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Book part
Publication date: 23 December 2005

Akiko Kamesaka

This paper investigates aggregate buying and selling by foreign investors, subdivided into US, European and Asian investors, in the Japanese stock market over the period…

Abstract

This paper investigates aggregate buying and selling by foreign investors, subdivided into US, European and Asian investors, in the Japanese stock market over the period 1981–2004. The results indicate that in the late 1990s US investors began to take more active positions than other foreign investors, and traded with good timing from the middle of the 1990s. US investors were also generally better than other investors when completing net purchases. While European and Asian investors also traded with good timing, other foreign investors generally did not net purchase or sell with good timing.

Details

Asia Pacific Financial Markets in Comparative Perspective: Issues and Implications for the 21st Century
Type: Book
ISBN: 978-0-76231-258-0

Book part
Publication date: 27 September 2011

Narjess Boubakri, Jean-Claude Cosset and Hyacinthe Y. Somé

Institutional investors have increasingly gained importance since the early 1990s. The assets under management in these funds have increased threefold since 1990 to reach more…

Abstract

Institutional investors have increasingly gained importance since the early 1990s. The assets under management in these funds have increased threefold since 1990 to reach more than US$45 trillion in 2005, including over US$20 trillion in equity (Ferreira & Matos, 2008). Further, the value of institutional investors' assets represents roughly 162.6% of the OECD gross domestic product in 2005 (Gonnard, Kim, & Ynesta, 2008). Given the magnitude of institutional investors' holdings relative to the world market capitalization, challenging questions on the economic role of these investors have been raised. One such question concerns their impact on the stability of stock markets. On the one hand, active strategies of buying and selling shares by these investors may contribute to moving stock prices away from their fundamental values. On the other hand, if all institutional investors react to the same information in a timely manner, they are in fact helping to increase market efficiency by speeding up the adjustment of prices to new fundamentals (for competing theories on the role of institutional investors, see, e.g., Lakonishok, Shleifer, & Vishny, 1992). This view of institutional investors as “efficiency drivers” generated considerable debate for many years (see, e.g., Ferreira & Laux, 2007; French & Roll, 1986).

Details

Institutional Investors in Global Capital Markets
Type: Book
ISBN: 978-1-78052-243-2

Article
Publication date: 1 March 2024

Yuxuan Chang and Xiaoyang Zhao

This paper examines whether technological changes that promote communications between investors and managers help bridge the gap in the cost of equity capital among firms in…

Abstract

Purpose

This paper examines whether technological changes that promote communications between investors and managers help bridge the gap in the cost of equity capital among firms in different regions.

Design/methodology/approach

We use the online interaction platforms of listed firms in China and utilize brokerage presence (BP) to capture the geographic distribution of financial factors. We explore whether online interactions would reduce the cost of equity to a greater extent for firms located in low brokerage presence regions (hereafter “low-BP firms”) than those in high brokerage presence regions (hereafter “high-BP firms”).

Findings

We find low-BP firms benefit more from an improved information environment created by online interactions. We also find that posts about low-BP firms are more value-relevant and useful in processing corporate disclosures. Further, a higher number of interactions significantly enhances more informational efficiency for low-BP firms, and the effect of reducing the gap in financing costs is more pronounced when corporate information is complex.

Originality/value

We conclude that online interactions alleviate geography-induced information frictions and create a relatively level playing field for firms located in all regions.

Details

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

Keywords

Article
Publication date: 12 March 2024

Anu Mohta and V. Shunmugasundaram

This study aims to assess the risk profile of millennial investors residing in the Delhi NCR region. In addition, the relationship between the risk profile and demographic traits…

Abstract

Purpose

This study aims to assess the risk profile of millennial investors residing in the Delhi NCR region. In addition, the relationship between the risk profile and demographic traits of millennial investors was also analyzed.

Design/methodology/approach

Data was collected using a structured questionnaire segregated into two sections. In the first section, millennials were asked questions on socio-demographic factors, and the second section contained ten Likert-type statements to cover the multidimensionality of financial risk. Factor analysis and one-way ANOVA were used to analyze the primary data collected for this study.

