Template-Type: ReDIF-Article 1.0 Author-Name: Efstathios Sarantinos Author-X-Name-First: Efstathios Author-X-Name-Last: Sarantinos Author-Name: Dimitris Kenourgios Author-X-Name-First: Dimitris Author-X-Name-Last: Kenourgios Author-Name: John Hlias Plikas Author-X-Name-First: John Hlias Author-X-Name-Last: Plikas Title: On the key drivers of capital depletion in the EU-wide stress tests Abstract: We aim to identify the key drivers of capital depletion under the adverse scenario by reverse engineering the EU-wide stress tests. Our sample consists of the banks that participated in the 2016, 2018 and 2021 EU-wide stress tests. We use three separate sets of variables, namely the bank-specific indicators, the macroeconomic parameters and the banks' exposures per loan portfolio. The results demonstrate that banks that are more profitable, more efficient, smaller, more exposed to corporate clients, less exposed to governments and having booked more impairments beforehand experience lower capital depletion under the adverse scenario. In addition, high rates of inflation imply more severe capital reductions, while high GDP leads to mild capital depletion. The asset mix on banks' balance sheets significantly affects the impact of stress test under the adverse scenario. Results are robust to alternative econometric approaches and provide important implications for both supervisors and banks. Journal: Int. J. of Banking, Accounting and Finance Pages: 151-177 Issue: 2 Volume: 14 Year: 2024 Keywords: bank stress tests; adverse scenario; capital depletion; banking sector; European Union. File-URL: http://www.inderscience.com/link.php?id=141382 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:ids:injbaf:v:14:y:2024:i:2:p:151-177 Template-Type: ReDIF-Article 1.0 Author-Name: Nicholas Daniel Haupt Author-X-Name-First: Nicholas Daniel Author-X-Name-Last: Haupt Author-Name: Katinka Vermeulen Author-X-Name-First: Katinka Author-X-Name-Last: Vermeulen Author-Name: Elda du Toit Author-X-Name-First: Elda du Author-X-Name-Last: Toit Title: Value relevance: a systematic literature review Abstract: This research reviews value relevance studies (2000-2023) to understand how accounting information impacts firm value. A systematic literature review identified a rise in value relevance research, but a recent decline. It also revealed a concentration of publications in specific journals and by a limited number of authors. Thematic analysis suggests key areas like decision-making and market characteristics influence value relevance research. The research highlights the role of accounting information in investment decisions and emphasises the dynamic nature of the field due to evolving markets and information quality. Future research should explore non-financial factors for a more comprehensive understanding. Journal: Int. J. of Banking, Accounting and Finance Pages: 178-205 Issue: 2 Volume: 14 Year: 2024 Keywords: value relevance; accounting; finance; information; literature review. File-URL: http://www.inderscience.com/link.php?id=141385 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:ids:injbaf:v:14:y:2024:i:2:p:178-205 Template-Type: ReDIF-Article 1.0 Author-Name: Athanasios Pavlopoulos Author-X-Name-First: Athanasios Author-X-Name-Last: Pavlopoulos Author-Name: George Emmanuel Iatridis Author-X-Name-First: George Emmanuel Author-X-Name-Last: Iatridis Author-Name: Dimitrios N. Koufopoulos Author-X-Name-First: Dimitrios N. Author-X-Name-Last: Koufopoulos Title: The influence of integrated reporting compliance on analyst forecast accuracy and credit ratings Abstract: This study examines how integrated reporting (IR) affects analyst forecasts and credit ratings. Our findings indicate that a high level of IR compliance contributes additional valuable information to improve analyst forecast accuracy. Our research reveals that earnings manipulation exhibits a less pronounced negative relationship with credit ratings for companies that exhibit strong IR compliance. Additionally, we observe a positive association between voluntary IR adoption and credit ratings among companies that uphold high IR compliance standards. Finally, our study suggests that companies with robust IR compliance tend to receive higher credit ratings, even in cases where their legal, cultural and political institutional context may be less supportive. Journal: Int. J. of Banking, Accounting and Finance Pages: 206-246 Issue: 2 Volume: 14 