This study presents the first large-scale, comprehensive evidence on the insider trading patterns and abnormal returns in the Turkish stock market. Starting with a summary of the legislation, an event study methodology is used to compute daily abnormal returns of almost 65,000 insider transactions. Findings show that insiders earn 1.56 percent more than the market average return on the first six days following the trading day. The highest abnormal returns are earned by small firm insiders. Top executives, officers, directors, legal entities, funds, and large shareholders earn significantly higher than the market average return. Short-term and midterm abnormal profits vary with size, the value of the trade, holdings of the insider, relation of the insider with the company, number of insiders within a company, and whether the transaction is a sale or purchase.
{"title":"Insider Trading Profitability in Turkey","authors":"S. B. Avci","doi":"10.2139/ssrn.3896937","DOIUrl":"https://doi.org/10.2139/ssrn.3896937","url":null,"abstract":"This study presents the first large-scale, comprehensive evidence on the insider trading patterns and abnormal returns in the Turkish stock market. Starting with a summary of the legislation, an event study methodology is used to compute daily abnormal returns of almost 65,000 insider transactions. Findings show that insiders earn 1.56 percent more than the market average return on the first six days following the trading day. The highest abnormal returns are earned by small firm insiders. Top executives, officers, directors, legal entities, funds, and large shareholders earn significantly higher than the market average return. Short-term and midterm abnormal profits vary with size, the value of the trade, holdings of the insider, relation of the insider with the company, number of insiders within a company, and whether the transaction is a sale or purchase.","PeriodicalId":255992,"journal":{"name":"Consumer Financial Fraud eJournal","volume":"17 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-07-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123151748","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Ponzi Schemes is not a very complex form of thievery, in fact, they are quite simple. The only job is to dupe the unassuming investors into handing over their money under the guise that it would be placed into some form of investment. Given that it’s a scam, the money is never really invested, yet the “returns” do in turn happen. The question as to how the swindler manages to return the investment is answered in this paper. Furthermore, mushrooming of the Ponzi scheme in India is a common occurrence in the contemporary times, the root cause for such scams could be found in the failure of the formal financial institutions in catering to the felt needs of the people for a savings and thrift schemes by expanding their geographical coverage to all parts of India and a general lack of awareness amongst masses of the distinction between legal and permitted financial products and illegal and unsafe schemes. The article further analyses various Indian cases and assesses the viability of the Laws in force in India and the newly introduced the Unregulated Deposits Schemes (Banning) Act, 2019 and the Unregulated Deposits Schemes Rules, 2020.
{"title":"Delving into Ponzi Schemes - Evolution Impact and Enforcement","authors":"Visakha Raghuram, M. Dubey","doi":"10.2139/ssrn.3869793","DOIUrl":"https://doi.org/10.2139/ssrn.3869793","url":null,"abstract":"Ponzi Schemes is not a very complex form of thievery, in fact, they are quite simple. The only job is to dupe the unassuming investors into handing over their money under the guise that it would be placed into some form of investment. Given that it’s a scam, the money is never really invested, yet the “returns” do in turn happen. The question as to how the swindler manages to return the investment is answered in this paper. Furthermore, mushrooming of the Ponzi scheme in India is a common occurrence in the contemporary times, the root cause for such scams could be found in the failure of the formal financial institutions in catering to the felt needs of the people for a savings and thrift schemes by expanding their geographical coverage to all parts of India and a general lack of awareness amongst masses of the distinction between legal and permitted financial products and illegal and unsafe schemes. The article further analyses various Indian cases and assesses the viability of the Laws in force in India and the newly introduced the Unregulated Deposits Schemes (Banning) Act, 2019 and the Unregulated Deposits Schemes Rules, 2020.","PeriodicalId":255992,"journal":{"name":"Consumer Financial Fraud eJournal","volume":"2 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-06-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116031753","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We study the effects of investment-fraud victimization using information on thousands of Ponzi scheme participants combined with register data on the Finnish population. A difference-in-differences analysis reveals the victims earn 5% less income after the scheme collapses. This persistent loss arises from a combination of unemployment, absenteeism, mobility, and labor force exit, and its long-run value exceeds the direct investment loss. Victims also experience higher indebtedness and more divorces and shy away from investments delegated to asset managers. These scars from fraud victimization add to the social cost of fraud and are relevant for optimal regulatory design.
