Purpose The Gulf Cooperation Council (GCC) countries, characterised by their significant dependence on oil and gas revenues, have long grappled with the challenge of reducing their reliance on hydrocarbons and promoting more resilient and inclusive growth. This paper aims to examine whether and how financial development can help promote economic diversification in these countries. Design/methodology/approach This paper examines the impact of financial development on economic diversification in the GCC countries from 1995 to 2024. Utilising the export diversification index as a proxy for diversification, the study employs a vector autoregressive framework to capture both direct effects and dynamic interactions. Financial institutions development and private sector credit are used as measures of financial development, alongside several macroeconomic and institutional control variables. Findings The findings reveal that stronger financial institutions and increased credit to the private sector could significantly enhance economic diversification. These findings highlight the critical role of financial systems in supporting structural transformation and reducing reliance on resource revenues in the GCC economies. Originality/value The findings of this study diverge from prior studies that posited that finance in resource-dependent economies might remain concentrated in dominant sectors, highlighting the potential of financial development to facilitate structural transformation when it is effectively harnessed. This study contributes to the literature by presenting novel evidence that financial deepening can act as a catalyst for broadening the economic base, offering valuable insights for policymakers seeking to align financial reforms with diversification strategies.
Purpose- This study analyzes the impact of regulatory capital (Common Equity Tier 1, CET1) on bank profitability (ROA and ROE) in the three main Spanish systemic banks - Banco Santander, BBVA and CaixaBank - during the 2011-2023 period, in the context of Basel III implementation. Based on a strongly balanced panel dataset (N = 39 annual observations), it empirically investigates whether CET1 contributes to financial stability and efficiency, and whether its effect varies across institutions depending on structural characteristics and regulatory events. Design/methodology/approach- The methodology combines fixed effects models, interaction models and dynamic estimators of the Generalized Method of Moments (GMM) type in both difference and system forms. Control variables include bank size (log(Size)), nominal GDP and the MRO rate of the European Central Bank. The dynamic estimations allow the model to overcome the limitations of static specifications by capturing temporal inertia and endogeneity, following the approach of Arellano and Bond (1991) and Roodman (2009). Findings- The results suggest that the impact of capital on profitability is neither homogeneous nor constant. The difference GMM model provides evidence of a positive and significant effect of CET1 on ROE (ss = 0.665; p = 0.046), suggesting that capital acts as a risk buffer and improves medium-term profitability. However, the interaction models display divergent effects among banks: while Santander exhibits a strongly positive coefficient (ss = 0.87), BBVA shows a negative impact (ss = -0.47), confirming structural heterogeneity. The Chow tests support these differences (p < 0.01). Additionally, GDP has a robust procyclical effect, and bank size shows possible diseconomies of scale. Research limitations/implications- This study focuses on Spanish systemic banks, providing a specific analytical context. Moreover, the dynamic methodological approach adopted opens avenues for future research to expand the sample and further explore the role of institutional heterogeneity in the capital and profitability relationship. Practical implications- The findings suggest that regulatory capital should be managed as a strategic tool rather than solely as a compliance requirement. For regulators, the results support the need for more tailored supervisory approaches that account for institutional heterogeneity. For bank managers, they highlight the importance of aligning capital structures with risk profiles to enhance profitability and resilience. Originality/value- This study offers a theoretical contribution by challenging the neutrality hypothesis of capital on profitability and by highlighting the need for differentiated regulatory approaches tailored to the structural characteristics of each institution. From a practical perspective, the findings support more granular supervision and the strategic use of capital as a lever for profitability. Moreover, the paper proposes a methodological roadmap for future research on financial stability that integrates institutional dynamics, the economic cycle and banking heterogeneity. Ultimately, this study addresses three critical gaps: (1) the integration of European and local supervisory frameworks (2) the validation of regulatory versus audited data and (3) the modeling of institutional heterogeneity in systemic banks under Basel III.
