This paper examines whether correcting ESG scores for industry affiliation alters the risk–return profile of factor-based investment strategies in international equity markets. Value, size, and momentum portfolios are constructed for six equity regions (the United States, the United Kingdom, Continental Europe, Japan, Canada, and Emerging Markets) over the period June 2001–June 2023, and portfolios based on conventional factor rankings are compared with portfolios that combine these rankings with an industry-relative ESG score designed to mitigate the sectoral component embedded in raw ESG ratings. The contribution of the study is to isolate the ESG signal from industry tilts and to assess its effect on portfolio allocation, volatility, and exposure to global macroeconomic risk – an interaction that the literature on ESG pricing and on factor investing has so far examined only separately. Using descriptive portfolio evidence and two-step cross-sectional asset-pricing tests, the analysis finds that industry-adjusted ESG strategies do not systematically improve average returns relative to their non-ESG counterparts, but are frequently associated with lower return volatility, particularly in developed markets. Industrial production growth and the term spread are priced sources of systematic risk in both samples, whereas the pricing of unexpected inflation, the default spread, and the Environmental Performance Index differs across the two designs. Overall, once industry effects are neutralized, ESG integration does not generate a distinct return premium but instead reshapes portfolio composition and reduces risk, with practical implications for the design of sustainable factor strategies and for the interpretation of ESG-based performance evidence.
The growth of artificial intelligence (AI) and quantum computing (QC) firms has heightened interest in the financial behavior of these emerging technology sectors. This study applies fractional integration techniques to analyze the persistence of daily returns and volatility in companies specialized in AI, QC, and hybrid AI–QC activities. The results indicate that AI and QC firms exhibit similar degrees of long memory and deterministic behavior in returns, while hybrid companies display less persistent patterns. Volatility, in contrast, shows higher persistence across all groups, yet without significant structural differences. These findings provide novel evidence on the long term dependence underlying daily financial dynamics in high innovation industries, and highlight the usefulness of fractional models for characterizing the stability and risk profile of firms operating in transformative technological domains.
With increasingly severe climate change and ecological degradation, corporate environmental misconduct has become a threat to sustainable development and firms’ long-term value. Using a sample of Chinese A-share listed firms from 2011 to 2024, we examine whether top management team (TMT) stability, serving as either an anchor of order or a barrier to change, affects environmental misconduct. We find a significant negative association between TMT stability and environmental violations, and this result remains robust across a series of endogeneity and robustness tests. Mechanism analyses indicate that TMT stability reduces environmental misconduct through three main channels: strategic calibration, governance capacity, and sustainability orientation. Heterogeneity analyses further show that this governance effect is stronger among non-state-owned firms, firms whose TMTs possess environmental expertise, and firms with greater analyst coverage. The effect is also more pronounced in regions with stronger Confucian cultural influence, stricter environmental regulations, and more developed legal systems. By integrating upper echelons theory, agency theory, and social identity theory into the context of environmental governance, this study identifies TMT stability as an important internal governance mechanism and provides new theoretical and empirical insights into the relationship between corporate governance and sustainable development.
In the digital economy, data has emerged as a strategic organizational asset, yet its financial implications remain insufficiently understood. This study examines whether and how corporate data asset allocation influences stock price crash risk, an outcome of critical importance to investors and executives. Drawing on firm-level data, we find that greater investment in data assets is associated with a significantly lower likelihood of future stock price crashes. This relationship remains robust across multiple identification strategies, including instrumental-variables approaches and propensity-score matching. We further show that the risk-mitigating effect of data assets depends on external conditions, with stronger effects observed in highly competitive industries and among firms facing greater financing constraints. To uncover the underlying mechanism, we introduce the concept of network integration density, which captures a firm’s embeddedness in both production and information networks. The results indicate that data assets enhance firms’ integration within these networks, improving information transparency, coordination efficiency, and structural resilience, thereby reducing the accumulation of hidden negative information that often precedes stock price crashes. Overall, this study advances understanding of the economic value of data assets by linking digital resource allocation to financial stability and offering important implications for corporate digital strategy and risk management in the information age.
Green finance reallocates capital toward environmentally sustainable activities, yet its real effects on entrepreneurial dynamism in emerging markets remain unclear. This paper examines how green finance affects city-level entrepreneurial dynamism in China, a large emerging-market economy where green finance has expanded rapidly under policy-guided financial development. Using a city-year panel of Chinese cities from 2010 to 2020, we estimate a quadratic two-way fixed-effects model to examine the nonlinear effect of green finance on entrepreneurial dynamism. The estimates reveal a rising-then-falling pattern: green finance promotes entrepreneurial dynamism at low and moderate levels, but its marginal effect declines and turns negative beyond the estimated turning point. Turning-point checks, marginal slope tests, and the Lind-Mehlum test further support this non-monotonic pattern. Mechanism analyses show that green finance operates through an innovation-financing channel and a brown financial lock-in reduction channel. Heterogeneity analyses indicate that the effect varies with financial development, environmental regulation, and resource-based city status. These findings suggest that green finance can foster entrepreneurial dynamism, but only when financial deepening is accompanied by diversified intermediation, transition-finance capacity, and local institutional conditions that prevent allocation rigidity.
