Are Political Events Systematically Priced in the Stock Market? Evidence from Korean Listed Firms

2016 ◽  
Author(s):  
Seo Joon Choi ◽  
Sunyoung Park
Keyword(s):  
Stock Market ◽  
Listed Firms ◽  
Political Events

Power Distance, Political Uncertainty, and Stock Price Crash Risk: International Evidence

2021 ◽  
Author(s):  
Qiaoling Su ◽  
Xunchang Zhang ◽  
Jianming Ye
Keyword(s):  
Stock Price ◽  
Power Distance ◽  
Cultural Dimensions ◽  
Crash Risk ◽  
Corporate Disclosure ◽  
National Elections ◽  
Political Event ◽  
Listed Firms ◽  
Political Events ◽  
The Government

This study tests the effect of unbalanced power distance (PD) (i.e., Hofstede’s cultural dimensions PD index) and individual stock price crash risk. We examine the stock price behavior of listed firms in 37 countries from 2004 to 2016 and use multivariate analyses to document that societal PD is important in explaining firms’ propensity to release accounting information. This propensity suggests a psychological tendency regarding timing management, particularly for bad news. As countries with large PD prefer to keep things under control, the result is fewer unexpected stock price crashes during the long windows between election events. However, because large-PD countries focus their markets on maintaining temporary peace before and during periods of political events (i.e., national elections), crash risk increases after the political event window. Consistent with these predictions, we find that in large-PD countries, companies generally have less incentive to hide negative information and thus generate stock price crashes. This situation is substantially changed during the postpolitical windows, when firms and ways of spreading information are more controlled by the government. Our findings suggest that formal mechanisms alone are insufficient to explain the behaviors of corporate disclosure that are entangled with informal instruments.

Financial flexibility, managerial efficiency and firm life cycle on firm performance

2019 ◽  
Vol 16 (2) ◽  
pp. 168-180
Author(s):  
Heng-Yu Chang ◽  
Chun-Ai Ma
Keyword(s):  
Life Cycle ◽  
Firm Performance ◽  
Stock Market ◽  
Life Cycles ◽  
Mature Stage ◽  
Chinese Stock Market ◽  
Financial Flexibility ◽  
Content Type ◽  
Listed Firms ◽  
Managerial Efficiency

Purpose As the capital market in China is still developing, several constraints on a Chinese-listed firm’s financing strategy have a direct impact on its financial flexibility. The purpose of this paper is to reconstruct traditional financial flexibility index (FFI) derived from the western context, provide empirical evidence within eastern context by modified FFI and examine how the managerial efficiency of Chinese-listed firms is demonstrated with modified FFI to escort corporate life cycle hypothesis. Design/methodology/approach By tailored FFI to fit the contemporary operations of Chinese-listed firms, this study investigates how managerial efficiency varies across different life stages to demonstrate the moderating power in the firm performance of financially flexible firm. Findings It is found that financially flexible firms in the Chinese stock market generally experience good firm performance, yet the managerial efficiency could gradually be diminishing at their mature stage even firms’ financial flexibility remains consistent with the agency theory. This paper sheds light on the necessity to reexamine the components in financial flexibility based on the eastern context, and provides avenue to further understand the managerial behavior of Chinese listed firms when considering firm life cycles. Research limitations/implications Although it is difficult for this current study to offer the precise weights on each factor in calculating financial flexibility, the judgment matrix method is adopted to at least provide reliable estimates in accordance with Chinese business contexts with less than 10 percent errors in contrast to the actual weights. Practical implications This modified FFI is particularly suitable for Chinese-listed firms under certain unique financial reporting regulations by adjusting a number of weights and factors. This study may help practitioners understand the managerial conduct of publicly listed firms in China. Originality/value The paper constructs a modified FFI with Chinese stock market characteristics embedded, and provides insightful evidence to explain the new pecking order theory by considering the life cycle stage of Chinese-listed companies.

