Pub Date : 2023-08-21DOI: 10.1177/09726527231189558
Muneer Shaik
Using a time-varying parameter-structural vector autoregressive (TVP-SVAR) model, this study investigates the dynamic impact of uncertainty caused by worldwide pandemics on industrial productivity growth. We discover that the coronavirus has a negative influence on industrial production growth rates across economic blocs (i.e., United States, Developed, and Emerging nations). We also discover that, since 2016, there has been a considerable rise in the comovement of industrial production growth rates. We also employ the dynamic volatility connectedness methodology and find that the industrial productivity growth of Emerging nations economic bloc, and DPUI is observed to be net transmitters of volatility, whereas the industrial productivity growth of United States and other developed nations economic blocs are found to be net recipients of volatility throughout the sample periods. Furthermore, we find that the dynamic total connectedness among the variables under study is observed to be very strong and time-varying. JEL Codes: C15, C58, G15
{"title":"The Dynamic Effect of Pandemics on Industrial Production Growth","authors":"Muneer Shaik","doi":"10.1177/09726527231189558","DOIUrl":"https://doi.org/10.1177/09726527231189558","url":null,"abstract":"Using a time-varying parameter-structural vector autoregressive (TVP-SVAR) model, this study investigates the dynamic impact of uncertainty caused by worldwide pandemics on industrial productivity growth. We discover that the coronavirus has a negative influence on industrial production growth rates across economic blocs (i.e., United States, Developed, and Emerging nations). We also discover that, since 2016, there has been a considerable rise in the comovement of industrial production growth rates. We also employ the dynamic volatility connectedness methodology and find that the industrial productivity growth of Emerging nations economic bloc, and DPUI is observed to be net transmitters of volatility, whereas the industrial productivity growth of United States and other developed nations economic blocs are found to be net recipients of volatility throughout the sample periods. Furthermore, we find that the dynamic total connectedness among the variables under study is observed to be very strong and time-varying. JEL Codes: C15, C58, G15","PeriodicalId":44100,"journal":{"name":"Journal of Emerging Market Finance","volume":null,"pages":null},"PeriodicalIF":1.5,"publicationDate":"2023-08-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42390976","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 : 2023-08-17DOI: 10.1177/09726527231183014
Swechha Chada, Sumit Banerjee
This study investigates the effect of various firm-level corporate governance mechanisms on the likelihood of financial distress in India. We analyze the competing hypotheses of interest alignment and agency theory, examining how controlling shareholders affect the probability of financial distress. Additionally, we assess the potential impact of institutional investor shareholding and bank-appointed directors on the likelihood of financial distress. Our findings suggest that increasing controlling shareholder ownership decreases the probability of distress. However, the effects of institutional investors and bank-appointed directors vary and also depend on the quantum of shareholding of institutional investors and affiliation with business groups. Our results offer insights into improving governance in economies with higher ownership concentration, weaker institutional frameworks, and greater bank participation in credit facilitation. JEL Codes: G32, G33, G34
{"title":"Stretch or Suppress: Role of Owners and Nominee Directors in Financial Distress","authors":"Swechha Chada, Sumit Banerjee","doi":"10.1177/09726527231183014","DOIUrl":"https://doi.org/10.1177/09726527231183014","url":null,"abstract":"This study investigates the effect of various firm-level corporate governance mechanisms on the likelihood of financial distress in India. We analyze the competing hypotheses of interest alignment and agency theory, examining how controlling shareholders affect the probability of financial distress. Additionally, we assess the potential impact of institutional investor shareholding and bank-appointed directors on the likelihood of financial distress. Our findings suggest that increasing controlling shareholder ownership decreases the probability of distress. However, the effects of institutional investors and bank-appointed directors vary and also depend on the quantum of shareholding of institutional investors and affiliation with business groups. Our results offer insights into improving governance in economies with higher ownership concentration, weaker institutional frameworks, and greater bank participation in credit facilitation. JEL Codes: G32, G33, G34","PeriodicalId":44100,"journal":{"name":"Journal of Emerging Market Finance","volume":null,"pages":null},"PeriodicalIF":1.5,"publicationDate":"2023-08-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45789130","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 : 2023-08-14DOI: 10.1177/09726527231190690
