Financial Expertise Research Articles

Professional ecologies in European sustainable finance

AbstractFinding direction in new policy areas requires a combination of mandate, expertise, and stakeholder engagement. Here we investigate the formation of the EU's sustainable finance agenda through activity in and around its High Level Expert Group and Technical Expert Group. Actors from different professional ecologies struggle to determine the treatment of sustainable finance and establish policy practices. Those who shape issue treatments can be supported by a capacity to influence from either official mandate, scientific esteem, or claims to experience. These are contending conjectures to locate action among the professionals engaged in the process. We adjudicate between mandate, esteem, and experience with an assessment of the network ties and career histories of those involved in sustainable finance. Our findings suggest that those with many ties and mixed careers win. Professionals identified as offering access to a potential network of investors exhibit greater control over how issues are treated, to the detriment of civil society actors. We demonstrate likely influence over issue treatment through a discussion of environmental and social disclosures and debt financing mechanisms in European sustainable finance expert groups.

Peran komite audit pada sustainability disclosure

The purpose of the study was to analyze the effect of size, independence, frequency of meetings, and financial expertise of audit committee members on sustainability disclosure. The sample was taken using a purposive sampling method, and the sample was public goods and consumption sector companies from 2015 to 2019. The number of sample companies was 37, with some observations during 2015 – 2019 as many as 185 company years—tests using balanced panel regression using E-Views. The assessment of sustainability disclosure in the annual report uses the 2016 GRI index, which consists of universal (100), economic (GRI 200), environmental (GRI 300) and social (GRI 400) standards. The test results provide empirical evidence that the number of audit committee members has a negative effect on sustainability disclosure. The expert background of the audit committee members in the fields of accounting and finance has a positive effect on sustainability disclosure. The sustainability disclosure will be more qualified if the audit committee members have a financial background. Other independent variables, such as independence and meeting frequency, do not affect sustainability disclosure. This research implies that the amount and background of knowledge or expertise of audit committee members in the financial sector can improve the quality of sustainability disclosure.

Audit committee financial expertise and information asymmetry

PurposeThe purpose of this study is to examine the association between audit committee expertise and asymmetric information in the US equity market.Design/methodology/approachThe authors use measures of information asymmetry for 705 US firms (5,260 firm-year observations) over the period from 2007 to 2018, and use the theory of expertise (Ericsson and Smith, 1991) to examine the association between audit committee financial expertise and information asymmetry. The authors use multiple econometric approaches such as firm fixed-effect regression and two-stage ordinary least squares regression to control for possible endogeneity and reverse causality and find that the results remain the same.FindingsThe authors find that the existence of an audit committee with financial expertise is negatively and significantly associated with information asymmetry. The authors further provide empirical evidence through which audit committee financial expertise affects the firm’s informational environment. Additional analysis supports the argument that the audit committee’s financial expertise enhances the firm’s informational environment by increasing (decreasing) analyst following (dispersion).Research limitations/implicationsOne limitation to consider, like most studies on audit committees, is that the authors do not examine the actual role performed by the audit committee. The authors focus on the characteristics stipulated by the Sarbanes–Oxley Act 2002 and stock exchange rules regarding the financial expertise of audit committee members only.Practical implicationsThis study is useful to policy makers, standard setters, investors, activists, managers, lenders and various stakeholders who rely on the financial statements of firms with an expert audit committee on board. The outcome of this study promotes recruiting audit committees with financial expertise due to the assumed benefits of this trait to the US firm.Social implicationsThe results of this study are not event-dependent and therefore have persistent effects, which is important to the evaluation of the usefulness of a regulation. This study promotes recruiting audit committees with financial expertise on boards because of the assumed benefits to the firm and investors.Originality/valueThis study is the first to document that financial expertise of audit committee characteristics is not only negatively related to the magnitude of information asymmetry but also driven by the financial expertise of audit committee members rather than chairs.

Shareholder litigation and bank risk

Does a decrease in shareholder litigation enhance managers’ monitoring efforts by ensuring adequate firm risk management? We explore how state universal demand (UD) laws (which limit shareholder litigation as a mechanism to discipline managers), affect bank holding companies’ (BHCs) risk. Using a difference-in-differences analysis, we show that BHCs reduce their tail risk exposures after the implementation of UD laws, which is achieved by improving loan asset quality. Indeed, BHCs appear to apply stricter contract terms for syndicate loans to risky and opaque borrowers. We also show that UD law implementation leads to changes in BHC board composition by increasing the proportion of outside directors, the number of independent directors in audit committees and the number of independent directors with financial expertise.

