Global Business and Economics Review (57 papers in press)
The trajectory of the SRI fund industry in Brazil
by Jessica Barroso, Elaine Araújo
Abstract: This article utilizes data collected from the platforms Quantum Axis, Morningstar, and Central System from Comissao de Valores Mobiliarios (CVM) to present a descriptive analysis of the Brazilian Socially Responsible Investment (SRI) funds. It was noted that, overall, the Brazilian SRI funds adopt in their policies the third generation SRI approach (positive screen), and no fund with negative screen was found. From 2001 to December 2017, the Brazilian SRI funds industry had a total of 64 funds with sustainable characteristics in its name, which represents a negligible percentage compared to the total of the Brazilian funds industry.
Keywords: Investment funds; SRI; Socially Responsible Investments.
Impact of Corporate Governance on Working Capital Management: An Empirical Investigation from India
by Najib Hamood, Faozi Almaqtari, Mamdouh Abdulaziz Saleh Al-Faryan, Mosab Tabash
Abstract: The current study examined the effects of corporate governance on the effectiveness of working capital management among Indian pharmaceutical companies. The study extracted data for ten years from 2008 to 2017 and the empirical analysis conducted was based on a large sample of 82 companies. The results of the current study revealed the number of directors on a board of directors negatively and significantly affects payables deferral period and receivables collection period, while composition of the board does not have a significant impact on the efficiency of working capital management. The current research is believed to be among the first to investigate the influence of corporate governance on the effectiveness of working capital management in an emerging economy, India. The study data should be beneficial for policymakers, investors, finance managers, and others concerned with the efficiency of working capital management.
Keywords: working capital management; WCM; corporate governance; pharmaceutical industry; India; independent directors; dependent directors; board of directors size; emerging economy.
CROSS MARKET HERDING IN CHINESE, US AND CRUDE OIL MARKETS? QUANTILE REGRESSION ANALYSIS
by O.O.I. K.O.K. LOANG
Abstract: This study examines cross-market herding in Chinese and US markets from 2015 to 2020. It seeks to explore the impact of the crude oil market on Chinese and US. This study adopts cross-sectional absolute deviation to detect herding. This study employs quantile regression rather than OLS method to examine herding in different quantiles. The result shows that NYSE and NASDAQ are herded with each other. For Chinese markets, the bidirectional herding between Shanghai and Shenzhen tends to appear in median (Τ= 50%) and upper quantiles (Τ= 75% and 95%). The herding tendency of Shenzhen is higher than Shanghai and Nasdaq is higher than NYSE. The crude oil market can cause herding in US and Shanghai. The originality of this study contributes to academicians and practitioners in understanding the existence and tendency of cross-market herding. Investors shall aware that herding can be caused by the performance of other markets.
Keywords: herding; stock market; Chinese market; US market; globalisation.
Exploring Whistle-blowing Intentions of Employees Working in the Indian Banking Sector
by Narendra Singh Chaudhary, Kriti Priya Gupta
Abstract: The present study has explored the impact of organisational commitment and perceived organisational support on the internal and external whistle-blowing intentions of employees in the Indian Banking sector in this article. The purposive sampling technique has been employed to select a sample of 660 employees working in various banks in the National Capital Region (NCR) of Delhi. The primary data collected has been analysed through exploratory factor analysis (EFA) and multiple regression analysis. The results indicate that organisational support has a significant positive impact on both internal and external whistle-blowing intentions. With regards to organisational commitment, affective commitment and normative commitment have a significant positive impact on internal and external intentions of whistle-blowing. However, the relationship between continuance commitment and internal whistle-blowing intention is insignificant, whereas the impact of CC on external whistle-blowing intention has been significantly positive.
Keywords: organisational commitment; internal whistle-blowing intentions; external whistle-blowing intentions; wrongdoings; banking sector; perceived organisational support.
Corporate Governance Mechanisms and Banking Performance
by Meriem Jouirou, Fathi Jouini
Abstract: Our study focuses on the impact of corporate governance mechanisms on the performance of banks. Our basic idea is that several determinants of the board of directors could impact the profitability of banks. We conducted an econometric study using an estimate by panel data from a sample of 66 French banks observed over the period 2015-2019. Thus our research aims to see more closely the nature of the relationship between these banks governance mechanisms and banking performance. The results demonstrated a positive and significant relationship between gender diversity and profitability. In addition, we found a positive impact of the independence of directors on profitability while the impact of the duality of the CEO has negative and significant effects on the profitability of the bank. We also use the Newey-West estimator and the method of Weighted Last Square to confirm the relationship between corporate governance and banking profitability.
Keywords: governance; gender diversity; duality ; banking performance.
COVID-19 Pandemic: Revisiting the Safe Haven Assets
by DASAUKI C. MUSA, Oluwalaiye Olusola, Jerry Kwarbai, Jesudara M. Oyesiji
Abstract: Different assets behave differently during different economic situations and Investors are constantly searching for safe assets to hold and avoid volatile assets to hedge against risk. The study considered 13 safe haven assets across the worlds largest economies during the COVID-19 pandemic. The GARCH (1,1) and the threshold GARCH models were applied. The results obtained from the model estimation test showed that COVID-19 and Oil price had a negative effect on some safe haven assets. International stock has less volatility. The result also revealed that crypto currencies (bitcoin, tether, Etherium), stocks (Shanghai stock exchange), currencies (US dollars, Swiss franc, and pounds), precious metal (silver) and government securities (T-bond and T-bill) were less volatile but COVID-19 pandemic triggered higher volatility on precious metal (gold) and stocks (S&P500, CAC40).
Keywords: asymmetry; cryptocurrency; metals; stock; volatility.
Institutional and geopolitical aspects of bond spreads impacts on corporate capital structure in emerging markets
by Sylvia Gottschalk, Bertrand Ndang
Abstract: This paper investigates the impacts of institutional, geographical, and political determinants of corporate capital structure of non-financial companies in a large panel of emerging economies, whilst controlling for macro-economic and firm-level factors, particularly corporate bond spreads. There is extensive literature showing that spreads are a measure of corporate riskiniess and that they affect a firm's ability to raise external funding via the issuance of equity or bonds. More recently, it has been established in development finance literature that a country's financial and legal systems have significant impacts on the capacity of its private sector to raise external investment funding. In particular, there is evidence that Common Law systems and market-based economies are more favourable to private investment and external financing owing to their stronger investor protection. Our results show that, when macroeconomic and firm-level factors are controlled for, most institutional variables have no significant impact on capital structure, with the exception of regulatory quality. The type of financial system, namely, "market-based" or "bank-based", and the legal framework (Common vs French law) have hardly any impact on capital structure. Our results also address the endogeneity issue between corporate bond spreads and capital structure, and show that both variables interact significantly with each other. Firm-specific variables such as profitability, tangibility and macroeconomic performance were found to be the common determinants of both leverage and bond spread.
Keywords: Capital structure; corporate bond spread; emerging markets; bank-based vs market-based economies; governance indicators; financial systems; economic and political institutions; simultaneous equations models.
