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1 – 10 of over 6000
Article
Publication date: 26 June 2019

Javeria Farooqi, Surendranath Jory and Thanh Ngo

This paper aims to examine the association between the types of mutual funds, i.e. active versus passive, and the level of earnings manipulation in companies that comprise their…

Abstract

Purpose

This paper aims to examine the association between the types of mutual funds, i.e. active versus passive, and the level of earnings manipulation in companies that comprise their stock portfolios.

Design/methodology/approach

The authors use Cremers and Petajisto’s (2009) classification of mutual funds by active share and tracking error volatility to differentiate between active and passive mutual funds. To assess the extent of earnings quality at portfolio companies, the authors measure accruals earnings management and real earnings management.

Findings

The authors find that the portfolio firms held by active fund managers exhibit lower levels of earnings manipulation. The inverse relationship between earnings management and fund holdings is more pronounced at higher levels of active share selection among concentrated active fund managers.

Practical implications

The degree to which earnings management influences mutual funds’ investment behavior has significant implications for the stability of the US stock market. Based on the findings that earnings management at portfolio companies serves as a potential instrument to guide funds’ investment decisions, future research would examine how these investment preferences exert price pressure (if any) on the stock of the portfolio companies. It would also help to ascertain whether the investment preferences of fund managers with respect to earnings management help to render the stock market more or less efficient.

Originality/value

This paper contributes to the understanding of how actively managed funds perform stock selection. Earnings manipulation leads to negative earnings quality that would inhibit stock performance over time. Active fund managers, who dynamically manage their exposures to systematic and stock-specific risks (in their attempt to outperform their benchmark index), target firms that manage earnings less to form part of their investment portfolios.

Details

Review of Accounting and Finance, vol. 19 no. 1
Type: Research Article
ISSN: 1475-7702

Keywords

Article
Publication date: 1 March 2017

Yonghong Wu and Daniel W. Williams

This paper examines the determinants of success in seeking local government earmarked funding. We compile data of the aggregate amounts of the New York City Council discretionary

Abstract

This paper examines the determinants of success in seeking local government earmarked funding. We compile data of the aggregate amounts of the New York City Council discretionary expense grants received or requested by each council district every year during 2011-2013. The statistical results show that the allocation of the expense grants are politically motivated with more earmark funds flowing to the districts council leaders and key committee chairpersons represent. Furthermore, constituents of key committee chairpersons are more successful in the earmarking process. Districts with larger African American population have lower success ratios possibly because they request significantly more earmarks. These empirical findings are consistent with anecdotal perceptions that earmarking is not substantially effective in meeting community need.

Details

Journal of Public Budgeting, Accounting & Financial Management, vol. 29 no. 3
Type: Research Article
ISSN: 1096-3367

Article
Publication date: 7 September 2012

Rakesh Gupta and Thadavillil Jithendranathan

The purpose of this paper is to examine the various segments of the managed funds market to establish if there is any significant difference in the way the assets are allocated…

2359

Abstract

Purpose

The purpose of this paper is to examine the various segments of the managed funds market to establish if there is any significant difference in the way the assets are allocated into various asset categories and if investors base their investment decisions based on the past performance of the fund.

Design/methodology/approach

An average investor who does not possess superior investment knowledge may base their investment decision on the past performance of funds resulting in flow based on past performance. This study uses a panel regression model to test the relationship between net flows and past excess returns.

Findings

Significant differences are found in asset allocation between the retail and wholesale segments. Retail investors prefer less risky investments compared to wholesale investors and have lower preference for overseas investments. The results indicate that investors base their investment decisions on the past performance of funds, with the retail segment showing a higher level of influence of past performance, as compared to the wholesale segment. The results further show less evidence of a reaction to risk among the managed investment categories.

Practical implications

Fund managers use fund performance for marketing purposes and results of the study may be of importance to the managers and investors in understanding this objective. The findings are also of significance for policy makers in terms of understanding investor behaviour.

