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1 – 10 of 39Mehtap Aldogan Eklund and Pedro Pinheiro
This paper aims to investigate whether executive compensation, corporate social responsibility (CSR)-based incentives, environmental social and governance (ESG) performance and…
Abstract
Purpose
This paper aims to investigate whether executive compensation, corporate social responsibility (CSR)-based incentives, environmental social and governance (ESG) performance and firm performance are the significant predictors of CSR committees, in addition to CEO, firm and corporate governance characteristics, from the tenet of stakeholder and managerial power theories.
Design/methodology/approach
Switzerland is an exemplary country from the perspective of corporate governance and executive compensation. This empirical study includes a panel data set of listed Swiss companies, so fixed-effect logistic regression has been used.
Findings
It has been found that the companies that offer CSR-based incentives and higher compensation to their CEOs and have better ESG performance are more likely to have CSR committees.
Practical implications
This empirical paper fills the gap in the literature, guides practitioners about the factors that influence the creation and efficiency of CSR committees, and inspires regulatory bodies to ponder on a mandatory CSR committee to form resilient and sustainable organizations worldwide.
Social implications
COVID-19 has re-emphasized the prominence of sustainability and the stakeholder approach. Thus, this paper indicates that CSR committees require the adaption and implementation of a holistic sustainability policy that integrates both external and internal factors and thereby provides a whole process for sustainability issues.
Originality/value
The impact of CSR committees on corporate social performance (CSP) has already been investigated. However, the predictors of CSR committees have been less scrutinized in the literature.
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Pedro A. Fernandes, João Carvalho das Neves and Jorge Caiado
This paper studies diversification and value in the investment portfolios of (non-listed) Real Estate Investment Funds (REIFs) exploring how the value of diversification is…
Abstract
Purpose
This paper studies diversification and value in the investment portfolios of (non-listed) Real Estate Investment Funds (REIFs) exploring how the value of diversification is captured by the market and by investors (beyond reported valuations).
Design/methodology/approach
We apply the Herfindahl-Hirschman Index (HHI) to study the level of concentration versus diversification in the investment portfolios of REIFs (both in terms of segment and geographical diversification). We use a dataset from INREV with data from 62 investment portfolios, with an average of 86 REIFs per portfolio for the period of 2008–2020 (to study segment diversification). We use a second dataset from INREV with data from 30 investment portfolios with an average of 79 REIFs per portfolio for the period of 2005–2020 (to study geographical diversification). We employ a cluster analysis approach to identify common features among the investment funds.
Findings
We conclude that (segment diversified) portfolios with higher degrees of leverage exhibit higher income yields, albeit diversification is captured indirectly through asset choices – more diversified portfolios tend to exhibit a stronger risk and return relationship. Also, geographical diversification creates value (more significantly by for the correct combination of countries carefully choosing what different geographies to group in the diversified portfolio).
Research limitations/implications
One limitation of our study is that our portfolios are funds of funds, since the available data could not reach the asset detail, but we believe this does not compromise our results.
Practical implications
Diversification leads to higher risk-adjusted returns which suggests that properties may be undervalued (market value) in the framework of the Gordon Model, contrary to expectations (regarding investment value).
Originality/value
Investors capture the value of diversification differently, suggesting a gap between market value and investment value that can be explored.
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Sanjay Sehgal, Asheesh Pandey and Swapna Sen
In the present study, we investigate whether enhanced momentum strategies outperform price momentum strategies and if they show greater resilience and stability under adverse…
Abstract
Purpose
In the present study, we investigate whether enhanced momentum strategies outperform price momentum strategies and if they show greater resilience and stability under adverse market conditions. We also examine if such strategies are explained by prominent asset pricing models or are a result of behavioral mispricing.
Design/methodology/approach
Data consist of the equity shares of all companies listed on National Stock Exchange over the study period. To check the efficacy of enhanced momentum over price momentum, six momentum strategies have been designed and their raw as well as risk-adjusted returns using multi-factor models have been observed. Behavioral mispricing has been examined by constructing an investor attention index. Finally, few robustness tests have been performed to confirm the results.
