Comments on Exposure Draft for Proposed ISSA 5000, sustainability assurance engagements by the Auditing and Assurance Standards Committee of AFAANZ

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Abstract

The Exposure Draft for Proposed International Standard on Sustainability Assurance (ISSA) 5000 has been issued by the International Auditing and Assurance Standards Board (IAASB) because there is increasing demand by stakeholders for assurance of sustainability information. Our recommendations include: (i) a more flexible approach to ethics and quality management instead of the requirements for standards that are at least as demanding as the accounting profession's standards; (ii) more differentiation between the requirements for limited as opposed to reasonable assurance and (iii) more cautious use of the term materiality and clearer definitions of the different materiality concepts to avoid potential confusion.

Volatility spillovers of cloud stocks: Evidence from China using the dynamic connectedness approach

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Abstract

Based on daily data from 2013 to 2022, this study examines the spillover effects of volatility between cloud stocks and other asset classes (global stocks, treasury bonds, gold and crude oil) using the VAR connectedness approach. The results show that there is a significant spillover effect from global stocks and crude oil markets to the cloud stock market. The spillover effects become stronger whenever there are shocks such as economic crisis, turbulence in the international financial markets, COVID-19 and global inflation. However, nearly 91% of the variations of cloud stocks come from within, suggesting that the diversification/hedging value of cloud stocks is potentially high.

Confucian culture and cost stickiness

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Abstract

Cultural features may exert significant impact on firm behaviour. Through a sample of listed A-share firms on the Shanghai and Shenzhen Stock Exchanges, we find that Confucian culture may significantly lower firms' cost stickiness. Our mechanism tests suggest that ideologies of self-discipline and prudence embedded in Confucian culture may mitigate agency issues as well as overestimation of firm earnings. Furthermore, such impact is more pronounced among firms of lower shareholding by institutional investors or of weak internal control, which suggests that Confucian culture may help rectify the imperfection of corporate governance. Lower cost stickiness may also reduce firm risk.

Machinery structure, machinery subsidies, and agricultural productivity: Evidence from China

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Abstract

Although agricultural machinery is indispensable for modern agriculture, the effect of machinery structure on food production is rarely scrutinized. Machinery structure, referring to the proportion of high-capacity machines which are represented by tractors with relatively high horsepower, is used to measure the scale of agricultural machinery. In response, this article investigates how agricultural machinery structurally impacts grain production theoretically and empirically, with particular emphasis on the effects of capacity structure and subsidy policy. The article estimates a Translog production function with a panel dataset covering 126 counties across Xinjiang and Hubei provinces in China from 2002 to 2012. Though we find the general elasticity of output with respect to machinery inputs is .03, the capacity structure of agricultural machines could impact agricultural production by inducing the reallocation of other input factors. Along with the upsizing of farming machines, we observe the complementarity between machinery horsepower and land inputs in production increases, while the joint effect of machinery and fertilizer decreases. The positive land channel is found in areas with fewer high-capacity machines, while the negative fertilizer channel occurs when there are more large machines.

Europe’s ambitious pesticide policy and its impact on agriculture and food systems

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Abstract

European countries have set ambitious policy goals to reduce the risks of pesticides to the environment and human health. European agriculture could play a leading role in the transition to a low pesticide risk future, with various societal benefits. However, such a transition also involves trade-offs, costs, and risks for farmers and society. Here, we summarize possible implications for agriculture and food systems in Europe and beyond and discuss avenues for future research.

The impact of deviations from soybean product crushing estimates on return and risk

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Abstract

This study explores how differences in market yields of soymeal and soyoil, as derived from market prices compared to those obtained through the physical process of crushing soybeans, impact the returns and volatilities of these commodities. Positive (negative) deviations are associated with negative (positive) changes in return. Additionally, these deviations positively correlate with return volatility, suggesting that variations from the expected yields lead to price shifts and heightened return volatility. In summary, deviations from the crushing estimates significantly shape the modeling of soybean commodity returns and volatilities, with implications for understanding returns, hedging ratios, and portfolio return variance.

Armed conflicts and household food insecurity: Effects and mechanisms

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Abstract

Despite extensive studies on the effects of armed conflict on household dietary diversity, food security, and nutritional outcomes, the underlying pathways remain underexplored. A better understanding of these mechanisms could unpack the subsequent effects of conflict-induced food insecurity and oft-reported nutritional shortcoming, as well as identify which policy interventions hold promise. We study the effects of terrorist violence in Burkina Faso on household dietary diversity, as proxied by food consumption scores (FCS), and investigate the underlying mechanisms. For this purpose, we combine nationally representative 5-years panel data on households with spatial conflict data. We find negative and significant effects of conflict intensity on household food consumption scores. The decline in household FCS is a result of significant decreased dietary diversity in both food production and purchases. Although households in rural areas partially offset these reductions by food assistance, those reliant solely on farming as livelihoods remain the most affected. Further investigations show evidence that per-capita farm income and food expenditure are pathways linking the intensity of armed conflict to reduced FCS in food purchases, whereas reduced dietary diversity in food production results from decline in crop production. Additional specification tests support our main findings, offering insights that can help policymakers faced with similar scaled-armed conflicts. For instance, conflict-sensitive interventions aimed at supporting crop production and farm income for affected households could effectively improve their dietary diversity and overall food security in a post-conflict environment.

Agriculture and AfCFTA: NTM reductions increase intra‐Africa trade

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The African Continental Free Trade Area (AfCFTA) is expected to provide trade gains for Africa, especially from reducing non-tariff measures (NTM). Unfortunately, data on NTMs is scarce, both by country and sector. Using three underlying NTM data sets and other data sources, we provide a range of estimates to fill the missing gaps in the existing estimates. Focusing on agriculture, we then use a computable general equilibrium model to estimate the effects of the AfCFTA. Results from all three data sets indicate that NTM reduction leads to much greater intra-Africa trade gains than tariff reduction alone.