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Article
Publication date: 20 November 2023

Wael Mostafa and Rob Dixon

Recent studies on the securities market’s differential pricing of earnings components have shown that cash flow from operations is more highly valued than total accruals and that…

Abstract

Purpose

Recent studies on the securities market’s differential pricing of earnings components have shown that cash flow from operations is more highly valued than total accruals and that moderate cash flow from operations has higher valuation than extreme total accruals. An interesting question that follows is whether these findings hold regarding the differential valuations of cash flow and current accruals. This study aims to extend prior research by addressing this issue in two ways. First, the authors examine the incremental information content of cash flow from operations beyond working capital from operations. Second, the authors assess the effect of extreme working capital from operations on the incremental information content of cash flow from operations. This study aims to extend prior research by addressing this issue in two ways.

Design/methodology/approach

This study adopts market-based accounting research to test its hypotheses and to achieve its objectives. Specifically, this study uses statistical associations between accounting data and stock returns to examine the incremental information content (value relevance) of cash flow and working capital from operations and the effect of extreme working capital from operations on the incremental information content of cash flow.

Findings

The results show that cash flow from operations is not more highly valued than current accruals (both being valued equivalently). However, moderate cash flow from operations has higher valuation than extreme current accruals (each is valued differently). Overall, these research findings indicate that cash flow becomes more important for valuation as accruals get “extreme”.

Practical implications

As accruals are unlikely to persist to be permanent across the years, these results can be interpreted as indicating that cash flow and accruals information are used jointly by investors, with one being more important than the other depending on the relative “extremeness” of each. Therefore, both are of value to the investor and both should be reported.

Originality/value

The paper contributes to the UK research on determining the preferred level of disaggregation of earnings components, i.e. operating cash flow, current accruals and non-current accruals. This would help investors to improve their investment and credit decisions.

Open Access
Article
Publication date: 11 September 2023

Raffaella Santolini

The paper aims to examine the role played by property tax in influencing strategic decisions regarding marital separation and divorce in Italian municipalities.

Abstract

Purpose

The paper aims to examine the role played by property tax in influencing strategic decisions regarding marital separation and divorce in Italian municipalities.

Design/methodology/approach

The empirical analysis is conducted on a sample of 6,458 Italian municipalities by applying the ordinary least squares (OLS) and instrumental variables (IVs) approaches.

Findings

The estimation results show a small increase in marital separations and divorces as the difference between the municipal secondary and primary home tax rate increases. Specifically, an increase of 1‰ in the property tax rate differentials is accompanied by an increase of six marital separations and four divorces per 1,000 inhabitants.

Research limitations/implications

The main limitation of the analysis is that the strategic behavior of the married couple is inferred from econometric analysis with data aggregated at the municipal level. To investigate this phenomenon more precisely, it would be useful to have individual data collected by surveys on strategic divorce decisions due to property tax incentives.

Originality/value

This study contributes to the scant existing literature on the tax incentives for strategic divorce. It is the first study to empirically investigate the effects of property tax on separation and divorce decisions by investigating the Italian context. In Italy, a property tax was introduced in 1993, encouraging “false” divorces by spouses with a second home since the tax on the secondary home was set at a rate higher than that on the primary residence. Moreover, there were no tax deductions and no additional tax breaks on the secondary home, while they were established on the primary one. Higher property taxes and the absence of tax breaks on the secondary home may have encouraged a strategic behavior whereby many married couples filed for false separation and divorce in order to recover part of property tax rebates.

Details

Journal of Economic Studies, vol. 51 no. 9
Type: Research Article
ISSN: 0144-3585

Keywords

Article
Publication date: 23 January 2024

Manisha Yadav

The study aims to test prospect theory (PT) predictions in the cryptocurrency (CC) market. It proposes a new asset pricing model that explores the potential of prospect theory…

Abstract

Purpose

The study aims to test prospect theory (PT) predictions in the cryptocurrency (CC) market. It proposes a new asset pricing model that explores the potential of prospect theory value (PTV) as a significant predictor of CC returns.

Design/methodology/approach

The study comprehensively analyses a large sample set of 1,629 CCs, representing more than 95% of the CC market. The study uses a portfolio analysis approach, employing univariate and bivariate sorting techniques with equal-weighted and value-weighted portfolios. The study also employs ordinary least squares (OLS) regression, panel data methods and quantile regression (QR) to estimate the models.

Findings

This study demonstrates an average inverse relationship between PTV and CC returns. However, this relationship exhibits asymmetry across different quantiles, indicating that investor reactions vary based on market conditions. Moreover, PTV provides more robust predictions for smaller CCs characterized by high volatility and illiquidity. Notably, the findings highlight the dominant role of the probability weighting (PW) component in PT for predicting CC behaviors, suggesting a preference for lottery-like characteristics among CC investors.

Originality/value

The study is one of the early studies on CC price dynamics from the PT perspective. The study is the first to apply a QR approach to analyze the cross-section of CCs using a PT-based asset pricing model. The results shed light on CC investors' decision-making processes and risk perception, offering valuable insights to regulators, policymakers and market participants. From a practical perspective, a trading strategy centered around the PTV effect can be implemented.

