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This paper aims to investigate empirically the impact of economic policy uncertainty (EPU) on small-to-medium enterprises’ (SMEs) investment efficiency and whether product market competition influences this association.

The study was conducted on French SMEs listed on the “CAC Mid & Small” Index over 2008–2021. This paper proposes a quantitative approach to test the relationship between the EPU and SME investment efficiency.

These findings show that EPU significantly alleviates SMEs’ investment inefficiency, reflected in the reduction of overinvestment and underinvestment. As EPU increases, firms with more exposure to such uncertainty invest more efficiently, and their overinvestment tendency becomes lower, while reducing the risk of underinvestment. These results are still significant after a series of robustness checks. Further analysis shows that EPU mitigates investment inefficiency to a greater extent for firms operating in highly competitive industries, and better information environments.

This study was limited to the French EPU index and could be extended to a European or even international scale. Moreover, using alternative uncertainty indexes across various European countries can be more advantageous in further studies. Although results suggest that EPU affects investment efficiency, future studies could further explore the mechanisms through which EPU affects SMEs’ investment efficiency and, in particular, across different industries. Understanding these variations due to the specific industry-EPU sensitivity can provide valuable insights. Finally, it would be interesting to examine the risk management strategies adopted by SMEs in the face of EPU, combined with other growing risks, such as climate risk.

In the face of high EPU, SME managers must improve risk management, adopt appropriate investment strategies, consider using predictive analytics or economic forecasting tools and embrace technology and innovation that enhance agility and responsiveness to policy uncertainty. Besides, political decision-makers should adapt their regulatory policies (tax, labor, housing, etc.) to preserve the efficiency of SME investment.

Although the debates on how policy uncertainty affects the investment and financing of large businesses have received a great concern of academia, to the best of the authors’ knowledge, this is the first study that focuses on the effect of EPU on investment distortions for SMEs.

The purpose of this paper is to investigate the effect of equity market misvaluation on manager behavior. Using a sample of 535 French-listed over 2000–2018, the authors analyze whether corporate investment decision is sensitive to equity market overvaluation.

The study adopts market-to-book (M/B) decomposition developed by Rhodes-Kropf and Viswanathan (2004, RKV) that proxies for market misvaluation at the firm and industry levels. The authors conducted a long-term performance analysis via a portfolio sorting procedure and a Carhart (1997) four-factor pricing model. The authors tested the relationship between equity misvaluation, corporate investment decisions and equity issuance. The authors ran several robustness tests.

The empirical results show that equity market misvaluation affects corporate investment positively as the stock price deviates further away from its fundamental. Based on market timing theory, the authors find that corporate investment occurs in periods of high valuation motivated by equity issuance to benefit from the low cost of capital. This effect is more prominent for financially constrained firms. Consistent with the catering channel, the authors find that the misvaluation-investment nexus is more pronounced in firms with short-horizon investors. By examining the stocks’ long-term performance of misvalued firms, via a sorting portfolio procedure, the authors find that undervalued firms outperform and generate higher abnormal returns (Jensen’s alpha) than overvalued firms, suggesting that mispricing-driven investment appear to be short-lived and lead to lower return in the long term.

Corporate decision-makers and governance structures should pay attention to the rationality of the corporate investment decision in the context of equity market misvaluation. Managers who focus on maximizing the stock market value in the short-run at the expense of its long-term performance must give preference to value-creating investment, not driven by an external mechanism such as equity market mispricing. More generally, investors and portfolio managers must take into account the market mispricing process in decision-making. Nonetheless, from the portfolio sorting perspective, decision-makers must act in terms of high governance quality to mitigate suboptimal investment due to stock market mispricing (Jensen, 2005). Finally, equity market overvaluation, leading managers to invest via equity financing in particular, should be a signal to attract investors’ attention to seize the window of opportunity and embark on a short-term portfolio strategy. Such a strategy promises high returns in the short term.

