Purpose This study aims to examine the relationship between geopolitical risk (GPR) and the value relevance (VR) of accounting information (AI) under different types of auditor opinion (AO). Design/methodology/approach This study uses a sample of nonfinancial firms listed on EGX100 during the period 2014–2023. Whereas GPR and AO data have been collected manually from annual reports and governance reports, stock prices are collected from EGX Archives available at the Egyptian Company for Information Dissemination. The study depends on the t-test, Pearson correlation, and OLS, 2SLS and GMM regressions to examine the authors’ hypotheses. Findings The results revealed a negative effect of GPR on the VR of AI. However, this negative effect may vary across accounting measures, depending on the auditor’s opinion. The VR of book value (BVS) declined during higher GPR periods, which was clearly visible with qualified auditor opinion. However, GPR increased the value relevance of EPS, which was clearly visible with unqualified auditor opinion, indicating that EPS might be perceived as a more reliable measure in uncertain environments, especially with the existence of a supportive auditor opinion. Originality/value This study contributes to literature by examining relationships between geopolitical risk, the VR of AI and auditor opinion, especially in developing markets, such as the Egyptian stock market. This study has practical implications, which can guide emerging market firms facing challenges during GPR periods to improve market perceptions about the firm.
Purpose This paper aims to test the adverse impact of geopolitical risk (GP_RISK) on firm performance and to examine whether risk management and sustainability strategies mitigate this relationship in the Gulf Cooperation Council (GCC) countries. Design/methodology/approach The study sample comprises 6140 firm-year observations from non-financial listed firms from 2013 to 2024. Consistent with prior studies, the study uses a system GMM estimator to address endogeneity and heterogeneity issues in panel data, ensuring consistent and efficient estimates. Findings The study shows that heightened GP_RISK significantly reduces firm performance in the GCC, negatively affecting both return on assets (ROA) and Tobin’s Q. The adverse effect is stronger for ROA, indicating that geopolitical shocks transmit more immediately through operational channels, including higher adjustment costs, supply-chain disruptions and operational inefficiencies. The negative impact on Tobin’s Q reflects investors’ concerns regarding future performance and risk exposure. The findings further show that geographical diversification (GEO_DIV) intensifies the adverse effect of GP_RISK, while hedging does not significantly mitigate it. In contrast, environmental, social and governance performance reduces the negative impact of GP_RISK, driven primarily by the governance dimension. Originality/value This study contributes to research on GP_RISK and firm-level dynamics in the emerging GCC context. It integrates political risk, risk management and stakeholder theories to explore the relationship between GP_RISK and firm performance and to evaluate the shielding effect of risk management and sustainability strategies. The research offers several important theoretical and practical implications for emerging economies.
Purpose Venture capital (VC) participation in private placements may support innovation, but high subscription discounts can distort investor incentives and discourage long-term innovation. This study aims to examine how subscription discounts shape the innovation effects of VC participation. Design/methodology/approach Using China A-share listed firms from 2006 to 2023, this study examines the mechanisms and economic consequences of VC participation and subscription discounts in private placements. Findings VC participation in discounted private placements significantly weakens firms’ innovation capabilities. This effect operates through reduced R&D investment and increased inefficient investment and is more pronounced under greater information asymmetry. It is also stronger for mature and industry-focused VC investors, firms located in regions with greater capital concentration, growth-stage firms and financially constrained firms. Further analyses indicate that VC investors subscribing at higher discounts exhibit a stronger financial orientation. Under low-discount conditions, better innovation performance is associated with a lower likelihood of subsequent VC divestment, whereas this relationship disappears under high-discount conditions. Discounted subscriptions by VC investors also impair firms’ long-term stock market performance. Originality/value This study extends the VC short-termism literature by identifying entry-stage pricing as a determinant of VC incentives and corporate innovation.
Purpose This study aims to investigate how effectively GenAI (ChatGPT) displays professional skepticism characteristics in external audit tasks, as insufficient skepticism may impair audit quality and heighten the risk of audit failure. Design/methodology/approach ChatGPT is evaluated using four audit tasks representing common judgment-oriented audit procedures. Three experienced external auditors independently assessed ChatGPT’s responses using a structured professional skepticism assessment. Findings ChatGPT appears to display varying levels of skepticism characteristics across audit tasks, with relatively higher levels in preliminary risk assessments and substantive analytical procedures and lower levels in going-concern evaluations. This suggests that it may be more effective in analytical tasks than in those requiring deeper professional judgment. Originality/value This study appears to be among the first to systematically assess whether a general-purpose reasoning GenAI tool can display characteristics associated with professional skepticism across different audit tasks. By applying an established skepticism framework, it provides a structured baseline for understanding where GenAI may support or fall short in audit judgment contexts.
Purpose This paper aims to attempt to investigate whether firms have a target corporate cash holding (CCH) as well as determining firms speed of adjustment towards targeted corporate cash holding (SOA-CCH) and finally analysing firms performance impact on SOA-CCH. Design/methodology/approach The study is based on 2320 Indian-listed firms using data from 2000 to 2022. A panel data approach is used to examine the impact of firm performance on cash holding and the SOA. The models used are pooled OLS, fixed effect and generalised method of moments (GMM). Findings The results reveal that firms are only capable of reducing the discrepancy between their current and optimal liquidity levels by 48.3% within a year, which suggests that the adjustment process is imperfect. Firm performance and SOA are associated positively in India and adjustment speed is highly sensitive to firm performance. It is found that big firms have higher cash holding as compared to small firms. It is also found that SOA is highly sensitive in times of financial crisis (GFC 2008) as compared to health crisis (Covid-19). Practical implications The study offers valuable implications for diverse stakeholders. For investors, particularly those focused on dividend income, a firm’s SOA-CCH serves as a critical factor in shaping dividend policies. Regulators can view SOA-CCH as a mechanism to ensure firms meet investor expectations and fulfil debt obligations. From a managerial perspective, under the agency theory framework, higher SOA-CCH combined with strong financial performance can influence compensation and fiduciary incentives. For owners, both high and low SOA-CCH hold significance, as they inform investment and financing decisions that maintain financial stability and long-term sustainability of the firm. Originality/value This paper contributes to the body of literature by attempting to offer a thorough analysis on the nexus between the firm performance and SOA of CCH. Additionally, the uniqueness of the paper lies in its attempt to analyse the effect of firm performance on SOA-CCH during normal as well as crisis periods such as GFC 2008 and COVID 19 crisis. The results depict that firms were more robust in reaching a financial safe position during the global financial crisis than the global pandemic crisis. The paper also examined sensitivity of adjusting their SOA-CCH by big and small firms.
