Engineering Economics

Portfolio Choice Using Additional Information from Financial Statements - Evidence from the Frankfurt Stock Exchange

2024-02-25T21:43:50+02:00

Classical portfolio construction models consider only the information contained in the market prices of stocks, but ignore the financial performance of companies. Typically, the variance is used as the dispersion parameter. This symmetric measure of risk may be inadequate if the distribution of returns differs significantly from the normal or symmetric distribution. With this in mind, we introduce some additional portfolio selection criteria based on companies' financial performance. In addition, we consider semi-variance as an alternative risk measure to variance. The main research objective is to develop a classical portfolio theory by incorporating firms' financial indicators and using semi-variance as a measure of investment risk. In the paper a novel method for portfolio selection has been proposed and we have developed an original computer code to find the efficient three criteria portfolios. A set of 13 types of portfolios was constructed, differing in terms of fundamental values and risk measures. The proposed models were evaluated under the condition of an economic crisis caused by the COVID-19 pandemic. The research sample consisted of the largest companies listed on the Frankfurt Stock Exchange, the DAX 30 index. The research showed that the highest returns were observed for portfolios based on indicators related to the financial condition of the companies. These types of portfolios were also characterized by the highest level of risk, as measured by variance and semi-variance. The analysis thus confirms the usefulness of corporate financial indicators in portfolio decisions and points to the need for further research in this area.

Does Terrorism Hamper Innovation Performance? Yes-New Empirical Evidence from South Asia Region

2024-02-12T00:35:37+02:00

The contemporary literature has argued multiple factors affecting the innovation performance of a country. However, the frequency of studies exploring the terrorism-innovation nexus is quite low. To fill this gap, the current study is another attempt that quantifies the impact of terrorism on innovation performance. For empirical analysis, we utilize the data of South Asian countries over the period 2000 to 2021 and check the regression among variables by employing ARDL (autoregressive distributed lag) model. The consistency of results was checked by including the control variables i.e., FDI inflow, foreign aid, and government subsidies, and by employing the alternative estimation technique i.e., FMOLS (fully modified ordinary least square) model. The analysis infers that terrorism has a significant but negative impact on both RDE (research and development expenditures) and TMA (trademark applications) jointly pronounced as innovation performance. The increase in military expenditures, market uncertainty, and administrative costs are some possible channels through which terrorism hampers innovation. In view of the findings, we can infer the “sand the wheel” role of terrorism in determining innovation. The vital policy implication of the current analysis is that significant efforts should be exerted to ensure peace, and non-state actors responsible for fragile conditions should be handled by iron hands. This study provides robustness to existing studies exploring the terrorism-innovation nexus and adds new thoughts to limited literature.

Digital Banking and Gig Workers’ Green Behaviour: The Intervening Role of Financial Inclusion and Sustainable Bank Initiatives

2024-03-18T00:31:33+02:00

The digital banking system bridges the gap between green and sustainable activities by encouraging sustainable behaviour and empowering financial institutions to provide eco-friendly services. This study examines how financial inclusion and sustainable bank initiatives mediate the association between digital banking and gig workers’ green behaviour. This study utilised a quantitative survey methodology, based on data from gig workers in India who have used banking services for at least 10 years. The final sample consisted of 247 responses from gig workers aware of banks' sustainability initiatives. Data was analysed on AMOS, SPSS version 25 for confirmatory factor analysis. The sequential mediation model was analysed using Process Macro. Findings suggest that financial inclusion and sustainable bank initiatives are having a significant influence on expanding gig workers’ access to sustainable financial goods and services, encouraging sustainable behaviour, and providing incentives for it. The study's findings provide policymakers with valuable insights into how they can incentivise banking institutions to adopt digital banking as an influential tool for dealing with financial exclusion and promoting sustainable banking practices. These policy measures are anticipated to have a favourable effect on gig workers' green behaviour.

Which Factor Dominates the Evolution of Green Transformation System of Resource-based Enterprises? Evidence from China

2024-04-16T14:14:59+03:00

The green transformation of resource-based enterprises, as a complex systemic endeavour, has lacked in-depth exploration of the driving paths and evolutionary patterns of the system. Therefore, we analyse the formation mechanism and framework of the green transformation system of resource-based enterprises (GTSRE). Moreover, drawing on the practical experiences of representative provinces in central and western China from 2008 to 2019, the Haken model and evolutionary orderliness model are employed. The results show that the formation of GTSRE is a coupling and interactive behaviour that arises from the comprehensive consideration of the enterprises and the regions based on their respective development needs and capabilities. The evolution of the GTSRE does not have a completely consistent evolutionary process. Its evolution follows a driving path characterized by government regulation promotion–market green guidance–green technological innovation. The degree of influence of driving factors varies with the developmental stages. The evolution pattern of GTSRE in central and western regions shows significant gaps both within and between regions, and there is a further trend towards expansion.

