Capital Firms Research Articles

Decoding Sustainability Reporting: Insights from Text Mining and Classification Models for SDGs

Objective: This study aims to investigate the signaling effects of Sustainability Reporting (SR) in listed Singapore firms, particularly in demonstrating firm capitalization and sustainability performance. The research focuses on identifying distinct SR signals using advanced text mining and classification techniques, and their alignment with the United Nations' Sustainable Development Goals (SDGs). Theoretical Framework: The study is grounded in signaling theory, which posits that firms communicate observable characteristics (SR content) to signal unobservable attributes (firm capabilities and sustainability performance). By applying this framework, we analyze how SR may act as a signaling mechanism for large-cap firms and sustainability leaders. Method: This research collects 1,844 sustainability reports from listed Singapore firms between 2016 and 2022. Using a combination of Structural Topic Modeling (STM) and Random Forest (RF) classification models, we extracted and analyzed the key SR signals that differentiate firms by size and sustainability performance. Results: The results indicate that SR signals such as community engagement, climate risk, and compliance are effective in distinguishing between large firms and firms with strong sustainability performance. The Random Forest models achieved high accuracy in identifying these groups. Community engagement, compliance with the Global Reporting Initiative (GRI), and sustainable construction were among the most impactful topics, with large firms focusing more on scope and governance, while sustainability leaders emphasized environmental risks and compliance. Research Implications: The findings provide insights into the practical and theoretical implications of SR as a signaling tool. Key SR topics are identified as critical signals for firms with large capitalization and high sustainability performance, guiding firms in utilizing SR in the context of SDGs. Originality/Value: The findings show that SR topics such as community engagement, climate risk, and compliance serve as key signals for differentiating firms by size and sustainability performance. Firms can strategically emphasize these areas to enhance their SR practices while contributing to broader SDGs.The findings provide insights into the practical and theoretical implications of SR as a signaling tool. Key SR topics are identified as critical signals for firms with large capitalization and high sustainability performance, guiding firms in enhancing their SR strategies.

Measuring ESG risk premia with contingent claims

We propose a contingent claims approach for estimating ESG risk premia from market information and market participants' decisions. To this end, we infer the asset value dynamics via the structural model of Merton [1974, “On the Pricing of Corporate Debt: The Risk Structure of Interest Rates.” Journal of Finance 29: 449–470.] for a large panel of S&P 500 firms using an estimation algorithm that utilizes the information embedded in stock market prices, CDS spreads, and default probabilities. We find a statistically significant relationship between the ESG score and the volatility and drift terms of the asset value process, suggesting that ESG factors are structurally connected to the value of the firm. We establish a mapping between ESG scores and the cost of equity and debt as implied by firm's contingent claims, and derive estimates of the ESG risk premium across different ESG and leverage profiles. In addition, we break down the ESG risk premia by industry, and demonstrate how practitioners can adjust the weighed average cost of capital of ESG laggard firms for valuation and decision making purposes.

Selective industrial policy and innovation resource misallocation

Innovation resource misallocation is a major obstacle to improving innovation quality and economic efficiency. This study draws on a quasi-natural experiment designed from the “Ten Industrial Rejuvenation Plan” (TIRP) in China and investigates how selective industrial policy impacts innovation resource misallocation. The results show that the TIRP intensifies innovation resource misallocation and that this impact persists even after the policy terminates. Mechanism analyses reveal that TIRP-induced disparities in innovation resource accessibility among firms with varying productivity are potential causes. Specifically, the TIRP raises innovation personnel, innovation capital, and government subsidies for low-productivity firms but lowers them for high-productivity firms. The financing constraints of the low-productivity firm groups ease, whereas those of the high-productivity firm groups worsen. Heterogeneity examinations demonstrate that the exacerbating influence is more noticeable in businesses with state-owned attributes and in low-marketization regions. These findings deepen our understanding of policy interventions and innovation development in emerging nations.

Economic Value Added Break Even Point of Commercial Banks

Economic value added (EVA) is an estimate of a firm’s economic profit, or the value created in excess of the required return of the company’s shareholders. Economic Value Added is the net profit, less the equity cost of the firm capital. The idea is that value is created when the return of the firm’s economic capital employed exceeds the cost of the capital. The amount can be determined by making adjustments to Generally Accepted Accounting Principle accounting. This article aims to measure the Economic Value Added breakeven point of commercial banks in India.

