Showing papers on "Stock exchange published in 2007"
TL;DR: In this article, the authors provide a new explanation to the limited stock market participation puzzle: less trusting individuals are less likely to buy stock and, conditional on buying stock, they will buy less.
Abstract: We provide a new explanation to the limited stock market participation puzzle. In deciding whether to buy stocks, investors factor in the risk of being cheated. The perception of this risk is a function not only of the objective characteristics of the stock, but also of the subjective characteristics of the investor. Less trusting individuals are less likely to buy stock and, conditional on buying stock, they will buy less. The calibration of the model shows that this problem is sufficiently severe to account for the lack of participation of some of the richest investors in the United States as well as for differences in the rate of participation across countries. We also find evidence consistent with these propositions in Dutch and Italian micro data, as well as in cross country data.
1,293 citations
TL;DR: The empirical results show that novelty-centered business model design matters to the performance of entrepreneurial firms and that this positive relationship is remarkably stable across time, even under varying environmental regimes.
Abstract: We focus on the design of an organization's set of boundary-spanning transactions---business model design---and ask how business model design affects the performance of entrepreneurial firms. By extending and integrating theoretical perspectives that inform the study of boundary-spanning organization design, we propose hypotheses about the impact of efficiency-centered and novelty-centered business model design on the performance of entrepreneurial firms. To test these hypotheses, we developed and analyzed a unique data set of 190 entrepreneurial firms that were publicly listed on U.S. and European stock exchanges. The empirical results show that novelty-centered business model design matters to the performance of entrepreneurial firms. Our analysis also shows that this positive relationship is remarkably stable across time, even under varying environmental regimes. Additionally, we find indications of potential diseconomies of scope in design; that is, entrepreneurs' attempts to incorporate both efficiency-and novelty-centered design elements into their business models may be counterproductive.
1,133 citations
TL;DR: In a striking rejection of this null, a large catalog of variables with no apparent connection to risk has been shown to forecast stock returns, both in the time series and the cross-section as discussed by the authors.
Abstract: Over the last 20 years, the field of behavioral finance has grown from a startup operation into a mature enterprise, with well-developed bodies of of both theory and empirical evidence. On the empirical side, the benchmark null hypothesis is that one should not be able to forecast a stock's return with anything other than measures of its riskiness, such as its beta. This hypothesis embodies the familiar idea that any other form of predictability would represent a profitable trading rule and hence a free lunch to investors. Yet in a striking rejection of this null, a large catalog of variables with no apparent connection to risk has been shown to forecast stock returns, both in the time series and the cross-section. Many of these results have been replicated in a variety of samples and have stood up sufficiently well that they are generally considered to be established facts. One prominent set of patterns from the cross-section has to do with mediumterm momentum and post-earnings drift in returns. These describe the tendency for stocks that have had unusually high past returns or good earnings news to continue to deliver relatively strong returns over the subsequent six to twelve months (and vice-versa for stocks with low past returns or bad earnings news). Early work in this area includes Jegadeesh and Titman (1993) on momentum and Bernard and Thomas (1989, 1990) on post-earnings drift. Another well-established pattern is longer-run fundamental reversion-the tendency for "glamour" stocks with high ratios of market value to earnings, cashflows, or book value to deliver weak returns over the subsequent several years (and vice-versa for "value" stocks with low ratios of market value to fundamentals). Standard references for this
791 citations
TL;DR: This paper found that firms that are less compliant with the provisions of the Sarbanes Oxley Act and various amendments to the U.S. stock exchanges' regulations have a significant effect on firm value.
Abstract: The 2001 to 2002 corporate scandals led to the Sarbanes Oxley Act and to various amendments to the U.S. stock exchanges' regulations. We find that the announcement of these rules has a significant effect on firm value. Firms that are less compliant with the provisions of the rules earn positive abnormal returns compared to firms that are more compliant. We also find variation in the response across firm size. Large firms that are less compliant earn positive abnormal returns but small firms that are less compliant earn negative abnormal returns, suggesting that some provisions are detrimental to small firms.
