An empirical examination of the direct and indirect effects of geographic diversification on stock market and financial performances of multinational corporations

2017 ◽  
Vol 47 (6) ◽  
pp. 495-515 ◽  
Author(s):  
Woohyun Cho ◽  
Jian-yu Fisher Ke ◽  
Chaodong Han
Keyword(s):  
Financial Crisis ◽  
Stock Market ◽  
Multinational Corporations ◽  
Indirect Effects ◽  
Inventory Level ◽  
Direct And Indirect Effects ◽  
Geographic Diversification ◽  
Empirical Examination ◽  
Content Type ◽  
Stock Market Performance

Purpose Literature indicates that global geographic diversification (GD) has mixed effects on a multinational corporation’s (MNC) performances. The purpose of this paper is to examine how an MNC’s GD influences its stock market and financial performances directly and indirectly via operational performance (i.e. changes in inventory levels). Design/methodology/approach Using firm-level data collected from Compustat database for the period 2000-2011 and estimating a mediating regression model, the authors examine the direct and indirect effects of GD on an MNC’s stock market (Tobin’s q) and financial performances (ROA), with inventory level being a mediator. Additionally, the examination is implemented separately under two economic situations: financial crisis vs without financial crisis. Findings The results show that GD enhances an MNC’s stock market performance, while deteriorating its financial performance in the presence of a financial crisis. In contrast, GD has little direct impact on an MNC’s stock market and financial performances during periods without financial crisis. The indirect effects of GD are mediated by changes in inventory levels. Practical implications This study suggests that MNCs need to carefully weigh the benefits and costs of global strategy obtained through GD. The results also indicate that GD is highly appreciated by the stock market investors during economic downturns and tighter inventory management may further enhance firm values. Originality/value This paper is the first empirical research to estimate both direct and indirect effects of GD via inventory in the operations management literature, highlighting the value of GD depending on the different economic situations and echoing the role of operations in implementing GD.

What drives the venture capital investments in China?

2019 ◽  
Vol 13 (3) ◽  
pp. 574-602 ◽  
Author(s):  
Yixi Ning ◽  
Gubo Xu ◽  
Ziwu Long
Keyword(s):  
Financial Crisis ◽  
Stock Market ◽  
Global Financial Crisis ◽  
High Growth ◽  
Investment Strategies ◽  
Stock Market Crash ◽  
Content Type ◽  
Risk Levels ◽  
Aggregate Amount ◽  
A Share

Purpose This study aims to examine the venture capital (VC) industry in China. It has demonstrated a history of high growth with significant variations over time. The authors have examined the trends and determinants of VC investments in China over a 20-year period from 1995 to 2014. They find that the aggregate amount of VC investments, the total number of venture deals and the average amount of venture investments per deal in China are all significantly impacted by macroeconomic conditions (i.e. GDP, export, money supply), technology innovations and financial market indicators (i.e. initial public offerings (IPOs), interest rate, price-to-earnings ratio, etc.). They also find that the 2007 China A-Share stock market crash and the subsequent global financial crisis have motivated VCists in China to adjust their investment strategies and risk levels by allocating more capital to later-stage investments and securing more deals with later-round financings. However, after the 2008 global financial crisis, the China’s venture industry has recovered faster compared to the US counterpart response. Design/methodology/approach The authors first perform trend analysis of VC investments at an aggregate level, by stages of development, and across industry from 1995 to 2014.To test H1 and H2, the authors use multiple regression models with lagged explanatory variables. To test H3, the authors use univariate tests to compare the measures of VC investments at an aggregate level, stage funds ratios, stage deals ratios and financing series ratios during both a five-year and seven-year time windows around the 2007 A-Share stock market crash and the subsequent financial crisis. Findings The development of the VC industry in China has demonstrated a history of high growth with significant variation over time. The authors find that the aggregate amount of VC investments, the total number of venture deals and the average amount of venture investments per deal in China are all significantly impacted by macroeconomic conditions (i.e. GDP, export, money supply), technology innovations and financial market indicators (i.e. IPOs, interest rate, price-to-earnings ratio, etc.). The authors also find that the 2007 China A-Share stock market crash and the subsequent global financial crisis have motivated VCists in China to adjust their investment strategies and risk by allocating more capital to later-stage investments and securing more deals with later-round financings. However, the China VC industry has recovered faster compared to the USA just after the 2008 global financial crisis. Research limitations/implications There are also limitations in the study. The VC data in China in the earlier 1990s might not be very reliable due to the quality of statistics. Therefore, the trend analysis and discussions mainly focus on the time after 2000. Also, the authors cannot find VC financing sequence data for the analysis. Second, there is no doubt that the policy impact from Chinese transforming economic system and government policies on its VC industry is substantial (Su and Wang, 2013). However, they cannot find an appropriate variable to be included in the empirical models to consider this effect. Further study on this area would provide meaningful information. Third, although the authors have done comparison study between the VC industry in China in this study and the VC industry in the US documented in Ning et al. (2015) and discussed some interesting findings, more in-depth research in this area will be very useful. Practical implications The findings have meaningful implications for VCists and start-up companies seeking equity financings in China. VCists should closely monitor macroeconomic and market conditions to make appropriate adjustments to their risk and investment strategies. Entrepreneurs seeking equity financings for their business could also monitor the identified macroeconomic and market indicators, which can help them with their timing and to negotiate a better equity financing deal. VC financing is more likely to succeed when key macroeconomic and market indicators become favorable. Originality/value This paper contributes to the literature by testing the supply and demand theory on the VC market proposed by Poterba (1989) and Gompers and Lerner (1998) from the macroeconomic perspective using 20 years’ VC data from China. The authors also examine how the 2007 A-Share stock market crash and the subsequent financial crisis affected VCists to adjust their risk levels and investment strategies. It provides useful information for international academia and policymakers to understand the quick rise of China VC industry. The authors also find that the macroeconomic drivers of VC industry are somewhat different under different economic systems.