Islamic Legislation on Wealth Acquisition: A Critical Examination of Crypto-Currency

Islamic legislation on wealth acquisition is an integral part of the Islamic economic system. Crypto-currency is a new technological development in the global financial system. This development has become a contentious issue among Islamic economists, financial experts, jurists, scholars, and institutions. Many unsuspecting Muslims are also cynical about its appropriateness or otherwise in their economic and financial activities. This paper adopted a qualitative methodology, which relied on article journals, textbooks, internet sources, and fatāwā (verdicts) of Islamic scholars and Islamic bodies. The paper also derived logical deduction and conclusion from the Qur’ān and Ahādith (sayings of Prophet Muhammad [PBUH]). The paper found that, generally, crypto-currencies are used to acquire wealth. It revealed that, some seemingly Sharī’ah compliant crypto-currencies are used to acquire wealth. Although, most crypto-currencies do not conform to the Islamic concept of wealth acquisition, the paper concluded that Sharī’ah compliant crypto-currencies should and could be better developed to accommodate Muslims and Muslim investors in their bid to acquire wealth.

A Multimodal Affective Sensing Model for Constructing a Personality-Based Financial Advisor System

To achieve successful investments, in addition to financial expertise and knowledge of market information, a further critical factor is an individual’s personality. Decisive people tend to be able to quickly judge when to invest, while calm people can analyze the current situation more carefully and make appropriate decisions. Therefore, in this study, we developed a multimodal personality-recognition system to understand investors’ personality traits. The system analyzes the personality traits of investors when they share their investment experiences and plans, allowing them to understand their own personality traits before investing. To perform system functions, we collected digital human behavior data through video-recording devices and extracted human behavior features using video, speech, and text data. We then used data fusion to fuse human behavior features from heterogeneous data to address the problem of learning only one-sided information from a single modality. Through several experiments, we demonstrated that multimodal (i.e., three different signal inputs) personality trait analysis is more accurate than unimodal models. We also used statistical methods and questionnaires to evaluate the correlation between the investor’s personality traits and risk tolerance. It was found that investors with higher openness, extraversion, and lower neuroticism personality traits took higher risks, which is similar to research findings in the field of behavioral finance. Experimental results show that, in a case study, our multimodal personality prediction system exhibits high performance with highly accurate prediction scores in various metrics.

The ZEW Financial Market Survey Panel

Abstract The ZEW Financial Market Survey is a monthly panel survey among financial market experts that was launched in December 1991. The survey focuses on the experts’ expectations about international financial markets and macroeconomic developments. We describe the ZEW Financial Market Survey and the resulting research dataset, which is available for free for academic researchers, is large and includes long individual time series (99,001 responses by 2002 respondents, as of September 2021), and contains rich information on the financial market experts collected over the years and which can be combined with the data on expectations.

“Greasy Thumb”—The Man Who Made the Chicago Mob

“Greasy Thumb”—The Man Who Made the Chicago Mob

Financial Literacy and Its Impact on Fraud Detection of Indonesia's Generation Z

Everyone in the world had to adjust their way of life during the Covid-19 epidemic, since lockdown and quarantine measures were enacted in the majority of countries. As a result, social engagement and communication were forced to take place through the internet. Consequently, as in the case of Indonesia, the number of internet users expanded dramatically over this time period. With an increase in internet users and activity comes an increase in financial fraud. According to this study, Financial literacy has an effect on someone's capacity to spot fraud. From investigating through various literature and conducting surveys, Individuals with a high score in both financial knowledge and behavior have a better capacity to identify fraud. It might also be claimed that Indonesia's youth generation have financial literacy knowledge and skills. As technology advances, more research with the inclusion of digital literacy may be conducted. This will help people to get understanding of the digital world as well as financial expertise.