Purpose - In an increasingly competitive business environment, innovation is essential for companies to address global challenges and achieve sustainable growth. The board of directors, as responsible for corporate governance and strategic direction, plays a critical role in driving corporate innovation. Their ability to incorporate innovation into organizational strategies, allocate the necessary resources and manage the inherent risks involved can be significantly influenced by the predominant presence of directors who serve simultaneously on three or more boards. The research aims to investigate the influence of busy boards on corporate innovation. Design/methodology/approach - To examine the role of busy boards in risky decision-making such as research and development (R&D) intensity, this research uses a multivariate fixed-effects regression model on a database from 2012 to 2023 of the European companies with the highest R&D investments according to the "EU Industrial R&D Investment Scoreboard." The final sample includes 141 listed companies with a total of 1,692 observations. Findings - The results support the "reputation hypothesis" by demonstrating that the accumulated knowledge and external networks of busy boards contribute to more effective decision-making in innovation. The findings highlight the crucial advisory role of boards in addressing complex and high-risk corporate decisions. In sum, the research reveals the importance of board connectivity for long-term growth and innovation strategies. Originality/value - Little research has focused on analyzing the role of busy boards in managing high-risk corporate decisions. As a result, this research makes a significant contribution by providing valuable insights on the importance of board composition in driving corporate innovation and managing strategic risk.
PurposeThis research is imperative in understanding how artificial intelligence (AI) impacts financial market performance, thereby emphasizing the necessity of instituting robust regulatory frameworks. By focusing on the European Union (EU), it illustrates how accountability, transparency and governance quality shape the AI-driven innovation to enhance investor confidence, reduce systemic risks and attain financial stability.Design/methodology/approachBy employing panel data from 24 EU-member states, covering a time period from 2000 to 2022, this paper applies the generalized method of moments to address endogeneity concerns. This analysis is complemented by the Arellano-Bond Estimator as a robustness check, ensuring the validity of the empirical results.FindingsThe empirical findings of the paper indicate that strong regulatory frameworks are the foundation of enhanced financial performance since they are incremental in reducing systemic risks and promoting investor confidence. Moreover, ICT diffusion is a vital component that contributes to financial innovation, however its benefits are contingent on effective governance quality.Practical implicationsThis study has key policy implications for the EU when it comes to amplifying financial market performance, driving sustainability objectives and attaining regulatory reforms. AI integration has become quintessential across the EU financial sector due to its indispensable nature in promoting transparency, accountability, fraud detection services and fair governance practices. Moreover, AI models are being employed across the financial sector for forecasting trends, protecting consumers' privacy concerns and in FinTech-related services.Originality/valueWhile existing studies shed light on the broader implications of regulation, and the benefits of governance to amplify technological benefits, they lack in addressing the direct role of regulatory quality on AI's integration in financial markets. Furthermore, they also neglect the role regulatory quality and patents play on ICT diffusion across financial markets. Thus, this study endeavors to address all of these gaps.
PurposeToday, environmental, social and governance (ESG) issues are very important for the corporate sustainability reporting performance and trustworthiness. To help organizations respond to these expectations, guides have been designed, offering a systematic approach for reporting ESG information. Although such standards facilitate firms to disclose a complete picture of their ESG performance, the effective implementations of these guidelines remain a challenge for the business community. In this context, this paper examines the quality of ESG information disclosed by Greek firms in relation to an ESG guide introduced by the Athens Stock Exchange (Greece) which is in line with the various international standards. Design/methodology/approachAn evaluation framework based on a content analysis technique was constructed that combines a set of reporting topics and a scoring system. This framework was applied to a sample of Greek sustainability reports to assess the quality of the disclosed ESG information. FindingsThe findings showed that the sampled firms provide a moderate level of ESG disclosure in terms of both quality and quantity. Environmental issues are the most well-disclosed issues compared to the other two ESG dimensions, with industry sensitivity (i.e. division into sensitive and non-sensitive sectors) being a factor which affects disclosure performance. In contrast the listed status of firms and the publication years do not affect the disclosure quality. Originality/valueThis paper contributes to the literature on the quality of ESG disclosures. Focusing on the Greek context, it provides insights into the ESG reporting behavior of firms operating under the common regulatory regime of a European Union member state. It offers empirical evidence on the ESG reporting practices of Greek firms and their initial responses to the requirements of an ESG guideline.
