Can Euribor be fixed?
The manipulation of Euro Interbank Offered Rate (Euribor) is a problem with great impact on international financial markets. This paper focuses on two aspects of the Euribor benchmark rate for the period 2004–2018: the specific features that make the Index more vulnerable to manipulation and the potential for Index manipulation over the studied period. To address the first aspect, we examine the range and the standard deviation of daily quotes, as well as the panel banks’ quote submissions to the Euribor administrator, the maximum and minimum quotes and the daily variation of submissions. As a result, we found a group of five banks with similar and extreme submission patterns, which might b…
The impact of institutional and macroeconomic conditions on aggregate business bankruptcy
Abstract This paper investigates the aggregate business bankruptcy in relation to three macro-level factors: the government effectiveness, entrepreneurship activity and control of corruption for six European countries during the period from 2004 to 2017. We employ fuzzy-set qualitative comparative analysis (fsQCA) and partial least squares regression (PLS). Our findings show that countries with a high level of new firm creation and entrepreneurial activity can lead to a rise in the number of company failures. Furthermore, countries with a low corruption index and high levels of government effectiveness can mitigate insolvency. Our results have several policy implications for the evaluation …
Corporate Governance Configurations and Corporate Social Responsibility Disclosure: Qualitative Comparative Analysis of Audit Committee and Board characteristics
[EN] Drawing on the complexity theory and responding to the recent calls to use such creative methods that mix between a quantitative and qualitative approach. Therefore, this study fills the literature gap, adding novelties, showing evidence from the unexplored (or underexplored) European context and, consequently, shedding light to inconclusive results in previous research concerning the effect of audit committee (AC) and board characteristics on corporate social responsibility (CSR) disclosure by applying a novel research methodology: the fuzzy set qualitative comparative analysis. The data were collected from Eikon database for a sample of the top 69 non¿financial European companies (ba…
Alternative paths to high performance of independent financial advisors: A fuzzy-set analysis
Abstract This study performs a fuzzy-set Qualitative Comparative Analysis (fsQCA) to determine the conditions that lead to high performance of independent financial advisors. The study examines the performance of these companies in terms of their involvement in innovation activities, participation in business networks, and open innovation as a strategy to cope with difficult market conditions resulting from the recent economic downturn. This approach clarifies the relationship between combinations of conditions and high performance. The results suggest that involvement in innovation activities is the most relevant factor in financial advisors performance. Independent financial advisors may …
Revisiting bank failure in the United States: a fuzzy-set analysis
Past financial crises have illustrated the importance of recognising the combinations of factors that can cause financial distress in the banking industry. Accordingly, this study uses fuzzy-set qualitative comparative analysis (fsQCA) to identify the combinations of factors that lead to bank failure. The data consist of 30 annual financial ratio series for 156 U.S. banks over a 15-year period (2001–2015). Identifying combinations of conditions that can produce bank failure is crucial to help regulators and bank managers. The fsQCA presented in this paper sheds light on the relationships between combinations of conditions and bank failure, providing a solution comprising two sufficient and …
Análise de divulgação de risco no Relatório Anual de Governança corporativa utilizando fuzzy-set qualitative comparative analysis
ABSTRACT This paper explores the necessary and sufficient conditions of good Corporate Governance practices for high risk disclosure by firms in their Corporate Governance Annual Report. Additionally, we explore whether those recipes have changed during the financial crisis. With a sample of 271 Spanish listed companies, we applied fuzzy-set qualitative comparative analysis to a database of financial and non-financial data. We report that Board of Directors independence, size, level of activity and gender diversity, CEO duality, Audit Committee independence, being audited by the Big Four auditing firms and the presence of institutional investors are associated with high risk disclosure. The…
Predicting failure in the U.S. banking sector: An extreme gradient boosting approach
Abstract Banks play a central role in developed economies. Consequently, systemic banking crises destabilize financial markets and hamper global economic growth. In this study, extreme gradient boosting was used to predict bank failure in the U.S. banking sector. Key variables were identified to anticipate and prevent bank defaults. The data, which spanned the period 2001 to 2015, consisted of annual series of 30 financial ratios for 156 U.S. national commercial banks. Identifying leading indicators of bank failure is vital to help regulators and bank managers act swiftly before distressed financial institutions reach the point of no return. The findings indicate that lower values for retai…
The effects of the provision of consulting services on audit reporting quality
The growing complexity of the global business environment is leading innovative firms to demand further external counselling to better handle rapid change and increasing uncertainty. Likewise, the implementation of new information systems is usually carried out with the help of external advisors. This paper examines whether the provision of consulting services undermines audit reporting quality by testing for an association between advisory services and audit reporting. A cross-sectional logistic regression is estimated to test the relationship between consulting fees and the audit outcome. The evidence suggests that there is no statistically significant association between non-audit fees a…
