Type of the article: Research ArticleAbstractESG investing has emerged as a key factor in corporate strategy and capital investment, although its effects on stock returns in emerging markets such as India remain inconclusive. This paper investigates the effects of ESG scores and the financial performance of firms on the stock returns of firms in the Indian Nifty100 ESG Sector Leaders Index. Based on balanced panel data on 14 firms for 2015–2024, the study employs pooled OLS, random-effects, and fixed-effects models, conducts the Breusch-Pagan LM and Hausman tests to determine the appropriate specification, and finally estimates a two-way fixed-effects model. The empirical findings show that the ESG score has a statistically significant negative correlation with stock returns, indicating a negative relationship between ESG performance and short-term returns in the market. Return on Capital Employed (ROCE) is an important positive factor of stock returns, indicating that capital efficiency is important for stock price growth. The macroeconomic factors are also important: GDP growth has a statistically significant negative correlation with stock returns, whereas the statistical significance of inflation and industrial production is insignificant. There are no significant effects on returns in Earnings per Share (EPS) and Return on Assets (ROA). These findings imply that ESG integration in India is in its early development stage and could introduce short-term adjustment costs where corporate strategy and policy support are necessary to ensure sustainability initiatives are justified in the long-term value creation.

Type of the article: Research ArticleAbstractThis study examines whether Environmental, Social, and Governance (ESG) performance enhances stock returns directly or indirectly through firm fundamentals in an emerging market context. The analysis focuses on non-financial firms listed on the Indonesian Stock Exchange (IDX) over the period 2014–2023, following the expansion of sustainability reporting regulations in Indonesia. The final sample comprises 4,037 firm-year observations, of which 477 contain available ESG scores obtained from a third-party rating database. Panel data regression models with firm-level controls and mediation analysis are employed to test both direct and indirect relationships. The empirical results indicate that ESG performance has a positive and statistically significant effect on total factor productivity (TFP) and return on assets (ROA), suggesting that sustainability practices are associated with improvements in operational efficiency and profitability. In turn, both TFP and ROA exhibit positive and significant effects on stock returns. However, ESG does not demonstrate a statistically significant direct effect on stock returns after controlling for firm fundamentals. Mediation analysis confirms that ESG influences stock returns indirectly through productivity and profitability channels, with productivity emerging as the stronger transmission mechanism. These findings suggest that, in the Indonesian capital market, ESG operates primarily as a fundamental value-enhancing mechanism rather than as an independent pricing signal. Sustainability performance contributes to shareholder value when it strengthens firms’ internal efficiency and financial resilience, highlighting the importance of fundamental performance channels in emerging markets.

Type of the article: Research ArticleAbstractFinancial statement fraud (FSF) continues to undermine investor confidence, particularly in emerging markets where governance enforcement remains uneven. This study examines how Fraud Triangle factors influence FSF and whether earnings management strengthens these relationships in Vietnam. Using a two-step system GMM regression on 138 listed non-financial firms over 2019–2022 to address potential endogeneity concerns, the results show that financial distress significantly increases fraud risk. Firm performance is also positively associated with fraud, implying that pressure to maintain good results may contribute to misreporting. State ownership and foreign ownership are both negatively associated with FSF, indicating that monitoring by these shareholders constrains fraudulent behavior. Industry characteristics proxied by receivables intensity are positively related to fraud, suggesting greater opportunity for manipulation in revenue-related accounts. In contrast, liquidity and auditor reputation do not exhibit statistically significant effects, suggesting that external audit prestige alone may be insufficient to constrain fraudulent reporting in transitional regulatory environments. Importantly, earnings management is positively associated with FSF and significantly strengthens the impact of financial distress on fraud, indicating that discretionary accruals amplify the translation of financial pressure into misreporting. These findings point to the importance of improving financial management, enhancing transparency, and strengthening regulatory oversight to reduce fraud risk and support more effective detection by policymakers, auditors, and investors.Acknowledgment(s)This research is funded by the University of Economics and Law, Vietnam National University Ho Chi Minh City/VNU-HCM

Type of the article: Research ArticleAbstractThis study aims to identify the nonlinear determinants of listing day returns globally using a comprehensive dataset. It further examines the regional distinctions and complexities in the international context using spline regression analysis. It also assesses variation in the linear and nonlinear relationships of listing day returns and their determinants across various geographical regions worldwide. Using a set of 8,914 initial public offerings issued across the globe from January 2011 to October 2024, this study employs a restricted cubic spline methodology. Spline knots for each determinant under study were identified to examine the nonlinear influence of the already studied determinant variables. The results of the analysis depict the offer price and listing delay as major non-linear determinants, whereas issue size and market timing significantly influence listing day returns based on linear analysis. In addition, it was found that the Asia-Pacific market substantially differs from other markets geographically, based on splines. The findings of this study provide valuable insights for associated stakeholders by focusing on issue performance, predictions, and market understanding. There is a substantial presence of nonlinear relations among listing day returns and their determinants worldwide.

