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Open Access
Article
Publication date: 13 October 2017

Shyam Sunder

The purpose of this paper is to examine the usefulness of statistical studies of financial reports and stock market data for improving corporate financial reports.

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Abstract

Purpose

The purpose of this paper is to examine the usefulness of statistical studies of financial reports and stock market data for improving corporate financial reports.

Design/methodology/approach

Analytical writing.

Findings

It is often claimed that statistical studies of co-variation between financial and stock market data can help set better financial reporting policy. Such co-variation, even when it can be estimated, tells us little about which financial reports help to make better financial decisions. A case in support of such claims remains to be made.

Practical implications

The readers are advised to be extremely careful in drawing inferences from studies of co-variation between accounting and stock market data for financial reporting policy.

Social implications

Inference from accounting empirical studies to policy needs better rationale to avoid bad policy consequences.

Originality/value

This paper raises original questions about policy inferences from a large class of empirical research in accounting.

Details

Journal of Capital Markets Studies, vol. 1 no. 1
Type: Research Article
ISSN: 2514-4774

Keywords

Abstract

Details

Dynamics of Financial Stress and Economic Performance
Type: Book
ISBN: 978-1-78754-783-4

Article
Publication date: 29 March 2022

Justine Wang, Mark Tomlins and Piyush Tiwari

The purpose of this paper is to examine information and volatility linkages among real estate, equity, bond and money markets in Australia.

Abstract

Purpose

The purpose of this paper is to examine information and volatility linkages among real estate, equity, bond and money markets in Australia.

Design/methodology/approach

A novel rational expectations framework of financial contagion (Kodres and Pritsker, 2002), along with a combination of robust statistical methods including simple and dynamic correlations and generalized impulse response (Fereidouni et al., 2014) have been employed using data covering three dynamic pre-pandemic economic cycles, namely, global financial crisis (GFC) period, pre-pandemic housing boom and pre-pandemic housing downturn from 2008 (February) to 2019 (December).

Findings

Results reveal information linkages across real estate, equity, bond and money markets through correlations in return and volatilities of these series. Finding indicates that the three financial markets (equity, bond and money markets) are interdependent and integrated through information and volatility linkages during the GFC period and pre-pandemic housing downturn period. Financial markets have stronger associations with real estate market during pre-pandemic housing boom. The findings contribute to the general notion that the performances of three financial markets are closely related to the “boom” phase of the real estate cycle.

Originality/value

This research provides an extension of existing literature regarding the information and volatility contagion of the expanded set of core investment markets in Australia. The findings could assist household buyers and investors in designing strategic investment portfolios/hedging strategies and minimizing asset specific risks through diversification over short-term and long-term. In addition, results could support the maintenance, growth and development of a combination of competitive balanced investment markets including real estate, equity, bond and money markets in post-pandemic economy.

Details

International Journal of Housing Markets and Analysis, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1753-8270

Keywords

Book part
Publication date: 9 July 2018

Katica Tomic

Product intervention power is introduced under the markets in financial instruments regulation (MiFIR) and packaged retail and insurance-based investment products (PRIIPs…

Abstract

Product intervention power is introduced under the markets in financial instruments regulation (MiFIR) and packaged retail and insurance-based investment products (PRIIPs) Regulation for all EU Member States and gives National Competent Authorities (NCAs), European Securities and Markets Authority (ESMA), and European Banking Authority (EBA) powers to monitor financial products (and services) under their supervision and to “temporarily” prohibit or restrict the marketing, distribution, or sale of certain financial instruments, or to intervene in relation to certain financial activities or practice. This extends the supervisory measures defined in MiFID II to any PRIIPs (including insurance-based investment products “IBI products”) that would not otherwise fall under the scope of MiFID II. Product intervention power is given to the NCAs, and in order to use power, it requires to take the specifics of the individual case into account and a series of conditions, criteria, and factors to fulfill. Moreover, ESMA and the EBA have a type of control function and ability to override national regulators on product. The aim of product intervention powers is to ensure strengthening of investor protection, but given the potential significant impact of this power, calls into question of possibility to delay innovation and slow down product developments on the capital market.