The Relation between Innovation and Earnings Management: Evidence for the UK
by Yahya Marei, Mohammad Al Bahloul, ADEL ALMASARWAH, Ashraful Alam
Abstract: The purpose of this paper is to investigate whether the executives of innovative firms in the UK economy. This study uses discretionary accruals and abnormal activities as proxies for earnings management and research and development as a proxy for innovation. This study finds dissimilar results for the discretionary accrual and abnormal activity models, it conducts additional analysis that accounts for the innovation to beat the earnings group, and refers to this group as the downward group; another analysis accounts for the innovation to reduce earnings, and refers to this group as the upward group. The results suggest that there is a negative association between discretionary accruals and downward innovation and finds a similar relationship in abnormal activities and the downward group, which indicates the referential value of beating earnings over innovation. This study also documented that innovative firms engage more in manipulation than non-innovative firms.
Keywords: innovation; real and accruals earnings management; incentives; manipulation; UK.
Imposing Zakat on Cryptocurrency (Bitcoin): A Shariah Appraisal
by Muhammad Ikhlas Rosele, Abdul Muneem, Azizi Bin Che Seman, Luqman Haji Abdullah, Noor Naemah Binti Abdul Rahman, Mohd Edil Abd Sukor, Abdul Karim Ali
Abstract: This research aims to study whether zakat is due on cryptocurrency (Bitcoin) and to address the issues related to imposing zakat upon it. This study is conducted based on the qualitative research method following the inductive method and explanatory research approach. The findings show that Bitcoin is recognised as a digital asset in many countries and the tax is imposed accordingly. As such, Bitcoin is among the zakatable assets since it meets the conditions of zakat on assets. Moreover, Bitcoin as a digital currency would also be zakatable if a country recognises it as currency, as would any regulated digital currency issued by a government. Imposing zakat on Bitcoin would boost the total amount of zakat collectible, which would be beneficial for needy people. Further research is recommended to provide the zakat model for Bitcoin and other cryptocurrencies.
Keywords: cryptocurrency; Bitcoin; digital asset; zakat; Shariah.
Macroeconomic uncertainty and stock price crash risk: the moderating roles of operating performance and investor sentiment
by P.E.I. Y.I.N. WONG, Y.E.E. PENG CHOW
Abstract: This paper investigates the association between macroeconomic uncertainty and stock price crash risk and the two potential mechanisms through which the former may affect the latter, namely firms operating performance and firm-specific investor sentiment, based on a sample of listed firms from six Asia-Pacific countries (Japan, Singapore, South Korea, Malaysia, China and Indonesia) for the period 2009 to 2019. Sub-sample analyses are also conducted, where the sample firms are segregated into developed and developing countries. The empirical results show that macroeconomic uncertainty has a significant positive relationship with stock price crash risk for the full sample and firms in both the developed and developing countries. Subsequent analyses reveal that good operating performance strengthens the positive relationship between these variables for the full sample but the opposite holds true for firms in the developing countries. Furthermore, we find that higher firm-specific investor sentiment strengthens the positive association between these variables for the full sample and firms in the developing countries.
Keywords: Asia-Pacific; investor sentiment; macroeconomic uncertainty; operating performance; stock price crash risk.
Is There a Relation between Stock Markets and Climate Change?
by Myeong Hwan Kim, Yongseung Han
Abstract: While economic growth has resulted in a secular upward trend in the performance of the stock market, the associated rise in economic activity has been responsible for the increase in carbon dioxide (CO2) emissions. The rise in emission levels has contributed to the phenomenon of global warming or climate change. Conversely, climate change may affect equity markets by the uncertainty which it produces. What is hypothesised in this study is that there should be an observable long-term secular trend in the US equity markets, and there should also be the seasonal variations described by other researchers. Taking this one step further, the increased CO2 emissions, if correlated with increased private productivity, should result in higher values for the underlying equities, than would be captured by a time linear time trend. Thus, this paper empirically examines the two-way relationship of variations in temperatures with the variations in equity market indices. The results provide evidence that there is a strong causal relationship from the changes in equity market indices to the changes in temperature levels, but there is no causal relationship in the opposite direction.
Keywords: stock market; CO2; global warming; cointegration; causality test.
FDI, Gender Spillovers and Firm Productivity: The Namibian Case
by Reem El Sherif, Charles Adjasi, Michael Graham
Abstract: The benefits of FDI to domestic firms encompass technology and knowledge diffusion, known as spillovers. Knowledge transmission from MNCs can largely differ between total and female labour, yet this critical distinction remains a void in the literature. Using data from the World Bank Enterprises Survey and a new measure of spillovers to capture the gender dimension, this study provides empirical evidence on the impact of FDI spillovers on domestic firm productivity in both Namibias manufacturing and services sectors. The study finds a general negative effect of gender spillovers on domestic services firms productivity, and none in the manufacturing sector. However, the productivity effects of gender spillovers are positive when conditioned on managers years of experience in both sectors as well as on technology in the manufacturing sector. These findings provide important policy implications on how technology and managerial expertise can be used to tap into the potential of female employees to absorb their productivity benefits.
Keywords: MNC; productivity; gender; spillovers; services; Namibia.
Dividend Policy Under the Influence of Corporate Governance Quality: An Empirical Analysis from Asian Emerging Markets
by Um-E-Roman Fayyaz, Michelina Venditti, Raja Nabeel-Ud-Din Jalal
Abstract: In the present study, we investigate the influence of corporate governance quality on the dividend policy of Asian emerging markets. First, we assess the level of corporate governance quality through a comprehensive index comprised of the combined board governance attributes (board of directors, ownership status, and progressive practices) and firm fundamentals through attributes of financial ratios. Then, using a sample of non-financial firms from the stock exchanges of the respective emerging markets (China, India, and Pakistan), our results depict firms corporate governance quality as a relevant factor for dividend pay-out.
Keywords: corporate governance quality; firm fundamentals; dividend policy; dividend pay-outs; emerging markets; Asia.
Determinants of Security Design in Venture Capital Investment: A study on Indian Start ups
by Sarita Mishra, Suresh Sahoo
Abstract: An imperfect competitive financial market has few underlying problems such as adverse selection and information asymmetry problem which is same in case of a venture capital (VC) investment deal. In these context VC investors designs their mode of financing to minimise the effect of above issues. This study encompasses various venture capital funds and their investment with Indian entrepreneurial firms to identify different factors contributing decision on security design of VC investor for the specific deal. Three categories of factors affect security choice by VC investors to invest in India: 1) firm characteristics including age of the firm, stage of the firm and type of industry; 2) VC characteristic include industry experience, total investment experience and past success experienced by the investors; 3) deal characteristics include size of investment, stage funding in round, syndication, control stake hold by VC, revenue generated in previous investment. The statistical significance of these factors is accessed through multinomial logistic regression analysis across different categories of security choice undertaken by venture capitalist in Indian start-ups.
Keywords: venture capital investment; security choice; multinomial logistic regression.
