Investors’ sentiment and accruals anomaly: European evidence

2018 ◽  
Vol 19 (4) ◽  
pp. 500-517 ◽  
Author(s):  
Francisca Beer ◽  
Badreddine Hamdi ◽  
Mohamed Zouaoui
Keyword(s):  
Stock Returns ◽  
Cultural Values ◽  
Investor Sentiment ◽  
European Countries ◽  
Legal Tradition ◽  
Content Type ◽  
Legal Enforcement ◽  
Accruals Anomaly ◽  
High Level ◽  
The Impact

Purpose The purpose of this paper is to examine whether investors’ sentiment affects accruals anomaly across European countries. Design/methodology/approach The authors estimate the model using Fama–MacBeth regressions. The sample includes 54,572 firm-year observations for 4,787 European firms during the period 1994–2014. Findings The authors find that investors’ sentiment influences accruals mispricing across European countries. The effect is pronounced for stocks whose valuations are highly subjective and difficult to arbitrage. The cross-country analysis provides evidence that sentiment influences accruals anomaly in countries with weaker outside shareholder rights, lower legal enforcement, lower equity market development, higher allowance of accrual accounting and in countries where herd-like behavior and overreaction behavior are strong. Research limitations/implications The findings suggest the generalizability of the sentiment-accruals anomaly relation in European countries characterized by different cultural values, levels of economic development and legal tradition. Practical implications The findings suggest to caution individuals investors. These investors would be wise to take into account the impact of sentiment on the performance of their portfolio. They must keep in mind that periods of high optimism are accompanied by a high level of accruals and followed by low future stock returns. Originality/value The research supplements previous American studies by showing the significance of the level of sentiment in understanding the accruals anomaly in Europe. Hence, it is important for future studies to consider investor sentiment as an important time-series determinant of the accruals anomaly, particularly for stocks that are hard to value and difficult to arbitrage.

scholarly journals The impact of culture on the innovative strength of nations

2017 ◽  
Vol 30 (7) ◽  
pp. 1149-1183 ◽  
Author(s):  
Piet Moonen
Keyword(s):  
Cultural Values ◽  
National Culture ◽  
Social Engineering ◽  
Management Style ◽  
European Countries ◽  
European Patent ◽  
Cultural Characteristics ◽  
Actual Performance ◽  
Content Type ◽  
The Impact

Purpose The purpose of this paper is to address the importance of cultural values, the organizational culture and management style for innovation. It also comparatively evaluates the actual performance of European countries in innovation. Design/methodology/approach In this paper, the theoretical frameworks of the well-known scholars Hofstede, House, Schwartz, Boisot and Cameron and Quinn are critically evaluated and compared with each other. In addition, the authors compared the cultural rankings and the actual performance in innovation of selected European countries. Before addressing the impact of culture on the innovative strength of nations, different definitions of innovation are being described. The theoretical framework developed on the basis of the six Hofstede dimensions is composed; the nine House dimensions are supplemented and the Schwartz values for innovative strength of nations are also being discussed. Culture as a knowledge asset, the positioning in information space and its influence on innovation following the theories of Boisot and the different cultural types as defined by Cameron and Quinn have been studied and evaluated. The performance of European countries in innovation has been evaluated on the basis of the Global Innovation Index, the patent applications to the European Patent Office and the European Innovation Scoreboard. Findings Based on literature review, one can conclude that there is a strong positive relation between several cultural characteristics of countries in question and their innovative strength. The results of this paper point out the importance of cultural values for innovation. Research limitations/implications This research has assessed the relation between national culture in general on the innovative strength of nations. Future research on which cultural characteristics and management styles have the strongest correlation with the innovative strength of nations could provide valuable insights for both scholars in this research field and for institutions and companies that wish to improve their innovative strength. Practical implications The results of this study provide us with the insight that the innovative strength of a nation or organization can be altered by changing (parts of) its culture. A practical implication of this finding is that a government can, for example, increase its nation’s innovative strength by encouraging cooperation between different institutions and by limiting rules and regulations which could cause barriers in the innovation process. Social implications A social implication of the findings of this study is the knowledge that to improve the innovative strength of a nation, a government needs to pursue a pro-active policy of transforming national culture, for example, by changing the educational system and decreasing the power distance between teachers and students. Such an effort to influence the national culture addresses interesting issues regarding the concept of social engineering. Originality/value By critically evaluating the qualitative cultural frameworks of several well-known scholars and relating them to quantitative statistical data about the innovative strength of nations, this study has combined the strengths of both qualitative and quantitative methodologies and produced non-trivial findings in an original manner.