This paper provided an overview of supervisory measures on product intervention, that is, scope of the product intervention power, criteria, factors, and risks which have to be taken into consideration when using this regulator’s tool.

Details

Governance and Regulations’ Contemporary Issues
Type: Book
ISBN: 978-1-78743-815-6

Keywords

Abstract

Details

Strategic Business Models: Idealism and Realism in Strategy
Type: Book
ISBN: 978-1-78756-709-2

Book part
Publication date: 2 March 2011

Douglas Sikorski

This chapter analyses the causes and effects of the financial crisis that commenced in 2008, and it examines the dramatic government rescues and reforms. The outcomes of…

Abstract

This chapter analyses the causes and effects of the financial crisis that commenced in 2008, and it examines the dramatic government rescues and reforms. The outcomes of this, the most severe collapse to befall the United States and the global economy for three-quarters of a century, are still unfolding. Banks, homeowners and industries stood to benefit from government intervention, particularly the huge infusion of taxpayer funds, but their future is uncertain. Instead of extending vital credit, banks simply kept the capital to cover other firm needs (including bonuses for executives). Industry in the prevailing slack economy was not actively seeking investment opportunities and credit expansion. The property and job markets languished behind securities market recovery. It all has been disheartening and scary – rage against those in charge fuelled gloom and cynicism. Immense private debt was a precursor, but public debt is the legacy we must resolve in the future.

Details

The Impact of the Global Financial Crisis on Emerging Financial Markets
Type: Book
ISBN: 978-0-85724-754-4

Keywords

Book part
Publication date: 26 November 2019

Debashis Mazumdar, Mainak Bhattacharjee and Jayeeta Roy Chowdhury

This chapter seeks to analyze the development across the length and breadth of the Indian financial system in the post-reform period, based on the “flow of funds” accounts…

Abstract

This chapter seeks to analyze the development across the length and breadth of the Indian financial system in the post-reform period, based on the “flow of funds” accounts estimates by RBI. Besides, this chapter also analyzes the integration of the Indian capital market with the stock markets of the United States, the United Kingdom, Japan, China, Hong Kong, and Singapore using the movements in their stock prices during 1998–2015. Moreover, this chapter is intended for examining the potential implication financial integration, particularly the financial openness of India, on volatility spillover and financial contagion in as much as these two issues have emphatic significance in the determination of the relevant policy roadmap. Our findings broadly confirms the expectations by revealing significantly positive correlations in stock prices, in returns to investments in stock markets, and in mean returns and risk. The integration of the capital markets is also manifested in the cyclical fluctuations of the stock price indices, signifying the underlying sensitivity to random shocks.

Details

The Gains and Pains of Financial Integration and Trade Liberalization
Type: Book
ISBN: 978-1-83867-004-7

Keywords

Book part
Publication date: 27 September 2021

Neil Thomas Bendle, Jonathan Knowles and Moeen Naseer Butt

Marketers frequently lament the lack of representation of marketing in the boardroom and the short tenure of CMOs. The most common explanations offered are that marketing

Abstract

Marketers frequently lament the lack of representation of marketing in the boardroom and the short tenure of CMOs. The most common explanations offered are that marketing is not perceived as a strategic discipline and that marketers do not demonstrate a strong enough understanding of how the business makes money.

Financial accounting is how “score is kept” in terms of business performance. It is, therefore, in the self-interest of marketers to become familiar with financial reporting. Doing so will allow them to understand how marketing activities are recorded. In addition, academic researchers need to understand the meaning of the financial measures that they often use as the metrics of success when researching marketing strategy questions.

This is especially important since financial reporting generally does not recognize assets created by marketing investments. In order to substantiate a claim that “brands are assets”, marketers must be able to explain how the financial accounting rules misrepresent economic reality and why managers might use a different set of principles for management reporting.

