Impact of special regime generation management on electricity prices: the Portuguese case

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Carlos Francisco Alves ◽  
Pedro Diogo Pinto
Keyword(s):  
Negative Impact ◽  
Generalized Method Of Moments ◽  
Wholesale Price ◽  
Spot Market ◽  
Spot Price ◽  
Renewable Electricity ◽  
Electricity Prices ◽  
Content Type ◽  
Ex Post ◽  
The Impact

Purpose The ex-post literature, which evaluates the real impact of renewable generation, is scarce. Most studies are simulations and therefore are not based on real data. This study aims to further this goal using a unique database of the Portuguese spot market, where there are powerful incentives for renewable electricity. Design/methodology/approach This paper analyses ex-post the impact of energy produced in special regime on the wholesale hourly spot market prices of Portuguese electricity during the period 2009–2016. This paper uses standard, two stage least squares and generalized method of moments multivariate regressions and other energy econometrics techniques. Findings It is found that special regime generation has a negative impact on the wholesale price. This impact is higher than that found in other markets. This paper also concludes that using special regime generation to supply the future growth of demand will decrease wholesale electricity spot prices more intensively than using other technologies. Originality/value This paper uses a unique database based on ex-post for the Portuguese spot market. The Portuguese case is particularly interesting, not only because of its strong incentives policy on renewable energy but also because its spot market is interconnected with the Spanish market. This paper contributes to the debate about the sustainability of current renewable electricity support schemes. The decreasing trend in electricity prices, with the introduction of new renewable capacity, can be incompatible with the required payments for non-renewable producers. This paper also shows that even if the price reduction on spot markets is transferred to final consumers, given that it is relatively small (8% spot price which represents 45% of the final price), compared with the cost of incentives (35% of the final price), consumers probably will not be able to support a new investment pipeline with a similar framework.

Mandatory CSR expenditure and stock return

2020 ◽  
Vol 28 (6) ◽  
pp. 951-975
Author(s):  
Asit Bhattacharyya ◽  
Md Lutfur Rahman
Keyword(s):  
Least Squares ◽  
Stock Returns ◽  
Least Squares Method ◽  
Negative Impact ◽  
Generalized Method Of Moments ◽  
Ordinary Least Squares ◽  
Reverse Causality ◽  
Endogeneity Bias ◽  
Content Type ◽  
The Impact

Purpose India has mandated corporate social responsibility (CSR) expenditure under Section 135 of the Indian Companies Act, 2013 – the first national jurisdiction to do so. The purpose of this paper is to examine the impact of mandated CSR expenditure on firms’ stock returns by using actual CSR spending data, whereas the previous studies mostly focus on voluntary CSR proxied by CSR scores. Design/methodology/approach The authors estimate their baseline regression by using ordinary least squares(OLS) method. Although the baseline regression involving CSR expenditure and stock returns using ordinary least squares method are estimated, endogeneity and reverse causality biases are addressed by using two-stage least squares and generalized method of moments approaches. These approaches contribute mitigating endogeneity bias and biases associated with unobserved heterogeneity and simultaneity. Findings The findings document that mandatory CSR expenditure has a negative impact on firms’ stock returns which supports the “shareholders” expense’ view. This result remain robust after controlling for endogeneity bias and the use of both standard and robust test statistics. The authors however observe that this result holds for the firms with actual CSR expenditure equal to the mandated amount but does not hold for the firms with actual CSR expenditure greater than the mandated amount. Therefore, the authors provide evidence that CSR expenditure’s impact on stock returns depends on whether firms simply comply the regulation or voluntarily chose an amount of CSR expenditure above the mandated amount. Originality/value The primary contribution is to present a valid and robust evidence of negative effect of mandated CSR spending on firms’ stock returns when the mandatory CSR spending rule is already in place. This study contributes by examining the impact of mandated CSR spending on stock during post-implementation period (2015-2017), whereas other studies by Dharampala and Khanna (2018); Kapoor and Dhamija (2017); and Mukherjee et al. (2018) mainly examined the impact of legislation on Indian CSR. The authors use mandated actual CSR expenditure, whereas previous studies mostly focus on voluntary CSR proxied by CSR scores.

Do firm-specific risks affect bank performance?

