scholarly journals Extreme Temperatures and Firm-Level Stock Returns

2021 ◽  
Vol 18 (4) ◽  
pp. 2004
Author(s):  
Jingbin He ◽  
Xinru Ma
Keyword(s):  
Stock Returns ◽  
Fixed Effects ◽  
Extreme Temperature ◽  
Weather Conditions ◽  
Ordinary Least Squares ◽  
Extreme Temperatures ◽  
Least Squares Regression ◽  
Firm Level ◽  
Induced Mood ◽  
The Impact

By linking stock returns with weather conditions from 2007 to 2019 in China, we study how firm-level stock returns react to extreme temperatures. Based on a multivariate ordinary least squares regression model with fixed effects, empirical results show that firm-level stock returns decrease with exposure to extreme temperatures. We further explore the heterogeneity in the temperature-return relation to enrich our understanding of the economic mechanism behind it. The impact of extreme temperatures on abnormal stock returns is more pronounced in smaller, younger, more volatile, less profitable firms and firms with more intangible assets. The results indicate that the investor mood likely plays a role in the extreme temperature effect. The impact of extreme temperatures holds after addressing a series of concerns. Overall, our paper provides additional firm-level evidence on the environment-induced mood effect in the stock market.

Lending relationships, credit ratings and bank loan spreads: evidence from Indonesian listed companies

2020 ◽  
Vol 16 (4) ◽  
pp. 455-479
Author(s):  
Yane Chandera ◽  
Lukas Setia-Atmaja
Keyword(s):  
Fixed Effects ◽  
Credit Ratings ◽  
Listed Companies ◽  
Bank Loan ◽  
Least Squares Regression ◽  
Firm Level ◽  
Content Type ◽  
Lending Relationships ◽  
Loan Spreads ◽  
The Impact

PurposeThis study examines the impact of firm-bank relationships on bank loan spreads and the mitigating role of firm credit ratings on that impact.Design/methodology/approachThe study sample consists of Indonesian publicly listed companies for the period 2006 to 2016; bank-loan data was extracted from the Loan Pricing Corporation Dealscan database. For the degree of firm-bank relationships, the data on each loan is manually computed, using five different methods taken from Bharath et al. (2011) and Fields et al. (2012). All of the regression analyses are controlled for the year fixed effects, heteroscedasticity, and firm-level clustering. To address the endogeneity issues, this study uses several methods, including partitioning the sample, running nearest-neighbour and propensity score matching tests, and using instrumental variables in two-staged least-squares regression models.FindingsIn line with relationship theory and in opposition to the hold-up argument, this study finds that lending relationships reduce bank loan spreads and that the impact is more noticeable among non-rated Indonesian firms. Specifically, each additional unit in the total number of years of a firm-bank relationship and the number of previous loan contracts with the same bank are associated with 7.34 and 9.15 basis-point decreases, respectively, in these loan spreads.Practical implicationsCorporations and banks should maintain close, long-term relationships to reduce the screening and monitoring costs of borrowing. Regulators should create public policies that encourage banks to put more emphasis on relationships in their lending practices, especially in relation to crisis-prone companies.Originality/valueTo the best of the authors’ knowledge, this is the first study to examine the impact of lending relationships on bank loan spreads in Indonesia. The study offers insights on banking relationships in emerging markets with concentrated banking industries, underdeveloped capital markets and prominent business-group affiliations.

Product diversification, business structure, and firm performance in Taiwanese property and liability insurance sector

2017 ◽  
Vol 18 (5) ◽  
pp. 486-499 ◽  
Author(s):  
Chen-Ying Lee
Keyword(s):  
Firm Performance ◽  
Financial Services ◽  
Fixed Effects ◽  
Ordinary Least Squares ◽  
Product Diversification ◽  
Least Squares Regression ◽  
Fixed Effects Model ◽  
Content Type ◽  
The Impact ◽  
Business Structure

Purpose The purpose of this study is to analyze product diversification, business structure and insurer performance with a comprehensive look at the property-liability (P/L) insurance operations. Design/methodology/approach Using a panel data, this study employs an ordinary least squares regression model, fixed effects model and random effects model to examine the impact of product diversification and business structure on the performance of P/L insurers. The study assesses insurer performance using both risk-adjusted return on assets and risk-adjusted return on equity. Findings The study finds that product diversification is significantly negatively related to the performance of P/L insurers. The results are consistent with the diversification discount theory. The empirical results reveal that business lines have significant impacts on firm performance, particularly on the lines of fire and marine insurances. Furthermore, the interaction between product diversification and firm size implies that product diversification significantly increases the performance of large-sized insurance firms. Originality/value The study provides some valuable insights into the effects of diversification and business structure on the performance of P/L insurers in a developing country. The study’s findings suggest that management of P/L insurers should clarify their objectives and carefully assess the company’s resources when dealing with product diversification and business structure. The results have practical implications for the financial services industry in Taiwan.