Akshita Arora
Our study examines the impact of dual leadership on the company’s performance. We also investigate the moderating effects of board independence on duality and firm-performance relationship. The article uses a panel data framework, and the estimation has been carried out using system-generalized methods of moments. The results of our study postulate that dual leadership negatively influences firm performance; however, when the moderator, board independence, is introduced in the empirical model, it affects firm performance positively. We submit that the extensive and complete abolition of CEO duality by Indian regulators may require caution for Indian markets. JEL Codes: G34, L25, C33
{"title":"Board Leadership Structure and Firm Performance: Moderating Effects of Board Independence","authors":"Akshita Arora","doi":"10.1177/09726527231190690","DOIUrl":"https://doi.org/10.1177/09726527231190690","url":null,"abstract":"Our study examines the impact of dual leadership on the company’s performance. We also investigate the moderating effects of board independence on duality and firm-performance relationship. The article uses a panel data framework, and the estimation has been carried out using system-generalized methods of moments. The results of our study postulate that dual leadership negatively influences firm performance; however, when the moderator, board independence, is introduced in the empirical model, it affects firm performance positively. We submit that the extensive and complete abolition of CEO duality by Indian regulators may require caution for Indian markets. JEL Codes: G34, L25, C33","PeriodicalId":44100,"journal":{"name":"Journal of Emerging Market Finance","volume":null,"pages":null},"PeriodicalIF":1.5,"publicationDate":"2023-08-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44708419","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 : 2023-08-09DOI: 10.1177/09726527231165365
Jains P. Chacko, Lakshmi Padmakumari
The majority of Indian firms have a promoter and family-owner-dominated ownership structure; therefore, the agency problem prevailing in such a setting would be the conflict of interest between the majority and minority shareholders. This motivated us to examine the adverse effect of not investing at the level implied by the firms’ characteristics, termed investment inefficiency, on the ex-ante measure of expected returns, the implied cost of capital. Our study finds a positive relationship between investment inefficiency and expected returns in the baseline results estimated using pooled ordinary least squares (OLS) and the robustness results estimated using a two-step generalized method of moments (GMM). The sample of the study consists of listed firms in India from 2016 to 2021. JEL Codes: G11, G31
{"title":"The Effect of Investment Inefficiency on Expected Returns","authors":"Jains P. Chacko, Lakshmi Padmakumari","doi":"10.1177/09726527231165365","DOIUrl":"https://doi.org/10.1177/09726527231165365","url":null,"abstract":"The majority of Indian firms have a promoter and family-owner-dominated ownership structure; therefore, the agency problem prevailing in such a setting would be the conflict of interest between the majority and minority shareholders. This motivated us to examine the adverse effect of not investing at the level implied by the firms’ characteristics, termed investment inefficiency, on the ex-ante measure of expected returns, the implied cost of capital. Our study finds a positive relationship between investment inefficiency and expected returns in the baseline results estimated using pooled ordinary least squares (OLS) and the robustness results estimated using a two-step generalized method of moments (GMM). The sample of the study consists of listed firms in India from 2016 to 2021. JEL Codes: G11, G31","PeriodicalId":44100,"journal":{"name":"Journal of Emerging Market Finance","volume":null,"pages":null},"PeriodicalIF":1.5,"publicationDate":"2023-08-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42042002","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 : 2023-08-03DOI: 10.1177/09726527231160856
Rexford Abaidoo, Elvis Kwame Agyapong
The study evaluates how specific features of financial institutions and investment sources influence enduring development among economies in the sub-region of Sub-Saharan Africa (SSA). Data for the interactions in question were compiled from 36 economies in SSA from 1996 to 2019, and various empirical estimates were carried out using the two-step system Generalized Method of Moments statistical framework. Results from the analyses suggest that growth in depth, improved access, and efficiency of financial institutions foster long-term development among economies in the sub-region. Investments in various forms were found to have a varied augmenting impact on long-term development. Further empirical analyses suggest that quality of governance has a significant positive moderating impact on how net foreign direct investment and domestic investments influence development among economies in the sub-region. Political instability is, however, found to negate gains to development from both investment growth and contributions from financial institutions. JEL Codes: C33, G2, E13