scholarly journals A Preliminary Study of the Emerging and Developing Stock Market of China

2014 ◽  
Vol 2 (1) ◽  
pp. 100
Author(s):  
Hai Long
Keyword(s):  
Stock Market ◽  
Foreign Currency ◽  
Chinese Stock Market ◽  
Significant Development ◽  
Listed Firms ◽  
Ipo Performance ◽  
Growth Enterprise Market ◽  
New Findings ◽  
Ipo Pricing ◽  
Preliminary Study

<p><em>The Chinese share market as an emerging and fast-growing listing venue has experienced a significant development since 2000.Prior studies on this market overwhelmingly concentrate on IPO-pricing-related and post-IPO performance-based propositions with lagging data. Adopting the updated data within the last couple of years, this paper comprehensively explores and accounts for some striking features of the Chinese stock market, and unfolds</em><em> </em><em>some new causes contributing to these characteristics.</em></p> <p><em>Some new findings are revealed. 1)</em><em> </em><em>Two new factors may lead to the extreme under</em><em> </em><em>pricing in China’s</em><em> </em><em>market, which are</em><em> </em><em>the unseasoned investor</em><em> </em><em>sand their high demands of IPO shares. 2)</em><em> </em><em>The foreign-currency trading platform is not effective and efficient to attract the overseas investors.</em><em> </em><em>3)</em><em> </em><em>The imbalanced industry structure of the listed firms is very significant, the Chinese share market is dominated by the manufacturing firms.4)</em><em> </em><em>The Growth Enterprise Market of China is essential to address the long-standing financing difficulties for the Chinese Small and Medium-sized Enterprises, which are unqualified to raise capital from the Primary Stock Market.</em></p>

scholarly journals Ownership structure and corporate governance: What does the data reveal about Saudi listed firms?

2017 ◽  
Vol 14 (4) ◽  
pp. 413-424 ◽  
Author(s):  
Mamdouh Abdulaziz Saleh Al-Faryan ◽  
Everton Dockery
Keyword(s):  
Corporate Governance ◽  
Stock Market ◽  
Firm Size ◽  
Ownership Structure ◽  
Ownership Concentration ◽  
Listed Firms ◽  
Ownership Structures ◽  
Market Instability ◽  
Positive Effect ◽  
Size Variable

In this paper we examine the ownership structure of 169 firms listed on the Saudi Arabian stock market from 2008 to 2014. The analysis uses the testing methodology described by Demsetz and Lehn (1985) to examine the effects of firm and market instability on Saudi ownership structure and additionally, the effect of systematic regulation that imposes constraints on the behaviour of the selected listed firms. We find evidence, for the majority of the ownership structures considered, in favour of the view that firm size, regulation and instability affects ownership structure. The results suggest that the size variable has a positive effect on ownership concentration. Our analysis also shows that instability had some effect on ownership concentration and structure when using the non-linear specification, particularly when using firm specific instability, albeit the effect was stronger when the instability measure was accounting profit returns. Lastly, there is evidence that government-owned firms were mostly affected by regulation while diffused owned firms were affected most by instability than non-government owned firms.

Financial performance and gender diversity. The effect of family management after a decade attempt

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Kofi Mintah Oware ◽  
Thathaiah Mallikarjunappa
Keyword(s):  
Stock Market ◽  
Financial Performance ◽  
Role Theory ◽  
Social Role ◽  
Gender Diversity ◽  
Family Management ◽  
Social Role Theory ◽  
Content Type ◽  
Listed Firms ◽  
And Gender

