High Financial Risk Research Articles

Perbandingan Kinerja Antar 3 Perusahaan pada PT Gudang Garam Tbk, PT HM Sampoerna Tbk dan PT Indonesia Tobacco Tbk Periode 2019-2023

This study discusses the comparison of the financial performance of three tobacco companies in Indonesia, namely PT Gudang Garam Tbk, PT HM Sampoerna Tbk, and PT Indonesia Tobacco Tbk in the 2019-2023 period. The analysis was conducted using financial ratios including liquidity, activity, solvency, profitability, and market to evaluate the operational performance and financial structure of each company. The results showed that PT HM Sampoerna Tbk consistently had the best performance in terms of operational efficiency, profitability, and solvency. Meanwhile, PT Gudang Garam Tbk excels in dividend policy, despite facing challenges in asset efficiency and profitability. PT Indonesia Tobacco Tbk, despite showing improvement in some solvency ratios, still faces high financial risk and low operational efficiency. This study provides important insights for investors and stakeholders to understand the competitive position and opportunities for improvement of corporate strategies in the tobacco industry.

Corporate Risk Disclosure Practice and Financial Performance of Listed Industrial Goods Firms in Nigeria

In recent years, corporate risk disclosure has gained increasing attention in corporate governance discourse due to its potential impact on financial performance. The need for transparency in reporting risks has become more critical, particularly in the industrial goods sector, which is often characterized by high operational and financial risks. This study examined the influence of corporate risk disclosure on the financial performance of listed industrial goods firms in Nigeria, a sector known for high levels of operational and financial risk. It specifically assessed how financial and operational risk disclosures affect financial performance. This study employed expo-facto research design. The study population consisted of 13 industrial goods firms listed on the Nigerian Exchange Group (NGX) as of 31st December 2023. Census sampling was applied to include the entire population. Data were collected from annual reports and corporate governance disclosures were analysed with descriptive statistics and feasible generalised least squares regression analysis. The findings found that while financial risk disclosure positively and significantly influences financial performance, operational risk disclosure has a negative but significant effect. These outcomes suggest that financial transparency boosts investor trust and confidence, enhancing financial performance, whereas disclosing operational risks may reduce investor confidence due to concerns about operational stability and profitability. This study concluded that corporate risk disclosure demonstrated a significant role in influencing financial outcomes, yet its effect varies based on the type of risk disclosed. In line with empirical findings of this study, it was recommended that firms should balance transparency with discretion by selectively disclosing operational risks that have been mitigated or managed, reducing the potential for investor concerns over operational vulnerabilities.

The impact of digital-oriented mergers and acquisitions on enterprise labor demand

Digital-oriented mergers and acquisitions (DOMA) are increasingly being adopted as strategic options by enterprises during digital transformation. They represent a crucial pathway for enterprises to transition from traditional to digital capabilities and enhance their digital competitiveness. Utilizing data from Chinese A-share listed companies from 2010 to 2020, this study thoroughly examines the relationship between DOMA and corporate labor demand, as well as the underlying mechanisms. Our findings reveal that DOMA positively impacts labor demand. Additionally, DOMA increases the proportion of highly educated and skilled labor forces, thereby amplifying the impact of human capital. Mechanism research further shows that DOMA enhances market synergies, thereby boosting labor demand. Moreover, heterogeneity analysis suggests that the positive effect of DOMA on labor demand is particularly pronounced in enterprises with lower market shares, lower M&A premiums, higher market competition, non-high-tech enterprises and higher financial risk. This paper not only expands the research on DOMA and corporate labor demand, but also provides significant practical implications for generating new labor demand, catalyzing the intelligent transformation of enterprises.

The Supervisory Role of the Board of Commissioners and Audit Committee on Compliance with Financial Instrument Risk Disclosure in Indonesian General Banking

Banking is a corporate sector that has high financial risks on financial instruments so that complete and transparent disclosure of risk information is needed to increase stakeholder trust. The purpose of this study is to examine the role of the existence of the board of commissioners and audit committees on compliance with risk disclosure on financial instruments in the general banking sector in Indonesia. This study uses 46 non-sharia general banks listed on the Indonesia Stock Exchange for the period 2021 to 2023. This study uses the number of boards of commissioners and audit committees as a measure of the board of commissioners and audit committee variables, this study uses a financial risk disclosure index compiled based on PSAK 107. To test the research hypothesis using multiple linear regression analysis. The results of the study empirically prove that the existence of the board of commissioners and audit committee can significantly affect the level of financial risk disclosure on financial instruments in general banking in Indonesia so that it can be concluded that the role of supervision of the audit committee and board of commissioners is able to strengthen management compliance with the provisions of accounting standards according to PSAK applicable in Indonesia.

