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1 – 8 of 8The purpose of this paper is to scrutinise the effectiveness of four derivative exchanges’ enforcement efforts since 2007. These exchanges include the Commodity Exchange Inc. and…
Abstract
Purpose
The purpose of this paper is to scrutinise the effectiveness of four derivative exchanges’ enforcement efforts since 2007. These exchanges include the Commodity Exchange Inc. and ICE Futures US from the United States and ICE Futures Europe and the London Metal Exchange from the UK.
Design/methodology/approach
The paper examines 799 enforcement notices published by four exchanges through a behavioural science lens: HUMANS conceived by Hunt (2023) in Humanizing Rules: Bringing Behavioural Science to Ethics and Compliance.
Findings
The paper finds the effectiveness of the exchanges’ enforcement efforts to be a mixed picture as financial markets transition from the digital to artificial intelligence era. Humans remain a key cog in the wheel of market participants’ trading operations, albeit their roles have changed. Despite this, some elements of exchanges’ enforcement regimes have not kept pace with the move from floor to remote trading. However, in other respects, their efforts are or should be, effective, at least in behavioural terms.
Research limitations/implications
The paper’s findings are arguably limited to exchanges based in Anglophone jurisdictions. The information published by the exchanges is variable, making “like-for-like” comparisons difficult in some areas.
Practical implications
The paper makes several recommendations that, if adopted, could help exchanges to increase the potency of their enforcement programmes.
Originality/value
A key aim of the paper is to shift the lens through which the debate concerning the efficacy of exchange-level oversight is conducted. Hitherto, a legal lens has been used, whereas this paper uses a behavioural lens.
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Jasper Grashuis and Keri Jacobs
The objective of the study is to explore explanations for the capital structure compositions of farmer cooperatives, which have a unique equity structure with allocated equity as…
Abstract
Purpose
The objective of the study is to explore explanations for the capital structure compositions of farmer cooperatives, which have a unique equity structure with allocated equity as well as unallocated equity.
Design/methodology/approach
Data came from a panel of US grain marketing and input supply cooperatives for the 2010–2020 period. The study is concerned with the proportions of debt, allocated equity and unallocated equity, which requires the application of a fractional multinomial panel model to ensure predictions fall within the observed data range (i.e. 0–1).
Findings
Larger cooperatives have relatively high debt proportions. Diversification of the product portfolio has a positive effect on the debt proportion. Profitability is associated with higher debt proportions in input supply cooperatives and higher allocated equity proportions in grain marketing cooperatives. Over time, the proportion of unallocated equity increased. Overall, some results differ across grain marketing and input supply cooperatives.
Practical implications
Increasing proportions of unallocated equity warrant a debate about the future value of ownership and governance by members of farmer cooperatives.
Originality/value
Previous empirical investigations of the capital structure compositions of cooperatives lacked a distinction between allocated and unallocated equity. Our results show that the proportions of the two equity accounts respond differently to given predictors. Furthermore, much of the prior empirical literature fails to separate cooperatives on the basis of economic activities (i.e. marketing, supply and mixed).
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Ahmed S. Baig, Muhammad Imran Chaudhry and R. Jared DeLisle
In this paper, the authors study the phenomenon of price clustering in the Pakistan Stock Exchange (PSX), a market viewed as one of the best-performing stock markets in the world…
Abstract
Purpose
In this paper, the authors study the phenomenon of price clustering in the Pakistan Stock Exchange (PSX), a market viewed as one of the best-performing stock markets in the world during 2014–2017. The authors study the effect of stock-level variables on price clustering and analyze the determinants of the cross-sectional patterns of price clustering in the PSX, in particular the causal link between price clustering and political instability.
Design/methodology/approach
The authors' dataset comprises daily observations on 100 PSX stocks spanning from January 1, 2009 to June 30, 2019. The authors use multivariate regression and spectral analysis to shed light on the dynamics of stock price clustering in PSX.
Findings
The authors document abnormally high levels of stock price clustering, particularly on integer increments, in PSX. The nature of stock price clustering in PSX is consistent with the negotiation hypothesis of Harris (1991). The levels of stock price clustering on PSX are persistent and contain a cyclical component. Furthermore, the authors find that political uncertainty in Pakistan is a significant contributor to the high levels of price clustering on PSX. The authors' conclusions are robust to alternative econometric specifications and different measures of price clustering and political uncertainty.