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ahmed Imran Hunjra ◽  
Asad Mehmood ◽  
Hung Phu Nguyen ◽  
Tahar Tayachi
Keyword(s):  
Financial Performance ◽  
Commercial Banks ◽  
Negative Impact ◽  
Generalized Method Of Moments ◽  
Bank Performance ◽  
Content Type ◽  
Nonperforming Loans ◽  
Operational Risks ◽  
Bank Managers ◽  
The Impact

PurposeThe authors examine the impact of credit, liquidity and operational risks on the financial performance of commercial banks of South Asia.Design/methodology/approachData are extracted from DataStream of 76 commercial banks of four countries, i.e. Pakistan, India, Bangladesh and Sri Lanka for the period 2009–2018. The generalized method of moments (GMM) is used to analyze the results.FindingsAll three risks are significantly associated with financial performance. The authors find that Z-score positively affects the bank performance, whereas the nonperforming loans (NPLs) ratio has a negative impact on financial performance of bank. Liquidity risk analyses show the current and loan-to-deposit (LTD) ratios positively and negatively, respectively, affect financial performance. While operational risk positively affects financial performance. The authors further present the significant effects of joint occurrence of credit and liquidity risks on financial performance.Practical implicationsFor managing credit risk, banking management should ensure the policies for granting loans and timely reimbursement of the loan installments from customers. Bank managers should regularly monitor the liquidity position by maintaining the necessary levels of loans and deposits. Management should retain a healthy capital charge to meet operational risks.Originality/valueCredit, liquidity and operational risks are considered the most important categories of risk which are faced by financial institutions. To the best of the authors’ knowledge, this is the first study which investigates the impact of these risks on banks’ financial performance in selected South Asian countries. The results of this study have relevance and probable generalizability about the impact of risks on the performance of banks in emerging markets.

Does debt heterogeneity impact firm value? Evidence from an emerging context

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Amit Tripathy ◽  
Shigufta Hena Uzma
Keyword(s):  
Firm Value ◽  
Negative Impact ◽  
Generalized Method Of Moments ◽  
Dynamic Panel Data ◽  
Debt Financing ◽  
Bank Debt ◽  
Content Type ◽  
Indian Context ◽  
Long Run ◽  
The Impact

PurposeThe present paper attempts to explain the impact of debt diversification and various debt financing sources on firm value. The paper also aims to address the long-run causality of various factors affecting firm value.Design/methodology/approachThe study employs a dynamic panel data model for a sample of 233 listed firms from 2010 to 2019. Two-step generalized method of moments (GMM) is devised to study the impact of firm-specific factors on firm value.FindingsThe study establishes a negative impact of debt diversification on firm value. Further, the results also signal how the choice of debt instruments has a heterogeneous effect on firm value. Non-bank debt leads to a discount in firm value, while bank debt has no effect on firm value. The long-run determinants of firm value are debt ratio, tangibility and liquidity.Research limitations/implicationsThe findings of the study would aid the mangers in making informed decisions regarding the debt financing structure. Too much reliance on non-bank debt instruments leads to a negative impact on firm value. Therefore careful evaluation is necessary before accessing multiple debt sources.Originality/valueDebt heterogeneity is globally established; however, its presence in the Indian context has not been validated extensively. The study not only validates the existence of debt diversification but also investigates how individual debt instruments affect firm value that is yet to be examined in the Indian context.

Multi-period dual-sourcing replenishment problem with option contracts and a spot market

2018 ◽  
Vol 118 (4) ◽  
pp. 782-805 ◽  
Author(s):  
Nana Wan ◽  
Xu Chen
Keyword(s):  
Wholesale Price ◽  
Price Volatility ◽  
Spot Market ◽  
Approximate Algorithm ◽  
Spot Price ◽  
Stochastic Dynamic ◽  
Operational Strategies ◽  
Content Type ◽  
Option Contracts ◽  
Replenishment Policy

