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Academic literature and market practitioners have always devoted great attention to the analysis of asset management products, with particular regard to fund classification and performance metrics. Less attention has been paid to rating methodologies and to the risk of attributing positive ratings to underperforming asset managers. The most widespread rating criterion is the ordinal one, which is based on the assumption that the best asset managers are those who have performed better than their competitors regardless of their ability to achieve a given threshold (i.e. a positive overperformance against the benchmark). Our study, after a description of the most common risk-adjusted performance measures, introduces the idea of attributing the rating on a cardinal basis, setting in advance a given threshold that should be achieved to receive a positive evaluation (i.e. a rating equal to or higher than 3 on a scale of 1–5). The empirical test conducted on a sample of funds (belonging to the main equity and bond asset classes) made it possible to quantify the effects of the cardinal approach on the attribution of the rating and on the probability of assigning a good rating to underperforming funds. Empirical analysis also highlighted how the cardinal method allows, on average, better performance than the ordinal one even in an out-of-sample framework. The differences between the two methodologies are particularly remarkable in efficient markets such as the North American equity market. The two rating assignment systems were also analyzed using contingency tables to test the ability to anticipate the default event (underperformance relative to the benchmark). The policy suggestion emerging from our study concerns the significant impact of the rating criterion in reducing the risk of recommending funds that, despite a good rating, have failed to perform satisfactorily and are unlikely to do so in the future either.

La crisi pandemica ha stravolto il modo di vivere dei cittadini modificando l'ordine di priorità degli individui nelle loro scelte di investimento immobiliare e ha messo in evidenza i problemi dello sviluppo immobiliare degli ultimi decenni, che ha privilegiato la location rispetto alla qualità dell'immobile, spesso inseguendo modelli insediativi insostenibili, diffusi se non di-spersi. Il lockdown e lo smart working hanno evidenziato l'esigenza di ripensare l'abitare e di conseguenza il patrimonio immobiliare, privilegiando dimensione e qualità piuttosto che sol-tanto la location. In questo scenario, la rigenerazione urbana rappresenta uno strumento privi-legiato di intervento, anche se quasi sempre demandato all'iniziativa degli operatori privati. Sulla base di un'analisi combinata economico-urbanistica, l'articolo evidenzia le opportunità che la rigenerazione urbana può (e deve) avere sul mercato immobiliare e sulla società e quali devono essere allora i meccanismi di (buon) governo del territorio da parte delle istituzioni pubbliche per raggiungere un ragionevole equilibrio tra interesse collettivo e interesse privato (senza demonizzare la rendita).

This study investigates the influence of features of the mutual fund product and of the disclosure document on financial decision making. Using a laboratory setting, we show that the higher the risk and reward profile (RRP) of the product, the poorer the perception of the product. When the colour red (or blue) is applied to graphics (the RRP scale and the graph of the past performance) in the documents, the perception of the attractiveness of the product is lower (or higher) in comparison to a black and white document. Finally, longer visual processing as measured by means of eye-tracking is associated with a higher perception of attractiveness. This neurofinance study highlights the importance for regulators and supervisors of the financial industry to explore the influence of the different features of the product and of the disclosure document on consumers’ financial decision making.