Details

Review of Behavioral Finance, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1940-5979

Keywords

Article
Publication date: 11 October 2023

Omid Sabbaghi

This study aims to investigate the variation in overvaluation proxies and volatility across industry sectors and time.

Abstract

Purpose

This study aims to investigate the variation in overvaluation proxies and volatility across industry sectors and time.

Design/methodology/approach

Using industry sector data from the S&P Capital IQ database, this study applies traditional cross-sectional regressions to investigate the relationship between overvaluation and volatility over the 2001–2020 time period.

Findings

This study finds that the most volatile industry sectors generally do not coincide with overvalued industry sectors in the cross-section, implying that there are limitations to price-multiple methods for forecasting future volatility. Rather, this study finds that historical volatility significantly increases the goodness-of-fit when modeling volatility in the cross section of industry sectors. The findings of this study imply that firms should increase disclosures and transparency about corporate practices to decrease downside risk that stems from bad news. In addition, the findings underline the consistency between market efficiency and high levels of volatility in periods of significant uncertainty.

Originality/value

This study proposes a novel approach to examining the cross section of volatility across time for industry sectors.

Details

Journal of Financial Reporting and Accounting, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1985-2517

Keywords

Article
Publication date: 21 November 2023

Umar Farooq, Ahmad A. Al-Naimi, Muhammad Irfanullah Arfeen and Mohammad Ahmad Alnaimat

The current analysis aims to explore the role of cash holdings in the nexus of national governance and capital investment (CIN).

Abstract

Purpose

The current analysis aims to explore the role of cash holdings in the nexus of national governance and capital investment (CIN).

Design/methodology/approach

To achieve this aim, the authors sample the nonfinancial enterprises from 5 Brazil, Russia, India, China, South Africa (BRICS) economies and employ system generalized method of moments(GMM) models as an estimation technique.

Findings

The empirical analysis infers that national governance has a positive relationship with CIN and a negative relationship with cash holdings. The cash holdings negatively determine CIN. However, the cash holdings show a positive relationship with CIN in the presence of the national governance index (NGI).

Research limitations/implications

The important policy layout of the current analysis is that corporate managers should reduce cash holdings during better governance situations. Alternatively, corporate managers can disentangle the negative impact of bad country governance conditions on CIN by holding more cash.

Originality/value

The study is innovative as it explores mediating impact of cash holdings in the NGI-CIN nexus.

Details

Asian Review of Accounting, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1321-7348

Keywords

Article
Publication date: 27 November 2023

Oğuz Kara, Levent Altinay, Mehmet Bağış, Mehmet Nurullah Kurutkan and Sanaz Vatankhah

Entrepreneurial activity is a phenomenon that increases the economic growth of countries and improves their social welfare. The economic development levels of countries have…

Abstract

Purpose

Entrepreneurial activity is a phenomenon that increases the economic growth of countries and improves their social welfare. The economic development levels of countries have significant effects on these entrepreneurial activities. This research examines which institutional and macroeconomic variables explain early-stage entrepreneurship activities in developed and developing economies.

Design/methodology/approach

The authors conducted panel data analysis on the data from the Global Entrepreneurship Monitor (GEM) and International Monetary Fund (IMF) surveys covering the years 2009–2018.

Findings

First, the authors' results reveal that cognitive, normative and regulatory institutions and macroeconomic factors affect early-stage entrepreneurial activity in developed and developing countries differently. Second, the authors' findings indicate that cognitive, normative and regulatory institutions affect early-stage entrepreneurship more positively in developed than developing countries. Finally, the authors' results report that macroeconomic factors are more effective in early-stage entrepreneurial activity in developing countries than in developed countries.

Originality/value

This study provides a better understanding of the components that help explain the differences in entrepreneurship between developed and developing countries regarding institutions and macroeconomic factors. In this way, it contributes to developing entrepreneurship literature with the theoretical achievements of combining institutional theory and macroeconomic indicators with entrepreneurship literature.

Details

Management Decision, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0025-1747

Keywords

Article
Publication date: 21 November 2023

António Miguel Martins and Susana Cró

This paper investigates the short-term market impact of the beginning of the military conflict between Russia and Ukraine (February 24, 2022) on a set of airline stocks listed.

Abstract

Purpose

This paper investigates the short-term market impact of the beginning of the military conflict between Russia and Ukraine (February 24, 2022) on a set of airline stocks listed.

Design/methodology/approach

This study uses an event study methodology, cross-section analyses and interaction effects to study the effect of the war on airline stock prices and firm-specific characteristics that explain the cumulative abnormal return.

Findings

The authors observe a negative and statistically significant stock price reaction at and around the beginning of the military conflict between Russia and Ukraine, for 74 listed airlines. These results are consistent with investment portfolio rebalancing and asset pricing perspective. Moreover, this study's results show a higher negative stock market reaction for airlines based in Europe. Empirical evidence suggests the existence of a “proximity penalty” for European companies. Finally, this study's results provide insights into which airline-specific characteristics emerge as value drivers. Larger, well-capitalized (high liquidity and low debt) and profitable airlines firms with less institutional ownership have superior stock market returns and show more able to handle with the losses resulting from the war.

