Purpose The purpose of this paper is to examine the impact of auditors’ personality traits, measured by the Big Five personality framework, on their attitudes toward dysfunctional audit behavior (DAB) in two different cultural contexts, the United States (US) and Lebanon. Design/methodology/approach The study uses a survey-based methodology administered to senior accounting students from accredited universities in the US and Lebanon, used as proxies for junior auditors. The survey measures respondents’ personality traits and their attitudes toward various forms of DAB using Likert-type scales, where lower values indicate stronger agreement with the behavior. Multiple statistical analyses are conducted to examine the relationships between personality traits, culture and attitudes toward DAB. Findings The results show that neuroticism is significantly associated with selected forms of DAB. Specifically, higher levels of neuroticism are associated with stronger agreement with Time Deadline Pressure Premature Sign-off (TDPMS) and weaker agreement with time budget pressure underreporting of time (TBURT). Other personality traits exhibit limited explanatory power. Cultural differences are also observed: Lebanese junior auditors demonstrate significantly stronger agreement toward certain types of DAB than their American counterparts. Culture is also found to moderate the relationship between neuroticism and some DAB types. Practical implications Universities and audit firms can use this research to raise awareness on the DAB issue, its impact on audit quality and its associated risks. Through training and awareness such behavior might be mitigated. Originality/value This study explores whether junior auditors’ personality is associated with their attitudes toward improper auditing practices, a topic that has not been thoroughly tackled in the literature. Addressing this issue from two different cultural contexts provides greater insight into the topic.
Purpose This study aims to examine the mediating role of organizational capabilities in the relationship between the management controls systems (MCSs) adopted by city councils and their performance. To achieve this, it pursues two objectives: to analyze the impact of MCSs adopted by city councils on organizational capabilities; and to examine the mediating effect of organizational capabilities on the relationship between MCSs and both financial and nonfinancial performance. Design/methodology/approach This study is based on a sample of 123 Portuguese city councils. The analysis was conducted using partial least square structural equation modeling and necessary condition analysis (NCA). Findings The results show that informal controls play a crucial role in developing organizational capabilities within city councils, and the relationship between informal controls and liquidity is nonlinear. In addition, the authors found that MCSs and some capabilities are necessary conditions to achieve different performance outcomes in these entities. Originality/value In an environment characterized by bureaucracy and strict legal compliance, where formal controls are often applied transversally, this study strengthens the empirical evidence that informal controls are very important for developing organizational capabilities. By adopting a multi-method approach using NCA and conducting a robustness analysis, the authors were able to identify nonlinear relationships between the variables under study. The results offer valuable insights for public managers into the controls and capabilities that can enhance city council performance.
Purpose This study aims to explore the effects of external capital providers, particularly the largest shareholders and debtholders, on environmental, social and governance (ESG) performance scores and three European industrial companies’ ESG pillar scores. Design/methodology/approach The sample consists of 135 industrial services and goods companies that were members of the STOXX Europe 600 Index during the 2019–2023 period. This selection enables the exploration of the effects of external capital providers beyond the constraints of intense public scrutiny within the industry. The study uses regression-based analyses complemented by Bayesian approaches. Because the sample period begins after the adoption of the Sustainable Finance Disclosure Regulation and the European Green Deal, the results provide valuable insights for policymakers, regulators and minority shareholders. Findings The findings consistently show that ownership concentration negatively affects social and governance scores, whereas corporate ownership positively affects environmental performance, likely because of potential synergies. In addition, financial investors appear to respond more to ESG controversies than to actively shape the ESG efforts of portfolio companies. Finally, Bayesian analysis reveals a high probability of a positive debt–social score association. Originality/value While previous studies have primarily relied on frequentist methods to assess ESG determinants at the aggregate level, this study leverages Bayesian analyses to quantify the likelihood that the largest shareholders and debtholders affect ESG performance positively or negatively. Furthermore, it broadens the scope of ESG research by investigating the role of non-financial corporations as significant equity holders, a topic that has received limited attention.
