Abstract

This study investigated the determinants of financing decisions of firms from the Middle East and North Africa (MENA) region, particularly the effect of public corruption on financing decisions and the effect of disorder following the Arab Spring on public corruption-financing structure relationship. The study encompasses a total of 800 business entities from 14 different countries, spanning the time frame of 2005–2018. Data is analyzed through the application of static fixed effects and dynamic GMM-System models. Results indicate that large, tangible companies prefer debt, whereas profitable companies with more room for growth choose equity. Less corruption is associated with increased corporate debt. The use of debt decreased because of the Arab Spring, and corruption’s effect on leverage became weaker. The speed of adjustment to the target leverage is comparatively slow for book leverage, while it is significantly greater for market leverage. These outcomes are consistent with the pecking order behavior resulted from increasing information asymmetry, but the tradeoff theory has some support as well. The implications of this study entail the need for enhancing investor protection, strengthening control measures, increasing transparency, and fostering the overall growth of the financial system to facilitate enterprises’ use of debt financing, particularly in the post-Arab Spring era. This paper provides fresh empirical evidence demonstrating the effect of the Arab Spring on capital structure and on the relationship between country corruption and capital structure in the MENA region. The paper also expands the body of research on capital structure and corruption across countries by providing empirical findings from a region that has been relatively overlooked in previous scholarly works.

Introduction

Lack of a perfect capital market necessitates the need for capital structure (CS) policy [1, 2, 3, 4, 5]. The choice of debt and equity is important not only for stable corporate financial health but also for the role it plays in economic growth [6,7]. Since Modigliani and Miller’s [8] slice-of-the-cake argument, the literature has identified many firm-specific CS determinants [6,9] as well as macroeconomic factors [7,10, 11, 12]. Country corruption facets, such as weak regulations and inconsistent policies at the macro level, may affect financing decisions as they influence agency conflicts of interest, the risk of financial fraud, and resource waste at the business level [10,13]. Such consequences are exacerbated if accompanied by weak disclosure policies that enhance the information asymmetry problem and increase the cost of capital [14]. Consequently, financial market activity reduces as a result of investors’ low confidence.

Public corruption is a potential determinant of CS that is largely ignored. A common link is through asymmetric information as a result of ineffective management transparency, monitoring, and law enforcement [15]. This information gap is also caused by manager-shareholder agency conflicts [16]. Because of poor ruling systems and regulations, emerging countries are deemed more corrupt than developed countries [17]. Non-financial enterprises are less regulated compared with financial firms, and thus they are more exposed to corruption [18].

Conclusions

This study investigates the CS practices of non-financial companies operating in the MENA region. Country-level corruption and the Arab Spring’s effect on CS is analyzed through the application of static and dynamic models. Country corruption has an effect on CS because of the significant agency problems and information asymmetry that are associated with corrupt practices. The developing countries in the MENA region are more susceptible to corruption because of inadequate governance systems and regulations, which make them a suitable choice for this study.

Our contribution to the literature on capital structure is threefold. The study expands the research on CS across countries in a geographic area that has been relatively overlooked in previous scholarly works. Our second contribution is emphasizing the significance of enhancing institutional environments in developing countries to facilitate firms’ access to external finance, particularly when the level of corruption in a country is found to have a significant effect on the decisions that corporations make about their CS. Finally, addressing the effect of the Arab Spring, a period of political instability, on the CS decisions is the first instance in which such an analysis has been conducted. The findings of this research are likely to be significant to other developing countries and regions and carry major implications for emerging economies that share similar attributes.

Abstract

This study investigates how voluntary International Financial Reporting Standards (IFRS) adoption impacts information asymmetry in the stock market. We analyze data from firms in Japan, where local accounting standards have substantially converged with IFRS but are more rules-based than principles-based IFRS. These different implementation approaches allow us to investigate how increased accounting flexibility influences recognition and measurement practices, attenuating the effects of accounting standard differences on the level of accounting rule existence or non-existence. We find that information asymmetry increases after voluntary IFRS adoption, which is driven by small- and medium-sized IFRS adopters’ decrease in earnings quality after voluntary IFRS adoption. Additional analyses reveal that firms’ reporting incentives and accounting resources influence these changes. These results suggest that IFRS’s increased accounting flexibility in recognition and measurement practices worsens the information environments of firms with weak incentives to commit to transparent financial reporting or fewer accounting resources (i.e., small- and medium-sized firms).

Introduction

As International Financial Reporting Standards (IFRS) are intended to provide investors with information that enables them to make better investment decisions, information asymmetry in stock markets is a critical potential consequence of IFRS adoption. IFRS adoption worldwide is either voluntary or mandatory. Since the 2005 mandatory adoption for firms listed in EU countries, extensive research has been conducted on the effects of mandatory IFRS adoption. However, voluntary IFRS adoption effects are relatively under-researched, especially in recent years (De George et al., 2016, Leuz and Wysocki, 2016). Understanding the effects of voluntary adoption is also important because a non-trivial number of countries either allow voluntary IFRS adoption or prohibit IFRS adoption (Song and Trimble, 2022). As of 2019, 11 % (22) of 195 countries/territories permit IFRS adoption and 6 % (11) presently prohibit it, although the latter could permit voluntary adoption in the future. This study attempts to further our understanding of how voluntary IFRS adoption affects information asymmetry in stock markets.