{"title":"Scammed and Scarred: Effects of Investment Fraud on its Victims","authors":"Samuli Knüpfer, V. Rantala, Petra Vokatá","doi":"10.2139/ssrn.3850928","DOIUrl":"https://doi.org/10.2139/ssrn.3850928","url":null,"abstract":"We study the effects of investment-fraud victimization using information on thousands of Ponzi scheme participants combined with register data on the Finnish population. A difference-in-differences analysis reveals the victims earn 5% less income after the scheme collapses. This persistent loss arises from a combination of unemployment, absenteeism, mobility, and labor force exit, and its long-run value exceeds the direct investment loss. Victims also experience higher indebtedness and more divorces and shy away from investments delegated to asset managers. These scars from fraud victimization add to the social cost of fraud and are relevant for optimal regulatory design.","PeriodicalId":255992,"journal":{"name":"Consumer Financial Fraud eJournal","volume":"35 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-05-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121992767","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper examines the Turn of the Month (TOM) effect in the highly capitalized emerging South African stock market which presents this calendar not only in the stock market, but in the USDZAR FX market also. These characteristics enable us to gain new perspectives on the study of the TOM effect. Specifically, we show that the inefficiencies in FX market (against a hard currency) influence not only the domestic stock market’s performance but also its Calendar Anomalies (CA). Additionally, we present some practical strategies based on the TOM effect which can prove beneficial for investors and outperform the stock market.
{"title":"Turn-of-the-Month Effect, FX Influence, and Efficient Market Hypothesis: New Perspectives from the Johannesburg Stock Exchange","authors":"Evangelos Vasileiou","doi":"10.2139/ssrn.3840993","DOIUrl":"https://doi.org/10.2139/ssrn.3840993","url":null,"abstract":"This paper examines the Turn of the Month (TOM) effect in the highly capitalized emerging South African stock market which presents this calendar not only in the stock market, but in the USDZAR FX market also. These characteristics enable us to gain new perspectives on the study of the TOM effect. Specifically, we show that the inefficiencies in FX market (against a hard currency) influence not only the domestic stock market’s performance but also its Calendar Anomalies (CA). Additionally, we present some practical strategies based on the TOM effect which can prove beneficial for investors and outperform the stock market.","PeriodicalId":255992,"journal":{"name":"Consumer Financial Fraud eJournal","volume":"30 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-05-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126407113","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Consumer fraud reports in the United States have increased each year along with median losses. Using survey data from 1,175 American and Canadian consumers who reported a scam to a North American consumer complaint organization, this study examines the correlates of engaging with (i.e., responding to) and complying with three types of consumer fraud: opportunity-based scams, threat-based scams, and consumer purchase scams. Consumers were less likely to engage with and lose money in threat-based scam solicitations relative to opportunity-based and consumer purchase scams. Risk factors, including household income, loneliness, financial fragility, and financial literacy, varied across scam categories. Different risk factors were associated with engaging in the scam than were associated with actually losing money. Having advance knowledge of fraud prior to being targeted was protective across scam types. Results derived from this unique data set that combined fraud reports from a consumer complaint organization with survey responses suggest that education about specific scams is effective at protecting against victimization. Additional research is needed on how to effectively deliver fraud awareness messages to those who are most susceptible.
{"title":"Correlates of Compliance: Examining Consumer Fraud Risk Factors by Scam Type","authors":"Marguerite DeLiema, Yiting Li, Gary Mottola","doi":"10.2139/ssrn.3793757","DOIUrl":"https://doi.org/10.2139/ssrn.3793757","url":null,"abstract":"Consumer fraud reports in the United States have increased each year along with median losses. Using survey data from 1,175 American and Canadian consumers who reported a scam to a North American consumer complaint organization, this study examines the correlates of engaging with (i.e., responding to) and complying with three types of consumer fraud: opportunity-based scams, threat-based scams, and consumer purchase scams. Consumers were less likely to engage with and lose money in threat-based scam solicitations relative to opportunity-based and consumer purchase scams. Risk factors, including household income, loneliness, financial fragility, and financial literacy, varied across scam categories. Different risk factors were associated with engaging in the scam than were associated with actually losing money. Having advance knowledge of fraud prior to being targeted was protective across scam types. Results derived from this unique data set that combined fraud reports from a consumer complaint organization with survey responses suggest that education about specific scams is effective at protecting against victimization. Additional research is needed on how to effectively deliver fraud awareness messages to those who are most susceptible.","PeriodicalId":255992,"journal":{"name":"Consumer Financial Fraud eJournal","volume":"27 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-02-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124105970","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This study investigates the pervasiveness of pay to play activities in the management of U.S. public pension assets. Our tests show the presence of government clients for an investment advisory firm is strongly associated with past owner and officer contributions to the campaigns of influential state politicians. We use the adoption of SEC pay to play rules in 2011 as a quasi-experiment. Prior to implementation, government clients make up nearly twice the number of clients in an advisor’s client base for donor advisors relative to non-donor advisors. We observe a precipitous decline in donations made by advisors catering to government clients post-rule enactment.