Purpose The purpose of this study is to investigate the relationship between audit quality and financial statement fraud through a comprehensive lens. Design/methodology/approach An Estimated Generalized Least Squares regression model was used to examine the relationship between audit quality indicators, such as audit committee independence, the oversight of tax planning by the audit committee and long auditor tenure and financial statement fraud, as measured by Beneish’s (1999) model. This study analyzed a sample of 904 companies from the European Union (EU) spanning 2019–2023. Findings The results of this study indicate that greater independence of the audit committee, active tax-planning oversight and shorter auditor tenures are linked to a lower risk of financial statement fraud. Conversely, during systemic shocks like the COVID-19 pandemic, firms tend to be more prone to earnings manipulation. Research limitations/implications This study indicates that financial fraud controls should include governance factors based on agency theory. Practical implications Boards and policymakers are encouraged to tighten independence criteria, mandate explicit tax-planning reviews and limit auditor tenure to reduce familiarity risks. Social implications Regulators can use the crisis-effect insights to focus monitoring during economic stress when fraud risks increase, thus protecting investors and society. Originality/value This study conducts a multi-country analysis within the EU to explore the relationship between audit-committee independence, tax planning oversight, auditor tenure and fraud risk, taking into account the impact of the COVID-19 pandemic. This study uses a large panel data set compared to previous research and highlights the importance of targeted, current audit practices to prevent and detect financial statement fraud.
Purpose In an environment where real-time information flows increasingly shape financial markets, this study investigates the impact of financial news sentiment on the daily returns of the Euro Stoxx 50 index from January 2022 to March 2024. The aim of this study is to examine whether sentiment derived from Bloomberg articles can predict stock returns and how this relationship is conditioned by market volatility and lagged performance. Design/methodology/approach Sentiment scores were computed using the Loughran–McDonald Lexicon applied to Bloomberg news headlines. These sentiment metrics were matched with daily Euro Stoxx 50 returns and market volatility indicators (VIX). A panel data framework was adopted using both fixed and random effects estimators, with the Hausman test guiding model selection. Additionally, year-by-year ordinary least squares regressions were conducted to capture temporal variation in sentiment effects across the post-COVID period. Findings The results indicate that financial news sentiment exerted a significant positive influence on Euro Stoxx 50 returns, particularly in periods of heightened market volatility. The predictive power of sentiment appears stronger during uncertain conditions, highlighting the role of investor psychology in shaping short-term market movements. However, the effect is not uniform over time, suggesting it is sensitive to prevailing market conditions. Practical implications From a managerial perspective, findings carry important implications for corporate communication practices. In fact, the measurable effect of news tone on market valuation underscores the power of language in shaping investor perception. Firms may be tempted to use optimistic wording in press releases or earnings announcements to elicit favorable short-term market reactions, even when underlying fundamentals are unchanged. Originality/value This study contributes to the growing literature on behavioral finance by offering new evidence on the conditional impact of sentiment on equity returns in a post-pandemic context. It highlights the limitations of traditional asset pricing models in explaining price formation under uncertainty and supports the integration of sentiment analytics into investment decision-making and risk assessment.
PurposeThis study aims to examine whether the audit committee (AC) characteristics affect corporate sustainability performance (SP). Furthermore, this study provides new insights into the moderating role of CEO duality (CEOD) on the nexus among AC characteristics and corporate SP. Likewise, this study considers several control variables within the tested models, such as corporate governance mechanisms and firm size.Design/methodology/approachThis study uses a sample of the listed firms in the Gulf Cooperation Council countries (GCC) from 2014 to 2023. This study uses the ordinary least squares test as the baseline model. In addition, this study conduct a battery of robustness checks, including Two-Stage Least Squares and Fixed Effects regression tests to address potential endogeneity.FindingsThis study finds that corporate SP is positively associated with the audit committee independence (ACI). While the audit committee tenure (ACT) has a limited effect on corporate sustainability practices. Furthermore, the findings show that CEOD positively and significantly moderates the nexus between ACI and corporate SP.Practical implicationsThis study provides insights for various stakeholders (managers and investors) to evaluate the role of ACs characteristics on sustainability practices.Originality/valueThis study contributes to the recent research on corporate sustainability practices by identifying the specific characteristics of AC on corporate SP.