Assessing the Internal Auditors Readiness for Digital Transformation
by Nadta Saengsith, Phassawan Suntraruk
Abstract: The purpose of this study is to investigate the factors that affect the internal auditors readiness for ongoing digital transformation. The questionnaire was designed and distributed to a total of 350 internal auditors who are the member of the Institute of Internal Auditors of Thailand (IIAT). Using multiple regression analysis, the findings indicate that factors relating to know-how including IT-based knowledge, cognition, and competency positively influence the internal auditors readiness for digital transformation. A positive attitude and a willingness to accept change on the part of internal auditors are also essential factors affecting their readiness. Moreover, support from organisations, including professional organisations, are key factors creating a positive working environment to drive the competency of the internal auditors to adapt themselves to cope with the advancement of technology.
Keywords: digital transformation; information technology; internal auditors; readiness; Thailand.
The impact of Facebook and Instagram on the growth of Egyptian MSMEs
by Hadia FakhrElDin, Mahitab Shahin, Rania Miniesy
Abstract: This study examines the impact of using Facebook and Instagram on the growth of micro, small and medium enterprises (MSMEs) in Egypt. It uses both the social exchange theory and the task-technology fit theory to capture the different relationships and effects between the use of these two social media tools and the growth of MSMEs in Egypt. Growth is divided into financial growth (measured through the increase in sales) and non-financial growth (measured through customer engagement and brand performance). Linear regression and t-tests are conducted to identify and compare the effects of the use of social media platforms. Findings indicate that the use of social media has a positive effect on both financial and non-financial growth. Specifically, the use of Facebook has a greater impact on financial growth and brand performance, while the use of Facebook and Instagram combined has a higher effect on customer engagement.
Keywords: brand performance; customer engagement; Egypt; Facebook; financial growth; Instagram; micro; small and medium enterprises; MSMEs; social media.
Financial Performance and Corporate Risk Disclosure: The moderating impact of Board Structure
by Ridhima Saggar, Nischay Arora, Balwinder Singh
Abstract: The study aims to unravel the moderating impact of board attributes, i.e., board size, board independence and gender diversity on the relationship between firms financial performance and corporate risk disclosure in the annual reports of Indian listed non-financial firms. For achieving the objective, the study deploys hierarchical moderated regression on a sample of S&P BSE-100 index pertaining to financial year 2018-19. In addition, automated content analysis has been employed to operationalise the dependent variable, i.e., risk disclosure. The main findings unveil that board size and board independence positively moderate the relationship between firm performance and risk disclosure; suggesting that larger the board size and higher the proportion of independent directors; higher the performance impacts risk disclosure. Contrarily, proportion of women directors negatively moderates the relationship between firm performance and risk disclosure emphasising on the importance of women directors in disclosing risk in low profitable firms.
Keywords: board size; gender diversity; board structure; profitability; risk disclosure.
Corporate Social Responsibility Disclosure: A Study on NIFTY 100 Companies
by Ritika Gupta, Pankaj Kumar
Abstract: Financial and social performances are strong pillars of sustainable corporate development. Presently, companies in India are showing a genuine and legitimate concern for the upliftment of stakeholders by giving corporate social responsibility (CSR) a place in their growth strategies. Therefore, the present study seeks to examine the CSR disclosures of companies constituting the NIFTY 100 index from 2015 to 2019 by preparing a CSR disclosure measurement index. The analysis reveals an average CSR disclosure of 62.13%. Further, the results indicate a significant difference in CSR disclosures on various themes, with environmental activities being the most preferred theme for disclosures followed by human resource, product and customer relation, community development, development of rural areas, and fair business. Likewise, retirement fund benefit plans and providing and promoting education are the most disclosed CSR items. The analysis also shows significant variations in CSR disclosures of sectors, with the cement and cement products sector at the top position and media and entertainment sector at the bottom-most position.
Keywords: corporate social responsibility; CSR; India; disclosure; NIFTY 100.
Relationship between Investor Sentiment and Stock Returns: A Bibliometric Analysis using SCOPUS database
by Ajit Yadav, Anindita Chakraborty
Abstract: This paper provides a comprehensive bibliometric analysis of the literature on the relationship between investor sentiment and stock returns. It identifies the key authors, publications, journals, publication countries, and reoccurring keywords using VOSviewer. It analyses 983 publications (procured through the SCOPUS database) using four bibliometric techniques: co-citation analysis, citation analysis, co-occurrence analysis, and bibliographic coupling. The results of the co-citation analysis of references and author reveal that investor sentiment and the cross-section of stock returns by Baker and Wurgler (2006) is the most cited article, and M. Baker is the top-cited author. The bibliographic coupling of sources suggests that Finance Research Letters leads in publications, co-occurrence analysis of author keywords reveals that behavioural finance, asset pricing, and volatility are the most occurring keywords. Further, the citation analysis of countries shows that the USA leads in terms of the number of publications, substantially growing globally since 2000.
Keywords: investor sentiment; stock returns; bibliometric analysis; VOSviewer; SCOPUS database.
Coffee shops visiting during the pandemic: Moderating effects of process and physical evidence
by Hiroko Oe, Yasuyuki Yamaoka, Krittin Buasin
Abstract: This study investigated the factors influencing consumers decision to purchase coffee products during the COVID-19 pandemic. Coffee retailers are faced with the impact of the pandemic and need to provide a safe and hygienic in-store environment. A quantitative method was applied to a dataset of 428 dataset collected from an online survey in Thailand. The results suggest that the effects of the key indicators promotion, people and price are accelerated by the moderating effect of process. On the other hand, the moderating effect of physical evidence was found to be influential only via the interaction between people and price. For the moderators, it was shown that process in particular, together with price, has a significant impact on consumer purchase intentions. The moderating effects of process and physical evidence on the sale of coffee products are of important implication that should be reflected in the marketing strategy to sustain the businesses.
Keywords: antecedent factors; moderating effect; process; physical evidence; COVID-pandemic.
Bank Capital and Liquidity Creation: Evidence from Sub Saharan Africa
by Adamu Yahaya, Fauziah Mahat, Mohammad Tukur Saidu, Umar Tijjani Babuga
Abstract: Liquidity creation is among the major function played by banks in advancing economic development within a country. This study seeks to examine the effect of bank capital on liquidity creation among sub-Saharan African banks. Fifty (50) listed banks are drawn across six (6) sub-Saharan African countries consisting of Nigeria, Ghana, South Africa, Zambia, Kenya, and Tanzania, based on their financial market strength within the region. The system-generalized method of moment (GMM) is the analysis technique used for inference in the study due to its ability to address endogeneity bias and provide consistent findings. The findings from the study revealed a significant positive correlation between bank capital and liquidity creation. The study suggests that banks should always comply with regulatory capital guidelines provided by regulatory authorities to maintain their critical role of liquidity creation in the economy.
Keywords: Tier 1 Capital; Cat_Fat; Cat_NonFat; Deposit ratio; Loan Ratio; System GMM.
Women Directors, CEO duality and Board Structure: Case of Indian firms Capital Structure Dynamism
by Pankaj Chaudhary
Abstract: We investigate the impact of women directors, CEO duality, and board structure on capital structure dynamism for Indian firms. We consider top non-financial BSE Group A firms for the time 2010 to 2019. We use dynamic panel data methodology to deal with endogeneity concerns that are prevalent in corporate finance variables. The board independence and women directors are positively related to the SOA. Their presence is associated with the faster adjustments of the firms towards the optimum capital structure. On the other hand, board size and CEO duality are negatively associated with the SOA. We further noticed that the speed of adjustment for the strong governance firms is much faster than the weak governance firms. We conclude that the prospective investors should study the governance system of the companies before investing and place a premium on the firms with a good governance system.