655 citations
TL;DR: This article investigated whether the returns of industry portfolios predict stock market movements and found that a significant number of industry returns, including retail, services, commercial real estate, metal, and petroleum, forecast the stock market by up to two months.
610 citations
TL;DR: This paper found that firms that are less compliant with the provisions of the Sarbanes-Oxley Act of 2002 (SOX) and various amendments to the stock exchanges' regulations earn negative abnormal returns.
Abstract: The 2001 to 2002 corporate scandals led to the Sarbanes‐Oxley Act and to various amendments to the U.S. stock exchanges’ regulations. We find that the announcement of these rules has a significant effect on firm value. Firms that are less compliant with the provisions of the rules earn positive abnormal returns compared to firms that are more compliant. We also find variation in the response across firm size. Large firms that are less compliant earn positive abnormal returns but small firms that are less compliant earn negative abnormal returns, suggesting that some provisions are detrimental to small firms. THE HIGH-PROFILE CORPORATE FAILURES IN THE UNITED STATES over the 2001‐2002 period have led to the Sarbanes‐Oxley Act of 2002 (SOX) and to various amendments to the stock exchanges’ regulations. These rules include different provisions whose purpose is to ensure alignment of incentives of corporate insiders with those of investors, and to reduce the likelihood of corporate misconduct and fraud. For example, SOX imposes higher penalties on officers who are charged with forging documents and requires more timely disclosure of equity transactions by corporate insiders. It also requires independence of audit committees, certification of financial statements by the chief executive officer and the chief financial officer, procedures to evaluate the effectiveness of the firms’ internal controls and increased oversight over audit firms. The exchange regulations require a majority of independent directors on corporate boards and independence of the board committees that choose new directors and compensate managers. Proponents of the rules argue that such rules are necessary because the corporate scandals indicate that existing monitoring mechanisms in U.S. public corporations should be improved. Yet, it is not clear whether the provisions of the rules indeed lead to more effective monitoring and to higher corporate value. To the extent that these provisions are only cosmetic in nature, they might not have any material effect on firm value. But even if the provisions have an effect, it is not clear whether all firms should benefit from them. Optimal governance structure depends both on a firm’s monitoring needs and the costs and benefits of different monitoring mechanisms. To the extent that these costs and benefits vary across firms and
511 citations
TL;DR: In this article, the performance and behavior of family firms listed on the French stock exchange between 1994 and 2000 are investigated. And they find that, in the cross-section, family firms largely outperform widely held corporations.
Abstract: This paper empirically documents the performance and behavior of family firms listed on the French stock exchange between 1994 and 2000. On the French stock market, approximately one third of the firms are widely held, whereas the remaining two thirds are family firms. We find that, in the cross-section, family firms largely outperform widely held corporations. This result holds for founder-controlled firms, professionally managed family firms, but more surprisingly also for firms run by descendants of the founder. We offer explanations for the good performance of family firms. First, we present evidence of a more efficient use of labor in heir-managed firms. These firms pay lower wages, even allowing for skill and age structure. We also find that descendants smooth out industry shocks and manage to honor implicit labor contracts. Second, we present evidence consistent with outside CEOs in family firms making a more parsimonious use of capital. They employ more unskilled, cheap labor, use less capital, pay lower interest rates on debt and initiate more profitable acquisitions. (JEL: G32, L25, J31)
488 citations
TL;DR: In this paper, the authors analyzed the price effects following the addition of individual stocks to the Hong Kong stock market and found that short-sales constraints tend to cause stock overvaluation and that the effect is more dramatic for individual stocks for which wider dispersion of investor opinions exists.
