Research articles for the 2020-09-26
Board Risk Oversight and Environmental and Social Responsibility
SSRN
Risk oversight has emerged as an important responsibility of corporate boards. At the same time, firms are increasingly recognizing the risks that social and environmental issues pose to investors and stakeholders. In this study, we examine the relation between board risk oversight and firms’ environmental and social (E&S) ratings. Using proprietary data on the board risk oversight practices of firms from 29 countries, we show that firms with more robust risk oversight have higher E&S ratings, are more likely to integrate E&S issues into their strategies and executive compensation contracts, and ultimately experience better E&S outcomes.
SSRN
Risk oversight has emerged as an important responsibility of corporate boards. At the same time, firms are increasingly recognizing the risks that social and environmental issues pose to investors and stakeholders. In this study, we examine the relation between board risk oversight and firms’ environmental and social (E&S) ratings. Using proprietary data on the board risk oversight practices of firms from 29 countries, we show that firms with more robust risk oversight have higher E&S ratings, are more likely to integrate E&S issues into their strategies and executive compensation contracts, and ultimately experience better E&S outcomes.
Did the 1918â€"19 Influenza Pandemic Kill the US Life Insurance Industry?
SSRN
We document two puzzling facts during the 1918â€"19 influenza outbreak. First, we find no significant differences among US life insurers’ profitability before or after 1918. Second, there are fewer insurers in distress after the outbreak. We argue that an increase in insurance demand offset higher death claim payouts. Moreover, we find that life insurers from heavily affected states were more likely to issue equity. The prudential control of state regulators also mitigated financial difficulties. The influenza pandemic, while severe from a public health perspective, was arguably a blessing in disguise for the sector.
SSRN
We document two puzzling facts during the 1918â€"19 influenza outbreak. First, we find no significant differences among US life insurers’ profitability before or after 1918. Second, there are fewer insurers in distress after the outbreak. We argue that an increase in insurance demand offset higher death claim payouts. Moreover, we find that life insurers from heavily affected states were more likely to issue equity. The prudential control of state regulators also mitigated financial difficulties. The influenza pandemic, while severe from a public health perspective, was arguably a blessing in disguise for the sector.
The Loss in Meaning: Influence of Strategy Language and Modern Financial Discourse on the Working Concepts in Islamic Banking and Finance
SSRN
This paper employs Wittgenstein language-games to analyze strategy language used by leaders of Islamic finance industry to envision its future. The analysis infers that the explicit market orientation of strategy language and modern knowledge of finance has redefined various concepts related of Islamic finance at the cost of its original spirit. This may also have adverse effects on developing ethical and spiritual orientation of Islamic banks. The concerned academia and scholarship therefore need to review such trends and work to prevent the subsequent degradation in the public image of IFIs to avoid disappointments of religiously inspired customers.
SSRN
This paper employs Wittgenstein language-games to analyze strategy language used by leaders of Islamic finance industry to envision its future. The analysis infers that the explicit market orientation of strategy language and modern knowledge of finance has redefined various concepts related of Islamic finance at the cost of its original spirit. This may also have adverse effects on developing ethical and spiritual orientation of Islamic banks. The concerned academia and scholarship therefore need to review such trends and work to prevent the subsequent degradation in the public image of IFIs to avoid disappointments of religiously inspired customers.
Winter Is Coming: Repercussions of a New COVID-19 Wave in Global Stock Markets
SSRN
The outbreak of the pandemic of COVID-19 in the beginning of 2020 had a significant impact both to the real economy and to the financial markets which exhibited high volatility movements of unprecedented scale. In this study we employ an AR(1)-GARCH(1,1) model with Student-t distributed standard errors in 8 jurisdictions to investigate the effects of the pandemic outbreak in the stock market returns, and based on that to assess the impact of a new massive wave of infections in the upcoming Winter. Our main finding is that there is strong negative relationship between new COVID-19 cases and stock market returns, whereas policy reactions had a beneficial impact only when combined with the effectiveness of measures taken by each country to curtail the pandemic. Finally, even though the perception about the virus has changed significantly, as fear has given ground to the hope for treatment, an abrupt massive wave of new infections could provoke exacerbated financial turmoil in 2021.
SSRN
The outbreak of the pandemic of COVID-19 in the beginning of 2020 had a significant impact both to the real economy and to the financial markets which exhibited high volatility movements of unprecedented scale. In this study we employ an AR(1)-GARCH(1,1) model with Student-t distributed standard errors in 8 jurisdictions to investigate the effects of the pandemic outbreak in the stock market returns, and based on that to assess the impact of a new massive wave of infections in the upcoming Winter. Our main finding is that there is strong negative relationship between new COVID-19 cases and stock market returns, whereas policy reactions had a beneficial impact only when combined with the effectiveness of measures taken by each country to curtail the pandemic. Finally, even though the perception about the virus has changed significantly, as fear has given ground to the hope for treatment, an abrupt massive wave of new infections could provoke exacerbated financial turmoil in 2021.
