Pub Date : 2019-01-01DOI: 10.35944/jofrp.2019.8.1.016
Gopalakrishnan Chinnasamy, Araby Madbouly Ahmed Hussein, Stephen O. Aro-Gordon
This paper examines the behavioural factors influencing investment decisions and strategy in the Sultanate of Oman. Investors’ decision-making process is thought to be influenced by a wide range of factors directly or indirectly (Kusev et al. 2017). The rational approach considers only the mathematical results thereby failing to recognize the investor’s related psychological and sociological factors, categorized in the paper as heuristic factors, prospect factors and herding factors. This study attempts to identify the behavioural factors that influence individual investors’ decision in the Muscat Securities Market (MSM). Specifically, the study was designed to identify the factors which are mostly influencing the investment decisions of investors. Employing descriptive research design; data were collected from individual investors who had traded in the MSM during the fourth quarter of 2018. The primary collected through structured questionnaire and the secondary data is collected from various sources from stock brokers, Journals and other sources respectively. The simple random sampling technique was applied and the collected data covering 16 variables of behavioural factors were analyzed using the factor analysis, principal component analysis with varimax rotation, and Analysis of Variance tools. The anchoring, mental accounting, movement of prices, volume of trade and market information factors emerged as the five principal determinants of investment strategy are the major findings of the study. The results might make investors and advisors to understand the optimal ways to improve on strategy for structuring optimum portfolio selection and how far this can be optimised further in terms of managing their investment behaviour.
本文考察了影响阿曼苏丹国投资决策和战略的行为因素。投资者的决策过程被认为直接或间接地受到多种因素的影响(Kusev et al. 2017)。理性方法只考虑数学结果，而没有认识到投资者的相关心理和社会因素，本文将其分为启发式因素、前景因素和羊群因素。本研究试图找出影响马斯喀特证券市场(MSM)个人投资者决策的行为因素。具体而言，该研究旨在确定影响投资者投资决策的主要因素。采用描述性研究设计;数据收集自2018年第四季度在MSM交易的个人投资者。主要通过结构化问卷收集，次要数据分别从股票经纪人、期刊和其他来源收集。采用简单随机抽样方法，对收集到的16个行为因素变量进行因子分析、主成分分析和方差分析。锚定、心理会计、价格变动、交易量和市场信息因素成为投资策略的五个主要决定因素，是本研究的主要发现。研究结果可能会使投资者和顾问了解优化策略的最佳方法，以构建最佳投资组合选择，以及在管理他们的投资行为方面，这可以进一步优化到什么程度。
{"title":"The Determinants of Investment Strategy: An Empirical Assessment of Behavioural Factors in the Omani Context","authors":"Gopalakrishnan Chinnasamy, Araby Madbouly Ahmed Hussein, Stephen O. Aro-Gordon","doi":"10.35944/jofrp.2019.8.1.016","DOIUrl":"https://doi.org/10.35944/jofrp.2019.8.1.016","url":null,"abstract":"This paper examines the behavioural factors influencing investment decisions and strategy in the Sultanate of Oman. Investors’ decision-making process is thought to be influenced by a wide range of factors directly or indirectly (Kusev et al. 2017). The rational approach considers only the mathematical results thereby failing to recognize the investor’s related psychological and sociological factors, categorized in the paper as heuristic factors, prospect factors and herding factors. This study attempts to identify the behavioural factors that influence individual investors’ decision in the Muscat Securities Market (MSM). Specifically, the study was designed to identify the factors which are mostly influencing the investment decisions of investors. Employing descriptive research design; data were collected from individual investors who had traded in the MSM during the fourth quarter of 2018. The primary collected through structured questionnaire and the secondary data is collected from various sources from stock brokers, Journals and other sources respectively. The simple random sampling technique was applied and the collected data covering 16 variables of behavioural factors were analyzed using the factor analysis, principal component analysis with varimax rotation, and Analysis of Variance tools. The anchoring, mental accounting, movement of prices, volume of trade and market information factors emerged as the five principal determinants of investment strategy are the major findings of the study. The results might make investors and advisors to understand the optimal ways to improve on strategy for structuring optimum portfolio selection and how far this can be optimised further in terms of managing their investment behaviour.","PeriodicalId":37351,"journal":{"name":"ACRN Journal of Finance and Risk Perspectives","volume":"1 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"70083896","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}
Pub Date : 2019-01-01DOI: 10.35944/JOFRP.2019.8.1.003
F. Beer, F. Lin