We argue that the misrepresentation of market-based assets has two forms of negative impact for marketers: external and internal. The external problems are that financial statements are not especially informative about the value of marketing for the providers of capital and do not provide a true portrait of the economic resource base of the company. The internal problems are that marketers cannot point to valuable assets that they are creating, nor can they be effectively held accountable for the way that these assets are managed given that the assets are not recorded.

We do not expect immediate radical changes in financial reporting because financial accounting rules are designed with the specific interests of the suppliers of capital (debt and equity) in mind. To influence financial accounting developments, such as encouraging greater disclosure of marketing activity in the notes to the published accounts, marketers must be able to communicate in language understood by accountants and the current users of financial accounts. To aid this we provide guidance for marketers on the purpose and practices of accounting. We also discuss how academic marketing researchers might wish to adjust financial accounting data to capitalize a proportion of marketing expenses for companies where marketing is a primary driver of business performance.

Details

Marketing Accountability for Marketing and Non-marketing Outcomes
Type: Book
ISBN: 978-1-83867-563-9

Keywords

Book part
Publication date: 24 August 2021

Athanasios Panagopoulos

This chapter aims the research whether the application of European Directive, Markets in Financial Instruments Directive (MiFID), had any significant effects on the…

Abstract

This chapter aims the research whether the application of European Directive, Markets in Financial Instruments Directive (MiFID), had any significant effects on the European Capital Markets and the progress of the European Integration. This new regulation specifies the tasks and responsibilities of the supervisory authorities of the Member State of origin and the host Member State, in order to enhance the certainty of effectiveness of cross-border transactions supervision and to reduce the risk of imposing unnecessary legal reforms from the host Member State on investment firms which perform cross-border transactions. It has been concluded, among others, that the aligning of the national regulatory approaches to a common European regulatory system is quite necessary. It is finally concluded that MiFID will contribute to reduce problems at country level as the previous experience of the Investment Services Directive, where the European investments and economies of Member States were based mainly on the level of ‘country’ and not of the ‘sector’. An effective capital entrepreneurship market is a strategically important element in the development of new and innovative businesses, encouraging entrepreneurship, increasing the productivity and maintaining high economic growth rates in Europe. Currently, European venture capital market is much less effective than that of the US market, for example. Therefore, in this area, should be specified the priorities that will lead to new initiatives.

Details

Entrepreneurship, Institutional Framework and Support Mechanisms in the EU
Type: Book
ISBN: 978-1-83909-982-3

Keywords

Book part
Publication date: 23 May 2019

Zoya A. Pilipenko

The chapter contains a methodology for formalized evaluation of the role of the Central Bank of the Russian Federation (Bank of Russia) in ensuring monetary and financial

Abstract

The chapter contains a methodology for formalized evaluation of the role of the Central Bank of the Russian Federation (Bank of Russia) in ensuring monetary and financial sustainability with the help of the monetary policy transmission mechanism and its inflation target regime. The significance of the research of the Bank of Russia operations to ensure financial sustainability is due to a number of circumstances: the uniqueness of the Bank of Russia that appeared only 27 years ago and experienced several devastating events related to the 1998 financial crisis, the global financial crisis of 2008–2009, and the stagnation of the Russian economy in 2014–2016, as well as high volatility of world prices for Russian commodity exports and the latest contra-Russian sanctions that significantly affected the volatility of the Russian ruble. Taking into account all the above, the issue of the Bank of Russia’s effective activities in the long run is aggravated by the fact that there are still more open questions than proven relationships of causes and effects regarding the potential of specific monetary policy instruments in the context of low-growth and high-volatility environment. The modeling of the Bank of Russia strategic and operational targets has been based on the parameters’ dependencies presented by the money (credit) multiplier in the interpretation of G. Schinasi (2006) and on the instability of stable economy hypothesis of H. Minsky (2008). As a result, there have been established the marginal levels of definite indicators of the banking system performance that could allow the Bank of Russia to ensure financial sustainability in the low-growth and high-volatility environment.

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