Purpose The spot market has been gradually recognized as an important alternative purchasing source. To maintain a flexible replenishment strategy, call, put and bidirectional option contracts, as a risk hedging, are in combined usage with the spot market, respectively. The purpose of this paper is to analyze a finite-horizon replenishment problem with option contracts in the context of a spot market. Design/methodology/approach Based on stochastic dynamic programming, the firm’s optimal replenishment policy with either call, put or bidirectional option contracts is always shown to be order-up-to type, characterized by an upper threshold and a lower one. The corresponding policy parameters in different cases are calculated through an approximate algorithm. This research highlights the effectiveness of option contracts on the firm’s operational strategies and overall profitability. Findings This study reveals that the firm is better off with option contracts than without them. When the price parameters are the same for different option contracts, bidirectional option contracts are the best choice among these flexible contracts; otherwise, unilateral option contracts might be either better or worse than bidirectional ones. In addition, if low inventory costs and high spot price volatility are confronted, the firm prefers to call option contracts rather than put ones; otherwise, there exists an opposite conclusion. Originality/value In addition to highlight the advantage of option contracts over wholesale price contracts, this paper provides interesting observations with respect to the effect of different option contracts on the firm. Many significant insights derived from this research do not only contribute to the provider’s feasible design of the supply contracts, but also contribute to the user’s rational operational strategies for higher profitability.

Ex ante, ex post risk and bank capital ratios: an empirical investigation

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Faisal Abbas ◽  
Adnan Bashir
Keyword(s):  
Generalized Method Of Moments ◽  
Regulatory Capital ◽  
Content Type ◽  
Ex Post ◽  
Ex Ante ◽  
Capital Ratios ◽  
Cooperative Banks ◽  
The Impact ◽  
Practical Implications ◽  
Tier I

PurposeThe purpose of this study is to investigate the impact of leverage, regulatory capital and tier-I capital ratios on the ex ante and ex post risk of Japanese banks.Design/methodology/approachTo test the hypotheses, the authors have implemented a panel of 507 commercial and cooperative banks of Japan over the period extending from 2001 to 2020, using a two-step system Generalized Method of Moments (GMM) framework.FindingsThe overall sample banks' results show that the impact of leverage, regulatory capital and tier-I capital ratios on ex ante and ex post risk is positive. The findings reveal that the effects of regulatory and tier-I capital ratios on ex post risk are negative (positive) for commercial (cooperative) banks, high-liquid, low-liquid and high-growth banks in Japan. In addition, the regulatory capital ratio is more beneficial for risk due to its power to absorb losses. The lagged coefficient indicates that banks require more time to adjust their ex post and ex ante risk during crisis period than during normal economic conditions.Practical implicationsThe heterogeneity in results has practical implications for regulators, policymakers and bank managers in formulating the capital requirement guidelines with respect to ex ante and ex post risk across different categories and characteristics of banks.Originality/valueTo the best of the authors' knowledge, this is the first study investigating the impact of leverage, regulatory capital and tier-I capital ratios on the ex ante and ex-post risk of Japanese commercial and cooperative banks over the period from 2001 to 2020. The insights into the impact of leverage, regulatory capital and tier-I capital ratios on the ex ante and ex post risk of well-capitalized, under-capitalized, high and low-liquid banks are new in the context of Japan.

scholarly journals Doing good when times are bad: the impact of CSR on brands during recessions

2020 ◽  
Vol 54 (9) ◽  
pp. 2049-2077
Author(s):  
Abhi Bhattacharya ◽  
Valerie Good ◽  
Hanieh Sardashti
Keyword(s):  
Negative Impact ◽  
Generalized Method Of Moments ◽  
Brand Value ◽  
Brand Performance ◽  
Content Type ◽  
Charitable Contributions ◽  
Brand Quality ◽  
Economic Recessions ◽  
Corporate Social ◽  
The Impact

Purpose This paper aims to determine what the brand performance consequences of corporate social responsibility (CSR) activities would be during times of recession for well-known brands. Design/methodology/approach Based on signaling theory, this paper investigates if CSR activities serve to signal higher brand value for consumers via perceptions of better quality and greater differentiation, specifically during recessions. This study incorporates a representative longitudinal sample of known US firms for the analyses, which is accomplished through generalized method of moments estimations. Findings The findings empirically demonstrate that CSR initiatives during recessions are actually associated with increased perceptions of brand value. More specifically, during recessions, CSR initiatives such as charitable contributions provide a signal to customers of higher brand quality. Research limitations/implications This study did not control for the costs of doing specific CSR activities that may be less visible to consumers. Practical implications While individual firms or managers may not be able to prevent recessions from happening, they can limit the negative impact of recessions on their performance by engaging in CSR activities (or refrain from cutting back) during these times. Social implications Because CSR initiatives during recessions result in more favorable consumer perceptions of the brand, engaging in CSR aligns both social and managerial interests, owing to the economic gains from CSR investments. Originality/value During times of recession, some critics indicate that CSR may be an unaffordable luxury. On the contrary, this research shows that managers may want to consider CSR activities as a means of increasing the value of their brands, especially during economic recessions.