Legal family, cultural dimensions, and FDI

2019 ◽  
Vol 15 (3) ◽  
pp. 285-314 ◽  
Author(s):  
Tanja Steigner ◽  
Marian K. Riedy ◽  
Antonina Bauman
Keyword(s):  
Fixed Effects ◽  
Cultural Distance ◽  
Common Law ◽  
Ordinary Least Squares ◽  
Cultural Dimensions ◽  
Source Country ◽  
Least Squares Regression ◽  
Legal Origin ◽  
Content Type ◽  
The Impact

Purpose The purpose of this paper is to investigate the interaction between legal origin and cultural distance and its impact on foreign direct investment (FDI) flows into the OECD. Design/methodology/approach Ordinary least squares regression analysis is used to evaluate FDI flows into OECD countries between 2003 and 2012. Estimations use fixed effects and clustered standard errors. Findings FDI flows from civil to common law countries are greater than vice versa. Further, cultural distance impacts FDI flows depending on the legal origin of the source country. Specifically, more FDI flows from civil and common law countries, when the host country has a higher (lower) power distance (individualism) score. Civil law countries send more FDI into countries with higher masculinity, uncertainty avoidance and indulgence scores and with lower long-term orientation scores. The opposite is the case with common law source countries. The findings remain robust for various changes to the sample selection. Research limitations/implications The concepts of cultural distance and legal origin have been criticized. However, neither concept has been rejected; rather, both concepts persist as robust empirical research tools. Practical implications Scholars, managers and investors can gauge the impact of cultural distance on FDI flows based on the legal family of the source country. Further, policy makers might want to consider rebranding their countries in terms of cultural perceptions to show the attractiveness of specific cultural dimensions to foreign companies and investors. Originality/value To the best of the authors’ knowledge, this is the first paper that jointly investigates FDI, legal origin and national culture.

scholarly journals CEO power and R&D investment

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Christine Naaman ◽  
Li Sun
Keyword(s):  
Chief Executive ◽  
Ordinary Least Squares ◽  
Financial Accounting ◽  
Least Squares Regression ◽  
Ceo Power ◽  
Firm Level ◽  
Content Type ◽  
Negative Relation ◽  
The Impact ◽  
D Investment

Purpose This study aims to examine whether and how the power of a chief executive officer (CEO) relates to firm-level research and development (R&D) investment. Design/methodology/approach The authors use clustered standard errors ordinary least squares regression using a large sample of US firms from 1994 to 2017. Findings The authors find a significant negative relation between CEO power and R&D investment, suggesting that firms with more powerful CEOs are less likely to invest in R&D activities. Besides, the study finds that this significant negative relation is largely driven by firms with weaker corporate governance. Originality/value This study contributes to the finance literature on the impact and consequences of having powerful CEOs and the financial accounting literature on the determinants of R&D expenditures.

scholarly journals THE IMPACT OF THE INTERNET ON TRADE IN EDUCATION

2015 ◽  
Vol 21 (6) ◽  
pp. 833-854 ◽  
Author(s):  
Christina TAY
Keyword(s):  
Fixed Effects ◽  
Internet Access ◽  
Ordinary Least Squares ◽  
The Internet ◽  
Education For All ◽  
Least Squares Regression ◽  
Fixed Effects Model ◽  
Analyse Data ◽  
Time Frames ◽  
The Impact

The purpose of this study is to investigate how the Internet impacts trade in education. Divided into three time frames – 2000 to 2006, 2007 to 2012 and 2000 to 2012, data on 189 countries was used to compare the impact of different intensities of the Internet access on trade in education. This research uses the following methods to analyse data: pooled ordinary least squares regression, fixed-effects model and random effects model. Results suggest that the Internet facilitates trade in education, the impact of which is between 16.4% and 21% for every 0.01% increase in Internet access. Larger countries and countries that share a common language show a highly significant impact of the Internet on trade in education for all three time frames at 0.01%. However, economic health of a country does not necessarily imply greater trade. This study finds mixed results for fixed (wired) broadband over the three time frames. The results explain between 63.2% and 74.9% of the impact of the Internet on trade in education. Finally, the results of this study strongly suggest that improving Internet access in a country will stimulate trade in education.

scholarly journals Does Innovation Explain the Skewness of Stock Returns?