{"title":"Pay to Play in Investment Management","authors":"William Beggs, Thuong Harvison","doi":"10.2139/ssrn.3446357","DOIUrl":"https://doi.org/10.2139/ssrn.3446357","url":null,"abstract":"This study investigates the pervasiveness of pay to play activities in the management of U.S. public pension assets. Our tests show the presence of government clients for an investment advisory firm is strongly associated with past owner and officer contributions to the campaigns of influential state politicians. We use the adoption of SEC pay to play rules in 2011 as a quasi-experiment. Prior to implementation, government clients make up nearly twice the number of clients in an advisor’s client base for donor advisors relative to non-donor advisors. We observe a precipitous decline in donations made by advisors catering to government clients post-rule enactment.","PeriodicalId":255992,"journal":{"name":"Consumer Financial Fraud eJournal","volume":"127 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-10-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124217717","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Inaccuracy of borrower-provided information in marketplace loans for credit card debt repayment and consolidation contains information about credit risk. I identify inaccuracies based on three indicators: consistency of loan amount with outstanding credit balance, roundness of reported income, and roundness of chosen loan amount. An Inaccuracy Index constructed from these indicators has significant predictive power over the likelihood of default, and the additional default risk is not compensated by higher interest. Inaccurate information is more prevalent in areas with lower social capital, implying weaker social norms, among borrowers whose professions are considered less honest, and among borrowers with higher genuine income uncertainty.
{"title":"Inaccurate Information in Marketplace Loans","authors":"Vesa Pursiainen","doi":"10.2139/ssrn.3326588","DOIUrl":"https://doi.org/10.2139/ssrn.3326588","url":null,"abstract":"Inaccuracy of borrower-provided information in marketplace loans for credit card debt repayment and consolidation contains information about credit risk. I identify inaccuracies based on three indicators: consistency of loan amount with outstanding credit balance, roundness of reported income, and roundness of chosen loan amount. An Inaccuracy Index constructed from these indicators has significant predictive power over the likelihood of default, and the additional default risk is not compensated by higher interest. Inaccurate information is more prevalent in areas with lower social capital, implying weaker social norms, among borrowers whose professions are considered less honest, and among borrowers with higher genuine income uncertainty.","PeriodicalId":255992,"journal":{"name":"Consumer Financial Fraud eJournal","volume":"20 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-09-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130151473","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We investigate the importance of client relationships in the financial advisory industry. We exploit firm-level variation in adoption of the Broker Protocol, which enabled clients to follow their advisers to member firms without fear of litigation. We show that advisers’ ability to maintain client relationships is a significant predictor of their employment decisions; that about 40% of client assets follow advisers when they move; and that once clients are ``unlocked,” firms become less willing to fire advisers for misconduct. Firms that unlock their clients subsequently experience higher levels of misconduct and increase their fees, calling into question whether clients are better off.
{"title":"Unlocking clients: The importance of relationships in the financial advisory industry","authors":"Umit G. Gurun, Noah Stoffman, Scott E. Yonker","doi":"10.2139/ssrn.3132127","DOIUrl":"https://doi.org/10.2139/ssrn.3132127","url":null,"abstract":"We investigate the importance of client relationships in the financial advisory industry. We exploit firm-level variation in adoption of the Broker Protocol, which enabled clients to follow their advisers to member firms without fear of litigation. We show that advisers’ ability to maintain client relationships is a significant predictor of their employment decisions; that about 40% of client assets follow advisers when they move; and that once clients are ``unlocked,” firms become less willing to fire advisers for misconduct. Firms that unlock their clients subsequently experience higher levels of misconduct and increase their fees, calling into question whether clients are better off.","PeriodicalId":255992,"journal":{"name":"Consumer Financial Fraud eJournal","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130977529","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The term Fraud does not need any formal introduction, the disaster it has been creating since the past decades has left an everlasting effect on the world. It has become a part of almost every company in recent times. No matter what is the size, geographical location or the industry of the company, the impact is always highly negative. The origin of the word “Forensic” was from mid 17thcentury from Latin word “Forensis” which means “in open court, forum”. In an archaeological survey it is revealed that, during 3300-3500 B.C, the scribes (now accountants in real world) of the ancient Egypt were involved in fraud detection. But this niche area in finance is getting popular in the present world, because the growing complexities of the business, legal procedures, inefficiencies in the system attracts or tends the companies in committing a fraud. In simple words, financial fraud is knowingly using illegal ways to make money or other benefits.
