Sector-specific Characteristics Research Articles

Capital structure specificity in knowledge-intensive industries: A comparative study of EU countries

PURPOSE: This paper aims to examine and compare the capital structure patterns and financial decision-making determinants of knowledge-based firms and traditional industries in selected EU countries over the period 2000–2023. The study seeks to uncover sector-specific features, focusing on the unique financial behaviors of knowledge-intensive enterprises compared to their traditional counterparts. It also explores how factors such as asset structure, profitability, and growth opportunities influence capital structure decisions within these industries, thus providing implications for financial management in innovation-driven sectors. METHODOLOGY: The methodology involves analyzing data from 12 EU countries, categorized by industry (sectors M and J for knowledge-based firms and other sectors for traditional firms) and firm size. The research applies panel data modeling to evaluate the differences and influences on capital structure within these groups. FINDINGS: The study reveals that knowledge-based firms exhibit distinct capital structure characteristics, including a higher reliance on intangible assets and lower ratios of long-term debt compared to traditional firms. Specifically, the findings indicate that intangible assets are positively correlated with total and long-term debt in knowledge-based firms, meaning that an increase in intangible asset value is associated with a corresponding increase in total and long-term debt levels. This relationship aligns with the modified pecking order theory, which posits that firms prioritize funding sources based on their perceived cost and risk. The determinants of capital structure – such as profitability and growth opportunities – also demonstrate differing impacts, revealing the unique financial strategies employed by knowledge-based firms. IMPLICATIONS: This research highlights the importance of adapting financial strategies to the specific needs of knowledge-based firms, which often face unique challenges due to their reliance on intangible assets. Policymakers can use these findings to design targeted financial policies that support the growth and sustainability of innovation-driven enterprises, such as by offering incentives for intangible asset financing or by reducing barriers to accessing long-term debt. For practitioners, the insights highlight the need to align financial decision-making with sector-specific characteristics to optimize capital structure and drive competitive advantage. ORIGINALITY AND VALUE: This research makes a unique contribution by providing one of the first comparative analyses of capital structure determinants across knowledge-based and traditional firms in multiple EU countries over an extended timeframe (2000–2023). Unlike prior studies, which often focus on individual sectors or countries, this study offers a comprehensive and cross-sectoral perspective, enriching the understanding of how financial theories operate in diverse economic and institutional contexts. By addressing the financial behaviors of knowledge-intensive firms, the research bridges a critical gap in the literature and informs both academia and practice.

Systemic aspects of agricultural investments: regional variability and sector-specific characteristics in cost efficiency

This paper explores whether the impacts of long-term investments on efficiency vary significantly across different regions and sectors of agricultural production. By delving into these complexities, this study seeks to determine if these factors should be integral considerations in the formulation of policies and strategies aimed at improving the efficiency and resilience of the European agricultural system. To address this, the study employs mathematical and statistical analyses of data from the Farm Accountancy Data Network (FADN) covering 2014-2020. The findings reveal that the diverse behaviors of agricultural systems across various regions and sectors present unique challenges in efficiency analysis. The results indicate that (i) incorporating regional and sector-specific variability provides a more comprehensive and nuanced understanding of the factors influencing the agricultural cost efficiency of EU farm groups; (ii) emphasizing the systemic aspects of agricultural investments and adopting a system thinking approach in evaluations ensures more accurate and meaningful assessments of investments, interventions, and their impacts. Keywords: agricultural investments, system thinking, cost efficiency, DEA, model performance

The AI revolution: are crypto markets more efficient after ChatGPT 3?

The AI revolution: are crypto markets more efficient after ChatGPT 3?