Year: 2024 Keywords: integrated reporting; analyst forecast accuracy; credit ratings; compliance quality. File-URL: http://www.inderscience.com/link.php?id=141391 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:ids:injbaf:v:14:y:2024:i:2:p:206-246 Template-Type: ReDIF-Article 1.0 Author-Name: Seyed Alireza Athari Author-X-Name-First: Seyed Alireza Author-X-Name-Last: Athari Title: Do governance settings moderate the effect of country risk on firms' cash holdings? Evidence from China Abstract: This study examines the impact of governance settings, country risk, and their interactions on Chinese firms' cash holdings. The results reveal that companies stockpile less cash after the enhancement of governance quality by firms, provinces, and the country. Likewise, the results reveal that companies stockpile more cash by decreasing a country's vulnerability to financial, economic, and political risks. The findings also reveal that improvement in governance quality at firms, provinces, and country levels leads to Chinese firms becoming less responsive to country-specific risks in setting their cash holdings policies. Besides, the findings underscore that the impact of country risk is more prominent in companies with small sizes, low debt, and high profitability characteristics. Journal: Int. J. of Banking, Accounting and Finance Pages: 247-278 Issue: 2 Volume: 14 Year: 2024 Keywords: governance settings; country risk; cash holdings; Chinese firms; GMM; China. File-URL: http://www.inderscience.com/link.php?id=141393 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:ids:injbaf:v:14:y:2024:i:2:p:247-278 Template-Type: ReDIF-Article 1.0 Author-Name: Nikos D. Kagkarakis Author-X-Name-First: Nikos D. Author-X-Name-Last: Kagkarakis Author-Name: Dimitris A. Tsouknidis Author-X-Name-First: Dimitris A. Author-X-Name-Last: Tsouknidis Title: Modelling the probability of asset value covenant violations in shipping bank loans Abstract: This paper aims to model the probability of a borrower violating an asset value covenant in a shipping bank loan agreement, where the main collateral (the vessel) exhibits very high price volatility. We estimate a panel data regression model using the largest dataset of shipping bank loans examined to date. The results reveal that loan-specific variables, particularly the amount of loan, advance ratio, and existence of a holding company guarantee, are the most important factors affecting the probability of observing an asset value covenant violation. These results are important for ship-lending financial institutions because: 1) vessel prices serve as the main collateral in bank loan agreements; 2) vessel prices are significantly larger in magnitude and much more volatile when compared to other widely examined asset-backed loan agreements, such as mortgages. Journal: Int. J. of Banking, Accounting and Finance Pages: 324-346 Issue: 3 Volume: 14 Year: 2024 Keywords: bank loans; asset value covenant; credit scoring models; shipping. File-URL: http://www.inderscience.com/link.php?id=142704 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:ids:injbaf:v:14:y:2024:i:3:p:324-346 Template-Type: ReDIF-Article 1.0 Author-Name: Salma Mokdadi Author-X-Name-First: Salma Author-X-Name-Last: Mokdadi Author-Name: Kamel Naoui Author-X-Name-First: Kamel Author-X-Name-Last: Naoui Title: Bank shareholding, corporate governance and the adjustment cost of debts Abstract: A large strand of the literature exploring the mechanisms linking the ownership structure of firms and their indebtedness considers institutional investors as a highly homogeneous group. Among this category of investors, banking institutions are still attracting little attention despite their strong influence on capital structure through their simultaneous role of lenders and shareholders. The case of the French firms was also scarcely explored. This paper aims to fill these gaps by checking the impact of bank shareholding on the indebtedness and the cost of debt adjustment of firms. We use a sample of listed French SMEs observed between 2007 and 2017 and estimate a dynamic panel model using one-step GMM with robust standard deviations. The robust two-step system GMM is performed for robustness check while sector and time dummies are introduced for the sake of sensitivity check. The results indicate that bank shareholding positively impacts French firms' indebtedness, confirming the assumption of complementarity