Findings
We find that an enhanced momentum strategy which combines relative and absolute strength momentum outperforms conventional price momentum strategy in India. We also demonstrate that rational pricing models are not able to explain momentum profits for any of the strategies. Finally, we observe that investor overreaction is the possible explanation of momentum profits in India. Thus, our results confirm the role of behavioral mispricing in explaining momentum returns.
Originality/value
Our research is the first major attempt to study enhanced momentum strategies in the Indian context. We experiment with several new enhanced momentum strategies which have not been explored in prior literature. The findings have strong implications for global portfolio managers who wish to design profitable trading strategies.
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Lumengo Bonga-Bonga and Salifya Mpoha
This paper contributes to the literature on exchange rate exposure by assessing the extent to which exchange rate risk is priced in both African emerging and developed equity…
Abstract
Purpose
This paper contributes to the literature on exchange rate exposure by assessing the extent to which exchange rate risk is priced in both African emerging and developed equity markets. It examines whether this risk leads to a premium or discount in market returns. The study uses the United States and South Africa as representatives for developed and emerging economies, respectively.
Design/methodology/approach
The paper employs two-factor and three-factor conditional CAPM approaches with a two-stage estimation process. In the first stage, time-varying risk exposures are derived using the ICAPM model estimated through rolling regression. In the second stage, the impact of these risk exposures, particularly exchange rate risk exposure, is assessed on stock market returns using Generalized Linear Model (GLM) regression.
Findings
Unlike previous studies that suggest exchange rate risk is not necessarily priced in the equity market due to hedging, this paper finds that exchange rate risk is indeed priced in both African and developed equity markets, albeit to different extents. The African equity market demands a higher premium compared to the developed equity market.
Practical implications
The findings of this paper have significant implications for policymakers, asset managers, and investors. They provide insights for making more informed decisions, implementing effective risk management strategies, and fostering a more stable and appealing investment environment.
Originality/value
To the best of our knowledge, this is the first study to evaluate the degree of exchange rate exposure in environments characterized by high currency volatility versus those with low volatility, all within the context of the conditional ICAPM model.
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Fatemeh (Nasim) Binesh, Sahar E-Vahdati and Ozgur Ozdemir
This study examines the relationship between Environmental, Social and Governance (ESG) practices and financial distress in times of uncertainty.
Abstract
Purpose
This study examines the relationship between Environmental, Social and Governance (ESG) practices and financial distress in times of uncertainty.
Design/methodology/approach
Thomson Reuters ESG database, Compustat and Center for Research in Security Prices (CRSP) were used to derive a final sample size of 1,572 firms and 11,618 firm-year observations from 2003 to 2022. Fixed-effects regression was used to analyze the data.
Findings
It was found that increasing ESG involvement leads to an increase in Z score (i.e. lower financial distress), and this impact was more profound during the COVID-19 period and also when firms' innovativeness increased. However, during the COVID-19 period, increases in capital expenditures weaken the positive effect of ESG on financial distress.
Research limitations/implications
This study contributes to the growing body of literature on the impact of ESG performance on financial distress and the nature of this relationship during times of uncertainty such as COVID-19.
Practical implications
This study offers insights to managers and practitioners when developing their corporate financial strategies, particularly financial distress management, showing the potential benefits of innovativeness and capital intensity during turbulent times similar to COVID-19.
Originality/value
Little knowledge exists on how ESG engagement helps weather financial distress during periods of uncertainty due to external shocks (e.g. COVID-19). This paper looks at the effect of ESG engagement on financial distress and how capital intensity and innovativeness could influence this relationship while giving fresh insights into the impact of COVID-19.
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Sharneet Singh Jagirdar and Pradeep Kumar Gupta
The present study reviews the literature on the history and evolution of investment strategies in the stock market for the period from 1900 to 2022. Conflicts and relationships…
Abstract
Purpose
The present study reviews the literature on the history and evolution of investment strategies in the stock market for the period from 1900 to 2022. Conflicts and relationships arising from such diverse seminal studies have been identified to address the research gaps.