PurposeThe purpose of this paper is to explore whether and how the innovation performance of start-ups and small and medium-sized enterprises (SMEs) that collect funds using equity crowdfunding (EC), i.e. creators (or proponents), and the EC performance are influenced by the social media networks (SMNs) in which EC platforms' managers and firms exchange their ideas with investors and customers.Design/methodology/approachThe empirical analysis is conducted on a sample composed by all the creators that collected funds in EC platforms over the three-year period 2018–2020. For each creator, the innovation performance is computed as the percentage of sales from new or significantly improved product and services compared to total sales of firm. For each campaign, the EC performance is considered as the ratio between the total amount of funding raised at the end of the campaign and the target capital for the campaign. To investigate EC platform social media activity, LinkedIn profiles of EC platforms managers are analyzed using the social network analysis (SNA) methodology, which permits to observe the quantity and the quality of managers' interactions with other users. A regression analysis is thus performed to observe the relationship between managers' LinkedIn activities, EC performance and creators' innovation performance.FindingsData reveal that EC platforms managers display different activities in networking, with some individuals more active than others and more oriented to interact with business profiles rather than personal ones. The variables related to managers' LinkedIn activities are shown to impact both on the EC performance and on the ability of creators to innovate, suggesting the existence of a link between creators, EC platforms and the activity of the subject who manages it.Originality/valueThe present study is the first to examine the link between the ability of creators to innovate and SMNs, focusing on the social links of platforms managers and considering the LinkedIn social media; moreover, the analysis is conducted analyzing the quality of the interactions in addition to their number. The study is original also in that rather than focusing on specific EC platforms it considers all those purposefully authorized by the Italian financial market supervisory authority over a three-year time span. From a managerial point of view, the observation of the relevance of social networks by personnel with specific professional skills reveals it can be a successful driver for operators in the sector, not only to safeguard their reputation, but to stimulate the processes of co-creation of value that is essential in the crowdfunding market.

REITs are frequently considered as an investment opportunity for Institutional investors due to the above the average returns offered with respect to other financial instruments. Due to the specific characteristic of the real estate market normally geographically specialized REITs (home biased) can benefit from an higher quality of the information available for selecting among investment opportunities and from a reduction of the cost of monitoring and servicing of assets owner. Home Biased REITs could be particularly appealing for such type of investors because the opportunity to add this type of asset to an investment portfolio already diversified can allow to optimize the risk-return of their investment strategy. The paper considers all the REITs included in the Standard and Poor’s Global REIT Index and evaluates the percentage of investment released by institutional investors and their change over time. Focusing the attention on REITs’ international real estate exposure, the paper shows that the geographical diversification matters for the investment decisions made by international investors and results are robust with respect to the time horizon considered and the proxy used for the concentration of the ownership.

PurposeThis paper aims to examine the relevance of cross-border activity in the European banking sector, evaluating the role of differences in regulation to explain the level of interest in entering foreign markets.Design/methodology/approachThe sample considers all banks in the European Union (EU 28) existing at year-end 2017, and information about the ultimate owners’ nationality to classify local and foreign banks is collected. The analysis provides a mapping of regulatory restrictions for foreign banks and evaluates how they impact the role of foreign players in the deposit and lending markets.FindingsResults show that the lower are the capital adequacy requirements, the higher are the amounts of loans and deposits offered by non-European Economic Area banks and, additionally, the higher the probability of having a foreign bank operating in the country.Originality/valueThis paper provides new evidence on regulatory arbitrage opportunities in the EU and outlines differences among EU countries not previously studied.

PurposeThe paper aims to study the performance of crowdfunding REITs with respect to traditional REITs in order to evaluate the differences in the risk–return profile and their usefulness for a diversification strategy within the indirect real estate investments.Design/methodology/approachThe paper considers the crowdfunding REITs introduced after the JOBS act in the United States and evaluates their performance and risk during the time period 2016–2018. Performance achieved by crowdfunding REITs is compared with other types of REITs in order to evaluate their usefulness for constructing an optimal portfolio strategy based on a standard mean variance approach.FindingsResults show that the performance of crowdfunding REITs is more stable over time with respect to other REITs and the lack of correlation with traditional REITs may be exploited for constructing a more efficient diversified portfolio of indirect real estate investments.Practical implicationsCrowdfunding REITs have different performance with respect to standard REITs and, especially individual investors, may benefit from including this new investment opportunity in their portfolio.Originality/valueThe paper is the first study on the performance of the crowdfunding REITs that is evaluating their usefulness for a diversification strategy within the real estate sector.

A poor risk culture was one of the causes of the financial crisis. Surprisingly, there is no evidence of the link between risk culture and bank stability. Using a large sample of European banks from 2004 to 2017, our paper shows that a sound risk culture leads to better performance. Our research design is based on three steps. First, we developed a new Sound Risk Culture Indicator based on the Financial Stability Board (2014) risk culture framework. Second, we estimated this new metric by applying Quantitative Text Analysis. Third, we used an IV 2SLS panel data approach to establish a causal link between bank risk culture and profitability.