Originality/value

This is the first study of the Australian managed funds industry (including wholesale and retail funds) that tests the link between past performance and fund flows. The study includes data until June 2008, which includes a period when a number of policy changes occurred in Australian superannuation industry.

Details

Accounting Research Journal, vol. 25 no. 2
Type: Research Article
ISSN: 1030-9616

Keywords

Article
Publication date: 1 March 1995

Vincent L. Marando and Alan C. Melchior

Contrary to the popular view of mandates as rigid and dictatorial mechanisms, this article advances a view of mandates as mechanisms for cooperation and negotiation. The…

Abstract

Contrary to the popular view of mandates as rigid and dictatorial mechanisms, this article advances a view of mandates as mechanisms for cooperation and negotiation. The relationship between several state and local actors is investigated in Maryland, particularly within the context of the development of a "loosely" mandated public health program, the Targeted Funding Program (TFP). An analysis of the TFP and the actors involved in the program's development demonstrates how this program is designed to achieve much more than increased fiscal responsibility. The TFP is designed, and continues to be redesigned, to meet the political and professional objectives of various elected and appointed officials at the state and local levels.

Details

Journal of Public Budgeting, Accounting & Financial Management, vol. 7 no. 3
Type: Research Article
ISSN: 1096-3367

Article
Publication date: 21 September 2012

Dodik Siswantoro

The purpose of this paper is to discuss some unique phenomena on Islamic fixed (sukuk) mutual fund price during financial global crisis in Indonesia. It aims to show that the sukuk

1890

Abstract

Purpose

The purpose of this paper is to discuss some unique phenomena on Islamic fixed (sukuk) mutual fund price during financial global crisis in Indonesia. It aims to show that the sukuk mutual fund did not adopt the actual price of sukuk which may contradict Islamic teaching with regards to transparency and could cause investors to make wrong decisions. In addition the paper also aims to analyse correlation analysis, dependency of sukuk price to conventional bond and proposed recommendations.

Design/methodology/approach

The study applies benchmarking graph analysis, Pearson correlation as well as Correlogram Granger Causality test and Response to Cholesky. To show that sukuk did not adopt the actual price, benchmarking analysis and correlation analysis were conducted as additional tools.

Findings

The paper finds that the sukuk price movements were affected by the conventional bond and have a strong correlation, while the Islamic fixed mutual fund did not apply the actual price, which was unstabler. This has caused the fund to remain in a steadily increasing trend and stable; in addition, this has brought about good performance which actually did not show the real price.

Practical implications

This research is practically of benefit because it helps to show the correlation of price movement in sukuk and conventional bond. Fund managers should be transparent in marking the real price and prudent in managing the liquid reserve of the sukuk mutual fund.

Originality/value

This case may only occur in Indonesia as decreasing price of stocks and bonds in the USA has habitually caused the same to be seen as very expensive in some countries. Thus, bond price in Indonesia was affected significantly; this was actually caused by panic action. Foreign investors withdrew their funds because of liquidity and currency depreciation. On the other hand, an Islamic market that might be based on a conventional system was indirectly affected with benchmarking price problems. Sukuk mutual fund performance would look nice and stable as it did not adopt the actual price, this could mislead the performance analysis of the fund.

Details

Journal of Islamic Accounting and Business Research, vol. 3 no. 2
Type: Research Article
ISSN: 1759-0817

Keywords

Open Access
Article
Publication date: 12 September 2018

Gro Holst Volden

The purpose of this paper is to explore the adverse incentives at the front end of government-funded projects with concentrated benefits and no liabilities for the privileged…

5382

Abstract

Purpose

The purpose of this paper is to explore the adverse incentives at the front end of government-funded projects with concentrated benefits and no liabilities for the privileged groups. In particular, the author discusses the risk of perverse incentives of the types typically found in the development aid sector that results in counterproductive outcomes.

Design/methodology/approach

The paper uses a simple conceptual framework based on agency theory. A qualitative, case-based approach with purposive sampling was chosen for the empirical part of the study. Eight Norwegian projects were selected because incentive problems were to be expected, and one development aid project served as a reference case.