{"title":"Financial Institutions Dynamics, Investments and Development","authors":"Rexford Abaidoo, Elvis Kwame Agyapong","doi":"10.1177/09726527231160856","DOIUrl":"https://doi.org/10.1177/09726527231160856","url":null,"abstract":"The study evaluates how specific features of financial institutions and investment sources influence enduring development among economies in the sub-region of Sub-Saharan Africa (SSA). Data for the interactions in question were compiled from 36 economies in SSA from 1996 to 2019, and various empirical estimates were carried out using the two-step system Generalized Method of Moments statistical framework. Results from the analyses suggest that growth in depth, improved access, and efficiency of financial institutions foster long-term development among economies in the sub-region. Investments in various forms were found to have a varied augmenting impact on long-term development. Further empirical analyses suggest that quality of governance has a significant positive moderating impact on how net foreign direct investment and domestic investments influence development among economies in the sub-region. Political instability is, however, found to negate gains to development from both investment growth and contributions from financial institutions. JEL Codes: C33, G2, E13","PeriodicalId":44100,"journal":{"name":"Journal of Emerging Market Finance","volume":null,"pages":null},"PeriodicalIF":1.5,"publicationDate":"2023-08-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46166706","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 : 2023-08-03DOI: 10.1177/09726527231184555
Vedika Saxena, Seshadev Sahoo
This study evaluates corporate cash holdings (CCHs) as a determinant of share buyback for three emerging economies, India, Malaysia, and South Korea, from 2002 to 2020. We find CCH as a significant determinant of share buyback for our sample nations. Our results suggest that share buyback is a flexible way for firms to distribute excess cash across our sample nations. Our study also documents the impact of different country-level investor protection frameworks on buybacks. A favorable relationship between a strong investor protection environment (good governance) and buyback explains the effective role of buyback in resolving agency conflicts compared to dividends. JEL Codes: C5, F3, G3
{"title":"Corporate Cash Holdings and Share Buyback: Evidence from Emerging Markets","authors":"Vedika Saxena, Seshadev Sahoo","doi":"10.1177/09726527231184555","DOIUrl":"https://doi.org/10.1177/09726527231184555","url":null,"abstract":"This study evaluates corporate cash holdings (CCHs) as a determinant of share buyback for three emerging economies, India, Malaysia, and South Korea, from 2002 to 2020. We find CCH as a significant determinant of share buyback for our sample nations. Our results suggest that share buyback is a flexible way for firms to distribute excess cash across our sample nations. Our study also documents the impact of different country-level investor protection frameworks on buybacks. A favorable relationship between a strong investor protection environment (good governance) and buyback explains the effective role of buyback in resolving agency conflicts compared to dividends. JEL Codes: C5, F3, G3","PeriodicalId":44100,"journal":{"name":"Journal of Emerging Market Finance","volume":null,"pages":null},"PeriodicalIF":1.5,"publicationDate":"2023-08-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44178348","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 : 2023-08-03DOI: 10.1177/09726527231178086
Siti Sarah Alyasa-Gan, Norliza Che-Yahya, Rand Kwong Yew Low
Initial public offering (IPO) information disclosures such as the IPO proceeds’ strategic uses and the time frame have the potential to signal the listing firms’ post-IPO survival. We investigate the impact of IPO proceeds on 423 firms’ ability to maintain survival in business in Malaysia from 2000 to 2014. With a median survival span of approximately 104 months, our examination of survival data reveals that more than 40% of the firms in our sample had trouble surviving after their seventh year of listing. Our findings indicate that the share of IPO proceeds and the firms’ time horizon may be used to forecast whether or not they will survive, with meeting financial obligations serving as the primary motivating factor. A major fraction of IPO proceeds used for growth motives and financial obligations lead to shorter survival, while a longer time frame to meet the obligations leads to longer post-IPO survival. Our findings offer empirical support for regulators to safeguard investors’ interests and enhance firms’ survival in an environment with developing markets; information disclosure requirements include both the use of IPO proceeds and the time frame for its utilization.
