Does disclosure of earnings forecasts regulation affect the valuation of IPOs? Evidence from an emerging country

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Chui Zi Ong ◽  
Rasidah Mohd-Rashid ◽  
Waqas Mehmood ◽  
Ahmad Hakimi Tajuddin
Keyword(s):  
Financial Crisis ◽  
Initial Public Offerings ◽  
Global Financial Crisis ◽  
Earnings Forecasts ◽  
Regulatory Change ◽  
Content Type ◽  
Crisis Period ◽  
Earnings Information ◽  
The Global Financial Crisis ◽  
The Impact

PurposeThis paper aimed to explore the effect of a regulatory change pertaining to earnings forecasts disclosure from a mandatory to a voluntary regime on the valuation of Malaysian initial public offerings (IPOs).Design/methodology/approachThe study employed ordinary least square (OLS) regression and quantile regression to analyse the impact of disclosure of earnings forecasts regulation on the valuation of IPOs which comprised 458 IPOs reported for the period 2000–2017 on Bursa Malaysia.FindingsThis paper revealed that the regulatory change in forecasted earnings disclosure from a mandatory to a voluntary regime, effective from 1 February 2008, had a negative impact on the valuation of IPOs. The regime change did not improve the transparency of firms issuing IPOs. In fact, the absence of forecasted earnings information in most IPO prospectuses caused ex ante uncertainties to increase. Voluntary disclosure, however, had a significant positive relationship with the valuation of the IPOs issued during the global financial crisis period (2008–2010). Firms concealed their poor qualities by excluding forecasted earnings information from their prospectuses in order to have a fair valuation.Practical implicationsThe findings may be used by policymakers as guidance in improving the existing regulation regarding the disclosure of forecasted earnings.Originality/valueThis paper provides new insight on the effect of a regulatory change pertaining to earnings forecasts disclosure from a mandatory to a voluntary regime on the valuation of Malaysian IPOs. It also provides evidence that the regulatory change of earnings forecast disclosure affects the IPOs' values listed during the global financial crisis period.

Uncertainty avoidance culture, cash holdings and financial crisis

2020 ◽  
Vol 28 (4) ◽  
pp. 549-566
Author(s):  
Quoc Trung Tran
Keyword(s):  
Financial Crisis ◽  
Global Financial Crisis ◽  
Cash Holdings ◽  
Uncertainty Avoidance ◽  
Cultural Dimension ◽  
Exogenous Shock ◽  
Content Type ◽  
Crisis Period ◽  
The Global Financial Crisis ◽  
The Impact

Purpose This paper aims to investigate how the global financial crisis affects the relationship between uncertainty avoidance culture and corporate cash holdings. Design/methodology/approach This study develops a research model in which cash holdings ratio is a function of post-crisis period dummy, Hofstede’s cultural dimension of uncertainty avoidance, their interactive term and control variables. The research sample includes 188,264 observations from 26,509 firms incorporated in 44 countries between 2003 and 2016. Findings This study finds that the effect of uncertainty avoidance culture on firm cash holdings is stronger in the post-crisis period from 2008 to 2016. This effect is stronger for financially constrained firms. In addition, the research findings show that uncertainty avoidance culture is more effective in cash–cash flow sensitivity over the post-crisis period. Originality/value Prior studies show that uncertainty avoidance culture positively affects corporate cash reserves. However, the authors only examine the effect of uncertainty avoidance culture on cash holdings in a static environment. This paper investigates this effect under the impact of the global financial crisis – an exogenous shock.

Global financial crisis, ownership structure and firm financial performance

2017 ◽  
Vol 34 (4) ◽  
pp. 447-465 ◽  
Author(s):  
Ali Salman Saleh ◽  
Enver Halili ◽  
Rami Zeitun ◽  
Ruhul Salim
Keyword(s):  
Financial Crisis ◽  
Financial Performance ◽  
Ownership Structure ◽  
Family Firms ◽  
Global Financial Crisis ◽  
Ownership Concentration ◽  
Financial Leverage ◽  
Content Type ◽  
Crisis Period ◽  
The Global Financial Crisis

Purpose This paper aims to investigate the financial performance of listed firms on the Australian Securities Exchange (ASX) over two sample periods (1998-2007 and 2008-2010) before and during the global financial crisis periods. Design/methodology/approach The generalized method of moments (GMM) has been used to examine the relationship between family ownership and a firm’s performance during the financial crisis period, reflecting on the higher risk exposure associated with capital markets. Findings Applying firm-based measures of financial performance (ROA and ROE), the empirical results show that family firms with ownership concentration performed better than nonfamily firms with dispersed ownership structures. The results also show that ownership concentration has a positive and significant impact on family- and nonfamily-owned firms during the crisis period. In addition, financial leverage had a positive and significant effect on the performance of Australian family-owned firms during both periods. However, if the impact of the crisis by sector is taking into account, the financial leverage only becomes significant for the nonmining family firms during the pre-crisis period. The results also reveal that family businesses are risk-averse business organizations. These findings are consistent with the underlying economic theories. Originality/value This paper contributes to the debate whether the ownership structure affects firms’ financial performance such as ROE and ROA during the global financial crisis by investigating family and nonfamily firms listed on the Australian capital market. It also identifies several influential drivers of financial performance in both normal and crisis periods. Given the paucity of studies in the area of family business, the empirical results of this research provide useful information for researchers, practitioners and investors, who are operating in capital markets for family and nonfamily businesses.