Problem/Relevance: This study is motivated by psychological evidence of a strong connection between sporting event outcomes and mood. To evaluate this connection, we analyze the Indian stock market reaction to sudden changes in investors’ mood captured by India’s cricket results. By focusing on a rarely studied mood variable and a very infrequently studied stock exchange, this study adds to our understanding of the association between sporting event outcomes and mood. Research Objective/Questions: In this study, we investigate the impact of cricket wins and losses on the Bombay Stock Exchange. We hypothesize that cricket wins or losses will drive investors’ mood substantially and unambiguously so that the game outcomes will be powerful enough to impact asset prices. We also evaluate the hypothesis that losses are psychologically more powerful than wins. Methodology: We analyze the daily data from the Bombay Stock Exchange using the methodology of Edmonds et al. (2007). This methodology has the advantages of capturing the Bombay Stock Exchange stock returns timevarying volatility through a GARCH model. Major Fundings: Our findings show that cricket wins and losses do not impact the Bombay Stock Exchange. On the exchange, stock prices reflect relevant information. Our results are thus consistent with the Efficient Market Hypothesis. Implication(s): Our results imply that on the Bombay Stock Exchange, cricket wins and losses cannot be reliably used by investors and portfolio managers to achieve returns in excess of the average market returns on a risk-adjusted basis.
{"title":"Sports Sentiment and Stock Returns: The Bombay Stock Exchange","authors":"F. Beer, F. Lin","doi":"10.35944/JOFRP.2019.8.1.003","DOIUrl":"https://doi.org/10.35944/JOFRP.2019.8.1.003","url":null,"abstract":"Problem/Relevance: This study is motivated by psychological evidence of a strong connection between sporting event outcomes and mood. To evaluate this connection, we analyze the Indian stock market reaction to sudden changes in investors’ mood captured by India’s cricket results. By focusing on a rarely studied mood variable and a very infrequently studied stock exchange, this study adds to our understanding of the association between sporting event outcomes and mood. Research Objective/Questions: In this study, we investigate the impact of cricket wins and losses on the Bombay Stock Exchange. We hypothesize that cricket wins or losses will drive investors’ mood substantially and unambiguously so that the game outcomes will be powerful enough to impact asset prices. We also evaluate the hypothesis that losses are psychologically more powerful than wins. Methodology: We analyze the daily data from the Bombay Stock Exchange using the methodology of Edmonds et al. (2007). This methodology has the advantages of capturing the Bombay Stock Exchange stock returns timevarying volatility through a GARCH model. Major Fundings: Our findings show that cricket wins and losses do not impact the Bombay Stock Exchange. On the exchange, stock prices reflect relevant information. Our results are thus consistent with the Efficient Market Hypothesis. Implication(s): Our results imply that on the Bombay Stock Exchange, cricket wins and losses cannot be reliably used by investors and portfolio managers to achieve returns in excess of the average market returns on a risk-adjusted basis.","PeriodicalId":37351,"journal":{"name":"ACRN Journal of Finance and Risk Perspectives","volume":"1 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"70083296","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}
Pub Date : 2019-01-01DOI: 10.35944/JOFRP.2019.8.1.005
Natasha Ahmetaj, Merita Bejtja
Problem/Relevance: Investigation of exchange rate behaviour has been an important topic in international monetary economics because of the impact of exchange rates on economies. One strand of the literature has focused on explaining the observed movement of the nominal or real exchange rate in terms of macroeconomic variables. Another strand of the literature has evaluated the behaviour of the real exchange rates in relation to the equilibrium exchange rate, which is the real exchange rate that is consistent with macroeconomic balances. Albania implements a free floating exchange rate regime; therefore, evaluating whether the actual real exchange rate is too strong or too weak compared with the real equilibrium exchanges rate has great relevance for the Albanian economy. Research Objective/Questions: Generally, the real exchange rate is defined as the nominal exchange rate adjusted for the relative price differential between domestic and foreign goods and services. So, an appreciation of the nominal exchange rate or higher inflation at home relative to other countries may lead to an appreciation of the real exchange rate. Such appreciation weakens the competitiveness of a country, widens the current account deficit and increases vulnerability to financial crises. The opposite holds true when the real exchange rate depreciates. The aim of this paper is, first, to estimate the equilibrium