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Case study
Publication date: 10 October 2013

Zizah Che Senik, Rosmah Mat Isa, Noreha Halid, Adlin Masood, Soo-Wah Low and Khairul Akmaliah Adham

The area of focus is on organization strategies, specifically in developing appropriate strategies for business expansion in a situation of high economic uncertainties.

Abstract

Subject area

The area of focus is on organization strategies, specifically in developing appropriate strategies for business expansion in a situation of high economic uncertainties.

Study level/applicability

This case is designed for advanced undergraduate in the business and management programs and students in the MBA programs. It is suitable for courses of organizational management, organization theory and design, strategic management, and managerial economics.

Case overview

At the end of 2009, Kumpulan Perubatan Johor Healthcare Group was the largest public-listed healthcare service provider in Malaysia, with revenues of RM1.5 billion (approximately USD0.5 billion) and a net profit after tax of RM115 million (approximately USD38 million). The country was experiencing economic downturn, which affected demands of the affluent as well as medical tourism segments, which were the targeted market of the company. Datin Paduka Siti Sa'diah Sheikh Bakir, the group's CEO and her management team realized that the company needed to seek a new growth strategy. The case stimulates a discussion on the future strategy of a high-growth healthcare company that aspired to be the leading healthcare player in the region.

Expected learning outcomes

Understanding the process of analyzing an industry, as well as formulating strategies, enables case analysts to extend the practice of making strategic decisions to many business situations.

Supplementary materials

Teaching notes are available for educators only. Please contact your library to gain login details or email support@emeraldinsight.com to request teaching notes.

Details

Emerald Emerging Markets Case Studies, vol. 3 no. 4
Type: Case Study
ISSN: 2045-0621

Keywords

Article
Publication date: 30 July 2019

Ali Albada, Soo-Wah Low and Othman Yong

The purpose of this paper is to examine the effects of prestige signals measured by the reputations of the underwriter, auditor and board size on the heterogeneity of investor…

Abstract

Purpose

The purpose of this paper is to examine the effects of prestige signals measured by the reputations of the underwriter, auditor and board size on the heterogeneity of investor belief about the true value of IPO in the Malaysian IPO market.

Design/methodology/approach

This study employs a sample of 281 IPOs issued between January 2000 and December 2015. The relationship between prestige signals and investor heterogeneity, measured by first-day price range of IPOs, is analysed using cross-sectional regression and quantile regression technique.

Findings

Of the three prestige signals, the findings show that only underwriter reputation and board size have significant negative relationships with IPO first-day price range. This implies that IPOs underwritten by reputable underwriters and issuing firms with larger board members have lower heterogeneity of opinion among investors. The findings also show that underwriter and auditor reputations have negative relationship with IPO initial return, suggesting that these prestige signals help to reduce IPO under-pricing, which is a direct cost of raising capital for the issuing firm. Furthermore, the results indicate that offer price, initial return, over-subscription ratio and private placement are associated with higher first-day price range. However, the findings on offer size suggest that larger IPO offer size is associated with lower first-day price range. Overall, the findings suggest that firm’s prestige signals reduce opinion heterogeneity among investors and that lower investors’ heterogeneity leads to lower IPO under-pricing cost for issuing firms.

Originality/value

Despite the importance of underwriter, auditor and board member reputations in signalling firm’s quality and reducing the level of information asymmetry of the listing firm’s issues, research on the effects of prestige signals on investor heterogeneity remains unexplored. This study investigates the role of prestige signals in influencing investors’ heterogeneity in Malaysia. The authors conjecture that underwriter, auditor and board member with higher reputations are associated with lower levels of opinion heterogeneity among IPO investors.

Details

International Journal of Emerging Markets, vol. 15 no. 2
Type: Research Article
ISSN: 1746-8809

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Article
Publication date: 12 April 2019

Ali Albada, Othman Yong and Soo-Wah Low

The purpose of this paper is to examine whether initial public offering (IPO) over-subscription is a function of firm’s prestige signals conveyed by third parties with…

Abstract

Purpose

The purpose of this paper is to examine whether initial public offering (IPO) over-subscription is a function of firm’s prestige signals conveyed by third parties with reputational capital such as underwriter, auditor and independent non-executive board member.

Design/methodology/approach

The relationship between prestige signals and over-subscription ratio (OSR) of IPOs is analysed using a cross-sectional regression based on a sample of 393 IPOs issued between January 2000 and December 2015.

