Using a large sample of Chinese listed firms from 2012 to 2022, this study investigates the relationship between corporate digital transformation and accounting comparability. The baseline results show that the degree of corporate digital transformation is positively associated with accounting comparability, indicating that the former improves the latter. Further, channel analyses show that corporate digital transformation improves accounting comparability by increasing the accuracy of financial reporting, alleviating agency conflicts, and enhancing the quality of internal control. Finally, cross-sectional analyses show that the positive effect of corporate digital transformation on accounting comparability is stronger in firms with more executives with financial backgrounds, in state-owned enterprises, and in high-tech firms. Overall, the study's findings suggest the corporate digital transformation improves accounting comparability in an emerging market with relatively low accounting information quality.
This study examines how China's New Asset Management Regulation (NAMR) affected bank liquidity creation between 2013 and 2022 using panel data on 42 listed Chinese banks. We find that the NAMR led to a significant decline in on-balance-sheet liquidity creation, while off-balance-sheet liquidity creation remained unaffected. The regulation tightened banks' funding conditions, which is associated with lower profitability and higher risk exposure, thereby potentially constraining banks' capacity to create liquidity. These effects are more pronounced among non-state-owned banks, small banks, banks with higher pre-policy funding costs and greater reliance on interbank business, and in regions with weaker pre-policy regulatory enforcement and more developed microfinance sectors. By identifying the spillover effects of off-balance-sheet regulation on banks' core on-balance-sheet functions, this study contributes to the literature on shadow banking regulation and liquidity creation and provides new insights into how regulatory reforms reshape financial intermediation in emerging markets.
Global mergers and acquisitions (M&A) activity has significantly increased in recent decades, leading to a corresponding accumulation of goodwill in the balance sheets of the acquiring companies. This trend has raised concerns about potential overpayments and the formation of a goodwill bubble with social and economic risks. This study examines the impact of acquirer type (financial versus strategic) on overpayments in M&A transactions. Using a sample of 92 private equity (PE)-backed buyouts, matched with strategic acquisitions in the Spanish context, our findings reveal that PE-backed buyouts show significantly higher overpayment levels than their strategic counterparts. Testing potential drivers behind these results, we find significance in transaction volume, the substantial use of debt and credit market conditions. Our research contributes to the understanding of excess goodwill in M&A transactions, offering valuable insights for regulators and analysts in detecting initial signs of overpayment, thus helping to mitigate risks associated with goodwill bubbles.
This study investigates volatility spillovers, network connectedness, and hedging strategies among major fossil fuels and energy stock indices in the five highest fossil fuels-consuming countries from 2008 to 2024. Using TVP-VAR and DCC-GARCH models, we examine how geopolitical and economic shocks influence market interactions. Results show that volatility connectedness increases during turbulent periods, peaking during the COVID-19 pandemic. Brent crude oil incurs the highest hedging cost and delivers the strongest hedging effectiveness in the full sample. However, its effectiveness deteriorates during oil-specific supply shocks. Natural gas and coal display low correlations with energy stock indices, making them the most cost-effective hedges. Regime-based hedging effectiveness analysis reveals that natural gas is countercyclical, strengthening precisely when oil-based hedges weaken. Coal hedging is highly regime-dependent, with its viability contingent on a country's energy structure and the source of market stress. The findings highlight the need for adaptive, regime-sensitive hedging strategies.
Auditor reputation is central to trust in financial reporting, yet evidence on how reputational capital is built remains fragmented. This study conducts scoping review of 85 empirical articles. The review examines determinants and consequences of auditor reputation, proxies used to operate it, and research designs employed, consolidating knowledge and identifying avenues for research. Findings reveal a markedly unbalanced literature. Research is heavily skewed towards consequences (e.g. market-share, audit-fees, capital-market-outcomes), while evidence on determinants remains limited and fragmented. Measurement relies predominantly on coarse firm-level proxies (e.g. Big4-affiliation, market-share) and event-based negative shocks (e.g. scandals, regulatory sanctions). Empirical designs are largely confined to short-term settings, leaving long-term processes of reputation formation, erosion, and recovery insufficiently understood. The study outlines directions for advancing the field, including more granular and behaviourally grounded proxies (e.g. partner-level track-records, media sentiment) and adoption of mechanism-based research designs linking perceived reputation to observable audit practices. A key frontier concerns the role of technology: as auditing becomes increasingly analytics-and-AI-driven, reputational capital may depend strongly on perceived technological competence and data-security reliability.
We study whether CEOs' career concerns relate to the use of low-profile narrative strategies, particularly among lower-ability CEOs. Using a large sample of US firms' 10-K annual reports, we document that CEOs use low profile narrative strategies to assuage career concerns, particularly among lower ability CEOs. Narrative strategies are closely linked to managerial human capital and CEO performance assessment concerns, making it important to understand how CEOs shape their narratives in annual reports and navigate evaluation pressures early in their tenure. Overall, our findings demonstrate that CEO-specific, career-linked characteristics and skills shape narratives in annual reports. This has implications for investors, regulators, and other users (e.g. creditors, employees, or governance bodies), who may want to interpret qualitative information with greater attention to CEOs' career concerns and ability to make more informed and comparable assessments.