real exchange rate for the Albanian currency against the euro and, second, to assess the total exchange rate misalignment during the period of 2001Q1-2017Q1. Thus, the equilibrium real exchange rate is used as a benchmark for evaluating the misalignment of the actual real exchange rate. Methodology: This paper explores the determinants of the real exchange rate for Albania, during the period of 2001Q1-2017Q1, based on the stock-flow approach, the so called Behavioural Equilibrium Exchange Rate (BEER), which effectively employs reduced-form modelling of the exchange rate based on standard co-integration techniques. The stock of net foreign assets and productivity changes has been considered fundamental for the real exchange rate. We have used the Johansen co integration technique to test the existence of long-run relationships between our main variables and to evaluate the path of the equilibrium real exchange rate based on vector error correction model (VECM) results. Then the analysis is completed by calculating the degree of misalignment as the difference between the actual real exchange rate and the equilibrium real exchange rate. Major Findings: Based on the Johansen co-integration approach, we find one long-run relationship between the real exchange rate of the Albanian lek against the euro, relative productivity and net foreign assets during the period of 2001Q1 to 2017Q1. The model implies that the real exchange rate is affected, as we expected, by relative productivity and net foreign assets, confirming that an increase in both variables leads to an app
{"title":"Determinants of the Real Equilibrium Exchange Rate in Albania: An Estimation Based on the Co-Integration Approach","authors":"Natasha Ahmetaj, Merita Bejtja","doi":"10.35944/JOFRP.2019.8.1.005","DOIUrl":"https://doi.org/10.35944/JOFRP.2019.8.1.005","url":null,"abstract":"Problem/Relevance: Investigation of exchange rate behaviour has been an important topic in international monetary economics because of the impact of exchange rates on economies. One strand of the literature has focused on explaining the observed movement of the nominal or real exchange rate in terms of macroeconomic variables. Another strand of the literature has evaluated the behaviour of the real exchange rates in relation to the equilibrium exchange rate, which is the real exchange rate that is consistent with macroeconomic balances. Albania implements a free floating exchange rate regime; therefore, evaluating whether the actual real exchange rate is too strong or too weak compared with the real equilibrium exchanges rate has great relevance for the Albanian economy. Research Objective/Questions: Generally, the real exchange rate is defined as the nominal exchange rate adjusted for the relative price differential between domestic and foreign goods and services. So, an appreciation of the nominal exchange rate or higher inflation at home relative to other countries may lead to an appreciation of the real exchange rate. Such appreciation weakens the competitiveness of a country, widens the current account deficit and increases vulnerability to financial crises. The opposite holds true when the real exchange rate depreciates. The aim of this paper is, first, to estimate the equilibrium real exchange rate for the Albanian currency against the euro and, second, to assess the total exchange rate misalignment during the period of 2001Q1-2017Q1. Thus, the equilibrium real exchange rate is used as a benchmark for evaluating the misalignment of the actual real exchange rate. Methodology: This paper explores the determinants of the real exchange rate for Albania, during the period of 2001Q1-2017Q1, based on the stock-flow approach, the so called Behavioural Equilibrium Exchange Rate (BEER), which effectively employs reduced-form modelling of the exchange rate based on standard co-integration techniques. The stock of net foreign assets and productivity changes has been considered fundamental for the real exchange rate. We have used the Johansen co integration technique to test the existence of long-run relationships between our main variables and to evaluate the path of the equilibrium real exchange rate based on vector error correction model (VECM) results. Then the analysis is completed by calculating the degree of misalignment as the difference between the actual real exchange rate and the equilibrium real exchange rate. Major Findings: Based on the Johansen co-integration approach, we find one long-run relationship between the real exchange rate of the Albanian lek against the euro, relative productivity and net foreign assets during the period of 2001Q1 to 2017Q1. The model implies that the real exchange rate is affected, as we expected, by relative productivity and net foreign assets, confirming that an increase in both variables leads to an app","PeriodicalId":37351,"journal":{"name":"ACRN Journal of Finance and Risk Perspectives","volume":"1 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"70083395","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}