Leader Social Capital in Real Estate Firms Via Colleague Ingredients

Objective: The following were the objectives of this study: (i) analysis and measurement of leader social capital in real estate firms in Hanoi and neighboring provinces, Vietnam, via colleague ingredients; (ii) comparison of assessments of the leader social capital in real estate firms in Hanoi and neighboring provinces, Vietnam, via colleague ingredients, between respondents. Method: The data used in this study are primary, including survey data obtained from the respondents. We designed a questionnaire related to the leader's social capital via colleague ingredients in real estate firms in Hanoi and neighboring provinces, Vietnam. We determined the observed variables (scales) of the leader's social capital via colleague ingredients in real estate firms in Hanoi and neighboring provinces, Vietnam, based on previous studies and expert interview results. We use both qualitative and quantitative research methods, including descriptive statistics, the independent T test, and ANOVA analysis. Results: According to the findings of this study, three attributes of the leader's social capital via colleague ingredients in real estate firms in Hanoi and neighboring provinces, Vietnam, were quite high. All the attributes of the variables are statistically significant. There is no statistically significant difference in the leader's social capital via colleague ingredients in real estate firms in Hanoi and neighboring provinces, Vietnam, between these different genders, marital statuses, and ages. Conclusions: It was found that, although still difficult, the current real estate market has more opportunities than challenges. Because macroeconomics, the world economy, and Vietnam are showing signs of recovery, inflation and interest rates are no longer increasing and are gradually decreasing; legal and institutional problems are also gradually being resolved and implemented; planning at all levels is being completed; and public investment and infrastructure development have been promoted. This article is an academic contribution that enables understanding of the research developed and focuses on leaders' social capital via colleague ingredients in real estate firms in Hanoi and neighboring provinces, Vietnam, considering data from several reference research databases and survey results.

Leader Social Capital in Real Estate Firms: Evaluation of Respondents

Objective: This article argues that leader social capital in real estate firms in Hanoi and neighboring provinces of Vietnam via colleague ingredients needs to be researched. Based on a survey of relevant academic and policy literature, the study presenting assessments of survey subjects for leader social capital in real estate firms in Hanoi and neighboring provinces, Vietnam, via colleague ingredients may contribute to improving the business performance of real estate firms. Method: This study used a mix of methods for gathering qualitative and quantitative data. SPSS software is used for quantitative research methods, including assessing the reliability coefficient of the scales through the Cronbach alpha coefficient, EFA analysis, independent T-tests, and ANOVA analysis. Results: Based on our findings, we argue that a leader's social capital via colleague ingredients in real estate firms in Hanoi and neighboring provinces, Vietnam, is reliable and meaningful. Additionally, there is no statistically significant difference in the leader's social capital via colleague ingredients in real estate firms in Hanoi and neighboring provinces, Vietnam, between respondents with these different family platforms and job positions. Conclusions: Real estate firms should have solutions to enhance leaders' social capital through colleague ingredients, thereby contributing to improving business performance. This study sheds light on the social capital information gaps that, when filled, could help real estate firms reach their full potential by improving leaders' social capital through colleague ingredients.

The role of shifts in the effective tax rate on the cost of equity

We propose an asset pricing model conditional on the effective tax rate, which allows us to explicitly estimate the impact of shifts in corporate taxes on the expected returns of equities. We evaluate the model using Spanish macro and market data to estimate the time-varying average corporate tax rate and average returns of different anomaly portfolios. Our results show that changes in corporate taxation are strongly explanatory of future stock returns and, consequently, the cost of capital of firms. Furthermore, uncertainty about the future tax burden generally translates into higher expected returns, which results in a lower value of firms.