Determinants of Audit Report Lag: Evidence from Commercial Banks in Indonesia

This research aims to test and analyze the determinants of audit report lag. This research uses purposive sampling and includes commercial banking companies listed on the Indonesian Stock Exchange during 2017-2019. Using multiple regression analysis methods, the study found that companies have shorter ARL if they have an audit committee with members with financial expertise or are audited by auditors with industry specialization. These findings indicate that companies with an audit committee with financial expertise or those audited by auditors with industry specialization produce a shorter audit process. However, this research did not find evidence of the influence of the audit committee size, the number of audit committee meetings, and the reputation of independent auditors on ARL

Audit committee attributes and financial performance of Saudi non-financial listed firms

This article investigates the impact of the audit committee attributes in determining the financial performance of Saudi non-financial firms. The research sampled the data of 100 companies spanning from 2010 to 2019 obtained from the firms’ financial statements. The data generated were analysed using different panel data techniques (pooled OLS, fixed and random effects). This study emphasises that audit committee size and meetings negatively influence firms’ performance. However, audit committee independence and financial expertise indicate a strong and positive relationship with financial performance. Therefore, this study provides valuable insights into how audit committee attributes affect profitability. Furthermore, this research may guide companies’ top management on restructuring the audit committee to improve corporate governance practices. Also, the results suggest that Saudi regulatory agencies should ensure that listed firms set up audit committees with more independent directors and financial experts. This requirement may help the firms mitigate information disparity between management and shareholders, thus, reducing agency conflicts and boosting firm performance. Consequently, this paper sheds light on the Saudi corporate environment, so investors may find this research helpful in making their investment decisions.

Brief Analysis of “Coffee Can Investing” approach

Financial experts agree that while people have much more money today than they did generations ago, the amount of knowledge on how to manage that money hasn’t kept pace- not at all (Maura Fogarty, 2012).

Six Essential Questions in Indian Public Finance

In his latest book, Dr. M Govinda Rao, one of India’s foremost public finance experts, distills the insights of the field of public finance for students, scholars, practitioners, and lay readers alike. Studies in Indian Public Finance is a must-read for anyone interested in Indian public policy.

The Hidden Connection of Duration to Average Life And Financial Crisis

<i>Modified duration</i> and <i>average life</i> are financial measures belonging to the mathematics of discounting. They are frequently confused, even by financial experts. The likely source of confusion is the failure of quantitative credit studies to have developed in tandem with market risk studies. Instead, mathematical ideas have been imported wholesale from trading and used in credit engineering without sensitivity to their different risk polymorphisms. But while market risk is short-term, credit is a long game where the key determinants of value are time and quality. A good incentive for building an authentic quantitative credit layer is the capital value and risk that remain buried in the mathematics of discounting.

Top Management Characteristics and Earnings Management Strategies: Evidence from Indonesia

This study examines whether the strategic choice of earnings management chosen by top management (such as CEO and CEO and a team separately) is related to characteristics of top management (i.e., genders, age, tenure, financial expertise, business experience, and education). This study employs regression analyses to analyse 707 firm-year observations of manufacturing companies listed in the Indonesian Stock Exchange (IDX) between 2010 and 2018. This study found that top management team tended to choose the strategic choice of real-based earnings management. Meanwhile, top management individually, both CEO and CFO tend to choose accrual earnings management strategies over real activity-based earnings management. These results are inline with upper echelon theory and financial reportpreparation and mechanism in companies, especially in selecting and appointing top-level executive.

RETRACTED: The Nexus between sustainability of business model innovation, financial knowledge, and environment: A developing economy perspective

This study intends to investigate how aspects such as financial knowledge and the rate of technological advancement influence the lifetime of enterprises in developing nations like Pakistan. For this purpose, a survey study was designed to obtain data from 325 business owners in different parts of the country. Structural Equation Modelling (SEM) was utilized to analyze this dataset. According to the analysis outcomes, not only do practices connected to financial literacy and innovation play a crucial role in a firm’s long-term viability, but they also have a substantial beneficial impact on the company’s viability. The research concluded that an increase in financial knowledge, expertise, and experience in corporate operations helps the continued viability of firms. Knowledge of financial concerns also predicted the company’s ability to innovate and adapt. In addition to the environmental sustainability of the business. As a result, it was concluded that it plays the role of a mediator in the link between innovation and the ongoing existence of businesses. Because of this, financial literacy is now acknowledged as a vital knowledge resource for determining one’s financial course of action, which was not the case previously. According to the study’s conclusions, for businesses to continue to be sustainable, authorities need to enhance their financial literacy level and adopt sustainability models into their day-to-day operations.

Does board diversity reduce the probability of financial distress? Evidence from Chinese firms.