Findings

The findings indicate that the risk profile of millennials is mainly affected by three factors: risk-taking capacity, risk attitude and risk propensity. Except for educational qualification and occupation, all other demographic features, such as age, gender, marital status, income and family size, seem to significantly influence the factors defining millennials' risk profile.

Originality/value

Uncertainty is inherent in any financial decision, and an investor’s willingness to deal with these variations determines their investment risk profile. To make sound financial decisions, it is mandatory to understand one’s risk profile. The awareness of millennials' distinctive risk profile will come in handy to financial stakeholders because they account for one-third of India’s population, and their financial decisions will shape the financial world for the decades to come.

Details

Global Knowledge, Memory and Communication, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2514-9342

Keywords

Open Access
Article
Publication date: 23 February 2024

Bonha Koo and Ryumi Kim

Using the next-day and next-week returns of stocks in the Korean market, we examine the association of option volume ratios – i.e. the option-to-stock (O/S) ratio, which is the…

Abstract

Using the next-day and next-week returns of stocks in the Korean market, we examine the association of option volume ratios – i.e. the option-to-stock (O/S) ratio, which is the total volume of put options and call options scaled by total underlying equity volume, and the put-call (P/C) ratio, which is the put volume scaled by total put and call volume – with future returns. We find that O/S ratios are positively related to future returns, but P/C ratios have no significant association with returns. We calculate individual, institutional, and foreign investors’ option ratios to determine which ratios are significantly related to future returns and find that, for all investors, higher O/S ratios predict higher future returns. The predictability of P/C depends on the investors: institutional and individual investors’ P/C ratios are not related to returns, but foreign P/C predicts negative next-day returns. For net-buying O/S ratios, institutional net-buying put-to-stock ratios consistently predict negative future returns. Institutions’ buying and selling put ratios also predict returns. In short, institutional put-to-share ratios predict future returns when we use various option ratios, but individual option ratios do not.

Details

Journal of Derivatives and Quantitative Studies: 선물연구, vol. 32 no. 1
Type: Research Article
ISSN: 1229-988X

Keywords

Article
Publication date: 9 February 2024

Wei Wang, Haiwang Liu and Yenchun Jim Wu

This study aims to examine the influence of reward personalization on financing outcomes in the Industry 5.0 era, where reward-based crowdfunding meets the personalized needs of…

Abstract

Purpose

This study aims to examine the influence of reward personalization on financing outcomes in the Industry 5.0 era, where reward-based crowdfunding meets the personalized needs of individuals.

Design/methodology/approach

The study utilizes a corpus of 218,822 crowdfunding projects and 1,276,786 reward options on Kickstarter to investigate the effect of reward personalization on investors’ willingness to participate in crowdfunding. The research draws on expectancy theory and employs quantitative and qualitative approaches to measure reward personalization. Quantitatively, the number of reward options is calculated by frequency; whereas text-mining techniques are implemented qualitatively to extract novelty, which serves as a proxy for innovation.

Findings

Findings indicate that reward personalization has an inverted U-shaped effect on investors’ willingness to participate, with investors in life-related projects having a stronger need for reward personalization than those interested in art-related projects. The pledge goal and reward text readability have an inverted U-shaped moderating effect on reward personalization from the perspective of reward expectations and reward instrumentality.

Originality/value

This study refines the application of expectancy theory to online financing, providing theoretical insight and practical guidance for crowdfunding platforms and financiers seeking to promote sustainable development through personalized innovation.

Details

European Journal of Innovation Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1460-1060

Keywords

Article
Publication date: 14 February 2024

Dorra Messaoud and Anis Ben Amar

Based on the theoretical framework, this paper analyzes the sentiment-herding relationship in emerging stock markets (ESMs). First, it aims to examine the effect of investor

Abstract

Purpose

Based on the theoretical framework, this paper analyzes the sentiment-herding relationship in emerging stock markets (ESMs). First, it aims to examine the effect of investor sentiment on herding. Second, it seeks the direction of causality between sentiment and herding time series.

