This study examines why firms' access to finance differs across countries and assesses the extent to which democracy and financial liberalisation account for these variations. Using political economy and liberalisation theories as a foundation, we analyse a comprehensive dataset of over 110,000 firms across 112 economies between 2006 and 2021. Although previous research identifies firm-level and macroeconomic sources of financial frictions, evidence on the institutional drivers of cross-country financial access remains limited. Our findings show that democracy and financial liberalisation, when considered independently, are associated with reduced access to finance. However, when both conditions coexist, they ease financing barriers and enhance access to finance. These results remain consistent across multiple robustness tests, including alternative model specifications, endogeneity corrections, and various measures of institutional quality and financial openness. Overall, the study highlights that neither democracy nor liberalisation alone is sufficient to enhance access to credit. Instead, simultaneous institutional strengthening and financial market access are necessary to ease financing barriers. This has important policy implications, particularly for emerging and developing economies seeking to expand firm-level access to capital and stimulate economic growth.

We examine the relationship between political partisanship and commercial bank efficiency in the United States from 1972 to 2020, assessing the persistent influence of political affiliations at the state and District of Columbia levels. Bank efficiency scores are estimated using a double-bootstrap approach, and the analysis is conducted within a Spatial Dynamic panel Tobit framework that controls for a broad set of banking and macroeconomic factors. The results reveal a significant effect of US state and national elections on interdependent bank efficiency scores, providing robust support for the partisan theory in the context of US banking over five decades. We find compelling evidence that Democratic victories at both the state and national levels are associated with higher state-level bank efficiency, even after accounting for bank-specific characteristics. Additionally, changing the political party in power every four years could enhance the efficiency of the US banking system. These findings suggest that political change, rather than being purely disruptive, can act as a catalyst for efficiency improvements in the US banking system. The results remain consistent across multiple robustness tests.

This study examines the relationship between executive perks and corporate green innovation, a topic central to the debate over whether such perks serve long-term strategic interests or managerial self-interest. Using data from Chinese A-share listed firms from 2009 to 2023, our findings reveal an inverted U-shaped relationship between perks and green innovation. Furthermore, we find that both analyst coverage and institutional investor attention—two critical forms of external monitoring—strengthen this relationship by mitigating the negative effects of perks and enhancing their efficiency. This study also explores the moderating effects of firm age, executives’ overseas experience, and executives’ educational background. Our findings enrich the understanding of the economic consequences of executive perks and the determinants of corporate green innovation, providing valuable theoretical and practical implications for improving perks-related governance and fostering sustainable corporate innovation.

This editorial introduces a special issue of the British Accounting Review on alternative finance, comprising four papers on venture capital social networks, the relationship between corporate social responsibility and corporate hedging, regional patterns in private equity buyout pricing and performance in the United Kingdom, and the internationalisation of equity crowdfunding platforms. We position the four contributions within the broader literature on information asymmetry, the geography of capital allocation, and the role of environmental, social, and governance (ESG) engagement as a financial signal. We then discuss policy implications relating to institutional reform, regional finance policy, crowdfunding regulation, and mandatory ESG disclosure, and outline an agenda for future research, with attention to data limitations, identification, and international generalisability.

We propose two opposing forces that impact the relation between electoral integrity and poverty. On the one hand, it is more costly to provide electoral integrity in states where there is more poverty due to transaction costs and opportunity costs. On the other hand, extreme levels of poverty attract media scrutiny and greater external monitoring of electoral integrity, giving rise to more demand for electoral integrity. Taken together, we expect electoral integrity to be a U-shaped function of poverty. We also hypothesize that electoral integrity will vary depending on the strength of state electoral laws. Expert-level survey data on electoral integrity from the 2016 U.S. Presidential election and the 2018 U.S. congressional election, in combination with U.S. state-level data on poverty are strongly consistent with these predictions.

Purpose Access to bank loans is often limited for small businesses in emerging economies, particularly during crises when capital becomes scarce. In such situations, financially underserved entrepreneurs may resort to unregulated financing options, often involving high-interest, illegal loans. This study aims to examine the relationship between informal, unregulated debt, financial education and well-being among entrepreneurs in Chile. Design/methodology/approach The empirical analysis is based on a novel large data set from the Impact of the COVID-19 pandemic on small businesses survey. The data set contains information on 1,191 entrepreneurs enrolled in Chile’s Small Business Development Center program. Linear probability and instrumental variable models are used to analyze the data. Findings Entrepreneurs with unregulated debt from moneylenders are more likely to have worse levels of mental well-being across multiple measures. Those who perceive a need for financial education are more likely to depend on informal, high-cost financing. Financial-advisory assistance reduces the probability of relying on unregulated debt. Practical implications This study highlights the role of access to financial education and formal sources of capital in improving the well-being of entrepreneurs. Moreover, this study underscores the negative consequences of illegal lending practices often associated with organized crime, which target entrepreneurs with limited financing options. Originality/value This research provides new insights into the adverse effects of informal, unregulated lending on well-being. It emphasizes how financial education can alleviate financial strain and improve mental health outcomes among small business owners.

