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1 – 10 of 629Nan Hua, Qu Xiao and Elizabeth Yost
The purpose of this paper is to explore the financial characteristics associated with outperformance of US public restaurant firms in challenging economic times and the empirical…
Abstract
Purpose
The purpose of this paper is to explore the financial characteristics associated with outperformance of US public restaurant firms in challenging economic times and the empirical measure of outperformance proposed herein.
Design/methodology/approach
This study utilizes a Logit model and considers the relevant financial variables in annual deviation forms to explore an empirical model that explains financial outperformance in troubled economic times for the restaurant industry.
Findings
The results of the study indicate that larger market share, asset turnover, and profit margin, combined with lower leverage, BM, earnings variance, and size, in addition to franchise utilization, appear to produce collectively a fine balance for success in difficult economic times.
Research limitations/implications
This paper does not address the fine balance between short‐term financial performance and long‐term sustainability. Further, the employed contemporaneous modeling framework may limit generality of findings of this paper.
Originality/value
This study provides systematic evidence on an empirical framework linking financial characteristics and outperformance of restaurant firms in difficult economic times. Its results have timely and significant implications for practitioners, researchers and other parties of interest.
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Nan Hua, Khaldoon “Khal” Nusair and Arun Upneja
The paper aims to provide empirical evidence that certain financial characteristics are critical for lodging firms to earn a higher profit. Further, it proposes, perhaps more…
Abstract
Purpose
The paper aims to provide empirical evidence that certain financial characteristics are critical for lodging firms to earn a higher profit. Further, it proposes, perhaps more importantly, a robust empirical framework for identifying outperformance in profitability, which has been barely studied in the lodging industry.
Design/methodology/approach
The paper employed logit models, under the framework of comparative advantage theory, to explore the relationships between firm financial characteristics and outperformance from a financial perspective.
Findings
This study, for the first time, provides systematic empirical evidence on how to identify lodging firms that outperform their competitors over time. From a practical standpoint, owners and managers should use industry medians to benchmark financial performance, focusing on factors such as leverage, book to market, asset turnover, and firm size to ensure financial performance leadership among lodging firms. Moreover, echoing previous research, a franchise appears to help differentiate an outperforming firm from its competitors in a positive way.
Research limitations/implications
Because of the chosen research framework, the study results need to be interpreted with caution. Specific suggestions appear in the section of limitations and future research.
Practical implications
The paper includes implications of general guidelines to identify financial characteristics that differentiate outperforming firms from their competitors as well as some specific action plans for investors, practitioners, and researchers to consider.
Originality/value
This paper is the first one that provides systematic empirical evidence on how to identify lodging firms that outperform their competitors over time, thus shedding lights on what financial characteristics lodging firms should keep a close eye on for a better future.
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Qiang Bu and Nelson Lacey
– The purpose of this paper is to examine managerial skill of US equity mutual funds in the context of both abnormal return and risk.
Abstract
Purpose
The purpose of this paper is to examine managerial skill of US equity mutual funds in the context of both abnormal return and risk.
Design/methodology/approach
The authors evaluate manager skill based on the outperforming probability and cumulative distribution function of the actual funds and the bootstrapped funds. And the authors recognize the role of fund life cycle and use different evaluation horizons to control for fund age and the overall state of the market.
Findings
The authors find that a small percentage of equity funds can beat the market, and the percentage is overall higher than what the control group would predict. The authors find no evidence of persistence. The authors also document that the chance of underperformance is much higher than what the authors had expect from the control group. Taking the risk-return tradeoff into account, any performance advantage of actual funds over bootstrapped funds is correlated with tail risk, and a robustness check confirms this finding.
Originality/value
The authors find that the outperforming probability itself is not enough to confirm the existence of manager skill. The complete story of mutual fund alpha, should it exist, would not be complete without incorporating both risk and luck.
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Muhammad Shoaib and Hazir Ullah
This paper attempts to explore possible contributing factors of females' outperformance and males' underperformance in the higher education in Pakistan from teachers' perspective…
Abstract
Purpose
This paper attempts to explore possible contributing factors of females' outperformance and males' underperformance in the higher education in Pakistan from teachers' perspective. The central question of the study is what are the key factors that affect female and male students' educational performance at the university level? Using Artificial Neural Network (ANN) as a framework, we attempted to predict differentials of the perceived “female outperformance” and “male underperformance” in higher education. We carried out the study by employing quantitative research methods.
Design/methodology/approach
The data for the study come from 253 teachers from University of the Punjab-largest and oldest University in Pakistan. We used a structured questionnaire for data collection. The analysis was carried out with the help of ANN model. Statistical Package for Social Sciences (SPSS) was used to analyze the data.