Analysis Of Financial Statement of Chinese Real Estate Enterprises-Take One Certain Company as An Example

Real estate enterprises play an important role in the economic development of China, which are directly influence the economy. Different from other enterprises, real estate enterprises have the features of high leverage, large capital demand, slow repayment and long investment period. In recent years, the central government has implemented a series of policies, real estate enterprises facing severe financial risks. It’s important for enterprises to identify and prevent the financial risks. As a representative of China's highly leveraged and large-scale real estate enterprises, the company continuously violates the "three lines and four levels" policy when it is implemented. This article analyses the financial risks of this company by collecting the company’s financial statement data from the past five years, using ratio analysis and Z-value model. By researching the data, this article finds that the company has weak debt paying ability, operational ability, and profitability in recent years, also facing high financial risks.

Do technology export regulations impact corporate trade credit financing? Evidence from China

Based on an exogenous shock—the 2008 revision of the Catalog of Technologies Prohibited and Restricted from Export in China—we use a difference-in-differences (DID) research design to examine the impact of technology export restrictions (TERs) on corporate trade credit financing. We document that TERs limit a firm's access to trade credit. Specifically, TERs reduce corporate trade credit by approximately 44 % compared with that of an average firm in the sample. Moreover, the negative impact is more pronounced for firms with high financial risk or high product risk. Additionally, our tests show that both upstream and downstream firms reduce their provision of trade credit to firms impacted by TERs. The results suggest that TERs add trade barriers between countries, resulting in restricted corporate trade credit financing.

Using Artificial Intelligence to Advance the Research and Development of Orphan Drugs

While artificial intelligence has successful and innovative applications in common medicine, could its application facilitate research on rare diseases? This study explores the application of artificial intelligence (AI) in orphan drug research, focusing on how AI can address three major barriers: high financial risk, development complexity, and low trialability. This paper begins with an overview of orphan drug development and AI applications, defining key concepts and providing a background on the regulatory framework of and AI’s role in medical research. Next, it examines how AI can lower financial risks by streamlining drug discovery and development processes, analyzing complex data, and predicting outcomes to improve our understanding of rare diseases. This study then explores how AI can enhance clinical trials through simulations and virtual trials, compensating for the limited patient populations available for rare disease research. Finally, it discusses the broader implications of integrating AI in orphan drug development, emphasizing the potential for AI to accelerate drug discovery and improve treatment success rates, and highlights the need for ongoing innovation and regulatory support to maximize the benefits of AI-driven research in healthcare. Based on those results, we discuss the implications for traditional and AI-powered business in the drug industry.

A Novel Model for Finance and Reliability Applications: Theory, Practices and Financial Peaks Over a Random Threshold Value-at-Risk Analysis

In this paper, the authors introduce a new three-parameter lifetime probability distribution known as the Marshall-Olkin-generated log-logistic (LL) distribution. They thoroughly examine and describe this distribution, providing insights into its characteristics and its suitability for various applications. This newly constructed distribution's density function exhibits characteristics of both symmetry and right-skewness, providing modelling flexibility across a range of datasets. Because of its skewness coefficient, which can take both positive and negative values, a wide range of data asymmetries can be represented. The Marshall-Olkin generated LL distribution's corresponding hazard rate displays a variety of characteristics, including monotonic increase, increasing-constant, constant, upside-down, and monotonic drop. Because of its adaptability, the distribution can successfully capture various risk or failure rate patterns across time. Using a number of techniques, the researchers expand this distribution to the bivariate domain. Its utility in modelling multivariate lifetime data and inter-variable relationships is improved by these extensions. The researchers use the maximum likelihood method to estimate the parameters of the distribution, which ensures reliable and effective parameter estimation from observed data. They carry out an extensive simulation research to analyse biases and mean squared errors in a range of scenarios and sample sizes in order to evaluate the finite behaviour of the maximum likelihood estimators. In real-life and reliability applications, this meticulous methodology aids in evaluating the estimators' precision and dependability. Because it may offer a comprehensive and nuanced knowledge of high financial risks, the Peaks Over a Random Threshold Value-at-Risk (PORT-VaR) study is crucial for evaluating Norwegian fire insurance claims. This financial analysis is given extra consideration.

