How much does valuation model choice matter? Target price accuracy of PE and DCF model in Asian emerging markets

2017 ◽  
Vol 7 (1) ◽  
pp. 90-107 ◽  
Author(s):  
Samie Ahmed Sayed
Keyword(s):  
Emerging Markets ◽  
Emerging Market ◽  
Institutional Setting ◽  
Research Report ◽  
Target Price ◽  
Predictive Utility ◽  
Content Type ◽  
Valuation Model ◽  
Asian Emerging Markets ◽  
Dcf Model

Purpose The purpose of this paper is to focus on valuation practices applied by analysts to derive target price forecasts in Asian emerging markets. The key objective of this study is to understand valuation model preference of analysts and to compare the predictive utility of target price forecasts derived through heuristics-driven price-to-earnings (PE) model and theoretically sound discounted cash flow (DCF) model. Design/methodology/approach Each research report in the sample of 502 research reports has been studied in detail to understand the dominant valuation model (PE or DCF) applied by analyst to derive target price forecasts. These research reports have been issued on stocks trading in seven emerging markets including India, Malaysia, Indonesia, Taiwan, Philippines, Korea and Thailand during a six-year period starting 2008. Standard OLS and logit regression analysis has been performed to derive empirical findings. Findings The study finds that lower regulatory and reporting standards prevailing in emerging markets have no significant bearing on analyst choice of valuation model (PE or DCF). Time-series analysis suggests that emerging market analysts did not rely upon the usage of DCF model and preferred PE model during and immediately after the financial crisis of 2008. Multivariate regression results show weak evidence that PE model produces better results than DCF model after adjusting for the complexities associated with analyzing emerging market equities. The results imply that PE model, to some degree, is better equipped to capture market moods and sentiment in dynamic emerging markets rather than theoretically sound DCF model. Originality/value Most past studies on valuation model practices have focused on developed markets and this study provides a fresh perspective on analyst valuation model practices and performance in a new institutional setting of Asian emerging markets. The marginally better predictive utility of PE model as compared to DCF model is possibly a feature limited to Asian emerging markets.

Impulse buying tendencies among Indian consumers: scale development and validation

2016 ◽  
Vol 8 (3) ◽  
pp. 205-226 ◽  
Author(s):  
Sheetal Mittal ◽  
Deepak Chawla ◽  
Neena Sondhi
Keyword(s):  
Factor Analysis ◽  
Emerging Markets ◽  
Emerging Market ◽  
Reliability And Validity ◽  
Future Research ◽  
Impulse Buying ◽  
Content Type ◽  
Statistical Measures ◽  
Asian Emerging Markets ◽  
Impulse Buying Tendency

Purpose The purpose of this paper is to conceptualize, develop and validate the measurement of impulse buying tendency India, an emerging market in Asia. Design/methodology/approach The conceptualization of India’s impulse buying tendency (IBT) has been based on a review of academic literature and an analysis of qualitative data from 30 observations at retail stores and 25 in-depth consumer interviews. The scale’s reliability and validity were assessed by content, convergent, discriminant, nomological and predictive validity using statistical techniques such as exploratory factor analysis and confirmatory factor analysis. Findings A two-dimensional measure for IBT was developed for the Indian market, and then tested and validated using appropriate statistical measures. Research limitations/implications The study was skewed towards offline retail with both observations and interviews focusing on the bricks-and-mortar model. With e-retailing in India growing at a rapid rate, future research should extend the study and verify the IBT instrument’s validity specifically for impulse buying behaviour online. Originality/value To the best of authors’ knowledge, the present study is the first to bridge the gap in the existing research of impulse buying in context of emerging markets like India that are culturally, unlike both the western/developed and other Asian/emerging markets; and socio-economically, facing an interplay of variety of factors that are in a state of flux. The developed IBT scale would help by providing academics and practitioners with means of broadening their perspectives and understanding of retail behaviours in a context that is characterized by unprecedented consumer spending, increasing proliferation of modern retail and influence of a culture traditionally been given to simplicity and frugality.

