Does Board Collective Suitability Affect Performance and Risk? Evidence from European Banks

This paper analyzes the features of the boards of large listed European banks and their degree of “collective suitability” as formalized by the Capital Requirements Directives (CRD4) and evaluates whether closer proximity to the collective suitability regulatory paradigm affects banks’ performance, risk and risk-adjusted performance. We leverage Self-Organizing Maps (SOMs) to analyze board features and suitability (i.e. competence, diversity, independence and time commitment) jointly as a multifaceted, non-linear combination of all board variables, rather than evaluating the single variables individually as in the mainstream literature. Using a hand-collected dataset based on numerous features of boards of directors, we find that European banks’ boards can be classified in four different board archetypes characterized by different degrees of collective suitability. Our findings also suggest positive relationships between the degree of collective suitability and performance, risk-adjusted performance, and risk, confirming that the regulatory provisions on governance are going in the right direction, enhancing effective and prudent management.

PERSEPSI RISIKO ATAS IMBAUAN SOCIAL DISTANCING AKIBAT PANDEMI COVID-19

Penelitian ini bertujuan untuk menggambarkan persepsi risiko masyarakat atas pandemi Covid-19 dan imbauan social distancing di Kabupaten Sidenreng Rappang (Sidrap), Sulawesi Selatan. Temuan penelitian diharapkan memberi rekomendasi gagasan kepada pemangku kepentingan. Penelitian ini menggunakan data berupa data primer dengan menyebarkan kuesioner secara online. Jumlah sampel mempertimbangkan jumlah perumahan sebagai populasi yaitu 5.989. Jumlah responden penelitian adalah 105. Teknik sampling adalah purposive sampling. Teknik analisis data adalah deskriptif kuantitatif, menggunakan program SPSS. Hasil penelitian menunjukkan dari keenam tipe persepsi risiko menunjukkan bahwa psychological risk (risiko psikologis) termasuk kategori sangat tinggi yakni 82.34%, Physical risk (risiko fisik) termasuk kategori tinggi yakni 71.45%, dan performance risk (risiko realitas informasi), finance risk (risiko keuangan), time-losss risk (risiko kehilangan waktu), social risk (risiko sosial) berada pada kategori sedang dengan masing-masing persentasi yakni 49.63%, 57.29%, 55.94%, 44.46%. Data ini bisa dipahami bahwa semakin tinggi persentase berarti semakin tinggi persepsi risiko masyarakat dan begitupun sebaliknya.

Managing Risks in Offshore Outsourcing Relationships with China: A Relational View

<p>Over the past two decades, offshore outsourcing to emerging economies, such as China, has been viewed by firms as an efficient way to gain competitive advantage. Literature indicates that offshore outsourcing can enhance firms’ competitiveness and efficiency by reducing costs, expanding relational ties, freeing up scarce resources, and leveraging capabilities. However, the research relating to risk management of offshore outsourcing relationships has not been widely reflected in extant literature. This study addresses this research gap by developing a conceptual model that examines the association between management approaches and the risks in offshore outsourcing relationships. This study applies two types of risks being relational risk and performance risk, as dependent variables. Based on social exchange theory and transaction cost theory, this study proposes two management approaches to minimise risks in offshore outsourcing relationships, which are the relational approach and the transactional approach. Empirical testing of the conceptual model employed a quantitative approach using an online survey of 41 managers from Australia and New Zealand. The survey data was analysed using a multiple regression technique, which revealed four valuable findings. Firstly, a higher level of relational risk leads to a higher level of performance risk. Secondly, the relational approach, based on interdependence of outsourcing exchange firms, can reduce performance risk. Thirdly, an increased level of relationship-specific investments contributes to the rise of performance risk. More importantly, the survey results show that relational risk plays a mediating role between relational factors and performance risk. This study recommends that offshore outsourcing firms employ the relational approach to manage performance risk. The mediating role of relational risk also indicates that firms should not just concentrate on minimising the performance risks of offshore outsourcing relationships, but should also manage relational risks due to uncooperative behaviours such as opportunism.</p>

Managing Risks in Offshore Outsourcing Relationships with China: A Relational View

