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The authors measure the cost of equity to earnings yield differential for a sample of 2,035 non-financial firms. In a series of Logit and Tobit regressions, the authors examine if the cost of equity to earnings yield differential is related to dividend policy in the manner predicted by agency theory.

Agency theory says a firm's optimal dividend policy is partially determined by the relationship between the earnings yield and the cost of equity capital. When the cost of equity is higher (lower) than the earnings yield, firms are motivated to (not) pay dividends as this reduces the cost of capital and holding other things constant, increases corporate valuations. The authors test whether managers set dividend policies to maximize the value of the firm.

The study’s findings show that when the cost of equity is higher (lower) than earnings yield, firms are more (less) likely to be dividend payers and the payouts are higher (lower). The results are robust to the inclusion of share repurchases as an alternative to cash distributions. The study’s findings support the cost of equity hypothesis and are consistent with alternative dividend theories.

The study’s findings support the cost of equity hypothesis and are consistent with alternative dividend theories. To the authors’ knowledge, this is the first paper testing the cost of equity hypothesis.

The purpose of this study is to examine the relationship between the ownership concentration and cost of equity of firms in Pakistan context. Moreover, this study also investigates how the presence of disclosure quality and governance quality affects the relationship between ownership concentration and the cost of equity of firms.

Data are collected from six non-financial sectors listed on Pakistan Stock Exchange during the period of 2015–2019. This study uses pooled ordinary least square (OLS) method to validate the proposed hypothesis in STATA.

The study found a positive and significant relationship between ownership concentration and cost of equity. The results also show that better disclosure and governance quality negatively moderates the relationship between ownership concentration and cost of equity.

The findings of this study will help firm managers to implement a high level of disclosure and governance quality in firms to reduce agency problems which will further help a firm in reducing the firm's cost of equity. Furthermore, this study is valuable for practitioners regarding thinking about the process of designing ownership structures to protect minority shareholders' rights, especially in emerging markets.

The novelty of this study is having better disclosure quality and more board independence members helps firms with higher ownership concentration in reducing the cost of equity.

This study aims to extend the literature on psychological contracts, employee mental health, self-control and equity sensitivity among employees in Ghana.

Data for this study came from a sample of 484 employees from an organisation in the telecommunication sector of Ghana. The details of the study were discussed with employees after which they were given the choice to participate in the study.

The present study found that psychological contract breach is directly associated with mental health and indirectly related to mental health through equity sensitivity and self-control.

The findings suggest that psychological contracts are important aspects of the employment relationship that could be used to enhance employee mental health. Furthermore, enhancing employees’ self-control and resolving issues of individuals high on equity sensitivity are effective ways that organisations can deploy to sustain mental health in the face of psychological contract breaches.

This study aims to examine the effect of board gender diversity on corporate litigation in China’s listed firms. The key questions this study addresses are: what are the effect of board gender diversity on corporate litigation in terms of both the frequency and severity of consequence, is there any heterogeneous effects of the relationships across firm performance?

A sample consists of 25,668 firm-year observations from over 3,340 firms is examined using logistic regression analysis and negative binomial regression analysis. The authors also use event study method and ordinary least square (OLS) regression to explore female directors’ effects on reducing the negative consequences of litigation. The logistic regression and OLS regression are reestimated with interaction terms when examining the firm performance heterogeneity.

The authors document that firms with greater female representation on their boards experience fewer and less severe corporate litigations. Moreover, in high-performing firms, board gender diversity plays a more potent role in reducing the frequency and consequences of corporate litigation than low-performing firms.

This study is among the first to examine the relationship between board gender diversity and the comprehensive corporate litigations under Chinese context. It sheds new light on China’s boardroom dynamics, offering valuable empirical implication to Chinese corporate policymakers on the role of female directors.

The authors examine whether limitations in Form 990 result in zero or understated fundraising and administrative expenses for organizations supported by related organizations. Form 990 does not consolidate financial information of legally separate related organizations, resulting in fundraising and administrative expenses being reported by supporting organizations but not by the supported organization.

The authors use the IRS Statistics of Income Sample Data Files and compare charities receiving support from related organizations (supported) to non-supported charities.

The authors find evidence that supported organizations are likely to report zero or understated fundraising expenses and zero administrative expenses. Those receiving related donations are more likely to have zero or understated fundraising expense while those receiving related compensation are more likely to have zero and understated fundraising and administrative expenses. The authors also find evidence that supported organizations receiving greater amounts of related donations and related compensation are also more likely to report zero and understated fundraising expenses as well as zero administrative expenses while greater amounts of related compensation are also associated with understated administrative expense.