Investment environment, stock market perception and stock investments after stock market crash

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mohammad Tariqul Islam Khan ◽  
Siow-Hooi Tan ◽  
Lee-Lee Chong ◽  
Gerald Guan Gan Goh
Keyword(s):  
Stock Market ◽  
Market Performance ◽  
Mediating Effect ◽  
Individual Investors ◽  
Investment Environment ◽  
Stock Market Crash ◽  
Content Type ◽  
Stock Market Performance ◽  
Market Perception ◽  
Stock Investments

PurposeThis study examines how the importance of external investment environment factors affect stock market perception, and how stock market perception affects stock investments after stock market crash witnessed by individual investors in one of the emerging stock markets.Design/methodology/approachA cross-sectional survey was administrated among 223 individual investors who experienced stock market crash in 2010–2011 in Bangladesh, and the proposed model was tested by the partial least squares-structural equation modeling PLS-SEM model.FindingsFindings show that the importance of Bangladesh's stock market performance, government policy, economic issues and neighboring country's stock market performance has effects on investors' stock market perception. This perception, in turn, decreases monthly stock trading and short-term investment horizon. The findings further show the mediating effect of stock market perception.Practical implicationsInvestors need to carefully consider the external investment environment when they form their stock market perception, as this perception drives stock investments. Analogously, regulators should ensure releasing timely and updated statistics on external investment factors.Originality/valueAddressing those investors who encountered stock market crash, a set of external investment environment issues, stock market perception and stock investments are new in the literature.

Effects of the COVID-19 pandemic on stock market returns and volatilities: evidence from selected emerging economies

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Bijoy Rakshit ◽  
Yadawananda Neog
Keyword(s):  
Exchange Rate ◽  
Stock Market ◽  
Emerging Economies ◽  
Market Performance ◽  
Exchange Rate Volatility ◽  
Oil Price ◽  
Market Returns ◽  
Stock Market Returns ◽  
Content Type ◽  
Stock Market Performance

