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1 – 10 of over 45000
Article
Publication date: 28 October 2014

David Duffy and Niall O’Hanlon

This paper aims to, using a unique loan-level data set, show the extent to which negative equity in Ireland is concentrated in younger age groups. The sharp decline in house…

Abstract

Purpose

This paper aims to, using a unique loan-level data set, show the extent to which negative equity in Ireland is concentrated in younger age groups. The sharp decline in house prices since 2007 has led to the emergence of widespread negative equity in Ireland. However, little is known about the type of borrower experiencing negative equity.

Design/methodology/approach

This paper uses a unique data set that, for a large sample of mortgages, provides details on both the characteristics of the borrowers and their mortgages. Using this data set, the paper estimates the incidence of negative equity by analysing loans taken out to purchase a primary residence in the period 2005-2012.

Findings

The analysis finds the situation in Ireland to be much more severe than that being experienced in other housing market downturns at present, with 64 per cent of borrowers in the period 2005-2012 experiencing negative equity. Analysis by age gives rise to concern, with the majority of those in negative equity aged under 40 years. The paper also points to the large wealth loss experienced by Irish households, in the order of 43 billion, as a result of the fall in property values.

Originality/value

The paper is one of the first using loan-level time-series data in Ireland. It highlights the growth in negative equity during the crisis and the extent to which it is concentrated in the younger age groups. It also provides an estimate of the loss in wealth suffered by all households due to the fall in Irish house prices.

Details

Journal of European Real Estate Research, vol. 7 no. 3
Type: Research Article
ISSN: 1753-9269

Keywords

Book part
Publication date: 26 May 2022

Khaira Amalia Fachrudin and Fachrudin

Economic growth can be pursued through company performance. However, few companies present negative equity. In Indonesia, some firms with negative equity have positive net income…

Abstract

Economic growth can be pursued through company performance. However, few companies present negative equity. In Indonesia, some firms with negative equity have positive net income and stock returns. This study compares the performance of negative (and positive) equity in the Indonesia Stock Exchange. The observation was conducted from 2019, in marked negative equity notation and two previous periods. It involved all the market negative equity notation companies. We found no significant difference between companies with negative equity and those with positive equity on the asset's efficiency using comparative analysis. The difference relied on the capability of managing the expenses, including interest expenses. Leverage has a positive and significant correlation to assets utilization in companies with negative equity only, while it is insignificant in companies with positive equity. The investors consider the stock companies with negative equity even though the obtained stock returns are not different whether they invested either in the companies with positive or negative equity.

Details

Modeling Economic Growth in Contemporary Indonesia
Type: Book
ISBN: 978-1-80262-431-1

Keywords

Article
Publication date: 2 October 2017

Marcelo Bianconi and Joe Akira Yoshino

This paper aims to empirically investigate the market-to-book/return on equity valuation model.

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Abstract

Purpose

This paper aims to empirically investigate the market-to-book/return on equity valuation model.

Design/methodology/approach

The authors use a worldwide commodities sector panel of 6,323 firms from 69 countries with annual observations from 1999 to 2010 to estimate panel ordinary least squares (OLS), instrumental variables (IV) and quantile regressions. They also measure the impact of return on equity on market-to-book uncovering value versus growth and positive versus negative profitability dimensions.

Findings

The new evidence is that the impact of return on equity on market-to-book is time-varying and declining across the years in the sample. There is positive and strong persistence in the market-to-book of companies in this sector worldwide, but value stocks are more persistent than growth stocks. The coefficient of return on equity is positive at the 10th percentile of the market-to-book, but it becomes negative for growth stocks at 90th percentiles. Conditional on negative profitability, the coefficient of return on equity on market-to-book is negative for growth stocks. The effect of the S&P500 volatility index (VIX) is negative, significant and large in magnitude, but declines in absolute value, as the quantiles increase toward the upper 90th percentile.

Practical implications

The commodities sector is important for countries that depend on it for development.