{"title":"Does Time Frame of IPO Proceeds Predict Survival of Firms? Evidence from the Malaysian Market","authors":"Siti Sarah Alyasa-Gan, Norliza Che-Yahya, Rand Kwong Yew Low","doi":"10.1177/09726527231178086","DOIUrl":"https://doi.org/10.1177/09726527231178086","url":null,"abstract":"Initial public offering (IPO) information disclosures such as the IPO proceeds’ strategic uses and the time frame have the potential to signal the listing firms’ post-IPO survival. We investigate the impact of IPO proceeds on 423 firms’ ability to maintain survival in business in Malaysia from 2000 to 2014. With a median survival span of approximately 104 months, our examination of survival data reveals that more than 40% of the firms in our sample had trouble surviving after their seventh year of listing. Our findings indicate that the share of IPO proceeds and the firms’ time horizon may be used to forecast whether or not they will survive, with meeting financial obligations serving as the primary motivating factor. A major fraction of IPO proceeds used for growth motives and financial obligations lead to shorter survival, while a longer time frame to meet the obligations leads to longer post-IPO survival. Our findings offer empirical support for regulators to safeguard investors’ interests and enhance firms’ survival in an environment with developing markets; information disclosure requirements include both the use of IPO proceeds and the time frame for its utilization.","PeriodicalId":44100,"journal":{"name":"Journal of Emerging Market Finance","volume":null,"pages":null},"PeriodicalIF":1.5,"publicationDate":"2023-08-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42509991","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 : 2023-07-12DOI: 10.1177/09726527231165820
Ansu Royit, Babu Jose, James Varghese
This study investigates the dynamic relationship between noise trader sentiment and excessive volatility in the Indian financial market during the COVID-19 outbreak. It proposes novel options trading strategies to ensure profitability in times of irrational exuberance and to satisfy diverse investment requirements of volatility traders, which arise from the varying levels of stimulating neurotransmitters, namely dopamine and serotonin in the human body. Empirical results show that the incremental information content of sentiment measures is vital in forecasting future volatility and the proposed options trading strategies effectively accomplish the neuro-specific intentions of the traders during extreme volatility in the Indian equity market. JEL Codes: G12, G13
{"title":"Beware of Extreme Investor Sentiments! Indian Evidence on the Performance of Neuro-specific Options Volatility Trading Strategies on the Facets of COVID-19","authors":"Ansu Royit, Babu Jose, James Varghese","doi":"10.1177/09726527231165820","DOIUrl":"https://doi.org/10.1177/09726527231165820","url":null,"abstract":"This study investigates the dynamic relationship between noise trader sentiment and excessive volatility in the Indian financial market during the COVID-19 outbreak. It proposes novel options trading strategies to ensure profitability in times of irrational exuberance and to satisfy diverse investment requirements of volatility traders, which arise from the varying levels of stimulating neurotransmitters, namely dopamine and serotonin in the human body. Empirical results show that the incremental information content of sentiment measures is vital in forecasting future volatility and the proposed options trading strategies effectively accomplish the neuro-specific intentions of the traders during extreme volatility in the Indian equity market. JEL Codes: G12, G13","PeriodicalId":44100,"journal":{"name":"Journal of Emerging Market Finance","volume":null,"pages":null},"PeriodicalIF":1.5,"publicationDate":"2023-07-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47238631","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 : 2023-05-16DOI: 10.1177/09726527231160863
Vinod Kumar
Researchers argue about the beta anomaly and related anomalies in the capital market based on existing theories of asset pricing. This article shows that the observed beta anomaly is added due to the mathematical errors, inconsistencies, and limitations in existing theories. We propose a general theory for central concepts in asset pricing, including beta and cost of capital, that holds for growth, taxes, and risky debt. Our theory addresses observed beta-related anomalies and other phenomena, and provides a clearer taxonomy for ongoing research and a step toward resolving several issues. The findings are highly significant for researchers and firms. JEL Codes: G32, G12, G11, G35