Purpose The purpose of this paper is to investigate the effects of exchange rate volatility, oil price return and COVID-19 cases on the stock market returns and volatility for selected emerging market economies. Additionally, this study compares the market performance in the emerging economies during the COVID-19 pandemic with the pre-COVID and global financial crisis (GFC) period. Design/methodology/approach The authors apply the arbitrage pricing theory to model the risk-return relationship between the risk-based factors (exchange rate volatility and COVID-19 cases) and stock market returns. By applying the exponential generalized autoregressive conditional heteroskedasticity model, the study captures the asymmetric volatility spillover from the stock markets to foreign exchange markets and vice versa. Findings Findings reveal that exchange rate volatility exerts a negative and significant effect on the market returns in Brazil (BOVESPA), Chile (S&P CLX IPSA), India (SENSEX), Mexico (S&P BMV IPC) and Russia (MOEX) during the coronavirus pandemic. Regarding the effect of oil price returns, the authors find a positive relationship between oil price and stock market returns across all the economies in the study. The market returns of Russia, India, Brazil and Peru appeared more volatile during the pandemic than the GFC period. Practical implications As the exchange rate volatility is causing higher risk and uncertainty in the stock market’s performance, the central bank’s effort to maintain a stabilizing effect on the exchange rate sale can be proven crucial for the economies under consideration. Emphasized should also be given to boost investors’ confidence in the stock market, and for this, the government policy actions in reducing the transmission of the disease are the need of the hour. Originality/value While a large volume of literature on stock market performance in times of COVID-19 has emerged from developed economies, this study adds to the literature by exploring the emerging economies’ stock market performance during the COVID-19 pandemic. Unlike previous literature, this study examines the volatility spillover between stock and exchange rate markets in the worst affected emerging economies during the crisis.

Dark tourism: tourist value and loyalty intentions

2019 ◽  
Vol 74 (4) ◽  
pp. 915-929 ◽  
Author(s):  
Pramod Sharma ◽  
Jogendra Kumar Nayak
Keyword(s):  
Indirect Effects ◽  
Questionnaire Survey ◽  
Design Methodology ◽  
Direct And Indirect Effects ◽  
Local Authorities ◽  
Dark Tourism ◽  
Content Type ◽  
Loyalty Intentions ◽  
Emotional Value ◽  
Practical Implications

PurposeThis paper aims to examine the direct and indirect effects of tourists’ value on satisfaction and loyalty intentions in dark tourism.Design/methodology/approachThis research was conducted using the data collected through a questionnaire survey from 403 tourists visiting a dark tourism destination in India. Data were analyzed using CFA and SPSS macro (Process).FindingsThe findings confirmed that tourists’ values have significant direct and indirect effects on loyalty intentions via satisfaction in dark tourism. Among specific value, the strongest direct and indirect influence of emotional value in dark tourism is the unique finding of this research.Practical implicationsThis study would help the marketers, government, local authorities and relevant stakeholders operating in dark tourism to formulate policies and strategies to better serve this niche tourism.Originality/valueThis research is the first-known attempt to reveal the uniqueness of tourists’ perception of value in dark tourism. It could significantly add to the literature and practice of dark tourism.

Does macroeconomic uncertainty really matter in predicting stock market behavior? A comparative study on China and USA

2020 ◽  
Vol 10 (4) ◽  
pp. 393-427 ◽  
Author(s):  
Ghulam Abbas ◽  
Shouyang Wang
Keyword(s):  
Risk Factors ◽  
Financial Crisis ◽  
Stock Market ◽  
Global Financial Crisis ◽  
Content Type ◽  
Macroeconomic Variables ◽  
Macroeconomic Risk ◽  
Stock Market Return ◽  
Macroeconomic Uncertainty ◽  
The Impact

PurposeThe study aims to analyze the interaction between macroeconomic uncertainty and stock market return and volatility for China and USA and tries to draw some invaluable inferences for the investors, portfolio managers and policy analysts.Design/methodology/approachEmpirically the study uses GARCH family models to capture the time-varying volatility of stock market and macroeconomic risk factors by using monthly data ranging from 1995:M7 to 2018:M6. Then, these volatility series are further used in the multivariate VAR model to analyze the feedback interaction between stock market and macroeconomic risk factors for China and USA. The study also incorporates the impact of Asian financial crisis of 1997–1998 and the global financial crisis of 2007–2008 by using dummy variables in the GARCH model analysis.FindingsThe empirical results of GARCH models indicate volatility persistence in the stock markets and the macroeconomic variables of both countries. The study finds relatively weak and inconsistent unidirectional causality for China mainly running from the stock market to the macroeconomic variables; however, the volatility spillover transmission reciprocates when the impact of Asian financial crisis and Global financial crisis is incorporated. For USA, the contemporaneous relationship between stock market and macroeconomic risk factors is quite strong and bidirectional both at first and second moment level.Originality/valueThis study investigates the interaction between stock market and macroeconomic uncertainty for China and USA. The researchers believe that none of the prior studies has made such rigorous comparison of two of the big and diverse economies (China and USA) which are quite contrasting in terms of political, economic and social background. Therefore, this study also tries to test the presumed conception that macroeconomic uncertainty in China may have different impact on the stock market return and volatility than in USA.

