Workplace sustainability or financial resilience? Composite-financial resilience index

ArXiv ID: 2403.16296 “View on arXiv”

Authors: Unknown

Abstract

Due to the variety of corporate risks in turmoil markets and the consequent financial distress especially in COVID-19 time, this paper investigates corporate resilience and compares different types of resilience that can be potential sources of heterogeneity in firms’ implied rate of return. Specifically, the novelty is not only to quantify firms’ financial resilience but also to compare it with workplace resilience which matters more in the COVID-19 era. The study prepares several pieces of evidence of the necessity and insufficiency of these two main types of resilience by comparing earnings expectations and implied discount rates of high- and low-resilience firms. Particularly, results present evidence of the possible amplification of workplace resilience by the financial status of firms in the COVID-19 era. The paper proposes a novel composite-financial resilience index as a potential measure for disaster risk that significantly and persistently reveals low-resilience characteristics of firms and resilience-heterogeneity in implied discount rates.

Keywords: Corporate Resilience, Implied Discount Rates, Financial Distress, Workplace Resilience, Disaster Risk, Equities

Complexity vs Empirical Score

• Math Complexity: 2.0/10
• Empirical Rigor: 4.0/10
• Quadrant: Philosophers
• Why: The paper relies on descriptive statistics and regression analyses rather than advanced mathematical derivations, but involves multivariate functional principal components and constructs a composite index, indicating moderate empirical work with backtesting elements, yet not heavy implementation.

  flowchart TD
    A["Research Goal"] -->|Identify heterogeneity<br>in firms' implied discount rates| B["Methodology"]
    B --> C{"Data/Inputs<br>Corporate Risk &<br>Financial Distress Data<br>Post-2019 Period"}
    C --> D["Computational Process<br>Construct Resilience Indices<br>Financial vs. Workplace"]
    D --> E["Analysis<br>Compare High/Low Resilience Firms<br>Earnings Expectations & Discount Rates"]
    E --> F["Key Outcomes"]
    F --> G["Novel Composite-Financial<br>Resilience Index Proposed"]
    F --> H["Workplace Resilience<br>Amplified by Financial Status"]
    F --> I["Persistent Heterogeneity<br>in Implied Discount Rates"]