This paper investigates jointly two theoretical channels: equity market timing and catering. The authors propose for the analysis three components of the M/B decomposition to dissociate market misvaluation at the firm and industry level from the fundamental component of market value (growth). This procedure provides a better understanding of the role of firm and industry misvaluation in explaining corporate investments. The authors provide evidence of the equity market misvaluation via a portfolio sorting procedure and a Carhart (1997) four-factor pricing model. The authors examine the effect of misvaluation on both the investment and the financing decisions.

The purpose of this paper is to investigate the influence of gender diversity on the boardroom and in top management positions on the risk profile (RP) of acquiring banks.

To estimate the effect of mergers and acquisitions (M&A) in the RP of the acquirer, the authors will use the same methodology adopted by Vallascas and Hagendorff (2011), this method compares the variation of the RP of the acquirer to the level risk of control banks. To investigate how merger-related risk changes are affected by gender diversity, the authors use a linear regression.

The results show that, on average, bank mergers do not significantly affect the RP of the acquiring bank. However, the authors found that the proportion of women in the board standing reduces the RP of the acquiring bank. Overall, the authors observe evidence that the appearance of a female in top management is associated with lower bank risk. Moreover, the authors conclude that the relationship between the presence of at least three women on the board and the default risk of the acquiring bank is negative.

This finding suggests that in the M&A transactions, female directors are considerably more conservative than their male counterparts. Thus, the authors confirm the postulate that women are more risk averse and less overconfident than their male counterpart. The conclusions are of particular significance for the banking industry. The authors provide some support for the view that regulators should favor gender quotas in the board management of banks to reduce risk-taking behavior.

This study aims to examine the impact of corporate tax aggressiveness on future stock price crash. It also tests the impact of corporate tax aggressivness in predicting stock price crash for a two-year forecast window.

The study sample consisted of 1,169 firm-years observations. The multivariate analysis uses three measures of stock price crash risk, as a dependent variable. The key variable is tax aggressiveness lagged by one period (one year) as all independent variables. As a robustness check, this paper uses alternate measures of earning management and a longer forecast window (two years) to predict stock price crash risk.

Tax aggressiveness activity is positively related to a firm-specific future stock price crash. Moreover, corporate tax aggressiveness predicts stock price crash risk for a long forecast window (two years). The findings are robust to a number of checks and have several policy implications.

The cost of continuing to accumulate bad news will be greater than the cost of revealing them. Thus, board of directors should encourage disclosure in order to reveal private news and then, to increase the amount of firm-specific information in returns. Another point is that tax aggressiveness behavior implies a risk to be perceived by the market as socially irresponsible, and may harm the firm reputation. This fact leads, in terms of portfolio management, to deter investment in firm-equity. Therefore, Investors should be cautious about the different risks of corporate tax aggressiveness.

The accounting system in France, as in most European countries, relies upon codified rules and government requirement. Thus, our results provide some evidence of the effectiveness of the French laws and regulations in preventing indirectly earnings management from affecting stock price crash risk.

French companies are among the heavily taxed in Europe which makes France a particularly suitable context for studying tax aggressiveness issues. To the best of our knowledge, this study is the first in the french context, that document a signifcant and positive relation between tax aggressiveness and future crash risk. It focuses on the important role of corporate tax planning as a means of withholding bad news and its consequences in inflating stock prices.

The purpose of this paper is to analyze the perception held by attendees about the role and the effectiveness of their audit committees.

The investigation was conducted via a qualitative methodology through the content analysis of interviews conducted with 33 attendees of audit committee meetings of Tunisian listed companies.

The findings reveal that audit committees do not have the means to achieve the objectives that they have been given by the legal texts, which are likely to characterize their work as “ceremonial” or “symbolic.” This paper also found that the most significant effects of the audit committee chair’s role come through informal meetings and conversations.

The paper’s findings have policy implications for regulators. Findings from this research may allow regulators to assess whether the audit committee activities in Tunisian companies meet their expectations.

This paper tries to fill a gap in the extant literature and provides meaningful information on activities performed by audit committees and the extent to which they are perceived effective in the eyes of attendees of audit-committee meetings. This study is one of the few field investigations that have analyzed audit committees’ effectiveness in emerging markets through interviews with attendees involved in audit-committee processes.