Findings

The results indicate that IPOs underwritten by reputable underwriters have lower OSR than those underwritten by non-reputable underwriters. While issuer engages reputable underwriter to certify firm quality to reduce information asymmetry, the action brings with it lower initial returns for its IPO. Investors interpret the signal conveyed by issuer’s choice of underwriter from under-pricing perspective and respond accordingly by reducing IPO demand. This implies that investors regard under-pricing as a more valuable signal than firm quality signal associated with underwriter reputation. The findings also indicate that over-subscription increases in IPOs that have above average initial returns and higher institutional participation. Issuing firms that go public in a period of high IPO volume are associated with low OSR.

Originality/value

This is the first paper to examine the relationship between the prestige signals and OSR of IPOs in the Malaysian context.

Details

International Journal of Managerial Finance, vol. 15 no. 4
Type: Research Article
ISSN: 1743-9132

Keywords

Article
Publication date: 5 June 2017

Soo-Wah Low

The purpose of this paper is to examine the determinants of fund expense ratio for Malaysia-based international equity funds. An understanding of what these factors are and how…

Abstract

Purpose

The purpose of this paper is to examine the determinants of fund expense ratio for Malaysia-based international equity funds. An understanding of what these factors are and how they affect a fund’s expense ratio is important given that international funds can be expensive to operate and that fund expenses have negative impact on investors’ returns.

Design/methodology/approach

This study employs a standard cross-sectional regression model in examining the factors that influence fund expense ratio of international equity funds.

Findings

The findings show that sales charge is positively related to fund expense ratio although it is not included in the expense ratio computation. This suggests that investor could possibly incur additional “hidden cost” since sales charge represents an upfront cost that an investor has already paid at the time of the fund sale. Additionally, funds with aggressive investment objective and frequent portfolio turnover show higher expense ratios than funds with conservative investment objective and less trading activities. There is no evidence that fund size, fund age, and the number of funds in a fund family are significantly related to the fund expense ratio. While the lack of statistical finding for fund size in this study seems inconsistent with the results of the US market in general, the finding is supportive of the Thai equity fund market and thus implying that finding could be country specific.

Research limitations/implications

There is limited availability of international equity funds in Malaysia.

Practical implications

The findings provide useful insights for investors to make informed international fund selection decisions. Expense-conscious investors should pay particular attention to fund’s sales charge, turnover ratio, and its investment objective when selecting funds for investment.

Originality/value

This paper provides first evidence on the determinants of fund expense ratio of Malaysia-based international equity funds.

Details

American Journal of Business, vol. 32 no. 2
Type: Research Article
ISSN: 1935-5181

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Open Access
Article
Publication date: 23 March 2022

Ali Albada, Soo-Wah Low and Moau Yong Toh

This study aims to investigate the moderating role of investor demand on the relationship between the investors' divergence of beliefs and the first-day initial public offering…

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Abstract

Purpose

This study aims to investigate the moderating role of investor demand on the relationship between the investors' divergence of beliefs and the first-day initial public offering (IPO) return.

Design/methodology/approach

The study sample covers the period from 2010 to 2019 and consists of 117 IPOs that are priced using the fixed price and listed on the Malaysian stock exchange (Bursa Malaysia). This study employed both the ordinary least square (OLS) and the quantile regression (QR) methods.

Findings

Investor demand, proxied by the over-subscription ratio (OSR), plays a moderating role in increasing the effect of investors' divergence of beliefs on initial return, and the moderation effects vary across the quantile of initial return. Pure moderation effects are observed at the bottom and top quantiles, suggesting that investor demand is necessary for divergence of beliefs to influence IPO initial return. However, at the middle quantile of initial return, investor demand is a quasi-moderator. That is, the OSR not only moderates the relationship between the divergence of beliefs and initial return but also has a positive effect on the initial return.

Practical implications

Investors' excessive demand for an IPO issue exacerbates the IPO under-pricing issue induced by a divergence of beliefs amongst investors, thus rendering greater equity market inefficiency.

Originality/value

To the authors' knowledge, this study is amongst the first to empirically investigate the moderating role of investor demand on the investors' divergence of beliefs and IPO initial return relationship.

Details

Journal of Asian Business and Economic Studies, vol. 30 no. 4
Type: Research Article
ISSN: 2515-964X

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Article
Publication date: 21 September 2018

Soo-Wah Low, Ali Albada, Nurhatiah Ahmad Chukari and Noor Azlan Ghazali

The purpose of this paper is to investigate the impacts of stock market and banking sectors development on a country’s efficiency in transforming its innovation input into output.