This paper empirically investigates the impact of cognitive board diversity in education, expertise, and tenure facets on financial distress likelihood in the emerging economy of China. This study examines how this relationship varies across State-Owned Enterprises (SOEs) and Non-State-Owned Enterprises (NSOEs). Paper argues that the Chinese stock market, as a typical emerging market, is an excellent laboratory for studying the impact of board diversity on the probability of financial distress. Its underdeveloped financial system and inadequate investor protection leave firms unprotected from financial hardship. A sample of 12,366 observations from 1,374 firms from 2010 to 2018 shows that cognitive diversity qualities are positively linked with Z-score, implying that directors with different educational backgrounds, financial skills, and tenures can assist in reducing the probability of financial distress. Cognitive board diversity reduces the likelihood of financial distress in SOEs and NSOEs. However, tenure diversity is insignificant in all cases. Furthermore, the robustness model “two-step system Generalized Methods of Moments (GMM)” demonstrated a positive association between educational diversity, financial expertise, and financial distress scores. The results have significant implications for researchers, managers, investors, regulators, and policymakers.

Addressing the relation between transparency and supply chain finance schemes

ABSTRACT In the wake of technological innovation, supply chain transparency has become a concrete avenue for long-awaited improvements to supply chain processes and practices. Transparency is of particular interest to Supply Chain Finance; however, it is yet empirically unknown whether and how benefits would materialise. Being at the interface of finance and operations, Supply Chain Finance aims at improving the inter-company management of financial flows. Nowadays, different financing schemes are offered foremost by cooperation between financial institutions and fintechs. Uncertainty remains on whether and how supply chain transparency would benefit these schemes to allow the adoption of more sophisticated, higher-value schemes. By applying the Gioia method, we analysed a series of interviews with experts from the Supply Chain Finance industry regarding transaction cost economics, agency theory, and dynamic capability. The resulting series of pragmatic, theory-grounded but practice-inspired propositions untangle the relationship and barriers between supply chain transparency and Supply Chain Finance. The propositions provide advances in the theoretical understanding of Supply Chain Finance and uncover relevant directions for future research. This poses the base for actionable results in future research and leads to an impact in research by addressing the concerns and tensions raised by Supply Chain Finance experts.

Effect of board characteristics and risk management practices on the financial performance of listed non-financial firms in Nigeria

Faulty board configurations associated with risk management practices are alleged to be the primary sources of most corporate failures. Therefore, experts have suggested that firms should adopt holistic risk management practices. This study investigates the interactive effect of board characteristics with risk management activities on the performance of listed Nigerian non-financial firms. The study is anchored on the agency theory perspective. It is designed as ex post facto inquiry with a population of 113 companies, from which a sample of 96 firms was drawn from firms with a complete set of data. Secondary data were extracted from the NSE Factbook and Thomson Reuter’s DataStream for 2010–2019. The static panel regression technique was utilized to analyze and estimate the interaction between the variables. The findings show that all the independent variables positively impacted ROA of the listed firms. Nevertheless, concerning market evaluation (Tobin-Q), except for board financial experts and audit committee meetings, risk management committee meetings and the presence of chief risk officer showed an insignificant impact. The combined implication is that although firms have complied with the provision of the CG codes on risk governance structure, the improvements associated with risk management aimed at enhancing market evaluation are nonetheless not deeply embedded in these firms. Firms are suggested to implement effective risk management practices to achieve competitive advantages and substantiality. More studies are advocated to extend the literature by expanding the scope.

The Effect of Corporate Governance Structure on Fraud and Money Laundering

This paper aims to assess the effect of corporate governance mechanisms, including board members’ and audit committee members’ characteristics, particularly their independence, expertise in terms of finance and industry and efforts on the level of fraud and money laundering (ML) in financial statements of the listed firm on the Tehran Stock Exchange. The procedure of the study is descriptive correlation based on published information from firms listed on the Tehran Stock Exchange from 2014 to 2020, using a sample of 154 firms with 1071 observations. The method used for hypothesis testing is linear regression using panel data. The Benish model is used measure the level of fraud in financial statements, and for ML, the auditors’ opinion are used. The results show that board characteristics, including independence, financial expertise, industry expertise and board effort, as well as audit committee features, such as independence, financial expertise, industry expertise and audit committee effort, have a significant and negative impact on the fraudulent financial reporting and ML. Moreover, since this paper was carried out in an emerging financial market, particularly in Iran, to figure out the effect of corporate governance structures on financial statement fraud and ML, it can provide helpful information for investors and policymakers in this regard.