Impact of financial leverage on profitability of listed manufacturing firms in China

2018 ◽  
Vol 30 (4) ◽  
pp. 410-432 ◽  
Author(s):  
Ilhan Dalci
Keyword(s):  
Financial Distress ◽  
Fixed Effects ◽  
Negative Impact ◽  
Positive Impact ◽  
Generalized Method Of Moments ◽  
Manufacturing Firms ◽  
Chinese Government ◽  
Financial Leverage ◽  
Content Type ◽  
The Impact

PurposeThe purpose of the study is to explore how financial leverage influences profitability of 1,503 listed manufacturing firms in China.Design/methodology/approachThe sample of the study is composed of the listed manufacturing firms in China. For the manufacturing firms, the annual financial information from 2008 to 2016 is obtained from the ORBIS database. In this study, initially a simultaneous equation approach is used to control for potential endogeneity. Then, additional regression analyses are conducted with panel data over the period of 2008-2016 using OLS, Fixed-effects, First-difference, Random-effects and Arellano and Bond’s (1991) two-step Generalized Method of Moments (GMM) methods.FindingsThe results reveal that the impact of leverage on profitability is inverted U-shaped. In this inverted U-shaped relationship, the positive impact of financial leverage on profitability could be attributed to tax shield, whereas the negative impact might be because of bankruptcy cost, financial distress, severe agency problems and information asymmetry that the listed Chinese firms suffer from because of some institutional characteristics of China.Research limitations/implicationsFirst, this study focuses on only listed manufacturing firms in China. Second, ownership types are not taken into account in this study.Practical implicationsFirst, the Chinese government should direct its efforts toward developing the bond markets and promoting alternative privately owned loan creditors to state-owned banks. Parallel to this, the transformation process toward market economy should be accelerated to facilitate the privatization of state-owned enterprises (SOEs). In addition to this, development of the bond market and privatization of SOEs will also mitigate the agency conflict between creditors and managers and between shareholders and managers.Originality/valueTo the best of the author’s knowledge, this is the first study which investigates the impact of capital structure on profitability of the listed firms in China.

Cross-border equity flows and market volatility: the case of Qatar Exchange

2016 ◽  
Vol 11 (3) ◽  
pp. 395-418 ◽  
Author(s):  
Walid M.A. Ahmed
Keyword(s):  
Capital Market ◽  
Capital Flows ◽  
Institutional Investors ◽  
Foreign Capital ◽  
Generalized Method Of Moments ◽  
Market Volatility ◽  
Individual Investors ◽  
Content Type ◽  
Ex Post ◽  
The Impact

Purpose – Extending the extant literature and using Qatar’s equity market as a case study, this paper aims to look into the potential impacts of foreign investor groups’ trading activities on market volatility in comparison with those of Qatar’s domestic investor counterparts. Design/methodology/approach – The dataset is comprised of daily aggregated values of stock purchases and sales made separately by four investor groups, namely, foreign individual investors, foreign institutional investors, domestic individual investors, and domestic institutional investors. An ex post measure of volatility introduced by Rogers and Satchell (1991) is employed. Four proxies for investor trading are considered separately in the analysis. The objective of the study is empirically addressed in the context of the Generalized Method of Moments estimation technique. Findings – In general, there exists substantial contemporaneous price impact associated with foreign equity investment in the Qatari capital market, despite the fact that foreigners’ buy and sell trades are not as large as those of their domestic counterparts. More specifically, foreign institutional sales (purchases) tend to increase (reduce) market volatility. Like those of foreign institutions, the sell trades by foreign individuals have a positive impact on volatility. On the other hand, domestic institutional purchases are significantly negatively related with market volatility, whereas the sell trades by the same category have no impact on volatility. Finally, surprises in foreigners’ trading volumes turn out to be responsible for adding to volatility. Practical implications – Although a sudden reversal of foreign capital flows can pose a real threat to the stability of the Qatari capital market, such capital flows are deemed to be an indispensable vehicle for enhancing the liquidity and efficiency of the market. Accordingly, policy makers in Qatar should overhaul the current foreign investment legislation to make it even more streamlined and better suited to achieving the country’s strategic vision for the market. Foremost in these reforms is relaxing the stringent 25 percent foreign ownership restriction. Such a relaxation process is highly recommended to be phased in only gradually, in order to weigh its pros and cons. In this regard, the authorities concerned should consider embarking on a range of procedures intended to ward off the adverse ramifications of foreign capital outflows. Originality/value – To the author’s best knowledge, no study about the impact of foreign equity flows on domestic markets has been so far conducted using trading data from the Qatari market. This work presents one such attempt.

