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Article
Publication date: 22 August 2024

Michael O’Neill, Jie (Felix) Sun, Geoffrey Warren and Min Zhu

We model the relation between excess returns, fund size and industry size for active equity funds.

Abstract

Purpose

We model the relation between excess returns, fund size and industry size for active equity funds.

Design/methodology/approach

We study and contrast four markets – global equities, emerging markets, Australia core and Australia small caps – and use the results to investigate the extent to which funds deviate from estimated capacity.

Findings

We uncover a significantly negative relation between returns and both fund size and industry size across all markets. The estimated percentage of funds operating above versus below capacity varies both across markets and over time, as does the role played by fund size versus industry size. We find a greater prevalence of funds operating significantly below than above capacity, in contrast to findings for US equity mutual funds. Significant deviations from estimated capacity persist for a median of between two and six quarters.

Originality/value

Our main contribution is to show that the dynamics governing deviations from capacity for active equity funds vary across markets.

Details

Journal of Accounting Literature, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0737-4607

Keywords

Article
Publication date: 17 September 2024

Yu Xia and Shuxin Guo

We are the first to investigate the relationship between seasoned equity offerings (SEOs) and anchoring on historical high prices in China.

Abstract

Purpose

We are the first to investigate the relationship between seasoned equity offerings (SEOs) and anchoring on historical high prices in China.

Design/methodology/approach

We use the ratio of the recent closing price to its historical high in the previous 12–60 months (anchoring-high-price ratio) to study its impact on the market timing of SEOs.

Findings

Empirical results show that the anchoring-high-price ratio significantly and positively affects the probability of additional stock issuances. Contrary to the USA market, the Chinese stock market reacts negatively to the SEOs at historical highs. Moreover, the anchoring-high-price ratio exacerbates the negative effect of announcements and leads to long-term underperformance. Finally, we investigate the impact of the anchoring-high-price ratio on a company’s capital structure, showing that the additional issuance anchoring on historical highs reduces the company’s leverage ratio in the long run. Overall, our findings support the anchoring theory and can help understand better the anchoring behavior of managers and the company’s decision on additional stock issuances.

Originality/value

We are the first to use the anchoring-high-price ratio to study the timing of SEOs. We find that the anchoring-high-price ratio positively affects the probability of SEOs. Unlike the USA, the Chinese stock market reacts negatively to SEOs at high prices. SEOs anchoring on historical highs reduce a firm’s leverage ratio in the long run. Finally, our results support the anchoring theory.

Details

China Finance Review International, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2044-1398

Keywords

Article
Publication date: 12 August 2024

Asima Siddique

The purpose of this paper is to scrutinize the safe haven benefits of 13 individual commodities for the USA and Chinese equity sectors during the financial turmoil period…

Abstract

Purpose

The purpose of this paper is to scrutinize the safe haven benefits of 13 individual commodities for the USA and Chinese equity sectors during the financial turmoil period. Therefore, sectoral investors in the USA and China could invest in those specific commodities that provide stable returns during the health crisis and financial turmoil periods.

Design/methodology/approach

The daily data spans from February 1, 2015, to July 28, 2022. The present study applies several different approaches to analyzing the data set. The author apply the cross-quantilogram (C.Q) methodology to capture the lead-lag bivariate quantile interdependence between two stationary time series variables during the bearish, bullish and normal periods. Then the study used the hedging effectiveness (HE) and conditional diversification benefits (CDB) approaches to capture the hedging and diversification benefits of commodity classes and individual commodities.

Findings

The noteworthy findings of the quantilogram methodology reveal that livestock and agriculture commodities serve as better refuges as compared to the precious metals and energy index in both countries. On average, precious metals failed to serve as safe haven investments for the USA and Chinese equity market sectors. All energy commodities except soybean oil had strong comovements with China and the US equity sectors during bearish, bullish and normal periods. Lean hogs, fiddler cattle and live cattle are perfect hedging assets for both countries due to the presence of blue color at normal and bullish periods in all C.Q heat-maps. The HE table depicts that commodity indices and individual commodities failed to serve as hedging assets for the Chinese equity sectors. But commodities are semistrong hedging assets for the US equity sectors and the S&P 500 due to the average HE values being 0.7 and above. The CDB values depict that precious metals provide diversification benefits in both equity markets.