Originality/value

The paper provides a rich panel data approach, and the market-to-book/return on equity valuation model is naturally applied to the commodities sector, as this sector tends to have more tangibles relative to intangibles.

Details

Studies in Economics and Finance, vol. 34 no. 4
Type: Research Article
ISSN: 1086-7376

Keywords

Book part
Publication date: 18 September 2017

Raquel Meyer Alexander, Andrew Gross, G. Ryan Huston and Vernon J. Richardson

We investigate the interaction of debt covenants and tax accounting on the adoption of Financial Interpretation No. 48 (FIN 48). We examine how firms respond to the potential…

Abstract

We investigate the interaction of debt covenants and tax accounting on the adoption of Financial Interpretation No. 48 (FIN 48). We examine how firms respond to the potential tightening of covenant slack upon FIN 48 adoption and whether these actions are penalized by creditors and anticipated by equity markets. We find that upon FIN 48 adoption, the majority of sample corporate borrowers increase their tax reserves and reduce equity. Firms close to debt covenant violation were even more likely to increase tax reserves upon FIN 48 adoption; however, the size of the adjustment was relatively smaller, suggesting that the FIN 48 standards limited, but did not eliminate, firms use of discretion in reporting uncertain tax positions to avoid costly covenant violations. For firms near net worth debt covenant violation, the act of decreasing equity upon FIN 48 adoption imposes real economic costs, as the average cost of debt increased by 43 basis points. Finally, we extend prior research on the market response to FIN 48 by showing how the market response to FIN 48 adoption is a function of debt covenant slack and tax aggressiveness. Specifically, the cumulative abnormal return at the FIN 48 exposure draft release date is negative only for tax aggressive firms that are close to debt covenant violation.

Details

Advances in Taxation
Type: Book
ISBN: 978-1-78714-524-5

Keywords

Article
Publication date: 10 April 2017

Zohaib Razzaq, Salman Yousaf and Zhao Hong

The purpose of this paper is to investigate the significant contribution of emotions along with other conventional loyalty drivers on the loyalty intentions.

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Abstract

Purpose

The purpose of this paper is to investigate the significant contribution of emotions along with other conventional loyalty drivers on the loyalty intentions.

Design/methodology/approach

The influence of three conventional loyalty drivers, i.e., value equity, brand equity, relationship equity on loyalty intentions was investigated by further exploring the moderating effects of negative and positive emotions. A sample of 834 Pakistani consumers in the supermarkets and banking industries was studied employing store-intercept survey design.

Findings

Consumer behavior is driven by emotions in both the supermarkets and banking context. Thus, in order to better predict customer loyalty intentions, the emotional component is crucial and should be included along with other cognitive components.

Practical implications

Since customers’ emotional responses throughout service delivery are strongly linked to loyalty, therefore supermarkets and bank service managers need to make sure that the customers experience with their services as pleasurable as possible and for this purpose, customer service employees need to be trained in order to better understand the customers’ emotional responses during the course of service delivery process.

Originality/value

The present study complements the existing literature regarding the role of emotions in service settings and offers a new point of view for the linkage among emotions, customer equity drivers and customer loyalty intentions.

Details

Asia Pacific Journal of Marketing and Logistics, vol. 29 no. 2
Type: Research Article
ISSN: 1355-5855

Keywords

Article
Publication date: 2 July 2020

Mejda Bahlous-Boldi

The purpose of this study is to demonstrate that the conventional mortgage system is not appropriate for household finance because it encourages equity extraction and excessive…

Abstract

Purpose

The purpose of this study is to demonstrate that the conventional mortgage system is not appropriate for household finance because it encourages equity extraction and excessive leverage during housing boom and leads to negative equity during a housing bust, a situation that translates into mortgage defaults and foreclosures. Home financing could alternatively be structured as a diminishing partnership preventing the homeowner from ever having negative equity.

