Intel's Xinjiang woes widen US corporate risks

2021 ◽  
Keyword(s):  
Content Type ◽  
Corporate Risk

Headline INT: Intel's Xinjiang woes widen US corporate risk

Political connection, family ownership and corporate risk disclosure: empirical evidence from Jordan

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Malek Hamed Alshirah ◽  
Ahmad Farhan Alshira’h ◽  
Abdalwali Lutfi
Keyword(s):  
The Body ◽  
The Political ◽  
Family Ownership ◽  
Political Connection ◽  
Risk Disclosure ◽  
Moderator Effect ◽  
Content Type ◽  
Negative Effect ◽  
Corporate Risk ◽  
Level Of Risk

Purpose This study aims to empirically examine whether the political connection is related to risk disclosure practices. The study also seeks to contribute to the existent risk disclosure literature by investigating the moderator effect of family ownership on this relationship. Design/methodology/approach The content analysis approach was used to collect data and determine the level of risk disclosure over the non-financial Jordanian firms listed on 1Amman Stock Exchange. The sample of this study contains 376 annual reports over four years from 2014 to 2017. It used the random effect regressions to examine the hypothesis of the study. Findings The results show that politically connected companies disclose less risk information than the unconnected ones in Jordan. The results also refer that family ownership contributes in mitigating the negative effect of the political connection on the level of corporate risk. Practical implications The results have implications for regulatory institutions such as the Jordan Securities Commission to take the negative effect of political connection in their consideration and impose further regulations to monitor this board’s attribute and control politicians’ domination on the board decisions. Originality/value The current study also contributes to the body of literature by investigating the effects of the political connections on the level of risk disclosure in the financial reports. To the best of the authors’ knowledge, the current study is the first to examine the effect of the political connection on the risk disclosure practices. Moreover, the study is among the first studies that examine the moderating role of family ownership on such relationship.

The ascension of executives' tenure, corporate risk-taking and corporate performance: evidence from Malaysia

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Osama F. Atayah ◽  
Khakan Najaf ◽  
Ravichandran K. Subramaniam ◽  
Phaik Nie Chin
Keyword(s):  
Risk Taking ◽  
Corporate Performance ◽  
Stock Exchange ◽  
Generalized Method Of Moments ◽  
Negative Relationship ◽  
Ordinary Least Squares ◽  
Executive Management ◽  
Content Type ◽  
Top Executives ◽  
Corporate Risk

PurposeThis study aims to investigate the implication of top executives’ number of years of experience (tenure) on corporate risk-taking behaviour and corporate performance in Malaysian corporations.Design/methodology/approachTo test the hypothesis efficiently, the authors have extracted the data from Bloomberg for 788 listed companies of the Malaysian Stock Exchange. The methodology entails ordinary least squares regressions, quantile regression and dynamic system generalized method of moments model.FindingsFirst, the authors show that executive management tenure has a significant negative relationship with corporate risk-taking. It means that the long-tenured executives tend to undertake less risky strategies and decisions. Second, this study reveals that the longer executive management tenure has a positive relationship with corporate performance. Third, the moderating effect of corporate risk-taking with executive tenure (Tenure dummy*Risk) has a negative relationship with the corporate performance by 1%.Practical implicationsIt implies that the appointment of experienced executive management contributes towards corporate performance directly. However, experienced management trends take less risk, which eventually results in mitigating the corporate performance. On that basis, the findings are significant in highlighting the usefulness of executive leadership term and offers insights to academics, practitioners and policymakers.Originality/valueThis paper is novel since it is unique in evaluating the executive tenure and the preferences to handle risk strategies and how that impact the firm performance.

Reconsidering contact risk and contractual risk management

2017 ◽  
Vol 59 (4) ◽  
pp. 504-521 ◽  
Author(s):  
Ralph Schuhmann ◽  
Bert Eichhorn
Keyword(s):  
Risk Management ◽  
Corporate Management ◽  
Corporate Risk Management ◽  
Content Type ◽  
Management Processes ◽  
Risk Management Process ◽  
Management Capacity ◽  
Risk Dimensions ◽  
Contractual Risk ◽  
Corporate Risk