Strategy Deduction for Improving Aviation Emergency Rescue Capability from the Perspective of Public Safety

2024-03-01T00:28:17+02:00

Aviation emergency rescue plays a crucial role in the emergency management of various emergency events. Consequently, the processes of identifying relevant constraints of aviation emergency rescue ability, analyzing the interactive relationship among factors, and putting forward an economical and effective improvement strategy for aviation emergency rescue capabilities have become widely popular among scholars. To greatly improve the economic input efficiency of aviation emergency rescue capabilities, 18 relevant influencing factors were screened and identified from four perspectives: system institutionalization, technological advancement, rescuer professionalism, and operation safety. Then, the causal relationship among the influencing factors and the feedback mechanism were analyzed via the system dynamics (SD) method, and the influencing factor weights were calculated via the entropy weight method. Then, the equations of state variables and constants among the influencing factors were determined, and an SD model of aviation emergency rescue was built. Finally, a case study based on a practical construction condition of an aviation emergency rescue in Henan Province, China was analyzed. The variation trend of rescue ability was predicted from the temporal dimension, and the optimal economic input strategy for effectively improving the rescue ability was determined. Results demonstrate that the efficacy level of aviation emergency rescue ability in Henan Province is 44.97. The aviation rescue ability level on the 49th month can be improved to 90 if the monthly input into the aviation emergency rescue is raised to 3 million RMB. Additionally, the aviation rescue project can be significantly improved if the input proportions of operation safety, rescuer professionalism, system institutionalization, and technological advancement are 0.4, 0.2, 0.2, and 0.2, respectively. This work can provide an economic decision reference for building and perfecting public safety systems.

Does Mixed-Ownership Reform Affect SOEs' Competitive Strategies?

2024-04-02T13:52:21+03:00

State-owned enterprises (SOEs) are the leading force of the socialist economy, and their competitive strategy choice is the key to the high-quality development of micro-enterprises and even the national economy. This paper constructs the variables of mixed-ownership reform from shareholder power and board power and explores the impact of mixed-ownership reform on the competitive strategy of SOEs. We find that the higher the degree of SOEs' mixed-ownership reform, the greater the shareholder power and the board power held by non-state-owned shareholders, and the more inclined they are to carry out a differentiation strategy. The mechanism test shows that mixed-ownership reform eases the financing constraints and improves the risk-taking level, facilitating SOEs to choose a differentiation strategy. Further research states that the positive effect of mixed-ownership reform on differentiation strategy is more evident in SOEs with a better external institutional environment and higher internal control quality. This study enriches the relevant literature in mixed-ownership reform and strategic management, provides empirical evidence for perfecting the governance practice at the strategic level, and has certain reference value for further promoting the sustainable development of SOEs.

Social Media Content Multimodality and the Level of User Interactions from the Perspective of Facebook and Instagram

2024-05-13T01:39:14+03:00

The article aimed to establish a simple methodology for examining the impact of message modality on user interactions. Using communication theory and content analysis methodology, 1,172 entries of selected recreational entities on Facebook (N=579) and Instagram (N=593) were analysed. The results suggest that higher modality levels positively influence user interactions, with a weak positive effect observed on Facebook and a moderate positive effect observed on Instagram. Practical implications include content marketing on social channels and the development of a theory of memetic content propagation. An innovative aspect of the research is an approach that consolidates the different levels of modality into one simple Post Modality Value (PMV). Research limitations include focusing only on two social media platforms, analysing fanpages associated with specific service industry entities, and disregarding the size of follower groups.

The Impact of Macroeconomic Factors on the Performance of Commercial Banks: The Case of Lithuania

2024-06-03T12:18:30+03:00

In recent years, the stability and performance of commercial banks have become increasingly intertwined with macroeconomic conditions. This study explores the complex relationship between macroeconomic factors and the performance of Lithuanian commercial banks. By analyzing empirical data, we seek to understand how fluctuations in various economic indicators affect interest income, service and fee income and loan portfolio size in the Lithuanian banking sector. There is a lack of such research, as the efficiency of banks' operations and the sensitivity of loan portfolio quality to changes in macroeconomic indicators depend mostly on the structure and characteristics of the banking sector in each country. The results of the study show that the impact of macroeconomic fluctuations on the Lithuanian commercial banking sector is relatively limited. Understanding the impact of macroeconomic factors on commercial banks is crucial for policy makers, investors, and practitioners. Identifying these linkages can improve risk management practices, strengthen regulatory frameworks, and promote financial stability.