Abstract: Short-sales practices in the Hong Kong stock market are unique in that only stocks on a list of designated securities can be sold short. By analyzing the price effects following the addition of individual stocks to the list, we find that short-sales constraints tend to cause stock overvaluation and that the overvaluation effect is more dramatic for individual stocks for which wider dispersion of investor opinions exists. These findings are consistent with Miller's (1977) intuition and other optimism models. We also document higher volatility and less positive skewness of individual stock returns when short sales are allowed. THE QUESTION OF HOW SHORT SALES IMPACT capital markets is highly controversial, with short-sale regulations varying widely across countries and capital markets.1 Although short selling has been carried out for years in major financial markets around the world, its effects on market efficiency, especially on pricing efficiency, remain of interest to financial researchers. Miller (1977) theorizes that in the presence of short-sales constraints, security prices tend to reflect a more optimistic valuation than the average opinion of potential investors and thus tend to be upward biased. This overvaluation argument is based on two conditions: (1) A security's short sales are either prohibited or costly, and (2) investors have heterogeneous beliefs or information about the security's value. The underlying intuition is quite straightforward. Pessimistic investors are forced to sit out of the market when short sales are not available, and thus some negative information is not reflected in prices, enabling enthusiastic buyers to bid prices above the level that average investors perceive as fair. This argument has significant implications for market efficiency theories, since one of the major functions of capital markets is price discovery. Indeed, an efficient market should be "a market in which prices always
468 citations
TL;DR: To alleviate the conflict of interest between dispersed small shareowners and powerful controlling managers, the separation of ownership and control and its consequences have been discussed in the corporate governance debate as discussed by the authors.
Abstract: to alleviate the conflict of interest between dispersed small shareowners and powerful controlling managers. Classic works like Berle and Means (1932) andJensen and Meckling (1976) discussed this separation of ownership and control and its consequences. Although some companies in the United States are controlled by large blockholders-for instance, Microsoft, Ford, and Wal-Martsuch firms are relatively few and have thus drawn less attention in the corporate governance debate (Anderson and Reeb, 2003). In contrast, the fundamental problem of corporate governance in continental Europe and in most of the world is different. There, few listed companies are widely held. Instead, the typical firm in stock exchanges around the world has a dominant shareholder, usually an individual or a family, who controls the majority of votes. Often, the controlling shareholder exercises control without owning a large fraction of the cash flow rights by using pyramidal ownership, shareholder agreements, and dual classes of shares (La Porta, Lopez-de-Silanes, and Shleifer, 1999).
338 citations
TL;DR: In this article, the determinants of disclosure level in the accounting for financial instruments of Portuguese listed companies were studied and an index of disclosure based on IAS 32 and IAS 39 requirements was computed for each company.
335 citations
TL;DR: This article examined the relationship between exchange rates and stock prices for seven East Asian countries, including Hong Kong, Japan, Korea, Malaysia, Singapore, Taiwan, and Thailand, for the period January 1988 to October 1998.
TL;DR: In this article, a continuous time econometric modelling framework for multivariate flnancial market event data is developed in which the model is specifled via the vector stochastic intensity, which has the advantage that the conditioning ae-fleld is updated continuously in time as new information arrives.
TL;DR: A decision-making model for selecting superior stocks in stock exchange is developed and a model is provided in order to structure this problem and the preference ranking organization method for enrichment evaluation (PROMETHEE) has been used for solving the problem.
TL;DR: In this paper, the authors examined the determinants of corporate dividend policy in Jordan using Tobit specifications and found that the proportion of stocks held by insiders and state ownership significantly affect the amount of dividends paid.
Abstract: This paper examines the determinants of corporate dividend policy in Jordan. The study uses a firm‐level panel data set of all publicly traded firms on the Amman Stock Exchange between 1989 and 2000. The study develops eight research hypotheses, which are used to represent the main theories of corporate dividends. A general‐to‐specific modeling approach is used to choose between the competing hypotheses. The study examines the determinants of the amount of dividends using Tobit specifications. The results suggest that the proportion of stocks held by insiders and state ownership significantly affect the amount of dividends paid. Size, age, and profitability of the firm seem to be determinant factors of corporate dividend policy in Jordan. The findings provide strong support for the agency costs hypothesis and are broadly consistent with the pecking order hypothesis. The results provide no support for the signaling hypothesis.
TL;DR: In this paper, the authors examined the economic importance of stock markets in Africa and discussed policy options for promoting the development of the stock market in Africa, showing that the stock markets have contributed to the financing of the growth of large corporations in certain African countries.