Keywords: capital structure; speed of adjustment; SOA; women director; board of directors; CEO duality.
Investigation of Cointegration and Causal Linkages on Bitcoin Volatility during the COVID-19 Pandemic
by Tiffani -, Ingrid Claudia Calvilus, Shinta Amalina Hazrati Havidz
Abstract: In this study, we focus on a prominent feature in Bitcoin: its volatility. This paper aims to examine the volatility action of Bitcoins price during the COVID-19 pandemic through various angles: COVID-19 fear sentiments, investor fear sentiments, macro-financial factors, and crypto market factors. The study utilises daily data from 11 March 2020 to 31 May 2021. We implemented an ARDL bound testing approach to find cointegration, and the Toda-Yamamoto approach to further examine any existing causal relationships between the variables. The empirical results show that COVID-19 fear increased Bitcoin volatility and a unidirectional causal relation was found between them. Investor fear sentiments revealed that US dollar volatility moved in the same direction as Bitcoin volatility, while VIX was found to be insignificant. Gold, crude oil, and the stock market did not influence the volatility of Bitcoin. Overall, only crypto market factors were cointegrated with Bitcoin volatility in the long run.
Keywords: autoregressive distributed lag; ARDL; Bitcoin; causal linkages; cointegration; COVID-19; crypto market; fear sentiments; macro-financial; Toda-Yamamoto.
Business cycles in Ecuador: an analysis of stylized facts before and after dollarization
by Mercy Orellana, Rodrigo Mendieta, Santiago Pozo-Rodríguez, Joselin Segovia, Sofía Vanegas
Abstract: This study examines stylised facts related to the business cycle in Ecuador for the 1990 to 2019 period. To reflect on the dollarisation process that the country went through by the end of 1999, the analysis is conducted for two sub-periods: 1990 to 1999 and 2000 to 2019. The paper invest igates a wide range of macroeconomic variables for Ecuador, including variables regarding demand, the labour market, nominal variables, and variables related to an open economy. The sensitivity of correlations is studied through two detrending techniques: 1) the modified Hodrick-Prescott (MHP) filter; 2) a Hodrick-Prescott filter with a smoothing parameter of 1,600. The results reveal substantial changes in the cyclical behaviour of the Ecuadorian economy under dollarisation. In particular, the country shows greater dependence on the international market and high vulnerability to demand shocks.
Keywords: economic cycle; Ecuador; dollarisation.
Declining Trade Interest in Indian Commodity Derivatives: A survey-based study on Cardamom Futures Contract
by Vijayakumar. A. N.
Abstract: Agri-plantation commodity futures contracts provide an opportunity for transparent price discovery and hedging to market participants in the commodity ecosystem. In this endeavour, the market regulator of derivatives and the government has been taking several measures for improving trade volumes, market efficiency and to protect the interest of trade participants. However, commodity futures contract volumes at the Indian Commodity Exchange has been experiencing a consistent fall in trade. This paper focusing on high-value cardamom futures contracts explored reasons for declining trade interest and falling trade volumes. This study with survey and impact of the event finds revised quality norms for fresh deposits of cardamom at accredited warehouses, higher cost of testing quality, raise in margin rate resulted in declining trading interest amongst market participants. The study also recommends appropriate policy to recognise exchange specific commodity trade norms considering Spices Boards e-auction to benefit market participants. This would facilitate transparent and competitive price discovery and an opportunity for managing price risk through the hedging process.
Keywords: cardamom futures; quality norms; margin money; commodity exchange; trading interest.
COVID-19 and negative oil prices-an empirical analysis comparing importing and exporting countries
by Muhammad Umar, Joaquim António Ferrão, Mário Nuno Mata
Abstract: The coronavirus pandemic has forced lockdown in many countries, reducing the use of vehicles and planes, resulting in a negative oil demand shock. In the USA, West Texas Intermediate (WTI) crude oil FOB spot price was recorded to be negative $36.98 per barrel on April 20, 2020. This would seem to be good news for oil importers and bad news for oil exporters. However, the results of an event study analysis of indices data ranging from July 1, 2019 to May 29, 2020 present a different picture. The incidence of a negative oil price had a negative impact on the stock markets of both major oil importing and exporting countries, although the effects on exporting countries were much more negative. Cumulative average abnormal returns, measured using a historical mean model and in reference to the event day of April 20, were significantly negative for all groups in the first two days, vanishing quickly in the very short term.
Keywords: negative oil price; COVID-19; demand shock; energy markets; oil importing; event study.
Performance of the African stock market amid COVID-19 global health crisis: empirical analysis using four events
by Richard Danquah, Samuel Kortu Nelson, Chiamaka Nneoma Nweze, Peter Davis Sumo, Lydia Osarfo Achaa, Ishmael Arhin
Abstract: The study employs the market model and event study approach with four events to examine the performance of the African stock market amid COVID-19 global health crisis. We use daily stock market data from 14 African countries (as a proxy for the African market) spanning September 2019 to June 2021 and COVID-19 data to estimate average abnormal returns for Africa. The results show significant positive average abnormal returns in Africa when the WHO announced COVID-19 as a global health epidemic. The events of infections and deaths generated significant negative average abnormal returns while the event of vaccination did not generate any significant average abnormal returns in the market. In as much as pandemics are unpredictable, the African market quickly recovers as depicted by COVID-19; therefore, we recommend to investors, speculators, and portfolio managers not to quickly exit the continent during pandemics.
Keywords: COVID-19; Africa; stock market; performance; event study; market model; abnormal returns.
The COVID-19 impact on MSME earnings: evidences from Saudi Arabia
by Ahmad T. Al-Harbi, Moid U. Ahmad
Abstract: Small businesses are more prone to market a movement which gets aggravated in an uncontrollable scenario such as COVID-19. The objective of the study is to understand the impact of COVID-19 and the subsequent government's policy support, on the earnings of MSME firms in Saudi Arabia. Based on a selected study period (MarchMay 2021), a survey of MSME owners and managers was conducted (41% response rate) using a 33 items questionnaire. Linear regression analysis and moderation analysis was used for data interpretation. One of the key findings of the study is that firms size and the governments economic support moderates the relationship of MSME operations with MSME earnings.
Keywords: micro; small and medium enterprises; MSME; earnings; COVID-19; operations; governments support; Saudi Arabia.
Synthesis of effect of investor sentiment on stock returns: a systematic review
by Ajit Yadav, Anindita Chakraborty
Abstract: The effect of investor sentiment on stock returns is a topic of long-standing interest amongst behavioural economists. This paper systematically reviews the literature on the effect of investor sentiment on stock returns. We have systematically reviewed 107 selected studies and analysed them based on the year, journal of publication, country of sample data, study type, techniques employed, and citations. The literature analysis reveals the dearth of literature on the sentiment-return relationship in developing economies. It also highlights that there exists no set consensus on the sentiment-return relationship along with a lack of clear-cut distinction between the effect of components (rational or irrational) of investor sentiment on the stock performance. It also questions whether the investors can hedge against future risk and whether distinct return patterns are based upon the lead-lag variation or is merely the effect of the optimistic exuberance of the investors.