This study aims to investigate the unsettled issue of the relationship between CEO duality and a firm&rsquo, s value through the perspective of investors&rsquo, reaction to news which mention apical directors with a single role and Board Chair CEOs. With a unique and hand-collected database of 60,805 newspaper articles, text-analysis, event-study and regression analysis methodologies were applied to capture news sentiment and study the direction and the magnitude of the stock market reaction. Results reveal that news mentioning Board Chair CEOs are negatively processed by investors, revealing a negative perception by investors about CEO duality. The study provides empirical support for the agency theory, in contrast to the stewardship theory, in the interpretation of CEO duality. It also proposes the methodology of systematically quantifying language to explore corporate governance issues and their link with financial markets.

Although numerous studies have investigated the determinants of users’ acceptance of online channels, little attention has been paid to the continuous usage of a direct bank. To address this research gap, we analysed data collected via semi-structured interviews and a survey questionnaire distributed in 2017 to a sample of Italian bank customers. Responses were evaluated using a different statistical methodology based on the Shapley Value regression analysis. In brief, user-friendliness and economic advantages appear to be more decisive at an early stage of adoption. Moreover, structural assurance mechanisms (e.g. clarifying security policies and guarantees) have a robust impact on keeping customers online and loyal to electronic channels. Surprisingly, accessibility and compatibility do not seem to be determinant factors.

The real estate industry was severely affected by the COVID-19 in both the residential and the commercial sectors due to travel and site-visit limitations, rent sustainability issues and a decrease or higher uncertainty about disposable income. During the lockdown, houses became more important and were analysed in depth. It can be assumed that a new demand could emerge after this crisis making households looking for more comfortable houses since this asset will increase its importance for living and working. Similarly, the commercial real estate sector will change due to lower rent sustainability. However, the main expected change is related to the building type and the standards requested by tenants in the new economic environment.

The paper investigates the market reaction to three different events related to Brexit through an event study analysis, i.e. the announcements of the referendum date (20 February 2016), the referendum result (23 June 2016) and the election of Theresa May as Prime Minister (11 July 2016). We study the impact of these announcements on stock prices of UK companies belonging to export- and import-oriented industries. We also investigate the influence of previous events on stock prices of European companies belonging to the same sectors. Our results show that financial markets did not perceive the announcement of the referendum date and the election of Theresa May as Prime Minister as elements of political uncertainty. However, in the days before the referendum, investors priced it as an uncertain political event. The text analysis conducted on mass media sentiment about Brexit mainly supports the results of our event studies. Stock market performance around the events depends more on industry factors than on firm-specific characteristics, for both UK and EU companies. The only exception is company size, which positively affects investor reaction.

Misconduct is still widespread in banking. It often leads to economic and reputational losses and negatively affects trust in the economic and financial systems. Misconduct is mainly a result of errors in policies and procedures, of mistakes or malpractices in individual behaviours and of failure in management and control systems. Elaborating on the new theory of risk culture in banking, we develop a general framework of errors and failures in banking, on the basis of existing literature and taking into account the empirical evidence that is currently available. Particularly, we focus our attention on the influence of national cultures, the role of the organizational environment, errors and management practices and the impact on reputational risk role of banking regulators and supervisors in the handling of errors and mistakes. Our work helps demonstrate that culture is the main driver of organizational and individual behaviours and consequently of errors, mistakes and failures in bank management. Moreover, in a “sound” risk culture environment, the ability to manage errors must be in the toolkit of bankers and banking supervisors, enhancing cultural capital while preserving stability and efficiency of the whole financial system.

In the last years of the twentieth century central banks started strengthening their communication strategy, making it easier to analyze the evolution of central banks’ functions and role over time and space. In this chapter we employ a topic modeling approach to investigate the differences in the topics contained in European Central Bank (ECB) and Federal Reserve (FED) Governors’ speeches over the time period 2007–2019. We find that both ECB and FED speeches are strongly related to monetary policy, even if the largest number of FED Governors’ speeches is related to the promotion of financial stability, especially with respect to the time period 2008–2010. Additionally, in the United States, the topic of consumer protection is also detected.