Abstract: This paper examines the economic importance of stock markets in Africa. It discusses policy options for promoting the development of the stock market in Africa. The results of the paper show that the stock markets have contributed to the financing of the growth of large corporations in certain African countries. An econometric investigation of the impact of stock markets on growth in selected African countries, however, finds inconclusive evidence even though stock market value traded seem to be positively and significantly associated with growth. African stock exchanges now face the challenge of integration and need better technical and institutional development to address the problem of low liquidity. Preconditions for successful regional approaches include the harmonization of legislations such as bankruptcy and accounting laws and a liberalized trade regime. Robust electronic trading systems and central depository systems will be important. Further domestic financial liberalization such as steps to improve the legal and accounting framework, private sector credit evaluation capabilities, and public sector regulatory oversight would also be beneficial.
TL;DR: In this paper, the authors examined the extent to which factors such as ownership structure, dispersion of shareholding, firm size, and leverage influence disclosure practices of Ghanaian listed firms.
Abstract: Purpose – Following previous studies the paper seeks to use disclosure scores to examine corporate governance practices of Ghanaian listed firms. The study is motivated by the dearth of literature on corporate governance practices in the developing world despite the increasing interests in the topic in both the developed and the developing world.Design/methodology/approach – The data for the analysis are gathered from 22 listed companies on the Ghana Stock Exchange (GSE representing 95 percent of the Ghanaian market capitalization). The paper also examines the extent to which factors such as ownership structure, dispersion of shareholding, firm size, and leverage influence disclosure practices.Findings – Consistent with findings reported in studies from other developing countries the study finds that the level of disclosure in Ghana is low. Furthermore, ownership structure, dispersion of shareholding, and firm size (measured as total assets and market capitalization) all have significant effect on disclos...
TL;DR: In this article, the extent to which empirical research on corporate boards and firm performance supports these reforms is evaluated, and most of the practices mandated by the Sarbanes-Oxley Act of 2002, and the regulations issued by the New York Stock Exchange (NYSE) and NASDAQ, had not been subject to prior study.
Abstract: Recent US corporate governance reforms introduced extensive regulations and guidelines for public corporations, particularly corporate boards. This article evaluates the extent to which empirical research on corporate boards and firm performance supports these reforms. Building on the meta-analysis conducted by Zahra and Pearce (1989), we review 105 studies published between 1989 and 2005. We find most of the practices mandated by the Sarbanes-Oxley Act of 2002, and the regulations issued by the New York Stock Exchange (NYSE) and the NASDAQ, had not been subject to prior study. Where board characteristics have been studied, we find limited guidance for policymakers on identifying governance practices that result in more effective firm performance. In an effort to increase the relevance of future research on boards and firm performance, we provide a framework on corporate boards.
TL;DR: This article examined factors associated with voluntary disclosure of four types of information: general and strategic, financial, forward-looking, and social and board information in the annual reports of Kenyan companies.
Abstract: In recent years, the Kenyan Government has initiated reforms at the Nairobi Stock Exchange aimed at transforming the exchange into a vehicle for mobilising domestic savings and attracting foreign capital investments. Consequently, the corporate financial reporting, and in particular, the level of voluntary disclosure is a vital part of the process for building investor confidence (local and foreign) and trust. Drawing on prior corporate disclosure research, this study examines factors associated with voluntary disclosure of four types of information: general and strategic, financial, forward-looking, and social and board information in the annual reports of Kenyan companies. This study provides longitudinal examination of voluntary disclosure practices in the annual reports of listed companies in Kenya from 1992 to 2001. The study investigates the extent to which corporate governance attributes, ownership structure and company characteristics influence voluntary disclosure of various types of information. Due to the panel nature of our data, to estimate the determinants of voluntary disclosure of various types of information, we use pooled Ordinary Least Square (OLS) with Panel-Corrected Standard Errors (PCSEs). Our results indicate that, disclosures of all types of information are influenced by corporate governance attributes, ownership structure and corporate characteristics. In particular, the results also suggest that size and companies in the agricultural sector are significantly associated with the voluntary disclosure of all four types of information disclosures.