Economic Shockwaves: Examining Stock Market Behavior in Pakistan Amidst the COVID-19 Pandemic

The COVID-19 pandemic sent shockwaves through global economies, particularly affecting capital markets and stock price returns across major indices. This study examines the response of various industries listed on the Pakistan Stock Exchange (PSX) to the initial COVID-19 lockdown implemented on March 23, 2020. The research evaluates stock market reactions within a 61-day event window, with a focus on Average Abnormal Returns (AAR) and Cumulative Average Abnormal Returns (CAAR). The study encompasses nine diverse industries and employs regression analysis to compute alpha and beta coefficients. Notably, the findings reveal short-lived negative impacts across industries, followed by swift recoveries, indicative of the stock market's resilience in Pakistan. Descriptive statistics highlight sector-specific characteristics, while regression results emphasize low stock return volatility. The study underscores the role of government interventions and investor confidence in mitigating the pandemic's economic impact, providing valuable insights for investors, policymakers, and researchers. This research contributes to our understanding of stock market dynamics during crises, particularly in emerging economies.

Event Study: The Effect of the Passing Away of Queen Elizabeth II on the UK Stock Market

This study assesses the heterogeneous impact of the death of Queen Elizabeth II on industry leaders in the United Kingdom. It reveals the firm-specific characteristics that lead to this heterogeneity. This study applies an event study methodology to a sample of 20 leading UK companies across a 250-day estimation window and a 40-day event window. According to the event study, the death of Queen Elizabeth II has had a differential impact on most UK companies for different industries. In contrast, companies in the Biotech, Oil & Gas, Mining, and Tobacco industries were less affected. However, companies in the Retail, Telecommunications, Banks, and Defense Contractors sectors show significant negative CARs. This article has implications for investors in identifying company sector-specific characteristics that drive premium returns and guiding diversification by improving the sectoral diversity of portfolios. However, the study is limited by a relatively small sample size. There is a gap in earlier research on the related change of kingship and stock market performance, and this study makes two contributions to the literature. The authors first analyze the impact of the death of Queen Elizabeth II on British firms. Secondly, the study also provides guidance on how investors can diversify across different sectors in the UK to reduce risk.

How Does Environmental Data from ESG Concept Affect Stock Returns: Case of the European Union and US Capital Markets

This article examines the environmental, social, and governance (ESG) performance of firms, with a focus on the environmental pillar of the ESG concept. It is believed that the price of equities as well as sector-specific characteristics may be affected by ESG data. It also contributes to the argument that environmental performance and governance quality are related. The purpose of this paper is to statistically validate the separated environmental data from the ESG concept and investigate its impact on the equity price in the EU and the United States. Using simple linear regressions and a fixed effect panel data model, the association between environmental score and governance score, as well as equity price and environmental score, was estimated. This study examines the 500 largest US corporations comprising the S&P 500 index (S&P) and the 600 largest EU companies comprising the STOXX Europe 600 index (STOXX) (SXXP). This article analyzes ESG statistics for the period 2015–2020. The results indicate that a higher government score has a favorable effect on environmental pledges and that changes in stock price depend in part on environmental data. The novel contribution of this paper is that the results suggest a sector-specific contribution to the model, and it would be fascinating to analyze sector disparities and their ESG-related policies in greater detail. Doi: 10.28991/ESJ-2023-07-02-08 Full Text: PDF

Reading Mozambique’s mega-project developmentalism through the workplace: evidence from Chinese and Brazilian investments

ABSTRACT Propelled by a commodities boom and expanding South–South investment, mega-projects have reshaped the politics of labour in many African settings. Reflecting on such dynamics, this article critically engages with questions of employment, skills development, and contestation re-configuring capital–labour encounters in the ‘Chinese’ and ‘Brazilian’ workplace in Mozambique. We analyse two mega-projects: the Maputo Ring Road, implemented by the China Road and Bridge Corporation, and the Moatize Coal Project, led by the Brazilian mining company, Vale SA. Engaging with the complex realities at project ground level, the article unpacks how workplace regimes and outcomes reflect an intricate, multi-scalar array of spatial encounters, sector-specific characteristics, and national political economies. For both cases, this is associated with common promises of development and prosperity for Mozambique. While such promises take on different ideational guises, we show that the Chinese and Brazilian workplaces expose, nonetheless, overlapping patterns of inequality, contention, and hostility, reinforced by broader vulnerabilities and imbalances in global production networks and the Mozambican political economy. By providing a ground-level reading of the multi-scalar forces at play in the workplace, this article sheds light on the relationship between emerging South–South global encounters, national political realities, and labour geographies in African contexts shaped by mega-projects.