<p>Over the past two decades, offshore outsourcing to emerging economies, such as China, has been viewed by firms as an efficient way to gain competitive advantage. Literature indicates that offshore outsourcing can enhance firms’ competitiveness and efficiency by reducing costs, expanding relational ties, freeing up scarce resources, and leveraging capabilities. However, the research relating to risk management of offshore outsourcing relationships has not been widely reflected in extant literature. This study addresses this research gap by developing a conceptual model that examines the association between management approaches and the risks in offshore outsourcing relationships. This study applies two types of risks being relational risk and performance risk, as dependent variables. Based on social exchange theory and transaction cost theory, this study proposes two management approaches to minimise risks in offshore outsourcing relationships, which are the relational approach and the transactional approach. Empirical testing of the conceptual model employed a quantitative approach using an online survey of 41 managers from Australia and New Zealand. The survey data was analysed using a multiple regression technique, which revealed four valuable findings. Firstly, a higher level of relational risk leads to a higher level of performance risk. Secondly, the relational approach, based on interdependence of outsourcing exchange firms, can reduce performance risk. Thirdly, an increased level of relationship-specific investments contributes to the rise of performance risk. More importantly, the survey results show that relational risk plays a mediating role between relational factors and performance risk. This study recommends that offshore outsourcing firms employ the relational approach to manage performance risk. The mediating role of relational risk also indicates that firms should not just concentrate on minimising the performance risks of offshore outsourcing relationships, but should also manage relational risks due to uncooperative behaviours such as opportunism.</p>

Did the STOCK Act impact the performance, risk and flow of hedge funds?

PurposeThis research aims to examine hedge funds’ performance, risk and flow before and after the implementation of the Stop Trading on Congressional Knowledge (STOCK) Act.Design/methodology/approachThis paper includes the use of different factor models to highlight the performance and risk of hedge funds before and after the implementation of the STOCK Act. Hedge fund holdings are retrieved from Thomson Reuters Lipper Hedge Fund Database (TASS).FindingsThis study finds significant differences before and after the implementation of the STOCK Act. The results for the entire sample period indicate that hedge funds suffered lower-alpha, standard deviation and idiosyncratic risk after the implementation of the STOCK Act.Originality/valueThe paper’s originality and value lie in addressing the relationship gap between the STOCK Act and hedge fund performance.

Unsustainability Risk of Bid Bonds in Public Tenders

Public works contracts are commonly priced and awarded through a tender process. Each bidder joining the tender must underwrite a bid bond that guarantees their fitness as contractors in case of a win. The winning contractor also needs to underwrite a performance bond before entering the contract to protect the procuring entity against the performance risk arising during the execution phase. This study addresses the case when sureties refuse to issue the performance bond, despite having issued a bid bond to the same subject. A creditworthiness variation of the contractor during the tender or an excessive discount of the contract’s price may lead to this outcome. In that case, all the subjects involved are damaged. The surety who issued the bid bond has to indemnify the procuring entity. The contract award is nullified, which is financially harmful to both the contractor and the procuring entity. We show that sureties adopting a forward-looking risk appetite framework may prevent the demand for unsustainable performance bonds instead of addressing it by rejecting the bidders’ requests. The Solvency II regulatory framework, the Italian bidding law, and actual historical data available from the Italian construction sector are considered to specify a simplified model. The probability of unsustainable tender outcomes is numerically estimated by the model, together with the mitigating impact of a surety’s proper strategy.

The dangers of pursuing innovation at all costs

Purpose This paper aims to review the latest management developments across the globe and pinpoint practical implications from cutting-edge research and case studies. Design/methodology/approach This briefing is prepared by an independent writer who adds their own impartial comments and places the articles in context. Findings This research paper concentrates on the inter-relationships between technology orientation (TO), company performance, risk-taking propensity, and innovativeness. The responses from the Florida-based technology firm managers revealed that too much TO effort can cause innovations to fall flat on their face. Up to the optimum level, however, increasing TO and innovativeness drove company performance. Risk appetites also impact the innovativeness-performance relationship, by enhancing it where innovativeness is low, and by mitigating the diminishing return of the innovativeness-performance dynamic whenever the amount of innovativeness was high. Originality/value The briefing saves busy executives, strategists and researchers hours of reading time by selecting only the very best, most pertinent information and presenting it in a condensed and easy-to-digest format.