Prior research provides mixed evidence on the stock market consequences of voluntary IFRS adoption. Early studies on this topic focus on Germany, where local accounting standards are substantially different from IFRS. These studies provide evidence suggesting that voluntary adopters exhibit lower information asymmetry in the stock market compared to non-adopters (Gassen and Sellhorn, 2006, Leuz and Verrecchia, 2000). However, in international comparisons, Daske et al. (2008) use two proxies for differences between local accounting standards and IFRS and report inconsistent liquidity effect results. Specifically, they observe no change in liquidity after voluntary IFRS adoption in countries with small differences between local generally accepted accounting principles (GAAP) and IFRS, but a decrease in liquidity in countries with IFRS convergence processes. Therefore, how voluntary IFRS adoption affects information asymmetry in stock markets in countries whose accounting standard differences from IFRS are relatively small remains unclear. This study aims to extend this line of research.

Conclusions

Prior research suggests that voluntary IFRS adoption positively affects information asymmetry in stock markets when local accounting standards significantly differ from IFRS and is viewed as a commitment to transparent financial reporting. However, other research obtains inconsistent results for voluntary IFRS adoption effects on information asymmetry in countries with small accounting differences between local standards and IFRS. We looked closer at Japan, where local accounting standards have been converged to IFRS but have a different implementation approach (i.e., small accounting rule differences but large implementation approach differences). We investigated the effect of voluntary IFRS adoption on the stock market (i.e., changes in information asymmetry in the stock market proxied by bid-ask spread) as well as its potential reason (i.e., changes in earnings quality proxied by the absolute value of discretionary accruals). We also examined whether this effect varies according to firm size, which represents firms’ reporting incentives and accounting resources. Our study’s findings and incremental contributions to the literature are as follows.

First, we find an increase in the bid-ask spread after voluntary IFRS adoption. This result suggests that, on average, voluntary IFRS adoption worsens information asymmetry in Japan’s stock markets. Second, we observe deterioration in bid-ask spread only for smalland medium-sized voluntary adopters. Third, we examine changes in IFRS adopters’ earnings quality before and after IFRS adoption to explore a reason for the increased bid-ask spread. We find that small- and medium-sized firms report larger discretionary accruals after voluntary IFRS adoption. These results suggest that the increase in information asymmetry in the stock market results, at least partially, from the decreased earnings quality of small- and medium-sized firms after voluntary IFRS adoption. Finally, we provide some evidence suggesting that firms’ reporting incentives and limited accounting resources deteriorate earnings quality and information asymmetry at the time of voluntary IFRS adoption.

Abstract

This study examines the role of gamification elements in engaging suppliers of sharing economy platforms in corporate social responsibility (CSR) activities. We expected that engaging business owners in CSR would improve the brand equity of these platforms by leveraging the business owners’ brand loyalty and brand association. The statistical population of the study is owners of Iranian accommodation who use sharing economy platforms. The size of the sample was 323 accommodation owners. The hypotheses of this study were tested using Smart PLS-3. The study confirmed all the research hypotheses and showed that engaging business owners in social responsibility activities using gamification elements on sharing economy platforms can lead to an increase in the brand equity of the sharing economy platforms. These results will reinforce the synergy between the platforms and their users by making both parties aware of it.

Introduction

The sharing economy (SE) is where customers and business owners (suppliers) are brought together by an online platform. It is a means by which individuals may leverage their assets, such as their cars, their property and, of course, their time so that these assets may be utilized more thoroughly. This increases the efficiency of society as a whole while either increasing the wealth of participating business owners, or increasing their work flexibility, or both (Kuhzady et al., 2021). Advocatesof the SE have often painted a picture of a utopia where business owners will be set free from the shackles of employment while their customers would be able to take advantage of the lower prices (Belk, 2007). Well known examples of SE platforms are Uber in the ride sharing (taxi substitute) field and Airbnb in the accommodation sharing (hotel substitute) field, though there are also imitators of these platforms which have different degrees of market presence in different parts of the world.

However, the vision presented by SE tends to place its emphasis on the freedom of individuals, whether customers or business owners, while ignoring the fact that one of the reasons for the lower costs and prices of the SE compared with traditional businesses is the lack of regulation designed to counteract some negative consequences. Criticisms of the SE approach (Kuhzady et al., 2021) have included negative social and environmental impacts (Ma et al., 2018), limited safety and security (Birinci et al., 2018) and lack of certainty caused by unknown parties (Hossain, 2020) that contradict the vision of SE platforms of being sustainable and socially responsible. Consumers demand social responsibility from SE platforms and therefore business owners must also adopt sustainability and corporate social responsibility (CSR) principles in their businesses (Mi and Coffman, 2019). Consequently, sustaining the SE requires the engagement of all stakeholders where platforms, consumers and business owners are stakeholders in making a sustainable and responsible SE.

Discussion and conclusion

The study examined the role of gamification elements in engaging accommodation owners in CSR activities and enhancing their experience on SE platforms and how it leads to enriching brand equity through mediating effects of accommodation owners’ satisfaction and trust that leads to brand loyalty and brand association.

ads to brand loyalty and brand association. The gamification elements have a significant effect on engaging accommodation owners in CSR activities on SE platforms based on selfdetermination theory. Analysis of the collected data showed that gamification can have a significant and strong effect on engaging accommodation owners in CSR activities on accommodation sharing platforms. This is consistent with previous research on the power of gamification. Researchers have shown that gamification can be used to transfer complex information and promote green behaviour among users (Souza et al., 2020). In this study, it was shown that gamification elements can be used, not only for customers, but also for the accommodation owners and can engage them in behaving sustainably and responsibly. Analysing the collected data indicates a significant effect of gamification elements on the experience of accommodation owners on SE platforms. This also is consistent with previous studies which indicate that gamification can activate hedonic emotions and ultimately enhance the user experience (Hsu and Chen, 2018). It was also concluded that this hedonic experience is not limited to customers but also includes the business owners.

