Environmental Risk, Environmental Action, and Firm Value: Evidence From Climate‐Linked Contracts

The aim of this paper is to provide a preliminary analysis of the relationship between firm market value and the size and gender diversity of a board of directors for a sample of publicly listed Australian firms. Our results show that smaller boards appear to be more effective in representing the shareholders as smaller boards are associated with higher firm value. As board size increases firm value declines, however at a decreasing rate suggesting that the relationship between board size and firm value is not strictly linear. Our findings further indicate that gender diversity promotes shareholders’ value as the presence of women directors is associated with higher firm value

Wetlands are valuable natural capital and sensitive ecosystems facing significant risks from anthropogenic and climatic stressors. An assessment of the environmental risk levels for wetlands’ dynamic ecosystems can provide a better understanding of their current ecosystem health and functions. Different levels of environmental risk are defined by considering the categories of risk and the probability and severity of each in the environment. Determining environmental risk levels provides a general overview of ecosystem function. This mechanism increases the visibility of risk levels and their values in three distinct states (i.e., low, moderate, and high) associated with ecosystem function. The Bayesian belief network (BBN) is a novel tool for determining environmental risk levels and monitoring the effectiveness of environmental planning and management measures in reducing the levels of risk. This study develops a robust methodological framework for determining the overall level of risks based on a combination of varied environmental risk factors using the BBN model. The proposed model is adopted for a case study of Shadegan International Wetlands (SIWs), which consist of a series of Ramsar wetlands in the southwest of Iran with international ecological significance. A comprehensive list of parameters and variables contributing to the environmental risk for the wetlands and their relationships were identified through a review of literature and expert judgment to develop an influence diagram. The BBN model is adopted for the case study location by determining the states of variables in the network and filling the probability distribution tables. The environmental risk levels for the SIWs are determined based on the results obtained at the output node of the BBN. A sensitivity analysis is performed for the BBN model. We proposed model-informed management strategies for wetland risk control. According to the BBN model results, the SIWs ecosystems are under threat from a high level of environmental risk. Prolonged drought has been identified as the primary contributor to the SIWs’ environmental risk levels.

BackgroundWhile single (genetic and environmental) risk factors for psychosis have been studied for their impact on brain structure and function, there is little understanding of how they interact to generate psychosis liability on the neural level. Direct associations between cumulative genetic risk scores and risk phenotypes are often weak, and analyses of G×E interactions are scarce. We developed and tested a multivariate model, in which the effects of cumulative environmental and genetic risk on a dimensional phenotype are mediated by brain structural variation.MethodsIn a data set of 440 non-clinical subjects, we tested a moderated mediation model with an interaction of an environmental (ERS) and a polygenic risk score (PRS) for schizophrenia, impacting on the subclinical psychosis spectrum phenotype schizotypy. We propose this effect to be mediated by grey matter volume variation, derived from voxel-based morphometry. In addition, cognitive function (CF) was considered as a potential moderator.ResultsFirstly, in a whole-brain analysis, we detected a significant interaction effect of PRS×ERS in a cluster (k=910, x/y/z=-4/-50/33, p=0.024 FWE cluster-level corrected) including the left precuneus (Pc, 64%) and posterior cingulate gyrus (pcG, 33%). Secondly, cluster values were extracted and entered into a multivariate moderated mediation model. This model was significant, showing that Pc/pcG volume mediated the impact of a PRS×ERS interaction on positive schizotypy (R2=10.91%, p=4.9×10–5). In predicting Pc/pcG variation (R2=51.69%), neither PRS (b=0.638, p=0.830) nor ERS had a main effect on grey matter variation, but their interaction was significant (b=-3.13, p=0.002): The intensity and direction of the PRS effect is moderated by the level of ERS, with a positive slope for low ERS (i.e., low environmental risk), and a negative slope for high ERS. In predicting positive schizotypy, the direct effects of PRS (b=6.116, p=0.477) and ERS (b=0.006, p=0.068) were not significant. However, we demonstrate an indirect effect through brain structural variation, showing a significant mediation (index=0.223, bootstrapped confidence interval 0.004–0.542). Cluster variation had a significant main effect on positive schizotypy (b=-0.277, p=0.049), but was modulated by the level of cognitive function, with a positive slope for low CF, and a negative slope for high CF, showing a second significant interaction (b=-0.070, p=0.027).DiscussionOur finding is the first to integrate polygenic and poly-environmental markers with MRI parameters to demonstrate that the interaction of these cumulated risk factors leads to the emergence of subclinical symptoms through changes in brain structure. Furthermore, our model confirms cognition as a protective factor, indicating that above-average levels of cognitive function can compensate for dysfunctional processes that arise from altered neurodevelopment. Such compensatory mechanisms are crucial for understanding resilience, explaining high (positive) symptom load in unaffected individuals. Conventional diathesis-stress models propose increased vulnerability specifically to adverse events – our model extends this to suggest an inverted effect for high PRS and low ERS subjects. Under favourable environmental conditions, an increased genetic load might paradoxically result in low psychopathology outcomes or gain of function, supporting the notion of genes associated with schizophrenia as “plasticity genes” rather than simple risk factors. In sum, the present study provides proof for a multivariate model predicting the impact of genetic and environmental risk on a psychosis risk phenotype, extendable to other clinical spectra.