Comparative Evaluation of Leader Social Capital in Real Estate Firms

Comparative Evaluation of Leader Social Capital in Real Estate Firms

The Influence of Corporate Governance on Market Capitalization: Evidence from Listed Firms of DSE

This study examines the relationship between the corporate governance (CG) mechanisms related to board size (BS), board independence (BI), board committees (BC), ownership structure (OS), and the market capitalization of companies listed in the Dhaka stock exchange (DSE). Secondary data from 41 listed firms in Dhaka Stock Exchange during the period of 2015 to 2022 is utilized in this study. The ordinary least square, regression techniques were applied on the panel data collated to estimate the model. The findings reveal a significant positive impact of board committees and board independence on the market capitalization of the companies, while ownership structure shows a significant negative effect on the market capitalization of the companies. Thus, the results suggest that board committees and board independence have a crucial role in determining the market capitalization of firms. This finding supports the hypothesis that corporate governance adds value to companies and that investments in effective governance systems have a net positive benefit and should be pursued.

ESG Performance, Financing Constraints and Firm Capital Efficiency

ESG Performance, Financing Constraints and Firm Capital Efficiency

LMX and a perceived supportive environment for corporate entrepreneurship: the mediating role of psychological empowerment

Purpose This paper aims to explore the potential explanatory mechanisms linking leader–member exchange (LMX) and a perceived supportive environment for corporate entrepreneurship. Specifically, this paper develops and tests a hypothesized moderated mediation model of the relationship between LMX and a perceived supportive environment for corporate entrepreneurship through psychological empowerment as conditional upon the level of control orientation. Design/methodology/approach Data were collected from a sample of 682 full-time working adults in the USA and were examined in a moderated mediation model in PROCESS. Findings The findings suggest that higher LMX augments perceptions of a supportive environment for corporate entrepreneurship with a mediating role for psychological empowerment and a moderating role for control orientation on that conditional relationship. Research limitations/implications This research suggests that high quality LMX relationships may enrich the human capital of firms, helping them to innovate and outperform competitors in the context of modern competitive dynamics. The study findings are limited by several factors including a cross-sectional design and a student-recruited sampling approach. Originality/value The study offers unique contributions to the leadership and entrepreneurship literature by being among the first to empirically investigate the relationship between LMX and a perceived supportive environment for corporate entrepreneurship as mediated by psychological empowerment and moderated by control orientation, yielding important insights regarding effective leadership practices for facilitating innovative behaviors and corporate entrepreneurship.

How to assess the intellectual capital of firms in uncertain times: a systematic literature review and a proposed model for practical adoption

PurposeIntellectual capital (IC) plays a crucial role in today’s volatile business landscape, yet its measurement remains complex. To better navigate these challenges, the authors propose the Integrated Intellectual Capital Measurement (IICM) model, an innovative, robust and comprehensive framework designed to capture IC amid business uncertainty. This study focuses on IC measurement models, typically reliant on secondary data, thus distinguishing it from conventional IC studies.Design/methodology/approachThe authors conducted a systematic literature review (SLR) and bibliometric analysis across Web of Science, Scopus and EBSCO Business Source Ultimate in February 2023. This yielded 2,709 IC measurement studies, from which the authors selected 27 quantitative papers published from 1985 to 2023.FindingsThe analysis revealed no single, universally accepted approach for measuring IC, with company attributes such as size, industry and location significantly influencing IC measurement methods. A key finding is human capital’s critical yet underrepresented role in firm competitiveness, which the IICM model aims to elevate.Originality/valueThis is the first SLR focused on IC measurement amid business uncertainty, providing insights for better management and navigating turbulence. The authors envisage future research exploring the interplay between IC components, technology, innovation and network-building strategies for business resilience. Additionally, there is a need to understand better the IC’s impact on specific industries (automotive, transportation and hospitality), Social Development Goals and digital transformation performance.

A review on ESG investing: Investors’ expectations, beliefs and perceptions

AbstractThis study examines the recent literature on the expectations, beliefs and perceptions of investors who incorporate Environmental, Social, Governance (ESG) considerations in investment decisions with the aim to generate superior performance or make a societal impact. Through the lens of equilibrium models of agents with heterogeneous tastes for ESG investments, green assets are expected to generate lower returns in the long run compared to their non‐ESG counterparts. However, in the short run, ESG investments can outperform non‐ESG investments through various channels. Empirically, results for the relative performance to ESG investment are mixed. We find strong empirical evidence in the literature that investors have a preference for ESG and that their actions can generate positive social impact through engagement. The shift towards more sustainable policies in firms is motivated by the increased market values and the lower cost of capital of green firms driven by investors’ choices.