Keywords: investor sentiment; stock returns; stock markets; mispricing; trading behaviour; asset pricing; measuring sentiment.
Academic Footprint of Financial Literacy and Financial Inclusion (FLFI): A review and Future research agenda
by Biswajit Prasad Chhatoi, Sarada Sahoo, Durga Prasad Nayak
Abstract: Despite the substantial interest by research geographer, experts, policymakers and World Bank, there are still atypical and disintegrated theories of financial literacy and financial inclusion (FLFI) as the research domain is still emerging. In response, the objective of this research is to review and synthesise FLFI research and to suggest directions for future research. We review certified knowledge (journal articles) published during the first two decades of 21st century. The research on FLFI is fragmented and has emerged in 21st century in diverse directions. The current research unearths key publication outlets and articles, theoretical and methodological approaches and major variables, and several themes of FLFI literature. The findings also suggest future research direction in FLFI and themes associated to them. The current research is an attempt to summarise the current state of the FLFI literature and unearths future research direction that requires immediate attestation.
Keywords: financial literacy; financial inclusion; systematic literature review; financial awareness; financial services.
Do women use annual reports differently than men? A Case of India
by Meena Bhatia
Abstract: This study uses gender in financial research. The purpose is to examine women investors perceptions of the importance and understanding of sections of annual reports and problems that restrict utility. It also explores the perception towards the other announcements made by the corporates. Data was collected using a questionnaire sent to 700 individual investors. Descriptive statistics and non-parametric tests were used to analyse the data received from 341 respondents (48.71% response rate). Results indicated a significant difference between the frequency of use of annual reports and other announcements amongst both genders. Understanding various sections of annual reports is better for male investors than female investors. Women investors deficiencies in annual report utility had various implications for practitioners, standard setters, and regulatory bodies. Drastic improvements are needed in the awareness programmes for women investors.
Keywords: announcements; emerging markets; financial statements; Ind AS; India.
Asymmetric Stock-Bond Interrelationships in Islamic Markets: EEMD-Based Frequency-Dependent and Causality Analyses
by Ahmed Bossman, Peterson Owusu Junior, Anokye M. Adam, Samuel Kwaku Agyei
Abstract: We examine the stock-bond interrelations using decomposed return series of stocks and bond yield in Islamic markets. We aim to establish the bi-directional relationships between the two assets classes amid the financial market turmoil consequentially presented to the world by the COVID-19 pandemic. We employ the ensemble empirical mode decomposition and quantile-in-quantile regression techniques to daily data between 23 November 2015 and 8 September 2021. We reveal that the stock-bond connection is bi-directional and varies across quantiles in Islamic markets. We submit that in the medium long-term of market stress, Islamic stocks and bonds are negatively interrelated and offer diversification opportunities to international investors who seek to maximise returns on their portfolio whiles minimising risks. The Pakistani market has few exceptions in the medium-term. We additionally find that stocks and bonds in Indonesia, Malaysia and Qatar can be diversifiers across all market conditions. The studys implications are further discussed.
Keywords: ensemble empirical mode decomposition; EEMD; QQR; Islamic markets; quantile-in-quantile regression.
Fraudulent Financial Reporting Analyses Using Beneish Model: Evidence from Malaysian Public Companies
by Nurshamimi Sabli, Rosmini Mohd Aripin, Radziah Mahmud, Roszana Tapsir
Abstract: Increasing fraud cases are alarming, particularly during economic instability periods. In meeting the financial targets and secure financing to sustain business activities, companies may be involved in fraudulent activities. However, such unethical behaviour will adversely affect the sustainability of business in the long run. Adopting agency theory, this study intends to explore the influence of firm characteristics and corporate governance attributes on the fraudulent financial reporting (FFR) proxied by Beneish model. Based on 754 firm-year observations from public listed companies in Bursa Malaysia from 2018 to 2020, it is found that only the firm characteristics have influenced the inclination for fraudulent financial reporting activities. Apart from contributing additional knowledge to existing literature, this study is expected to provide valuable insights to the industry players in Malaysia to curb fraudulent activities through appropriate monitoring mechanisms, from both the firm characteristics and governance.
Keywords: fraudulent financial reporting; FFR; firm characteristics; corporate governance; Beneish model.
Efficiency and its determinants of systemically important Shadow Banks of India
by NANDITA BHATTACHARJEE, Ambika P. Pati
Abstract: The growth of shadow banks (SBs) across the globe is ubiquitous, and they are playing a major role in the financial system of all the developed and emerging economies. During the last decade, India as an emerging economy has seen a phenomenal growth of their activities which has prompted the Reserve Bank of India to bring these financial companies under a robust regulatory structure. This necessitates an understanding of their functioning with respect to their efficiency. With ten years dataset of SBs, the efficiency score is ascertained. Data envelopment analysis approach has been employed to ascertain their efficiency. The Malmquist productivity index is applied to see the changes in efficiency over the period. Followed by Tobit regression to determine the influence of efficiency on bank variables. The findings reveal that improvement in internal practices, cost control and monitoring the asset quality is imperative.
Keywords: shadow banks; efficiency; determinants; India.
Good Governance and Financial Crises: A Global Evidence
by Davoud Mahmoudinia, Behrouz Sadeghi Amroabadi
Abstract: The purpose of this study is to provide empirical evidence on the links between financial crises and good governance indicators. We employ the data for a sample of 89 developing and 29 developed countries from 1996 to 2018 to investigate the links. In line with the literature, our dependent variables are banking, debt, currency, and twin and triple crises. Using a panel logit model, we find that good governance, low corruption, increased transparency, a modern legislation system, and high political stability could reduce the likelihood of financial crises in all three samples (developing countries, developed countries, and all countries). The study also shows a positive relationship between various types of financial crises and a large number of macroeconomic variables, including inflation, exchange rate, debt, real interest rate, and credit. Moreover, according to our results, GDP and foreign direct investment could reduce the likelihood of any financial crisis. Hence, this study contributes to the literature by considering good governance indicators as influential factors leading to different types of financial crises.
Keywords: good governance; financial crises; developing countries; developed countries; logit model.
Contagion or Interdependence Evidence from Asian Emerging Stock Markets in times of COVID-19 Pandemic
by Bhaskar Bagchi, RAKTIM GHOSH, AVIJIT KANRAR
Abstract: This study examines the presence of contagion effect along with interdependency between the stock markets of Asian emerging economies like China, India, South Korea, Indonesia, Hong Kong, and Thailand that are caused due to COVID-19 pandemic. The study employs an adjusted correlation coefficient along with the DCC-MGARCH model to capture the contagion effect or interdependency between Shanghai Composite and other select stock markets. Mild enhancement of short-run volatility (DCC∝1) is found to be significant under the DCC framework during COVID-19 period only, although long-run volatility is insignificant in both periods. Contagion effect can be slightly traced in BSE Sensex, KOSPI, and SET 100 while market co-movement remains same for Hang Seng and JKSE Composite and thus they are interdependent with Shanghai Composite. Interestingly, adjusted correlation coefficients between Shanghai Composite and other stock markets increased substantially during COVID-19 period indicating the presence of high contagion effect amongst the markets.