Type of the article: Research ArticleAbstractCorporate tax avoidance remains a central governance concern in emerging markets characterized by concentrated ownership and uneven monitoring effectiveness. This study examines whether multiple large shareholders and family ownership constrain corporate tax avoidance and whether digital transformation moderates these relationships in Indonesian listed firms. The sample consists of 369 firms (3,670 firm-year observations) during 2013–2022, representing major industry groups on the Indonesia Stock Exchange, including basic materials, energy, consumer cyclical, consumer non-cyclical, industrials, infrastructure, and property and real estate. Panel regression models are estimated using effective tax rates (ETR) and book–tax differences (BTD) as tax avoidance proxies. The results show that multiple large shareholders are negatively but not significantly associated with tax avoidance, indicating limited monitoring effectiveness in the full sample. Family ownership likewise exhibits no systematic relationship with tax avoidance. Furthermore, digital transformation does not significantly moderate the ownership–tax avoidance relationship at the aggregate level. However, industry-level analysis reveals that multiple large shareholders significantly reduce tax avoidance in the consumer cyclical sector, and this effect becomes stronger in firms with higher digital transformation intensity. Overall, the findings indicate that ownership-based governance and digital transformation do not uniformly constrain corporate tax avoidance in Indonesia, and their effectiveness is highly dependent on industry context.AcknowledgmentThis research was supported by the Ministry of Higher Education (MoHE) of Malaysia through the Fundamental Research Grant Scheme (FRGS/1/2022/SS01/UUM/02/10).

Type of the article: Research ArticleAbstractThailand’s green bond market is expanding but remains less developed than in advanced economies, raising questions about issuance patterns and whether return–risk conditions support broader market growth. This study aims to analyze issuance dynamics in Thailand’s green bond market, evaluate return and risk performance, assess the relationship between return, risk, and issuance volume, and classify green bonds based on their risk characteristics. The sample included 62 green bonds registered with the Thai Bond Market Association (ThaiBMA) during 2019–2025. Descriptive statistics are used to summarize issuance and performance indicators; return measures include current yield, yield to maturity, holding period return, and annual percentage rate; risk is assessed using seven variables capturing default, liquidity, interest rate, inflation, and reinvestment risks, and hierarchical clustering is applied to classify bonds by risk level. Results show that private-sector issuers dominate the market, accounting for 79% of outstanding green bond value (103.216 billion baht), followed by state-owned enterprises (12%) and foreign issuers (9%). Current yield ranges from 1.62% to 5.55% (mean 3.40%), while yield to maturity ranges from 1.75% to 8.86% (mean 3.20%). Credit spreads range from 0.41% to 3.49% (mean 1.46%), and duration ranges from 0.019 to 10.07 years (mean 3.35), indicating generally moderate risk conditions. SEM analysis further reveals a significant positive relationship between risk and return, while issuance volume is not significantly related to either factor. Cluster analysis identifies four distinct risk groups – low, medium, high, and highest – offering a practical risk classification for investors and policymakers to support sustainable finance development in Thailand.

Type of the article: Research ArticleAbstractVolatility in international capital flows remains a key source of global financial stability, particularly in the manifestation of sudden stop episodes with disruptive consequences. This study examines how global financial conditions, domestic macroeconomic fundamentals, and macroprudential policy responses shape the likelihood of sudden stop episodes in international capital flows. The analysis utilizes an unbalanced quarterly panel of up to 64 advanced and emerging economies over 1980–2024, in which sudden stop episodes in total, portfolio, and cross-border bank gross inflows are constructed following the Forbes and Warnock methodology. A panel probit with clustered standard errors is employed to estimate the likelihood of sudden stop episodes. The results indicate that tighter global financial conditions, measured by global uncertainty and long-term interest rates, significantly increase the probability of sudden stop episodes across capital flow categories. For total inflows, a one-point increase in the VIX raises sudden stop probability by 0.39 percentage points, while a one-standard-deviation increase raises it by 2.66 percentage points. Stronger domestic fundamentals, including high capital account openness and higher growth, reduce sudden stop risk, whereas elevated domestic credit significantly increases this risk. Emerging economies exhibit a structurally higher baseline probability than advanced economies, even after controlling global and domestic factors. Macroprudential policy tightening does not prevent sudden stop risk unconditionally, but when tightened amidst domestic credit expansion, it significantly mitigates sudden stop probability. These effects are most pronounced for Total and Cross-border sudden stop episodes, whereas portfolio flow sudden stops are largely driven by global push factors.

