Risk Research Articles

Business Risk Management Strategy in Adaptation of Beef Caft Businesses to the Impact of Climate Change in Sumenep District

Business Risk Management Strategy in Adaptation of Beef Caft Businesses to the Impact of Climate Change in Sumenep District

Burial objects” or “Birds of a feather”: The contagion effect of financial violations in business groups——The evidence from China

This study explores the conagion effect of financial violations within Chinese business groups from 2012 to 2021. Findings reveal that violations lead to stock price declines in member companies, with contagion primarily driven by irrational investor sentiment (“burial objects”) over the short term. The financial and governance characteristics of infected companies deteriorate (“birds of a feather”), but do not impact their long-term stock returns. Mitigating investor irrationality in infected companies helps curb contagion. This research contributes to business group governance and risk contagion theories, revealing a unique irrational contagion channel of financial violations within business groups in emerging markets.

The lower the integrity, the higher the risk: how does the lack of corporate integrity exacerbate risk?

Corporate integrity is not only a core element of its success but also plays a crucial role in the development of the corporation itself, consumers, investors, and society as a whole. This paper focuses on companies listed on the A-share market from 2017 to 2022, delving into the impact of corporate integrity on business risk. The findings indicate a significant negative correlation between corporate integrity and business risk, primarily mediated through the profitability of the corporation. Further heterogeneous analysis reveals that for large and state-owned enterprises, the impact of corporate integrity on their risk levels is particularly pronounced.

Model For Small Enterprises Innovation Strategies Adaptation On Climate Change: Learn From Traditional Textile Sumba

All business organizations face various risks that might arise from changes in the external macro and micro environment. One of the significant changes in the external macro-environment is climate change. Climate change and its derivative impacts on business activities need to be managed properly by adapting innovations in the production process. Various studies on the impact of climate change on business activities are more focused on conventional measures to gauge business risks which are more responsive and focused on large companies. There are still few studies conducted on small and traditional businesses related to strategic actions in dealing with climate change, especially non-agricultural businesses. Therefore, this research aims to provide an overview of the adaptation strategy of production process innovation in the small-scale weaving industry in Sumba Island, Indonesia. The research conducted in-depth qualitative interviews with traditional textile producers in East Sumba. The main criterion in determining the respondents is the length of the business run by the traditional weaver. The study found that while most traditional weavers of Sumba textile rely on status quo technology, some strategies emerged to adapt to climate uncertainty in weaving production. The authors also identify three benchmarks of climate adaptation measures by the traditional weavers.

ESG Rating Divergence and Trade Credit Financing : Promotion or Inhibition ?

ESG plays a key role in promoting sustainable development strategies. Data integrators integrate ESG-related information of enterprises and provide measurable reference for investors. However, different ESG rating agencies have different rating results for the same enterprise, which brings trouble to users in evaluating company information and formulating relevant investment strategies. This paper takes 2009-2022 Shanghai and Shenzhen A-share listed companies as the research object, and examines the relationship between ESG rating divergence and trade credit financing from the perspective of supply chain financing. The study finds that ESG rating divergence significantly inhibits the trade credit financing of enterprises, which is mainly achieved by aggravating the divergence of analysts ' forecasts and increasing the business risks of enterprises. Heterogeneity analysis shows that ESG rating divergence have a more significant inhibitory effect on trade credit financing in enterprises with high supply chain discourse power, strong supply chain stability and weak development ability. The conclusions of this paper are helpful to understand the economic consequences of ESG rating divergence and enrich the research on the influencing factors of trade credit financing.

Pengaruh profitabilitas, likuiditas, leverage, kepemilikan manajerial dan risiko bisnis terhadap kebijakan dividen dengan firm size sebagai variabel moderasi pada perusahaan sektor consumer cyclicals

This study aims to examine the effect of probability, liquidity, leverage, managerial ownership, and business risk on dividend policy and to determine whether firm size can moderate the influence of profitability, liquidity, leverage, managerial ownership, and business risk on dividend policy. The sample of this study consisted of 52 companies confirmed by the Indonesian Stock Exchange in the consumer cyclical industry from 2020-2022. The sampling technique used purposive sampling. The analysis technique uses Multiple Regression Analysis (MRA) with STATA 17. The findings obtained show that managerial ownership has a significant positive effect on dividend policy. Profitability, liquidity, leverage, and business risk do not affect dividend policy. Firm size cannot moderate the effect of profitability, liquidity, Leverage, managerial ownership, and business risk on dividend policy. Under the agency model theory, consumer cyclical companies are expected to monitor the performance and the proportion of managerial ownership shares on deciding dividend policy because the more significant the percentage of managerial share ownership will minimise agency conflicts.