Strategic procurement from forward contract and spot market

2014 ◽  
Vol 114 (5) ◽  
pp. 778-796 ◽  
Author(s):  
C.K.M. Lee ◽  
Danping Lin ◽  
Rohan Pasari
Keyword(s):  
Demand Uncertainty ◽  
Price Volatility ◽  
Real Data ◽  
Spot Market ◽  
Spot Price ◽  
Content Type ◽  
Procurement Process ◽  
The Impact ◽  
Forward Contracting

Purpose – The purpose of this paper is to formulate procurement strategies and determine the optimal procurement quantity in order to maximize profit through forward contracting and the spot market. Design/methodology/approach – The procurement process is modeled at various stages along a time horizon from the perspective of the buyer, with consideration of uncertain yields, stochastic demand and dynamic spot market prices. Monte Carlo simulation based experiments were conducted to figure out the best procurement quantity for five different scenarios. The framework was developed to understand the impact of different uncertain variables on a firm's profit. A case study was carried out in a steel making company in India, with real data. Findings – The results indicate that the proposed approach enables buyers to achieve higher profits under volatile demand conditions. In the case study, it was found that the profit is higher for the spot market than for contract pricing if there is significant demand and spot price volatility. Originality/value – This research considers not only demand uncertainty but also supply uncertainty in the procurement process, and profit analysis was carried out to enable an enterprise to set up a procurement plan by using forward contracting and the spot market. This study should also increase awareness in both academia and industry on the opportunities of using the spot market to enhance flexibility and to mitigate risk in the procurement process.

Corporate governance practices and capital structure decisions: the moderating effect of gender diversity

2020 ◽  
Vol 20 (5) ◽  
pp. 939-964
Author(s):  
Mohammad A.A Zaid ◽  
Man Wang ◽  
Sara T.F. Abuhijleh ◽  
Ayman Issa ◽  
Mohammed W.A. Saleh ◽  
...  
Keyword(s):  
Corporate Governance ◽  
Panel Data ◽  
Capital Structure ◽  
Generalized Method Of Moments ◽  
Gender Diversity ◽  
Business Environment ◽  
Board Structure ◽  
Content Type ◽  
Financing Decisions ◽  
The Impact

Purpose Motivated by the agency theory, this study aims to empirically examine the nexus between board attributes and a firm’s financing decisions of non-financial listed firms in Palestine and how the previous relationship is moderated and shaped by the level of gender diversity. Design/methodology/approach Multiple regression analysis on a panel data was used. Further, we applied three different approaches of static panel data “pooled OLS, fixed effect and random effect.” Fixed-effects estimator was selected as the optimal and most appropriate model. In addition, to control for the potential endogeneity problem and to profoundly analyze the study data, the authors perform the one-step system generalized method of moments (GMM) estimator. Dynamic panel GMM specification was superior in generating robust findings. Findings The findings clearly unveil that all explanatory variables in the study model have a significant influence on the firm’s financing decisions. Moreover, the results report that the impact of board size and board independence are more positive under conditions of a high level of gender diversity, whereas the influence of CEO duality on the firm’s leverage level turned from negative to positive. In a nutshell, gender diversity moderates the effect of board structure on a firm’s financing decisions. Research limitations/implications This study was restricted to one institutional context (Palestine); therefore, the results reflect the attributes of the Palestinian business environment. In this vein, it is possible to generate different findings in other countries, particularly in developed markets. Practical implications The findings of this study can draw responsible parties and policymakers’ attention in developing countries to introduce and contextualize new mechanisms that can lead to better monitoring process and help firms in attracting better resources and establishing an optimal capital structure. For instance, entities should mandate a minimum quota for the proportion of women incorporation in boardrooms. Originality/value This study provides empirical evidence on the moderating role of gender diversity on the effect of board structure on firm’s financing decisions, something that was predominantly neglected by the earlier studies and has not yet examined by ancestors. Thereby, to protrude nuanced understanding of this novel and unprecedented idea, this study thoroughly bridges this research gap and contributes practically and theoretically to the existing corporate governance–capital structure literature.

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