Design/methodology/approach

The present study applies the Exponential Generalized Auto_Regressive Conditional Heteroskedasticity (EGARCH) model to capture the volatility clustering of herding on the financial market and to investigate the role of the investor sentiment on herding behaviour. Then the vector autoregression (VAR) estimation uses the Granger causality test to determine the direction of causality between the investor sentiment and herding. This study uses a sample consisting of stocks listed on the Shanghai Composite index (SSE) (348 stocks), the Jakarta composite index (JKSE) (118 stocks), the Mexico IPC index (14 stocks), the Russian Trading System index (RTS) (12 stocks), the Warsaw stock exchange General index (WGI) (106 stocks) and the FTSE/JSE Africa all-share index (76 stocks). The sample includes 5,020 daily observations from February 1, 2002, to March 31, 2021.

Findings

The research findings show that the sentiment has a significant negative impact on the herding behaviour pointing out that the higher the investor sentiment, the lower the herding. However, the results of the present study indicate that a higher investor sentiment conducts a higher herding behaviour during market downturns. Then the outcomes suggest that during the crisis period, the direction is one-way, from the investor sentiment to the herding behaviour.

Practical implications

The findings may have implications for universal policies of financial regulators in EMs. We have found evidence that the Emerging investor sentiment contributes to the investor herding behaviour. Therefore, the irrational investor herding behaviour can increase the stock market volatility, and in extreme cases, it may lead to bubbles and crashes. Market regulators could implement mechanisms that can supervise the investor sentiment and predict the investor herding behaviour, so they make policies helping stabilise stock markets.

Originality/value

The originality of this paper lies in investigate the sentiment-herding relationship during the Surprime crisis and the Covid-19 epidemic in the EMs.

Details

EuroMed Journal of Business, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1450-2194

Keywords

Article
Publication date: 9 February 2024

Alexandre Esteves and Pedro Piccoli

The purpose of this study is to investigate the influence of firm-specific investor sentiment on Brazilian companies’ accrual-based earnings management between 2010 and 2018. The…

Abstract

Purpose

The purpose of this study is to investigate the influence of firm-specific investor sentiment on Brazilian companies’ accrual-based earnings management between 2010 and 2018. The paper aims to bring deeper insight into the relationship between the investor expectations and managers’ decision-making in an emerging market.

Design/methodology/approach

The authors use the quantitative approach and apply a multiple linear regression model to test the relationship among the abnormal accruals, the firm-specific investor sentiment index and the control variables. The final sample includes data from 175 companies, between 2010 and 2018.

Findings

These results reveal a negative association between firm-specific investor sentiment and accrual-based earnings management, which could mean that the risk propensity of managers to manipulate earnings increases when they face known losses in the capital market.

Research limitations/implications

The research findings provide a valuable understanding of how emerging capital market expectations can influence managerial decisions, such as accrual-based earnings management. The geographical area of study was limited to only Brazil.

Originality/value

Previous studies on developed markets show that market-wide investor sentiment positively influences accrual-based earnings management. However, the present study shows that the firm-specific investor sentiment index has a significant and negative relationship with Brazilian companies’ earnings manipulation, whereas market sentiment indicates contradictory relationship in previous studies in the country.

Propósito

El propósito de este estudio es investigar la influencia del sentimiento de los inversionistas a nivel de empresa en la manipulación contable de las empresas brasileñas entre 2010 y 2018. El documento pretende aportar una visión más profunda sobre la relación entre las expectativas de los inversores y la toma de decisiones de los gestores en un mercado emergente.

Diseño/metodologia/enfoque

usamos el enfoque cuantitativo y aplicamos un modelo de regresión lineal múltiple para probar la relación entre las acumulaciones anormales, el índice de sentimiento de los inversores a nivel de empresa y las variables de control. La muestra final incluye datos de 175 empresas, entre 2010 y 2018.

Hallazgos

Los resultados revelan una asociación negativa entre el sentimiento de los inversores a nivel de empresa y la manipulación contable basada em acumulaciones, lo que podría significar que la propensión al riesgo de los administradores a manipular las ganancias aumenta cuando enfrentan pérdidas conocidas en el mercado de capitales.