Keywords: COVID-19; stock markets; Asian economies; DCC-MGARCH model; contagion.
Are broker-sold funds flows sensitive to fund performance or not ? Evidence from Indian Mutual Funds Market
by Dipika, SHVETA SINGH
Abstract: The primary purpose of the study is to investigate whether funds flows are sensitive to fund performance or not and to gain insight into how investors from different fund categories react to funds flow and performance relationships in the broker-sold segment. By using the panel dataset, the sample of 138 surviving open-ended regular mutual funds from April 2014 to March 2018 is considered. The study assesses the evidence that past performance has a significant positive influence on the fund flow and different categories have different level of investor sophistication through Sirri and Tufano (1998) fractional flow model, piecewise regression and Fama and MacBeth (1973) approach. The studys findings can be used by regulatory bodies and policymakers to develop effective regulations for increasing market penetration, investor awareness, and transparency. The findings of the study assist the various stakeholders in understanding the behaviour pattern of investors while making an investment decision.
Keywords: Indian mutual fund; equity fund; fund flows; fund performance; balanced funds; raw return; fund age.
Financial Conservatism and Shareholders Value
by Ammara Yasmin, Abdul Rashid Abdul Rashid, Saba Kausar
Abstract: Conservative use of leverage makes the firm less susceptible to financial risk. The use of debt is also proscribed as per the Islamic financing approach. On the contrary, dominant theories of finance appreciate the use of leverage to attain higher returns. To solve this puzzle we have empirically examined the long-run performance of firms that use financially conservative policy in Pakistan. This is the first study comparing the long-run performance of financially conservative firms classified into; a business-group affiliated with non-affiliated, dividend-paying with zero-dividend and financial surplus with financial deficit. We have analysed data from 146 non-financial publicly listed companies for a period of 21 years (1998 to 2018) using the Fama and French three-factor model and the CAPM. The results of this study have strong implications for investors, as we discover that the stocks of financially conservative firms generate positive abnormal returns regardless of any classification.
Keywords: capital structure; net debt ratio; financial conservatism; zero leverage; shareholders value; business groups.
Spillover Effect of Economic Risks, Globalization and Herding in GCC and Malaysian Islamic Markets during COVID-19
by O.O.I. K.O.K. LOANG
Abstract: This study examines the impact of economic risks and globalisation on herding in GCC and Malaysian markets before and during the pandemic. This study explores the spillover effect of the Saudi Arabia market over Islamic markets by using panel data and quantile regression. Panel-corrected standard error is adopted to rectify heteroscedasticity, and the data ranged from 2015 to 2021. The result shows that herding exists in Bahrain, Oman, Qatar, UAE and Malaysia during pre-pandemic, except in Kuwait and Saudi Arabia. The tendency of herding is more pronounced with the emergence of the pandemic. Trade freedom, investment freedom, financial freedom and economic freedom indices are significant to herding before and during the pandemic. The spillover effect of Saudi Arabia is shown in GCC markets except for the Malaysian market. This study assists the regulators and policymakers assess the determinants of herding as investors behave differently in a turbulent period. Analysts, individual investors and institutional investors can also benefit from this study to formulate a better investment strategy under the influence of economic risks and globalisation.
Keywords: economic risks; globalisation; herding; GCC markets; COVID-19.
Impact of Economic Transition on the Outreach of Microfinance Sector
by Samapti Guha, Chandralekha Ghosh
Abstract: Microfinance Institutions in different countries initiated the process of transformation from non-profit entity to not-for-profit entity after 2003 to 2004. Again in 2006 to 2007, there is a transition from not-for-profit entity to for-profit entity. First transition needed for scaling up operations and the second transition needed to achieve self-sufficiency to render the services to marginalized people. In this paper, MFIs in Bolivia, Mexico and India are studied to understand the nature of transition in microfinance sector. We have carried out Exploratory Factor Analysis to understand Social, Financial and Operational factors for the period 2006 to 2007 and 2012 to 2013. Further we have carried out Confirmatory Factor Analysis to confirm the factors which influence outreach of women borrowers during these two different periods of transition. It is concluded that social and financial factors do not have any impact on outreach for the year 2012-2013 however it had influence in the 2006 to 2007.
Keywords: microfinance; outreach; self-sufficiency; confirmatory factor analysis; exploratory factor analysis; economic transition.
Financial Reporting quality, audit quality and idiosyncratic volatility: Moderating role of family ownership concentration
by Afkar Majeed, Rohaida Basiruddin, Salman Khalid
Abstract: This study explores the relationship between financial reporting quality and audit quality on idiosyncratic volatility. The study also analyses the moderating role of family ownership concentration (FOC) on financial reporting quality and idiosyncratic volatility. This study uses a sample of 726 firm-year observations of non-financial firms listed in the PSX 100 index of Pakistans stock market from 2009 to 2019. The study uses the system-generalised method of moment analysis method. The main findings indicate that low financial reporting quality negatively and significantly affects idiosyncratic volatility. In contrast, audit quality positively and substantially impacts idiosyncratic volatility. Additionally, FOC moderates the relationship between financial reporting and idiosyncratic volatility. These findings will help regulators advance policies that can improve the informativeness of stock prices. Focusing on Pakistan, a developing market, this study adds value to the existing literature, as most previous evidence was derived from the developed markets. Moreover, the moderating role of FOC is not frequently investigated.
Keywords: idiosyncratic volatility; financial reporting quality; audit quality; family ownership concentration; FOC; system generalised method of moment; Pakistan stock market.
Non-performing Loans in Central-East European Countries: Investigation of Macroeconomic, Policy, and Global Risk Determinants
by Agim Kukeli, Robert Forrester, Fitim Deari, John Martinez
Abstract: This study investigates the impact of macroeconomic, policy, and global risk variables on non-performing loans (NPLs) for 18 Central-East European Countries (CEEC) over 26 years (1995 to 2020). The study uses the method of unbalanced panel data analysis. Results reveal that comprehensive triple-factor analyses explain NPLs variation for the period and countries included in this study. We find that an increase in GDP growth, inflation, and trade decrease NPLs while an increase in credit availability, lending rate, and exchange rate increase NPLs. We find that an increase in Euro-area GDP growth and unemployment rate will increase NPLs. These effects are sensitive to both pre-and post-US Great Recession and for middle-income/high-income countries. The novelty of this study rests on being the first to investigate economy-wide aggregate factors impact on NPLs. and confirming that there is room for policymakers to mitigate bad loans before and when they become a problem.
Keywords: macroeconomic variables; non-performing loans; NPLs; unbalanced panel data analysis; global risk variables.
Using Product Space to Connect Local Products to Foreign Markets: Paths for Export Basket Diversification of the Brazilian state of Minas Gerais
by Otavio Rezende, Marcelo Andrade, Josiane Rafaella Faleiro, Leandro Collares, Ítalo Daldegan De Oliveira
Abstract: The export basket is a key indicator of the economic development of a country (Hausmann et al., 2014). Therefore, export-oriented policies must be adopted to diversify exports and increase their volume. This study aims to identify sectors and markets that deserve support and investments based on the complexity index. We apply the product space methodology to select products with a latent competitive advantage and a high degree of sophistication that could diversify the Minas Gerais export basket. This application is based on the economic complexity theory, the product space, and economic indicators provided by the Dataviva platform. Results yielded include 12 products that could be exported by the state and their competitiveness levels in different markets. Sectors with latent potential and their behaviour in foreign markets derive from empirical analysis. The two main contributions of this work are the identification of products made in Minas Gerais with latent comparative advantage and the target market classification for these products.
