nep-isf New Economics Papers
on Islamic Finance
Issue of 2022‒02‒07
five papers chosen by

  1. Environmental, Social and Corporate Governance (ESG) Diplomacy: The Time Has Come for a Corporate and Financial Social Justice Great Reset By Julia M. Puaschunder
  2. Board Gender Diversity and Firm Risk By Zyed Achour
  3. Social Diversity on Corporate Boards in a Country Torn by Civil War By Nazliben, Kamil Korhan; Renneboog, Luc; Uduwalage, Emil
  4. Preemptive Policies and Risk-Off Shocks in Emerging Markets By Ms. Mitali Das; Ms. Gita Gopinath; Şebnem Kalemli-Özcan
  5. Board Gender Quotas and Outward Foreign Direct Investment: Evidence from France By Koray Aktas; Valeria Gattai; Piergiovanna Natale

  1. By: Julia M. Puaschunder (The New School, Department of Economics, Eugene Lang College, New York, NY 10003, USA)
    Abstract: The external shock of the novel Coronavirus SARS-CoV-2 has profound impacts around the world for this generation and the following. Although accounting for the most drastic societal shift in modern history, the Coronavirus pandemic also holds the potential of a Great Reset. This paper addresses three trends that have become prevalent in the wake of the Coronavirus pandemic: (1) A rising inequality experienced has led to demands for Corporate Social Justice, namely the corporate engagement in social justice initiatives and action. (2) The finance world has had opportunities to diversify and exchange COVID-struck industries for COVID-profiting market segments and therefore a rising financial market performance versus real economy budget constraint gap has arisen. (3) Governments around the world are pegging economic COVID-19 rescue and recovery aid to pursue noble goals – such as climate change abatement and a transitioning to renewable energy in the United States Green New Deal and the European Green Deal and the European Sustainable Finance Taxonomy. These trends point at the integration of environmental, social and corporate governance in the corporate sector. The aftermath of the crisis is now a time for a great system reset to integrate environmental, social and corporate governance in the corporate and finance sectors. Future economic policy research may be inspired by legal expertise on disparate impact. With respect for current trends of citizen scientists and science diplomacy, public policy work may embrace environmental, social and corporate governance whole-roundedly. While natural behavioral laws were guiding anchors to address inequality during a turbulent time of the pandemic, more rational behavioral insights could nudge people into more equitable growth strategies in a recovering world.
    Keywords: Change management, Corporate Social Justice, Coronavirus, Corporate sector, COVID-19, Disparate impact, Environmental, European Green Deal, Social and Corporate Governance (ESG), Equitable Growth, Equality, Equity, Finance, Great reset, Green New Deal, Law and economics, Pandemic, Public policy, Recovery
    Date: 2021–08
  2. By: Zyed Achour (INTES - Institut national du travail et des études sociales - Université de Carthage - University of Carthage)
    Abstract: In this chapter, we address the following question: Does board gender diversity affect global risk? Drawing on agency theory, upper echelon theory, and human capital theory, we hypothesize that gender diversity on the board of directors will decrease the volatility of firm risk. Applying fixed effect estimation on a panel data of listed French companies (SBF120) for the years 2011–2018, the results show a negative link between the percentage of female directors on the board and the standard deviation of monthly stock return as firm risk proxy suggesting that the inclusion of more women on corporate boards could improve financial stability. Our findings contribute to the literature by providing empirical evidence from France occupying the first place at the European level with the most female presence on the boards of directors.1
    Keywords: board gender diversity,board of directors,corporate governance,firm risk,SBF 120
    Date: 2021–11–15
  3. By: Nazliben, Kamil Korhan (Tilburg University, School of Economics and Management); Renneboog, Luc (Tilburg University, School of Economics and Management); Uduwalage, Emil (Tilburg University, School of Economics and Management)
    Date: 2022
  4. By: Ms. Mitali Das; Ms. Gita Gopinath; Şebnem Kalemli-Özcan
    Abstract: We show that “preemptive” capital flow management measures (CFM) can reduce emerging markets and developing countries’ (EMDE) external finance premia during risk-off shocks, especially for vulnerable countries. Using a panel dataset of 56 EMDEs during 1996–2020 at monthly frequency, we document that countries with preemptive policies in place during the five year window before risk-off shocks experienced relatively lower external finance premia and exchange rate volatility during the shock compared to countries which did not have such preemptive policies in place. We use the episodes of Taper Tantrum and COVID-19 as risk-off shocks. Our identification relies on a difference-in-differences methodology with country fixed effects where preemptive policies are ex-ante by construction and cannot be put in place as a response to the shock ex-post. We control the effects of other policies, such as monetary policy, foreign exchange interventions (FXI), easing of inflow CFMs and tightening of outflow CFMs that are used in response to the risk-off shocks. By reducing the impact of risk-off shocks on countries’ funding costs and exchange rate volatility, preemptive policies enable countries’ continued access to international capital markets during troubled times.
    Keywords: Preemptive policies, UIP, external finance premia, risk-off shocks, FX debt
    Date: 2022–01–07
  5. By: Koray Aktas; Valeria Gattai; Piergiovanna Natale
    Abstract: We show that board gender quota laws reduce the propensity of French firms to undertake outward foreign direct investment. For this, we use Orbis data for the period 2007–2015 and a difference-in-difference approach. The exogenous increase in the share of women directors decreases the share of foreign subsidiaries by 7 percentage points when the share of women directors is at its highest. The share of foreign subsidiaries is affected by the decrease in the probability of having a foreign subsidiary, which indicates disinvestment. Accordingly, the estimated effects on the number and cost of employees are negative, with no impact on firm performance.
    Keywords: Board diversity, Gender quota, Outward foreign direct investment (OFDI), Europe, Women directors.
    JEL: G30 F23 J16
    Date: 2021–12

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