Design/methodology/approach
The studies for this review were identified and screened from electronic databases to compile a comprehensive list of 200 relevant studies for inclusion in this review and summarized for the cognizance of researchers.
Findings
The study finds a coherence to complex theoretical documentation of more than a century of evolution on investment strategy in stock markets, capturing the characteristics of time with a chronological study of events.
Research limitations/implications
There were complications in locating unpublished studies leading to biases like publication bias, the reluctance of editors to publish studies, which do not reveal statistically significant differences, and English language bias.
Practical implications
Practitioners can refine investment strategies by incorporating behavioral finance insights and recognizing the influence of psychological biases. Strategies span value, growth, contrarian, or momentum indicators. Mitigating overconfidence bias supports effective risk management. Social media sentiment analysis facilitates real-time decision-making. Adapting to evolving market liquidity curbs volatility risks. Identifying biases guides investor education initiatives.
Originality/value
This paper is an original attempt to pictorially depict the seminal works in stock market investment strategies of more than a hundred years.
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Abed Al-Nasser Abdallah, Wissam Abdallah, Youssef Bassam, Ullas Rao and Mohsen Saad
This study aims to examine stock price synchronicity during the COVID-19 crisis using 32,452 firms from 61 countries. This paper explores the impact of government effectiveness on…
Abstract
Purpose
This study aims to examine stock price synchronicity during the COVID-19 crisis using 32,452 firms from 61 countries. This paper explores the impact of government effectiveness on synchronicity while distinguishing between developed and emerging markets.
Design/methodology/approach
The research analysis employs ordinary OLS pooled regression analysis.
Findings
This paper presents worldwide evidence that stock price synchronicity was significantly higher during February and March 2020. This paper shows that synchronicity increased with the intensity of the crisis. In addition, the government's role reduced the COVID-19 impact on synchronicity, which was stronger in developed markets than in emerging markets.
Originality/value
The novelty of the study lies in documenting the impact of the COVID-19 pandemic on stock price synchronicity. The findings add to a deeper understanding of market behavior amid significant disruptive shocks.
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Baba Mohammed Adam, Emmanuel Sarpong-Kumankoma and Vera Fiador
This study aims to examine the impact of economic freedom and corruption on bank stability in sub-Saharan Africa (SSA).
Abstract
Purpose
This study aims to examine the impact of economic freedom and corruption on bank stability in sub-Saharan Africa (SSA).
Design/methodology/approach
This study uses 38 countries in SSA from 2008 to 2019 using system GMM technique.
Findings
The authors found that greater economic freedom increases economic efficiency through improving bank stability. Besides this, the authors also find that banks in environments with greater business freedom, financial freedom, trade freedom and investment freedom are less prone to solvency. The results also show that corruption improves bank stability, suggesting evidence of the “grease the wheels” hypothesis.
Practical implications
The results suggest to policymakers that a high economic freedom may be an appropriate policy toward enhancing bank stability. Besides this, the results also suggest to policymakers to prioritize addressing the core issues that encourage corruption to extort bribes.
Originality/value
This study provides insightful discussion on whether economic freedom and its subcomponents and corruption have an effect on bank stability in SSA.
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This paper aims to examine the influence of overconfident or conservative CEOs on the performance feedback of R&D investment, as well as the combined impact of CEO overconfidence…
Abstract
Purpose
This paper aims to examine the influence of overconfident or conservative CEOs on the performance feedback of R&D investment, as well as the combined impact of CEO overconfidence and demographic characteristics on the relationship between performance feedback of R&D investments.
Design/methodology/approach
Grounded in the upper echelon theory, listed companies in China are selected as samples, and the Heckman two-stage model is used to examine all the models.
Findings
This paper reveals that overconfident CEOs tend to make suboptimal investment decisions. These decisions are influenced by cognitive biases that have a negative impact on the performance of R&D investments. However, the negatively moderating effects of CEO overconfidence can be mitigated if they have overseas experience or academic background, or they are younger.
Originality/value
These mechanisms highlight the various ways in which CEO psychological factors and demographic characteristics can complement each other.
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