The Influence of Financial Literacy and Risk Preferences on Cryptocurrency Investment Choices

This study aims to describe the overview of financial literacy, risk preferences, and investment decisions, as well as to analyze the influence of financial literacy and risk preferences on cryptocurrency investment decisions among millennials in Tangerang City. The research sample consisted of 95 respondents, selected using purposive sampling technique. Data was collected through a questionnaire with a Likert scale format. The collected data was then analyzed using Partial Least Square (PLS). The results indicate that financial literacy and risk preferences among cryptocurrency investors in Tangerang City are at a very high level. The high financial literacy and risk preferences positively contribute to cryptocurrency investment decisions. Hypothesis testing shows that both financial literacy and risk preferences have a positive and significant impact on cryptocurrency investment decisions. This study has implications for efforts to improve the rationality of cryptocurrency investment decisions to avoid undesirable losses, such as selecting cryptocurrencies with less volatile price fluctuations or diversifying portfolios by combining cryptocurrencies with conventional assets like stocks, bonds, or mutual funds.

Democracy at the Limit: Does the U.S. Debt Ceiling Really Enhance Fiscal Accountability?

ABSTRACT Congressional control of the U.S. debt ceiling continues to prompt uncertainty among financial markets. Nevertheless, the standard defense of a statutory debt limit invokes the idea of accountability: oversight of the national debt by democratically elected policymakers precludes fiscal profligacy. For this argument to hold water, however, one should observe that lawmakers are indeed motivated and held accountable by voters on the debt ceiling. Do policymakers' positions toward the debt ceiling reflect the preferences of their constituents? And are policymakers punished or rewarded for their stances? Analyzing roll call votes on the debt ceiling in the U.S. House of Representatives from 1983 to 2014, I show that lawmakers' positions are driven predominantly by policymaker ideology and bank campaign contributions rather than the demographics or ideological makeup of their constituencies. Furthermore, I find no evidence that Republicans nor lawmakers from conservative-leaning districts are punished by their constituents when voting to raise the debt limit. Democratic lawmakers' reelection chances are affected by their voting behavior but in the form of rewards for approving debt ceiling increases. These findings suggest the U.S. debt ceiling – in addition to posing a high financial risk – contributes little to fiscal accountability.

The Effect Of Next Generation Accountable Care Organizations On Medicare Expenditures.

The Next Generation Accountable Care Organization (NGACO) model (active during 2016-21) tested the effects of high financial risk, payment mechanisms, and flexible care delivery on health care spending and value for fee-for-service Medicare beneficiaries. We used quasi-experimental methods to examine the model's effects on Medicare Parts A and B spending. Sixty-two ACOs with more than 4.2million beneficiaries and more than 91,000 practitioners participated in the model. The model was associated with a $270 per beneficiary per year, or approximately $1.7billion, decline in Medicare spending. After shared savings payments to ACOs were included, the model increased net Medicare spending by $56 per beneficiary per year, or $96.7million. Annual declines in spending for the model grew over time, reflecting exit by poorer-performing NGACOs, improvement among the remaining NGACOs, and the COVID-19 pandemic. Larger declines in spending occurred among physician practice ACOs and ACOs that elected population-based payments and risk caps greater than 5percent.

Experimental Investigation of the Effect of Surfactant–Polymer Flooding on Enhanced Oil Recovery for Medium Crude Oil

High technical and financial risks are involved in exploring and exploiting new fields; hence, greater focus has placed on the development of environmentally friendly, cost-effective, and enhanced oil recovery (EOR) options for existing fields. For reservoirs producing high-density crudes and those with high interfacial tensions, water flooding is usually less effective due to density differences—hence the advent of polymer and surfactant flooding. For cost-effective and eco-friendly EOR solutions, a biopolymer and a surfactant synthesized from Jatropha seeds are used in this study to determine their effectiveness in increasing the oil recovery during core flooding analysis. The experiment involved an initial water flooding that served as the base cases of three weight percentages of polymers and polymeric surfactant solutions. The results for the polymer flooding of 1 wt%, 1.5 wt%, and 2 wt% showed an incremental oil recovery in comparison to water flooding of 16.8%, 17%, and 26%, while the polymeric surfactant mixtures of 5 wt% of surfactant and 1 wt%, 1.5 wt%, and 2 wt% of a polymer recorded 16.5%, 22.3%, and 28.8%, and 10 wt% of surfactant and 1 wt%, 1.5 wt%, and 2 wt% of a polymer recorded incremental oil recoveries of 20%, 32.9%, and 38.8%, respectively.