Type of the article: Research ArticleAbstractThis study aims to examine whether herding behavior intensifies during shock events and whether such crisis-induced herding leads to abnormal returns across nine IDX sectors over the 1997–2025 period. The study employs a quantitative event study approach using daily stock return data from 13 major global and domestic shock events representing nine industrial sectors listed on the Indonesia Stock Exchange. Herding behavior is measured using the cross-sectional absolute deviation model, while its effect on abnormal returns is analyzed through time series regressions incorporating interaction terms between herding indicators and shock event dummies, controlling for firm size, SMB, and HML factors. The results show strong asymmetry across market conditions and sectors. During bearish market phases, herding intensifies significantly in the agriculture, finance, and property real estate construction sectors and is associated with positive short-term abnormal returns, indicating crisis-driven market inefficiency. In contrast, during bullish market phases, most sectors exhibit anti-herding behavior, reflected in greater return dispersion and more selective investor decision making. The interaction between herding behavior and shock events is positive and statistically significant in most sectors, with the strongest effects observed during the 1997–1998 Asian Financial Crisis, the 2008 Global Financial Crisis, and the 2020 COVID-19 pandemic. Overall, the findings indicate that the Indonesian capital market remains in a transitional stage toward full efficiency, where psychological factors and information asymmetry continue to influence price formation during periods of extreme uncertainty.

Type of the article: Research ArticleAbstractThis paper aims to examine the operating performance of firms after new issues. Using financial data of 43 initial public offering (IPO) firms from 2013/14 through 2022/23 with 215 observations, operating performance is evaluated. Both the independent samples t-test and the Wilcoxon signed-rank test were used to compare firms’ operating performance between pre- and post-issue periods. Results reveal that operating performance after IPO for all indicators in different time windows from Year t+0 to t+3, has been negative compared to Year t–1. Sector-specific analysis shows that the decline in operating performance is significantly higher in the microfinance sector compared to hydropower firms. Underpricing has a positive effect on operating performance except in a few cases. Hot issue dummy has a negative, insignificant effect on both measures of operating performance, viz., operating return on assets and operating cashflow to total assets, for the first two-time windows, and it weakly supports the windows of opportunity hypothesis. On the other hand, the influence of promoter ownership on operating performance was positive except in few cases, which is contrary to the agency theory. Further, the results show that operating performance has a weaker influence on long-run IPO returns. Thus, it is proposed that IPO firms should strive to intensify their activities and effectively utilize capital raised through IPOs, considering the net present value of the projects to achieve better firm performance.AcknowledgmentsThis paper is prepared based on my ongoing PhD work. So, I would thank my supervisors, Professor Dr. Keshar J. Baral and Professor Dr. Dilli Raj Sharma, for their mentoring during my PhD. I also extend a deep gratitude to the University Grants Commission Nepal for providing me PhD Fellowship with the Award No. PhD-78/79-Mgmt-02. I never forget my friend Ramkrishna Chapagain, a research scholar at Delhi School of Economics, University of Delhi, for assisting me with several inaccessible resources for this study.

Type of the article: Research ArticleAbstractStrengthening environmental, social, and governance (ESG) practices is a keyway for corporations to improve their adaptability and cope with uncertainty. This study explores how ESG performance affects the adaptability of listed companies in China. The study used an observation data set of 45,031 Chinese listed companies from 2009 to 2024, and the fixed effect regression model was used to reveal the positive impact of ESG performance on corporate adaptability. The benchmark regression results show that the overall ESG performance has significantly improved corporate adaptability. In-depth analysis shows a significant U-shaped relationship between environmental performance and corporate adaptability. This shows that environmental investment will initially inhibit corporate adaptability due to cost pressure, but once it exceeds a certain threshold, it will have a positive impact. At the same time, both the social and governance dimensions show a continuous linear improvement effect. Heterogeneity analysis shows that higher internal agency costs will weaken the positive impact of ESG, while higher levels of external supervision will enhance these impacts. The economic consequence test corroborates that ESG performance indirectly has a positive impact on corporate value by enhancing adaptability. The research results show that for corporates operating in a dynamic environment, ESG development should be regarded as a strategic investment, especially through long-term continuous improvement of social and governance performance to overcome the threshold of environmental management costs, which can effectively enhance the corporate resilience and corporate adaptability of corporates and ultimately enhance the corporate value.AcknowledgmentsThis research was funded by the General Program of the National Social Science Fund of China [Grant 25BGL022], The Impact Effect and Mechanism of Generative Artificial Intelligence on Organizational Deviant Innovation.