Purpose This study aims to explore the relationship between Fintech integration and innovation performance in French SMEs listed on Euronext Growth Paris and investigates the effects of digital finance adoption on the financial performance of UK-listed SMEs. Design/methodology/approach The French study uses a balanced panel of 186 SMEs from 2022 to 2024, using fixed-effects regression to examine how Fintech adoption (digital credit, payment systems, governance expertise) affects innovation (patent applications). For the UK SMEs, secondary data from 224 firms (2022–2024) is analysed using multivariate regression to explore how digital finance adoption, financial literacy, financial constraints and macroeconomic factors influence profitability and operational efficiency. Findings The results show that Fintech adoption significantly enhances innovation in French SMEs, with governance expertise further boosting this impact. In the UK, digital finance adoption improves profitability by reducing transaction costs and enhancing financial access. Financial literacy moderates the relationship, and macroeconomic factors, like GDP growth, strengthen the positive effects of digital finance adoption on SME performance. Research limitations/implications The focus on publicly listed SMEs limits generalisability to private firms. Future research could explore broader sectors and markets. Practical implications SMEs can leverage Fintech for enhanced innovation and improved financial outcomes, offering insights for managers and policymakers. Social implications The study highlights how Fintech adoption can promote financial inclusion and contribute to more sustainable economic growth by supporting innovation in SMEs. Originality/value This research contributes to entrepreneurial-ecosystem theory by demonstrating Fintech’s role as a strategic capability that drives innovation in public SMEs. It also extends Transaction Cost Economics by illustrating how digital finance adoption reduces transaction costs and enhances financial performance for SMEs in developed economies.
Purpose This paper aims to investigate how recurrent heavy rain events affect the financial conditions and productivity of European small and medium-sized enterprises (SMEs). It also examines whether nati onal green policy environments can enhance SMEs’ financial resilience. Design/methodology/approach The authors combine meteorological data from the European Severe Weather Database with firm-level financial data for the 2016–2022 period. The analysis focuses on 40,000 unlisted, independent SMEs (186,156 firm-year observations). The authors estimate baseline ordinary least squares regressions and conduct extensive robustness checks using alternative econometric approaches, estimators and subsamples. Findings The results show that heavy rainfall significantly reduces SMEs’ cash flow and productivity while increasing their leverage. The impact on liquidity is less clear, with coefficients varying across specifications. When rainfall events cause damage, injuries or fatalities, negative effects intensify. Green policy indicators play a mitigating role by improving SMEs’ financial conditions. However, green policies are associated with short-term productivity losses, suggesting transitional compliance costs. Practical implications The major policy implication of the study is the need to improve green measures to mitigate adverse climate change effects. Originality/value The paper contributes to climate finance research by shifting the focus from temperature anomalies and catastrophic events to recurrent heavy rainfall, and from large firms to unlisted European SMEs. It also provides novel evidence of institutional environments, showing how green policies shape financial resilience but may entail short-term efficiency trade-offs.
Purpose This study aims to examine how environmental, social and governance (ESG) compliance affects the financial performance of Islamic and conventional banks in the MENAT region, addressing a gap in understanding ESG’s role within Shariah-compliant banking. Design/methodology/approach Using panel data from 43 banks (2018–2022) and a system Generalized Method of Moments estimator, this study evaluates the impact of overall ESG scores on profitability and conducts an exploratory assessment of the ESG dimensions. Findings ESG influences profitability in both banking models but in nonlinear ways. Islamic banks exhibit a concave relationship, where moderate ESG engagement enhances ROA before marginal benefits decline. Conventional banks display a convex pattern: ESG initially imposes costs but becomes beneficial at higher adoption levels. ESG dimensions show heterogeneous effects reflecting differences in governance structures and regulatory environments. Practical implications Results highlight the need for banking-model-specific ESG strategies. Policymakers should strengthen disclosure standards and support sustainable finance instruments, while banks can enhance performance by aligning ESG initiatives with their operational and ethical frameworks. Originality/value This study provides one of the first comparative analyses of ESG–performance dynamics in Islamic and conventional banks in the MENAT region, offering new evidence on non-linear effects and institutional differences in sustainability integration.