To What Extent Collateral in PLS Financing Brings Maṣlaḥah? An Analytical Comparison from Islamic Law Outlook with Maqāṣid al-Sharī’ah Index

This study aims to compare the level of maṣlaḥah regarding the existence of collateral in Profit and Loss Sharing (PLS) financing from Islamic banking customers and employees standpoints. This is crucial as PLS financing becomes the main characteristic product of Islamic banks, but it emerges as an unfavorable product due to the high financial risk. The existence of collateral plays a pivotal role in this situation to realize maṣlaḥah. This is an explanatory study with a quantitative approach and survey method, considering 400 respondents, particularly 200 Islamic banking customers and 200 Islamic banking employees, who were conveniently obtained at certain time intervals for a one-shot. An Independent sample t-test is used to calculate the comparison level of maṣlaḥah among these two groups. At the same time, Rasch Model analysis is also used to measure the data based on the demographic characteristics of respondents. The result discovers that although there is a slightly different level of maṣlaḥah between Islamic banking customers and employees in PLS finance practice regarding collateral, it still significantly brings benefit, as it aligns with the concept of ta’widh to prevent financial risk. This finding contributes to Islamic banks as a guideline to understand how to operate and enhance the market share of this financing product based on the Rasch Model Analysis.

The impact of financial risk on boilerplate of key audit matters: Evidence from China

This paper examines whether auditors of firms with higher financial risk disclose less boilerplate of KAMs. Our empirical study demonstrates that KAMs are more differentiated if the firms are subject to higher financial risk. This association is only pronounced for client firms in the weaker legal environment and audit firms with larger market shares. In addition, client pressure will weaken the motivation of auditors to differentiate KAMs of firms with a higher level of financial risk. We also find that auditors are more likely to differentiate KAMs related to firms’ profitability if firms are subject to high financial risk.

Does being single bring freedom or burden? Examining the expenditure patterns of single-person households in Taiwan

This study utilizes data from Taiwan’s “The Survey of Family Income and Expenditure” from 2011 to 2021 to examine the differences in expenditure patterns between single-person households and multi-person households. The aim is to understand the impact of being single and living alone on living expenses. The estimation results indicate that, after controlling for other variables, single-person households spend significantly more on “housing, water, electricity, gas, and other fuels”, amounting to NT$67,920 per capita higher than other families. Additionally, per capita expenditures related to maintaining the living environment and daily operations are also significantly higher for single-person households. This shows the higher fixed cost of living alone without sharing expenses with others. However, single-person households have the advantage of being able to concentrate their expenses more on themselves. Significant higher per capita expenditures on several “treating oneself well” items demonstrate the freedom that comes with single living. On the other hand, the comparison of income elasticities shows that the expenditures of single-person households fluctuate more significantly, indicating higher financial risks.

How digital finance impacts listed companies' green innovation in China: a product market perspective.

We empirically test whether and how digital finance impact green innovation utilizing data from Chinese listed companies and the Digital Inclusive Finance Index at the city level over the period from 2011 to 2020. The results show the following: (a) digital finance has a positive impact on green innovation, (b) improving consumer demand and strengthening market competition are two important influence channels, (c) customer concentration and corporate social responsibility are two important moderating variables that affect the aforementioned product market mechanisms, and (d) the positive impact of digital finance is more prominent within state-owned enterprises, companies with high financial risks, economically underdeveloped regions, and low-polluting industries. This research provides insights for China and similar economies on how to leverage the significant role of digital finance in achieving their net-zero-carbon targets.

Pension funding gaps: do mandated external governance mechanisms matter?