Purpose-This study analyses the potential and emerging risks of blockchain technology in several financial and non-financial industries. The ability of blockchain technology to comply with the Corporate Sustainability Reporting Directive is also analysed. Design/methodology/approach-A systematic bibliometric analysis was carried out based on the PRISMA 2020 methodology, reviewing 43 articles, all peer-reviewed and indexed in the Web of Science database. Subsequently, a meta-analysis was conducted to assess how blockchain technology can provide advances and improvements. Findings-Seven research questions were answered to highlight the ability of blockchain technology to automate data verification, data immutability and align corporate reporting with International Financial Reporting Standards. Blockchain technology has the potential to enhance corporate risk management strategies and promote cross-industry collaboration. Research limitations/implications-We found that technology can act as an enabler for achieving sustainability goals and more effective corporate governance in increasingly changing environments. Practical implications-In addition to the ability to automate traceability and strengthen regulatory compliance in sectors such as finance, tourism and agribusiness. Blockchain technology has the potential to improve environmental, social and governance auditing and facilitate verification processes. The findings focus on its role in enhancing transparency, risk management and cross-industry collaboration, leading to more reliable and sustainable corporate reporting. Originality/value-A combined approach is offered by bibliometric analysis and meta-analysis to assess the role of blockchain technology in Corporate Sustainability Reporting Directive compliance. Theoretical frameworks such as institutional, stakeholder and corporate governance theories are integrated from a sustainable and technological perspective.
PurposeThe paper aims to examine the return spillover effects between G7 stock markets, investors' FEAR and pandemic-related CORONA FEAR while analyzing their correlation, volatility influence and dynamic interconnections.Design/methodology/approachThe study uses daily data from January 2, 2019, to April 2021. Two novel sentiment indices (FEAR and CORONA FEAR) are constructed from Google Trends following Da et al. (2015). The analysis relies on the dynamic conditional correlation generalized autoregressive conditional heteroskedasticity model to capture dynamic correlations and the time-varying parameter vector autoregression (TVP-VAR) framework to assess time-varying connectedness across markets and fear indices.FindingsBoth FEAR and CORONA FEAR show long-run dynamic correlations with G7 stock markets. Uncertainty and pandemic fear gradually affect asset prices. TVP-VAR results reveal synchronization between fear sentiment and volatility across G7 markets. Both indices act as net volatility receivers, indicating stock markets are the main triggers of fear. Findings highlight the psychological impact of crises on investors and provide policy insights to reduce fear-driven reactions and enhance financial stability.Originality/valueThe paper introduces two new fear sentiment indices, FEAR and CORONA FEAR, derived from Google Trends data, and integrates them into financial spillover analysis, highlighting their role in shaping market volatility and investor behavior during crises.
PurposeThis study examines the evolving role of green and conventional cryptocurrencies in systemic risk transmission within global financial markets, focusing on environmental sustainability. It specifically assesses whether ESG-aligned tokens act as financial safe havens or contribute to systemic vulnerabilities. Design/methodology/approachUsing a time-varying parameter vector autoregressions (TVP-VAR) framework, the analysis covers 2020–2025 and investigates dynamic connectedness, volatility propagation and shock transmission among selected digital assets across multiple market conditions. FindingsThe results show that environmentally sustainable cryptocurrencies, such as ADA and XRP, frequently serve as dominant transmitters of volatility across both stable and turbulent market conditions. In contrast, traditional proof-of-work cryptocurrencies, including Bitcoin (BTC) and Litecoin (LTC), tend to act as volatility absorbers, largely owing to their liquidity depth and central positions within the network. These findings directly challenge the widespread assumption that ESG-aligned tokens inherently offer financial resilience. Practical implicationsThe results provide valuable guidance for portfolio managers, ESG-oriented investors and regulators, emphasizing that sustainability credentials alone do not ensure systemic stability. Market microstructure factors, including liquidity, investor composition and network effects, are critical for effective risk management. Originality/valueThis study is among the first to systematically integrate environmental sustainability into the analysis of systemic risk in cryptocurrency markets. By revealing the paradoxical role of green tokens as potential volatility transmitters and highlighting the critical influence of market microstructure, it provides insights that bridge financial stability, ESG investment strategies and regulatory policy. The findings offer a robust foundation for both future academic research and the design of more informed, resilient and environmentally conscious financial frameworks.