Abstract

This study examines the relationship between Bitcoin market dynamics and user activity on the r/cryptocurrency subreddit. The purpose of this research is to understand how social media activity correlates with Bitcoin price and trading volume, and to explore the sentiment and topical focus of Reddit discussions. We collected data on Bitcoin’s closing price and trading volume from January 2021 to December 2022, alongside the most popular posts and comments from the subreddit during the same period. Our analysis revealed significant correlations between Bitcoin market metrics and Reddit activity, with user discussions often reacting to market changes. Additionally, user activity on Reddit may indirectly influence the market through broader social and economic factors. Sentiment analysis showed that positive comments were more prevalent during price surges, while negative comments increased during downturns. Topic modeling identified four main discussion themes, which varied over time, particularly during market dips. These findings suggest that social media activity on Reddit can provide valuable insights into market trends and investor sentiment. Overall, our study highlights the influential role of online communities in shaping cryptocurrency market dynamics, offering potential tools for market prediction and regulation.

Introduction

The rapid growth and adoption of cryptocurrencies have attracted significant attention from investors, researchers, and policymakers. Among these digital assets, Bitcoin (BTC) [1] stands out due to its market dominance and influence on the broader cryptocurrency ecosystem. Understanding the factors that drive Bitcoin’s price and trading volume is crucial for stakeholders across various sectors. One such factor is the sentiment and activity within online communities, where discussions and opinions about cryptocurrencies are actively shared.

Social media platforms and online forums play a vital role in shaping the market dynamics of cryptocurrencies [2]. These platforms provide real-time information, opinions, and sentiment that can influence investor behavior and market trends. Several studies have explored the relationship between social media activity and cryptocurrency markets, highlighting the significance of sentiment analysis and user engagement in predicting price movements and trading volumes.

While previous studies have examined the relationship between social media sentiment and cryptocurrency markets, our research distinguishes itself by focusing on the specific community of r/cryptocurrency on Reddit. We leverage a combination of sentiment analysis and topic modeling on a comprehensive dataset of posts and comments, providing a detailed view of how online discussions evolve and correlate with Bitcoin market movements. By examining both sentiment and thematic content over time, our study offers nuanced insights into the interplay between social media activity and cryptocurrency market dynamics.

Results

4. Results
4.1. Bitcoin Market Data
Figure 1 illustrates the closing price of Bitcoin (BTC) over a two-year period, from 1 January 2021 to 31 December 2022. The data reveal significant volatility, characteristic of the cryptocurrency market. Notably, BTC reached an all-time high in November 2021, approaching USD 68,000, before undergoing a substantial correction throughout 2022. This decline reflects broader market trends, including macroeconomic factors and changes in investor sentiment. The closing price provides a critical foundation for understanding market dynamics and investor behavior during this period.

Abstract

We estimate the effect of global supply chain disruptions on inflation for a panel of 28 European countries. Adverse shocks have a stronger and more persistent effect than favorable shocks.

Introduction

Disruptions to global supply chains, e.g. due to natural disasters and lockdowns, are considered a major driver of the drastic increase in inflation in Europe and other advanced economies after the COVID-19 pandemic. The evidence (Carrière-Swallow et al., 2023, Burriel et al., 2023, Ascari et al., 2023, Laumer, 2023, Khalil and Weber, 2022, Finck and Tillmann, 2023, Finck et al., 2023, Liu and Nguyen, 2023, Elsayed et al., 2023, De Santis, 2023) suggests that supply chain shocks indeed have a significant effect on inflation.

More recently, supply bottlenecks eased and indices of supply chain conditions (Benigno et al., 2022) are back at pre-pandemic levels. However, inflation remains high. The Economist (2023) asks: “Supply chains are back to normal. Why is inflation still so high?” This note provides one potential answer to this question. We estimate local projections for a panel of 28 European economies between 2010 and 2023 in order to quantify the effect of a supply chain disruption on headline inflation, core inflation and producer price inflation. The supply chain shock we use is the purified change in the Global Supply Chain Pressure Index (Benigno et al., 2022). Importantly, we allow positive, i.e. restrictive, and negative, i.e. expansionary, shocks to have different absolute effect sizes.

Conclusions

This note showed that the inflationary effects of disruptions to global supply chains are asymmetric. An increase in supply chain stress strongly contributes to the increase of inflation as seen after the COVID-19 pandemic. However, an easing of supply chain pressure contributes much less to the decline of inflation. Hence, our results provide one potential answer to the question asked by The Economist (2023).

Of course, asymmetric supply chain shocks are just one potential explanation of persistent inflation rates despite an easing of supply chain conditions. A tendency to de-globalize supply chains could raises costs even as shipping conditions normalize. Inflation could also remain elevated due to second-round effects of the initial spike in energy prices and costs of intermediate goods on wages. In addition, a shortage of labor post-Covid might also prevent inflation from returning to low levels. Finally, the sectoral shift of demand during the pandemic from services to goods is still visible in the data, which causes inflationary pressure in the presence of frictions.

Abstract

For over a decade, sharing economy companies (“sharecoms”) have been operating on an international stage with novel digital platform-based business models that create and capture value through unique dimensional configurations. However, the relationship between these business models and the international expansion of sharecoms remains under-theorized. This longitudinal study addresses this gap and presents new empirically driven insights. Based on a cross-border, cross-sector case study of six sharecoms, we investigated the evolution of the business model in relation to internationalization. The results showed that multidimensional changes took place within the business models, impacting the sharecoms’ internationalization in terms of speed, scale, and scope through circular causality. Moreover, by creating virtuous cycles of business model change and internationalization, sharecoms were able to achieve network effects and unlock value.