Keywords: Voluntary disclosures, companies’ annual reports, Kenya
TL;DR: In this paper, the authors investigated the short and long-run behavior of major emerging Central European (Poland, Czech Republic, Hungary, Slovakia) and developed (Germany, US) stock markets and assessed the impact of the EMU on stock market linkages.
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TL;DR: In this article, the authors developed a behavioral model for liquidity and volatility based on empirical regularities in trading order flow in the London Stock Exchange, which can be viewed as a very simple agent based model in which all components of the model are validated against real data.
Abstract: We develop a behavioral model for liquidity and volatility based on empirical regularities in trading order flow in the London Stock Exchange. This can be viewed as a very simple agent based model in which all components of the model are validated against real data. Our empirical studies of order flow uncover several interesting regularities in the way trading orders are placed and cancelled. The resulting simple model of order flow is used to simulate price formation under a continuous double auction, and the statistical properties of the resulting simulated sequence of prices are compared to those of real data. The model is constructed using one stock (AZN) and tested on 24 other stocks. For low volatility, small tick size stocks (called Group I) the predictions are very good, but for stocks outside Group I they are not good. For Group I, the model predicts the correct magnitude and functional form of the distribution of the volatility and the bid-ask spread, without adjusting any parameters based on prices. This suggests that at least for Group I stocks, the volatility and heavy tails of prices are related to market microstructure effects, and supports the hypothesis that, at least on short time scales, the large fluctuations of absolute returns are well described by a power law with an exponent that varies from stock to stock.
TL;DR: In this paper, the authors investigate which of the two competing capital structure theories, the pecking order of financing choices or the traditional static trade-off model, better describes the financing decisions in Polish companies traded on the Warsaw Stock Exchange (WSE).
Abstract: The main objective of this paper is to investigate which of the two competing capital structure theories – the pecking order of financing choices or the traditional static trade-off model – better describes the financing decisions in Polish companies traded on the Warsaw Stock Exchange (WSE). The data come from financial statements of the companies and cover a 5-year period, 2000–2004. First, a correlation is run in order to separate a set of significant factors influencing the capital structure from the list of the following independent variables: assets structure, profitability, growth opportunities, liquidity, firm size, product uniqueness, earnings volatility, non-debt tax shields, dividend policy, and the effective tax rate. Next, in order to test the relationship between capital structure and its potential determinants, multiple regression is run. The evidence generally suggests the relevance of the pecking order hypothesis in explaining the financing choices of Polish firms.
TL;DR: In this article, the authors investigated the impact of cross-listing on the performance of U.S. and London stock exchanges from 1990 to 2005, and found that the benefits of crosslisting have not been seriously eroded by the Sarbanes-Oxley Act of Congress (SOX) in 2002.
Abstract: We study the determinants and consequences of cross-listings on the New York and London stock exchanges from 1990 to 2005. This investigation enables us to evaluate the relative benefits of New York and London exchange listings and to assess whether these relative benefits have changed over time, perhaps as a result of the passage of the Sarbanes-Oxley Act of Congress (SOX) in 2002. We find that cross-listings have been falling on U.S. exchanges as well as on the Main Market in London. This decline in cross-listings is explained by changes in firm characteristics rather than by changes in the benefits of cross-listing. We show that, after controlling for firm characteristics, there is no deficit in cross-listing counts on U.S. exchanges related to SOX. Investigating the valuation differential between listed and nonlisted firms (the "cross-listing premium") from 1990 to 2005, we find that there is a significant premium for U.S. exchange listings every year, that the premium has not fallen significantly in recent years, that it persists when allowing for unobservable firm characteristics, and that there is a permanent premium in event time. In contrast, there is no premium for listings on London's Main Market for any year. Crosslisting in the U.S. leads firms to increase their capital-raising activity at home and abroad while a London listing has no such impact. Our evidence is consistent with the theory that an exchange listing in New York has unique governance benefits for foreign firms. These benefits have not been seriously eroded by SOX and cannot be replicated through a London listing.