PurposeThe relationship between the size of financial institutions and systemic risk remains a subject of interest among regulators, and research on this subject has focused mostly on banks, while overlooking the shadow banking sector. This paper examines the relationship between the size of shadow banking and systemic risk in South Africa.Design/methodology/approachThe study employed the conditional value-at-risk (CoVaR), using the returns of fixed-income funds, funds-of-funds, money market funds and multi-asset funds from January 2015 to December 2021, to measure systemic risk. Ordinary Least Squares and quantile regressions were used to estimate the models.FindingsThe results reveal a positive relationship between the size of shadow banking and systemic risk, and the relationship is stronger for retail multi-asset funds sponsored by asset managers. However, we did not find any relationship between the size of fixed-income funds, funds-of-funds and money market funds and systemic risk.Practical implicationsThe regulator should monitor the rapid growth of multi-asset funds and the concomitant systemic risk implications, and fund managers should shift their attention from idiosyncratic risk to the prevention and management of systemic risk.Originality/valueTo the best of the author's knowledge, this is the first study to examine the relationship between the size of shadow banking and systemic risk with a focus on sponsor and investor types.
Purpose-This study aims to understand the effect of the European Union's Corporate Sustainability Reporting Directive (CSRD) as a driver of emerging employment practices, specifically those that create or communicate sustainability-related jobs. It seeks to explore whether job markets mirror regulatory requirements, how organizations signal sustainability requirements in hiring and which sectors are ahead or behind the curve in CSRD-aligned recruitment. Design/methodology/approach-Leveraging a database of over 35,000 LinkedIn job positions across Europe, authors pursue an empirical approach. Text is classified using a BERT classifier, which has been fine-tuned to identify whether postings are CSRD-related. Keyword analysis and other text mining methods are used to determine which terms are most often associated with sustainability. It then addresses sectoral distributions, temporal dynamics and semantic framing of sustainability language. Findings-Just 3.8% of the analyzed jobs are directly CSRD-related, which demonstrates a lack of alignment between the expectations framed by the CSRD strategy and market signaling. CSRD-related job postings are focused on the staffing, IT consulting, finance and environmental services. Most job ads do not use explicit CSRD terms despite performing relevant functions. Temporal analysis shows a slow but steady rise in CSRDrelated job roles, especially post-Q1 2025. Keyword distributions reveal a prevalence of generic sustainability terms over regulatory-specific language, indicating a communication gap. Originality/value-This research offers anovel combination of machine learning and semantic analysis, aiming to quantify the effects of the CSRD framework in the digital labor market. The study is one of the first to draw on actual published online job postings as a real-time proxy for how companies are responding to new environmental regulations. The study offers practical implications, which will be useful for policy makers, human resources strategists and educational institutions on minimizing the environmental, social and governance talent gap.
PurposeThis study examines the efficiency of Lebanon's banking sector stock market by analyzing whether the stock prices of listed banks reflected macroeconomic conditions and geopolitical risks between 2011 and 2019. The research explores the disconnect between financial fundamentals and market behavior in a context marked by political instability and weak governance.Design/methodology/approachUsing monthly data and a Panel Autoregressive Distributed Lag model, the study assesses both short- and long-run relationships between Lebanese bank stock prices and a set of macroeconomic and geopolitical variables, including inflation, interest rates, gold prices, public debt, economic activity, and a custom-constructed Geopolitical Risk Index.FindingsThe results confirm the existence of long-run cointegration among the variables; however, key macroeconomic and financial indicators do not significantly explain stock price fluctuations. This suggests informational inefficiency in the Lebanese banking stock market, likely due to political interference, systemic corruption, and investor reliance on sentiment rather than fundamentals.Research limitations/implicationsThe analysis is limited to data from 2011 to 2019 and focuses solely on listed banks. Future research could extend the dataset beyond the 2019 crisis and incorporate firm-level or behavioral factors for deeper insights.Practical implicationsTo improve market efficiency, reforms are needed to enhance regulatory oversight, improve disclosure standards, and strengthen governance mechanisms. Incorporating geopolitical risk assessments into financial modeling is also recommended for better investor guidance.Social implicationsThe findings underline the need for stronger institutions, greater transparency, and reduced political influence to enhance investor confidence and restore proper market function in fragile economies.Originality/valueThis study provides a rare empirical investigation of the Lebanese stock market's efficiency using a comprehensive macro-financial and geopolitical framework. It highlights how structural governance failures and political shocks limit the ability of financial markets to reflect real economic dynamics.