This study investigates the dynamic connectedness between modern investment assets (MIAs) and stock markets to determine whether the inclusion of MIAs enhances portfolio risk diversification. The study employs a TVP-VAR model to analyze the connectedness between MIAs and stock markets over the period 2020 to 2024, and calculates spillovers, hedge ratios, and portfolio weights. The findings indicate moderate static connectedness, with dynamic spillovers fluctuating over time, reflecting the impact of geopolitical tensions on markets. The US and German stock markets, along with ETF markets, act as net transmitters of spillovers, whereas Japanese, Chinese, and Indian stock markets act as net recipients of spillovers. DeFi, cryptocurrency, and green bond markets exhibit time-varying behavior but remain mostly net recipients. The portfolio analysis confirms that MIAs offer diversification benefits, though effective risk management requires asset-specific hedging strategies. Specifically, DeFi and cryptocurrency markets require different approaches than ETFs and green bonds.
This study examines the association between top management team (TMT) heterogeneity and earnings management (EM) during the Chinese IPO process. Drawing on information processing theory and social identity theory, it explores whether heterogeneity in age, education, overseas experience, gender, financial background, and functional background relates to accrual-based (DA) and real earnings management (RM). Using a sample of 2327 Chinese A-share IPOs spanning 2007 to 2021, the analysis shows that TMT heterogeneity is significantly associated with EM. Specifically, heterogeneity in financial background, overseas experience, and gender is linked to higher EM, while educational heterogeneity is associated with lower EM. The relationship is more pronounced in non-state-owned, non-R&D, and smaller issuers. Although instrumental variables are employed to mitigate endogeneity, potential limitations remain. Thus, the findings are primarily interpreted as evidence of correlation rather than causation. The results provide new insights into how TMT diversity influences financial reporting behaviours during the IPO.
This study examines herding behavior of institutional investors during stock price manipulation in Taiwan, a market characterized by high information asymmetry and retail dominance. While prior research has explored herding and manipulation separately, their interaction across investor types remains underexamined. Using 201 legally prosecuted manipulation cases from 2000 to 2023, classified as trade-based, information-based, and action-based, we compare responses of foreign investors, mutual funds, and securities dealers. Results show securities dealers display the strongest herding during manipulation, amplifying price distortions. Mutual funds follow trade-based schemes but are misled under high information asymmetry, resulting in lower returns. Foreign investors exhibit limited herding and no significant profitability impact. Trade-based manipulation most strongly affects institutional returns, indicating trading-induced distortions influence behavior more than misleading information. These findings underscore the role of information asymmetry and suggest stricter oversight of securities dealers and improved market transparency to mitigate manipulation risks in emerging markets.
The emergence of green finance, and especially green bonds, has been central to funding the global transition towards sustainability. However, its development is becoming more susceptible to the uncertainties within environmental, social, and governance (ESG) framework. This research applies bootstrap rolling-window causality along with quantile-on-quantile regression methods to examine the time-varying and quantile-based influence of sustainability uncertainty on the promotion and growth of green finance. Empirical results show no stable predictive link in the full sample, but significant time-varying effects emerge once structural breaks are considered. Heightened ESG uncertainty erodes the informational value of the green bond signal, dampening investors' confidence in green assets. Furthermore, quantile-on-quantile regression results also confirm the robustness of our findings. The results highlight that robust disclosure, harmonised taxonomies, and policy consistency are essential to strengthen green finance resilience against ESG-related risks.
This study examines the relationship between cost stickiness and green innovation. Using data from Chinese public firms spanning the period from 2009-2020, we find that cost stickiness negatively affects green innovation, indicating that firms with sticky costs are associated with fewer green innovation activities. Also, it explores the moderating impact of government subsidies on the relationship between cost stickiness and green innovation. The results highlight the crucial role of government subsidies in mitigating this negative impact. Specifically, firms that receive R&D and green subsidies can better cope with the adverse effects of increased cost stickiness for green innovation than firms that do not receive such subsidies. The results remain consistent after addressing potential endogeneity concerns. This study contributes to the understanding of how cost behaviour and government interventions influence green innovation, offering practical implications for corporate management, policymakers, and sustainability practices.
This paper examines how incorporating regret aversion affects portfolio construction and performance in emerging stock markets. Using daily data from 2015-2025, the paper builds multivariate six-asset portfolios for Central and Eastern Europe (CEEC), East Asia, and Latin America, alongside a G7 benchmark. A regret-minimising portfolio is compared with traditional minimum-variance and maximum-Sharpe portfolios across pre-crisis and crisis periods. Results show that regret-averse portfolios are more diversified and place greater emphasis on low-correlation assets, reducing the likelihood of extreme underperformance relative to the best-performing asset. Emerging markets exhibit higher regret than developed markets, with the Latin American portfolios showing the largest regret levels. Notably, the CEEC portfolio consistently demonstrates the strongest performance, delivering the lowest regret and favourable risk-return outcomes in both subsamples. Robustness checks, including bootstrapping, variance-equality tests, and varying regret preferences, confirm the stability of the regret-minimising approach and highlight its practical relevance for behaviourally sensitive investors.