scholarly journals Alternative measures for predicting financial distress in the case of Malaysian Islamic banks: assessing the impact of global financial crisis

2020 ◽  
Vol 11 (9) ◽  
pp. 1827-1845
Author(s):  
Mehmet Asutay ◽  
Jaizah Othman
Keyword(s):  
Financial Crisis ◽  
Financial Distress ◽  
Global Financial Crisis ◽  
Islamic Banks ◽  
Content Type ◽  
Macroeconomic Variables ◽  
Explanatory Variables ◽  
Alternative Funding ◽  
The Global Financial Crisis ◽  
The Impact

Purpose The global financial crisis of 2008 still has an impact on the financial systems around the world, for which funding liquidity has been mentioned as one of the main concerns during that period. This study aims to consider the impact of and extent to which the funding structure of Islamic banks along with deposit structure, macroeconomic variables, other bank-specific variables, including alternative funding mix variables (in terms of funding structure measured as financing/deposit ratio), could play a part in explaining the financial conditions and predicting the failures and performances of Islamic banks in the case of Malaysia under the distress created by the global financial crisis. Design/methodology/approach Multivariate logit model was used with a sample including 17 full-fledged Islamic banks in Malaysia for the period from December 2005 to September 2010 by using quarterly data. Findings This study found that the funding mix variable (financing/deposit ratio), the composition of deposits, alternative bank-specific variables and alternative funding mix variables are statistically significant. In contrast, none of the macroeconomic variables is found to have a significant impact on bank liquidity. In the final models, the variables that showed significant performance were selected as explanatory variables. The results of McFadden R-squared for both selected models showed an excellent fit to predict the Islamic banks’ performance. Originality/value This empirical study contributes to the literature in two ways: to the best of the authors’ knowledge, this is the first study to examine the role of the funding structures of Islamic banks in determining their performance; and it also examines the effect of deposit composition (the mudharabah and non-mudharabah deposits) on Islamic banks’ performance.

scholarly journals Another piece of the puzzle: REIT IPO underpricing after the financial crisis

2017 ◽  
Vol 35 (3) ◽  
pp. 264-276 ◽  
Author(s):  
Bill Dimovski ◽  
Christopher Ratcliffe ◽  
Monica Keneley
Keyword(s):  
Financial Crisis ◽  
Initial Public Offerings ◽  
Global Financial Crisis ◽  
Ipo Underpricing ◽  
Content Type ◽  
Public Offerings ◽  
Industrial Companies ◽  
Retail Investors ◽  
The Global Financial Crisis ◽  
Academic Debate

Purpose The purpose of this paper is to investigate the underpricing of real estate investment trust (REIT) initial public offerings (IPOs) from January 2010 to June 2015, as the sector recovered from the global financial crisis. Design/methodology/approach This study analyses the first day returns of US REIT IPOs in the post financial crisis period. The study then employs regression analysis to examine the factors that influence IPO underpricing. Findings The study observes that underpricing, on average, is not significantly different to zero. Furthermore, the REIT IPOs examined display underperformance in the longer term. In contrast to the earlier data samples of Chen and Lu (2006), the authors do not find that underwriting costs are a direct substitute for the indirect cost of underpricing, instead the authors find that higher underwriting costs are associated with higher underpricing. Also in contrast to the mainstream underpricing literature, the data suggest larger capital raisings require higher underpricing. The authors also find that newly listed REITs provided significant excess dividend returns over the post-listing period. Practical implications For institutional and retail investors, the results will help to further inform investment opportunities in REIT IPOs. Originality/value This paper adds to the ongoing academic debate of the lack of underpricing in REIT IPOs relative to industrial companies. Research has shown periods of underpricing are often replaced with periods of overpricing suggesting that the pattern of behavior in REIT markets is substantially different.