PurposeBuilding on the theoretical model of Albuquerque et al. (2018), this study analyzes the relationship between environmental, social and governance (ESG) performance and systematic risk. It examines how overall ESG scores and their individual pillars (ESG) relate to the asymmetric components of beta: Beta+ (sensitivity to market upswings) and Beta- (sensitivity to downturns).Design/methodology/approachUsing a dataset of 9,643 firms from 89 countries, the study tests the ESG-risk relationship with pooled ordinary least squares and first-difference regressions to mitigate endogeneity concerns.FindingsContrary to the prevailing view that high ESG performance lowers risk, the results show that higher ESG scores are associated with greater systematic risk. ESG is positively and significantly related to both Beta+ and Beta-, suggesting that ESG performance amplifies firms' sensitivity to market movements. The effect is particularly strong during bull markets, while downside protection is limited. This pattern is consistent with demand-driven crowding into ESG assets and valuation premia that increase firms' co-movement with the market.Originality/valueThis study advances the literature by decomposing systematic risk into asymmetric betas and linking them to ESG performance. Unlike prior work focusing only on aggregate beta, this approach uncovers directional effects. The use of a large global sample and a first-difference design strengthens robustness, while the findings challenge the conventional assumption of ESG as downside insurance, showing instead that it may increase market covariance.
PurposeThis paper aims to investigate the relationship between digital trust and various categories of third-party risk within the Baltic banking industry, where the Digital Operational Resilience Act mandates comprehensive oversight of information and communication technology (ICT) third parties. Design/methodology/approachThe study employs a mixed-methods approach. Quantitative data were collected through a survey of 138 employees involved in ICT third-party cooperation, and partial least squares structural equation modelling was used to estimate the effects of digital trust on 12 third-party risk categories. Findings were then discussed with 13 industry experts. FindingsThe quantitative analysis reveals that higher digital trust is associated with lower assessed risk in 10 of the 12 categories, with the strongest effects observed for concentration, contingency planning and financial and strategic risks. No statistically significant effect was found for vendor and supply-chain cybersecurity or partner-specific factor risks. Expert interviews suggest that this is because cybersecurity risk is primarily driven by external attack activity. Trust assessments often occur prior to contract and are governance-focused. Additionally, self-reported assessments may lead to higher ratings. Furthermore, contractual coverage does not eliminate cybersecurity exposure. Practical implicationsThe findings confirm that digital trust assessment is a valuable complementary tool in third-party risk management. It provides practical value for governance, operational continuity, financial stability and strategic fit. However, it is not a reliable indicator of lower cybersecurity risk and should not replace policy-based screening. Originality/valueThis research presents a novel perspective on the trust–risk management relationship by empirically demonstrating the differential impact of digital trust across various categories of third-party risk.
PurposeThe objective of this research is to determine whether there is a positive relationship between the transparency of information on a company's environmental impacts and its main economic-financial ratios, such as profitability or leverage, for a sample of 1,170 Spanish companies, 585 of which submit detailed non-financial reports on their carbon footprint emissions and the other 585 do not report, assuming a control sample. Design/methodology/approachThe methodology employed uses a counterfactual analysis to help determine the existence of significant differences between the different samples, as well as several regression models to explain the relationship between carbon footprint and financial ratios. In this way, it can be tested whether the greater the transparency of information on the ecological footprint, the better the business performance and, within the companies that report their carbon footprint, whether the lower the emissions, the higher the return on assets. FindingsThe results indicate that the impact of carbon footprint disclosure is not identical across sectors. Thus, industries with high emissions, such as energy and manufacturing, show stronger relationships between environmental transparency and financial performance, due to the influence of sector-specific regulations on the matter. On the other hand, large companies are subject to greater control by public authorities, as well as by different interest groups or stakeholders. Originality/valueThe value is that companies that opt for greater transparency in the disclosure of their non-financial carbon footprint information tend to gain competitive advantages in financial terms. These companies demonstrate that sustainability can not only be environmentally friendly, but also lead to better economic and financial performance.