PurposeThe aim of this paper is to pursue three objectives: to assess the extent to which theoretical concepts and corporate practice are reflecting the contract’s risk management dimensions; to identify ways to make full usage of the contract’s risk dimensions for risk management purposes; to overcome the isolation of the contract caused by its perception as a legal instrument by integrating its handling into the overall corporate management processes. Design/methodology/approachLiterature is analyzed regarding the contract’s roles as a source of risk and as a risk management device. Based on the relevant findings, it uses the Contractual Management Model to develop a concept that integrates all contract-related risk management processes in an enterprise. FindingsThe paper redefines the term “contract risk” in the light of modern understanding of contract functions and contract purposes. It shows that only Contractual Risk Management theory takes the management capacity of the contract fully into account. A Contractual Risk Management process is suggested which integrates all contract-related corporate management processes and aligns them to the requirements of transaction risk management and enterprise risk management. Originality/valueThe paper may guide executives to optimize corporate risk management processes through a better understanding of the risk potential of contract and of its risk management capacity. It provides a checklist of redefined contract risks as well as a concept that, for the first time, is aligning all contract-related management processes to support the corporate risk management system.

Which formula for corporate risk-taking around the world? Exploring happiness as the “black box”

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Thao Phuong Tran ◽  
Anh-Tuan Le
Keyword(s):  
Risk Taking ◽  
Negative Influence ◽  
Current Debate ◽  
Alternative Measure ◽  
Firm Risk ◽  
Content Type ◽  
Financial Decisions ◽  
The World ◽  
Corporate Risk

PurposeThis paper examines how the degree of happiness affects corporate risk-taking and the moderating influence of family ownership of firms on this relationship.Design/methodology/approachThe authors use an international sample of 17,654 firm-year observations from 24 countries around the world from 2008 to 2016.FindingsUsing the happiness index from the World Happiness Report developed by the United Nations Sustainable Development Solutions Network, the authors show that a country's overall happiness is negatively correlated with risk-taking behavior by firms. The findings are robust to an alternative measure of risk-taking by firms. Further analyses document that the negative influence of happiness on firm risk-taking is more pronounced for family-owned firms.Practical implicationsThe paper is consistent with the notion that happier people are likely to be more risk-averse in making financial decisions, which, in turn, reduces corporate risk-taking.Originality/valueThis study contributes to the broad literature on the determinants of corporate risk-taking and the growing literature on the role of sentiment on investment decisions. The authors contribute to the current debate about family-owned firms by demonstrating that the presence of family trust strengthens the negative influence of happiness on corporate risk-taking, a topic that has been unexplored in previous studies.

Taxes and risk-taking behavior: evidence from mergers and acquisitions in the G7 nations

2018 ◽  
Vol 19 (3) ◽  
pp. 277-294
Author(s):  
Poonyawat Sreesing
Keyword(s):  
Mergers And Acquisitions ◽  
Option Pricing ◽  
Risk Taking ◽  
Investment Decisions ◽  
Tax Rates ◽  
Content Type ◽  
Asset Risk ◽  
Tax Effects ◽  
Corporate Risk

PurposeThis study aims to examine how corporate taxes affect corporate risk-taking decisions.Design/methodology/approachThis study examines corporate risk-taking by analyzing how a firm’s asset risk changes following an acquisition carried out by publicly listed companies in the G7 nations. To measure the asset risk of a firm, this study uses the option pricing framework in Merton (1974).FindingsConsistent with an implication of the Merton (1974) framework, the findings show that firms take more risk in their investment decisions when tax rates are high. Moreover, the tax effects wane for firms with a relatively large borrowing opportunity and this suggests that the risk-taking incentive from taxes is moderated by the reputation concern in the debt market, lending support to the Diamond (1989) reputation-building model. The empirical results also show that the tax-induced risk-taking incentive is restrained by creditor rights. Overall, the study reveals an important role of taxes in the structure of corporate investment decisions.Practical implicationsThe implications of this study can be beneficial to policymakers when considering the alteration of tax rates, as it will affect the riskiness of firm investment decisions.Originality/valueThis study provides a better understanding of the role of taxes on risk-taking and also contributes to the growing body of evidence supporting tax effects of risk-taking. The relationship between taxes and risk-taking has proven that the corporate taxation is one of the key factors that firms consider during their selection of risky investments. Unlike previous studies, this research is the first to investigate the change in asset risk, estimating by the option pricing framework, through studying a particular event: mergers and acquisitions.

scholarly journals Corporate risk and the humpback of CEO narcissism

2018 ◽  
Vol 10 (3) ◽  
pp. 252-273 ◽  
Author(s):  
Tom Aabo ◽  
Nicklas Bang Eriksen
Keyword(s):  
Risk Taking ◽  
Stock Return ◽  
Return Volatility ◽  
Moderate Degree ◽  
Content Type ◽  
Stock Return Volatility ◽  
Unobtrusive Measure ◽  
Ceo Narcissism ◽  
High Level ◽  
Corporate Risk

