Purpose We examine how climate change risk, the uncertainty component of a firm's climate change exposure, affects labor investment efficiency. Because labor is costly to adjust and labor investment is especially sensitive to uncertainty, we ask whether this risk dimension, rather than general exposure or sentiment, distorts firms' hiring and firing decisions. Design/methodology/approach We use US firm-level data from 2002 to 2022, measuring climate change exposure with the text-based measures of Sautner et al. (2023) and proxying for labor investment inefficiency using abnormal net hiring (Pinnuck and Lillis, 2007). We estimate regressions for all five climate measures and use correlation and principal component analysis to show that climate change risk captures variation distinct from the other four. We also examine whether the staggered adoption of state climate adaptation plans mitigates this effect, using a difference-in-differences design (Callaway and Sant'Anna, 2021). Findings Climate change risk reduces labor investment efficiency by increasing both over-hiring and under-hiring. This effect is specific to the risk dimension of climate change exposure; general exposure and sentiment measures show no significant association. The effect is stronger for financially constrained firms, firms with lower accounting quality, firms with low unionization, and firms in climate-vulnerable industries. We find no evidence that state climate adaptation plans mitigate this effect. Originality/value Prior climate finance research focuses mainly on capital-market and financing outcomes. We show that climate change risk also shapes firms' human capital allocation decisions, identifying it as a new determinant of labor investment efficiency.
This study examines whether climate change risk (CCR) increases investment-cash flow sensitivity (ICFS), indicating greater financing constraints that force firms to rely more heavily on internal funds for investment. We analyze 26,029 firm-year observations from 74 countries over 2001–2020, using climate risk measures from earnings call transcripts and interaction regression models. Climate risk significantly reduces investment and substantially increases investment-cash flow sensitivity, indicating climate-exposed firms become more dependent on internal financing. This effect is significantly stronger among financially constrained firms, concentrated during financial stress periods and in emerging markets, and driven primarily by regulatory transition risks rather than physical climate risks. Firms should prioritize financial flexibility through conservative leverage, while investors should incorporate climate-induced financing constraints into risk assessments, particularly for emerging market exposures. Policymakers should accompany transition regulations with targeted financial support for constrained firms and credible policy roadmaps. This study provides the first international evidence that climate risk fundamentally reshapes investment-financing relationships by increasing dependence on internal funds, with amplified effects among vulnerable firms and in emerging markets. We establish financial constraints as the primary transmission channel through which climate risk affects corporate investment.
Purpose This study examines the relationship between earnings management (EM) and financial performance (FP) in Vietnamese listed firms, while investigating the moderating roles of corporate governance (CG) and environmental, social and governance (ESG) disclosure within this nexus. Design/methodology/approach This study employs panel data from 303 non-financial listed firms over the period 2017–2024. A two-step System Generalized Method of Moments (GMM) estimator is applied to address endogeneity, simultaneity bias and dynamic persistence. Marginal effects are estimated to examine how EM affects FP across CG and ESG disclosure levels. Findings The findings show that the effect of EM on FP is contingent upon governance quality and ESG disclosure. When these mechanisms operate jointly, EM is more effectively constrained. Conversely, when ESG disclosure is high but governance quality is weak, the negative impact of EM becomes more pronounced, particularly for real EM. The findings are consistent with an expectation trap mechanism, whereby higher ESG disclosure may increase stakeholder expectations, while misalignment between disclosure and governance is associated with stronger negative market reactions. Overall, the evidence suggests that transparency alone is insufficient without credible internal governance. Originality/value This study contributes to the literature by developing a dual-discipline mechanism that captures the interaction between internal governance and external transparency. By separating CG from ESG disclosure, it avoids measurement overlap and clarifies their distinct roles. Moreover, a hand-collected Corporate Governance Index (CGI), based on the Organisation for Economic Co-operation and Development (OECD) Principles of Corporate Governance (2015, 2023), provides a context-sensitive measure of governance quality in an emerging market.
Purpose Small- and medium-sized enterprises (SMEs) often intend to make acquisitions but struggle to complete them. This exploratory research aims to identify the main drivers of and obstacles to acquisitions in the SME context. Design/methodology/approach This research is based on 23 open-ended interviews, conducted with French SME managers and support organizations. Findings The authors identify individual, organizational and environmental drivers and obstacles, as perceived by SME managers when they consider undertaking acquisitions. These factors relate to the central role of the SME manager, a lack of resources and skills, the SMEs' goal to reach critical size in a particular field of activity and the need to develop support for SME managers. Originality/value By identifying both drivers of and obstacles to SME acquisitions, the current study moves beyond extant literature that focuses on the drivers of acquisitions achieved by large, listed companies. Our findings provide novel insights for SME managers, support organizations and public policy-makers.
Purpose This study investigates how investor overconfidence shapes trading behavior and realized performance in cryptocurrency markets. Specifically, it examines whether overconfident trading leads to systematic return penalties, and whether these effects intensify under high-volatility conditions and for less experienced investors. Design/methodology/approach Using 77 million transaction records from 405,000 investors across four major cryptocurrency exchanges over 2014–2024, this paper proxies overconfidence by trading frequency and portfolio concentration (HHI). To strengthen causal interpretation, it exploits quasi-exogenous variation in trading frictions – exchange outages and fee-tier resets – as instruments for trading intensity, supplemented by extensive robustness checks and alternative concentration measures distinguishing benchmark (BTC/ETH) holdings from altcoin-dominant portfolios. Findings Both overconfidence proxies are robustly associated with significantly lower realized and risk-adjusted returns, indicating economically meaningful welfare losses for retail investors. The penalty is strongly state-dependent, becoming substantially larger during high-volatility regimes and among novice traders. Instrumental-variable results confirm that intensified trading causally contributes to performance deterioration rather than merely reflecting unobserved investor heterogeneity. Originality/value This study contributes transaction-level evidence to behavioral finance by quantifying volatility-sensitive overconfidence costs in an emerging digital-asset setting. It also provides managerial and regulatory implications by highlighting trading frictions as a market-design margin: exchange fee policies, operational resilience and consumer-facing risk disclosures can serve as practical levers to mitigate avoidable retail losses and improve market quality.