Pub Date : 2019-01-01DOI: 10.35944/jofrp.2019.8.1.008
Deepika Dhawan, S. K. Mehta
Relevance: This study is conducted to look into the investor rationality by examining the pattern of saving and investment in the city of Jammu situated in Jammu and Kashmir, India. Research Objective: The objective of this study is to see the association of saving and income; reasons for saving; and preferences of investors for different investment instruments through administering the structured questionnaire. Methodology: Respondents are conveniently selected based on judgment. One -Way ANOVA, ANCOVA, and MANOVA are used to identify and understand the patterns of saving and investment and underlying triggers for the same. Findings: A relationship between saving and income is found, after controlling for the effects of variables, namely, age, gender, and occupation. Likewise, the impact of gender on financial literacy and awareness is found. This study also finds that people prefer safe and liquid investments with tax benefits, higher returns, and fewer lock-in-periods. Implications: The outcome will help financial consultants and investment managers to know more about the psyche and the level of financial literacy of people, and thus to help them in their objective of garnering funds and invest at a significant level and, finally helping in the capital formation.
{"title":"Saving and Investment Pattern: Assessment and Prospects","authors":"Deepika Dhawan, S. K. Mehta","doi":"10.35944/jofrp.2019.8.1.008","DOIUrl":"https://doi.org/10.35944/jofrp.2019.8.1.008","url":null,"abstract":"Relevance: This study is conducted to look into the investor rationality by examining the pattern of saving and investment in the city of Jammu situated in Jammu and Kashmir, India. Research Objective: The objective of this study is to see the association of saving and income; reasons for saving; and preferences of investors for different investment instruments through administering the structured questionnaire. Methodology: Respondents are conveniently selected based on judgment. One -Way ANOVA, ANCOVA, and MANOVA are used to identify and understand the patterns of saving and investment and underlying triggers for the same. Findings: A relationship between saving and income is found, after controlling for the effects of variables, namely, age, gender, and occupation. Likewise, the impact of gender on financial literacy and awareness is found. This study also finds that people prefer safe and liquid investments with tax benefits, higher returns, and fewer lock-in-periods. Implications: The outcome will help financial consultants and investment managers to know more about the psyche and the level of financial literacy of people, and thus to help them in their objective of garnering funds and invest at a significant level and, finally helping in the capital formation.","PeriodicalId":37351,"journal":{"name":"ACRN Journal of Finance and Risk Perspectives","volume":"1 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"70083603","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}
Pub Date : 2019-01-01DOI: 10.35944/JOFRP.2019.8.1.004
A. Ji
Problem/ Relevance: Managerial myopia is an important issue of interests to academics, practitioners, and regulators as managers have been condemned for their obsession with short-term earnings and myopic investment decisions that sacrifice firms’ long term value for shareholders. This article contributes by examining whether the quality of firms’ internal controls over financial reporting (ICFR) is associated with managerial myopia. Research Objective/ Questions: The purpose of this study is to examine whether managers in firms reporting material internal control weaknesses (ICW) under Section 404 of the Sarbanes-Oxley Act (SOX) of 2002 engage in myopic behaviors more than those in firms without reporting ICW. Methodology: The study uses the logit regression model to investigate a sample obtained from Compustat for the period of 2005-2013. Major Findings: The study finds a positive association between internal control weaknesses reported by auditors under Section 404 of the SOX and managerial short-termism which is measured by the probability of cutting R&D expenses in the current year from the previous year. Implications: Whereas prior studies mostly examine the impact of internal controls on accounting quality, this study demonstrates the implication of internal controls beyond financial reporting quality by showing an association between internal control quality and managerial myopia. Future research may further investigate the association between firms’ financial reporting quality and managerial investment decisions.