Purpose The purpose of this paper is to investigate the association between CEO narcissism and corporate risk taking. Design/methodology/approach The authors provide a novel and unobtrusive measure of CEO narcissism based on LinkedIn profiling. The authors investigate the relationship between CEO narcissism and corporate risk taking (stock return volatility) for a sample of 475 US manufacturing firms in the period 2010-2014. Findings The authors find an inverse U-shape relationship between CEO narcissism and stock return volatility. The inverse U-shape relationship (the “humpback”) is caused by the paradoxical nature of the narcissistic personality in which the self-esteem is high but at the same time fragile with a combination of self-admiration and a constant need of having this positive self-view confirmed. The results are robust to alternative specifications of CEO narcissism and corporate risk taking. The results are economically meaningful. Thus, a moderate degree of CEO narcissism – as compared to a very low or a very high level of CEO narcissism – is associated with an increase in corporate risk taking of approximately 12 percent. Originality/value Previous literature provides multiple analyses on the association between managerial overconfidence and corporate decisions. As opposed to overconfidence, narcissism is a personality trait having both cognitive and behavioral dimensions. This paper provides a novel contribution to the growing literature on the association between managerial biases/traits and corporate decision-making.

Corruption and corporate risk-taking: evidence from emerging markets

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Quoc Trung Tran
Keyword(s):  
Emerging Markets ◽  
Risk Taking ◽  
Information Disclosure ◽  
Emerging Market ◽  
Generalized Method Of Moments ◽  
Content Type ◽  
Financing Cost ◽  
Market Index ◽  
Public Enemy ◽  
Corporate Risk

PurposeThis paper investigates the relationship between corruption and corporate risk-taking in emerging markets where corruption is considered as “public enemy number one.”Design/methodology/approachThe study measures corruption based on Corruption Control Index annually published by World Bank and examines how corruption affects corporate risk-taking in emerging markets covered in MSCI Emerging Market Index.FindingsWith a sample of 75,338 observations from 8,326 firms across 20 emerging stock markets during the period 2005–2016, the author finds that corruption negatively affects corporate risk-taking. Robustness checks with a reduced sample without China and India, alternatives of corruption measures, various measures of risk-taking and Generalized method of moments (GMM) estimator also show consistent results. Moreover, additional analysis shows that information disclosure mitigates the effect of corruption on risk-taking.Originality/valueThe extant literature implies that corruption may decrease corporate risk-taking behavior through two channels including operational cost and debt financing cost.

Corporate risk taking and sustainability: a case of listed firms from USA and Germany

2019 ◽  
Vol 10 (1) ◽  
pp. 2-15 ◽  
Author(s):  
Zahid Irhsad Younas ◽  
Ameena Zafar
Keyword(s):  
Risk Taking ◽  
Profit Maximization ◽  
Well Being ◽  
Least Square ◽  
Board Structure ◽  
Best Interest ◽  
Content Type ◽  
Listed Firms ◽  
Corporate Risk ◽  
The Impact

PurposeThis study aims to analyze the impact of corporate risk taking on the sustainability of firms in USA and Germany. As risk taking is an expensive phenomenon, the firm may shift the resources from stakeholder well-being to profit maximization of shareholders. Ultimately, risk taking results in the reduction of firm’s sustainability.Design/methodology/approachTo capture the impact of corporate risk taking, the corporate-governance variables, i.e. “independent board structure” and “board size,” were used as instrumental variables to control excessive corporate risk taking and restrict it at a healthy level. A sample of 3,387 unbalanced panel observations from USA and Germany, for the period 2004-2015, were assessed.FindingsThe results confirm that corporate risk taking has a negative and significant impact on the sustainability of firms.Research limitations/implicationsGovernment and policymakers in USA and Germany may introduce regulations to curb excessive corporate risk taking for sustainable corporations and sustainable society. This research suggests that corporate risk taking is not in the best interest of stakeholders.Originality/valuePrevious literature only finds the impact of sustainability on corporate risk taking and there is not a single study that examines the impact of corporate risk taking on the sustainability of a firm. Thus, this study contributes to existing literature on corporate risk taking and sustainability. The study further contributes by using the instrumental variable two stage least square.