Introduction

In an era driven by technology and globalization, the development of a firm’s business model and its international endeavors often go hand in hand, especially in the case of young entrepreneurial firms, which are both highly innovative and highly international (Onetti, Zucchella, Jones and McDougall-Covin, 2012). One such firm type operates in the sharing economy; referred to hereafter as “sharecoms” (Thornton, Campbell and Owusu, 2019).

Sharecoms are characterized by innovative business models and accelerated internationalization (Parente et al., 2018, Thornton and Sandberg, 2020). Their value proposition facilitates access to and redistribution of individual peer-to-peer (P2P) users’ tangible and intangible assets delivered via digital platforms (Frenken and Schor, 2017). The asset-light, internet-mediated nature of sharecoms’ business models provides them with increased scalability, meaning that they can reach a global audience with low transaction costs and limited capacity constraints (Täuscher and Kietzmann, 2017, Zeng et al., 2021). As such, they can internationalize immediately (Van Alstyne, Parker and Choudary, 2016) and, typically, do so.

According to Teece, “the right business model is rarely apparent early on in emerging industries” (2010, p. 187). Sharecoms innovate and develop their business models to align with the flourishing environments in which they operate. This strategy often begins early and proceeds rapidly, similar to their international expansion.

Discussion and conclusion

In this study, we sought to answer two research questions: (1) How do sharecom business models evolve during internationalization? and (2) How do changes in the business model affect internationalization? In doing so, new insights emerged regarding how business model change and internationalization relate to one another and evolve. This study also meets the calls for research on sharecom business models (e.g., Täuscher and Laudien, 2018, Bohnsack et al., 2021), aswell as the nexus between business models and internationalization (e.g., Onetti et al., 2012, Bohnsack et al., 2021). Thus, the purpose of this study — to explore cases of internationalized sharecoms over time to enhance the present knowledge of business model changes and internationalization in the sharing economy — has been fulfilled.

Abstract

The entire world is facing the issue of climate change. Due to rapid industrialization, enormous waste generation is aggravating the situation. In this study, we investigate the role of audit quality in promoting sustainable waste management in firms. Using a sample of 8100 firm-year observations for the period 2002–2017 from 34 countries, we provide novel empirical evidence that good audit quality significantly reduces total corporate waste production. Further, our results are robust to alternate proxies of audit quality, and waste management, and only appear with unqualified audit reports. To alleviate the endogeneity issue, we use two different identification strategies; namely, PSM and GMM. Altogether, these findings demonstrate that Big4 auditing firms ensure the credibility and reliability of the non-financial disclosures of their auditees as apparent by their rigorous auditing processes. Moreover, the main implication of our study is that firms are subject to a decrease in their overall waste production when their external assurer is one of the BIG4 auditing firms.

Introduction

The word ‘Sustainability’ has received immense global attention over the last decade, as obvious by its evident visibility in, corporate mission and vision statements (Meppem & Gill, 1998). Hereby, many internationally approved climate agreements, such as the Paris Agreement, and the Sustainable Development Goals (SDGs), etc., have been used as a source for embedding sustainable development in the core strategies of both developed and developing economies (Alam et al., 2019). According to these agreements, immense greenhouse gas (GHG) emissions are regarded as the prime reason for the present environmental degradation (Alam et al., 2019). Besides, these statistics by the World Bank (2012) state that the annual amount of solid waste produced by our global economy amounts to one billion tons, thus highlighting the increased contribution of the waste sector to the increase in global temperatures. Conversely, the United Nations Environmental Programme (2010) in its report on waste and climate change states that the waste sector can move its position from a minor contributor to a major saver of emissions, as it reports only a 3–5% contribution of the waste sector in GHG emission production. These statistics point toward the development of a circular economy through improvement in the waste management practices of firms in the last 40 years (Romero-Hernández & Romero, 2018).

Moving forward, these global environmental concerns have entailed primary pressure on corporates as they are subject to the generation of a massive amount of waste during the production of goods and services (Gull, Atif, & Hussain, 2022; Hirsch, 2019). Further, firms in response to the pressure entailed by certain internal and external stakeholders are moving towards more sustainable practices, like waste management, recycling, reusing, etc. (Alam et al., 2019). These sustainable business practices are costly to introduce and maintain and therefore depend on the strength of a firm’s governance structure, as strong governance structures predict the level of waste produced by firms (Gull, Atif, & Hussain, 2022; Shahab et al., 2022). For this reason, prior research has extensively highlighted the importance of a firm’s external and internal governance in the promotion of corporate sustainability (Bacha et al., 2020; Earnhart & Harrington, 2021; Hussain et al., 2018; Jo et al., 2015; Saeed et al., 2022).

Conclusion

The immense increase in global temperatures has become a substantial concern and emerged as a real-world phenomenon in recent years (Alam et al., 2019). The increase in global annual waste production further ruins the situation (World Bank, 2012). For this reason, firms have increased their attention toward sustainable development in the face of the pressure entailed by the governments, policymakers, stakeholders, and external assurers of a firm (Alam et al., 2019; Saeed et al., 2022). Prior research has extensively studied the impact of external stakeholders on a firm’s environmental sustainability (Dakhli, 2021; Dicu et al., 2020). As Braam et al. (2016) and Earnhart and Harrington (2021) also analyse the importance of audit quality in enhancing corporate environmental performance. While prior literature lacks to define the role of audit quality in improving several other dimensions of corporate social responsibility such as waste management. Therefore, concerning the importance of waste management, our study fills this void and provides robust empirical evidence on the impact of audit quality on waste management.

