Market capitalization

About: Market capitalization is a research topic. Over the lifetime, 3583 publications have been published within this topic receiving 77288 citations. The topic is also known as: market cap & market value.

The Role of Financial Markets in Economic Growth

Abstract: Msc., Istanbul Gelisim University This paper aims at scrutinizing how financial markets operate in trying to influence the magnitude and direction of economic growth as they purpose to intermediate funds between surplus spenders and deficit spenders. We examine how direct foreign investments and local investors interlink to optimize on the growth of the economy. We model our problem to incorporate financial markets operations, capital flows from foreign nations and the local market capital structure to show their influence in the level of economic growth. Our focus is construed towards two view points; that form of growth emanating from foreign direct investment and that which comes from local investments. The various links that are enjoined to from the funders all the way to the injections in the economic structure are also examined. Various past works by renowned scholars serve to provide the empirical evidence that foreign direct investment have superior impact on the growth relative to local investments. From this, we will demonstrate that for any financial market to operate at the point of optimality it needs to adopt mechanisms, policies and infrastructures to attract the FDI. Economic planners are faced with difficulties of balancing between short term funds availability versus long term. Their levels within the economy serve to guide liquidity conditions as well as prepare economies for long term investment take off influencing policing. The paper formulates ways through which agents can advantage themselves from the policies to either increase their return on investment or to grow, expand their enterprises.

Study of Effective Corporate Tax Rate and Its Influential Factors: Empirical Evidence from Emerging European Markets

Abstract: This article examines the driving factors of the effective corporate tax rate (ECTR) for a sample of companies listed on five Eastern European stock exchanges (Romania, Hungary, Poland, Bulgaria, and Slovenia), covering the period 2000–2016. The empirical research covers variables regarding firm characteristics (e.g., profitability, efficiency of assets, indebtedness, liquidity, and solvency), firm-level controls, auditing fees, and the statutory rate. The estimated panel data models provide support for a positive link between the ECTR and profitability, debt, capital and inventory intensity, firm size, and statutory rate, strengthening the validity of political cost theory. Further, the negative link between market capitalization and assets growth supports the idea of political power theory.

Does Overconfidence Harm Individual Investors? An Empirical Analysis of the Taiwanese Market

Abstract: This article uses the approaches of (Journal of Finance 53, 1998, 1775) and (The Review of Financial Studies 19, 2006, 1531) to study the influence of overconfidence on the trading behavior of investors based on the accounts of 1185 individual investors in the Taiwan market. In addition, private information, interaction effect, and credit are treated in the analysis to establish a model of psychological bias and trading behaviors. To prevent the effects of the subprime mortgage crisis on the stock market from affecting our dataset, the study period is set from January to September 2010; the data frequency is monthly so that complete economic cycles are included. Robustness analyses such as Newey–West and nonlinear regression reveal several important findings. First, Taiwanese traders exhibit the disposition effect, especially under bear market conditions. Second, on the cross-section, a more overconfident investor tends to show a higher degree of the disposition effect. Third, overconfident traders prefer to invest in small cap stocks. Fourth, leveraged, overconfident traders with private information eventually hold losers too long.

International Diversification with Large- and Small-Cap Stocks

Abstract: To the extent that investors diversify internationally, large-cap stocks receive the dominant share of fund allocation. Increasingly, however, returns to large-cap stocks or stock market indices tend to co-move, mitigating the benefits from international diversification. In contrast, stocks of locally oriented, small companies do not exhibit the same tendency. In this paper, we assess the potential of small-cap stocks as a vehicle for international portfolio diversification during the period 1980-1999. We show that the extra gains from the augmented diversification with small-cap funds are statistically significant for both in-sample and out-of-sample periods and remain robust to the consideration of market frictions.

Is Illiquidity a Risk Factor? A Critical Look at Commission Costs

Abstract: A quarterly time series of the aggregate commission rate for NYSE trading over 1980–2003 allowed an investigation of the information conveyed by this liquidity risk metric and analysis of its critical role in the generation of stock returns. The aggregate commission rate was found to be highly correlated with other illiquidity metrics, such as the bid–ask spread. The rate is significantly and positively related to the excess returns of the stock market portfolio and has significant explanatory power for the cross-sectional variation in stock returns. An analysis of size-based portfolios indicates that returns become more sensitive to the aggregate commission rate with declining market capitalization.