The relationship between individual investor sentiment, stock return and volatility

2015 ◽  
Vol 10 (3) ◽  
pp. 504-520 ◽  
Author(s):  
Mustafa Sayim ◽  
Hamid Rahman
Keyword(s):  
Stock Market ◽  
Stock Returns ◽  
Stock Return ◽  
Emerging Market ◽  
Investor Sentiment ◽  
Individual Investor ◽  
Content Type ◽  
Investor Sentiments ◽  
Market Fundamentals ◽  
The Impact

Purpose – The purpose of this paper is to examine the impact of Turkish individual investor sentiment on the Istanbul Stock Exchange (ISE) and to investigate whether investor sentiment, stock return and volatility in Turkey are related. Design/methodology/approach – This study used the monthly Turkish Consumer Confidence Index, published by the Turkish Statistical Institute, as a proxy for individual investor sentiments. First, Turkish market fundamentals were regressed on investor sentiments in order to capture the effects of macroeconomic risk factors on investor sentiments. Then, it used the impulse response functions (IRFs) generated from the vector autoregression (VAR) model to examine the effect of unanticipated movements in Turkish investor sentiment to both stock returns and volatility of the ISE. Findings – The generalized IRFs from VAR shows that unexpected changes in rational and irrational investor sentiment have a significant positive impact on ISE returns. This suggests that a positive investor sentiment tends to increase ISE returns. The study also documents that unanticipated increase in the rational component of Turkish investor sentiment has a negative significant effect on ISE volatility. This might indicate that investors have optimistic expectations of the economy overall with respect to market fundamentals in Turkey. This optimism can result in creating positive expectations, reducing uncertainty, and reducing the volatility of stock market returns. Research limitations/implications – The study was applied only for the period 2004-2010 on the ISE stock returns and volatility. Practical implications – Regardless, investors should know the impact of irrational investor sentiments while establishing investment strategies. The results of this study may also help policy makers stabilize investor sentiments to reduce stock market volatility and uncertainty. Originality/value – This paper adds to the limited understanding of investor sentiment impact on stock return and volatility in an emerging market context.

Investor sentiment and government policy interventions: evidence from COVID-19 spread

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Garima Goel ◽  
Saumya Ranjan Dash
Keyword(s):  
Stock Returns ◽  
Government Policy ◽  
Stock Return ◽  
Investor Sentiment ◽  
Role Of Government ◽  
Content Type ◽  
Policy Interventions ◽  
The Impact ◽  
Moderating Role

Purpose This paper aims to investigate the moderating role of government policy interventions amid the early spread of novel coronavirus (COVID-19) (January–May 2020) on the investor sentiment and stock returns relationship. Design/methodology/approach This paper uses panel data from a sample of 53 countries to examine the impact of investor sentiment, measured by the financial and economic attitudes revealed by the search (FEARS) index (Da et al., 2015) on the stock return. Findings The moderating role of government policy response indices with the FEARS index on the global stock returns is further explored. This paper finds that government policy responses have a moderating role in the sentiment and stock returns relationship. The effect holds true even when countries are split based on five classifications, i.e. cultural distance, health standard, government effectiveness, social well-being and financial development. The results are robust to an alternative measure of pandemic search intensity, quantile regression and two measures of stock market activity, i.e. conditional volatility and exchange traded fund returns. Research limitations/implications The sample period of this study encompasses the early spread phase (January–May 2020) of the novel COVID-19 spread. Originality/value This paper provides some early evidence on whether the government policy interventions are helpful to mitigate the impact of investor sentiment on the stock market. The paper also helps to shed better insights on the role of different country characteristics for the sentiment and stock return relationship.