This study employs a panel data set of 8100 firm-year observations from 34 countries between 2002 and 2017 and finds a negative relationship between audit quality (BIG4) and total waste generation (T_WASTE) (Earnhart & Harrington, 2021). Our results are robust to the use of several alternate proxies of waste management and audit quality. Moreover, we found our relationship to be more pronounced in firms that constitute CSR committees, have strong governance structures, have low institutional ownership, and are with high CSR intensity. While, in addition, we drive that audit quality is subject to reducing a firm’s overall waste generation only in the case of non-natural industries. Furthermore, to the extent possible, we rule out certain endogeneity concerns through the propensity score matching (PSM) and generalized methods of moments (GMM) techniques and analyse consistent results. Ultimately, our findings indicate that high audit quality plays the role of external governance helps firms to reduce their waste production.

Abstract

Existing literature shows that female-led companies exhibit lower leverage compared to their male-led counterparts, a trend frequently attributed to the traditional view of higher risk aversion among women. We explore firms with female CFOs at or close to their optimal leverage and find that their capital structure is no different than that of firms with male CFOs. We argue that female CFOs reveal their true preferences and risk appetite during significant capital structure adjustments and find that their tolerance for risk aligns closely with that of their male counterparts. Our study challenges the conventional narrative by demonstrating that the financing decisions of top executives are likely not influenced by gender-based psychological differences.

Introduction

Extensive literature builds upon upper echelons theory ( Hambrick and Mason, 1984 ) and relates various executive traits, such as gender, ethnicity, age, R&D background, and legal and financial expertise, to corporate policies and outcomes ( Custódio and Metzger, 2014 ; Serfling, 2014 ; Cline and Yore, 2016 ; Doan and Iskandar-Datta, 2021 ; Li and Xiang, 2022 ; Huang et al., 2023 ; Liao, Ouyang, and Tang, 2023 ; among others). The evidence suggests that the identity of the people at the helm of the company plays a role in shaping firm strategies, including the choice of capital structure. 1 One factor that has been advanced as contributing to the link between executive identity and leverage is the varying degrees of risk aversion that firm leaders might have.

Numerous studies in business and psychology show that gender is related to risk preferences, with females exhibiting higher levels of risk aversion, and lower overconfidence and competitiveness than males ( Barber and Odean, 2001 ; Croson and Gneezy, 2009 ; Bertrand, 2011 ; Charness and Gneezy, 2012 ; Chen, Leung, Song, and Goergen, 2019 ; Wang and Fung, 2022 ; Perrin, Bertrand, and Klein, 2023 ). Within the corporate finance field, extant literature finds evidence that the gender of the members of the top management team affects the capital structure of the firm. Female CEOs and CFOs are associated with lower leverage and less debt issuance ( Huang and Kisgen, 2013 ; Faccio, Marchica and Mura, 2016 ; Schopohl, Urquhart, and Zhang, 2021 ), shorter debt maturity ( Datta, Doan, and Toscano, 2021 ), higher cash holdings and lower cash flow volatility ( Elsaid and Ursel, 2011 ).

Conclusion

Our investigation into the capital structure decisions of firms led by female CFOs during leverage rebalancing events presents compelling evidence that challenges the conventional narrative linking gender to risk aversion in corporate finance. Our analysis reveals no significant gender-based differences in the optimal leverage ratios set by CFOs. This finding calls for a reevaluation of the impact of executive gender on corporate financial strategies, suggesting that factors beyond gender stereotypes are at play in shaping these decisions.

Like most studies in empirical corporate finance, we acknowledge that we can never fully address endogeneity concerns in the absence of a natural experiment despite employing several empirical strategies designed to address omitted variable bias and reverse causality. We do point out, however, that if there is an omitted factor that simultaneously influences the likelihood of having female CFOs and the level of leverage, then for this factor to account for our findings, it should have a differential effect across the year immediately before and the year of rebalancing.

Abstract

The literature on working capital management (WCM) provides mixed evidence on the effect of working capital on firm profitability and performance. We use firms from developed and emerging economies to explore how working capital and its components relate to firms’ performance while controlling for firm-specific and macroeconomic factors. The findings show that the cash conversion cycle (CCC) is inversely related to firm performance in developed and emerging economies—however, there are differences in the CCC’s components. While firms in developed economies exhibit higher firm performance with longer days’ inventory on hand, firms in emerging economies have lower firm performance with longer days’ inventory on hand, extended collection periods, and longer payable periods. Company-specific factors, such as firm size, growth, profitability, and leverage, influence the efficiency of WCM. We also find that country-specific variables such as gross domestic product (GDP), interest rate, and inflation have varying impacts on a firm’s WCM.

Introduction

Working capital management is a critical aspect of financial management that is pivotal in determining a firm’s overall performance and sustainability. It entails managing payables and receivables and reducing inventory. The working capital cycle encompasses the conversion of raw materials into finished goods, the sale of goods, and the subsequent collection of receivables, known as the cash conversion cycle. Effectively managing this cycle is essential for maintaining liquidity, supporting day-to-day operations, and ultimately influencing a firm’s financial health. A company’s liquidity management is becoming increasingly complex with the rise of digital transformation, ever-changing market conditions, globalization, and geopolitical uncertainty.

The literature on WCM holds two opposing views about the impact of working capital investment on firm profitability. One view advocates that an extended cash conversion period and a relaxed receivable collection period increase sales and firm performance (i.e., Deloof, 2003; Sharma and Kumar, 2010; Charitou et al., 2012). Another view documents a negative association between higher working capital and profitability because additional working capital requires more financing, which increases financing and opportunity costs (i.e., Alipour, 2011; Ren et al., 2019; Kayani et al., 2019a; Banerjee and Deb, 2023; Kamlesh et al., 2023). So, having excessive working capital may drag a firm’s financial performance because of the high cost of carrying working capital.