Purpose - This paper aims to investigate the impact of water use efficiency on income inequality in European countries, exploring how financial development moderates this relationship and controlling for economic, institutional and infrastructural control variables. Design/methodology/approach - This study uses Method of Moments Quantile Regression on a panel data set including 32 European countries from 2000 to 2021. The analysis uses the GINI coefficient as a measure of income inequality and assesses its relationship with water use efficiency, financial development and control variables. Findings - Water use efficiency has a statistically significant negative impact on income inequality across all quantiles, suggesting that more efficient water use contributes to reducing income disparities. This effect is stronger in countries with already lower levels of inequality. Financial development unexpectedly shows a positive relationship with income inequality, potentially indicating a misallocation of financial resources across income level categories. Government efficiency and inland waterways infrastructure have inequality-reducing effects, while the rule of law augments income inequality in the European Union. Research limitations/implications - This study is limited by the lack of comparable research to benchmark findings against and by potential country-specific institutional, cultural and political factors not fully captured in the model. Future research could explore the role of water efficiency technologies, the impact of climate change on water accessibility and sustainable manufacturing practices in relation to income inequality. Originality/value - This research addresses a significant gap in the literature by examining the impact of water use efficiency on income inequality, presenting novel insights into how water resource management affects socioeconomic disparities in European countries.
PurposeThis paper aims to digitally map the dynamic landscape of blue economy research and explore the potentials of bibliometric and data mining methodologies. It analyses the intersection of academic knowledge production and the financial resource allocation through the prisms of innovation and financial intermediation.Design/methodology/approachThe study uses a double-methodological framework. The first consists of bibliometric methods using 1,070 publications from Scopus, analyzing co-offering key words, research trends and institutional productivity relating blue economy and finance. The second phase includes a data mining pipeline using linked data methodologies on the EU-funded blue economy projects from the CORDIS database using SPARQL. Stages include preprocessing, clustering, funding analysis and visual exploration of thematic and temporal trends.FindingsThe results show a strong alignment in the evolution between academic research and public funding priorities. Both analyses revealed an acceleration from 2013 - years on blue economy research, focusing on the topics of sustainable development, marine governance and technological innovation. Some strategic domains in EU projects, e.g. marine shipping, water cleaning and blue biotechnology, demonstrate a similar focus. At the same time, the thematic analyses revealed the imbalances of too strong and too weak thematic clusters, including re-search areas in marine tourism and coastal ecosystems.Research limitations/implicationsThe bibliometric dataset focuses on the Scopus-indexed English publications, leaving out the potentiality of regional or policy-oriented papers. The funding analysis is exclusive for the EU projects, with a potential extension on a global scale. Potential work could include impact evaluations.Originality/valueTo the best of the authors' knowledge, this paper is one of the first that systematically applies bibliometric and funding-mapping da-ta mining to explore the Blue Economy research-policy nexus. This paper combines scientific publication trends with EU project funding data to analyze the degree of match between research activity and financial support in relation to blue economy. The results are actionable for the policymakers, financing agencies and researchers willing to align financial instruments with sustainability-driven innovation in marine systems.