TL;DR: This paper examined whether conflicts of interest with investment banking and brokerage induce sell-side analysts to issue optimistic stock recommendations and, if so, whether investors are misled by such biases and found that the level of analysts' stock recommendations is indeed positively related to the magnitude of the conflicts they face.
Abstract: We examine whether conflicts of interest with investment banking and brokerage induce sell-side analysts to issue optimistic stock recommendations and, if so, whether investors are misled by such biases. Using quantitative measures of potential conflicts constructed from revenue breakdowns of analyst employers, we find that the level of analysts' stock recommendations is indeed positively related to the magnitude of the conflicts they face. The optimistic bias stemming from investment banking conflict was especially pronounced during the late-1990s stock market bubble. However, evidence from the response of stock prices and trading volumes to upgrades and downgrades suggests that the market recognizes analyst conflicts and properly discounts analyst opinions. This pattern persists even during the bubble period, contrary to popular belief that investors threw caution to the wind during the bubble. Moreover, the one-year performance of revised recommendations is unrelated to the magnitude of conflicts. Overall, our findings do not support the view that conflicted analysts are able to systematically mislead investors with optimistic stock recommendations.
TL;DR: In this paper, the authors measured the intellectual capital performance of quoted banks in ISE using the efficiency coefficient, called Value Added Intellectual Coefficiency (VAICTM), and tested the effect of this Intellectual capital performance on profitability using Data Envelopment Analysis (DEA).
Abstract: Purpose – The purpose of the paper is to obtain measure of the intellectual capital (IC) performance of quoted banks on the Istanbul Stock Exchange Market (ISE) in Turkey for the period 1995‐2004 and test the effect of the intellectual capital performance on profitability.Design/methodology/approach – Data required for calculating intellectual capital efficiencies were obtained from the ISE for the period 1995‐2004. The authors measured the intellectual capital performance of quoted banks in ISE using the efficiency coefficient, called Value Added Intellectual Coefficiency (VAICTM), and tested the effect of this intellectual capital performance on profitability using Data Envelopment Analysis (DEA). In addition, three different portfolios were constructed based on three different inputs to observe the effect of the intellectual capital on investors' behavior.Findings – The effect of intellectual capital on profitability on the banking sector on the ISE was calculated as 61.3 percent on average and Portfol...
TL;DR: In this article, the authors examined the challenges and benefits of the adoption of International Financial Reporting Standards (IFRS) by DAX-30 companies, the German premium stock market, and found that adopting IFRS or US Generally Accepted Accounting Principles or cross-listing on the New York Stock Exchange significantly increases the value relevance of earnings relative to market prices.
Abstract: International Financial Reporting Standards (IFRS) are required for consolidated financial statements of all European Union (EU) publicly traded companies starting from the December 2005 fiscal year end [Regulation (EC)]; and endorsed by the International Organization of Securities Commission (IOSCO) for its member countries beginning in 2000. We examine the challenges and benefits, including value relevance, of the adoption of IFRS by DAX-30 companies, the German premium stock market. Based on a survey sent to DAX-30 company executives, we find most companies agreeing that implementing IFRS should improve the comparability of financial statements. The complex nature, high cost of adopting and lack of guidance for implementing IFRS, as well as increased volatility of earnings after adopting IFRS, are listed among the most important challenges of conversion to IFRS. We use regression to measure another benefit: the value relevance of book values of earnings and equity in explaining market values of DAX-30 companies during the period 1995–2004. Using 265 observations, we find that adopting IFRS or US Generally Accepted Accounting Principles or cross-listing on the New York Stock Exchange significantly increases the value relevance of earnings relative to market prices.
TL;DR: In this article, the authors analyzed all trading activity on the Taiwan Stock Exchange (TSE) for the five years ending in 1999 and found that 80% of all Taiwanese investors sell winners at a faster rate than losers.
Abstract: We ask whether the typical investor and the aggregate investor exhibit a bias known as the disposition effect, the tendency to sell investments that are held for a profit at a faster rate than investments held for a loss. We analyse all trading activity on the Taiwan Stock Exchange (TSE) for the five years ending in 1999. Using a dataset that contains all trades (over one billion) and the identity of every trader (nearly four million), we find that in aggregate, investors in Taiwan are about twice as likely to sell a stock if they are holding that stock for a gain rather than a loss. Eighty-four percent of all Taiwanese investors sell winners at a faster rate than losers. Individuals, corporations, and dealers are reluctant to realise losses, while mutual funds and foreigners, who together account for less than 5% of all trades (by value), are not.