Findings

The paper finds that low strategic project success corresponded well with the terms of financing. There were clear indications of agency problems, in three cases to the extent that the incentives turned perverse. The paper concludes with a discussion of relevant measures to prevent the emergence of perverse incentives.

Originality/value

The paper contributes to an improved understanding of the incentives related to public project initiation and selection, which is an under-researched topic and generally not included in formal project governance schemes. The research should therefore be useful to scholars as well as practitioners within the field of project governance.

Details

International Journal of Managing Projects in Business, vol. 12 no. 2
Type: Research Article
ISSN: 1753-8378

Keywords

Open Access
Article
Publication date: 4 June 2020

Nghia Nguyen Trong and Cong Thanh Nguyen

Debt, dividend and investment policy constitutes a company's important financial decisions to determine firm performance. The research emphasizes on the problem of overinvestment…

9587

Abstract

Purpose

Debt, dividend and investment policy constitutes a company's important financial decisions to determine firm performance. The research emphasizes on the problem of overinvestment, a phenomenon that worsens firm operation. Furthermore, it clarifies the moderation role of debt and dividend policy in mitigating the negative effect of overinvestment on firm performance in the case of Vietnamese listed companies.

Design/methodology/approach

The research uses all financial statement of non-financial Vietnamese listed companies on Ho Chi Minh and Hanoi Stock Exchange in the period of 2008–2018. The data are collected from Thomson Reuters Eikon. The final data set is comprised of 669 listed companies. The study measures overinvestment though investment demand function and HP filter. Moreover, the research employs the dynamic model, so it has to apply the SGMM method to deal with the problem of endogeneity caused by the lagged dependent variable.

Findings

The research finds that overinvestment is negatively associated with firm performance. Debt or dividend policy separately can moderate the negative effect of overinvestment on firm performance. However, when these two policies are combined, they lessen the positive interaction impact of each policy due to the substitution between debt and dividend policy.

Research limitations/implications

The research may have two limitations. Firstly, the research measures overinvestment indirectly through investment demand function and HP filter. These two measures only help identify the sign that companies may have the problem of overinvestment because we cannot determine whether they overinvest or not in reality. Secondly, when using interaction variables, the problem of multicollinearity may be higher, and this may adjust the signs and significance level of variables in the models.

Practical implications

Practically, the research proposes three policy recommendations. Firstly, a company can exploit debt or dividend policy to limit excessive free cash flow in order to constrain the problem of overinvestment. Secondly, a company should enhance its corporate governance to resolve agency problems. Thirdly, the government should make the financial sector more transparent and effective to improve monitoring functions of various parties in the capital market.

Social implications

Overinvestment sometimes can cause social issues. Overinvestment means that companies make ineffective investment. If they continue this situation over a long time, companies may have financial distress or even go bankruptcy. As a result, it will slow down economic growth and increase unemployment in the economy.

Originality/value

The research is supposed to make two great contributions to the existing empirical studies in two aspects. Firstly, it is the first attempt to take into consideration the interaction between overinvestment and financial policies. Secondly, it helps enhance the fundamental stance of the agency theory, which supports the interdependence of debt, dividend and investment policy.

Details

Journal of Asian Business and Economic Studies, vol. 28 no. 1
Type: Research Article
ISSN: 2515-964X

Keywords

Article
Publication date: 12 September 2008

Chris Bates, Carlos Conceicao, Guy Norman, David Pudge and Patrick Sarch

The purpose of this paper is to explain the FSA's new disclosure regime for short selling during rights issues, which it introduced by amending the Code of Market Conduct (MAR 1…

249

Abstract

Purpose

The purpose of this paper is to explain the FSA's new disclosure regime for short selling during rights issues, which it introduced by amending the Code of Market Conduct (MAR 1) under the Financial Services and Markets Act 2000 (FSMA).