between the shareholding and lending roles of banks. Equity-holding by banks is shown to reduce the cost of debt adjustment mainly through their lending relationship with firms. Journal: Int. J. of Banking, Accounting and Finance Pages: 279-298 Issue: 3 Volume: 14 Year: 2024 Keywords: bank shareholding; corporate governance; capital structure; adjustment cost; dynamic panel data; France. File-URL: http://www.inderscience.com/link.php?id=142710 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:ids:injbaf:v:14:y:2024:i:3:p:279-298 Template-Type: ReDIF-Article 1.0 Author-Name: Jon Tucker Author-X-Name-First: Jon Author-X-Name-Last: Tucker Author-Name: Ismail Ufuk Misirlioglu Author-X-Name-First: Ismail Ufuk Author-X-Name-Last: Misirlioglu Title: Dividends, investment and pension contributions Abstract: We study the determinants of pension contributions for UK listed companies to better understand how the contributions decision is placed within the wider operational and strategic framework of the company. We model the potential displacement effect of discretionary pension deficit contributions in relation to corporate investment and dividends and find a significant displacement effect in relation to both which is further strengthened for dividends during periods of poor firm performance and financial constraints. Our results imply that the firm's dividend payout and investment policies significantly influence its propensity to make extra pension contributions. Journal: Int. J. of Banking, Accounting and Finance Pages: 1-27 Issue: 1 Volume: 14 Year: 2024 Keywords: pension contributions; investment; dividends. File-URL: http://www.inderscience.com/link.php?id=137080 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:ids:injbaf:v:14:y:2024:i:1:p:1-27 Template-Type: ReDIF-Article 1.0 Author-Name: Jingyi Guan Author-X-Name-First: Jingyi Author-X-Name-Last: Guan Author-Name: Yunhui Wen Author-X-Name-First: Yunhui Author-X-Name-Last: Wen Author-Name: Eping Liu Author-X-Name-First: Eping Author-X-Name-Last: Liu Title: Does geographic dispersion increase the stock price crash risk after M%A with earnouts? Evidence from China Abstract: We investigate how geographic dispersion affects the stock price crash risk following mergers and acquisitions (M%A) transactions with earnouts using a sample of transactions from China's A-shares from 2010 to 2021. Empirical results show that geographic dispersion between the acquiring and target firms intensifies the stock price crash risk after earnouts. This occurs because geographic dispersion diminishes the levels of post-earnout performance achievements and R%D investment. Further discussion reveals that in cases of geographic dispersion, cross-industry M%As, and when target companies perform well and are of significant size, there is a greater propensity to sign earnout agreements, which leads to higher M%A premiums. Additionally, the negative impact of geographic dispersion on the stock price crash risk after earnouts is also affected by transaction characteristics. This study enriches the literature on M%A risks and provides valuable insights for mitigating risks in the capital markets. Journal: Int. J. of Banking, Accounting and Finance Pages: 299-323 Issue: 3 Volume: 14 Year: 2024 Keywords: geographic dispersion; earnouts; mergers and acquisitions; M%A; stock price crash risk; influence mechanism; China. File-URL: http://www.inderscience.com/link.php?id=142713 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:ids:injbaf:v:14:y:2024:i:3:p:299-323 Template-Type: ReDIF-Article 1.0 Author-Name: Hubert Tchakoute Tchuigoua Author-X-Name-First: Hubert Tchakoute Author-X-Name-Last: Tchuigoua Author-Name: Damaris Ning Mufur Author-X-Name-First: Damaris Ning Author-X-Name-Last: Mufur Author-Name: Magloire Tchatchoua Nya Author-X-Name-First: Magloire Tchatchoua Author-X-Name-Last: Nya Title: Internal control quality and earnings management. Lessons from microfinance institutions Abstract: This study examines the effect of internal control quality on the earnings quality of microfinance institutions (MFIs). Our analysis is based on an unbalanced sample of 374 ratings reports produced by Planet Rating over the period 2001 to 2012. Given that the cross-sectional dimension is dominant in our observations, we pooled the data and controlled for year-fixed effects. To check for the consistency of our results, we re-estimated our baseline model after controlling