Design/methodology/approach

Using Johansen’s cointegration test, the authors provide evidence of a long-run relationship between the delinquency rates, volume of refinancing and the change in house price index (HPI) during the 1994–2019 period. To unravel the short run dynamics between these variables, the authors used a Granger causality test that concludes that the volume of refinancing and the change in the HPI Granger cause default rates.

Findings

The authors provide evidence that under the current conventional mortgage system, excessive refinancing opportunities and equity extraction that are the main factors determining delinquency rates leading to a non-sustainable homeownership.

Practical implications

If mortgages were such that they do not incentivize defaults and foreclosures during a housing downturn, the recovery of the housing market always leads to capital gains. Therefore, disincentivizing refinancing and equity extraction would lead to a more sustainable homeownership.

Social implications

Households would be encouraged to pursue sustainable homeownership through a partnership-based model with long-term wealth accumulation for themselves and their heirs rather than short-term home ownership through the conventional mortgage system, leading to negative equity and defaults when the housing market slumps.

Originality/value

Policymakers ought to rethink the mortgage design by promoting partnership-based finance to protect the equity a household accumulates over a lifetime and thereby enhancing stable and sustainable homeownership.

Details

International Journal of Housing Markets and Analysis, vol. 14 no. 2
Type: Research Article
ISSN: 1753-8270

Keywords

Article
Publication date: 24 September 2020

Won-Moo Hur and Yeonshin Kim

The purpose of this study was to investigate the effect of perceived corporate hypocrisy on customer mistreatment behaviors within the banking industry and the moderating effects…

Abstract

Purpose

The purpose of this study was to investigate the effect of perceived corporate hypocrisy on customer mistreatment behaviors within the banking industry and the moderating effects of customer–company identification (CCI) and brand equity on the hypocrisy-mistreatment behavior relationship.

Design/methodology/approach

Using multistage sampling, 567 South Korean banking service users participated in an online survey. Structural equation modeling (confirmatory factor analysis) and hierarchical regression analysis were used to analyze the data.

Findings

Perceived corporate hypocrisy was positively related to customer mistreatment behaviors. CCI and brand equity differentially moderated the positive relationship between perceived corporate hypocrisy and customer mistreatment behaviors. Specifically, CCI and brand equity strengthened and weakened the positive relationship between perceived corporate hypocrisy and customer mistreatment behaviors, respectively.

Practical implications

Marketers and banking service managers should pay careful attention to customer evaluations of their social activities and communication about the ethical values and actions of their firms. Since CCI and brand equity have contrasting moderating effects on the corporate hypocrisy-aggressive behavior relationship, marketers should devise different strategies to manage the adverse effects of such corporate crises on company-identified and brand-committed customers. For example, managers should focus on customers who actively express their deep sense of disappointment or profound anger in response to corporate hypocrisy (e.g. those with high levels of CCI) because they are likely to exhibit aggressive behaviors toward the company or its employees. Managers need to devise customized relationship-recovery strategies for such customers (e.g. forging a personal connection between the customer and service provider).

Originality/value

The present findings delineate the adverse effects of perceived corporate hypocrisy on customer behaviors and the moderating effect of customer relationship quality on the corporate hypocrisy-mistreatment behavior relationship within the banking industry.

Details

International Journal of Bank Marketing, vol. 38 no. 7
Type: Research Article
ISSN: 0265-2323

Keywords

Article
Publication date: 1 January 2002

Jo Danbolt and William Rees

We extend the recent literature concerning accounting based valuation models to investigate financial firms from six European countries with substantial financial sectors: France…

Abstract

We extend the recent literature concerning accounting based valuation models to investigate financial firms from six European countries with substantial financial sectors: France, Germany, Italy, Netherlands, Switzerland and the UK. Not only are these crucial industries worthy of study in their own right, but unusual accounting practices, and inter‐country differences in those accounting practices, provide valuable insights into the accounting‐value relationship. Our sample consists of 7,714 financial firm/years observations from 1,140 companies drawn from 1989–2000. Sub‐samples include 1,309 firm/years for banks, 650 for insurance companies, 1,705 for real estate firms, and 3,239 for investment companies. In most countries we find that the valuation models work as well or better in explaining cross‐sectional variations in the market‐to‐book ratio for financial firms as they do for industrial and commercial firms in the same countries, although Switzerland is an exception to this generalization. As expected, the results are sensitive to industrial differences, accounting regulation and accounting practices. In particular, marking assets to market value reduces the relevance of earnings figures and increases that of equity.