Anticipating bank distress in the Eurozone: An Extreme Gradient Boosting approach
Abstract The banking sector plays a special role in the economy and has critical functions which are essential for economic stability. Hence, systemic banking crises disrupt financial markets and hinder global economic growth. In this study, Extreme Gradient Boosting, a state of the art machine learning method, is applied to identify a set of key leading indicators that may help predict and prevent bank failure in the Eurozone banking sector. The cross-sectional data used in this study consists of 25 annual financial ratio series for commercial banks in the Eurozone. The sample includes Eurozone listed failed and non-failed banks for the period 2006–2016. A number of early warning systems a…
The relationship between non-audit fees and audit quality: dealing with the endogeneity issue
Purpose – The purpose of this paper is to explore whether the provision of non-audit services (NAS) by public accounting firms undermines audit quality. The study addresses this question by testing for an association between the provision of consulting services and auditor independence in listed companies. Design/methodology/approach – The authors study if the magnitude of non-audit fees explains variations in earnings management by looking at the joint determination of non-audit fees, audit fees, and abnormal accruals using the SURE-regression estimation method. Findings – Evidence from tested models suggests that audit services quality is uncompromised by the provision of NAS. In other w…
Alternative paths to high consulting fees: A fuzzy-set analysis
Abstract Little research exists on factors that cause high consulting fees. This study examines what combinations of factors can generate the kind of competitive advantage that consulting firms can benefit from. Accordingly, this study performs a fuzzy-set qualitative comparative analysis (fsQCA) to ascertain whether consulting-client satisfaction explains differences in consulting fees and determine the conditions that lead to high consulting fees. This analysis suggests complex pathways driving companies' willingness to pay higher consulting fees. This methodological approach sheds new light on the relationship between combinations of conditions and high consulting fees. The set of condit…
The manipulation of Euribor: An analysis with machine learning classification techniques
The manipulation of the Euro Interbank Offered Rate (Euribor) was an affair which had a great impact on in ternational financial markets. This study tests whether advanced data processing techniques are capable of classifying Euribor panel banks as either manipulating or non-manipulating on the basis of patterns found in quotes submissions. For this purpose, panel banks’ daily contributions have been studied and monthly variables obtained that denote different contribution patterns for Euribor panel banks. Thus, in accordance with the court verdict, banks are categorized as manipulating and non-manipulating and Machine Learning classification techniques such as Supervised Learning, Anomaly …
The performance of entrepreneurial small‐ and medium‐sized enterprises
Innovation is an important driver of economic growth for it leads to new products and services, enhanced quality, and lower prices. In an increasingly competitive global market, innovation turns out to be essential to secure a viable competitive position. Although there is no perfect correspondence between accounting intangible assets and innovation activities, the association between these two concepts is close enough to take investment in intangible assets as a proxy for entrepreneurship and innovation. To identify differences between innovative and non‐innovative small and medium enterprises in the service industry, both descriptive and statistical analyses are performed on financial dat…
Análisis de la innovación en las cooperativas mediante la captación del valor intangible: un estudio empírico
Las empresas cooperativas al igual que las capitalistas deben apostar por la innovación en productos, servicios y procesos de producción para mantener e incrementar su posición competitiva, máxime si se tiene en cuenta que para ello se considera fundamental la existencia de un capital humano capaz de asimilar los cambios derivados de estos procesos. En este sentido, las cooperativas cuentan con una singular herramienta, que es el fondo de educación, formación y promoción, dotado a partir de los excedentes cooperativos y concebido precisamente para que sus empleados se formen adecuadamente, según las exigencias laborales de cada momento, pudiendo adaptarse más rápidamente a los cambios que c…
Quality of consulting services and consulting fees
Abstract This study explores whether consulting service clients' degree of satisfaction can explain differences in consulting service fees to the same clients. By monitoring factors having a relationship with consulting fees as well as consulting service quality attributes, this study notes that client satisfaction with consulting team positively and strongly affects consulting fees. A dimension of consulting client satisfaction, which is not a consulting service quality attribute, is the factor that better explains consulting service pricing. This satisfaction dimension may allow consultants to charge higher fees through higher leverage while setting prices during contracting process. Clie…
RISK DISCLOSURE ANALYSIS IN THE CORPORATE GOVERNANCE ANNUAL REPORT USING FUZZY-SET QUALITATIVE COMPARATIVE ANALYSIS
ABSTRACT This paper explores the necessary and sufficient conditions of good Corporate Governance practices for high risk disclosure by firms in their Corporate Governance Annual Report. Additionally, we explore whether those recipes have changed during the financial crisis. With a sample of 271 Spanish listed companies, we applied fuzzy-set qualitative comparative analysis to a database of financial and non-financial data. We report that Board of Directors independence, size, level of activity and gender diversity, CEO duality, Audit Committee independence, being audited by the Big Four auditing firms and the presence of institutional investors are associated with high risk disclosure. The…