This study explores a cultural determinant of excessive control of family board seats of a firm. Using a large sample of Chinese family listed firms between 2003 and 2023, this study investigates the relationship between Confucianism and excessive control of family board seats. The results indicate that Confucianism has a significant negative impact on excessive control of family board seats. Mechanism test indicates that this effect operates by mitigating the founding families’ perceived risk of control contests and enhancing board cultural deference. This study also reveals that the negative impacts of excessive control of family board seats on corporate governance and firm value are largely alleviated by Confucianism. Moreover, the results provide compelling evidence that the personal culture of the chairman amplifies the impact of Confucianism on excessive control of family board seats.
This study examines the effect of employee treatment on stock price synchronicity in the context of China. We document that firms adopting employee-friendly treatment exhibit higher stock price synchronicity. Mechanism tests provide evidence that is consistent with the interpretation that managers may strategically use employee-friendly policies to build manager-employee alliances, which exacerbates agency costs and deteriorates corporate transparency. Cross-sectional analyses further support this alliance-based explanation. The baseline effect amplifies under conditions that facilitate alliance formation: low managerial ownership, high bankruptcy risk, and the absence of employee stock ownership plans. Overall, our findings uncover the unintended negative externalities of labor-friendly practices on market information efficiency.
Understanding how monetary conditions influence safe-haven assets is increasingly important during periods of financial instability and large-scale monetary policy intervention. This study examines the dynamic relationships between monetary liquidity, inflation, interest rates, and gold returns in the United States from January 2005 to August 2025, encompassing the global financial crisis and the COVID-19 pandemic. An integrated framework that combines wavelet analysis and wavelet-conditional structural Granger causality is employed to capture time-frequency co-movements and horizon-specific predictive relationships across short-, medium-, and long-term horizons. The results indicate that the predictive information associated with monetary liquidity, the underlying inflation proxy, and interest rate changes varies across reconstructed frequency bands. Statistically significant predictive relationships are observed primarily over the medium- and long-term horizons, whereas predictive relationships are relatively weak over the short-term horizon. The findings indicate that the relationship between monetary liquidity and gold returns is frequency-dependent after accounting for the underlying inflation proxy and interest rate changes. These findings provide useful evidence for understanding how the predictive relationship between monetary liquidity and gold returns varies across investment horizons.
This study examines the effects of climate-related vulnerability, adaptation readiness, and attitudes to taxation on sovereign credit ratings, which were assigned by three major credit rating agencies, and sovereign credit default swap spreads of large samples of nations. We extend the related literature by focusing on a nation’s tax compliance and environmental tax support; both affect its ability and willingness to honour its debt. We create refined measures of climate susceptibility and resilience based on the Notre Dame Global Adaptation Initiative’s climate change vulnerability and adaptation readiness indices; each excludes components highly correlated with economic development. Overall, climate risk resilience and environmental tax support improve whereas tax evasion lowers sovereign creditworthiness. Their statistically significant effects on sovereign rating are unlikely to be driven by endogeneity. We provide supporting evidence that adaptation readiness and tax-related variables affect a nation’s banking sector’s credit risk, and its indebtedness and fiscal strength, which are respectively important in S&P’s monetary assessment and S&P’s external and fiscal assessments. Our results suggest that better attitudes to taxation would improve public revenues and banking sector’s credit quality, allowing for greater green infrastructure investment, enhancing a nation’s capacity to cope with climate change challenges, and accelerating its net-zero transition.
In developing economies, firms often face simultaneous pressures to grow and to advance low-carbon transition. Under such conditions, low-carbon transition may not immediately reduce both absolute carbon emissions and carbon emission intensity. Instead, firms may experience an emissions–efficiency tension in which absolute emissions rise while emission intensity declines. Drawing on the active monitoring perspective, this study examines how institutional ownership is associated with these two carbon outcomes. Using Chinese A-share listed firms from 2012 to 2023, we find that institutional ownership is positively associated with absolute carbon emissions but negatively associated with carbon emission intensity. Further analysis shows that institutional investor site visits strengthen the monitoring role of institutional investors: site visits attenuate the positive association between institutional ownership and absolute emissions and reinforce its negative association with emission intensity. Mechanism analyses indicate that operating-scale expansion helps explain the positive association with absolute emissions, whereas low-carbon transition strategy disclosure and carbon-efficiency improvement help explain the negative association with emission intensity. These findings suggest that firms’ low-carbon transition should be evaluated by jointly considering absolute environmental burden and relative carbon efficiency. This study contributes to the literature by providing firm-level evidence from China on how capital-market governance shapes the emissions–efficiency tension in low-carbon transition.
This study aims to explore how different Bowman’s and Porter’s competitive strategies influence the financial performance in Chilean firms. From a sample of 4828 companies from the most recent Public Longitudinal Survey of Companies, findings show Bowman's segmented differentiation strategy yields the highest return on investment (ROI) of 16.41%. Bowman's no-frills strategy has the highest return on assets (ROA) of 4.40%. In particular, microenterprises in the hospitality sector concentrates the highest results with a ROI of 61.33% when applying Bowman's no-frills strategy. In the transportation and storage sector, the highest ROA (6.90%) is presented when applying a differentiation strategy of Porter and Bowman. The results expose that both typologies are applied by companies in a developing country and that there are also factors, present in both strategies, that generate an influence on the competitive strategy, but to a lesser extent on the ROA such as firm type, competitors, customers and suppliers. This study contributes to literature on competitive strategy by examining the application of alternative strategic frameworks in firms operating in developing economies, contexts with limited empirical evidence. While prior research has predominantly focused on Porter’s typology, comparatively little attention has been given to Bowman's Strategy Clock. We aim to address this imbalance by providing empirical insights into the latter, thereby enriching understanding of strategic choice and outcomes in underexplored settings