Details

Review of Accounting and Finance, vol. 1 no. 1
Type: Research Article
ISSN: 1475-7702

Article
Publication date: 5 March 2018

Theresa Hilliard and Presha Neidermeyer

This study examines how International Financial Reporting Standards (IFRS) are applied, disaggregates the cumulative effect of the IFRS transition into magnitude measurements of…

Abstract

Purpose

This study examines how International Financial Reporting Standards (IFRS) are applied, disaggregates the cumulative effect of the IFRS transition into magnitude measurements of the standard-to-standard differences (by standard) and management discretionary choices (by choice) and tests which transitory effects at every level of disaggregation alter investor behavior.

Design/methodology/approach

Using hand-collected data from the IFRS 1 disclosures, the research design consists of eight regression models which test fluctuations in investment behavior as a function of varying measures of IFRS adjustments at aggregated and disaggregated levels including magnitude measurements of pronouncements and management choices.

Findings

Findings from the study identify specific standards and management discretionary choices associated with market reaction. Evidence from this study demonstrates the value of disaggregated measures to obtain a more comprehensive understanding of market reaction and associations with transitory effects of IFRS. Findings from the study suggest that the market favors management discretionary choices that decrease retained earnings and potentially increase future net income. Overall, model results suggest that a more comprehensive understanding of the specific standards is obtained that alters market behavior and how the market responds to positive and negative equity adjustments.

Originality/value

This study contributes to the literature examining the capital market effects of IFRS by decomposing the generally accepted accounting principle (GAAP) transition into magnitude measurements of specific standard-to-standard differences (by standard) and management discretionary choices (by choice) to understand how the market responds to the transitory effects of a GAAP change. This is important because it puts regulators, standard setters, investors and researchers on notice that the way in which the authors analyze and measure equity components could be consequential to the authors ability to assess a GAAP change. This study informs all jurisdictions which have adopted or are deliberating the adoption of IFRS how IFRS is being implemented and which areas of application are relevant to investors. Further, market reactions to accounting information pertaining to a GAAP change may only be revealed at the disaggregated and decomposed levels of the retrospective application of the GAAP implementation.

Details

International Journal of Accounting & Information Management, vol. 26 no. 1
Type: Research Article
ISSN: 1834-7649

Keywords

Book part
Publication date: 13 June 2013

Durairaj Maheswaran, Cathy Yi Chen and Junhong He

Purpose – Extensive research in the area of consumer behavior has documented the “Country of Origin Effect,” which identifies country of origin as an important decision variable…

Abstract

Purpose – Extensive research in the area of consumer behavior has documented the “Country of Origin Effect,” which identifies country of origin as an important decision variable in evaluating products and services. Past research has mostly assumed that country of origin effect is driven by the performance of the products originating in that country. However, consumers can also form opinions about countries based on exposure to information that is unrelated to the product and may have roots in macro factors such as history, culture, and politics. These emotions, while extraneous to the product, can also influence product evaluations along with performance-related country information.Design/methodology/approach – This review examines research addressing both performance and emotional perceptions related to country of origin.Findings – This review presents an integrating framework termed “Nation Equity” to systematically understand and examine the influence of various dimensions of country of origin on consumer decision making.

Details

Review of Marketing Research
Type: Book
ISBN: 978-1-78190-761-0

Keywords

1 – 10 of over 45000