The performance of the Broad Based Black Economic Empowerment compliant listed property firms in South Africa

2016 ◽  
Vol 34 (1) ◽  
pp. 3-26 ◽  
Author(s):  
Omokolade Akinsomi ◽  
Katlego Kola ◽  
Thembelihle Ndlovu ◽  
Millicent Motloung
Keyword(s):  
Stock Returns ◽  
Factor Model ◽  
Stock Exchange ◽  
Sharpe Ratio ◽  
Economic Empowerment ◽  
Content Type ◽  
Black Economic ◽  
Black Economic Empowerment ◽  
The Government ◽  
The Impact

Purpose – The purpose of this paper is to examine the impact of Broad-Based Black Economic Empowerment (BBBEE) on the risk and returns of listed and delisted property firms on the Johannesburg Stock Exchange (JSE). The study was investigated to understand the impact of Black Economic Empowerment (BEE) property sector charter and effect of government intervention on property listed markets. Design/methodology/approach – The study examines the performance trends of the listed and delisted property firms on the JSE from January 2006 to January 2012. The data were obtained from McGregor BFA database to compute the risk and return measures of the listed and delisted property firms. The study employs a capital asset pricing model (CAPM) to derive the alpha (outperformance) and beta (risk) to examine the trend amongst the BEE and non-BEE firms, Sharpe ratio was also employed as a measurement of performance. A comparative study is employed to analyse the risks and returns between listed property firms that are BEE compliant and BEE non-compliant. Findings – Results show that there exists differences in returns and risk between BEE-compliant firms and non-BEE-compliant firms. The study shows that BEE-compliant firms have higher returns than non-BEE firms and are less risky than non-BEE firms. By establishing this relationship, this possibly affects the investor’s decision to invest in BEE firms rather than non-BBBEE firms. This study can also assist the government in strategically adjusting the policy. Research limitations/implications – This study employs a CAPM which is a single-factor model. Further study could employ a multi-factor model. Practical implications – The results of this investigation, with the effects of BEE on returns, using annualized returns, the Sharpe ratio and alpha (outperformance), results show that BEE firms perform better than non-BEE firms. These results pose several implications for investors particularly when structuring their portfolios, further study would need to examine the role of BEE on stock returns in line with other factors that affect stock returns. The results in this study have several implications for government agencies, there may be the need to monitor the effect of the BEE policies on firm returns and re-calibrate policies accordingly. Originality/value – This study investigates the performance of listed property firms on the JSE which are BEE compliant. This is the first study to investigate listed property firms which are BEE compliant.

Epidemics and Chinese firms' stock returns: is COVID-19 different?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Quang Thi Thieu Nguyen ◽  
Dao Le Trang Anh ◽  
Christopher Gan
Keyword(s):  
Stock Returns ◽  
Negative Impact ◽  
Stock Exchange ◽  
Market Performance ◽  
Disease Outbreaks ◽  
Stock Exchanges ◽  
Content Type ◽  
Event Study Method ◽  
Economic Shock ◽  
The Impact

PurposeThis study investigates the Chinese stocks' returns during different epidemic periods to assess their effects on firms' market performance.Design/methodology/approachThe study employs an event study method on more than 3,000 firms listed on Shanghai and Shenzhen stock exchanges during periods of SARS, H5N1, H7N9 and COVID-19FindingsEpidemics' effect on firms' stock returns is persistent up to 10 days after the event dates. Although the impact varies with types and development of the disease, most firms experience a negative impact of the epidemics. Among the epidemics, COVID-19 has the greatest impact, especially when it grows into a pandemic. The epidemics' impact is uneven across industries. In addition, B-shares and stocks listed on Shanghai Stock Exchange are more negatively influenced by the epidemic than A-shares and those listed on Shenzhen Stock Exchange.Research limitations/implicationsThe results of the study contribute to the limited literature on the effects of disease outbreaks as an economic shock on firm market performance. Given the possibility of other epidemics in the future, the study provides guidance for investors in designing an appropriate investing strategy to cope with the epidemic shocks to the market.Originality/valueThe research is novel in the way it compares and assesses the economic impact of different epidemics on firms and considers their impact at different development stages.