Limitaciones/implicaciones de la investigación

los resultados de la investigación proporcionan una valiosa comprensión de cómo las expectativas de los mercados de capitales emergentes pueden influir en las decisiones de gestión, como la manipulación contable basada en acumulaciones. El área geográfica de estudio se limitó únicamente a Brasil y, en consecuencia, los hallazgos y conclusiones del estudio tuvieron sus límites.

Originalidad/valor

estudios anteriores sobre mercados desarrollados muestran que el sentimiento de los inversores a nivel de mercado influye positivamente en la manipulación contable. Sin embargo, el presente estudio muestra que el índice de sentimiento de los inversores a nivel de empresa tiene una relación significativa y negativa con la manipulación de las ganancias de las empresas brasileñas, mientras que el sentimiento del mercado indica una relación contradictoria en estudios anteriores en el país.

Details

Academia Revista Latinoamericana de Administración, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1012-8255

Keywords

Article
Publication date: 21 February 2024

Shihui Fan and Yan Zhou

This study aims to investigate the impact of earnings predictability and truthfulness on nonprofessional investors’ investment willingness.

Abstract

Purpose

This study aims to investigate the impact of earnings predictability and truthfulness on nonprofessional investors’ investment willingness.

Design/methodology/approach

Earnings predictability is captured by quarterly earnings autocorrelation, and earnings truthfulness is indicated by real earnings management (REM). The average of investment attractiveness and willingness measures investment willingness. The authors use experiments to isolate the impact of quarterly earnings autocorrelation and REM on investors’ investment behaviors.

Findings

From the 2 × 2 design, the authors observe that investors weight more on earnings predictability than earnings truthfulness.

Research limitations/implications

The generalization of the findings may be constrained for the following reasons. First, the authors use only one proxy, REM, to measure earnings truthfulness. In addition, the authors provide the participants, Amazon Mechanical Turk, with earnings predictability. Results may no longer hold if each participant has different understanding and analysis of earnings predictability.

Practical implications

In periods of unprecedented and severe financial uncertainty (i.e. the COVID-19 pandemic), investors rely more on earnings predictability than on earnings truthfulness. The study assists managers to strategically emphasize the predictability of earnings to attract investors, especially when firms face financial challenges or uncertainty.

Social implications

This study contributes to understanding investor behavior and the critical role of earnings predictability and truthfulness in shaping investment decisions.

Originality/value

This paper contributes to the literature of earnings properties in financial reporting, particularly by shedding light on the nuanced interplay between earnings predictability and earnings truthfulness. The research also demonstrates that elevated earnings autocorrelation indirectly stimulates investment willingness by enhancing the investors’ perception of earnings persistence of targeted firms.

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: 1 March 2006

Farshid Navissi and Vic Naiker

Prior studies examining the relation between the shareholdings by institutional investors and firm value have produced mixed results. These studies have assumed that a linear…

4402

Abstract

Purpose

Prior studies examining the relation between the shareholdings by institutional investors and firm value have produced mixed results. These studies have assumed that a linear relation exists between corporate value and institutional shareholdings. The purpose of this study is to further investigate the nature of this relationship and by partitioning institutional investors into institutions that have appointed a representative to the board of directors of the firms in which they have a block investment and institutions with a similar holding but without a representative on the board of directors.

Design/methodology/approach

The study is based on a sample of 123 firms with available financial and institutional ownership data. A cross‐sectional regression analysis is used to test the relation between corporate value and institutional ownership with and without board representation.

Findings

The results of the study suggest that share ownership by investors with board representation is positively related to the value of the firm at lower levels of ownership. However, as the share ownership increases, the impact on the value of the firm becomes negative, giving rise to a non‐linear relation. The extent of shareholding by institutions without board representation, on the other hand, is not related to the value of the firm.

Research limitations/implications

The findings show that institutions with board representation have greater incentives to monitor management, and therefore their presence should have a positive influence on firm value. However, at high levels of ownership, institutional investors with board representation may induce boards of directors to make sub‐optimal decisions.

Originality/value

The study provides a deeper understanding of the relationship between firm value and institutional ownership. That is, the effect of shareholding by institutions with board representation is likely to have a non‐linear relation with firm value.

Details

Managerial Finance, vol. 32 no. 3
Type: Research Article
ISSN: 0307-4358

Keywords

1 – 10 of over 59000