{"title":"Financial Forensics - An Overview","authors":"Rohit Sinha","doi":"10.2139/ssrn.3599703","DOIUrl":"https://doi.org/10.2139/ssrn.3599703","url":null,"abstract":"The term Fraud does not need any formal introduction, the disaster it has been creating since the past decades has left an everlasting effect on the world. It has become a part of almost every company in recent times. No matter what is the size, geographical location or the industry of the company, the impact is always highly negative. The origin of the word “Forensic” was from mid 17thcentury from Latin word “Forensis” which means “in open court, forum”. In an archaeological survey it is revealed that, during 3300-3500 B.C, the scribes (now accountants in real world) of the ancient Egypt were involved in fraud detection. But this niche area in finance is getting popular in the present world, because the growing complexities of the business, legal procedures, inefficiencies in the system attracts or tends the companies in committing a fraud. In simple words, financial fraud is knowingly using illegal ways to make money or other benefits.","PeriodicalId":255992,"journal":{"name":"Consumer Financial Fraud eJournal","volume":"2 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-05-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128133702","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Artificial Intelligence (AI) has, during the past few years, made many signs of progress which have enabled the creation of professional financing applications, which would, perhaps, disrupt the finance industry. Thus, it is assumed that the AI could not only replace human capital in full or in part but also enhance its performance beyond human benchmarks. For companies around the world, there are a variety of programs.
A systemic content analysis methodology was used to evaluate related literature publications in this study. A selection of papers, including posts, has been collected. This research focuses on broad publications peer-reviewed, including Scopus and SSRN, which are listed in quality and impact rankings. This selection of the highest-ranking papers not only guaranteed the quality of papers that were most reviewed and validated but also provided the most up-to-date research state during their publication periods. Some keywords are used to scan for artificial intelligence papers, such as artificial intelligence and financial articles such as corporate finance, artificial intelligence, digital finance, financial and artificial intelligence, etc.
AI has been found to be used by organizations around the world for the detection of anomalies. It is used to establish optimal investment strategies. The other use of AI in securities is algorithmic trading, programs that integrate information regarding changing market dynamics and price levels by using proprietary algorithms to making automated trading very rapidly.
However, given the financial consequences, companies should ensure a sufficient understanding of the AI and other technology used in business by the senior management and the board to ensure proper monitoring. This is particularly important in view of the growing expectations of Board members to monitor substantive issues affecting the long-term value of a company. The decision-making, deployment, and use of AI must be carried out within the context of risk management, in order to capture market improvements. It will include four main tasks, including risk recognition, risk assessment, prevention and risk control.
{"title":"Applications of Artificial Intelligence in Financial Management Decisions: A Mini-Review","authors":"Laila Al-Blooshi, Haitham Nobanee","doi":"10.2139/ssrn.3540140","DOIUrl":"https://doi.org/10.2139/ssrn.3540140","url":null,"abstract":"Artificial Intelligence (AI) has, during the past few years, made many signs of progress which have enabled the creation of professional financing applications, which would, perhaps, disrupt the finance industry. Thus, it is assumed that the AI could not only replace human capital in full or in part but also enhance its performance beyond human benchmarks. For companies around the world, there are a variety of programs. <br><br>A systemic content analysis methodology was used to evaluate related literature publications in this study. A selection of papers, including posts, has been collected. This research focuses on broad publications peer-reviewed, including Scopus and SSRN, which are listed in quality and impact rankings. This selection of the highest-ranking papers not only guaranteed the quality of papers that were most reviewed and validated but also provided the most up-to-date research state during their publication periods. Some keywords are used to scan for artificial intelligence papers, such as artificial intelligence and financial articles such as corporate finance, artificial intelligence, digital finance, financial and artificial intelligence, etc.<br><br>AI has been found to be used by organizations around the world for the detection of anomalies. It is used to establish optimal investment strategies. The other use of AI in securities is algorithmic trading, programs that integrate information regarding changing market dynamics and price levels by using proprietary algorithms to making automated trading very rapidly.<br><br>However, given the financial consequences, companies should ensure a sufficient understanding of the AI and other technology used in business by the senior management and the board to ensure proper monitoring. This is particularly important in view of the growing expectations of Board members to monitor substantive issues affecting the long-term value of a company. The decision-making, deployment, and use of AI must be carried out within the context of risk management, in order to capture market improvements. It will include four main tasks, including risk recognition, risk assessment, prevention and risk control.<br>","PeriodicalId":255992,"journal":{"name":"Consumer Financial Fraud eJournal","volume":"290 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-02-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134302586","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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