Since donors and other stakeholders use Form 990 to evaluate nonprofits, its unconsolidated nature could result in a lack of comparability across organizations and misinformed resource allocation (e.g. donation) decisions. The results also have implications for researchers who use zero and understated fundraising and administrative expenses as proxies for low quality reporting or interpret them as data errors.

The paper examines the extent to which zero or understated fundraising expense reporting (i.e. the fundraising expense puzzle) is associated with supported organizations receiving financial support from related organizations. The authors also expand their examination to zero and understated administrative expenses.

The present research study aims to explore the impact of the most recent Israeli–Palestinian conflict, which unfolded in October 2023, on global equity markets, including a wide range of both emerging and developed markets (as per the Morgan Stanley Capital Investment country classification).

The market model of event study methodology, with an estimation window of 200 days and 28-day event window (including event day, i.e. October 7, 2023), has been employed to investigate the event’s impact on the stock markets of different countries, with 24 emerging countries and 23 developed countries. The daily closing prices of the prominent indices of all 47 countries have been analyzed to examine the impact of the conflict on emerging markets, developed markets and overall global equity markets. Additionally, cross-sectional regression analysis has been performed to investigate the possible explanations for abnormal returns.

The findings of the study suggest the heterogeneous impact of the selected event on different markets. Notably, emerging markets and the overall global equity landscape exhibited substantial negative responses on the event day, as reflected in average abnormal returns of −0.47% and −0.397%, respectively. In contrast, developed markets displayed resilience, with no significant negative impact observed on the day of the event. A closer examination of individual countries revealed diverse reactions, with Poland, Egypt, Greece, Denmark and Portugal standing out for their positive or resilient market responses. Poland, in particular, demonstrated significantly positive cumulative abnormal returns (CARs) of 7.16% in the short-term and 8.59% in the long-term event windows (−7, +7 and −7, +20, respectively), emphasizing its robust performance amid the geopolitical turmoil. The study also found that, during various event windows, specific variables had a significant impact on the CARs.

The study suggests diversification and monitoring of geopolitical risks are key strategies for investors to enhance portfolio resilience during the Israeli–Palestinian conflict. This study identifies countries such as Poland, Egypt, Greece, Denmark and Portugal with positive or resilient market reactions, providing practical insights for strategic investment decisions. Key takeaways include identifying resilient markets, leveraging opportunistic strategies and navigating market dynamics during geopolitical uncertainties.

As per the authors’ thorough investigation and review of the literature, the present study is the earliest attempt to explore the short-term and long-term impact of the 2023 Israeli–Palestinian conflict on equity markets worldwide using the event study approach and cross-sectional regression analysis.

This paper aims to investigate not only the performance of Portuguese mutual funds investing in domestic and international equities but also which fund characteristics, such as age, size, family size, expense ratios and flows, influence future performance.

Fund performance is evaluated over the 2005–2022 period by a robust six-factor model, while the impact of fund characteristics on performance is assessed by a set of fixed-effects panel data regressions with two-way cluster-robust standard errors.

The results show that, while funds investing in domestic equities predominantly exhibit neutral performance, most international equity funds have significantly negative alphas. The authors document a negative and statistically significant relationship between fund age and performance for all fund categories. Total expense ratios have an inverse relationship with domestic equity fund performance but do not impact the performance of international equity funds significantly. Though fund flows have a neutral effect on performance across the overall period, they are important determinants of both domestic and international funds’ performance in more recent years.

The authors contribute to the literature by carrying out a comprehensive analysis, based on recent and robust methodologies, of the impact of mutual fund characteristics on the future performance of Portuguese equity funds. The research findings serve as a premise for advising investors on how to choose the top-performing funds.

Green technology innovation is the organic combination of green development and innovation driven. It is also a powerful guarantee for shaping sustainable competitive advantages of manufacturing enterprises. To explore what kind of executive incentive contracts can truly stimulate green technology innovation, this study aims to distinguish the equity incentive and reputation incentive, upon their contractual elements characteristics and green governance effects, and then put forward suggestions for green technology innovation accordingly.