This study investigates the role of listing in sustainability index on the firm values of Borsa Istanbul firms. Furthermore, the interaction effects of some firm specific characteristics on firm value are investigated. Firstly, the impact of each firm specific characteristics, and mainly sustainability dummy, on firm value is analysed. It is found that firms that are listed in BIST Sustainability Index have higher firm values. Secondly, the interaction terms with sustainability dummy and each firm-specific characteristic are created. It is concluded that, among the firms listed in BIST sustainability index, firms with higher leverage ratios, lower current ratios, lower price to equity ratios, lower asset turnover ratios, and lower tangibility ratios have higher firm values.

This study investigates the role of listing in sustainability index on the firm values of Borsa Istanbul firms. Furthermore, the interaction effects of some firm specific characteristics on firm value are investigated. Firstly, the impact of each firm specific characteristics, and mainly sustainability dummy, on firm value is analysed. It is found that firms that are listed in BIST Sustainability Index have higher firm values. Secondly, the interaction terms with sustainability dummy and each firm-specific characteristic are created. It is concluded that, among the firms listed in BIST sustainability index, firms with higher leverage ratios, lower current ratios, lower price to equity ratios, lower asset turnover ratios, and lower tangibility ratios have higher firm values.

The stock price is used as a consideration for investors to invest in a company. During the COVID-19 pandemic, stock prices fell thus it became a special concern for investors. The stock price can show the high and low of the firm value. A company that has a high firm value can reflect the company’s good performance and it able to provide prosperity to investors. In the future, highly firm value can make the markets and investors confident on the company’s prospects and performance. This study aims to determine the effect of earnings management and the audit committee on the firm value with control variables of profitability, leverage, and firm size in the companies indexed LQ45 on the Indonesia Stock Exchange 2016-2020. The data used were obtained from annual reports on the official website of the Indonesia Stock Exchange and the company’s official website. The populations are the companies indexed LQ45 on Indonesia Stock Exchange. The sampling technique used purposive sampling and obtained as many as 24 companies in 5 years, the total samples are of 120 companies. The analytical method used is panel data regression analysis. The result shows that earnings management and audit committee with profitability, leverage, and firm size as control variables have a simultaneous effect on the firm value. Meanwhile, earnings management and audit committee with profitability, leverage, and firm size as control variables have no partial effect on the firm value at the LQ45 indexed companies on Indonesia Stock Exchange in 2016-2020.

Firm value is the price of company’s stock in the capital market that must be paid by an investor if he wants to own the company. Every company aims to maximize the fi rm value because with a high fi rm value, investors assume that the company’s performance is better and has prospects in the future so that investors will be interested to invest in the company. Optimizing the fi rm value can be done with the implementation of fi nancial management functions. Financial management involves decisions made by the company. This research aims to fi nd out the infl uence of dividend policy, debt policy, investment decision, and profi tability on the fi rm value. The population in this study is consumer goods sector companies listed on the Indonesia Stock Exchange (IDX) period 2013-2017. A sample of 12 companies is obtained by using purposive sampling method. Analysis techniques used are statistical analysis and multiple linear regression analysis with SPSS 16. The results of this study show that the variables of dividend policy, debt policy, investment decision, and profi tability have an effect on the fi rm value.

``Agency costs” when agents perform better than owners

Avoiding Distortion in Corporate Valuation Litigation: An Application of Discounted Cash Flow

This paper examines the use of foreign currency derivatives (FCDs) as a proxy for risk management and its potential impact on firm value in a broad sample of firms from thirty-nine countries between 1990 and 1999. Our sample allows us to exploit differences in corporate governance across firms and countries, their impact on risk management policies and their value implications. We find that on average, hedging is associated with higher firm value around the world and that corporate governance is an important factor in assessing the value of risk management. The hedging premium is statistically significant and economically large for firms with strong internal corporate governance (such as those with an institutional blockholder) and those which reside in countries with strong external governance (such as those with an English legal origin), and insignificant for firms with weak internal governance and those which reside in countries with weak external governance. Finally, hedging is (not) valuable even when internal corporate governance is weak (strong), if the firm happens to reside in a country with strong (weak) external governance. Overall, our findings suggest that both firm-level and country-level corporate governance play a significant role in understanding when risk management is associated with higher value. Moreover, our results imply that risk management is one channel through which stronger corporate governance translates into higher firm value.

