analyzing corporate governance mechanisms in emerging markets and supporting more informed decision-making by investors, regulators, and policymakers. Full article

There have been multiple examples in recent years of nationalisation being used as a strategy for protecting the functions of failing public service providers. In the UK, at present, there is a demand for the nationalisation of Thames Water, which supplies water to 16 million users but is struggling financially and operationally. Proponents of nationalisation often overlook the complexity of the process, which involves the expropriation of shares and can be an expensive option. The expense arises in part due to the globalised investment context, where bilateral investment treaties (BITs) between various countries require compensation from foreign investors who suffer expropriation. There is wide foreign ownership of Thames Water, as well as many other UK public service suppliers. The practical and legal obstacles to nationalisation may mean that compensation must be paid at full market value, or not far short of it, even where the nationalised company is insolvent or failing. This paper examines the compensation frameworks applicable to the nationalisation of distressed public service providers with foreign ownership, analysing both bilateral investment treaties and the European Convention on Human Rights. Using Thames Water as a detailed case study, we demonstrate that current international investment law standards, which were developed for the expropriation of profitable enterprises, prove ill-suited when applied to the nationalisation of insolvent companies. Requiring “prompt, adequate and effective” compensation at fair market value for failing public service providers, such as utilities, creates perverse outcomes, as the taxpayers are asked to fund both the rescue of failed private ownership and the infrastructure investments that private owners neglected, while the shareholders who presided over the decline receive windfalls from state intervention. We propose an alternative framework based on four graduated responses: (1) enhanced regulatory intervention before failure occurs; (2) the use of upstream insolvency procedures, including restructuring plans; (3) the use of ordinary insolvency procedures of liquidation and administration; and (4) nationalisation as a last resort when market-based solutions are exhausted. Crucially, in this last case, we advocate for compensation to be calculated on a basis that reflects the insolvency of the nationalised entity. This entails valuing expropriated interests at what shareholders and creditors would have received through the insolvency proceedings that nationalisation displaces, which will typically be well below market value, even zero. Full article

This study examines stock market reactions to share repurchase announcements by firms listed on the Korean Stock Exchange from 2015 to 2024. Unlike the U.S. market, where share repurchases are generally viewed as a shareholder-friendly signal of strong firm performance, Korea’s institutional environment permits relatively discretionary treasury stock transactions, potentially leading to heterogeneous investor responses. Using an event-study methodology, we analyze short-term abnormal returns around repurchase announcements, differences across stated repurchase motives, and the moderating role of firm valuation. We document significantly positive short-term abnormal returns following repurchase announcements, consistent with signaling-based explanations. However, these positive market reactions are driven exclusively by repurchases explicitly intended to enhance shareholder value. Furthermore, the market response to shareholder-value-oriented repurchases is significantly stronger among firms with lower valuation levels, suggesting that undervaluation enhances the credibility of repurchase signals. Overall, our findings indicate that repurchase announcements are not interpreted uniformly in the Korean market. Instead, investors condition their reactions on both managerial intent and firm-specific valuation contexts. By jointly considering repurchase motives and valuation effects, this study contributes to the literature by showing that the informational content of repurchase announcements is contingent rather than universal, and that signaling effects materialize primarily when managerial actions align with credible undervaluation signals. Full article

Using a panel dataset of 385 European bank-year observations covering the 2012 to 2022 period, this study aimed to investigate the impact of derivatives on bank value and performance. We used bank-level panel data and conducted several multivariate statistical analyses, i.e., ordinary least squares (OLS), random-effects, and feasible generalized least squares (FGLS) regressions, to examine the ways in which using derivatives for different purposes influences bank value and performance. The regression results indicated a positive and significant association between hedging derivatives and bank performance, while trading derivatives had a negative effect on bank performance and value. Furthermore, the findings suggest that using such derivatives for hedging does not enhance value. Regarding the practical implications of this study and banking sector soundness, financial market regulators and policymakers should be cautious of the potential negative consequences of extensive trading derivative use. In particular, maintaining an acceptable level in this regard is essential to ensuring that the costs of engaging in derivative markets do not surpass their benefits. Hedging through derivatives may not translate into higher bank value, thus managers should justify to investors how such hedging derivatives enhance shareholder wealth. Additional research could focus on whether using derivatives in the banking industry offers any palpable advantage in the intermediate to long term; whether their use by non-financial organizations has different implications that than of financial firms; and the extent to which such financial instruments are useful for enhancing bank value. Full article