for the endogeneity of internal control quality (self-selection bias) and including additional control variables. The results reveal a significant negative association between internal control quality and abnormal loan loss provisions (ALLP) suggesting that setting-up sound internal control mechanisms limit discretion in reporting provisions and thus improves earnings quality. Journal: Int. J. of Banking, Accounting and Finance Pages: 347-369 Issue: 3 Volume: 14 Year: 2024 Keywords: internal control quality; agency problems; earnings management; loan loss provisions; microfinance institutions; MFIs. File-URL: http://www.inderscience.com/link.php?id=142714 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:ids:injbaf:v:14:y:2024:i:3:p:347-369 Template-Type: ReDIF-Article 1.0 Author-Name: Spyros Papathanasiou Author-X-Name-First: Spyros Author-X-Name-Last: Papathanasiou Author-Name: Drosos Koutsokostas Author-X-Name-First: Drosos Author-X-Name-Last: Koutsokostas Title: A trade-off between sustainability ratings and volatility in portfolio hedging strategies Abstract: Given the growing popularity of sustainable investing in recent years, we investigate the role of sustainability ratings in the transmission of volatility across various significant markets within a time-varying parameter vector autoregressive approach. For this purpose, we sort 271 European-domiciled equity mutual funds based on their ESG score to construct equivalent indices and examine their interaction with the most traded asset classes such as equities, bonds, real estate, crude oil, gold, and currency, for the period 1/1/2010-5/31/2024. The empirical findings demonstrate moderate volatility spillovers, primarily transmitted from the ESG-low index, whereas the conventional markets absorb the diffused shocks. Our hedging analysis reveals that ESG stocks can effectively mitigate risk for investors holding long positions in crude oil, real estate, gold, and equities. While ESG-low produces higher hedging effectiveness than ESG-high for the overall period, including the pandemic, ESG-high has proven to be a better hedge during the armed conflict. Journal: Int. J. of Banking, Accounting and Finance Pages: 370-406 Issue: 3 Volume: 14 Year: 2024 Keywords: ESG equity mutual funds; ESG score; crude oil; real estate; connectedness; hedging ability. File-URL: http://www.inderscience.com/link.php?id=142715 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:ids:injbaf:v:14:y:2024:i:3:p:370-406 Template-Type: ReDIF-Article 1.0 Author-Name: Carmela D'Avino Author-X-Name-First: Carmela Author-X-Name-Last: D'Avino Author-Name: Mimoza Shabani Author-X-Name-First: Mimoza Author-X-Name-Last: Shabani Title: Booking positions in small offshore financial centres: focus on US global banks Abstract: Small offshore centres are home to the leading booking centres of global banks and facilitate their transactions across offices worldwide. This paper investigates the factors driving booking positions in offices located in small offshore centres, with a focus on US global banks. We find that global banks tend to increase their booking positions when liquidity conditions at the global and parent levels deteriorate and when banks' risk-taking increases through leverage. Our results suggest that lower tax levels and higher secrecy explain booking centres' localisation in small offshore countries. Journal: Int. J. of Banking, Accounting and Finance Pages: 28-57 Issue: 1 Volume: 14 Year: 2024 Keywords: small offshore centres; prudential regulation; global banks; booking positions. File-URL: http://www.inderscience.com/link.php?id=137095 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:ids:injbaf:v:14:y:2024:i:1:p:28-57 Template-Type: ReDIF-Article 1.0 Author-Name: Suraj Velip Author-X-Name-First: Suraj Author-X-Name-Last: Velip Author-Name: Mrunali Jambotkar Author-X-Name-First: Mrunali Author-X-Name-Last: Jambotkar Title: Asymmetric volatility of the US dollar index in the stock and cryptocurrency market during the Russia-Ukraine war Abstract: In this study, we analyse if changes in the US dollar index (USDX) have a volatility and asymmetric effect on stock and cryptocurrency market returns in light of the Russia-Ukraine war. We estimate an asymmetric dynamic conditional correlation model (ADCC) that shows the short-term and long-term volatility persistence and asymmetric effect for ten leading cryptocurrencies and stock markets. Except