2021 ◽  
Vol 24 (2) ◽  
pp. 12-31
Author(s):  
Ahmed Baig ◽  
Hassan Anjum Butt ◽  
Abrar Fitwi ◽  
Joey Smith
Keyword(s):  
Research And Development ◽  
Stock Returns ◽  
Fixed Effects ◽  
Stock Return ◽  
Stock Exchanges ◽  
Firm Level ◽  
Input And Output ◽  
Development Expenditure ◽  
Using Data ◽  
The Impact

This paper investigates the impact of firm-level innovation on the skewness of stock returns. Using data on a broad sample of equities from the major US stock exchanges, we find that innovative companies exhibit strong positive skewness. Our results are robust to both input and output measures of innovation as we find that increases in both firm-level research and development expenditure (R&D), as well as the number of patents, are positively associated with future stock return skewness. Our results hold using both systematic and idiosyncratic measures of skewness while controlling for various stock characteristics, time, and industry-fixed effects.

Irrigation investment in China: trends, correlates and impacts

2015 ◽  
Vol 7 (3) ◽  
pp. 344-359 ◽  
Author(s):  
Fei He ◽  
Yaojiang Shi ◽  
Renfu Luo ◽  
Linxiu Zhang ◽  
Natalie Johnson ◽  
...  
Keyword(s):  
Fixed Effects ◽  
Agricultural Land ◽  
Crop Yields ◽  
Ordinary Least Squares ◽  
Least Squares Regression ◽  
Content Type ◽  
Irrigated Area ◽  
Nationally Representative ◽  
The Impact ◽  
Sown Area

Purpose – The purpose of this paper is to describe trends in irrigation investment in China’s rural villages in the 2000s, identify the types of villages in which investment occurred and examine whether this investment had an impact on agricultural land. Design/methodology/approach – This study makes use of longitudinal survey data from a nearly nationally representative sample of 101 villages spread across five provinces. The outcome variables are cultivated area, sown area and effectively irrigated area, and ordinary least squares regression and fixed effects models are used for the analysis. Findings – In spite of sustained investments into irrigation from 1998 to 2011, there has been almost no impact on agricultural land. Cultivated area and sown area have fallen across all five sample provinces while effectively irrigated area remains largely unchanged. The authors also show that there is no relationship between investment into irrigation and agricultural land. Irrigation facilities also have the lowest rate of rural resident satisfaction of any of the major public services provided. Research limitations/implications – More research is needed to understand the impact of irrigation investment on crop yields and water savings. Practical implications – Policymakers may need to rethink the current pattern of investment into irrigation. Originality/value – This is the first study to quantitatively model the impact of investment into irrigation at the village level all over China.

The impact of executives’ perceptions of environmental threats and organizational slack on innovation strategies

2016 ◽  
Vol 7 (2) ◽  
pp. 216-230 ◽  
Author(s):  
Chengyuan Wang ◽  
Biao Luo ◽  
Yong Liu ◽  
Zhengyun Wei
Keyword(s):  
Cognitive Theory ◽  
Environmental Changes ◽  
Ordinary Least Squares ◽  
Organizational Slack ◽  
Least Squares Regression ◽  
Content Type ◽  
Environmental Threats ◽  
Innovation Strategies ◽  
The Impact ◽  
The Relationship