Keywords: economic complexity; competitiveness; comparative advantage; product space; priority markets.
Investor sentiment and firm characteristics
by Wafa Hadj Mohamed, Abdelfettah BOURI
Abstract: Baker and Wurgler (2006) have shown that securities that are difficult to value and have high arbitrage costs are more affected by investor sentiment. Indeed, we study the hypothesis that the securities of young, small, less profitable, less tangible, low dividend and high sales growth firms are the most vulnerable to investor sentiment. Using a VAR model, we find that in the Tunisian market, high sentiment leads to low future returns for the securities of large firms, the youngest, the least profitable, the least tangible, paying lower dividends and with lower sales growth. Furthermore, past returns with inverse characteristics can predict investor sentiment. Our findings also have practical investment and policy implications for investors and corporate decision makers, but also for policy makers in their assessment of financial fundamentals, hence for efficient market theory.
Keywords: sentiment; returns; firm characteristics; VAR model; Tunisian market.
The Announcements of Unconventional Monetary Policies and Sovereign Bond Liquidity Premia
by Tarek Chebbi, Waleed Hmedat
Abstract: This article makes an original assessment of the ECBs asset purchase program effects on the sovereign bond liquidity premia in selected Euro area periphery countries by employing an event-study analysis during the period of 2009 to 2015. We provide evidence that monetary news emerge as a key determinant in bond market liquidity as measured by the CDS-bond basis. More specifically, the estimates show that all events were effective in countering upward pressure on Italian liquidity premia. Our findings show also robust and economically significant impact of events associated with securities markets program and outright monetary transactions on the Italian and Spanish liquidity premiums. Alternatively, some insights gained from our study include an imperative for a careful effect identification and the review of the legitimacy of the perfection of bid ask spreads. Surprisingly, the information contained in unconventional monetary announcements does not matter for assessing the liquidity dynamics of the 10-years sovereign bonds.
Keywords: monetary policy; asset purchases; ECB; bond markets; liquidity.
Nexus between Credit Default Swap Spreads and Foreign Exchange Rates: Evidence from BRICST, E7, MINT, and Fragile Five Countries
by MUSTAFA TEVFIK KARTAL, Serpil Kilic Depren, Özer Depren
Abstract: The study investigates the nexus between credit default swap (CDS) spreads and foreign exchange (FX) rates in leading emerging countries, most of which CDS spreads are high and volatile. In this context, six leading emerging countries are included, daily data between October 8, 2004 and July 23, 2021 is used, nonlinear econometric models such as wavelet coherence (WC), Granger causality in quantiles (GCQ), and quantile-on-quantile regression (QQR) approaches are applied, and quantile regression (QR) is performed for robustness checks. The WC results show that there is bidirectional nexus between the CDS spreads and the FX rates. While the CDS spreads drive the FX rates until 2012, the FX rates drive the CDS spreads after this date. Also, the GCQ and QQR outcomes present that the nexus exists in almost all quantiles excluding middle quantiles (0.35, 0.40, 0.45, 0.50) and the highest quantile (0.95) for some countries whereas country-based results change.
Keywords: CDS spreads; FX rates; emerging countries; nonlinear approaches.
Does Microfinance Foster Development? A Critical Review of Literature
by Md. Atiqur Rahman, Salah Uddin Rajib
Abstract: We reviewed literature on impacts of microfinance on poverty, women empowerment, social welfare of participants, and on macroeconomic impacts of microfinance. Forty articles and five books published between 1996 and 2021 were reviewed. Researchers generally agree that microfinance increases consumption and generates income for participants. But several studies find improvement in consumption to be led by misappropriation of microcredit. Sufficiency of income generated is also questioned. Researchers agree that generating savings, and developing entrepreneurship are prerequisites for sustainable escalation from poverty through microfinance. Impact of microfinance on women empowerment and social welfare remains ambiguous. Popularity of non-subsidised microfinance model raised concern about compromise of MFI social missions. In macro level, microfinance has trivial positive impact on GDP. It slightly reduces poverty headcount, and income inequality, and reduces production efficiency in short run. Significant regional differences in micro and macro level impacts have been observed. We also identified future research avenues.
Keywords: microfinance; microcredit; poverty; women empowerment; mission drift; macroeconomic development; GDP; literature review.
Analysing the impact of financial constraints and group affiliation on mode of payment and announcement returns of the Indian acquiring companies
by Harshika Jain, Reena Nayyar
Abstract: This study aims at assessing the impact of financial constraints on mode of payment employed and announcement returns of the acquiring companies in India. Further, the study also aims at analysing the combined impact of financial constraints and group affiliation on the mode of payment and announcement returns of the acquiring companies. It is found that the likelihood of stock financing on part of acquiring companies increases with increase in the financial constraints and the market reacts positively to such stock funded acquisitions. Thus, the study is able to validate opportunity cost of capital theory. However, the financial advantage theory with respect to the mode of funding employed by group affiliated financially constrained acquiring companies cannot be substantiated by the results of the study.
Keywords: mergers; acquisitions; financial constraints; group affiliated; mode of payment; event study; announcement returns; India.
Financial Innovation as a Response to Crisis - The case of Catastrophe Bonds
by Natália Teixeira, Alexandre Correia, Rui Vinhas Da Silva, Leandro Pereira, Sérgio Vinhas Da Silva
Abstract: Large fluctuations in stock markets, caused by financial problems that may originate in the sector itself, as was the case of the 2007 to 2009 crisis, or originate in other events, as was the case of the 2020 pandemic that led to a sharp drop in the stock market between the first and second quarter of that year, lead market players to look for instruments that can prevent large losses. This study aims to understand whether innovative instruments such as insurance-linked securities, more specifically catastrophe bonds, can be an alternative to other more traditional instruments. For this purpose, Pearsons coefficient was used to analyse the relationship between the Dow Jones average yearly rate of return variable, between 2001 and 2020, and bonds and securities issued in the US, between 2001 and 2020. The results showed a strong or tending to strong positive correlation during a specific period of time.
Keywords: insurance-linked securities; ILS; catastrophe bonds; financial innovation; financial crisis; Pearson correlation coefficient.
Brands visual identity on social media platforms: a content analysis
by Harsandaldeep Kaur, Muhammad Tanveer, Haider Mahmood, Kanwal Roop Kaur
Abstract: This paper investigates how brands delineate their visual identity in avatar (profile photo) and header (cover photo) on social media platforms. The content analysis of the top 50 Indian brands was conducted from 116 screenshots taken from the brands Facebook, Twitter, and YouTube page to determine the visual identity exhibited by brands on social media platforms. We found the actual use of visual elements, i.e., logotype, text type, typography, colour, and photographic elements employed by brands in avatar and header to demonstrate their visual identity. The findings also revealed that brands are inconsistent in wielding their overall visual identity across three social media platforms. Designers and marketers are suggested to position their brand across social media platforms strategically.