Capital structure, profitability and risk: a study of small companies in the industrial sector of the Republic of Kazakhstan

The purpose of the study: Determining the impact of the capital structure on small companies’ performance operating in the field of industry in Kazakhstan. The problem statement. The question to be analyzed in this study is: does the capital structure aff ect the performance of small Kazakhstani companies operating in the industrial sector? Methodology: In this study, we use data from 30 small industry companies in Kazakhstan based on annual reports for 2012-2022. The total debt ratio is the dependent variable used in this study. Profi tability, business risk, tax efficiency and age of the company were taken as independent variables. Statistics, correlation and multivariate regression were used to analyze the data. Originality/value of the study: The results showed that borrowed capital is subject to factors of profi tability, tax burden, and business risk. There was no signifi cant impact of the age of the company on the borrowed capital. Relevance: This study complements the literature on capital structure factors in developing countries and the financial condition of small industrial enterprises. This research will be aimed at exploring the potential use of borrowed capital to increase the profi tability of the company to reduce business risks.

Chinese Family Farm Business Risk Assessment Using a Hierarchical Hesitant Fuzzy Linguistic Model

Chinese family farms are continuously expanding; they are also facing various business risks that lead to a shorter lifespan. This paper constructed a family farm business risk assessment model that combined a hesitant fuzzy linguistic term sets (HFLTS) model with a hesitant fuzzy weighted average (HFWA) operator. On the basis of the factor analysis, this study built a family farm indicator system that included the natural, technical, market, policy, society, and management risk. The HFLTS was used for the assessment of weights in pairwise comparison matrices, and the HFWA operator was used as an aggregation operator to calculate the business risk score of family farms. For our case study, a method comparison analysis was also performed to check the validity of the results obtained by our risk assessment model.

Affiliated guarantee risk control and firm cash holdings: Evidence from China

As an inseparable part of a company's business risk, the ability to reduce the impact of affiliated guarantee risk on business decisions has become a topic of great concern to governments. This paper focuses on the “Circular on Enhancing Risk Prevention and Mitigation of Loans from Corporate Guarantee Circles” (ERPML) and explores its impact on affiliated guarantee risk control and firms' cash holdings. The findings suggest that affiliated guarantee risk control increases firms' cash holdings, a conclusion supported by robustness tests. This increase is primarily driven by preventive motives and the reduction of shareholders' agency costs. The heterogeneity test indicates that the influence of affiliated guarantee risk control is more pronounced in nonstate-owned firms and firms with low institutional shareholding, low debt financing and low financialization. Finally, the economic results suggest that affiliated guarantee risk control helps reduce firms' business risks and improve their performance. Overall, this paper provides empirical evidence of the positive economic consequences of strengthening the regulation of associated guarantee risk.

Efek Risiko Bisnis, Risiko Keuangan Dan Growth Opportunity Pada Struktur Modal Perusahaan Manufaktur Food And Beverage

This research is research that aims to analyze the influence of business risk, financial risk, and growth opportunity on the capital structure of food and beverage manufacturing companies listed on the Indonesian Sharia Stock Index (ISSI) for the 2020-2022 period. The background to this research is the occurrence of fluctuations which tend to decrease the company's capital structure. This type of research is associative research. The kind of approach used is a quantitative approach. Sampling in this research used the purposive sampling method. Purposive sampling is a technique for determining samples based on special considerations so that they are worthy of being used as samples. The sample in this study consisted of 14 food and beverage manufacturing companies listed on the Indonesian Sharia Stock Index. The data used in the research is secondary data obtained from the official website of each relevant company. The research results show that partial financial risk has a positive effect on capital structure. Meanwhile, business risk and growth opportunity do not affect capital structure.

Modelling the impact of business risk on the competitiveness of purpose-grown biomass of annual and perennial crops

Perennial energy crops compete with conventional annual crops in land-use. The production price of biomass from perennial energy crops is thus derived on the basis of the opportunity cost principle. This means that in deciding whether to grow perennial energy crops, the farmer will demand a price for biomass that will at least provide him with the same economic effect over the lifetime of the plantation in the form of the present value of net cash flows over the lifetime of the energy crop plantation. The level of discounts used to discount the cash flows associated with (annual) conventional crops and perennial energy crops plays an important role in modelling the biomass production price. The business risk associated with the two types of crops is different, with generally higher risk associated with perennial energy crops. This study focuses on developing a methodology to incorporate the risk associated with growing conventional and energy crops and to derive the discount rate for both crop groups. The methodology is demonstrated using the example of the Czech Republic and the price level in 2021. The analysis using Czech data led to a discount rate of 8.5 % for conventional crops and 11.5 % for perennial energy crops. The increase in the discount value for perennial energy crops leads to an increase in the expected biomass sales price by a producer. The sensitivity of the biomass production price level to an increase in the discount rate is lower for Miscanthus plantations compared to short rotation coppice.