for XRP, ADA, USA and Japan, all other cryptocurrencies and stock markets exhibit significantly higher volatility spillover from USDX. The result also indicates instability in USDX has a significant asymmetric effect in seven cryptocurrencies and four stock markets. A salient contribution concerns the suggestions for policymakers to monitor the cross-market shock, volatility spillover and asymmetric effect, which will assist them in making the cryptocurrencies and stocks more immune to the shock from USDX in times of turmoil. Journal: Int. J. of Banking, Accounting and Finance Pages: 97-112 Issue: 1 Volume: 14 Year: 2024 Keywords: asymmetric DCC; stocks and cryptocurrencies; volatility spillover; asymmetry; Russia-Ukraine war. File-URL: http://www.inderscience.com/link.php?id=137105 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:ids:injbaf:v:14:y:2024:i:1:p:97-112 Template-Type: ReDIF-Article 1.0 Author-Name: Maher Khasawneh Author-X-Name-First: Maher Author-X-Name-Last: Khasawneh Author-Name: David G. McMillan Author-X-Name-First: David G. Author-X-Name-Last: McMillan Author-Name: Dimos Kambouroudis Author-X-Name-First: Dimos Author-X-Name-Last: Kambouroudis Title: Lottery stocks in the UK: evidence, characteristics and cause Abstract: Research across international markets identifies lottery-like stocks that contradict the standard positive risk-return trade-off paradigm. This paper, consistent with those results, reports under-performance for lottery-like stocks in the UK market. Moreover, while the under-performance appears stronger in crisis periods, it persists across all periods even when controlling for other return predictors, including size, momentum and downsize risk. However, the cause of this under-performance remains a source of debate. Our results show that a left-tail measure subsumes the UK lottery effect. This suggests under-reaction and continuation behaviour to bad news and is combined with limits to arbitrage. In addition, our findings indicate that poor lottery stock performance is partially explained by the anchoring effect and is more prevalent with greater optimism and sentiment. This contrasts with US results where reversion behaviour is reported for lottery-like stocks and supports the need for market specific research. Journal: Int. J. of Banking, Accounting and Finance Pages: 58-96 Issue: 1 Volume: 14 Year: 2024 Keywords: stock returns; lottery effect; idiosyncratic volatility; max-effect; UK. File-URL: http://www.inderscience.com/link.php?id=137117 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:ids:injbaf:v:14:y:2024:i:1:p:58-96 Template-Type: ReDIF-Article 1.0 Author-Name: Jagadison K. Aier Author-X-Name-First: Jagadison K. Author-X-Name-Last: Aier Author-Name: Eun Hye Jo Author-X-Name-First: Eun Hye Author-X-Name-Last: Jo Author-Name: Jung Wha Lee Author-X-Name-First: Jung Wha Author-X-Name-Last: Lee Author-Name: Gnanakumar Visvanathan Author-X-Name-First: Gnanakumar Author-X-Name-Last: Visvanathan Title: Financial statement comparability and goodwill impairments: evidence from South Korea Abstract: We examine the association between financial statement comparability and timely recognition of goodwill impairments in an IFRS setting. The study is predicated on the idea that comparability lowers investors' and analysts' information acquisition and processing costs, thus facilitating the users' ability to infer the valuation of goodwill through comparison with peer firms. This in turn reduces the managers' ability to delay the impairments of goodwill. The results support this characterisation and show that firms that have more comparable financial statements recognise goodwill impairments in a timely manner. The analysis emphasises the contextual nature of these findings, i.e., the results are more pronounced in environments characterised by low information quality, weak external monitoring, and less product market competition. Overall, these findings indicate that comparability constrains the discretion in goodwill accounting rules, and promotes financial reporting quality by timely recognition of impairments. Journal: Int. J. of Banking, Accounting and Finance Pages: 113-150 Issue: 1 Volume: 14 Year: 2024 Keywords: financial statement comparability; goodwill impairments; managerial incentives. File-URL: http://www.inderscience.com/link.php?id=137119 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:ids:injbaf:v:14:y:2024:i:1:p:113-150