Human capital in knowledge-based firms: Re-creating value post-pandemic

BACKGROUND/OBJECTIVE: In today’s volatile business environment, the competitive advantages of firms are temporary. The top management does not, and cannot, have all the answers to increasingly complex and rapidly changing problem situations facing their firms. Since the COVID-19 crisis, organizations have been under pressure to improve their knowledge management practices to continue creating value. Knowledge management capabilities are essential for business performance and competitive advantage. In order to ensure continuous value creation, we conducted research to identify various drivers and dimensions that were revitalized in the ongoing KM practices post-pandemic. METHODOLOGY: In this study, 81 research papers published between January 2010 and March 2022, have been examined from a knowledge management, human capital, and value creation perspective, aiming to understand how a firm can continue to create value before, during, and after the pandemic. RESULTS/CONCLUSION: Our review identifies critical factors in knowledge management and value creation and how companies generate value by leveraging KM during the COVID-19 pandemic. As a result of the research, the authors describe their findings in the form of a conceptual framework which deals with the various drivers and the factors within the KM architecture.

Information Complementarities and the Dynamics of Transparency Shock Spillovers

ABSTRACTWe show that information complementarities play an important role in the spillover of transparency shocks. We exploit the revelation of financial misconduct by S&P 500 firms, and in a “Stacked Difference‐in‐Differences” design, find that the implied cost of capital increases for “close” industry peers of the fraudulent firms relative to “distant” industry peers. The spillover effect is particularly strong when the close peers and the fraudulent firm share common analyst coverage and common institutional ownership, which have been shown to be powerful proxies for fundamental linkages and information complementarities. We provide evidence that increase in the cost of capital of peer firms is due, at least in part, to “beta shocks.” Disclosure by close peers—especially those with co‐coverage and co‐ownership links—also increases following fraud revelation. Although disclosure remains high in the following years, the cost of equity starts to decrease.

Resource scarcity, circular economy and the energy rebound: A macro-evolutionary input-output model

We propose an Agent-Based Stock-Flow Consistent model combined with a simplified Input-Output (IO) structure of production. In the model, heterogeneous firms interact in the energy, material, capital and consumption markets. Materials for production of consumer goods can be manufactured using non-renewable or recycled material inputs. We examine the conditions under which the circular economy emerges through market mechanisms, as well as it can be a source of the rebound effect. An important novelty of our approach is that recycling and mining sectors employ different types of capital for production. Capital goods (machinery) are produced by capital firms, which constantly engage in innovations to improve their technological features. This way we endogenize changes in technological coefficients of the Input-Output tables. We show that sectoral interdependencies along the value chain can render the energy rebound effect due to the circular economy (CE) even if energy intensity of the recycling process is lower compared to mining. This effect depends on the impact of investment in the recycling sector on the aggregate demand and energy use along the entire value chain. We assess the role of macroeconomic policies, namely mission-oriented innovation policies (MOIPs), active fiscal policies (AFPs), and environmental taxes in fostering the CE transition, while mitigating the rebound effect. We find that the combination of MOIPs and active fiscal policy is the most effective in promoting the circular economy, preserving employment and ensuring a sustainable growth path.

Comparative Evaluation of the External Social Capital of Food Firms Between Respondents

Purpose: To investigate the external social capital of food firms. In addition, the comparative evaluation between respondents of genders, job positions, ages, academic standards, career seniority, and work location is one way to evaluate the external social capital of food firms. Theoretical framework: Social capital affects innovation in firms and entrepreneurship, thereby bringing solutions to difficult situations for firms, and social capital also helps firms improve their adaptability, minimize risks, maintain existing economic strength, and affect business performance. Method/design/approach: Data were collected through questionnaires sent to 200 employees of food firms, but only 156 questionnaires were suitable. SPSS was utilized for a comparative evaluation of the external social capital of food firms between respondents. Multiple statistical techniques were employed for data analysis, including SPSS via the independent t-test and ANOVA. Results and conclusion: The study's results indicate that there is no difference in assessing the external social capital of food firms between different subjects in terms of gender, academic standards, work location, job position, career seniority, and age. This study offers theoretical and practical implications for improving the external social capital of the food firms in Hanoi, thereby improving business performance. Based on this result, the study proposes some recommendations for food firms. Research implications: This research utilizes the external social capital mix concept based on prior studies in the realm of firms. Within the context of the digital transformation of the entire society, these variables are useful solutions for firms. Originality/value: The analysis of the external social capital of food firms is one of the effective solutions that contributes to improving the business performance of food firms.