{"title":"Internal Control Weakness and Managerial Myopia: Evidence from SOX Section 404 Disclosures","authors":"A. Ji","doi":"10.35944/JOFRP.2019.8.1.004","DOIUrl":"https://doi.org/10.35944/JOFRP.2019.8.1.004","url":null,"abstract":"Problem/ Relevance: Managerial myopia is an important issue of interests to academics, practitioners, and regulators as managers have been condemned for their obsession with short-term earnings and myopic investment decisions that sacrifice firms’ long term value for shareholders. This article contributes by examining whether the quality of firms’ internal controls over financial reporting (ICFR) is associated with managerial myopia. Research Objective/ Questions: The purpose of this study is to examine whether managers in firms reporting material internal control weaknesses (ICW) under Section 404 of the Sarbanes-Oxley Act (SOX) of 2002 engage in myopic behaviors more than those in firms without reporting ICW. Methodology: The study uses the logit regression model to investigate a sample obtained from Compustat for the period of 2005-2013. Major Findings: The study finds a positive association between internal control weaknesses reported by auditors under Section 404 of the SOX and managerial short-termism which is measured by the probability of cutting R&D expenses in the current year from the previous year. Implications: Whereas prior studies mostly examine the impact of internal controls on accounting quality, this study demonstrates the implication of internal controls beyond financial reporting quality by showing an association between internal control quality and managerial myopia. Future research may further investigate the association between firms’ financial reporting quality and managerial investment decisions.","PeriodicalId":37351,"journal":{"name":"ACRN Journal of Finance and Risk Perspectives","volume":"1 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"70083350","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}
Pub Date : 2019-01-01DOI: 10.35944/jofrp.2019.8.1.017
Theresia Harrer
Following literature that already reframes entrepreneurship as a social change activity, we consider the societal change potential of entrepreneurial narratives in crowdfunding pitches of predominantly female-run ventures. We understand the community-driven phenomenon crowdfunding therefore as a vehicle to transcend and change the predominantly masculine entrepreneurial discourse of innovation and business success. Following an idiographic methodology, we analyse the discourse in crowdfunding video-representations of female-run ventures and explore structure, linguistic usage, visual artefacts and the implied intentions towards social change from a feminist perspective. From the sampling set of 42 crowdfunding campaigns, we use the resulting discursive elements and tropes to identify feminist themes that drive the success of these campaigns through connecting with immanent societal values. With this we contribute to the social change perspective in entrepreneurship research by addressing epistemological issues within prevailing paradigms.
{"title":"The Positive Side of Feminist Theory in Entrepreneurial Finance: Feminist Themes and Tropes in Crowdfunding for Social Change","authors":"Theresia Harrer","doi":"10.35944/jofrp.2019.8.1.017","DOIUrl":"https://doi.org/10.35944/jofrp.2019.8.1.017","url":null,"abstract":"Following literature that already reframes entrepreneurship as a social change activity, we consider the societal change potential of entrepreneurial narratives in crowdfunding pitches of predominantly female-run ventures. We understand the community-driven phenomenon crowdfunding therefore as a vehicle to transcend and change the predominantly masculine entrepreneurial discourse of innovation and business success. Following an idiographic methodology, we analyse the discourse in crowdfunding video-representations of female-run ventures and explore structure, linguistic usage, visual artefacts and the implied intentions towards social change from a feminist perspective. From the sampling set of 42 crowdfunding campaigns, we use the resulting discursive elements and tropes to identify feminist themes that drive the success of these campaigns through connecting with immanent societal values. With this we contribute to the social change perspective in entrepreneurship research by addressing epistemological issues within prevailing paradigms.","PeriodicalId":37351,"journal":{"name":"ACRN Journal of Finance and Risk Perspectives","volume":"1 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"70083963","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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