Purpose The paper aims to study the relationship between executives’ perceptions of environmental threats and innovation strategies and investigate the moderating effect of contextual factor (i.e. organizational slack) on such relations. It proposes a dualistic relationship between executives’ perceptions of environmental threats and innovation strategies, in which different perceptions of environmental threats will lead to corresponding innovation strategies, and dyadic organizational slack can promote such processes. Design/methodology/approach The paper is based on a survey with 163 valid questionnaires, which were all completed by executives. Hierarchical ordinary least-squares regression analysis is used to test the hypotheses proposed in this paper. Findings The paper provides empirical insights about that executives tend to choose exploratory innovation when they perceive environmental changes as likely loss threats, yet adopt exploitative innovation when perceiving control-reducing threats. Furthermore, unabsorbed slack (e.g. financial redundancy) positively moderates both relationships, while absorbed slack (e.g. operational redundancy) merely positively influences the relationship between the perception of control-reducing threats and exploitative innovation. Originality/value The paper bridges the gap between organizational innovation and cognitive theory by proposing a dualistic relationship between executives’ perceptions of environmental threats and innovation strategies. The paper further enriches innovation studies by jointly considering both subjective and objective influence factors of innovation and argues that organizational slack can moderate such dualistic relationship.

Estimating defaults in organized security lending markets

2016 ◽  
Vol 24 (3) ◽  
pp. 343-362
Author(s):  
Latif Cem Osken ◽  
Ceylan Onay ◽  
Gözde Unal
Keyword(s):  
Credit Risk ◽  
Stock Returns ◽  
Stock Price ◽  
Price Volatility ◽  
Equity Market ◽  
Ordinary Least Squares ◽  
Least Squares Regression ◽  
Content Type ◽  
Central Counterparties ◽  
Risk Determinants

Purpose This paper aims to analyze the dynamics of the security lending process and lending markets to identify the market-wide variables reflecting the characteristics of the stock borrowed and to measure the credit risk arising from lending contracts. Design/methodology/approach Using the data provided by Istanbul Settlement and Custody Bank on the equity lending contracts of Securities Lending and Borrowing Market between 2010 and 2012 and the data provided by Borsa Istanbul on Equity Market transactions for the same timeframe, this paper analyzes whether stock price volatility, stock returns, return per unit amount of risk and relative liquidity of lending market and equity market affect the defaults of lending contracts by using both linear regression and ordinary least squares regression for robustness and proxying the concepts of relative liquidity, volatility and return constructs by more than variable to correlate findings. Findings The results illustrate a statistically significant relationship between volatility and the default state of the lending contracts but fail to establish a connection between default states and stock returns or relative liquidity of markets. Research limitations/implications With the increasing pressure for clearing security lending contracts in central counterparties, it is imperative for both central counterparties and regulators to be able to precisely measure the risk exposure due to security lending transactions. The results gained from a limited set of lending transactions merit further studies to identify non-borrower and non-systemic credit risk determinants. Originality/value This is the first study to analyze the non-borrower and non-systemic credit risk determinants in security lending markets.

Does the second wave of COVID-19 undermine corporate immunity? International evidence

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Huy Viet Hoang ◽  
Cuong Nguyen ◽  
Khanh Hoang
Keyword(s):  
Stock Returns ◽  
Stock Price ◽  
Fixed Effects ◽  
Management Strategies ◽  
The United States ◽  
Least Square ◽  
Content Type ◽  
The Impact ◽  
Second Wave ◽  
Practical Implications

PurposeThis study compares the impact of the COVID-19 pandemic on stock returns in the first two waves of infection across selected markets, given built-in corporate immunity before the global outbreak.Design/methodology/approachThe data are collected from listed firms in five markets that have experienced the second wave of COVID-19 contagion, namely the United States (US), Australia, China, Hong Kong and South Korea. The period of investigation in this study ranges from January 24 to August 28, 2020 to cover the first two COVID-19 waves in selected markets. The study estimates the research model by employing the ordinary least square method with fixed effects to control for the heterogeneity that may confound the empirical outcomes.FindingsThe analysis reveals that firms with larger size and more cash reserves before the COVID-19 outbreak have better stock performance under the first wave; however, these advantages impede stock resilience during the second wave. Corporate governance practices significantly influence stock returns only in the first wave as their effects fade when the second wave emerges. The results also suggest that in economies with greater power distance, although stock price depreciation was milder in the first wave, it is more intense when new cases again surge after the first wave was contained.Practical implicationsThis paper provides practical implications for corporate managers, policymakers and governments concerning crisis management strategies for COVID-19 and future pandemics.Originality/valueThis study is the first to evaluate built-in corporate immunity before the COVID-19 shock under successive contagious waves. Besides, this study accentuates the importance of cultural understanding in weathering the ongoing pandemic across different markets.

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