TQM practices and its performance effects – an integrated model

2019 ◽  
Vol 36 (8) ◽  
pp. 1318-1344 ◽  
Author(s):  
Anu P. Anil ◽  
Satish K.P.
Keyword(s):  
Customer Satisfaction ◽  
Performance Indicators ◽  
Indirect Effects ◽  
Integrated Model ◽  
Mediating Effect ◽  
Common Method ◽  
Direct And Indirect Effects ◽  
Content Type ◽  
Performance Effects ◽  
And Performance

Purpose Total quality management practices have been embraced by many quality-oriented firms around the world in order to improve performance in terms of quality, productivity, customer satisfaction and profitability. The purpose of this paper is to investigate the direct and indirect effects of TQM practices on various performance indicators specifically in the Indian manufacturing context. This paper focuses on developing an integrated model encompassing significant structural relations showing the linkage between TQM practices and multiple performance indicators – quality performance, customer satisfaction level, operating performance, employee performance, innovation performance, society results and financial performance. Apart from analyzing the direct relationship between constructs, the main purpose of this work is also to identify all the possible mediation effects of performance indicators on others using structural equation modeling (SEM). Design/methodology/approach An in-depth literature review was conducted to identify the key practices for the successful implementation of TQM in an organization as well as to explore TQM-performance effects. As a result, four TQM practices and seven performance indicators were identified. The data were collected from 260 Indian manufacturing organizations. After confirming the reliability and validity using exploratory and confirmatory factor analysis, the proposed hypotheses were tested using SEM. Findings Through testing the proposed hypothesized structural model, the direct and indirect effects of TQM practices have been examined. Moreover, this work developed an integrated model showing the interrelationships between TQM practices and performance indicators identified. The findings gave an insight that the effective implementation of TQM practices assists in reaping benefits in the every facet of an organization. By implementing these practices effectively, managers can expect to realize improvement in all these performance areas. Research limitations/implications This study is subject to certain limitations. Even if all variables were found to be reliable, valid and satisfactory non-response bias test results, the remote possibility of bias in the data might not be fully ruled out. There is a probability of occurrence of common method variance and common method bias, since the data for both dependent and independent variables were collected from the same respondents in the organization. Additionally data on performance indicators were based on the respondent’s assessment and awareness only. The mediating relationship between individual TQM practice and performance indicators can be investigated in future studies. Since society results are a necessity in future, the direct and indirect practices focusing toward this can be explored. In addition, there is a research scope to identify the moderating effect of contextual factors such as degree of TQM implementation, scope of operation and type of organization. Practical implications The findings of the research offer some potentially valuable insights into the relevance of TQM practices and its strong linkage on various performance indicators, through which the overall organization performance can be enhanced. By implementing these practices effectively, managers can expect to realize improvement in all these performance areas. Hence, the managers can adopt this approach to assess their organization’s level in the quality path and as a guideline in implementing TQM practices. They can also measure the impacts of TQM practices on multiple performance measures in order to evaluate their TQM initiatives. Especially the deployment of quality culture is a requisite to excel in the every facet of performance. The positive relationship between TQM practices and various performance indicators can motivate the managers to allocate resources in time, effort and capital for TQM implementation in pursuing quality, leading to customer retention and competitiveness. The findings of the study strongly suggest the need for the holistic implementation of TQM practices for the survival of the organization. Originality/value While there is a considerable volume of researches carried out to investigate the linkage between TQM and organization’s performance across the globe, still little is evidenced regarding the mediating effect of performance indicators on others, especially in the Indian manufacturing context. The present paper attempts to extend and add knowledge to this line of research and to bridge the gap and provide sufficient empirical evidence specifically in the Indian scenario. Thereby helps the organization to follow a guideline to improve the overall performance.

