Journal of Risk and Financial Management

23 pages, 598 KiB

Open AccessArticle

The Good, the Bad, and the Bankrupt: A Super-Efficiency DEA and LASSO Approach Predicting Corporate Failure

by Ioannis Dokas, George Geronikolaou, Sofia Katsimardou and Eleftherios Spyromitros

J. Risk Financial Manag. 2025, 18(9), 471; https://doi.org/10.3390/jrfm18090471 - 24 Aug 2025

Corporate failure prediction remains a major topic in the literature. Numerous methodologies have been established for its assessment, while data envelopment analysis (DEA) has received particular attention. This study contributes to the literature, establishing a new approach in the construction process of prediction models based on the combination of logistic LASSO and an advanced version of data envelopment analysis (DEA). We adopt the modified slacks-based super-efficiency measure (modified super-SBM-DEA), following the “Worst practice frontier” approach, and focus on the selection process of predictive variables, implementing the logistic LASSO regression. A balanced sample with one-to-one matching between forty-five firms that filed for reorganization under U.S. bankruptcy law during the period 2014–2020 and forty-five non-failed firms of a similar size from the U.S. energy economic sector has been used for the empirical analysis. The proposed methodology offers superior results in terms of corporate failure prediction accuracy. For the dynamic assessment of failure, Malmquist DEA has been implemented during the five fiscal years prior to the event of failure, offering insights into financial distress before the event of a default. The model outperforms alternatives by achieving higher overall prediction accuracy (85.6%), the better identification of failed firms (91.1%), and the improved classification of non-failed firms (80%). Compared to prior DEA-based models, it demonstrates superior predictive performance with lower Type I and Type II errors and higher sensitivity as well as specificity. These results highlight the model’s effectiveness as a reliable early warning tool for bankruptcy prediction. Full article

(This article belongs to the Special Issue AI and Sustainable Growth in Economics and Finance: Global Trends and Challenges)

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25 pages, 3735 KiB

Open AccessArticle

Climate Sentiment Analysis on the Disclosures of the Corporations Listed on the Johannesburg Stock Exchange

by Yolanda S. Stander

J. Risk Financial Manag. 2025, 18(9), 470; https://doi.org/10.3390/jrfm18090470 - 23 Aug 2025

Abstract

International organizations have highlighted the importance of consistent and reliable environment, social and governance (ESG) disclosure and metrics to inform business strategy and investment decisions. Greater corporate disclosure is a positive signal to investors who prioritize sustainable investment. In this study, economic and climate sentiment are extracted from the integrated and sustainability reports of the top 40 corporates listed on the Johannesburg Stock Exchange, employing domain-specific natural language processing. The intention is to clarify the complex interactions between climate risk, corporate disclosures, financial performance and investor sentiment. The study provides valuable insights to regulators, accounting professionals and investors on the current state of disclosures and future actions required in South Africa. A time series analysis of the sentiment scores indicates a noticeable change in the corporates’ disclosures from climate-related risks in the earlier years to climate-related opportunities in recent years, specifically in the banking and mining sectors. The trends are less pronounced in sectors with good ESG ratings. An exploratory regression study reveals that climate and economic sentiments contain information that explain stock price movements over the longer term. The results have important implications for asset allocation and offer an interesting direction for future research. Monitoring the sentiment may provide early-warning signals of systemic risk, which is important to regulators given the impact on financial stability. Full article

(This article belongs to the Section Economics and Finance)

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4 pages, 162 KiB

Open AccessEditorial

Editorial—The Future of Money: Central Bank Digital Currencies, Cryptocurrencies and Stablecoins

by Ramona Rupeika-Apoga

J. Risk Financial Manag. 2025, 18(9), 469; https://doi.org/10.3390/jrfm18090469 - 22 Aug 2025

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Abstract

Money has always been a mirror of society, shifting from precious metals to paper, from checks to cards, from cash to mobile payments [...] Full article

(This article belongs to the Special Issue The Future of Money: Central Bank Digital Currencies, Cryptocurrencies and Stablecoins, 2nd Edition)

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J. Risk Financial Manag., Volume 18, Issue 9 (September 2025) – 3 articles

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