Relationship between Climate Change and Business Risk: Strategies for Adaptation and Mitigation: Evidence from a Mediterranean Country

Global corporate operations are facing significant challenges as a result of climate change. Businesses are exposed to a variety of dangers because of their effects, which might include anything from changing regulations to excessive weather. The objective of this research is to examine the connection between business risk and climate change, with a particular emphasis on the success of different adaptation and mitigation tactics used by Greek companies. A cross-sectional study was carried out among 345 enterprises in Greece using a quantitative research methodology. To investigate the relationship involving company risk management, adaptation, and mitigation plans with climate change risks, descriptive, correlational, and regression analyses are employed. Businesses are most distressed about the financial risks associated with climate change, followed by supply chain disruptions and physical hazards. Moreover, developing climate-resilient infrastructure and enhancing catastrophe preparedness have evolved into vital adaptation tactics. Also, converting to renewable energy sources is the most preferred approach to mitigation initiatives. Furthermore, the study demonstrated a significant positive correlation between climate change mitigation strategies and effective business risk management. Nevertheless, as perceived climate change risks increased, business risk management effectiveness decreased. The study suggests that Greek businesses are actively engaging in climate change risk management strategies that embrace both adaptation and mitigation strategies. Yet, the study recommends a continued focus on developing resilient infrastructure and collaborative efforts with local communities, governments, and NGOs. Businesses should also prioritize the shift to renewable energy sources to better mitigate their carbon emissions. This research contributes significantly to understanding how companies can strategically address the challenges of climate change. Furthermore, the study provides valuable insights into the dynamics of climate change adaptation and mitigation in a specific geographical area, thereby enhancing the global dialogue on climate resilience and sustainable business practices.

In-depth Analysis of Business Risks in the Cattle Livestock Industry: Comprehensive Literature Review

Cattle farming is a vital sector in the livestock industry, but it is also faced with various complex business risks. This literature review aims to provide an in-depth understanding of the risks associated with cattle farming. Through a thorough analysis of various literature sources, we explore the main aspects that influence risk in the cattle industry, including external factors such as fluctuations in feed prices, changes in government policies, and market uncertainty, as well as internal factors such as livestock health, financial management, and operational efficiency. By thoroughly understanding these risks, cattle farmers can develop effective mitigation strategies to increase the resilience of their business amidst the challenges facing the cattle farming industry.

ОРГАНІЗАЦІЙНО-МЕТОДИЧНЕ ЗАБЕЗПЕЧЕННЯ АУДИТУ БЕЗПЕРЕРВНОСТІ ДІЯЛЬНОСТІ ПІДПРИЄМСТВ

The article is concerned with disclosing the theoretical, organisational foundations and methods of continuity audit based on analytical procedures. The purpose of the study is to substantiate the theoretical, organisational and methodological foundations of the going concern audit of enterprises under conditions of uncertainty. Object of research - organisational and methodological support for the audit of business continuity of enterprises. Methods used in the study: scientific cognition, method of generalisation, comparison, logical and substantive, methods of induction and deduction, analysis. The main hypothesis is the development of organisational and methodological foundations of the going concern audit based on the expansion of analytical procedures to meet the information needs of stakeholders about the status and potential of the financial viability of the enterprise's going concern under conditions of uncertainty. Summary of the main material. Under martial law, the importance of the continuity audit as a tool for protecting the interests of users of financial statements and ensuring that stakeholders are aware of the state of financial solvency and prospects for sustainable development of enterprises increases. Organisational and methodological support of the continuity audit is determined by the objectives of the audit and the needs of stakeholders to obtain reliable information on the assessment of financial viability to ensure continuing operations in the future. The proposed methodology for auditing the going concern of enterprises based on analytical procedures provides a holistic view of the organisation of the audit by the following stages: 1) analysis of liquidity and solvency of enterprises; 2) analysis of profitability potential; 3) analysis of financial stability; 4) analysis of risks of activity; 4) analysis of the potential of continuous activity of the enterprise. Particular attention in the process of a going concern audit is paid to the classification and analysis of business risks. Analytical procedures for assessing business risks, determining reserves to cover losses of economic benefits in relation to the risks of non-payment of receivables and reduction in the value of financial instruments have been substantiated. The methodology for auditing the going concern of enterprises based on the expansion of analytical procedures, the implementation of which provides an opportunity to generate high-quality information to assess the potential of the enterprise's going concern, taking into account the risk and prepare a reasonable audit opinion, is original and of practical importance. Conclusions. The implementation of scientific and methodological recommendations on the organisation and methodology of the continuity audit based on the expansion of analytical procedures will help to obtain sufficient evidence for a realistic assessment of the potential of financial solvency of enterprises, preparation of the audit opinion on compliance with the principle of continuity and improve the quality of the audit.