In equity crowdfunding, establishing legitimacy is crucial for firms to mitigate the information asymmetry investors face. We propose that the strategic selection of incorporating a business in Delaware-a jurisdiction recognized for its investor-friendly legal framework-sends a quality signal to investors, enticing greater participation in capital raises. While prior studies indicate a diminishing relevance of Delaware incorporation for later-stage and mature ventures, our study presents a contrasting story for smaller, nascent equity crowdfunding firms. Utilizing a comprehensive dataset of U.S. regulated equity crowdfunding offerings from May 2016 to December 2021, our empirical analysis uncovers a positive and meaningful relationship between Delaware incorporation and crowdfunding success in the United States. These findings underscore the significance of Delaware's legal infrastructure for firms confronting heightened challenges of establishing trust due to otherwise limited governance mechanisms. By highlighting the importance of institutional quality, this research contributes to understanding how legal frameworks influence investment outcomes and entrepreneurial motivations, offering insights for entrepreneurs, investors, and policymakers.

This paper examines how China's infrastructure investment influences African exports to China. We analyse data from 46 African countries and 14 industries that have received China's infrastructure investment from 2005 to 2019. Our results show that China's infrastructure investment in the primary sector has led to more African exports to China (i.e. resource-seeking). In contrast, investment in the non-primary sector has had a substitution effect on African exports to China (i.e. market-seeking). We find that China's infrastructure investment in Africa is driven mainly by resource-seeking. We further document that both the host country's endowment of natural resources and the resources for infrastructure arrangement moderate the positive impact of China's infrastructure investment on African exports to China. These results consistently confirm that China's infrastructure investment in Africa has facilitated China's access to African natural resources.

We explore how climate change risk affects the performance of new entrant firms seeking external capital by using a sample of Initial Public Offerings (IPO) from 2000 to 2020. We find climate change risk negatively affects underpricing and the long-term performance of the IPO firms. We further investigate the moderating effect of investor sentiment on the relationship between climate change risk and IPO long-term performance. We find that the negative effect of climate change risk on IPO performance is stronger for firms going public when investors are pessimistic. Exploring the channels through which climate change risk affects IPO performance, the results show that the effect of climate change risk on IPO underpricing is channeled through the IPO volume, while long-term underperformance is channeled through growth opportunities. Overall, our results are robust to various model specifications, firm-level measures of climate change risk, CEO traits, endogeneity concerns, and exogenous shocks. How does climate change risk impact IPO success? We find that climate change risk reduces both underpricing and the long-term performance of IPOs, and this negative effect is stronger when investor sentiment is pessimistic. Our study shows that climate change risk impacts IPO performance in two main ways: it reduces underpricing by affecting the volume of IPOs and lowers long-term performance by limiting growth opportunities. Overall, our findings highlight that climate risk plays a key role in shaping the IPO market. This has important implications for states vulnerable to climate change, investors, and the management of new entrant firms on the importance of climate change risk as an additional risk factor. In particular, our work encourages IPO firms and stock market regulators to address environmental and social issues to reduce uncertainties tied to climate risks.

We investigate whether features of the tournament structure determine the cross-sectional variation in the pay premiums of tournament winners and whether the level of rewards for tournament winners is related to future firm performance. Using a unique data set of 116 internal Chief Executive Officer (CEO) succession events in US bank holding companies, we find that the winner's pay premium level is positively associated with the steepness of the tournament structure before CEO succession. Higher pay premiums reflect the new CEO's managerial ability as perceived by shareholders and are also associated with greater improvements in bank performance following CEO succession.

Using a novel economic connectedness measure, we investigate whether impact investments are more likely to be in economically disadvantageous areas and whether their location affects deal size, activity, and exit outcomes. We identify impact investments in two ways—first, by identifying deals invested by investors whose primary investor type is impact investing, and second, by identifying with deal descriptions (self-identified impact investments). We find that impact investors are more likely to invest in economically disconnected areas where upward mobility is limited. The result remains robust with propensity score matching analyses. Impact deals in connected areas co-invested with non-impact investors appear to obtain similar results to traditional venture capital investments with large deal sizes and less monitoring, indicated by fewer financing rounds. Self-identified impact investments located in connected areas are more likely to receive larger deals but with more monitoring. Impact investors' likelihood of successful exits is no different from that of non-impact investors. However, self-identified impact investments are more likely to succeed than non-impact investments and are more successful in economically disconnected areas.