The effects of the global financial crisis on the capital structure of EPRA/NAREIT Europe index companies

2015 ◽  
Vol 8 (1) ◽  
pp. 3-23 ◽  
Author(s):  
Giacomo Morri ◽  
Andrea Artegiani
Keyword(s):  
Financial Crisis ◽  
Real Estate ◽  
Capital Structure ◽  
Global Financial Crisis ◽  
Pecking Order ◽  
Trade Off ◽  
Content Type ◽  
The Global Financial Crisis ◽  
The Impact ◽  
The Capital Structure

Purpose – The purpose of this paper is to test whether the financial crisis has affected the capital structure of real estate companies in Europe and whether these impacts can be studied utilizing the variables traditionally used by the trade-off and pecking-order theories to explain the capital structure of companies. Design/methodology/approach – The study uses a fixed-effect panel regression analysis and a sample composed of companies included in the EPRA/NAREIT Europe Index. The effect of the financial crisis has been accounted for within the model by means of a dummy variable. Findings – The global financial crisis did have an impact on the capital structure of companies and the main variables traditionally used by the trade-off and pecking order theories proved to be suitable in explaining the capital structure of real estate companies. Real estate investment trusts are, on average, more leveraged than traditional real estate companies due to their special regulatory status. Research limitations/implications – The study is limited to the European market and UK companies in particular account for a large part of the sample. In addition, major regulatory differences between the various European countries are not taken into account in the model. Originality/value – Similar studies have been performed for the US and Australian market. However, the impact of the global financial crisis has not been traditionally considered in these studies.

The impact of the global financial crisis on audit and non-audit fees

2015 ◽  
Vol 30 (4/5) ◽  
pp. 302-323 ◽  
Author(s):  
Irina Alexeyeva ◽  
Tobias Svanström
Keyword(s):  
Financial Crisis ◽  
Global Financial Crisis ◽  
Audit Fees ◽  
Return On Assets ◽  
Public Companies ◽  
Content Type ◽  
Audit Firms ◽  
The Global Financial Crisis ◽  
The Impact ◽  
Non Audit Services

Purpose – The paper aims to investigate audit and non-audit fees during the global financial crisis (GFC) in an environment that is relatively sparsely regulated with regard to the provision of non-audit services. Design/methodology/approach – Audit and non-audit fees were studied during pre-GFC (2006-2007), GFC (2008-2009) and post-GFC (2010-2011) periods. Findings – During the GFC, Swedish companies benefited from an increase in sales and total assets, although return on assets decreased. In this setting, the auditors charged higher audit fees compared with the pre-GFC period, despite the absence of increased audit reporting lags. A significant increase in audit fees continued during the post-crisis periods with auditors paying more attention to companies’ leverage and whether they report losses. At the same time, the companies spent less on non-audit services. Research limitations/implications – This study is limited to companies from Sweden, which was less affected by the GFC. Practical implications – GFC auditors are able to charge higher audit fees to public companies including those that are well-performing during financial crises, and they are also able to increase the audit fees in the post-crisis period. This implies that auditors put in extra audit effort to compensate for higher risk, or that they are good at negotiating prices with their clients. However, non-audit fees decreased during the same period, implying that the demand for these services drops under financial instability. Originality/value – The study highlights auditors’ behavior in the liberal economic environment and it studies both audit fees and non-audit fees before GFC, during GFC and after the GFC. The GFC appears to have provided audit firms the opportunity to extract higher audit fees. Our findings are of interest to managers, auditors and regulators.

Income return versus capital appraisal for real estate funds during the financial crisis

2015 ◽  
Vol 10 (1) ◽  
pp. 66-79
Author(s):  
Gianluca Mattarocci ◽  
Georgios Siligardos
Keyword(s):  
Financial Crisis ◽  
Real Estate ◽  
Global Financial Crisis ◽  
Capital Gains ◽  
Annual Reports ◽  
Content Type ◽  
Income Sources ◽  
Overall Performance ◽  
The Global Financial Crisis ◽  
The Impact

Purpose – The overall performance of real estate funds can be ascribed to capital appreciation and/or income return. The Italian property funds market has grown significantly over the past few years; however, little is known about the key drivers of property fund performance. The purpose of this paper is to measure the impact of two sources of funds’ performance and identify their relevance during the financial crisis. Design/methodology/approach – The paper considers the Italian market in the last decade and analyses the annual reports of public real estate funds, separating appraisal returns from income returns. By considering a wide time horizon, it evaluates if the roles of income returns and capital gains with respect to overall performance are more or less influenced by fund characteristics, such as asset diversification, concentration, and leverage. Findings – The contribution of income return and capital growth are not strictly related to the overall performance of Italian real estate funds, with a significantly lower correlation during the global financial crisis. Furthermore, the main drivers of the two income sources are not strictly comparable. Originality/value – The paper presents the first analysis on the source of income return for the Italian real estate funds and it represents one of the few studies that considers the effect of the financial crisis on European indirect real estate investments, capital appreciation and income return.

Volatility of Malaysian conventional and Islamic indices: does financial crisis matter?

