As companies and investors globalize, we are increasingly faced with estimation questions about the risk associated with this globalization. When investors invest in China Mobile, Infosys or Vale, they may be rewarded with higher returns, but they are also exposed to additional risk. When Siemens and Apple push for growth in Asia and Latin America, they clearly are exposed to the political and economic turmoil that often characterize these markets. In practical terms, how, if at all, should we adjust for this additional risk? We will begin the paper with an overview of overall country risk, its sources and measures. We will continue with a discussion of sovereign default risk and examine sovereign ratings and credit default swaps (CDS) as measures of that risk. We will extend that discussion to look at country risk from the perspective of equity investors, by looking at equity risk premiums for different countries and consequences for valuation. In the fourth section, we argue that a company’s exposure to country risk should not be determined by where it is incorporated and traded. By that measure, neither Coca Cola nor Nestle are exposed to country risk. Exposure to country risk should come from a company’s operations, making country risk a critical component of the valuation of almost every large multinational corporation. In the final section, we will also look at how to move across currencies in valuation and capital budgeting, and how to avoid mismatching errors.

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Using a novel and dynamic measure of fund-level herding that captures the tendency of a fund manager to imitate the trading decisions of the institutional crowd based on a sample of 3490 mutual funds in China for 21 years between 2003 and 2023, we find that funds with higher herding tendencies face significantly elevated delisting risks. Additionally, herding behavior is associated with shorter fund lifespans, smaller asset bases, and higher portfolio manager turnover rates. These results remain robust after employing a battery of methods to address endogeneity concerns. Collectively, our study demonstrates that herding substantially amplifies funds’ running risks.

Mutual funds create liquidity for investors by issuing demandable equity shares while holding illiquid securities. We study the implications of this liquidity creation by examining frequent trading suspensions in China, which temporarily eliminate market liquidity in affected stocks. These suspensions cause significant mispricing of mutual funds due to inaccurate valuations of their illiquid holdings. We find that investors actively acquire information about suspended stocks held by mutual funds, driving flows into underpriced funds. This information is subsequently incorporated into stock prices when trading resumes. Our findings suggest that mutual fund liquidity creation stimulates information acquisition about illiquid, information-sensitive assets.

The Fibonacci sequence is created by the recurrence of Fn = Fn−1 + Fn−2 ( n ≥ 2; F0 = 0; F1=1) from which the nearly 38.2% or 61.8% is derived for revenue increase or decrease. It has been increasingly and widely studied in research on options market trading. The high volatility of the options market makes the option premium greatly affected by the growing emotional involvement of buyers and sellers before the position is closed. The efficient affective computing and measures may provide traders a rough guide to working out the route to a profit. Based on the practical application of Fibonacci-like sequence and affective computing of option trading data in China SSE (Shanghai Stock Exchange) 50ETF options, we concluded that profit statistically changes around 38.2% or 61.8% increase line once call options flood in the market and bring the rapid price acceleration. On the contrary, 38.2% or 61.8% is considered another temporary decrease line when the price quickly falls from the balance point of price under the influence of huge put options. The mixed emotions of greed and fear make the option premium commonly fluctuate in cycles. The Fibonacci-like wavelet analysis is only one of the options volatility strategies, and it does not change the nature of market uncertainty.

In highly competitive product markets, firms can internalize other firms’ resources through interfirm collaboration. Using a longitudinal dataset on strategic alliances among private and public firms in Europe, this study examines how industry competition induced by international trade inflows affects the interfirm competitive and cooperative dynamics. We document that industry-level competition shocks, caused by Chinese import penetration, are a key driver in shaping corporate alliances. Notably, firms with constrained cash flow but ample cash reserves are more likely to form alliances in industries experiencing competition shocks. After these alliances, we observe improvements in cash flow growth and investment, with this positive impact of interfirm collaboration being more pronounced among private firms. These findings suggest that strategic alliances are crucial tools for restructuring following international trade inflows, particularly among small, private enterprises.

We examine how Chinese mutual funds react to superstitious beliefs about bad luck during one’s zodiac year, which occurs on a 12-year cycle around a person’s birth year. Funds decrease their holdings of zodiac stocks, non-state-owned enterprises in the zodiac years of their chairperson, and profit more from trading zodiac stocks than from trading other stocks. This pattern is more pronounced in firms with lower investor awareness and higher liquidity, and for fund managers with higher past ability, indicating that fund managers trade in anticipation of the negative market reaction towards zodiac stocks.

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