Value of certification in collective reputation crises: Evidence from Chinese dairy firms

Collective reputation crisis incidents imply considerable negative within-sector spillovers. Understanding how to reduce such negative spillovers is crucial for industry development, especially in the food industry where information is asymmetric. As certification is an important tool to reduce information asymmetry in product quality, it’s role in reducing such spillovers needs to be discussed systematically. First, we use an analytical model to reveal the effects and mechanisms by which certification helps dairy firms resist the negative spillovers of collective reputation crises. Next, we study the effects of certification in the context of a large-scale dairy scandal in China. Using firm-level microdata, we empirically analyze the effects of adopting certification on improving innocent firms’ return on capital. The results show that in the year of the scandal, the return on capital of firms without certification was significantly negatively affected while that of firms with certification was not affected. In the wake of the scandal, adopting certification helped dairy firms effectively improve their return on capital, but these effects diminished over time. In addition, the effects are larger for firms with lower established reputations, such as new and non-state-owned dairy firms.

Maddi Olmayan Firma Sermayesi ile Pazar Odaklı Öğrenme Arasında Pazarlama Yeteneklerinin Aracılık Rolünün İncelenmesi

The purpose of this study is to investigate the mediating role of marketing capabilities in the relationship between intangible firm capital and market-focused learning. The study was conducted by structured survey method. The research scale was adapted from the scales commonly used in the literature. According to the research results, it has been determined that intangible firm capital affects market-focusing learning and marketing skills. In addition to this, it has also determined that marketing skills affects market-focusing learning and it has partially mediated the relationship between intangible firm capital and market-focused learning. Especially, in the dimensional analysis, it is seen that human capital has a partial mediation effect in this relation. In this context, it can be stated that in the context of the literature contribution, the intangible firm capital will contribute to the improvement of marketing capabilities and market-focused learning. Based on this result, human capital can be considered as an important element for marketing capabilities and market-focused learning.

Firm Characteristics and Financial Distress among Manufacturing Firms Listed at Nairobi Securities Exchange Kenya

Businesses including companies listed on stock markets strive to predict financial distress to ensure they manage the factors that could potentially lead to such distress. It is however not clear how the various factors affect financial distress particularly firm size; firm activity levels; firm financial leverage; and profitability given that these are some of the biggest determinants of the financial condition of a business. The lack of clarity results from the fact that there are numerous models of financial distress with each providing varying factors some often contradicting each other. It is therefore critical to evaluate how these affects financial distress among manufacturing firms listed at Nairobi Security Exchange (NSE). This study aims to evaluate how firm size, turnover, leverage and profitability influence financial distress as measured by the B-Ratio. This census survey with a population of 13 companies covers the period 2013 to 2022. Three companies however did not meet the data criteria and were therefore excluded from the analysis. This left 100 firm-year observations. The study utilized four theories of financial distress that include neoclassical theory of investment; liquidity preference theory; pecking order theory; and Wreckers theory of financial distress. The study used panel regression analysis to test the hypotheses that firm size, turnover, leverage and profitability have no significant influence on financial distress. Hausman model specification test revealed that the fixed effects panel regression model was the most appropriate for analysis and it was subsequently used in arriving at the inferential findings. T-test and p-value at 95% confidence interval were used in hypotheses testing. All the four hypotheses set for the study were rejected and it was concluded that size, activity, leverage and financial performance are significant determinants of financial distress. The findings reveal that whereas firm size (as shown by firm capitalization ratio), firm activity level (as shown by total asset turnover) and firm profitability (as shown by return on equity) all had a negative effect on B-ratio, financial leverage had a direct positive effect on financial distress. The study was limited to the 10 qualifying companies at the NSE and has suggested that similar studies could be expanded to non-listed companies, listed nonmanufacturing companies as well as with the use of different models such as hazard models.