PurposeThis study aims to evaluate the risk-adjusted performance and diversification characteristics of water-themed exchange-traded funds (ETFs), within the context of sustainable finance aligned to United Nations Sustainable Development Goal 6 (Clean Water and Sanitation). The author analyzes four leading water-themed ETFs, Amundi MSCI Water ESG Screened UCITS ETF (WATL.L), Tortoise Global Water ESG Fund (TBLU), L&G Clean Water UCITS ETF (GLUG.L) and iShares Global Water UCITS ETF (IH2O.L), to assess whether water-themed ETFs offer meaningful diversification relative to each other and whether multi-scale correlation analysis can enhance portfolio performance. The author tests whether correlations differ across investment horizons and whether horizon-aware rebalancing outperforms static benchmarks.Design/methodology/approachThe research uses DCC-GARCH and wavelet local multiple correlation (WLMC) to examine the daily returns of water ETFs from July 2019 to April 2025. The DCC-GARCH model focuses on temporal correlation, while the WLMC method decomposes correlations across different time scales. The sample is partitioned 70%/30% into in-sample (for estimating correlations and constructing rules) and out-of-sample (for portfolio evaluation). The author constructs DCC and WLMC-guided portfolios, rebalanced monthly and compares them with equally weighted (EW) and static minimum-variance (MV) benchmarks. Performance is evaluated using annualized return, volatility, Sharpe ratio, Sortino ratio (MAR = 0) and maximum drawdown.FindingsMGARCH-DCC shows relatively low correlations at short horizons. WLMC confirms that low correlations persist up to about 32-64 days. These patterns suggest that water-themed ETFs offer some diversification potential at short horizons, although long-term comovements limit diversification benefits. Using DCC-GARCH/WLMC with monthly rebalancing achieved higher annualized returns and Sharpe ratios compared to MV and EW benchmarks. The results indicate a modest yet meaningful potential for horizon-aware, correlation-guided allocation among water-themed ETFs.Research limitations/implicationsFuture research should incorporate a broader range of ETFs and directly link ESG scores with financial performance.Practical implicationsThe findings demonstrate how institutional investors may channel funds to water infrastructure to be in accordance with SDG 6, while enhancing the resilience of their portfolios. Using the proposed horizon-aware rebalancing rules allows investors to achieve higher risk-adjusted returns.Social implicationsInvesting in companies working to bring solutions to water stress contributes indirectly to financing one of the most important challenges faced by over four billion of people around the word. Even though the impact is not straightforward, investors are aligned with SDG 6. The ETFs' performance does not imply a direct measurable impact on access to water. The paper findings support that blue finance investment may contribute to social equity.Originality/valueEven though the DCC and WLMC were used in previous research, the proposed methodology is showing novelty in the way they can be mobilized to bring insights into portfolio construction. The rebalancing frequency is provided by the multi-wavelet, while the DCC is used to optimize the portfolio weights. The strategy clarifies when within-theme diversification is the most plausible.
PurposeThis study aims to investigate the impact of green technological innovation, taxes and environmental pollution on the blue economy within OECD countries.Design/methodology/approachThe Method of Moments Quantile Regression (MMQR) and Bootstrap Quantile Regression methods were used to investigate the relationship between Gross Domestic Product (GDP), Natural Resources Rents, carbon dioxide (CO2) emissions, green taxation, green innovation and blue economy. This study uses panel data covering the period from 1990 to 2022.FindingsGreen taxes demonstrate a stronger positive impact on the blue economy at lower quantiles, with this effect diminishing progressively across the distribution to higher quantiles. Green innovation exhibits a consistently robust positive relationship with the blue economy throughout the distribution, remaining statistically significant across all quantiles examined. Carbon emissions display a significant negative association with the blue economy across the entire conditional distribution, with this adverse effect intensifying at higher quantiles. The findings further reveal that both GDP and natural resources rents exert positive effects on the blue economy across all quantiles, suggesting their role as consistent drivers of blue economy development regardless of the level of blue economy performance.Originality/valueBy combining MMQR with Bootstrap Quantile Regression, this study conducts a detailed examination of how environmental and economic determinants influence blue economy performance across varying quantiles. The findings contribute to the existing body of knowledge on sustainable ocean economies and provide practical guidance for policymakers seeking to promote economic development while safeguarding environmental integrity.