PurposeThis study aims to examine whether and how the experience of specialized external governance mechanisms mandated by the Employee Retirement Income Security Act of 1974 – the actuary and auditor – affect pension plan funding.Design/methodology/approachThis study uses data from annual pension plan regulatory reports (Form 5500), Form 10-K filings, Form DEF 14A filings (company proxy statements) and publicly available data sources. The hand-collected data include information related to the pension plan’s actuary and auditor and various pension plan data disclosed in the company’s financial statement footnotes.FindingsThe author finds that more experienced actuaries and auditors are associated with better funded pension plans, especially when the company has higher financial risk or lower board independence. Additional analyses indicate that companies with more experienced actuaries and pension plan auditors are more likely to make higher annual pension plan contributions and hold fewer Level 3 fair value assets.Originality/valueThe dearth of pension plan governance research generally focuses on whether and how internal governance mechanisms affect pension plan funding. To the best of the author’s knowledge, this is the first empirical study of the relationship between external pension plan governance mechanisms and pension plan funding.

Family control, institutional investors, and financial distress: Evidence from China

AbstractThe effect of family control on corporate governance and risk‐taking behaviours remains disputed worldwide. We examine how family control affects the financial distress of firms listed on the Chinese stock market. Our empirical findings suggest that family firms, particularly those with descendant CEOs, face significantly higher financial distress risk. Higher debt levels and more diversified acquisitions of family firms can partially explain their higher financial risk. Further analysis indicates that institutional investors help reduce the financial distress risk of Chinese family firms. We contend that institutional investors play vital roles in enhancing the corporate governance of family firms in China. Taken together, our study urges attention to the financial distress risk of family firms in a transient economy.

ОСОБЛИВОСТІ ЗАБЕЗПЕЧЕННЯ ФІНАНСОВОЇ БЕЗПЕКИ КОМУНАЛЬНИХ ПІДПРИЄМСТВ

The article examines the peculiarities of ensuring the financial security of utility enterprises in conditions of uncertainty, military operations and the instability of economic and social processes. It was determined that both external and internal factors influence the formation of the financial security of the enterprise. The main meaningful accents of the financial security of utility enterprises are highlighted, taking into account their organizational and functional features. The influence of the external environment and the balance of interests are particularly relevant for utility companies as determining components of financial security, since for most of them the revenue base is formed by external stakeholders and capital investments are financed. An assessment of the financial security of utility enterprises was carried out based on the indicators of the financial condition on the example of utility enterprises of water supply and drainage. The main financial threat to utility enterprises is the lack of financial resources for functioning, which will make it impossible to provide the necessary services to the residents of the community. Such enterprises cover losses from the local budget, that is, community residents pay for services twice: directly as part of the tariff and indirectly by paying taxes to the local budget. At the same time, a restraining tariff policy and additional financing from the budget is an objective necessity, therefore ensuring the financial security of utility companies must be closely related to permanent financial planning, monitoring, auditing of financial policy and the efficiency of spending financial resources to balance the interests of utility companies enterprises and the local community. Utility companies, on the one hand, cannot independently conduct pricing policy, determine types of activities and areas of service provision; on the other hand, they are under the constant financial care of local authorities. Taking into account the financing features of such enterprises, their capital structure and liquidity level do not carry high financial risks. And the danger is the level of wear and tear of fixed assets, unprofitability and the impossibility of self-financing, which makes such utility companies dependent on budget allocations. It was determined that in order to increase their financial security, a system of measures should be developed together with state and local self-government bodies for a complete restructuring of the economic and financial mechanism of their functioning.

Financial Analysis of the Pharmaceutical Industry Based on Dupont Analysis: Taking Guangzhou Baiyunshan Pharmaceutical Group as an Example

As an infrastructure industry, the pharmaceutical industry is related to peoples livelihood and social stability and is one of the pillar industries of society. With the in-depth advancement of various medical policy reforms since 2021, the scale of Chinas pharmaceutical market has continued to rise, and the revenue and profit of the pharmaceutical industry have maintained steady growth, so the industry still has outstanding growth advantages. Based on the pharmaceutical industry, this paper selects Guangzhou Baiyunshan Pharmaceutical Group as the research object, takes the companys financial data from 2018 to 2022 as the basis, conducts a comprehensive study on the companys operating conditions based on DuPont analysis, and finds that Guangzhou Baiyunshan has problems such as high financial risk, low turnover of receivables and low profitability during its development. The paper puts forward the corresponding suggestions of saving expenditure, increasing income and focusing on sustainable development in solvency; improving enterprise credit policy and strengthening accounts receivable management in operational capacity; and optimizing pharmaceutical R&D investment and management in profitability.