Practical implications

The present study results have important implications for equity sector investors of the USA and China in suggesting particular commodity during the financial turmoil period. During the bearish market condition, risk averse equity sector investors can invest in livestock commodities and agriculture commodities, due to their relatively stable returns. In addition, policymakers can use the analysis insights to formulate policy tools and monitoring mechanisms, effectively mitigating the unfavorable effects arising from asymmetric dependence between commodities and equity sectors during the upper tail, middle and lower tail. Policymakers can suggest equity investors to invest in which commodity during extreme conditions.

Originality/value

The current study has the following points of originality. First, to the best of the author’s knowledge, this is the first study to investigate the individual commodities’ roles as safe havens taken from all four major commodity classes. More importantly, it is also noticeable that the safe haven abilities of commodities are usually tested for the stock market, but the equity sectors are ignored. Therefore, the present study used both stock market and sectoral indices data.

Details

Journal of Financial Economic Policy, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1757-6385

Keywords

Open Access
Article
Publication date: 22 December 2023

Khaled Hamad Almaiman, Lawrence Ang and Hume Winzar

The purpose of this paper is to study the effects of sports sponsorship on brand equity using two managerially related outcomes: price premium and market share.

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Abstract

Purpose

The purpose of this paper is to study the effects of sports sponsorship on brand equity using two managerially related outcomes: price premium and market share.

Design/methodology/approach

This study uses a best–worst discrete choice experiment (BWDCE) and compares the outcome with that of the purchase intention scale, an established probabilistic measure of purchase intention. The total sample consists of 409 fans of three soccer teams sponsored by three different competing brands: Nike, Adidas and Puma.

Findings

With sports sponsorship, fans were willing to pay more for the sponsor’s product, with the sponsoring brand obtaining the highest market share. Prominent brands generally performed better than less prominent brands. The best–worst scaling method was also 35% more accurate in predicting brand choice than a purchase intention scale.

Research limitations/implications

Future research could use the same method to study other types of sponsors, such as title sponsors or other product categories.

Practical implications

Sponsorship managers can use this methodology to assess the return on investment in sponsorship engagement.

Originality/value

Prior sponsorship studies on brand equity tend to ignore market share or fans’ willingness to pay a price premium for a sponsor’s goods and services. However, these two measures are crucial in assessing the effectiveness of sponsorship. This study demonstrates how to conduct such an assessment using the BWDCE method. It provides a clearer picture of sponsorship in terms of its economic value, which is more managerially useful.

Details

European Journal of Marketing, vol. 58 no. 13
Type: Research Article
ISSN: 0309-0566

Keywords

Article
Publication date: 12 July 2024

Bilu Cheng and Siyu Hou

The purpose of this study is to investigate the influence of brand equity on corporate financial performance across various institutional factors in China, encompassing macro…

Abstract

Purpose

The purpose of this study is to investigate the influence of brand equity on corporate financial performance across various institutional factors in China, encompassing macro (regional economic development and product market development), meso (industry uncertainty), and micro (CEO overseas experience) levels.

Design/methodology/approach

Using archival data related to Chinese listed companies, this study employs standard error combined with fixed effect regression for model estimation to empirically evaluate the impact of brand equity on financial performance (Tobin’s q) and its boundary effects.

Findings

This study reveals that in China, the influence of brand equity on Tobin’s q isn’t significant. However, when considering institutional factors across various levels, its impact becomes significant. Specifically, the positive effect of brand equity on Tobin’s q in China is more pronounced in regions with higher economic or product market development, industries with high uncertainty, or when the CEO has overseas experience.

Research limitations/implications

This study enriches the brand-related marketing literature in China and highlights the potential underperformance of brand equity within this context. Furthermore, this study advances the integration of resource-based view with institutional theory by combining brand equity with institutional factors at the macro-, meso-, and micro-level in China.

Originality/value

This study focuses on brand performance in China, the largest emerging market, emphasizing the importance of integrating brand equity with diverse institutional factors to amplify its beneficial influence on financial performance.

Details

Marketing Intelligence & Planning, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0263-4503

Keywords

Article
Publication date: 3 October 2023

Jerry Chen

This study aims to investigate the equity market reaction to sustainability disclosure measures derived from firms' inaugural sustainability reports following the implementation…

Abstract

Purpose

This study aims to investigate the equity market reaction to sustainability disclosure measures derived from firms' inaugural sustainability reports following the implementation of mandatory sustainability reporting in Singapore.

Design/methodology/approach

This study explores the equity market reaction to first-time sustainability reports of mandatory adopters and compares the reactions between voluntary and mandatory adopters. To mitigate any imbalanced distribution effects, entropy balancing techniques are employed.