Conclusion

Our research examines the impact of working capital management on corporate performance for a group of firms in developed and emerging economies. We find statistically significant differences between developed and emerging economies concerning working capital and firm-specific and country-specific variables. For example, the CCC is significantly higher for emerging economies than developed ones. Similarly, DSO and DSI are considerably higher for emerging economies, while there is no statistically significant difference in DPO. In our further analysis, we note the following similarities and differences between developed and emerging economies concerning the impact of working capital management on firm performance. First, CCC is a significant determinant of firm performance for both developed and emerging economies. Notably, a longer cash conversion cycle is associated with lower firm performance. These findings are supported by Jose et al. (1996), Kayani et al. (2019a), Kayani et al. (2019b) and Deloof (2003) for developed economies and by Lin and Wang (2021), Garg and Meentu (2022), and Jaworski and Czerwonka (2022) for emerging economies. We find significant differences between developed and emerging economies for the components of CCC. For example, only the DSI component of CCC has a statistically significant direct impact on firm performance in developed economies. For emerging economies, all components of CCC (i.e., DSI, DSO, and DPO) have a statistically significant impact on firm performance. In particular, a higher inventory holding period, receivable collection period, and days’ payables are associated with lower firm performance.

Abstract

     A growing body of scholarship has examined circular business models as a pathway towards sustainability. However, employee skills to support such business models have been largely overlooked. Addressing this research gap, this article proposes a comprehensive skill taxonomy for start-ups embracing circular economy transition. As the first large-N effort to develop a comprehensive skill taxonomy for circular business model implementation, this study uses a clustering analysis of self-reported skill profiles for 2407 staff working in circular start-ups. The taxonomy outlines 40 skills across six categories: business innovation, operations, social dimensions, systems, digitization, and technical issues. Findings suggest that circular business model implementation requires a set of general, sustainable, and circular skills, but some of these skills have been neglected in scholarship. Promoting circular narratives as a framing device for skill development can help advance CE towards mainstream uptake, and this study’s taxonomy offers a practical framework for using talent to accelerate CE transition.

Introduction

      Businesses and policy-makers often view the circular economy1 (CE) as a promising way to reconcile economic growth and sustainable development (Corvellec et al., 2021; Geissdoerfer et al., 2017; Kirchherr, 2022). Years into conceptual development and refinement, CE has been seen in a variety of ways ranging from holistic and comprehensive to only partially beneficial (Corvellec et al., 2021; Geissdoerfer et al., 2017) and even detrimental (Harris et al., 2021; Zink and Geyer, 2017). While the conceptual foundations of CE remain contested (Blomsma and Brennan, 2017; Korhonen et al., 2018a, 2018b; Skene, 2018), the topic is receiving growing scholarly interest (Ehrenfeld, 2004; Kirchherr and van Santen, 2019; Lüdeke-Freund and Dembek, 2017).

      Sustainability transitions research suggests that socio-technical transitions involve systemic changes in multiple dimensions beyond technology, including organizational and human decision-making. Such changes are expected to yield innovative products, services, and business models (Geels, 2004; Markard et al., 2012). CE transition is one type of socio-technical transition (Jurgilevich et al., 2016) and scholars have highlighted transition and innovation as conceptual elements of CE (Suchek et al., 2021) – both of which are seen as relevant to circular business models (CBM) (Antikainen and Valkokari, 2016; Bocken et al., 2016; Lewandowski, 2016; Santa-Maria et al., 2021). Relatedly, scholars have proposed various typologies of CBM (Henry et al., 2020; Urbinati et al., 2017) and have focused on CBM strategies, related experimentation (Bocken et al., 2016; Kane et al., 2018; Konietzko et al., 2020), and enablers and barriers around implementation (Hartley et al., 2021; Ünal et al., 2019; van Keulen and Kirchherr, 2021). While scholarship on CBM is growing (Ferasso et al., 2020; Lüdeke-Freund et al., 2019; Rosa et al., 2019), practical uptake remains limited (Centobelli et al., 2020; Kirchherr et al., 2018b; Urbinati et al., 2017).

Conclusion

     The CE concept has gained substantial momentum in the 21st century as a key facilitator of sustainability efforts. Given the influence of business decisions not only on environmental conditions but also on consumer preferences and habits, the private sector is recognized as a key catalyst for society-wide CE transition. Nevertheless, substantive progress towards CE transition remains limited. While refashioned strategies and supportive infrastructure provide businesses with some pathways, skills for CBM are an often-overlooked topic in the academic literature and in practice. A modestly sized literature offers some useful insights (e.g., Janssens et al., 2021; Sumter et al., 2021) but a systematic understanding about the relevance of employee skills to CBM implementation has yet to be fully researched or integrated into practice. This study has sought to fill this gap not only by outlining skills in circular start-ups but also by presenting a way to refine understandings about these skills and help businesses identify and cultivate them.

This study proposes the first comprehensive skill taxonomy for CBM implementation in start-ups in the literature, as far as the authors can determine. The taxonomy includes 40 skills for CBM implementation and finds that CBM implementation requires a set of general, sustainable, and circular skills. It also finds that some skills, such as digital skills, have been neglected. Skills declared as specifically circular are not as common in circular start-ups as the literature suggests. Given that CBM is not an entirely new concept, some skills identified in this study have existed in the workforce for decades. Thus, the novelty of skills for CBM implementation lies in the shifting context of their application and in their utilization as microfoundations of organizational capabilities. Circular start-ups might need to develop existing employee skills in novel or differentiated circular application contexts. Consequently, using circular narratives as a framing device for skill development can promote understanding and recognition of those skills in efforts to mainstream CE.