Urban freight characteristics and externalities – A comparative study of Gothenburg (Sweden) and Delhi (India)

Background: The urban freight transportation (UFT) system is an essential facilitator for the smooth functioning of city logistics. It also contributes significantly to transportation-related issues, such as vehicular congestion, pollution, accidents, infrastructure damage and other related problems.Objectives: This study aimed to understand and compare the urban freight traffic characteristics and their impact in two cities: Gothenburg, Sweden and Delhi, India, having high socio-economic differences. The findings of this study will be helpful for practitioners and policymakers in the development and successful implementation of UFT management policies.Method: Using the cordon count (traffic data), retailers’ interviews (receivers’ data) and freight vehicle drivers’ interviews, UFT characteristics such as sector-specific contribution, trip characteristics, vehicular characteristics and negative impacts in terms of external cost to society are evaluated. This study also discusses the prediction of attracted trips in the study zone using freight trip attraction (models.Results: About 75% of the trips in Gothenburg and 92% of the trips in Delhi are made by light commercial and other small-sized vehicles. Gothenburg has formally organised sectors involved in freight vehicle movement; however, Delhi has informally organised sectors.Conclusion: The results revealed substantial differences in characteristics of freight trip operations in both the cities, compared with few similarities. Measures taken considering the specific local attributes of freight traffic and stakeholders’ requirement may lead to a sustainable transportation system in cities.

Beyond the social license to operate: Whole system approaches for a socially responsible mining industry

The demand for minerals, metals and rare-earth elements is rapidly growing to support the transition to low-carbon energies, and the mining industry must increase its supply while facing complex Environmental, Social and Governance (ESG) risks. Traditionally relying on its engineering expertise to maximize ore extraction, the sector must now find ways to sustain its production while facing increased scrutiny from the public, civil societies and shareholders alike. The paper reviews current practice in sustainability assessment to highlight sector-specific characteristics and the notion of trust as central to effective project developments. Because the social interface of extractive operations is complex, dynamic and non-linear in nature, we recommend going beyond the aim of obtaining a social license to operate and use Systems Thinking to fully embed Corporate Social Responsibility (CSR) at the core of strategic mine planning. System Dynamics can foster interdisciplinary collaborations by bridging together social and technical flows within simulation models to identify sustainable levers of change. We present the development of a stock and flow model quantifying causal mechanisms between the use of cyanide, the environment, communities and public trust, and operational productivity. Industry practitioners, researchers and facilitators can use the model as an adaptable framework to engage with systems modelling in mining. We recommend its use in conjunction with meaningful stakeholder’s engagement to ensure shared understanding, reduced uncertainty and long-term benefits for all.

Welfare-Based Optimal Macroprudential Policy with Shadow Banks

In this paper, I show that the existence of non-bank financial institutions (NBFIs) has implications for the optimal regulation of the traditional banking sector. I develop a New Keynesian DSGE model for the euro area featuring a heterogeneous financial sector allowing for potential credit leakage towards unregulated NBFIs. Introducing NBFIs raises the importance of credit stabilization relative to other policy objectives in the welfare-based loss function of the regulator. The resulting optimal policy rule indicates that regulators adjust dynamic capital requirements more strongly in response to macroeconomic shocks due to credit leakage. Furthermore, introducing non-bank finance not only alters the cyclicality of optimal regulation, but also has implications for the optimal steady-state level of capital requirements and loan-to-value ratios. Sector-specific characteristics such as bank market power and risk affect welfare gains from traditional and NBFI credit.