Findings

The author observes a significant equity market reaction when mandatory adopters adhere to a reporting framework and release sustainability reports as standalone documents. Additionally, the study indicates that government regulation amplifies the equity market reaction for companies that include a board statement within their sustainability reports and present them as standalone publications.

Research limitations/implications

The lack of quantitative information disclosed in the first-time sustainability reports may restrict the generalizability of the findings.

Practical implications

The findings provide valuable insights for organizations and managers to evaluate the market's response to sustainability disclosures and improve communication effectiveness with investors. Furthermore, the study has direct policy implications for global standard-setting organizations in sustainability reporting. The findings support the notion that investors value market-led and investor-focused sustainability disclosures.

Originality/value

The study contributes to the limited body of research that examines the capital market effects of mandatory sustainability disclosures. To the author’s knowledge, this is among a few studies to directly investigate the equity market reaction to mandatory sustainability disclosures at the firm level.

Details

Journal of Applied Accounting Research, vol. 25 no. 3
Type: Research Article
ISSN: 0967-5426

Keywords

Article
Publication date: 14 December 2023

Florin Aliu, Vincenzo Asero, Alban Asllani and Jiří Kučera

Paper aims to investigate the interdependencies and spillover effects that the Visegrad (V4 hereafter) Equity Markets hold on each other. The V4 group stands for the political…

Abstract

Purpose

Paper aims to investigate the interdependencies and spillover effects that the Visegrad (V4 hereafter) Equity Markets hold on each other. The V4 group stands for the political alliance of four Central European countries: Poland, the Czech Republic, Hungary and Slovakia.

Design/methodology/approach

The study uses Wavelet coherence, dynamic conditional correlation GARCH (1, 1) and unrestricted vector autoregression (VAR) methodologies. Daily data series (covering the period from January 2, 2006, to February 2, 2023) are analyzed to assess coherence, time-varying conditional correlation and shock transmission among the V4 Equity Markets.

Findings

Wavelet analysis reveals that the Slovak equity market does not maintain coherence with three other equity markets. The time-varying conditional correlation documents for the high interdependence during the COVID-19 outbreak of the four indexes. The VAR estimates reveal that shocks in the Warsaw equity market are easily transmitted in Prague and Budapest exchanges but not in Bratislava. The results show that the Slovak equity market tends to be isolated from the influence of other three V4 exchanges. This isolation is attributed to its size, limited volume and adoption of the euro in 2009. The study emphasizes the Slovak financial system’s gravitation toward the Eurozone after euro adoption.

Originality/value

Notably, the findings provide important signals for local and international investors as the results cover four significant international shocks. The global meltdown of 2008/09, the Greek debt crisis of 2010/11, the COVID-19 pandemic and the Russia-Ukraine war.

Details

Studies in Economics and Finance, vol. 41 no. 2
Type: Research Article
ISSN: 1086-7376

Keywords

Article
Publication date: 12 August 2024

Alain Wouassom

After considering the price reversal among countries' indices as a global, coordinated and generalized phenomenon, this paper aims to examine the profitability of the reversal…

Abstract

Purpose

After considering the price reversal among countries' indices as a global, coordinated and generalized phenomenon, this paper aims to examine the profitability of the reversal strategy internationally and find an economically essential and predictive reversal effect. Indices' portfolios form based on the prior 48 months; prior losers outperform prior winners by 8.86% per year during the subsequent 48 months. Interestingly, the reversal effect is substantially stronger for emerging countries, yielding 14.04% annually. It remains profitable post-globalization, countering the concern of whether the integration of equity markets synchronized the price reversal worldwide. Returns' differences consistent with portfolio formation approaches are also observed.

Design/methodology/approach

This study follows the methodology De Bondt and Thaler (1985) set out and uses the same methodological framework Wouassom et al. (2022) put forward. Nevertheless, this study does not focus on stocks. Still, it employs global equity indices from the viewpoint of an international investor who can switch between worldwide equity indices using a contrarian trading strategy.

Findings

My findings indicate that reversal strategies with overlapping portfolios are profitable over the entire sample period and every formation and holding period. These returns are highly statistically significant and vary considerably from one horizon to another. More importantly, the reversal strategies remain, on average, profitable and significant in the period post-1994 but are not particularly distinctive, which implies that the reversal effect survives the globalization impact and indicates that the integration of equity markets together with the international correlation among markets do not synchronize the prices reversal effect around the world given that.

Research limitations/implications

Further work would be recommended to study a more extended period dating back to the nineteenth century or the Victorian Era, characterised by rapid economic development in almost every domain, to verify if reversal is historically compensation for carrying risks exclusively during contraction.