Abstract

Fintech revolutionized the traditional banking business models in emerging countries. The effect of fintech on banks’ operating efficiency and risk-taking behavior is still inconclusive. The study is aimed at exploring the effect of fintech products on banks’ operating efficiency and risk-taking behavior. The study used a quantitative research approach by collecting secondary data from annual reports of 50 commercial banks from emerging countries, namely, China, India, Pakistan, and Bangladesh, for the period 2014 to 2021. The study used panel data for path analysis and structural equation modeling (SEM) to test the theoretical mediation model by using STATA. The results show that the fintech product reduces the bank’s risk-taking behavior by enhancing the bank’s operating efficiency. The path analysis results show that operating efficiency mediates the relationship between fintech products and bank risk-taking behavior in emerging countries. The paper offers useful recommendations for central bank and commercial bank policymakers. The study is also beneficial for commercial banks that use fintech solutions to increase operational effectiveness and reduce risk. The study is the first empirical investigation into the connection between the growth of fintech products, bank operational effectiveness, and risk-taking behavior in developing nations.

Introduction

The global financial industry has been rapidly changing with the advancement of financial technology over the last few years. New emerging technologies such as Internet finance, blockchain, and mobile banking are penetrating, forming the fintech that revolutionized the whole financial industry. It offered lower-cost services with more choices for consumers to buy financial services that shift their financial behavior to digitalization. The rise of financial technology (fintech) has brought about significant changes in the financial industry, including the way banks manage risk. Fintech has introduced new tools and technologies that enable banks to more accurately assess and manage risk, as well as new business models that challenge traditional approaches to risk-taking.

The pace of fintech development in developed and emerging economies countries is different. In developed countries such as the UK, USA, and Europe, fintech extended the financing transaction methods through algorithmic trading, helping the manager to build better compliance systems to manage risk, and it also improves the electronic payment systems for both domestic and cross-border payments [1]. However, in developing countries, fintech adoption has been slow despite having growth and expansion opportunities in the digital economy (Zhang et al., 2020). Fintech has expanded financial services digitally across countries, particularly during the COVID-19 pandemic. During the pandemic, the usage of fintech services and products has increased tremendously as identified in research [2].

Conclusion and Recommendations/Implications of the Study

The evolution of digital technology has changed the world drastically. The COVID-19 pandemic changed the whole business structure. The customers’ increasing demand for fintech products increases the competition in the financial industry. To retain their customers and remain competitive in the industry, traditional banks adopted fintech products. So that they can deliver efficient, accessible, and low-cost financial services to their customers with the help of technology. Fintech has facilitated the banking industry with better user experience and lower costs by using technological advancement.

The primary objective of the study is to explore the relationship between fintech products and bank risk-taking behavior with mediating role of a bank’s operating efficiency using a sample of commercial banks from China, India, Pakistan, and Bangladesh. The empirical evidence shows that the bank’s risk-taking behavior decreases, and bank stability is improved with the development of fintech products. Fintech products improve the bank’s operating efficiency. The effect of fintech products on bank risk-taking is more pronounced in countries such as China and India because they are extensively using fintech products in their operations. Banks are adopting fintech products such as artificial intelligence blockchain, mobile banking, and Internet banking. The results show that the banks adopting fintech products in their initial phase increase the bank risk-taking behavior, and then later on, it decreases the bank risktaking behavior by improving their operating efficiency.

Abstract

There is a debate at the highest levels of government and civil society over whether the rise in fraud is a blip exacerbated by the pandemic or a more fundamental transformation (or flip) in the structure of crime. This paper examines this debate by exploring the social factors influencing the level of fraud. It does so by conceptualising these factors as a fraud field, offering a novel way to visualise and consider vulnerability through the broad categories of ‘threats’ and ‘safeguards’ which influence levels of fraud. In doing so it offers the first attempt to map the wide range of ‘forces’ that influence levels of fraud and produces a mathematical expression of this, which will provide a basis for further debate, refinement and research. The threats include the myriad of opportunities, the large population of fraudsters, and the range of human and technology enablers that support the fraudsters. The principal safeguards that resist the fraud threat are culture, the law and the defensive resilience of individuals and organisations. Using the fraud field and official crime statistics, the paper argues that the safeguards are so structurally weak that the fraud epidemic is not a blip, but an opportunistic flip from traditional acquisitive crimes. The forces influencing levels of fraud mean high volumes of fraud will continue at the current levels or even accelerate further, unless there is a collective national strategy to strengthen the safeguards.