European Industries’ Energy Efficiency under Different Technological Regimes: The Role of CO2 Emissions, Climate, Path Dependence and Energy Mix

The assessment of industrial-level energy efficiency’s (EE) development is a critical research topic that has entrenched in the global battle against climate change. Under the Energy Efficiency Directives 2012/27/EU and 2018/2002/EU, European Commission sets specific industrial energy efficiency targets, rules and obligations for the 2020-2030 period aiming, among others, at specific energy intensity reduction and energy efficiency improvements. In this paper we use a balanced panel of fourteen European industries from twenty-seven countries for the period 1995-2011 under a metatechnology framework. The aim of this study is to evaluate, at a first stage, the industrial total factor energy efficiency (TFEE) at a national and European level by incorporating technological heterogeneity through a nonparametric approach. Reflecting the divergent views on the importance of desirable and undesirable outcomes in the pursuit of TFEE, we additionally estimate industrial performance by prioritizing either economic or environmental aspects. At the second stage of our analysis, econometric models are applied to investigate the main factors of industrial TFEE using sector specific and country characteristics while we further proceed with a ft and ^-convergence analysis for our TFEE measures. The results of this study reveal that small-scale economies exhibit persistent high TFEE scores. At the same time, TFEE determinants suggest that path dependence phenomena have a strong presence, climatic characteristics occur while energy mix displays both linear and non-linear relationship. Either considering one desirable output or consolidating the undesirable output in the production function our results indicate a strong evidence of conditional and unconditional convergence in TFEE scores.

Occupational Health and Safety Maintenance in Micro and Small Enterprises: A Study on Select Sectors of West Burdwan, West Bengal

In any developing country like India, Micro and Small Enterprises (MSEs) showed its best effort in improving the mass standard of living by ensuring employment generation. Thus the grass root people who otherwise might not get entered into the formal sector due to lack of technical skill and education could get their employment there easily. But the lack of technical know-how of the participants of MSEs may not allow them to have awareness of occupational hazards. This calls for a severe problem in Health and Safety related issues in MSEs for those individuals. The present study, therefore, takes its objectives to highlight on the maintenance of Occupational Health and Safety (OH&S) related issues in MSEs where the perceptions of the participants play an important role. To fulfil these objectives, the study takes its attempt to pursue a primary survey on 95 randomly selected participants out of 24 registered MSEs of select sectors of West Burdwan, an industrially developed district of West Bengal. The sectors are selected purposively based on their significant presence in West Burdwan. The data have been collected through questionnaire and non-parametric tests has been used for further assessment. It is found that creating cozy atmosphere, privacy, artificial lighting conditions, ventilation, facilities for rest and meals, and so on are the factors to be maintained under OH&S in MSEs. The responses of the participants are found as sector specific and socio-demographic characteristics specific. In this issue, while the young male members like ‘facilities for rest and meals’, the female members prefer ‘privacy’ as the factor to be maintained for OH&S in MSEs. Thus the paper in its policy implication exhibited the sector-wise and socio-demography wise preferences of the participants on OH&S related issues.

Non-performing loans in the hotel industry: The case of Greece

Throughout the Greek economic crisis, the problem of rising stock of non-performing loans (NPLs)[1] gradually evolved into one of the most challenging structural deficiencies faced by the Greek banking sector. Despite outstanding performance of the Greek tourism sector, which over the last five years attracted record number of tourists each year, NPLs in the hotel sector remain widespread. The objective of this study is to identify macroeconomic factors and sector-specific characteristics, which led to NPL stock piling in Greek tourism sector. Our findings are supported by rare dataset on NPLs in Greek hospitality sector compiled from publicly available sources. We apply descriptive quantitative analysis to the data from the Bank of Greece, the Hellenic Statistical Authority and other official sources. We found that, despite the record performance of the Greek tourism sector, hotel loans are as problematic as loans issued to other sectors of the Greek economy. Our findings contribute to the NPL literature by providing valuable insights for the Greek hotel industry’s NPL stock, especially in view of the fact that such academic research has not been conducted before.
 