Measuring the effectiveness of managerial action in SMEs

2007 ◽  
Vol 30 (12) ◽  
pp. 892-914 ◽  
Author(s):  
Glenn A. Metts
Keyword(s):  
Indirect Effects ◽  
Equation Modeling ◽  
Direct And Indirect Effects ◽  
Manufacturing Companies ◽  
Automotive Manufacturing ◽  
Content Type ◽  
Managerial Action ◽  
The Impact ◽  
Competitive Forces ◽  
Strategy Making

PurposeThe paper's purpose is to investigate the direct and indirect effects of industry competitive forces on strategy‐making and performance in small‐to‐medium‐sized manufacturing companies.Design/methodology/approachThe paper's approach is a survey design with structural equation modeling used for hypotheses testing.FindingsThe findings provide strong support for the mitigating role of managerial action through the strategy‐making process and indications that this is true regardless of small‐to‐medium‐sized enterprise (SME) size. Also, automotive‐manufacturing SMEs seem to exhibit higher levels of competitive factors compared with non‐automotive manufacturing SMEs.Research limitations/implicationsThe major limitation of this research is that the survey was taken in the Mid‐western USA and involved only SME manufacturing organizations. The research should be extended to other geographic regions, industry types, and larger organizations.Practical implicationsMany small company managers feel that they have little impact on industry‐wide macro‐economic and industry‐specific forces. This research indicates that managers in SMEs can mitigate some of the negative effects of industry competitive factors through strategy‐making activities.Originality/valueThis research is unique in several ways. It is the only research that has clearly identified and successfully measured the impact of managerial action in SMEs. It demonstrates that managerial action can be measured by comparing the direct and indirect effects of industry competitive forces on performance. It further identifies the need for a self‐assessment tool to measure the effectiveness of managerial action of top managers in SMEs.

Optimization of the promotion mix in the healthcare industry

2015 ◽  
Vol 9 (4) ◽  
pp. 289-305
Author(s):  
Dominique Haughton ◽  
Guangying Hua ◽  
Danny Jin ◽  
John Lin ◽  
Qizhi Wei ◽  
...  
Keyword(s):  
Data Mining ◽  
Indirect Effects ◽  
Directed Acyclic Graphs ◽  
Optimization Process ◽  
Sales Volume ◽  
Healthcare Industry ◽  
Direct And Indirect Effects ◽  
Data Set ◽  
Content Type ◽  
Data Mining Techniques

Purpose – The purpose of this paper is to propose data mining techniques to model the return on investment from various types of promotional spending to market a drug and then use the model to draw conclusions on how the pharmaceutical industry might go about allocating promotion expenditures in a more efficient manner, potentially reducing costs to the consumer. The main contributions of the paper are two-fold. First, it demonstrates how to undertake a promotion mix optimization process in the pharmaceutical context and carry it through from the beginning to the end. Second, the paper proposes using directed acyclic graphs (DAGs) to help unravel the direct and indirect effects of various promotional media on sales volume. Design/methodology/approach – A synthetic data set was constructed to prototype proposed data mining techniques and two analyses approaches were investigated. Findings – The two methods were found to yield insights into the problem of the promotion mix in the context of the healthcare industry. First, a factor analysis followed by a regression analysis and an optimization algorithm applied to the resulting equation were used. Second, DAG was used to unravel direct and indirect effects of promotional expenditures on new prescriptions. Research limitations/implications – The data are synthetic and do not incorporate any time autocorrelations. Practical implications – The promotion mix optimization process is demonstrated from the beginning to the end, and the issue of negative coefficient in promotion mix models are addressed. In addition, a method is proposed to identify direct and indirect effects on new prescriptions. Social implications – A better allocation of promotional expenditures has the potential for reducing the cost of healthcare to consumers. Originality/value – The contributions of the paper are two-fold: for the first time in the literature (to the best of the authors’ knowledge), the authors have undertaken a promotion mix optimization process and have carried it through from the beginning to the end Second, the authors propose the use of DAGs to help unravel the effects of various promotion media on sales volume, notably direct and indirect effects.

scholarly journals The impact of epidemics on agricultural production and forecast of COVID-19

2020 ◽  
Vol 12 (3) ◽  
pp. 409-425 ◽  
Author(s):  
Shurui Zhang ◽  
Shuo Wang ◽  
Lingran Yuan ◽  
Xiaoguang Liu ◽  
Binlei Gong
Keyword(s):  
Indirect Effects ◽  
Agricultural Production ◽  
Negative Impact ◽  
Spillover Effects ◽  
Control Measures ◽  
Growth Accounting ◽  
Direct And Indirect Effects ◽  
Content Type ◽  
Dynamic Panel Model ◽  
The Impact