PurposeThis study explores the drivers and expected outcomes of fintech proactiveness in banks. It also examines how collaborative knowledge creation (CKC) moderates this relationship and how fintech proactiveness affects value co-creation and competitive agility.Design/methodology/approachData were collected from 281 specialists and managers from the banking sector through an online survey. These data were analysed using partial least squares structural equation modelling (PLS-SEM).FindingsEntrepreneurial leadership, customer-centric innovation and ecosystem collaboration are key drivers of fintech proactiveness. CKC moderates the impact of ecosystem collaboration on fintech proactiveness. Fintech proactiveness significantly affects value co-creation and competitive agility.Originality/valueThe results of this study contribute to the entrepreneurial fintech adoption literature and theory. They reveal the need for more studies linking fintech and entrepreneurship in the context of collaboration, leadership mindset, customer-centric innovation and CKC. The study opens new horizons for research on fintech performance indicators by emphasising the role of fintech performance in value co-creation and competitive agility. The findings provide financial organisations, managers and policymakers with valuable insights to develop their fintech-based entrepreneurship capabilities and strategies.
Purpose This paper reviews and synthesizes empirical research on how traditional accounting and audit firms engage with blockchain technology (BCT) in their daily operations. It critically reflects on the current state of knowledge, identifies gaps and outlines directions for future research. Design/methodology/approach Based on 52 carefully selected articles from the Web of Science and Scopus databases, this systematic literature review uses a comprehensive mapping approach to uncover key patterns and identify critical gaps in the field. Findings The review indicates that BCT is continuously evolving in the accounting and auditing profession, reshaping the roles of professionals and highlighting the growing need for technical skills. Key themes in empirical literature include BCT as a tool for accounting and auditing, organizational and ecosystem perspectives, opportunities and challenges, adoption and acceptance, education and skills, fraud and sustainability and cryptocurrencies. Originality/value By (1) charting the progression of empirical blockchain research in accounting and auditing, (2) organizing existing work into a coherent thematic framework and (3) pinpointing unresolved questions poised to drive the next phase of study, this review provides an integrative overview that advances current understanding and guides scholars toward promising research avenues. Besides identifying potential pathways for further investigation, the study offers valuable insights that can guide stakeholders in formulating targeted strategies and technological solutions to strengthen auditing practices and adapt to evolving regulatory and digital landscapes.
Purpose This paper examines the market for insurance risk transfer via catastrophe bonds (CAT bonds), with a particular focus on the issuer's change in shareholder value. It addresses two gaps in the existing literature. Firstly, changes in risk composition over time in the CAT bond market are analysed, including an examination of innovative CAT bonds that cover risks such as cyber-attacks. Secondly, it examines how the sponsor's shareholder value reacts to the issuance of a CAT bond. Design/methodology/approach An event study evaluates the impact of CAT bond issuances on the sponsor's shareholder value. It analyses 118 bonds issued under Rule 144A since 2016. This is followed by a cross-sectional analysis. Findings Our findings challenge the prevailing view in the existing literature, indicating that CAT bond announcements are typically met with a negative market reaction. This can be explained by two factors: the high costs associated with these instruments, which often exceed the actuarial price of the risk, and the negative perception of CAT bonds among potential investors. The cross-sectional analysis reveals a negative impact of the relative issuance size, the size of the issuer and the risk multiple, as well as a positive influence of the number of issuances, the trigger selection and the issuer’s overall performance. Originality/value This study offers a novel perspective by identifying a negative market reaction to CAT bonds. It deepens our understanding of how issuance characteristics interact with market responses and provides insight into the complexities of CAT bond issuances.