Findings
The testing results of ANN indicated 85.3% of teachers' perception was correctly predicted on various dimensions of performance differentials across female and male students in higher education.
Research limitations/implications
The study banks on primary data collected from teachers of the University of University of the Punjab, Pakistan. Thus, the study's universe was limited to one university – University of Punjab. It is purely based on a quantitative approach employing ANN.
Practical implications
The findings of this study have several significant implications, i.e. it makes a significant contribution to the existing body of scholarly texts on the issue of gender reverse change in academic performance in higher education.
Originality/value
The findings of this research, derived from primary data in Pakistan context, qualify this research as an original one. We also claim that this study is one of the first studies on gender reverse change in academic performance among graduate students in a public sector university of Pakistan employing ANN.
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Bart Frijns and Ivan Indriawan
This paper aims to assess the ability of New Zealand (NZ) actively managed funds to generate risk-adjusted outperformance using portfolio holdings data. Focusing on domestic…
Abstract
Purpose
This paper aims to assess the ability of New Zealand (NZ) actively managed funds to generate risk-adjusted outperformance using portfolio holdings data. Focusing on domestic equity allocations addresses the benchmark selection issue, particularly for funds with national and international exposures.
Design/methodology/approach
The authors assess performance using several asset pricing models including the CAPM, three-factor and four-factor models. The authors also assess performance across funds with different characteristics such as fund size, size of local holdings, type of fund provider, past returns and fees. The authors further examine whether funds engage in any stock-picking or market timing by considering the active share and tracking error.
Findings
The returns on NZ equity holdings of NZ actively managed funds from 2010 to 2017 provide little evidence of risk-adjusted outperformance and stock-picking skill. These exposures yield pre-cost returns that have a nearly perfect correlation with the market index and an insignificant alpha. Funds show little tendency to bet on any of the main characteristics known to predict stock returns, such as size, book-to-market and momentum. In addition, the authors show that the average active shares and tracking errors are low, suggesting that the majority of funds hold NZ equity portfolios that closely mimic the market index.
Originality/value
Existing studies rely on returns data which aggregate performance across all asset classes with varying exposures. This may lead to benchmark selection issues (particularly for funds with international exposures) which may obscure the fund manager’s true stock-picking skills. Assessment using holdings data would enable suitable performance measurement by researchers and industry analysts.
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The purpose of this study is to investigate whether the direct and indirect sentiment measures are similar in explaining mutual fund performance.
Abstract
Purpose
The purpose of this study is to investigate whether the direct and indirect sentiment measures are similar in explaining mutual fund performance.
Design/methodology/approach
The authors examine the role of direct and indirect sentiment measures on fund performance in two scenarios. One is when a sentiment measure is added to market models, and the other is when it used independently. Also, the authors propose a system science theory to explain the findings.
Findings
The authors find that both direct and indirect sentiment measures are integral to the benchmark models to explain fund performance. However, while the explanatory power of the direct sentiment index is robust when used independently or collectively, the indirect sentiment measures can explain fund performance only when used along with other market factors.
Originality/value
Given the number of sentiment measures, it is critical to determine whether these measures contain the same information of sentiment. This paper represents the first study on this topic.
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This study investigates the performance distribution of passive funds in the Korean market and compares it with the performance distribution of active funds. The key findings are…
Abstract
This study investigates the performance distribution of passive funds in the Korean market and compares it with the performance distribution of active funds. The key findings are as follows, first, the performance distribution of passive funds has a thicker tail compared to that of active funds. There are passive funds that achieve outstanding performance, and both the false discovery rate (FDR) analysis and simulation analysis suggest that their outperformance is driven by managerial skill rather than luck. Second, passive fund performance is more persistent compared to active fund performance. Third, investors are less responsive to passive fund performance compared to active fund performance. The fund flow-performance relationship is significantly positive for active funds but not for passive funds. This implies that investors may not recognize the managerial skills of passive funds.
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The existing research finds a positive financial impact of franchising for relatively short time windows, usually less than ten years. As a result, these studies leave one…
Abstract
Purpose
The existing research finds a positive financial impact of franchising for relatively short time windows, usually less than ten years. As a result, these studies leave one critical research question unanswered: does franchising influence restaurant firms' financial performance consistently in the long term? The purpose of this paper is to address the research question and offer relevant managerial implications.
Design/methodology/approach
This study uses and expands the models derived from Ohlson, from Amir and Lev and from Lev and Zarowin to address the financial impacts of franchise in the restaurant industry from a long-term and consistent perspective.