Keywords: content analysis; logo; social media; visual identity; brands.
Efficiency Level of Zakat Funds for the Social Sector and Poverty alleviation in Indonesia
by Sri Herianingrum, Fatimatuzzahro Fatimatuzzahro, Tika Widiastuti, R. Moh. Qudsi Fauzi, Syed Alamdar Ali Shah
Abstract: This study aims to measure the efficiency of BAZNAS, LAZNAS and APBN funds. It uses input variables of total assets and operational costs and the output variables of funds received and disbursed using the data from 2002 to 2017 on data envelopment analysis (DEA) method. The average technical efficiency score of revenue and funds distributed by BAZNAS, LAZNAS is 80.30%. This means that there is a 19.7% chance that it can be optimised to achieve a perfect technical efficiency score. Meanwhile, the APBN received an efficiency score of 94.3%. Historically, the technical efficiency scores of BAZNAS and LAZNAS funds have fluctuated with a positive trend. Based on the results of multiple linear regressions, the effect of the efficiencies of BAZNAS, LAZNAS and APBN funds shows that their funds have a significantly negative effect on the poverty level.
Keywords: National Amil Zakat Agency; BAZNAS; LAZNAS; APBN fund; data envelopment analysis; DEA; technical efficiency score; economy; Indonesia.
Financial analyst coverage and tax avoidance: evidence from the UK
by Mohammad Issa Almaharmeh, Ali A. Shehadeh, Mohammad Aladwan
Abstract: This paper examines the impact of analyst coverage on corporate tax avoidance strategies. Previous literature suggests different views about the possible relationships linking these phenomena. After examining 3,475 firm-year observations collected from the UK market for the period 2011-2018 the findings suggest that high intensity in analyst coverage leads to increased tax avoidance activities. This result is in line with the 'pressure view', which posits that managers may be more incentivised to reach or exceed earnings expectations to evade the unfavourable consequences of missing analysts' earnings benchmarks. Our results are robust after applying pooled OLS and fixed-effects panel regressions.
Keywords: corporate tax avoidance; corporate tax aggressiveness; financial analyst coverage; earnings management; corporate governance; market pressure; analyst following; UK.
Leverage and firm characteristics what matter? Data from the Indonesian Stock Exchange
by Puji Handayati, Cipto Wardoyo, Lioni Indrayani, Yohanes Indrayono
Abstract: The purpose of this study is to investigate the relations between firm characteristics and financial leverage for Indonesian publicly-held firms. Based on data obtained from 206 firms listed in the Indonesian stock exchange for the periods of 2007-2016, we hypothesise and find that financial leverage is negatively associated with a firm's profitability, and firm size. Furthermore, we predict and find that growth opportunity and median industry leverage is positively associated with financial leverage. Concerning asset tangibility, we did not find a significant relation with financial leverage. The findings of our study provide useful insights into understanding the factors that should be used by firm managers to make their financing decisions especially in Indonesian publicly-held firms.
Keywords: leverage; assets-tangibility; profitability; firm-size; market-to-book-ratio; median industry leverage; Indonesian publicly-held firms.
Effect of consumers' perceived risk on relationship marketing for m-shopping in India: the moderated mediation role of demonetisation
by Ishfaq Hussain Bhat, Shilpi Gupta
Abstract: With the development of digital technologies, customers have shifted to various digital platforms for fulfilling their shopping requirements. With demonetisation digital platforms for shopping have been encouraged thus paving the way for m-shoppers to shop at their place of convenience. In spite of all the benefits offered to m-shoppers, they perceive certain risks while shopping through their mobile phones. Therefore, the present study examines the impact of various behavioural constructs like perceived risk, trust, commitment and purchase intention on m-shopping. The data collected with the help of standardised questionnaires was subject to various statistical tools. The findings of the study reveal that perceived risk has an inverse relationship with m-shopping behaviour. The moderated mediation analysis also indicates a positive impact of demonetisation on overall m-shopping behaviour. The study contributes to the m-shopping literature and recommends to the academicians, policymakers and retailers to gauge the quantum of various risks perceived by the customers in m-shopping.
Keywords: perceived risk; demonetisation; trust; commitment; purchase intention; India; digital; m-shopping; apps; shopping behaviour; financial risk; functional risk.
The effect of capital structure on banking performance: a meta-analytical approach
by Houda BenMabrouk, Ikbel BenAbdessalem
Abstract: This paper studies the relationship between banking capital and performance through a systematic review. We perform the meta-analysis technique on 66 papers for a 57-year period that spans from 1958 to 2015. Using the random effect model and the Hedges' g measure, the results show that the capital structure does not affect banking performance, which confirms the Modigliani and Miller (1958) findings. However, the meta-regression indicates that the relationship between banking capital structure and performance is significantly associated to the proxy of capital structure, the performance indicator, the banking type (conventional versus Islamic) and the context of the study (developed versus emerging). Finally, the results indicate that Islamic banks' performance is not affected by capital structure.
Keywords: banking performance; capital structure; meta-analysis; meta-regression.
Systematic review on performance and growth drivers of SMEs
by Mokhalles M. Mehdi, Tridib Ranjan Sarma
Abstract: The small and medium enterprises (SMEs) sector is an influential driver in the growth of any economy in the world. Albeit scholars have conducted SME research on performance and growth factors for over two decades, our understanding of this particular type of research is still limited. The study is an attempt to explore the determinants of SMEs' performance and systematically reviewed 78 relevant literatures. It concluded that SMEs characteristics, managerial characteristics, internal and external factors influenced the growth and performance of SMEs. The study proposed a framework integrating the past approach and literature. Through the systematic review, we noticed inconsistencies in paradigms that allowed us to offer suggestions for future research. Among the opportunities for future research in the area of SME performance is in-depth qualitative research in the diverse SME sector to understand the performance followed by a focus on methodological trends in SMEs research that need further attention.
Keywords: entrepreneurship; small and medium enterprises; SMEs; performance; financial; non-financial; systematic literature review.
A closer look at industry-associated value premium: evidence from India
by Bhumiswor Sharma, P. Srikanth, Mareena Mathew
Abstract: This paper examines whether the academic literature-promised value premium has any industry association in the Indian equity market and the relationship between stock returns, value, and size within and across industries. We examine all listed firms trading at BSE India between 1999-2020, using CAPM and Fama-French three-factor models on each firm-levels and industry-level portfolio. The positive and significant value effect was found to exist in 17 out of 21 industry groups. Both industry and firm-level value effects are identified; however, the firm-level effect seems more prominent. Furthermore, the value effect is most substantial in small-cap value stocks of value- and growth-oriented industries, large-cap value stocks of value-oriented industry groups, then small-cap growth stocks of value- and growth-oriented industries and large-cap growth stocks of value- and growth-oriented industries. We also show evidence confirming the claim that value premium results from investors challenging higher returns from firms and industries operating in higher risk and distressing constraints.
Keywords: value premium; firm size; regulated industry groups; risk measures; portfolio management; financial market; CAPM; Fama-French three-factor model; value effect; stock returns; India.