Practical implications

My analysis takes on particular significance given the association between lagged market movement in share prices and investors’ optimism that appears among traders, generating an increasing reversal effect (Siganos and Chelley-Steley, 2006) and has direct implications for predicting and controlling trading costs associated with asset allocation strategies.

Social implications

The difficulty with using the reversal strategy to uncover the long-term return reversal effects in the equity markets today resides in the fact that the globalization of the economy has fuelled the concentration of assets within institutional investors. The critical insight is that the concentration of equity in the hands of institutional investors activated international equity trading. These institutional investors seek to maximize their shareholder value from the opportunity by simultaneously dealing in many markets while constructing and holding portfolios that include assets from various countries using highly profitable investment strategies such as reversal.

Originality/value

To the best of the authors’ knowledge, this is the first paper to show an easily implemented contrarian strategy that switches back and forth between country indices and generates extraordinarily high abnormal returns of more than 8.86% per annum. We also show that these returns compensate for global risks and for investors ready to take them during contraction.

Details

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

Keywords

Article
Publication date: 2 May 2024

Mariam Farid, Noha M. El-Bassiouny and Hagar Adib

Drawing from the literature on internationalization, higher education marketing and place branding, this paper aims to link the internationalization of higher education to country…

Abstract

Purpose

Drawing from the literature on internationalization, higher education marketing and place branding, this paper aims to link the internationalization of higher education to country branding. It explores the impact of internationalization within the higher education system on Egypt’s destination brand equity. This investigation offers insights for decision-makers in both the higher education and country branding sectors.

Design/methodology/approach

This empirical paper adopts an exploratory approach and serves as an initial step for researchers. It utilizes a quantitative methodology, employing a survey with 366 responses, to examine the effects of internationalization efforts in higher education on country brand equity.

Findings

The results reveal a direct correlation between student engagement and the brand equity of international branch campuses (IBCs), as well as a link between IBCs and Egypt’s brand equity. Notably, the study highlights the mediating role of IBC brand equity in the relationship between student engagement and the overall brand equity of Egypt.

Originality/value

This paper is innovative in its method of assessing the impact of internationalization efforts in higher education, specifically at IBCs in Egypt, on Egypt’s destination brand equity. Additionally, the study identifies student engagement as an antecedent to IBC brand equity.

Details

International Journal of Educational Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0951-354X

Keywords

Article
Publication date: 8 November 2023

Vibhava Srivastava, Deva Rangarajan and Vishag Badrinarayanan

This study aims to investigate the role of three customer equity drivers on customer repurchase intent in business-to-business (B2B) markets. It also explores the interconnected…

Abstract

Purpose

This study aims to investigate the role of three customer equity drivers on customer repurchase intent in business-to-business (B2B) markets. It also explores the interconnected nature of equity drivers, specifically, the effects of brand equity and value equity on relationship equity. Further, it investigates how perceived switching costs moderates the interrelationships between customer equity drivers. The authors explore the interrelationships between the customer equity drivers in a B2B context involving commodity products in a developing market.

Design/methodology/approach

Data collection was done from a pool of 184 institutional customers of a lubricant brand in a developing market. The sample had representations of buyer organizations across sectors, namely, automobile, cement, metal, fertilizer, railway, defence and mining, etc. The final data were subjected to partial least squares-based structural equation modeling to test the hypothesized model.

Findings

The study found a direct effect of brand equity, and value equity on relationship equity and an indirect effect on repurchase intent, namely, relationship equity. Perceived switching cost was found to moderate the interaction between brand equity and relationship equity as well as between value equity and relationship equity. The direct effect of relationship equity on repurchase intent was also significant.

Practical implications

The study implies that B2B firms should ground their marketing program on these customer equity drivers, especially when dealing with commodity products. The absence of any of these drivers would be detrimental in customer retention. The study also establishes the relevance of switching cost(s) and its impact on the underlying dynamics between the different equity drivers in the context of commodity products. The customer equity drivers along with switching costs, if managed well, may become switching barriers for customers and eventually would ensure recurring revenue through repeat purchases.

Originality/value

To the best of the authors’ knowledge, this is one of the first studies that focuses on the disaggregated effect of customer equity on customer outcomes in the B2B context. Furthermore, this study investigates how perceived switching costs moderates the interrelationships between customer equity drivers in the industrial sales context in an emerging market.

Details

Journal of Business & Industrial Marketing, vol. 39 no. 5
Type: Research Article
ISSN: 0885-8624

Keywords

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