 [1]The term ‘NPLs’ is used as a shorthand term to denote all Non-Performing Exposures (NPEs) (ECB, 2017).When a customer delays payment of a loan that is subject to a specific contract with a bank for more than a predetermined number of days then this is considered NPL. Depending on the country, bank, and applicable provisions, the number of days may refer to more than 30, 60 or 90 days (IMF, 2011). The European Supervisory Authorities consider a loan as non-performing when the borrower has been late for more than 90 days to pay the agreed installments to the financial institution that has contracted the contract. According to the European Central Bank (2016), loans repaid by the borrower within the agreed term are considered to be "serviced". Due to the fact that the definition of NPLs is based on a variety of different interpretations, the European Banking Authority attempted to give a single definition through the term ‘NPEs’. NPEs include not only loans but all debt instruments (loans, advances and debt securities) as well as off-balance sheet exposures. NPEs include either of the two criteria:
 - Long-term openings that have exceeded the 90-day limit,
 - "Uncertainty collection" exposures qualifying as non-serving, although they are either current or have a delay of less than 90 days.

Forecasting Forward Patent Citations: Comparison of Citation-Lag Distribution, Tobit Regression, and Deep Learning Approaches

This article aims to compare the existing approaches, such as citation-lag distribution, Tobit regression, and multilayered neural network to forecast forward patent citations as a proxy for patent technological impact. For the purpose of analysis, in this article, we focuse on estimating lifespan forward citations in the telecommunications sector because sector-specific characteristics may affect the citation patterns. Accordingly, U.S. utility patents in the telecommunications sector are collected and the patent ex-ante information (the information provided at the point of patent disclosure) along with patent ex-post information (the information available after patent disclosure) are extracted to be used for forecasting forward citations. The research findings indicate that the deep learning approach tends to outperform the other approaches only with the ex-ante information, and the performance of the deep learning approach increases significantly when the ex-post information is added to the ex-ante information. This article is expected to offer useful guidelines for choosing an appropriate approach to forecast citations based on available dataset.

The surprising case of police bribery reduction in South Africa

The paper examines why there was a reduction of almost 15% in police bribery in Limpopo province, South Africa between 2011 and 2015, compared to only a 4% reduction the country overall. Drawing on statistical analysis and in-depth qualitative fieldwork, the research shows that the reduction occurred during an unprecedented anticorruption intervention in the province that did not directly tackle police bribery. Despite this, the intervention’s high visibility, along with uncertainty among the police of its mandate, was likely to have made police less willing to engage in bribery during this period. While police sector-specific characteristics (high degree of discretion, peer solidarity and contact with criminals) make fighting entrenched corruption particularly difficult, the research shows how a disruptive event can counteract these factors and how this can happen more quickly than previously anticipated. For long-term impact, however, disruption strategies likely need to be driven by strong leadership and structural changes that will continually disrupt corruption patterns.

Sector-Specific Characteristics of Tax Crime in Russia

The article discusses the hypothesis that fiscal crime has some sector-specific characteristics, which tend to become more pronounced as new technologies emerge and develop. These characteristics should be taken into account when devising policies targeted at fighting tax evasion. To test this hypothesis, we analyzed quantitative (the level of economic crime in Russia in general and for different types of economic activity) and qualitative characteristics of crime (structure, dynamics and nature of crime). We also conducted analysis of the correlation between these indicators and the structure of costs and financial performance of organizations. The research relies on crime statistics, which reflect the scale of tax evasion better than financial statistics (since the latter are influenced by a large number of factors and are subject to significant change even within one year). Pearson’s and Spearman’s correlation coefficients were used for verification. Sectors of economy were ranked in descending order according to the corresponding economic crime rates and loss to gross value added in the sector. The findings show that unlike the cases of tax evasion, the number of economic crimes does not closely correlate with the structure of costs. Most tax crimes and corporate tax evasion in particular are recorded in sectors with lower labour costs, social security contributions and other prime costs but with higher depreciation of fixed assets (capital intensive industries). Thus, the results of this study contradict the findings of international scholars that shadow economy is larger in highest paying industries. It is shown that the sectors with higher losses are characterized by higher crime rates, that is, the loss in many cases is connected to tax evasion and related economic crime. The research has brought to light certain sector-specific characteristics of tax evasion, which means that these characteristics should be taken into account in governance and policy-making as well as in further research on this topic.