Purpose The purpose of this study is to investigate family management, financial performance and gender diversity of listed firms. Design/methodology/approach Using the India stock market as a testing ground, this paper used descriptive statistics and panel regression with random effect assumptions in the analysis of 800 firm-year observations between 2010 and 2019. Findings The findings show that an improvement in stock price returns leads to a corresponding increase in women employment. Also, the study shows that an increase in family-managed firms leads to a decrease in the number of women employed in listed firms. This paper speculates using the social role theory that family involvement may see women as the weaker vessel and with a role to concentrate on raising children and handling house affairs. The consequence is a decrease in women employment. The study also shows that the interactive variable of financial performance (return on assets and return on equity) × family-managed firms still causes a decrease in women employment. This paper perceives that managers in family-managed firms see women as weaker vessels and home managers which is consistent with the Indian culture. The results are robust after controlling for endogeneity. Research limitations/implications The research study is limited to large firms on the Indian stock market that submit sustainability reports and also used a single country data that can potentially limit the generalisation of the study. Originality/value No studies have combined social role theory in examining the effect of family management on gender diversity in the emerging markets.

OTC Stock Market in China – The New Venture Capital Exit?

2015 ◽  
Vol 6 (2) ◽  
Author(s):  
Jing Li
Keyword(s):  
Stock Market ◽  
Venture Capital ◽  
Active Role ◽  
New Venture ◽  
Stock Exchanges ◽  
Market Making ◽  
Secondary Markets ◽  
Listed Firms

AbstractVenture capital is certainly important to a country in that it finances entrepreneurship and innovation. In recent years, secondary markets for private shares have emerged as an important node in the VC cycle by both facilitating interim liquidity for non-listed firms and providing external investors with the access to good pre-IPO shares. Ready and able to play an active role on both the exit and entry sides, are VCs more engaged in reducing or increasing their ownership in these markets? Based on a sample consisting of a total of 102 firms that have been quoted on China’s New Third Board from 2006 to 2011 year end, this paper finds that VCs were much more likely to increase than decrease their ownership – there have been 128 times of increases in contrast to 45 times of decreases. In particular, VCs actively took the opportunities of subscribing new shares issued in capital increases to increase their ownership. Out of the total 85 VCs that invested in the 102 firms, 33 were already there as of first quotation, 39 VCs subscribed new shares in capital increases, 33 VCs bought shares from existing shareholders, while only 11 exited. For the purposes of enhancing the attractiveness of the New Third Board as an exit venue, this paper argues that the market should work on increasing its liquidity from both the supply and the demand sides. As the successor of the New Third Board, the National Equities Exchange and Quotations largely manages to realize this by considerably broadening the pool of potential eligible firms and investors, and also by making available various additional mechanisms such as market making and call auctions to boost share transfers. As such, it is generally reasonable to argue that for those SMEs that are not yet able to directly list on public stock exchanges but are already in need for interim liquidity, the NEEQ does serve as a useful platform to achieve the purpose, and thus fills a gap in China’s VC cycle.

scholarly journals DO FUNDAMENTALS DRIVE RELATIVE VALUATION? EVIDENCE FROM GLOBAL STOCK MARKET INDICES

2020 ◽  
pp. 2050002
Author(s):  
KOMLA AGUDZE ◽  
OYAKHILOME IBHAGUI
Keyword(s):  
Stock Market ◽  
Emerging Markets ◽  
Aggregate Level ◽  
Listed Firms ◽  
Level Data ◽  
Relative Valuation ◽  
Global Stock ◽  
Dynamic Link

In this paper, we use aggregate-level data from global, developed and emerging markets to empirically examine how fundamentals of publicly listed firms drive their relative valuation multiples. First, we find that, in each market, there is a dynamic link between fundamentals and relative valuation: relative valuation multiples are negatively linked to their past, suggesting that overvalued markets, based on high relative valuation multiples, often experience corrections that subsequently lower their relative valuation multiples, making them less overvalued, fairly valued or even undervalued, compared with previous periods. Secondly, we document that fundamentals do indeed have significant effects on relative valuation multiples. This reveals that fundamentals are an important driver of relative valuation multiples at the aggregate level in the stock market. Hence, practitioners should not ignore outlook for relative valuation multiples of aggregate stock market that is deduced from fundamentals.

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