Liability of Foreignness: The Impact of Elimination of the Reconciliation Requirement on International Asset Allocation by U.S. Investors

2017 ◽  
Vol 17 (2) ◽  
pp. 75-95 ◽  
Author(s):  
Michael T. Dugan ◽  
Elizabeth H. Turner ◽  
Clark M. Wheatley
Keyword(s):  
Asset Allocation ◽  
Mutual Fund ◽  
Institutional Investors ◽  
Stock Exchange ◽  
Cost Savings ◽  
Securities And Exchange Commission ◽  
Firm Level ◽  
Financial Disclosures ◽  
International Asset Allocation ◽  
The Impact

ABSTRACT In 2007, the Securities and Exchange Commission (SEC) eliminated the 20-F requirement to reconcile IFRS financial disclosures to U.S. GAAP. We find that this change in SEC regulation is associated with an overall decrease in the international asset allocation of U.S. institutional investors in European Union (E.U.) firms that are cross-listed on U.S. stock exchanges. We also find that U.S. mutual fund investors were more likely to invest in firms in countries with greater levels of investor protection and higher global visibility in the post-elimination period. A learning effect (measured as the length of time a firm is cross-listed on a U.S. stock exchange) is not, however, associated with U.S. institutional ownership. These results are robust to tests involving removal of OTC ADRs, firm-level controls, country controls, and financial controls resulting from the elimination of the 20-F reconciliation. Our results suggest that the increased information processing costs were not offset by information preparation cost savings. Our results indicate that the elimination of the 20-F reconciliation of IFRS to U.S. GAAP resulted in a loss of valuable information for U.S. institutional investors and thereby resulted in a divestment in cross-listed E.U. firms.

Relationship between Code of Corporate Governance and Corporate Financial Performance (An Empirical Study of Food Companies Listed on KSE)

GIS Business ◽  
2017 ◽  
Vol 12 (4) ◽  
pp. 01-09
Author(s):  
Asma Rafique Chughtai ◽  
Afifa Naseer ◽  
Asma Hassan
Keyword(s):  
Corporate Governance ◽  
Stock Exchange ◽  
Securities And Exchange Commission ◽  
Executive Directors ◽  
Agency Conflicts ◽  
Cross Sectional ◽  
Return On Equity ◽  
Governance Practices ◽  
Code Of Corporate Governance ◽  
The Impact

The crucial role that implementation of Code of Corporate Governance plays on protecting the rights of minorities, shareholders, local as well as foreign investors cannot be denied. Companies all over the world are required to implement their respective Code of Corporate Governance for avoiding agency conflicts between companies management and stakeholders and for assuring transparency in accountability. This paper aims at exploring the impact of implementation of corporate governance practices (designed by Securities and Exchange Commission of Pakistan) have on the financial position of companies. For explanatory variables of the study, composition of the board as per the Code of Corporate Governance that comprises of presence of independent, executive and non-executive directors has been taken into consideration. Return on equity has been taken as an indicator of firms profitability i.e. the dependent variable. For this study, companies listed on food producing sector of Karachi Stock Exchange have been screened for excogitation of the relationship. It is an empirical research based on nine years data from 2007–2015. Using Hausman Test for selecting the data analysis technique between Fixed or Random, Fixed Cross Sectional Panel Analysis has been used for analysis of the data collected. Findings indicate that presence of independent, executive and non-executive directors as per the code requirements levies a significant impact on the profitability of companies indicated by return on equity. It is, thus concluded that companies should ensure compliance with code of governance practices to reduce not only the agency issues but also to increase their profitability.

scholarly journals The Effect of Chief Executive Officer Dominance and Shareholder Rights on Cost of Equity Capital in Pakistan

2020 ◽  
Vol V (III) ◽  
pp. 84-93
Author(s):  
Yawar Miraj Khilji ◽  
Shehzad Khan ◽  
Muhammad Faizan Malik
Keyword(s):  
Chief Executive Officers ◽  
Stock Exchange ◽  
Chief Executive ◽  
Fixed Effect Model ◽  
Equity Capital ◽  
Shareholder Rights ◽  
Cost Of Equity Capital ◽  
Cost Of Equity ◽  
Firm Level ◽  
The Impact

This Research explores the effect of Chief executive Dominance and Shareholder rights on Cost of equity of listed companies in an emerging equity market, Pakistan. The research is for the period of 2012 to 2018 for which firm level data of top 100 non-financial listed firms from Pakistan Stock Exchange has been examined by using descriptive statistics, a correlation -matrix, Pooled OLS and Fixed Effect Model approach. The impact of controlled variables which includes firm size, Financial Leverage, and Book to market ratio influence on the firms cost of equity has also been investigated. Research results indicate that when Chief executive officers align their interest with that of shareholders, the risk of agency problem is mitigated thus leading to lower cost of equity.