Design/methodology/approach

The paper outlines the new provisions; explains the legal basis for the new regime; details the specific additions to the Code of Market Conduct; discusses the use of the UK super‐equivalent positions; explains the lack of FSA consultation based on urgent need for action; discusses practical issues for market participants, including compliance systems and controls; provides answers to frequently asked questions (FAQs) relating to the scope of the regime in terms of issuers and transactions covered, the applicability of the disclosure requirement to pre‐existing positions, the timing of intra‐day positions, netting of short and long positions for the purpose of calculating whether a short position reaches the threshold, including short positions in a rights issue in the calculation of the overall net short position, the exclusion of positions an entity holds in its capacity as a market maker, the requirement for the legal entity that holds the short position to make the required disclosures but not to aggregate positions held by its affiliates, the means of disclosure, disclosure deadlines, the content of disclosures, and disclosure of changes in position; and indicates likely further FSA action.

Findings

The new measures require market disclosure of short positions of 0.25 per cent or more in companies undertaking rights issues. The deadline for required disclosures is 3.30 pm on the business day following the day the short position threshold is reached. The new rules apply to shares in UK‐listed companies from 20 June 2008. The measures have been implemented as changes to the Code of Market Conduct rather than FSA rules as such. Rather than carrying out a consultation and cost‐benefit analysis as normally required by the FSMA, the FSA apparently relied on the FSMA's provisions that allow immediate amendments in cases of urgent need. The FSA is undertaking a wider review of the capital‐raising process and considering other measures, such as restrictions on stock lending.

Practical implications

On an ongoing basis firms need to have in place systems and controls that identify announcements by companies that they are undertaking rights issues subject to the regime and provide the means to calculate the level of positions held by the firm that might require disclosure.

Originality/value

The paper offers practical guidance by experienced securities lawyers.

Details

Journal of Investment Compliance, vol. 9 no. 3
Type: Research Article
ISSN: 1528-5812

Keywords

Book part
Publication date: 14 January 2019

Morgan R. Clevenger and Cynthia J. MacGregor

Considering a macro view of business and higher education interactions, this chapter explores key facets for business interest in other organizations (e.g., other businesses and…

Abstract

Considering a macro view of business and higher education interactions, this chapter explores key facets for business interest in other organizations (e.g., other businesses and their social agendas, nonprofits, and higher education) and a trend toward the creation of signature programs, which allow most companies to focus efforts by highlighting Carroll's (1991) Pyramid of Corporate Social Responsibility and Jacoby's (1973) Three Models of Behavior of the Business Enterprise. This chapter also addresses ethical opportunities and problems.

Details

Business and Corporation Engagement with Higher Education
Type: Book
ISBN: 978-1-78754-656-1

Article
Publication date: 1 September 2003

Harry Matlay and Mark Addis

This article sets out to critically evaluate the impact that higher education institution (HEI)‐based consultancy can have upon the adoption and use of e‐commerce by businesses…

3736

Abstract

This article sets out to critically evaluate the impact that higher education institution (HEI)‐based consultancy can have upon the adoption and use of e‐commerce by businesses units operating in the small business sector of the British economy. Anecdotal evidence suggests that “new” (post‐1992) universities are more likely to offer consultancy services to small businesses. It is also claimed that owner/managers seem reluctant to pay full economic prices and would only subscribe to HEI‐based consultancy services if and when these are supported by considerable subsidies. In order to test the owner/manager reluctance hypothesis, 60 matched case studies were conducted, involving small businesses based in the West Midlands region of Great Britain. Preliminary results indicate that most small business owner/managers are aware of the potential benefits accruing from ICT and e‐commerce and tend to use HEI‐based consultancy services as a subsidised access point to e‐markets, involving both their core and peripheral activities. There exists, however, an apparent mismatch between the supply and demand sides of the HEI‐based ICT and e‐commerce consultancy market.

Details

Journal of Small Business and Enterprise Development, vol. 10 no. 3
Type: Research Article
ISSN: 1462-6004

Keywords

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