Introduction

A recent report by the prestigious international relations think tank, the Royal United Services Institute, described fraud as an epidemic that threatens national security (Wood et al., 2021). In stark contrast, a senior official responsible for the counter-fraud policy in a large government agency expressed to one of this paper’s authors their frustration in failing to secure greater interest and resources from colleagues and politicians because of the prevailing perception that the recent rise in fraud in the UK is a ‘blip’, exacerbated by the COVID pandemic. In another illustration of the sanguine view regarding fraud, one of the authors of this paper was contacted by an undergraduate student from another university, who asked what they thought of their lecturer’s view that fraud was just another moral panic. These views attenuating the fraud problem might not be representative, but the fact of such views in ‘informed’ opinion in the face of the overwhelming evidence of the substantial fraud problem illustrated by the Crime Survey of England and Wales, illustrates the need for further exploration and exposure of the problem. Differential rationalisation theory suggests this sanguine view is dangerous because it justifies inaction (Shepherd and Button, 2018). The political perception is partly informed by a marked fall in traditional crimes since the early 1990 s in the UK and other Western nations (Tonry, 2014). It is also subject to the manipulative politicalisation of statistics. For example, former Prime Minister, Boris Johnson announced to the House of Commons in January 2022 that “we have been cutting crime by 14 %” (HC Deb, 2022). He was subsequently admonished by the head of the UK Statistics Authority for failing to explain that the fall excluded fraud and computer misuse (Norgrove, 2022). Had Johnson included fraud and computer misuse, he would have had to announce a 14 % increase in total crime. These political machinations do, nevertheless, point to a very important question. Can the fraud epidemic be ignored as just another cyclical change in crime that will eventually decline or is it a permanent feature of 21st century British society?

Conclusion

Galvanised by the dismissive attitudes of some senior leaders in the UK, this paper challenges the notion that the fraud epidemic in the UK could be described as blip. The examination of the official crime statistics shows that acquisitive crime has switched from theft to fraud because fraud has become a more accessible offence and, from the offender’s perspective, it is lower risk. Using the novel fraud field concept to visualise fraud threats and safeguards, the paper has noted the significant forces influencing fraud levels and developed a novel mathematical expression of this. From this assessment the paper argues that the threat forces in favour of fraud currently overwhelm the safeguard forces. The array of threat forces has been hugely amplified by the disruptive impact of new technologies. In particular, because the essence of fraud is a false communication, the digital communication and transaction technologies are powerful enablers that provide a whole generation of fraudsters across the world with access to victims anywhere in the world. Indifference is the essential cause of the weakness of the safeguard forces: an indifferent public, marginal interests within law enforcement, irresponsible organisations, and dismissive politicians. Consequently, it is naïve and reckless to regard the current level of fraud in the UK as a blip, and it will continue at the current levels or accelerate without strategic intervention. The fraud field analysis suggests that the threat field can be tackled by collective action: strengthening law enforcement, obliging large organisations to transition from enablers to disablers by investing in resilience that protects both themselves and the public, and by greater international efforts to tackle the international dimension of fraud.

Abstract

The current planetary crisis and the perceived urgency necessitates more sustainable production and consumption patterns. Businesses, particularly the multinationals, play a key role in transitioning to a circular economy, which provides a promising approach to achieving the UN Sustainable Development Goals. Industry 4.0 technologies can theoretically support this transition and enable circular economy through, for example, data-driven and smart business processes. However, merging these new technologies with a circular economy is not a straightforward and well-established process and it fundamentally changes the business value chain. Therefore, this paper provides a systematic overview to help better understand the transition process to circular business models and the enabling role of industry 4.0. Merging these concepts underlines that many factors are interrelated and should be investigated in a holistic way instead of siloes. The findings imply that changes transcend business boundaries, including new value chain characteristics and operation models and indicate the interconnected nature of certain factors along the product lifecycle, including service-based models, circular design, reverse flows, consumers and users, and collaborations. This paper proposes a conceptual transition framework to address how new circular business models can integrate digitally adaptive transformations and proposals for future research are reflected upon.

Introduction

Our world is currently facing numerous environmental, social and economic challenges and the consequences of these challenges can be seen in climate change, pollution, biodiversity loss and resource degradation (Okorie et al., 2018). We have reached a tipping point in what our Earth can sustain and the current living standards are not sustainable in the long-term. The problem can be tied back to the first industrial revolution and the logic our economy is built on. 91% of the world still follows this traditional, linear economic ‘take-make-use-dispose’ system, which is a driver of our production and consumption patterns (Nobre and Tavares, 2020). While innovations of the industrial revolutions have induced growth, with the growing population and the throwaway consumption patterns, products remain underutilized, are prematurely wasted, and their end-of-life is not generally considered (Rosa et al., 2020).

Therefore, it has become inevitable for production to transition to a more sustainable system and the search for solutions a priority for the social and political agenda globally (Ajwani-Ramchandani et al., 2021b; Bjørnbet et al., 2021). The United Nations Member States have summarized an action plan in the 2030 Agenda for Sustainable Development, articulating 17 transformative Sustainable Development Goals (SDGs) (United Nations, 2015). This initiative shows that there is an interest in finding a balance between human and nature to support the more efficient use of our resources and encourages us to do more and better with less (Tunn et al., 2019). Multinationals are particularly well-positioned to tackle this issue due to their overarching footprint (Ajwani-Ramchandani et al., 2021a).

Conclusion and limitations

This SLR has conceptualized the CE–I4.0 epistemology through current literature, synthesizing and providing an overview of the CE transition process through a business model lens. Our framework depicts which directions businesses should innovate to and it pinpoints specific I4.0 tools that enable the elements of service-based models, circular design, reverse flows, consumers and users, collaborations and product lifecycle management.

This framework contributes by bringing together relevant sciential and business factors into a single study. Although there has been an increasing number of studies in the field of CE–I4.0 (Bjørnbet et al., 2021), investigating the interconnected nature of elements along the business transition process to a CE has not yet been fully understood and conceptualized. The framework shows the transition to a CE as a paradigm shift (Campbell-Johnston et al., 2019), which transcends siloed solutions and requires a holistic, ‘embracing all’ approach and consideration of different stakeholder interest and expectations (Awan et al., 2021). With the proposed conceptual framework, we embrace a holistic approach, demonstrate which business elements influence each other and how within the same ‘circular system’, and we underline the role of specific I4.0 tools along this transition.