Financial Statement Fraud Risk and Financial Distress of Family Business: Socio-Emotional Wealth (SEW) Perspective

Financial Statement Fraud Risk and Financial Distress of Family Business: Socio-Emotional Wealth (SEW) Perspective

The Influence of Company Size, Business Risk, and Sales Growth on Capital Structure Mediated by Profitability

This study aimed to determine the effect of company size, business risk, and sales growth on capital structure with profitability as an intervening variable on the JII stock index on the Indonesia Stock Exchange (IDX) from 2017 to 2021. The method used to determine the research sample is purposive sampling. The source of data in this research is secondary data. Data analysis techniques used path analysis, t-test (partial), and Sobel test (mediation) using SPSS version 23. The study's results stated that company size, sales growth, and profitability have a significant effect on capital structure while business risk has no significant effect on capital structure. Company size, business risk, and sales growth significantly affect profitability. The Sobel test results state that company size, business risk, and sales growth have a significant effect on capital structure mediated by profitability, meaning that mediation occurs.

Faktor-Faktor Yang Mempengaruhi Struktur Modal Dengan Kepemilikan Manajerial Sebagai Variabel Moderasi

This research aims to analyze the influence of liquidity, business risk, asset structure, profitability and company size on the company's capital structure. Apart from that, this research also examines the role of managerial ownership as a moderating variable that can influence the relationship between the independent variable and the dependent variable. This research uses a sample of 603 manufacturing companies listed on the Indonesia Stock Exchange for the 2020-2022 period. The method used in sampling is based on criteria (purposive sampling). The data collection method in this research uses library research by means of documentation and literature. The results of this research show that liquidity, business risk, asset structure, profitability and company size have no effect on capital structure. Managerial ownership is able to moderate the relationship between company size and capital structure. Managerial ownership is unable to moderate the relationship between liquidity, business risk, asset structure and profitability on capital structure.

THE EFFECT OF FINANCIAL RATIO AND BUSINESS RISK ON FIRM VALUE

The purpose of this study is to obtain empirical evidence regarding the effect of financial ratios and business risk on firm value. There are eight independent variables in this study, namely profitability, leverage, liquidity, business risk, company size, institutional ownership, asset management, and company growth. The object of this research is manufacturing companies listed on the Indonesia Stock Exchange (IDX) from 2020-2022 with specifications for the energy industry, consumer cyclicals, and consumer non-cyclicals. The sampling technique used in this study is purposive sampling and uses multiple regressions in analyzing data. There are 58 companies that passed the sample selection criteria from 174 data. The results of this research indicate that profitability, leverage, business risk, and firm size affect firm value. Meanwhile, other independent variables such as liquidity, institutional ownership, assets management, and company growth have no effect on firm value.

Peran Profitability dalam Memoderasi Pengaruh Predictor Debt Policy

The research aims to examine and analyze the effect of business risk, company growth, company size, asset structure, and free cash flow on debt policy with profitability as a moderating variable. The population of this study consists of 191 mining companies for the period of 2020-2022 listed on Indonesia Stock Exchange (IDX). The sampling technique was purposive sampling and 106 company were used. This type of research was correlational method. Data analysis was performed using classical assumption, hypothesis testing, and moderating regression (MRA) using IBM SPSS 25 version. Partially, the result of the study indicate that company growth and company size had a significant positive effect on debt policy; free cash flow had a significant negative effect on debt policy; meanwhile, business risk and asset structure had no significant effect on debt policy. The result of the moderation test in this study indicate that profitabiliy can moderate the effect of company growth on debt policy. Meanwhile, profitability is unable to moderate the effect of business risk, company size, asset structure, and free cash flow on debt policy.

EXPLORING THE ROLE OF GOVERNMENT ASSISTANCE TOWARDS MICROENTERPRISES' PARTICIPATION IN TAKAFUL: A QUALITATIVE PERSPECTIVE

The study aims to discuss a comprehensive overview pertaining to the microenterprise’s participation in Takaful with the aid of government role. This study was conducted qualitatively where the data gathered through semi-structured interview with a microenterprise’s owner. The findings revealed three distinct themes that consist of business operations and risk exposures, the awareness of microenterprise owner with regards to Takaful and Insurance schemes, and his perception towards government role in assisting business owner to participate in Takaful. From the findings, it showed that low risks encountered by the owner due to strategic location of his business and there is an awareness on the importance of protection (Takaful/insurance) in protecting himself and his business. Furthermore, the findings also discover the limitation of the owner’s understanding relating to government assistance in helping the microenterprises to participant in Takaful scheme. The findings of the study enrich the existing knowledge about the obstacles and possibilities encountered by microenterprises. Additionally, the data gathered can be used to develop policies and support systems that are specifically designed to address the business risks among microenterprises.