Findings
Carrying out empirical tests over all ten-year testing windows that span 1980-2010 with quarterly data, this study finds that franchising is an effective mechanism to systematically and consistently outperform non-franchise firms in the long term and provides compelling empirical evidence to answer the research question. Further, limited-service restaurants also exhibit consistent and positive impacts on firm financial performance in the long term, suggesting limited-service operations are also effective to enhance firm value and outperform competitors.
Originality/value
First, this study expands the set of variables employed by many financial researchers to explain stock price in the restaurant industry. Second, this study tests and shows that franchising systematically leads to financial outperformance over the long term. Third, this study tests and shows that limited service restaurants consistently and systematically outperform their peers in the long run. Finally, the results of this study can be used to help investors and fund managers select restaurant company stocks and offer compelling evidence in support of franchising and limited service operations.
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A well-documented pattern in the literature concerns the outperformance of small-cap stocks relative to their larger-cap counterparts. This paper aims to address the “small-cap…
Abstract
Purpose
A well-documented pattern in the literature concerns the outperformance of small-cap stocks relative to their larger-cap counterparts. This paper aims to address the “small-cap versus large-cap” issue using for the first time data from the exchange traded funds (ETFs) industry.
Design/methodology/approach
Several raw return and risk-adjusted return metrics are estimated over the period 2012-2016.
Findings
Results are partially supportive of the “size effect”. In particular, small-cap ETFs outperform large-cap ETFs in overall raw return terms even though they fail the risk test. However, outperformance is not consistent on an annual basis. When risk-adjusted returns are taken into consideration, small-cap ETFs are inferior to their large-cap counterparts.
Research limitations/implications
This research only covers the ETF market in the USA. However, given the tremendous growth of ETF markets worldwide, a similar examination of the “small vs large capitalization” issue could be conducted with data from other developed ETF markets in Europe and Asia. In such a case, useful comparisons could be made, so that we could conclude whether the findings of the current study are unique and US-specific or whether they could be generalized across the several international ETF markets.
Practical implications
A possible generalization of the findings would entail that profitable investment strategies could be based on the different performance and risk characteristics of small- and large-cap ETFs.
Originality/value
This is the first study to examine the performance of ETFs investing in large-cap stock indices vis-à-vis the performance of ETFs tracking indices comprised of small-cap stocks.
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Omokolade Akinsomi, Katlego Kola, Thembelihle Ndlovu and Millicent Motloung
The purpose of this paper is to examine the impact of Broad-Based Black Economic Empowerment (BBBEE) on the risk and returns of listed and delisted property firms on the…
Abstract
Purpose
The purpose of this paper is to examine the impact of Broad-Based Black Economic Empowerment (BBBEE) on the risk and returns of listed and delisted property firms on the Johannesburg Stock Exchange (JSE). The study was investigated to understand the impact of Black Economic Empowerment (BEE) property sector charter and effect of government intervention on property listed markets.
Design/methodology/approach
The study examines the performance trends of the listed and delisted property firms on the JSE from January 2006 to January 2012. The data were obtained from McGregor BFA database to compute the risk and return measures of the listed and delisted property firms. The study employs a capital asset pricing model (CAPM) to derive the alpha (outperformance) and beta (risk) to examine the trend amongst the BEE and non-BEE firms, Sharpe ratio was also employed as a measurement of performance. A comparative study is employed to analyse the risks and returns between listed property firms that are BEE compliant and BEE non-compliant.
Findings
Results show that there exists differences in returns and risk between BEE-compliant firms and non-BEE-compliant firms. The study shows that BEE-compliant firms have higher returns than non-BEE firms and are less risky than non-BEE firms. By establishing this relationship, this possibly affects the investor’s decision to invest in BEE firms rather than non-BBBEE firms. This study can also assist the government in strategically adjusting the policy.
Research limitations/implications
This study employs a CAPM which is a single-factor model. Further study could employ a multi-factor model.
Practical implications
The results of this investigation, with the effects of BEE on returns, using annualized returns, the Sharpe ratio and alpha (outperformance), results show that BEE firms perform better than non-BEE firms. These results pose several implications for investors particularly when structuring their portfolios, further study would need to examine the role of BEE on stock returns in line with other factors that affect stock returns. The results in this study have several implications for government agencies, there may be the need to monitor the effect of the BEE policies on firm returns and re-calibrate policies accordingly.
Originality/value
This study investigates the performance of listed property firms on the JSE which are BEE compliant. This is the first study to investigate listed property firms which are BEE compliant.
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