{"title":"Is the Beta Anomaly Real? A Correction in Existing Theories of Cost of Capital and Asset Pricing","authors":"Vinod Kumar","doi":"10.1177/09726527231160863","DOIUrl":"https://doi.org/10.1177/09726527231160863","url":null,"abstract":"Researchers argue about the beta anomaly and related anomalies in the capital market based on existing theories of asset pricing. This article shows that the observed beta anomaly is added due to the mathematical errors, inconsistencies, and limitations in existing theories. We propose a general theory for central concepts in asset pricing, including beta and cost of capital, that holds for growth, taxes, and risky debt. Our theory addresses observed beta-related anomalies and other phenomena, and provides a clearer taxonomy for ongoing research and a step toward resolving several issues. The findings are highly significant for researchers and firms. JEL Codes: G32, G12, G11, G35","PeriodicalId":44100,"journal":{"name":"Journal of Emerging Market Finance","volume":null,"pages":null},"PeriodicalIF":1.5,"publicationDate":"2023-05-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41666242","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 : 2023-05-01DOI: 10.1177/09726527231163207
D. Rao, Rahul Kumar
We employ event study methodology to analyze the impact of unprecedented unconventional monetary policy (UMP) measures employed by the Reserve Bank of India to fortify monetary transmission mechanism and to restore financial stability. We find that the UMP announcements result in a decline in bond yields and yield spread as well as increase in market capitalization and sectoral portfolio of stock returns. Evaluating the relative efficacy of UMP measures, we find that targeted long-term repo operation announcements are more effective in easing bond yields than mere long-term repo operations. Our findings provide beneficial inference for day-traders and investors as asset prices increase significantly and durable goods producing stock returns found to be higher than those of non-durable goods. The lessons that can be drawn for the emerging market economy central banks, who do not have enough space to conduct conventional monetary policy and even when they do not face zero lower bound interest rate, they still can employ UMP tools to directly influence banks cost of funds, and long-term bond yields and interest rates, and in turn, portfolio of stock returns and investments to stimulate aggregate demand. JEL Codes: C13, C54, E52, E65
{"title":"An Assessment of Unconventional Monetary Policy During COVID-19 Pandemic in India","authors":"D. Rao, Rahul Kumar","doi":"10.1177/09726527231163207","DOIUrl":"https://doi.org/10.1177/09726527231163207","url":null,"abstract":"We employ event study methodology to analyze the impact of unprecedented unconventional monetary policy (UMP) measures employed by the Reserve Bank of India to fortify monetary transmission mechanism and to restore financial stability. We find that the UMP announcements result in a decline in bond yields and yield spread as well as increase in market capitalization and sectoral portfolio of stock returns. Evaluating the relative efficacy of UMP measures, we find that targeted long-term repo operation announcements are more effective in easing bond yields than mere long-term repo operations. Our findings provide beneficial inference for day-traders and investors as asset prices increase significantly and durable goods producing stock returns found to be higher than those of non-durable goods. The lessons that can be drawn for the emerging market economy central banks, who do not have enough space to conduct conventional monetary policy and even when they do not face zero lower bound interest rate, they still can employ UMP tools to directly influence banks cost of funds, and long-term bond yields and interest rates, and in turn, portfolio of stock returns and investments to stimulate aggregate demand. JEL Codes: C13, C54, E52, E65","PeriodicalId":44100,"journal":{"name":"Journal of Emerging Market Finance","volume":null,"pages":null},"PeriodicalIF":1.5,"publicationDate":"2023-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47477374","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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