Impact of volatility and equity market uncertainty on herd behaviour: evidence from UK REITs

2018 ◽  
Vol 11 (2) ◽  
pp. 169-186 ◽  
Author(s):  
Omokolade Akinsomi ◽  
Yener Coskun ◽  
Rangan Gupta ◽  
Chi Keung Marco Lau
Keyword(s):  
Asset Allocation ◽  
Regime Switching ◽  
Stock Exchange ◽  
Equity Market ◽  
Market Uncertainty ◽  
Content Type ◽  
Regime Switching Model ◽  
Switching Model ◽  
Market Sentiment ◽  
The Impact

PurposeThis paper aims to examine herding behaviour among investors and traders in UK-listed Real Estate Investment Trusts (REITs) within three market regimes (low, high and extreme volatility periods) from the period June 2004 to April 2016.Design/methodology/approachObservations of investors in 36 REITs that trade on the London Stock Exchange as at April 2016 were used to analyse herding behaviour among investors and traders of shares of UK REITs, using a Markov regime-switching model.FindingsAlthough a static herding model rejects the existence of herding in REITs markets, estimates from the regime-switching model reveal substantial evidence of herding behaviour within the low volatility regime. Most interestingly, the authors observed a shift from anti-herding behaviour within the high volatility regime to herding behaviour within the low volatility regime, with this having been caused by the FTSE 100 Volatility Index (UK VIX).Originality/valueThe results have various implications for decisions regarding asset allocation, diversification and value management within UK REITs. Market participants and analysts may consider that collective movements and market sentiment/psychology are determinative factors of risk-return in UK REITs. In addition, general uncertainty in the equity market, proxied by the impact of the UK VIX, may also provide a signal for increasing herding-related risks among UK REITs.

scholarly journals Institutional Investors’ Corporate Site Visits and Firms’ Sustainable Development

2020 ◽  
Vol 12 (17) ◽  
pp. 7036
Author(s):  
Yize Hu ◽  
Jun Shan ◽  
Peixun Zhan
Keyword(s):  
Sustainable Development ◽  
Institutional Investors ◽  
Information Acquisition ◽  
Stock Exchange ◽  
Manufacturing Firms ◽  
Econometric Analysis ◽  
Environmental Investment ◽  
The Government ◽  
The Impact

Institutional investors are essential stakeholders of the firm, and they care about firms’ sustainable development. In this study, we focused on a prevalent and essential type of information acquisition activity of institutional investors: corporate site visits, which refers to their trip to the firms’ headquarters and factories. We investigated the impact of institutional investors’ corporate site visits on firms’ likelihood of environmental violation. Using Chinese listed manufacturing firms in the Shenzhen Stock Exchange from 2009 to 2017, the econometric analysis shows that institutional investors’ corporate site visits significantly decrease firms’ likelihood of environmental violation. Moreover, this effect is more pronounced for firms in heavily polluting industries, firms not owned by the government, and firms with less institutional shareholding. Furthermore, we show that institutional investors’ corporate site visits prevent environmental violations by increasing firms’ environmental investment. Our study highlights the importance of institutional investors’ corporate site visits by showing that they are beneficial to the firms visited.

A study of prominence for disposition effect: a systematic review

2019 ◽  
Vol 11 (1) ◽  
pp. 2-21 ◽  
Author(s):  
Syed Aliya Zahera ◽  
Rohit Bansal
Keyword(s):  
Mutual Funds ◽  
Behavioral Finance ◽  
Mutual Fund ◽  
Institutional Investors ◽  
Disposition Effect ◽  
Individual Investors ◽  
Content Type ◽  
Experimental Market ◽  
The Individual ◽  
The Impact

Purpose The purpose of this paper is to study the disposition effect that is exhibited by the investors through the review of research articles in the area of behavioral finance. When the investors are hesitant to realize the losses and quick to realize the gains, this phenomenon is known as the disposition effect. This paper explains various theories, which have been evolved over the years that has explained the phenomenon of disposition effect. It includes the behavior of individual investors, institutional investors and mutual fund managers. Design/methodology/approach The authors have used the existing literatures from the various authors, who have studied the disposition effect in either real market or the experimental market. This paper includes literature over a period of 40 years, that is, Dyl, 1977, in the form of tax loss selling, to the most recent paper, Surya et al. (2017). Some authors have used the PGR-PLR ratio for calculating the disposition effect in their study. However, some authors have used t-test, ANNOVA, Correlation coefficient, Standard deviation, Regression, etc., as a tool to find the presence of disposition effect. Findings The effect of disposition can be changed for different types of individual investors, institutional investors and mutual funds. The individual investors are largely prone to the disposition effect and the demographic variables like age, gender, experience, investor sophistication also impact the occurrence of the disposition effect. On the other side, the institutional investors and mutual funds managers may or may not be affected by the disposition effect. Practical implications The skilled understanding of the disposition effect will help the investors, financial institutions and policy-makers to reduce the adverse effect of this bias in the stock market. This paper contributes a detailed explanation of disposition effect and its impacts on the investors. The study of disposition effect has been found to be insufficient in the context of Indian capital market. Social implications The investors and society at large can gains insights about causes and influences of disposition effect which will be helpful to create sound investment decisions. Originality/value This paper has complied the 11 causes for the occurrence of disposition effect that are found by the different authors. The paper also highlights the impact of the disposition effect in the decision-making of various investors.