Readability and transparency of Key Audit Matters (KAMs) are essential to improving audit quality and stakeholder understanding, yet evidence from emerging markets remains limited. This study examines how audit firm characteristics, KAM coverage (entity-level versus accounting-level risks), and audit procedure disclosures influence the clarity and informativeness of KAM sections in audit reports. Drawing on Agency Theory and Stakeholder Theory, we analyse KAMs disclosed by companies listed on the Bucharest Stock Exchange. The results show that non-Big 4 auditors, contrary to evidence from developed markets, produce more readable KAM descriptions and audit procedure explanations. Entity-level KAMs are less readable, reflecting their higher inherent complexity. Variations in readability in Romania appear driven less by auditor status and more by differences in disclosure practices and linguistic conciseness. The study advances understanding of audit communication in emerging markets and offers practical implications for regulators and standard-setters seeking to reduce the Audit Expectation Gap (AEG).
This study is the first to evaluate the performance of Euro government bond mutual funds with characteristic-based benchmarks. This analysis is based on the security-level holdings of the most-affected countries in the Euro sovereign debt crisis, i.e. the so-called periphery countries of Southern Europe, including Greece, Italy, Portugal, and Spain (GIPS). The combined contribution of bond selection and timing casts doubt on the value of active management relative to its costs. The results also show that the reinforced home bias after the Euro sovereign debt crisis resulted in assorted management skills across these markets.
This research examines whether and how digital finance influences a firm's environmental performance. It utilises the digital finance index and a sample of Chinese-listed firms from 2011 to 2023. Results indicate the positive link between digital finance and corporate environmental performance. Additionally, financing constraints and production efficiency are investigated, as they are crucial channels that reveal the link between digital finance and corporate environmental performance. Further analysis shows that digital finance promotes corporate R&D expenditure, equipment investment, and green technological innovation capabilities, thereby contributing to improved environmental protection. Consistency of findings remains with alternative proxies of digital finance and corporate environmental performance, econometric methods, and endogeneity problems.
This study investigates the value relevance of accounting information based on firms' actions following share repurchases. Although repurchases are used to distribute excess cash and mitigate agency problems, firms in emerging markets like Korea face an important choice after repurchasing shares, as many retain the repurchased shares for later resale rather than retiring them immediately. Using 11,133 firm-year observations, we find that share retirements significantly enhance the value relevance of accounting information compared to non-retiring firms, whereas resales have a contrasting effect. Specifically, we find that investors pay a premium of 164% to book value and 70% to earnings in retiring firms. Conversely, investors discount by 57% on earnings in reselling firms. These results suggest that investors view accounting information as more credible when firms retire shares and less reliable when firms resell them. Our findings offer important implications for markets that allow managerial discretion in post-repurchase actions.
This study examines the use and evolution of "public interest" and "public good" notions in corporate reporting regulation in the European Union from 2000 to 2024. We aim to trace how the implicit meaning of these terms has shifted over time, employing two complementary approaches. First, by considering all documents related to corporate reporting issued by the European Commission, we show a change in the context in which these terms are used. Our findings point to a three-step evolution: initially framed within the capital market efficiency, then linked to financial stability, and more recently to a multi-stakeholder and sustainable context. Based on the different theoretical perspectives of public interest, the observed institutional changes in the standard-setting process align with a shift in the public interest theoretical perspective. We conclude by highlighting the potential for unintended effects we emphasize the role of empirical research in anticipating and interpreting their impact.
The scenario created by sustainability reporting regulations has provided a special momentum for the analysis of the implementation of Integrated Reporting (IR). This study examines how sustainability regulation has fostered the implementation of sustainability reports and IR by large Spanish State-Owned Enterprises (SOEs), identifying the factors that explain their varying behaviours. The content of the reports highlights areas of common concern such as protecting diversity, gender equality and the environment. The results show that mandatory non-financial and sustainability reporting, without practical performance indicators and metrics, is not enough at present to introduce homogeneous and comparable sustainability reporting and IR at SOEs. The corporate governance is also a driver of different speeds in the development of practical sustainability reporting and IR. Our approach differs from previous research by exploring the intersection between mandatory and voluntary sustainability reporting at SOEs, where coercive forces may interact with legitimacy pressures in public sector companies.
Finance has integrated sustainable investment criteria, widening options. While research shows gender differences in risk tolerance, less is known about sustainable preferences. This paper analyses this gap, surveying 1,357 Spanish investors to explore gender-differentiated preferences for sustainable investments. Results indicate return-risk remains the most important factor, though sustainability is also a significant attribute. Gender-based differences are observed: female investors show a stronger preference for low-risk, SDG-aligned investments, even at the cost of reduced returns, while male investors prioritise profitability and exhibit higher risk tolerance. These insights highlight the need for gender-sensitive strategies and tailored investment products.