PurposeThis article investigates the mechanism of the direct and indirect effects of epidemics on agricultural production and projects the impact of COVID-19 on agricultural output in China.Design/methodology/approachThis article first adopts a dynamic panel model and spatial Durbin model to estimate the direct and indirect effects, followed by a growth accounting method to identify the channels by which epidemics affect agriculture; finally, it projects the overall impact of COVID-19 on agriculture.FindingsThe incidence rate of epidemics in a province has a negative impact on that province's own agricultural productivity, but the increase in the input factors (land, fertilizer and machinery) can make up for the loss and thus lead to insignificant direct effects. However, this “input-offset-productivity” mechanism fails to radiate to the surrounding provinces and therefore leads to significant indirect/spillover effects. It is projected that COVID-19 will lower China's agricultural growth rate by 0.4%–2.0% in 2020 under different scenarios.Research limitations/implicationsIt is crucial to establish a timely disclosure and sharing system of epidemic information across provinces, improve the support and resilience of agricultural production in the short run and accelerate the process of agricultural modernization in the long run.Originality/valueConsidering the infectivity of epidemics, this article evaluates the mechanism of the direct and indirect effects by introducing a spatial dynamic model into the growth accounting framework. Moreover, besides the impact on input portfolio and productivity, this article also investigates whether epidemics reshape agricultural production processes due to panic effects and control measures.

Stock market performance and foreign exchange market in Egypt: does 25th January revolution matter?

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ahmed A. El-Masry ◽  
Osama M. Badr
Keyword(s):  
Stock Market ◽  
Causal Relationship ◽  
Foreign Exchange ◽  
Foreign Exchange Market ◽  
Market Performance ◽  
Exchange Market ◽  
Content Type ◽  
Stock Market Performance ◽  
Portfolio Managers ◽  
Market Indexes

PurposeThis paper examines the causal relationship between stock market performance and foreign exchange market in Egypt over the period 2009–2016. The study period is divided into two sub-periods: pre- and post-January 25th Egyptian revolution (ER). The reason is to examine how this revolution affects the causal relationship between the two markets' performance.Design/methodology/approachIn this study, the daily basis data are used to enable good and effective observation changes in the foreign exchange rate and stock market performance over time. Stock market indexes and stock market capitalization are used as proxies for stock market performance. Further, the Egyptian pound to US$ exchange rate is used as a measure for foreign exchange market performance. The study analysis is done in stages. The first is to check the variables' stationarity for the pre- and post-revaluation. The second is to examine the cointegration among the variables. The third is to run vector autoregression (VAR) estimates, after which VAR Granger causality tests are employed.FindingsThe results show that the data are not stationary at their levels but stationary in their first difference level while there is no cointegration in the long-run among the variables in both sub-periods. Further, findings indicate that, in the pre-January 25th revolution period, there is a significant causal relationship between the foreign exchange market and stock market indexes and a significant causal relationship between market capitalization (CAP) and exchange rate at the 1% level. However, in the post-January 25th revolution period, the study does not find a significant causal relationship between foreign exchange market and stock market indexes and capitalization.Research limitations/implicationsAs this study focuses on the causal relationship between foreign exchange and stock markets before and after the 25th January Revolution, other macroeconomic variables such as consumer price index, interest rate and GDP were excluded for the comparison purposes with other studies. Further research is suggested to include them in the analysis to find out its effect on the performance of stock market and foreign exchange market.Practical implicationsThe existence of long-run bidirectional causality means that portfolio managers and hedgers may have improved their understanding regarding the dynamic relationship between foreign exchange market and stock market performance as this may help them to plan and implement suitable hedging strategies to guard against currency risk in future crises or events. Investors, fund and portfolio managers and policymakers should give much attention to these event-specific interactions when they make capital budgeting decisions and implement regulation policies. Furthermore, our results may allow portfolio managers, investors and policymakers to assess the importance of informational efficiency for both markets.Originality/valueThis paper is an original contribution to the literature that concerns the causal relationship between stock market and foreign exchange market in the period of political instability and social unrest such as the January 25th Revolution in one of the emerging markets, namely Egypt.

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