The Correlation between R&D Activities and Income Rate in Addition to Gross Profit Rate of the Enterprise Operation

2013 ◽  
Vol 798-799 ◽  
pp. 865-868 ◽  
Author(s):  
Tina C. Chiao
Keyword(s):  
Research And Development ◽  
Financial Performance ◽  
Institutional Investors ◽  
Trading Volume ◽  
Stock Exchange ◽  
Business Value ◽  
Profit Rate ◽  
Taiwan Stock Exchange ◽  
The Impact ◽  
Future Business

As the trading volume by institutional investors in Taiwans stock market increasing in recent years according to information of Taiwan Stock Exchange Corporation, the influence on financial performance by the institutional investors is getting more and more important although institutional investors play a monitoring role to the company. Thus the impact of R & D activities on the financial performance of enterprises is studied frequently. This study focuses on the impact of R & D activities on income rate in addition to gross profit rate of the Enterprise Operation. The implication in practice is that business must attract research and development intensity (RDI) relative to research and development density (RDD) to improve future business value.

scholarly journals Institutional Investor Expectations, Manager Performance, and Fund Flows

2017 ◽  
Vol 52 (6) ◽  
pp. 2755-2777 ◽  
Author(s):  
Howard Jones ◽  
Jose Vicente Martinez
Keyword(s):  
Asset Allocation ◽  
Institutional Investors ◽  
Investment Decisions ◽  
Fund Flows ◽  
Past Performance ◽  
Fund Managers ◽  
Future Performance ◽  
Manager Performance ◽  
The Impact ◽  
Allocation Decisions

Using survey data, we analyze institutional investors’ expectations about the future performance of fund managers and the impact of those expectations on asset allocation decisions. We find that institutional investors allocate funds mainly on the basis of fund managers’ past performance and of investment consultants’ recommendations, but not because they extrapolate their expectations from these. This suggests that institutional investors base their investment decisions on the most defensible variables at their disposal and supports the existence of agency considerations in their decision making.

scholarly journals Environmental issues as a non-financial reporting area using the example of selected companies listed on the Warsaw Stock Exchange

2020 ◽  
Vol 64 (9) ◽  
pp. 45-56
Author(s):  
Hanna Czaja-Cieszyńska
Keyword(s):  
Financial Reporting ◽  
Raw Materials ◽  
Stock Exchange ◽  
Secondary Data ◽  
Environmental Issues ◽  
Financial Indicators ◽  
Financial Reports ◽  
Warsaw Stock Exchange ◽  
Financial Disclosures ◽  
The Impact

The purpose of this article is to assess the comparability of non-financial disclosures on the impact of economic activity on the natural environment in reports of selected companies listed on the Warsaw Stock Exchange. The ten largest listed companies listed in the WIG-20 index were selected for the study. The analysis of the reports was based on the following disclosure categories: Materials and raw materials, Fuels and energy, Water, Biodiversity, Emissions to the atmosphere, Waste and Effluents, and Others. Within these categories, 14 key environmental non-financial indicators were defined. The empirical study carried out confirmed that the non-financial reports analyzed in all of the seven categories of disclosures were not fully comparable. The research methods used were: literature studies, analysis of legal regulations, analysis of secondary data, as well as methods of induction and synthesis.

scholarly journals The Moderating Effect of Gender on Audit Committee Attributes and Earnings Management

2020 ◽  
Vol 7 (3) ◽  
pp. 48
Author(s):  
Usman Abbas
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Audit Committee ◽  
Stock Exchange ◽  
Securities And Exchange Commission ◽  
Moderating Effect ◽  
Ex Post ◽  
Ex Post Facto ◽  
Regulatory Bodies ◽  
The Impact

There exist a number of studies that have been conducted on the influence of audit committee attributes on earnings management but no attention has been given to the moderating effect of gender on audit committee attributes and earnings management. The main objective of this study was to examine the moderating effect of gender on the impact of audit committee attributes on earnings management of listed Agricultural companies in Nigeria for a period of six years (2012-2017). The study used ex-post facto and correlational research designs. The population of the study was the five (5) Agricultural companies in Nigeria listed on the Nigerian Stock Exchange as of 31st December 2017 and all the companies were used as a sample of the study. The study used a panel of multiple regression techniques for data analysis. It was found that gender has a strong and significant influence on the impact of audit committee attributes on earnings management of listed Agricultural companies in Nigeria. It was recommended that the audit committee of companies in Nigeria should comprise of at least 40% of women. Regulatory bodies concerned in Nigeria like Securities and Exchange Commission, Nigerian Stock Exchange and Financial Reporting Council should clearly state the composition of audit committee members and increase the number to ten where women should form 40% of the members of the committee and a woman with financial knowledge should be made the chairperson of the committee since women have shown a significant level of commitment to their responsibilities and contribute in reducing earnings manipulation.

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