Firm value is important because high company value will bring great prosperity to shareholders. Firm value describes company performance which can influence investor perceptions. High firm value not only reflects the company's current performance, but also shows market confidence in the company's prospects in the future. This study aims to determine and analyze the effect of Corporate Social Responsibility (CSR) and Intellectual Capital (IC) on firm value which is moderated by profitability. The sampling technique of this study used purposive sampling and based on established criteria obtained as many as 33 manufacturing companies listed in BEI in 2021-2023. This study adopted a quantitative approach with data analysis methods in the form of descriptive statistical analysis and panel data regression analysis. The result show that Corporate Social Responsibility (CSR) has a positive effect on firm value, Intellectual Capital (IC) has no effect on firm value, profitability is able to moderate the effect of Corporate Social Responsibility (CSR) on firm value, and profitability is able to moderate the effect of Intellectual Capital (IC) on firm value.

A puzzling phenomenon in finance is the underpricing of new issues of common stock. A signaling model, with two signals, two attributes, and a continuum of signal levels and attribute types, is developed to explain this underpricing. The model has two signals: (1) the fraction of the new issue retained by the issuer, and (2) its offering price. These convey to the investors the unobservable intrinsic value of the firm and the variance of its cash flows. In the model, an issuer has better information about future cash flows than outside investors; to overcome the asymmetric information problem, the issuer signals the firm's value by offering discounted shares and retaining some of the new shares. The model is consistent with the rationale for underpricing given by many investment professionals. The model's signaling schedule (a function of project variance and issuer's fractional holdings) reveals that the intrinsic value of the firm is positively related to the underpricing of the new issue; there is a positive relation between project variance and underpricing discount; there is a negative relation between the fractional holdings and the project variance; that fractional holdings and underpricing discount are positively related; that fractional holdings and firm value are positively related; and that firm's value and variance are positively related. Three empirical predictions and eight testable implications are articulated. Existing empirical evidence on new issues is consistent with the model's implications. Two applications are suggested: where high firm value is signaled through (1) expensive investment bankers, auditors, and advertising, and (2) high dividends. (TNM)

Objective - The environment is one of the more interesting issues to discuss, especially if it relates to companies' accounting issues. This study was conducted to determine the effect of green accounting implementation on firm value. Methodology/Technique – Firm value is measured using Tobins-Q, and green accounting is measured by ratings based on PROPER. Multiple regression analysis was used, and 35 manufacturing companies were sampled in this study. Findings - The results of this study show that green accounting can increase firm value. Companies that apply green accounting have a higher firm value because information about environmental costs is additional information for stakeholders when making decisions. If the company does not incur environmental costs, it is considered bad for investment. Novelty - Green accounting is still new, so this study was conducted to provide an overview of green accounting and firm value. Companies implementing green accounting will increase their firm value and help preserve the environment. It is hoped that Indonesian accounting organizations will develop standards regarding green accounting. Type of Paper: Empirical. JEL Classification: F64, L50, M14, Q52, Q56 Keywords: Green Accounting; Firm Value; Green Investment; PROPER; Indonesia Reference to this paper should be referred to as follows: Alexander, N. (2023). Green Accounting and Firm Value, Acc. Fin. Review, 7(4), 12 – 18. https://doi.org/10.35609/afr.2023.7.4(2)

In this study, we use TWSE CG 100 Index, a corporate governance index launched by Taiwan Securities Exchange (TWSE) in 2015, to examine the connection between corporate governance and firm value. The empirical sample consists of 1,401 firm-year observations, spanning the period from 2015 to 2017. Our findings indicate that the CG 100 Index constituents have higher firm value than those not. In addition, the moderating analysis finds that the CG 100 Index constituents with higher customer awareness measured by marketing intensity are significantly and positively associated with firm value. This implies that a firm's CG performance can further enhance the firm's value through the customer channel, and several robust results provide evidence to support the main results.

Firm value is dependent on corporate which leads to increased value. High valued firms attract more investors. Towards firm value protection, minimum capital requirements were raised by the Central Bank of Kenya from 250 million to 1 billion shillings on commercial banks to cushion bank shareholders value. Despite the increased oversight and regulatory efforts on corporate governance to protect and enhance firm value, some commercial banks have recorded low firm value. Hence, this study sought to investigate the mediating effect of financial performance on the relationship between corporate governance and firm value of commercial banks in Kenya. The study was anchored on Agency Theory. Explanatory research design was adopted. Target population was forty four Kenyan commercial banks, where a census was conducted. Secondary data was collected from published financial statements and bank websites for the period 2009 to 2018. STATA version 13.0 was used for data analysis. Descriptive and inferential statistics specifically panel regression was used in data analysis. The study findings established that there is a statistically significant effect between financial performance and firm value of commercial banks in Kenya. Therefore, the study concluded that firms with good financial performance have high firm value. And as such, these calls for the management of the commercial banks improve financial performance which will go a long way in improving firm value. There is also need for Central bank of Kenya, Capital Markets Authority and Nairobi Securities Exchange to emphasis on corporate governance and short term goals to enable achievement of long term goals .