TL;DR: In this article, the authors examined whether Asian emerging stock markets (India, Korea, Malaysia, Philippines, Taiwan, and Thailand) have become integrated into world capital markets since their official liberalization dates by estimating and testing a dynamic integrated international capital asset pricing model (ICAPM) in the absence of purchasing power parity (PPP) using an asymmetric multivariate GARCH(1,1)-in-Mean approach.
TL;DR: In this paper, the authors investigate the association of foreign share ownership with firm-level disclosure and corporate governance structures in Zimbabwe, a developing country in Southern Africa, and find that disclosure, proportion of non-executive directors, institutional share ownership and audit committee independence are all positively and significantly associated with foreign ownership.
Abstract: We investigate the association of foreign share ownership with firm-level disclosure and corporate governance structures in Zimbabwe, a developing country in Southern Africa. Our motivation for the study derives from the literature, which suggests that foreign investors: (1) generally have a preference for companies in which they are well informed and where their investments are more likely to be protected, and (2) avoid companies in developing countries because of weak corporate governance structures and low disclosure. Using data drawn from companies listed on the Zimbabwe Stock Exchange, we examine the effect of disclosure and corporate governance on foreign share ownership. We find that disclosure, proportion of non-executive directors, institutional share ownership and audit committee independence are all positively and significantly associated with foreign share ownership. Our results also demonstrate that market capitalization, return on equity and liquidity ratios are significantly associated with foreign share ownership. These results are consistent with the notion that foreign investors have a preference for companies with effective corporate governance structures, companies with less information asymmetry, as well as companies with healthy cash positions. The results have implications for policy-makers in developing countries in their endeavour to improve liquidity on stock markets through the participation of foreign investors. The results are also useful to managers in developing countries who are keen to increase the market value of their company, thereby reducing their cost of capital
TL;DR: In this article, the authors examined the patterns of IP reporting of large listed firms in a developing nation, Sri Lanka The aim of this study is to highlight the differences in ICR practice between developing and developed nations.
Abstract: Purpose – This paper aims to examine the patterns of intellectual capital reporting (ICR) of large listed firms in a developing nation, Sri Lanka The aim of this study is to highlight the differences in ICR practice between developing and developed nationsDesign/methodology/approach – The paper begins by examining each of the top 30 firms by market capitalization listed on the Colombo stock exchange in 1998/1999 and 1999/2000 Using the content analysis method, it reviews the annual reports of these firms to determine the types of intellectual capital (IC) items reported in Sri Lanka It then compares these findings with a similar study undertaken in Australia during the same periodFindings – The findings in this paper highlight the need for a uniform ICR definition and a reporting framework that provides comparative and consistent reporting under the auspices of a regulatory body ICR differences were identified between Sri Lankan and Australian firms, and it is argued that these differences can be at
TL;DR: In this article, the authors examined the linkages between the two emerging stock exchanges in mainland China and the established markets in Hong Kong and in the US by a multivariate GARCH approach.
Abstract: This paper examines the linkages between the two emerging stock exchanges in mainland China and the established markets in Hong Kong and in the US by a multivariate GARCH approach. We use a four-variable asymmetric GARCH in the line of the BEKK model proposed by Engle and Kroner (1995) to account for the regularities documented in the share price indices and test for the transmission of returns and volatility across the markets. While we do not find any evidence of a direct linkage between the stock exchanges in mainland China and the US market, we find evidence of uni-directional volatility spillovers from the stock exchange in Hong Kong to those in Shanghai and Shenzhen. However, the magnitude of the volatility linkages between the mainland and Hong Kong is small, indicating a weak integration of the Chinese stock exchanges with the regional developed market. The implication of the weak integration is that overseas investors will benefit from the reduction of diversifiable risk, and thus total portfolio...