Title: Is the sky bluer than before? Examining firm stability in Europe

Authors: Sadia Binte Shafiq; Tahani Tahmid; Md. Yousuf; Md. Abul Kalam Azad

Addresses: Department of Business and Technology Management, Islamic University of Technology, Gazipur 1704, Bangladesh ' Department of Business and Technology Management, Islamic University of Technology, Gazipur 1704, Bangladesh ' Chief Economist's Unit, Bangladesh Bank, Head Office, Bangladesh; Graduate School of International Cooperation and Studies, Kobe University, 1-1, Rokkodai-cho, Nada-ku, Kobe, 657-8501, Japan ' Department of Business and Technology Management, Islamic University of Technology, Gazipur, Bangladesh

Abstract: Stability is essential for any firm because it signifies the robustness in financial structure. Financial stability of a firm cannot be assessed only by approaching the financial statements. Instead, incorporating risk management capabilities with financial statements can provide a clear picture of financial stability. While there are many studies in the literature exploring specified firm (banks, insurance, etc.) stability measuring conception of risk, only a few of them have examined the financial institutions as a whole. In addition, fewer studies have been found where firm stability has been measured by the relationship between firm's conception of risk and the accounting variables. In light of this need, the current study measures the impact of accounting variables and country level indicators on firm stability in 1,331 European firms covering the period 2010-2020. A negative relationship between the risk factors and the variables has been found, indicating firm stability.

Keywords: stability; firm; Europe; default risk; leverage risk; portfolio risk; ROA; financial variables; accounting variable; microeconomic variables.

DOI: 10.1504/IJMABS.2024.138412

International Journal of Markets and Business Systems, 2024 Vol.5 No.1, pp.26 - 42

Received: 23 Nov 2021
Accepted: 09 Mar 2022
Published online: 03 May 2024 *

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