Originality/value

This paper fills a gap in the literature about the impact of the Russia–Ukraine war on the airline industry.

Details

Journal of Economic Studies, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0144-3585

Keywords

Article
Publication date: 11 January 2023

Nor Salwani Hashim and Fatimah De’nan

It is generally known that the perforated section such as the castellated section is good to sustain distributed loads but inadequate to sustain highly concentrated loads…

Abstract

Purpose

It is generally known that the perforated section such as the castellated section is good to sustain distributed loads but inadequate to sustain highly concentrated loads. Therefore, it is possible to design the opening in a different arrangement of web opening to achieve section efficiency, thus improving the strength and torsional behaviour of the section with web opening. This study aims to focus on the finite element analysis of I-beam with and without openings in steel section dominated to lateral-torsional buckling behaviour.

Design/methodology/approach

In this work, the analysis of different sizes, shapes and arrangements of web opening is performed by using LUSAS application to conduct numerical analysis on lateral-torsional buckling behaviour. This involves three diameter sizes of web opening, five types of opening shapes and two criteria of the model.

Findings

The section with c-hexagon web opening was placed about 200-mm centre to centre and 100-mm edge distance, contribute to 7.26% increase of buckling capacity. For the section with 150-mm centre to centre and 50-mm edge distance, the occurrence of local buckling contributes to decrease of lateral buckling section capacity to 19.943 kNm, where pure lateral-torsional buckling mostly occurred because of prevented section. Besides that, the web opening diameter was also analysed. The web crippling was observed because of the increase of opening diameter from 0.67 to 0.80 D.

Originality/value

This contributes to a decrease in buckling capacity as figured in the contour of the deformed shape. For Model 1, an increase of buckling capacity (31.46%) is observed when the opening diameter are changed from 0.67 to 0.80 D.

Details

World Journal of Engineering, vol. 21 no. 2
Type: Research Article
ISSN: 1708-5284

Keywords

Article
Publication date: 1 April 2024

Zeyang Zhou and Jun Huang

This study aims to learn the dynamic radar cross-section (RCS) of a deflection air brake.

Abstract

Purpose

This study aims to learn the dynamic radar cross-section (RCS) of a deflection air brake.

Design/methodology/approach

The aircraft model with delta wing, V-shaped tail and blended wing body is designed, and high-precision unstructured grid technology is used to deal with the surface of air brake and fuselage. The calculation method based on multiple tracking and dynamic scattering is presented to calculate RCS.

Findings

The fuselage has a low scattering level, and the opening air brake will bring obvious dynamic RCS effects to itself and the whole machine. The average indicator of air brake RCS can be lower than –0.6 dBm2 under the tail azimuth, while that of forward and lateral direction is lower. The mean RCS of fuselage is obviously higher than that of air brake, while the deflected air brake and its cabin can still provide strong scattering sources at some azimuths. When the air brake is opening, the change amplitude of the aircraft forward RCS can exceed 19.81 dBm2.

Practical implications

This research has practical significance for the dynamic electromagnetic scattering analysis and stealth design of the air brake.

Originality/value

The calculation method for aircraft RCS considering air brake dynamic deflection has been established.

Details

Aircraft Engineering and Aerospace Technology, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1748-8842

Keywords

Article
Publication date: 26 March 2024

Haichao Wang, Xiaoqiang Liu, Zhanjiang Li, Li Chen, Pinqiang Dai and Qunhua Tang

The purpose of this paper is to study the high temperature oxidation behavior of Ti and C-added FeCoCrNiMn high entropy alloys (HEAs).

Abstract

Purpose

The purpose of this paper is to study the high temperature oxidation behavior of Ti and C-added FeCoCrNiMn high entropy alloys (HEAs).

Design/methodology/approach

Cyclic oxidation method was used to obtain the oxidation kinetic profile and oxidation rate. The microstructures of the surface and cross section of the samples after oxidation were characterized by X-ray diffraction (XRD) and scanning electron microscope (SEM).

Findings

The results show that the microstructure of the alloy mainly consisted of FCC (Face-centered Cubic Structure) main phase and carbides (M7C3, M23C6 and TiC). With the increase of Ti and C content, the microhardness, strength and oxidation resistance of the alloy were effectively improved. After oxidation at a constant temperature of 800 °C for 100 h, the preferential oxidation of chromium in the chromium carbide determined the early formation of dense chromium oxide layers compared to the HEAs substrate, resulting in the optimal oxidation resistance of the TC30 alloy.

Originality/value

More precipitated CrC can preferentially oxidize and rapidly form a dense Cr2O3 layer early in the oxidation, which will slow down the further oxidation of the alloy.

Details

Anti-Corrosion Methods and Materials, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0003-5599

Keywords

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