Value is the result of the combined, conscious, and creative actions of caring, which promote sustainable prosperity. Despite its centrality in marketing theory, value is treated in the literature as a self-evident, abstract term denoting concepts as diverse as the desire to acquire goods or enjoy services, the benefits derived from using a product, the price of an object, or a customer’s contribution to business profits. This approach leads to amoral marketing decision-making focused on extracting value from stakeholders and accumulating it in the form of shareholder wealth. In this framework, the negative consequences of marketing actions for society and the natural environment are simply dismissed as externalities. This is not sustainable as it degrades the environment and increases wealth and human welfare disparities between individuals, groups, and societies. Drawing on conceptualisations of value from the fields of philosophy, semiotics, and economics, value is here defined as the result of the combined, conscious, and creative actions of caring which promote sustainable prosperity. As such, value is understood to be co-created by the interactions of various stakeholders and positioned as the link between individuals, companies, markets, society, and the natural environment. Marketing theory has traditionally viewed value creation and exchange as the result of dyadic interactions. The socioeconomic and technological milieu of the 21st century, however, creates a business ecosystem characterised by digitalisation, interconnectivity, and decentralisation which means that, the number of participants in value co-creation networks is increasing and potentially tending towards infinity. Consequently, marketing is reconceptualised as the values-driven mechanism for value formation, valuation, symbolism, exchange facilitation, and integration of the resources required for value co-creation and distribution aiming at contributing to sustainable prosperity. Virtuous marketers and mindful marketing practice can ensure the optimal use of resources and the maximisation and equitable distribution of welfare in the present without compromising the ability of future generations to continue to generate and enjoy value. Thus, by placing value at the centre of the business ecosystem, marketing contributes to sustainable prosperity. Full article

This paper studies optimal dividend and capital injection strategies with active exit options under a jump-diffusion model. We introduce a piecewise terminal payoff function to capture stop-loss exits (for deficits) and profit-taking exits (for surpluses), enabling shareholders to dynamically balance risk and return. Using the dynamic programming principle, we derive the associated quasi-variational inequalities (QVIs) and characterize the value function as the unique viscosity solution. To address analytical challenges, we employ the Markov chain approximation method, constructing a controlled Markov chain that closely approximates the jump-diffusion dynamics. Numerical solutions of the approximated problem are obtained via value iteration. The numerical results demonstrate how the value function and optimal strategies respond to different claim distributions (comparing Exponential and Pareto cases), key model parameters, and exit payoff functions. The numerical study further validates the algorithm’s convergence and examines the stability of solutions with respect to domain truncation in the QVI formulation. Full article

This study investigates the interplay between asset quality, financial ratios, and market valuation in Indian commercial banks over a twelve-year period (2014–2025). Using a hybrid approach combining Structural Equation Modeling, correlation analysis, and trend evaluation, the research examines whether Non-Performing Assets (NPAs) influence market capitalization directly or through Return on Equity (ROE) as an intermediary. The findings reveal that NPAs exert a significant negative impact on both ROE and market value, while Net Interest Margin (NIM) emerges as a strong positive determinant of valuation. Conversely, Capital Adequacy Ratio (CAR), though vital for regulatory compliance, shows no direct effect on market prices. Mediation analysis challenges conventional assumptions, indicating that profitability alone does not fully explain valuation dynamics. These insights underscore the need for integrated strategies addressing asset quality and operational efficiency, offering practical implications for policymakers, investors, and bank management in strengthening resilience and optimizing shareholder value. Full article

In the context of the growing prominence of socially responsible investment, the debate over whether sustainable corporate practices translate into sustained shareholder value has intensified. As a key tool for aligning their investment portfolios with responsible/sustainable corporate practices, investors rely on listed companies’ Environmental, Social, and Governance (ESG) ratings. This study aims to investigate the long-term impact of ESG practices on the stock performance of listed companies. We perform a Q1 2000–Q1 2025 backtest to analyse the comparative performance of a Best-in-Class ESG portfolio, constructed by the top 30 listed companies with market capitalisations above USD 2 billion ranked by Morningstar Sustainalytics’ ESG Risk Ratings as of 31 March 2025 against the S&P 500 Total Return index. We found that ESG leaders exhibited superior risk-adjusted performance, outperforming the S&P 500 Total Return Index. The BiC portfolios achieved a substantially higher CAGR and Sharpe ratio, while maintaining maximum drawdowns that remained comparable to the benchmark S&P 500 Total Return index. We also found that ESG advantages were more pronounced in market downturns, with the Best-in-Class ESG portfolio showing better CAGR and Sortino ratios. The findings of this study demonstrate that responsible governance and management create benefits for all stakeholders, including investors, society and nature, in the broadest sense of these terms. Full article