PurposeThe blue economy includes a variety of economic activities and provides a remarkable contribution to sustainable development. This paper aims to assess the financial performance of diverse sustainable economy activities and evaluate whether blue firms based on natural resources, mainly water behave compared with clean energy firms and in contrast to a broad-market benchmark.Design/methodology/approachThe study estimates per-exchange traded fund (ETF) time-series Capital Asset Pricing Model (CAPM)/ Fama-French Three-Factor (FF3)/ Fama-French Five-Factor (FF5) models on daily excess returns from July 2008 to November 2024. Coefficients are obtained by ordinary least squares (OLS) with Newey-West/HAC standard errors to address heteroskedasticity and serial correlation. As a robustness check, the study also runs a pooled regression with factor & times;ETF interactions to test cross-ETF equality of factor loadings (Wald tests). This design provides a robust empirical assessment of the risk-return drivers for blue economy and clean energy ETFs within standard asset-pricing theory.FindingsThe results show how blue economy water-related investments are more profitable, less volatile and follow more conservative investment policies than renewable energy investments. Findings also suggest a preference for value-driven firms within water-related industries, while clean energy firms are often growth-oriented. This confirms that the blue economy firms should be preferred to clean energy firms, within the investment portfolios following a binomial risk-return strategies.Originality/valueBlue economy stocks are increasingly gathering the interest of investors which follow a risk-return strategy but also include sustainable development principles in their investment decisions. While some studies have analyzed the impact of green and other sustainable factors in the financial performance and investors preferences, to the best of the authors' knowledge, this study is the only one or among the very few that conduct this analysis within blue economy stocks.
PurposeThis study aims to investigate how French chartered professional accountants (CPAs) perceive their legitimacy to deliver sustainability advisory services in light of regulatory changes such as the Corporate Sustainability Reporting Directive. Drawing on legitimacy theory and information integration theory (IIT), it explores how CPAs cognitively integrate cues related to the nature and extent of sustainability services and whether judgements vary across professional subgroups.Design/methodology/approachWith the aid of functional measurement methodology, 67 French CPAs evaluated 36 scenarios combining four types of sustainability advisory services (carbon footprint analysis, non-financial reporting, management transformation and mission-driven status), with varying levels of complexity. Cluster analyses and mixed-design analyses of variance identified distinct cognitive patterns in legitimacy judgements.FindingsThree clusters of CPAs emerged: the Confident, who consistently judge high legitimacy across all services; the Circumspect, whose legitimacy judgements decrease sharply when services become complex or cumulative; and the Sceptical, who express systematically low legitimacy perceptions, especially of carbon-related services. These profiles highlight heterogeneity within the profession and reveal how personal dispositions and organisational contexts shape legitimacy judgements.Research limitations/implicationsThis study is based on a French convenience sample and hypothetical scenarios, focusing on four service types. Broader contextual and personal factors may affect the findings and warrant further research.Practical implicationsStrategies to strengthen CPAs' legitimacy should be tailored to different profiles. Recommended actions include creating specialised sustainability units in firms, offering targeted training programs and clarifying professional and regulatory guidelines for sustainability-related services.Originality/valueTo the best of the authors' knowledge, this study is the first to apply IIT to the accounting profession, bridging cognitive psychology and legitimacy theory. In revealing the heterogeneous and dynamic legitimacy perceptions among CPAs, it also challenges assumptions of uniform scepticism.
PurposeThe prevalence of excessive deposits and loans in corporations signals potential financial misconduct and poses systemic risks. This study aims to investigate how a technology-driven tax administration reform can serve as an external governance mechanism to mitigate this issue. The authors argue that by enhancing transaction-level transparency, such digital infrastructures can curb firms' ability to maintain opaque and risky financial structures.Design/methodology/approachThis paper develops a multiperiod difference-in-differences model grounded on the quasi-natural experiment of Golden Tax Project III (GTP III). In addition, controls the year-fixed effect and industry-fixed effect, clustering at the firm level. This model is used to gauge the influence of big data tax governance on enterprises' excessive deposits and loans.FindingsUsing a difference-in-differences model on Chinese A-share firms from 2010 to 2021, the authors find that the staggered implementation of China's "Golden Tax Project III" (GTP III) significantly reduces the likelihood of a firm exhibiting an excessive deposits and loans structure. The authors identify reduced agency costs, enhanced information transparency and decreased tax avoidance as the key underlying mechanisms.Practical implicationsThe findings offer a blueprint for global policymakers, regulators and investors. The authors propose that similar digital tax audit infrastructures can be leveraged as an early-warning system to detect financial irregularities and liquidity risks, thereby improving market stability and corporate oversight beyond the confines of tax collection.Originality/valueTo the best of the authors' knowledge, this study is the first to conceptualize GTP III as an exogenous, large-scale shock to corporate opacity and to document that a state-operated, data-rich tax infrastructure can directly reduce the prevalence of excessive deposits and loans.