Characterizing response quantity on academic social Q&A sites: a multidiscipline comparison of linguistic characteristics of questions

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Lei Li ◽  
Anrunze Li ◽  
Xue Song ◽  
Xinran Li ◽  
Kun Huang ◽  
...  
Keyword(s):  
Information Needs ◽  
Function Words ◽  
Second Person ◽  
Content Type ◽  
Five Disciplines ◽  
Negative Effect ◽  
Academic Communication ◽  
High Level ◽  
The Impact ◽  
The Relationship

PurposeAs academic social Q&A networking websites become more popular, scholars are increasingly using them to meet their information needs by asking academic questions. However, compared with other types of social media, scholars are less active on these sites, resulting in a lower response quantity for some questions. This paper explores the factors that help explain how to ask questions that generate more responses and examines the impact of different disciplines on response quantity.Design/methodology/approachThe study examines 1,968 questions in five disciplines on the academic social Q&A platform ResearchGate Q&A and explores how the linguistic characteristics of these questions affect the number of responses. It uses a range of methods to statistically analyze the relationship between these linguistic characteristics and the number of responses, and conducts comparisons between disciplines.FindingsThe findings indicate that some linguistic characteristics, such as sadness, positive emotion and second-person pronouns, have a positive effect on response quantity; conversely, a high level of function words and first-person pronouns has a negative effect. However, the impacts of these linguistic characteristics vary across disciplines.Originality/valueThis study provides support for academic social Q&A platforms to assist scholars in asking richer questions that are likely to generate more answers across disciplines, thereby promoting improved academic communication among scholars.

Does the second wave of COVID-19 undermine corporate immunity? International evidence

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Huy Viet Hoang ◽  
Cuong Nguyen ◽  
Khanh Hoang
Keyword(s):  
Stock Returns ◽  
Stock Price ◽  
Fixed Effects ◽  
Management Strategies ◽  
The United States ◽  
Least Square ◽  
Content Type ◽  
The Impact ◽  
Second Wave ◽  
Practical Implications

PurposeThis study compares the impact of the COVID-19 pandemic on stock returns in the first two waves of infection across selected markets, given built-in corporate immunity before the global outbreak.Design/methodology/approachThe data are collected from listed firms in five markets that have experienced the second wave of COVID-19 contagion, namely the United States (US), Australia, China, Hong Kong and South Korea. The period of investigation in this study ranges from January 24 to August 28, 2020 to cover the first two COVID-19 waves in selected markets. The study estimates the research model by employing the ordinary least square method with fixed effects to control for the heterogeneity that may confound the empirical outcomes.FindingsThe analysis reveals that firms with larger size and more cash reserves before the COVID-19 outbreak have better stock performance under the first wave; however, these advantages impede stock resilience during the second wave. Corporate governance practices significantly influence stock returns only in the first wave as their effects fade when the second wave emerges. The results also suggest that in economies with greater power distance, although stock price depreciation was milder in the first wave, it is more intense when new cases again surge after the first wave was contained.Practical implicationsThis paper provides practical implications for corporate managers, policymakers and governments concerning crisis management strategies for COVID-19 and future pandemics.Originality/valueThis study is the first to evaluate built-in corporate immunity before the COVID-19 shock under successive contagious waves. Besides, this study accentuates the importance of cultural understanding in weathering the ongoing pandemic across different markets.

The moderating effect of culture on the relationship between accountability and professional scepticism

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Medhat Endrawes ◽  
Shane Leong ◽  
Kenan M. Matawie
Keyword(s):  
Cultural Values ◽  
Design Methodology ◽  
Middle Eastern ◽  
Cognitive Effort ◽  
Planning Stage ◽  
Content Type ◽  
Big 4 ◽  
Prior Literature ◽  
The Impact ◽  
The Relationship