Corporate environmental sustainability disclosures and environmental risk

2015 ◽  
Vol 11 (3) ◽  
pp. 301-332 ◽  
Author(s):  
Michael Dobler ◽  
Kaouthar Lajili ◽  
Daniel Zéghal
Keyword(s):  
Environmental Risk ◽  
Environmental Performance ◽  
Environmental Indicators ◽  
Environmental Data ◽  
Content Type ◽  
Political Theories ◽  
Public Pressure ◽  
Environmental Disclosures ◽  
Corporate Risk ◽  
Risk Reporting

Purpose – This paper aims to propose and apply a novel risk-based approach to explore whether socio-political theories explain the level of corporate environmental disclosures given inconclusive evidence on the relation between environmental disclosure and environmental performance. Design/methodology/approach – Based on content analysis of corporate risk reporting, the paper develops measures of environmental risk to proxy for a firm’s exposure to public pressure in regard to environmental concerns that should be positively associated with the level of corporate environmental disclosures according to socio-political theories. Multiple regressions are used to test the predictions of socio-political theories for US Standards and Poor’s 500 constituents from polluting sectors. Findings – The level of environmental disclosures is found to be positively associated with a firm’s environmental risk while unrelated to its environmental performance. The findings suggest that firms tend to provide higher levels of environmental disclosures in response to greater exposure to public pressure as depicted by broad environmental indicators. The results are robust to alternative measures of environmental disclosures, environmental risk and environmental performance, alternative specifications of the economic model and additional sensitivity checks. Research limitations/implications – This study is limited to US firms in polluting sectors. The risk-based approach proposed may not be appropriate to cover sectors where corporate risk reporting is less likely to address environmental risk, but it could potentially be adopted in other countries with advanced risk reporting regulation or practice. Practical implications – Findings are important to understand a firm’s incentives to disclose environmental information. Cross-sectional differences found in environmental disclosures, risk and performance, highlight the importance of considering industry affiliation when analyzing environmental data. Originality/value – This paper is the first to use firm-level environmental risk variables to explain the level of corporate environmental disclosures. The risk-based approach taken suggests opportunities for research at the multi-country level and in countries where corporate environmental performance data are not publicly available.

Board of directors' characteristics and corporate risk disclosure: the moderating role of family ownership

2020 ◽  
Vol 15 (2) ◽  
pp. 219-252
Author(s):  
Malek Hamed Alshirah ◽  
Azhar Abdul Rahman ◽  
Ifa Rizad Mustapa
Keyword(s):  
Board Of Directors ◽  
Family Ownership ◽  
Risk Disclosure ◽  
Content Type ◽  
The Board Of Directors ◽  
Corporate Risk ◽  
The Relationship ◽  
Moderating Role ◽  
Level Of Risk

PurposeThis study aims at examining the level of risk of disclosure practices and the effect of four board of directors' characteristics (board size, board meetings, CEO duality and board expertise) on these practices in the Jordanian context. This study also adds to the body of literature by examining the moderating effect of family ownership on the relationship between the board of directors' characteristics and the corporate risk disclosure.Design/methodology/approachThe sample of this study contains the non-financial Jordanian firms listed on Amman Stock Exchange (ASE). 376 annual reports of the sampled firms over four years from 2014 to 2017 were used. The content analysis approach was used to collect data and to determine the level of risk disclosure by computing the number of risk-related sentences in the annual reporting. To test the study's hypothesis, the random effect model was employed.FindingsThe empirical results show that the total of the risk disclosure sentences for each firm ranges from a minimum value of 2 sentences to a maximum value of 61 sentences, and the mean of CRD is 28 sentences. The results also indicate that the board expertise is positively related with the level of risk disclosure. Conversely, CEO duality has a negative impact on the risk disclosure practices. However, the results failed to support that the board size and the board meetings have a significant effect on the level of risk disclosure. Furthermore, the study demonstrated that the family ownership moderates the relationship between the board of directors and the corporate risk disclosure.Practical implicationsThe finding of this study is more likely be useful for many concerned parties, researchers, authorities, investors and financial analysts alike in understanding the current practices of the risk disclosure in Jordan, thus helping them in reconsidering and reviewing the accounting standards and improving the credibility and transparency of the financial reports in the Jordanian capital market.Originality/valueThe current study contributes to the literature of risk disclosure because the previous research has paid little attention to this topic in Jordan. To the best knowledge of the researcher, this study is the first Jordanian study that focuses on examining the relationship between the board of directors' characteristics and the corporate risk disclosure in the non-financial sector. Furthermore, it is the first study that examines the moderating role of family ownership on such relationships. Consequently, the results of the current study draw attention to the CRD practices and the monitoring role of board of directors in Jordan.

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