This study establishes an evaluation model and uses empirical methods to test. Concretely, using data from A-share listed manufacturing companies for the period from 2007 to 2020, this study compares and analyzes the impact of equity and reputation incentive on green technology innovation and explores the relationship between internal green business behavior and external green in depth.

This study finds that reputation incentives focus on long-term and non-utilitarian orientation, which can promote green technology innovation in enterprises. While equity incentives, linked to performance indicators, have a inhibitory effect on green technology innovation. Internal and external institutional factors such as energy conservation measures, the “three wastes” management system, and environmental recognition play the regulatory role in the relationship between incentive contracts and green technology innovation.

Those findings validate and expand the efficient contracting hypothesis and the rent extraction hypothesis from the perspective of green technology innovation and provide useful implications for the design of green governance systems in manufacturing enterprises.

The purpose of this paper is to investigate the effect of equity market misvaluation on manager behavior. Using a sample of 535 French-listed over 2000–2018, the authors analyze whether corporate investment decision is sensitive to equity market overvaluation.

The study adopts market-to-book (M/B) decomposition developed by Rhodes-Kropf and Viswanathan (2004, RKV) that proxies for market misvaluation at the firm and industry levels. The authors conducted a long-term performance analysis via a portfolio sorting procedure and a Carhart (1997) four-factor pricing model. The authors tested the relationship between equity misvaluation, corporate investment decisions and equity issuance. The authors ran several robustness tests.

The empirical results show that equity market misvaluation affects corporate investment positively as the stock price deviates further away from its fundamental. Based on market timing theory, the authors find that corporate investment occurs in periods of high valuation motivated by equity issuance to benefit from the low cost of capital. This effect is more prominent for financially constrained firms. Consistent with the catering channel, the authors find that the misvaluation-investment nexus is more pronounced in firms with short-horizon investors. By examining the stocks’ long-term performance of misvalued firms, via a sorting portfolio procedure, the authors find that undervalued firms outperform and generate higher abnormal returns (Jensen’s alpha) than overvalued firms, suggesting that mispricing-driven investment appear to be short-lived and lead to lower return in the long term.

Corporate decision-makers and governance structures should pay attention to the rationality of the corporate investment decision in the context of equity market misvaluation. Managers who focus on maximizing the stock market value in the short-run at the expense of its long-term performance must give preference to value-creating investment, not driven by an external mechanism such as equity market mispricing. More generally, investors and portfolio managers must take into account the market mispricing process in decision-making. Nonetheless, from the portfolio sorting perspective, decision-makers must act in terms of high governance quality to mitigate suboptimal investment due to stock market mispricing (Jensen, 2005). Finally, equity market overvaluation, leading managers to invest via equity financing in particular, should be a signal to attract investors’ attention to seize the window of opportunity and embark on a short-term portfolio strategy. Such a strategy promises high returns in the short term.

This paper investigates jointly two theoretical channels: equity market timing and catering. The authors propose for the analysis three components of the M/B decomposition to dissociate market misvaluation at the firm and industry level from the fundamental component of market value (growth). This procedure provides a better understanding of the role of firm and industry misvaluation in explaining corporate investments. The authors provide evidence of the equity market misvaluation via a portfolio sorting procedure and a Carhart (1997) four-factor pricing model. The authors examine the effect of misvaluation on both the investment and the financing decisions.

We explore the impact of equity liquidity on a firm’s dynamic leverage adjustments and the moderating impacts of leverage deviation and target instability on the link between equity liquidity and dynamic leverage in the UK market.

In applying the two-step system GMM, we estimate our model by exploring suitable instruments for the dynamic variable(s), i.e. lagged values of the dynamic term(s).

Our analyses document that a firm’s equity liquidity has a positive impact on the speed of adjustment (SOA) of its leverage ratio back to the target ratio in the UK market. We also demonstrate that the positive relationship between liquidity and SOA is more pronounced for firms whose current position is relatively close to their target leverage ratio and whose target ratio is relatively stable.

This study provides important implications for both firms’ managers and investors. Particularly, firms’ managers who wish to increase the leverage SOA to enhance firms’ value need to give great attention to their equity liquidity. Investors who want to evaluate firms’ performance could also consider their equity liquidity and leverage SOA.

We are the first to enrich the literature on leverage adjustments by identifying equity liquidity as a new determinant of SOA in a single developed country with many differences in the structure and development of capital markets, ownership concentration and institutional characteristics. We also provide new empirical evidence of the joint effect of equity liquidity, leverage deviation and target instability on leverage SOA.