The Post-issue Market Performance of Initial Public Offerings: Empirical Evidence from the Malaysian Stock Markets

This study examines the long-run performance of the initial public offerings (IPOs) listed in the Malaysian main and alternative ‘Access, Certainty and Efficiency’ (ACE) markets at the economic and sectorial levels. Using event- and calendar-time study methods and monthly data from January 2000 to December 2011, we provide novel evidence on the existence of under performance anomaly in the Malaysian markets and more intensely in the ACE markets. We demonstrate robust evidence on the distinction in sector-specific characteristics from the aggregate market characteristics. While the consumer products and industrial sectors dominate the overall underperformance, the construction, property and technology sectors significantly overperform. The findings are robust to a wide range of other sensitivity checks including parametric and non-parametric tests.JEL Classification: G14, G15, G30, G34, G32, G38

Sectoral Evaluation for Economic and Financial Development in Dubai and rest of UAE

The paper examines sector specific characteristics to analyse the factors affecting the sustainability of the economies of Dubai and rest of the United Arab Emirates (UAE).
 The study applies system design to analyse the research questions. Consequently, Zellner’s seemingly unrelated regressions (SURE) technique is used to examine the relative contribution of sectors to the economies Dubai, as an individual Emirate, and the rest of UAE as a group of Emirates using time series sectoral level data for 2001–2015.
 The study shows that there exists positive interdependencies between Dubai and rest of UAE economies. This signifies that the core competencies across various sectors in Dubai and rest of UAE economies need to be promoted further to have overall diversified impact on UAE economy.
 The positive sizable impact of the finance sector in Dubai and negative sizable impact in the rest of the UAE provide many opportunities for designing diversification programs for sustained economic development of the entire UAE economy. The small sample size, non-availability of detailed sectoral data in four of the seven emirates constrained the scope of the study for generalization to other economies in the middle east.
 
 The study findings are very crucial for identifying structural reforms, to strengthen competitiveness and accelerate private sector-led job creation for nationals, potential on further opening up foreign direct investment (FDI), improving selected areas of the business environment, and easing access to finance for start-ups and SMEs in both the economies.
 There are very few studies, which have researched the sector specific characteristics to explain the factors affecting the sustainability of the economies of Dubai and the rest of UAE. The study provides insights to the UAE policy makers, for enhancement of policies through development of the key sectors that influence the performance of the two economies. Despite being independent entities though, the seven emirates of the UAE are economically interdependent. Studies on such interactions add unique value to the literature.
 Keywords: SURE, GDP, Dubai, UAE, Sectoral Evaluation, Financial development.

Business model in the context of Sustainable Urban Water Management - A comparative assessment between two urban regions in Australia and Germany

Abstract Over the last decade, various concepts with similar underlying philosophies have evolved within the urban water sector calling for a more integrated, sustainable, and adaptive management approach. Whilst many advocate this idea, the process of transitioning to sustainability-focused water management seems to proceed slowly. There are sector-specific characteristics that generally bring a level of conformity within the sector, but various national and regional drivers and constraints also shape each utility's option space. Business models can be useful catalysts for change by providing a more holistic view of potential options and transition pathways. This paper outlines the concept of business modeling for use in Sustainable Urban Water Management (SUWM). A literature-based comparative assessment was undertaken for two cases: Melbourne, Australia and the Emscher Region, Germany. The practical relevance of the proposed framework is demonstrated for understanding enablers and inhibitors of change and identifying strategies for sustainability within the urban water sector.

Gender and Ethnic Diversity on Boards and Corporate Responsibility: The Case of the Arts Sector

This study provides insights on sector-specific characteristics, challenges and issues that affect corporate responsibility (CR) in relation to ethnicity and gender on arts boards. Using stakeholder theory, the study explores how arts board composition (e.g. gender and ethnicity) sets the scene for dynamics that affect CR. Data analysis is based on interviews with 92 board members and stakeholders sitting on 66 arts boards in Australia. Results suggest that the dynamism of gender and ethnic diversity on arts boards makes them responsive to CR; however, their presence does not always lead to CR. For diverse boards to lead to CR, our findings indicate the significance of board member attributes of passion, skill and capability of developing networks, irrespective of gender and ethnicity. The article advances understanding of the implications and relevance of ethnic and gender diversity on non-profit boards and contributes to an important yet under-researched body of literature.