Abstract

Purpose

The purpose of this paper is to investigate the impacts of stock market and banking sectors development on a country’s efficiency in transforming its innovation input into output.

Design/methodology/approach

This study employs a generalized method-of-moments panel estimator to examine the role of stock market and banking development in influencing innovation efficiency.

Findings

Findings show that a country’s stock market development is positively related to its innovation efficiency ratio. Countries with more developed stock markets have relatively higher efficiency in transforming innovation input into innovation output than those with less developed stock markets. There is no evidence that innovation efficiency is influenced by banking sector development. However, when stock market and banking sectors are modeled together, while stock market development retains its positive influence, the findings indicate that banking sector exerts negative impact on innovation efficiency.

Practical implications

The findings provide useful insights to guide policy decisions for a country’s innovation agenda in enhancing its innovation performance. The findings imply that stock market development should be embraced as one of the key policy areas in order for a country to be more efficient in transforming its innovation input into innovation output.

Originality/value

This paper provides first evidence using data sourced from Global Innovation Index report, first available in 2007 and published by Cornell University, INSEAD and the World Intellectual Property Organization.

Details

International Journal of Managerial Finance, vol. 14 no. 5
Type: Research Article
ISSN: 1743-9132

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Article
Publication date: 23 January 2007

Soo‐Wah Low and Noor Azlan Ghazali

The primary objective of the paper is to examine the short and long run price linkages between Malaysian unit trust funds and the stock market index as proxied by the Kuala Lumpur…

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Abstract

Purpose

The primary objective of the paper is to examine the short and long run price linkages between Malaysian unit trust funds and the stock market index as proxied by the Kuala Lumpur composite index (KLCI) over the period 1996‐2000.

Design/methodology/approach

Cointegration analyses are used to identify the long run relationship between unit trust funds and the stock market index while Granger causality tests are used to measure the short run price linkages.

Findings

Cointegration results show that the long run pricing performance of the unit trust funds differs significantly from that of the KLCI. Interestingly, the findings also reveal that two index funds are found not to be cointegrated with the stock market index. In the short run, one‐way Granger causality test shows that changes in the KLCI Granger causes changes in the unit trust funds. This suggests that fund managers are responding to the past changes in the stock market index over the short run.

Research limitations/implications

The findings of non‐cointegration between passively managed funds and the KLCI are restricted to only two index funds in the sample among other actively managed funds. Since there were not enough index funds available over the study period, future research should include more index funds in the analysis.

Practical implications

In the short run, investors may gather information on the changes in their portfolio composition by observing the movement in the KLCI.

Originality/value

The paper represents the first evidence on the pricing relationships between unit trust funds and the local stock market index and the findings are important to investors in terms of their investment strategies.

Details

Managerial Finance, vol. 33 no. 2
Type: Research Article
ISSN: 0307-4358

Keywords

Article
Publication date: 23 January 2007

Soo‐Wah Low

The paper seeks to examine whether selectivity and timing performance of fund manager is sensitive to the choice of market benchmarks. The two benchmarks used are the Kuala Lumpur…

5206

Abstract

Purpose

The paper seeks to examine whether selectivity and timing performance of fund manager is sensitive to the choice of market benchmarks. The two benchmarks used are the Kuala Lumpur Composite Index (KLCI) and the Exchange Main Board All‐Share (EMAS) Index.

Design/methodology/approach

The paper seeks to employed Jensen's model to estimate the overall fund performance and Henriksson and Merton's model to separate the fund manager's investment performance into the selectivity and market‐timing components.

Findings

The findings indicate that, on average, the funds display negative overall performance with either the KLCI or the EMAS Index. In addition, there is little variation in the manager's market‐timing and selectivity performance across alternative market benchmarks. It is also reported that a manager's poor timing ability contributes significantly to the fund's negative overall performance.

Research limitations/implications

The paper employed just two market benchmarks. Inclusion of more market benchmarks in future research may provide further support for the existing findings.

Practical implications

Regardless of the market benchmarks used, the results imply that fund managers should seriously reassess their market timing efforts, given that their predictions are very often in the wrong direction than in the right direction. Such findings suggest that no economic benefit accrues to the average fund manager involved in market‐timing activities.

Originality/value

The paper provides first evidence on the sensitivity of a fund manager's separate investment components (timing and selectivity) to different specification of the market benchmarks.