2020 ◽  
Vol 11 (1) ◽  
pp. 1-11 ◽  
Author(s):  
Muhamad Abduh
Keyword(s):  
Financial Crisis ◽  
Global Financial Crisis ◽  
Stock Exchange ◽  
Composite Index ◽  
Least Square ◽  
Content Type ◽  
Long Run ◽  
Short Run ◽  
The Global Financial Crisis ◽  
The Impact

Purpose This study aims to investigate the volatility of conventional and Islamic indices and to explore the impact of the global financial crisis toward the volatility of both markets in Malaysia. Design/methodology/approach The data consist of financial times stock exchange group (FTSE) Bursa Malaysia Kuala Lumpur Composite Index and FTSE Bursa Malaysia Hijrah-Shari‘ah Index covering the period January 2008-October 2014. Generalized autoregressive conditional heteroskedasticity is used to find the volatility of the two markets and an ordinary least square model is then used to investigate the impact of the crisis toward the volatility of those markets. Findings Interestingly, the result shows that Islamic index is less volatile during the crisis compared to the conventional index. Furthermore, the crisis is proven to significantly affect the volatility of conventional index in the short run and Islamic index in the long run. Originality/value This study explores the volatility–financial crisis nexus, especially for the Islamic financial markets, which to the best of the author’s knowledge, is still lacking empirical research which may improve the understanding upon this issue.

Money supply, exchange rates and office market dynamics: comparative evidence from the UK and Germany

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Alain Coën ◽  
Benoit Lefebvre
Keyword(s):  
United Kingdom ◽  
Financial Crisis ◽  
Exchange Rates ◽  
Money Supply ◽  
Global Financial Crisis ◽  
Content Type ◽  
The United Kingdom ◽  
Office Markets ◽  
The Global Financial Crisis ◽  
The Impact

PurposeThe aim of this study is to shed light on the relative importance of money supply and exchange rates variations on office markets prices dynamics.Design/methodology/approachUsing a parsimonious real estate asset pricing model, the authors focus on the two biggest European office markets; namely the United Kingdom and Germany. The authors use a panel approach based on a robust econometric methodology (GMM with correction errors-in-variables). The authors take into account the variations of exchange rates and money supplies for the most important currencies.FindingsThe results highlight the impact of money supplies and exchange rates on office prices after the Global Financial Crisis. The authors report that the monetary policies in the UK and in Germany (Euro zone) have had significant influences in the real estate sector after the Global Financial Crisis. However, the authors identified significant differences between British and German office markets for the 2009–2019 period regarding the impact of money supply and exchange rates variations on the office prices dynamics.Practical implicationsThe results highlight the impact of money supplies and exchange rates on office prices after the Global Financial Crisis. The detailed and exclusive database (composed of the main office markets in the United Kingdom and in Germany) allows the authors to identify significant differences and opportunities for investors.Originality/valueThe authors use a parsimonious model and apply a panel approach based on a robust econometric methodology to analyse the impact of exchange rates and money supply variations on the office prices dynamics. The detailed and exclusive database (composed of the main office markets in the United Kingdom and in Germany) allows the authors to identify significant differences for investors.

Global financial crisis, foreign portfolio investment and volatility

2020 ◽  
Vol 32 (2) ◽  
pp. 177-195
Author(s):  
Abdelkader Derbali ◽  
Ali Lamouchi
Keyword(s):  
Financial Crisis ◽  
Stock Market ◽  
Emerging Markets ◽  
Global Financial Crisis ◽  
Portfolio Investment ◽  
Content Type ◽  
Foreign Portfolio Investment ◽  
Crisis Period ◽  
Asian Emerging Markets ◽  
The Impact

Purpose The purpose of this paper is to understand and compare the extent and nature of the impact of foreign portfolio investment (FPI) on the stock market volatility, particularly in the Southeast Asian emerging markets, and compare that against the corresponding experience of Indian economy, in the context of a global financial crisis of the recent past. Design/methodology/approach The Asian emerging markets are now being perceived as becoming financially more and more vulnerable to international events because of their growing exposure to unstable foreign investment flows. The daily net FPI inflow and the daily leading stock market composite index of four countries, namely, Thailand, the Philippines, Indonesia and India, have been analyzed using autoregressive conditional heteroscedasticity (ARCH)-generalized ARCH group of models dividing the study period from 2000 to 2014 among pre-crisis, crisis and post-crisis period separately. Findings The study reveals that the net inflow of FPI has been a significant determinant of stock market returns in all countries. The impact of volatility spillover from the FPI market to the stock market in the sample countries has been found to be different under different market conditions. The past information and volatility clustering have been significantly influencing the stock market return volatilities of all these Southeast Asian countries on average. Originality/value However, there are significant country-wise differences in the relative importance and direction of the relationship of each of these effects with the volatility of the FPI and the stock markets. These effects have been different in these four different markets and they have significantly altered in strength and significance during the global financial crisis and in the post-financial crisis period.

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