Affordance theory suggests that technology offers certain opportunities or 'affordances' that can be exploited by users. In this context, we are exploring how FinTech adoption provides opportunities to address corporate greenwashing. Drawing on an affordance perspective, we assert that FinTech adoption effectively inhibits corporate greenwashing behaviour, primarily through facilitating green innovation and improving managerial efficiency. We also contend that the impact of FinTech adoption on reducing greenwashing behaviour is not uniform across all industries. It is more pronounced in heavy-polluting industries, indicating that FinTech has a greater effect in encouraging accurate disclosure of environmental information in environmentally sensitive sectors. Conversely, its impact is weaker in high-tech industries, which might already have strong environmental commitments. The findings contribute to the literature on sustainability, FinTech and governance.

This study examines the influence of platform characteristics — ownership stakes and underwriting fees — on the outcomes of equity crowdfunding campaigns and their ability to attract subsequent funding. Analyzing data from 2016 to 2022 across all U.S. equity crowdfunding platforms, our findings reveal that while platform ownership stakes positively correlate with immediate campaign success and follow-on funding, underwriting fees negatively impact success. However, these correlations weaken or reverse when analyzing the varying stakes taken within an individual platform like Wefunder and StartEngine. The findings highlight the importance of using multiple platforms in analyzing the impact of platform stakes on success.

European Financial ManagementVolume 30, Issue 2 p. 675-679 EDITORIAL Sustainability, climate change and financial innovation: Future research directions Douglas Cumming, Corresponding Author Douglas Cumming [email protected] [email protected] orcid.org/0000-0003-4366-6112 College of Business, Florida Atlantic University, Boca Raton, USA Birmingham Business School, University of Birmingham, Birmingham, UK Correspondence Douglas Cumming, Florida Atlantic University, Boca Raton, USA. Email: [email protected] and [email protected]Search for more papers by this authorHisham Farag, Hisham Farag orcid.org/0000-0002-6110-7747 Birmingham Business School, University of Birmingham, Birmingham, UKSearch for more papers by this authorSofia Johan, Sofia Johan orcid.org/0000-0003-1359-6029 College of Business, Florida Atlantic University, Boca Raton, USA InnoLab, University of Vaasa, Finland, FinlandSearch for more papers by this author Douglas Cumming, Corresponding Author Douglas Cumming [email protected] [email protected] orcid.org/0000-0003-4366-6112 College of Business, Florida Atlantic University, Boca Raton, USA Birmingham Business School, University of Birmingham, Birmingham, UK Correspondence Douglas Cumming, Florida Atlantic University, Boca Raton, USA. Email: [email protected] and [email protected]Search for more papers by this authorHisham Farag, Hisham Farag orcid.org/0000-0002-6110-7747 Birmingham Business School, University of Birmingham, Birmingham, UKSearch for more papers by this authorSofia Johan, Sofia Johan orcid.org/0000-0003-1359-6029 College of Business, Florida Atlantic University, Boca Raton, USA InnoLab, University of Vaasa, Finland, FinlandSearch for more papers by this author First published: 01 February 2024 https://doi.org/10.1111/eufm.12481 We are grateful to the Editor, Professor John Doukas for his support to the Sustainable Financial Innovation Research Centre s annual conference at the University of Birmingham in Dubai. 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This research focuses on the cash conversion cycle as a crucial metric for evaluating short-term firm performance. Despite its importance, there has been limited investigation into the relationship between the cash conversion cycle and firm performance within the five major emerging markets, namely Brazil, Russia, India, China, and South Africa (BRICS) as a single region. To bridge this gap, our study examines this relationship using a comprehensive dataset spanning the period of 2009–2019. Employing a set of regression analyses namely, seemingly unrelated regression, system generalized method of moments, dynamic quantile regression, and difference-in-difference regression, we provide empirical evidence indicating an inverse association between cash conversion cycle and firm performance across all BRICS countries. Specifically, firms with longer cash conversion cycle periods exhibit lower profitability compared to those with shorter cash conversion cycle periods. Moreover, our analysis incorporates various control variables encompassing firm and country characteristics, which also display significant relationships with firm performance. These empirical findings are robust, aligned with existing theoretical frameworks, and support the cash conversion cycle theory. The outcomes of this study offer valuable insights for investors, policymakers, financial managers, and debt holders, contributing to their decision-making processes.