PurposeThis study investigates how investors integrate environmental, social and governance (ESG) disclosure into their investment decision-making process.Design/methodology/approachA structured questionnaire was developed incorporating ESG factors and investment decision items. Data have been collected from retail investors and representatives of institutional investors. Moreover, Investment Opportunity has been used as a moderator in this study, which posits the overall structure of the Bangladeshi financial market. Furthermore, partial least squares structural equation modelling (PLS-SEM) has been used for analyzing the data.FindingsThe results indicate that social and governance disclosures have a significant influence on the investment decision-making process in Bangladesh. In the moderation analysis, environmental and governance disclosures have also been observed to influence the investment decision significantly.Research limitations/implicationsThis finding signifies that investors will look for well-governed firms to invest in the Bangladeshi capital market.Originality/valueESG disclosure is a voluntary activity by various companies that involves disclosing value-added information. In the absence of a concrete framework for ESG, this study identifies ESG disclosure items based on previous literature and prescribed voluntary and compulsory disclosure guidelines available in Bangladesh. Consequently, preference for these kinds of non-financial information in investment decision-making is changing corporate reporting practice in Bangladesh.
PurposeThis study assesses how financial and carbon capture and storage (CCS) metrics affect oil and gas (O&G) firms' profit margins in Europe between 2013 and 2023. The effects of CO2 emissions, both direct and from suppliers and conventional profitability-related financial indicators are examined using panel data and regression analysis to verify whether emission-reduction strategies can align with financial performance.Design/methodology/approachO&G companies' profit margins are examined using panel data analysis of two models, incorporating CCS-linked factors and conventional financial indicators (e.g. capital intensity, cash flow and Tobin's Q). The effects of direct and indirect CO2 emissions on profitability are also evaluated. This dual-model method comparatively assesses the environmental and financial drivers of company performance.FindingsProfit margins and CO2 emissions show strong direct and indirect relationships, indicating that emission-reduction policies can potentially counteract profit-margin reductions. These results demonstrate that a low-carbon transition is feasible without sacrificing financial results, whereas inaction has pernicious effects.Research limitations/implicationsFrom the point of view of the techniques used, the study follows a path already taken in other studies. However, in terms of the set of variables considered in the study, it is innovative. The results are encouraging, which means that this new combination of variables has greater explanatory potential.Practical implicationsThe results clearly indicate that inaction with regard to the energy transition has negative implications for companies and that, on the contrary, investing in initiatives to reduce emissions is comparatively a better option. These results allow companies to view efforts to reduce emissions with greater confidence.Social implicationsThere is a broad consensus on the need to address the energy transition. The division that exists over the energy transition is not about its necessity, but about how to achieve it and make it compatible with wealth creation. This work brings new insights to the discussion of this issue. The transition is feasible and compatible with other economic objectives.Originality/valueBy incorporating CCS-related indicators, a factor normally neglected in profitability evaluations, into a financial analysis of O&G firms, this study offers a deeper understanding of how environmental factors affect financial performance by examining direct and indirect CO2 emissions. The results show that initiatives to reduce emissions can align with profitability, providing important information for managers, investors and politicians. Furthermore, the results show that proper analyses of O&G companies' profitability and risk must include data on emission reduction.
PurposeThis study aims to investigate how corporate social responsibility (CSR) moderates the relationship between asset sales and financial distress, addressing a critical gap in corporate finance literature where these interactions remain unexplored.Design/methodology/approachUsing a sample of 114 French firms observed over 2001-2023 (2324 firm-year observations) and employing generalized least squares regression, we test two competing theoretical perspectives: the stakeholder trust enhancement hypothesis versus the resource depletion hypothesis. France provides an ideal empirical setting with its mandatory CSR framework and over two decades of standardized data.FindingsAsset sales significantly reduce financial distress. However, when firms maintain high CSR commitments, this beneficial relationship weakens substantially. Our results support the resource depletion hypothesis, revealing that CSR negatively moderates the asset sales-financial distress relationship, creating a substitution rather than a complementary effect between these strategies.Practical implicationsOur findings offer crucial guidance for corporate managers facing financial distress: maintaining extensive CSR programs during asset sales may inadvertently reduce restructuring effectiveness. Firms should strategically prioritize resource allocation, potentially scaling back CSR commitments temporarily to optimize financial recovery. For policymakers, our results highlight potential unintended consequences of mandatory CSR frameworks during economic downturns.Originality/valueThis is the first study to examine how CSR moderates the asset sales-financial distress relationship, resolving competing theoretical perspectives through empirical evidence. We provide novel insights into the strategic trade-offs between sustainability investments and financial recovery mechanisms during corporate distress.