PurposeThe Fed model implies a stable relation between equity and bond yields such that movement in one particular direction provides a trading signal for an investor to move between the two assets. As such, the Fed model should provide predictive power not only for stock returns as previously considered, but also for bond returns and the difference between the two assets. However, a complicating factor is that the mean value of the Fed series, over the full sample period, may not be constant. This paper aims to examine these questions.Design/methodology/approachUsing monthly US data from 1952 to 2023, the paper estimates predictive regressions for stock and bond returns and the difference between them. Two definitions of the Fed ratio are considered, using both current and forward earnings. Breaks in the ratio are allowed for using both a breakpoint test and forward recursions. Two trading-based strategies are considered, including an in-sample portfolio where investors move into stocks or bonds once the Fed series is sufficiently far from its mean and an out-of-sample exercise.FindingsResults supports predictive power of the Fed model for the two asset returns and their difference. This supportive evidence remains consistent over two definitions of the Fed model and two adjustments for mean shifts. Further evidence is provided through the two-trading strategy-based approaches. Firstly, the in-sample portfolio where investors move between stocks or bonds. This active portfolio is compared against two passive, fixed asset allocation portfolios. Secondly, the out-of-sample forecast exercise for the return difference where the outcome of the forecasts determine trading signals and is compared to a baseline forecast.Originality/valueThe predictive regression results and both exercises provide continued support for the Fed model in its ability to aid investors in switching between stocks and bonds. Overall, while debate continues within the literature, the evidence provided here supports the Fed model as containing information for investors, and that stock and bond yield do exhibit a relation over time, although with mean level shifts.
PurposeThis study aims to investigate whether the presence of women in three senior positions - chairperson, chief executive officer (CEO) and chief financial officer (CFO) - improves or impairs corporate investment efficiency in European listed firms. It also examines whether any gender effect differs between over- and under-investment and during the 2012 sovereign-debt crisis.Design/methodology/approachUsing 11,730 firm-year observations from 14 EU countries (2012-2018), the paper models expected investment with a modified Biddle et al. (2009) specification and measures inefficiency as the absolute residual (positive = over-investment; negative = under-investment). Panel regressions with industry- and year-fixed effects relate inefficiency to gender dummies for chairperson, CEO and CFO and a crisis interaction. Robustness checks exclude French firms, add equity-ownership dummies and track year-to-year gender changes.FindingsWomen in executive roles enhance investment efficiency: a female CEO significantly reduces both over- and under-investment. In contrast, a female chairperson (non-executive) is associated with lower efficiency, driven by a propensity to over-invest. Gender effects are stronger for over-investment than under-investment, supporting the view that female executives curb empire-building incentives. During the 2012 crisis the presence of women in top management is linked to higher inefficiency, suggesting crisis-specific constraints may offset their normally positive influence. All results remain robust to alternative samples, equity-ownership splits and gender-turnover tests.Research limitations/implicationsThe relatively small proportion of female top managers (approximately 3%-6%) limits statistical power and external validity. Results cover European Union (EU) firms in 2012-2018; effects may differ in other regions or regulatory settings.Practical implicationsRegulators and boards aiming for better capital allocation may achieve more by promoting gender diversity in executive, rather than purely supervisory, posts. Quotas that focus only on-board seats risk unintended efficiency losses if women are channelled mainly into non-executive roles.Social implicationsDemonstrating performance benefits from female executives reinforces the business case for dismantling barriers to women's career progression and supports EU policy initiatives to widen the talent pool.Originality/valueTo the best of the authors' knowledge, this is the first large-scale European evidence that distinguishes between executive and non-executive female leadership when linking gender diversity to investment efficiency and that separately analyses over- versus under-investment and crisis periods.