Practical implications
The authors' findings are of interest to investors and policymakers. Since price clustering decreases market quality and degrades the information content of stock prices, the authors' study shows that price efficiency in PSX has not improved despite major reforms over the last decade. One practical implication of the authors' results is that investors should be cautious while rebalancing portfolios around political events such as general elections because stock price clustering increases in the PSX during these periods. As a result, stock prices are likely to deviate from their intrinsic values.
Originality/value
Research on price clustering is limited to developed markets, and emerging/frontier markets have been largely overlooked. The phenomenon of price clustering in the PSX has yet to be studied, despite the relevance of the PSX for emerging/frontier market investors.
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Mazhar Farid Chishti, Rizwana Bashir, Tanja Mancinelli and Rana Tanveer Hussain
The primary goal of this study is to look at the behavioral factors that influence an individual's decision to invest in the Pakistan Stock Exchange (PSX).
Abstract
Purpose
The primary goal of this study is to look at the behavioral factors that influence an individual's decision to invest in the Pakistan Stock Exchange (PSX).
Design/methodology/approach
Existing behavioral finance theories serve as a foundation for hypotheses. Further hypotheses were investigated by disseminating questionnaire results from a number of individual Pakistani investors. Brokerage and asset management fund managers were also questioned in semi-structured interviews. The obtained data were analyzed using statistical package for the social sciences, and latent variables were identified using the structural equation model (SEM) and an asset management operating system (AMOS).
Findings
Individual investor investment decisions in the PSX are influenced by five behavioral factors: herding, market, prospect, overconfidence and gambler fallacy and anchoring-ability bias. The majority of the variables have a modest impact; however, the market component has a significant impact. Only three behavioral elements, herding, prospect and heuristic, are found to influence investment performance among the behavioral factors stated above. Heuristic habits have been discovered to have the greatest positive impact on investment performance.
Practical implications
This study is one of the few in Pakistan that looked at the factors that influence stock investment decisions using behavioral finance. Prior research has only considered the effects of a restricted number of behavioral characteristics on Pakistani individual investors; however, this study seeks to use a whole collection of behavioral factors to examine their impacts on Pakistani individual investors.
Research limitations
The focus of the study remains on the individual investor, whereas the impact of institutional investors on investment behavior could bring different outcomes.
Originality/value
This is among the few studies that investigated the impact of cognitive factors on investment decisions in the context of Pakistan and will help policy makers, opinion makers and individuals.
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Mohammad Tariqul Islam Khan, Siow-Hooi Tan, Lee-Lee Chong and Gerald Guan Gan Goh
This study examines how the importance of external investment environment factors affects stock market perception, and how stock market perception affects stock investments after…
Abstract
Purpose
This study examines how the importance of external investment environment factors affects stock market perception, and how stock market perception affects stock investments after stock market crash witnessed by individual investors in one of the emerging stock markets.
Design/methodology/approach
A cross-sectional survey was administrated among 223 individual investors who experienced stock market crash in 2010–2011 in Bangladesh, and the proposed model was tested by the partial least squares-structural equation modeling PLS-SEM model.
Findings
Findings show that the importance of Bangladesh's stock market performance, government policy, economic issues and neighboring country's stock market performance have effects on investors' stock market perception. This perception, in turn, decreases monthly stock trading and short-term investment horizon. The findings further show the mediating effect of stock market perception.
Practical implications
Investors need to carefully consider the external investment environment when they form their stock market perception, as this perception drives stock investments. Analogously, regulators should ensure releasing timely and updated statistics on external investment factors.
Originality/value
Addressing those investors who encountered stock market crash, a set of external investment environment issues, stock market perception and stock investments are new in the literature.