Details

Managerial Finance, vol. 33 no. 2
Type: Research Article
ISSN: 0307-4358

Keywords

Article
Publication date: 10 June 2021

Zhenyu Su and Paloma Taltavull

This paper aims to analyse the risk and excess returns of the Spanish real estate investment trusts (S-REITs) using various methods, though focusing primarily on the Fama-French…

Abstract

Purpose

This paper aims to analyse the risk and excess returns of the Spanish real estate investment trusts (S-REITs) using various methods, though focusing primarily on the Fama-French three-factor (FF3) model, over the period from 2007Q3 to 2017Q2.

Design/methodology/approach

The autoregressive distributed lag model is used for the empirical analysis to test long-term stable relationships between variables.

Findings

The findings indicate that the FF3 model is suitable for the S-REITs market, better explaining the S-REITs’ returns variation than the traditional single-index capital asset pricing model (CAPM) and the Carhart four-factor model. The empirical evidence is reasonably consistent with the FF3 model; the values for the market, size and value are highly statistically significant over the analysis period, with 68.7% variation in S-REITs’ returns explained by the model. In the long run, the market factor has less explanatory power than the size and value factors; the positive long-term multiplier of the size factor indicates that small S-REIT companies have higher returns, along with higher risk, while the negative multiplier of the value indicator suggests that S-REITs portfolios prefer to allocate growth REITs with low book-to-market ratios. The empirical findings from a modified FF3 model, which additionally incorporates Spain’s gross domestic product (GDP) growth rate, two consumer price index (CPI) macro-factors and three dummy variables, indicates that GDP growth rate and CPI also affect S-REITs’ yields, while investment funds with capital calls have a small influence on S-REITs’ returns.

Practical implications

The regression results of the standard and extended FF3 model can help researchers understand S-REITs’ risk and return through a general stock pattern. Potential investors are given more information to consider the new Spanish investment vehicle before making a decision.

Originality/value

The paper uses standard techniques but applies them for the first time to the S-REIT market.

Book part
Publication date: 25 February 2016

Jana Hili, Desmond Pace and Simon Grima

The uncertainty as to whether investments in riskier and less efficient markets allow managers to ‘beat the market’ remains a question to which answers are required. Accordingly…

Abstract

Purpose

The uncertainty as to whether investments in riskier and less efficient markets allow managers to ‘beat the market’ remains a question to which answers are required. Accordingly, the purpose of this chapter is to offer new insights on portfolios of the US, European and Emerging Market (‘EM’) domiciled equity mutual funds whose objectives are the investment in emerging economies, and specifically analyses two main issues: alpha generation and the influence of the funds’ characteristics on their risk-adjusted performance.

Methodology/approach

The dataset is made up a survivorship-bias controlled sample of 137 equity funds over the period January 2004 to December 2014, which are then grouped into equally weighted portfolios according to the scheme’s origin. The Jensen’s (1968) Single-Factor model along with the Fama and French’s (1993) and Carhart’s (1997) multifactor models are employed to authenticate results and answer both research questions.

Findings

Research analysis reveals that EM exposed fund managers fail to collectively outperform the market. It thereby offers ground to believe that the emerging world is very close to being efficient, proving that the Efficient Market Hypothesis (‘EMH’) ideal exists in this scenario where market inefficiency might only be a perception of market participants as any apparent opportunity to achieve above-average returns is speedily snapped up by very active managers. Overall these managers take a conservative approach to portfolio construction, whereby they are more unperturbed investing in large cap equity funds so as to lessen somewhat the exposure towards risks associated with liquidity, stability and volatility.

Furthermore, the findings show that large-sized equity portfolios have the lead over the medium and small-sized competitors, whilst the high cost and mature collective investment vehicles enjoy an alpha which although is negative is superior to their peers. The riskiest funds generated the lowest alpha, and thereby produced doubts as to whether investors should accept a higher risk for the hope of earning higher returns, at least when aiming to gain an exposure into the emerging world.

Originality/value

Mutual fund performance is not an innovative topic so to speak. Nonetheless, researchers and academia have centred their efforts on appraising the behaviour of fund managers domiciled primarily in developed and more efficient economics, leaving the emerging region highly uncovered in this respect. This study, therefore aims at crafting meaningful contributions to the literature as well as to the practical perspective.

Details

Contemporary Issues in Bank Financial Management
Type: Book
ISBN: 978-1-78635-000-8

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