Purpose This study aims to examine whether accountability and culture have an impact on auditors’ professional scepticism. It also examines whether culture moderates the effect of accountability on auditors’ professional scepticism. Design/methodology/approach Three of the Big 4 firms in Australia and Egypt participated in an audit judgement experiment, which required them to indicate their beliefs about the risk of fraud and error at the planning stage of a hypothetical audit and evaluate the truthfulness of explanations provided by the client management. The authors examined whether their professional scepticism was influenced by accountability. Findings The results indicate professional scepticism differs significantly between cultures in some situations. The fact that culture influences scepticism suggests that even when auditors use the same standards (such as ISA 240 and ISA 600), they are likely to be applied inconsistently, even within the same firm. The authors, therefore, recommend that international bodies issue additional guidance on cultural values and consider these cultural differences when designing or adopting auditing standards. Originality/value To the best of the authors’ knowledge, this is the first study that examines whether culture moderates the impact of accountability on auditors’ professional scepticism using Egyptian and Australian (Middle Eastern and Western) auditors. Prior literature suggests that individuals subject to accountability pressure increase their cognitive effort and vigilance to detect fraud and error. As the authors find evidence that culture moderates accountability pressure and as accountability affects scepticism, they add to the literature suggesting that culture can influence professional scepticism.

Government failures and non-performing loans in European countries: a spatial approach

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ferdinando Ofria ◽  
Massimo Mucciardi
Keyword(s):  
Public Debt ◽  
Geographically Weighted Regression ◽  
European Countries ◽  
Weighted Regression ◽  
Second Step ◽  
Ols Regression ◽  
Content Type ◽  
The Impact ◽  
The Relationship ◽  
The Eu

PurposeThe purpose is to analyze the spatially varying impacts of corruption and public debt as % of GDP (proxies of government failures) on non-performing loans (NPLs) in European countries; comparing two periods: one prior to the crisis of 2007 and another one after that. The authors first modeled the NPLs with an ordinary lest square (OLS) regression and found clear evidence of spatial instability in the distribution of the residuals. As a second step, the authors utilized the geographically weighted regression (GWR) to explore regional variations in the relationship between NPLs and the proxies of “Government failures”.Design/methodology/approachThe authors first modeled the NPL with an OLS regression and found clear evidence of spatial instability in the distribution of the residuals. As a second step, the author utilized the Geographically Weighted Regression (GWR) (Fotheringham et al., 2002) to explore regional variations in the relationship between NPLs and proxies of “Government failures” (corruption and public debt as % of GDP).FindingsThe results confirm that corruption and public debt as % of GDP, after the crisis of 2007, have affected significantly on NPLs of the EU countries and the following countries neighboring the EU: Switzerland, Iceland, Norway, Montenegro, and Turkey.Originality/valueIn a spatial prospective, unprecedented in the literature, this research focused on the impact of corruption and public debt as % of GDP on NPLs in European countries. The positive correlation, as expected, between public debt and NPLs highlights that fiscal problems in Eurozone countries have led to an important rise of problem loans. The impact of institutional corruption on NPLs reports that the higher the corruption, the higher is the level of NPLs.

The robot-to-robot service encounter: an examination of the impact of inter-robot warmth

2021 ◽  
Vol 35 (9) ◽  
pp. 15-27
Author(s):  
Magnus Söderlund
Keyword(s):  
Design Methodology ◽  
Service Robots ◽  
Service Robot ◽  
Service Encounters ◽  
Experimental Setting ◽  
Content Type ◽  
Robot Systems ◽  
Synthetic Agents ◽  
High Level ◽  
The Impact

Purpose This study aims to examine humans’ reactions to service robots’ display of warmth in robot-to-robot interactions – a setting in which humans’ impressions of a service robot will not only be based on what this robot does in relation to humans, but also on what it does to other robots. Design/methodology/approach Service robot display of warmth was manipulated in an experimental setting in such a way that a service robot A expressed low versus high levels of warmth in relation to another service robot B. Findings The results indicate that a high level of warmth expressed by robot A vis-à-vis robot B boosted humans’ overall evaluations of A, and that this influence was mediated by the perceived humanness and the perceived happiness of A. Originality/value Numerous studies have examined humans’ reactions when they interact with a service robot or other synthetic agents that provide service. Future service encounters, however, will comprise also multi-robot systems, which means that there will be many opportunities for humans to be exposed to robot-to-robot interactions. Yet, this setting has hitherto rarely been examined in the service literature.

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