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According to the market competition theory, a firm’s decision-making is influenced by the behaviors or strategies of its competitors. The repercussions of competition include…
Abstract
Purpose
According to the market competition theory, a firm’s decision-making is influenced by the behaviors or strategies of its competitors. The repercussions of competition include market-stealing and spillover effects. Relatively few studies in the reinsurance literature discuss the effect of competitors on an insurer’s decision-making. This study aims to fill a gap in the reinsurance literature by comparing insurers' reinsurance demand to their competitors' reinsurance purchases.
Design/methodology/approach
This study uses unbalanced panel data for the US property-liability insurance industry from 2006 to 2017 to determine the impact of competitors' reinsurance purchases on insurers' reinsurance demand. This study employs the Mixed Effect Model and the Quantile Regression to test the proposed hypotheses.
Findings
The evidence suggests that the affiliated reinsurance purchases of competitors have a positive and substantial effect on the affiliated reinsurance demand of insurers, crediting mimicking the reinsurance strategy. Interestingly, the market-stealing effect is supported while the non-affiliated reinsurance metric is used. Remarkably, given insurers with low non-affiliated reinsurance purchases, the finding sustains the mimicking reinsurance strategy. Nevertheless, the market-stealing effect remains a concern for insurers with a high non-affiliated reinsurance purchase.
Originality/value
The new findings concerning competitor effects analysis fill a void in the reinsurance literature. Risk diversification, capital substitution, and real services demand may play a crucial role in determining the market-stealing effect, leading to a decrease in market share. Insurers can mitigate the market-stealing effect of competitors by accessing expertise and capital substitution through non-affiliated reinsurance purchases.
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Halina Waniak-Michalak and Jan Michalak
The study aims to determine whether a relationship exists between the potential significance of corporate controversies for stakeholders and how organisations respond to them in…
Abstract
Purpose
The study aims to determine whether a relationship exists between the potential significance of corporate controversies for stakeholders and how organisations respond to them in their annual and sustainability reports.
Design/methodology/approach
This paper employs content analysis on annual and sustainability reports of 48 listed companies from the Refinitiv database. The logit regression was used to estimate the model.
Findings
The study revealed that the main factors increasing the probability of a controversial issue being addressed in a corporate report are the controversy’s potential significance, companies’ financial performance and lawsuits.
Research limitations/implications
Our study has three major limitations. These are a relatively small sample of companies and reports, focusing on disclosures made in corporate reports and omitting other channels of communication, for example, social media, and a certain amount of subjectivity in the process of coding information.
Social implications
Former studies show that corporations face a serious risk of their hypocritical strategies becoming too evident for stakeholder groups. Our findings suggest that the risk is already materialising and may undermine the idea of CSR and sustainability reporting.
Originality/value
Our research focuses on high-profile adverse incidents widely reported in the media, the omission of which from corporate reports seems to constitute a particular case of organised hypocrite. It also demonstrates that companies use an impression management strategy to defuse adverse publicity and that major controversies cause minor ones to be omitted from their reports.
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Vibha Soni, Priti Saxena, Sana Moid, Abhineet Saxena and Mita Mehta
This study aims to use a multi-stage scale development process to identify the dimensions of philanthropic corporate social responsibility (PCSR) in India’s fast-moving consumer…
Abstract
Purpose
This study aims to use a multi-stage scale development process to identify the dimensions of philanthropic corporate social responsibility (PCSR) in India’s fast-moving consumer goods (FMCG) sector.
Design/methodology/approach
The authors conducted a study to develop a comprehensive, reliable and valid scale for measuring PCSR based on the customer perception of FMCG product manufacturers. This research adopted a comprehensive and detailed scale development process using multi-stage sampling for scale development. This final study was conducted on a sample of 402 respondents from the city of Jaipur, India.
Findings
The results have underlined the multi-dimensional aspect of PCSR; these dimensions are: altruism towards society, volunteering for local community development, generosity towards ecology, benevolent spirit and problem-solving charity.
Practical implications
This study gives valuable insights into philanthropic scale development in the FMCG sector that can immensely help domestic and international marketers to formulate CSR as a strategy. This research provides insights into a wide range of scales which can be base for future research studies that aim to explore different organizational settings.
Originality/value
PCSR and CSR are important for developing strategies for sustainable businesses across the globe. Dimensions of PCSR will be useful for practitioners and researchers in developing second-order constructs for future studies.
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