Divergent patterns in institutional entrepreneurship of MNCs in emerging economies

2017 ◽  
Vol 13 (3) ◽  
pp. 186-203 ◽  
Author(s):  
Florian Becker-Ritterspach ◽  
Knut Lange ◽  
Jutta Becker-Ritterspach
Keyword(s):  
Emerging Markets ◽  
Multinational Corporations ◽  
Emerging Market ◽  
Institutional Setting ◽  
Institutional Voids ◽  
Institutional Entrepreneurship ◽  
Content Type ◽  
Developed Economies ◽  
Institutional Settings ◽  
Institutional Embeddedness

Purpose The purpose of this paper is to develop a theoretical framework that addresses the question of how and why multinational corporations (MNCs) from developed economies engage in divergent patterns of institutional entrepreneurship (IE) in emerging markets. Design/methodology/approach The authors combine IB’s concept of institutional voids with comparative capitalism’s insights into the institutional embeddedness of firm capabilities and IE. This theoretical cross-fertilisation is instrumental in developing a refined understanding of institutional voids and how MNCs proactively engage with them. Findings The authors emphasise the notion of institutional voids as a relative concept and, thereby, move away from an ethnocentric view of emerging markets as “empty spaces” that are void of institutions. The authors’ framework proposes that MNCs from liberal and coordinated market economies experience institutional voids differently and engage in different patterns of IE. Research limitations/implications The main limitation of this work is that the propositions are restricted to the country-of-origin effect and that the observations are based on anecdotal evidence only. Against these limitations the authors call for a more comprehensive research agenda in their conclusion. Social implications The paper sensitises policymakers in emerging markets for the potentially different patterns of involvement of MNCs in their institutional environments. Specifically, the authors argue that MNCs may have a strong inclination to rebuild critical elements of their home country’s institutional setting in emerging markets. This touches upon questions of national sovereignty and highlights the need for emerging market policymakers to decide which kinds of institutional settings they would like or not like to see imported. Originality/value The paper provides a new and critical perspective of the mainstream IB concept of institutional voids. The authors’ key contribution is to highlight that the home country institutional context may substantially matter in how MNCs perceive and respond to institutional voids in emerging markets.

Bitter taste: an agency agreement in Vietnam goes awry

2017 ◽  
Vol 7 (2) ◽  
pp. 1-17
Author(s):  
Beat Hans Wafler ◽  
Rian Beise-Zee
Keyword(s):  
Emerging Markets ◽  
Emerging Market ◽  
Subject Area ◽  
Third Party ◽  
Longitudinal Case Study ◽  
Acceptable Solution ◽  
Food Ingredients ◽  
Content Type ◽  
Asian Emerging Markets ◽  
The Relationship

Subject area The case authentically illustrates a common problem encountered within the business scope of an agent who is representing a European food ingredients manufacturer in an emerging market. The case describes the kind of legal set-up and contracts that are necessary to safeguard the long-term prospective of the business for both parties, the agent and overseas supplier. It explains what each party has to observe in case of a termination of the agency agreement. Study level/applicability This is a longitudinal case study of a market entry by a European food ingredients manufacturer through a foreign-owned third agent. The authors studied how sales developed over the first few years and then concentrated the investigation on the fact that after the sales volume was reached, the overseas manufacturer wants to cancel the agency agreement and do the business directly without getting the agent involved. Case overview This case describes and explains a common problem encountered frequently by overseas manufacturers who want to enter an emerging market through a third-party agent representation. The overseas supplier uses the agent’s service and solid reputation to enter an emerging market with limited exposure to costs and risk. The agent works towards guarding the relationship with the overseas supplier for as long as possible. The development of the relationship illustrates what kind of conditions have to be stipulated in advance to provide an acceptable solution to both parties concerned once they part ways. Expected learning outcomes This research is based on a European food ingredients manufacturer, who was expanding its business in different Asian emerging markets, namely, Vietnam and Cambodia. The agent was a long-time established trading house who acted frequently as agent for overseas companies that wanted to get a foothold in these promising Asian emerging markets. Supplementary materials Teaching Notes are available for educators only. Please contact your library to gain login details or email [email protected] to request teaching notes. Subject code CSS 5: International Business

Earnings management and ownership structure in emerging market

2017 ◽  
Vol 43 (10) ◽  
pp. 1117-1136 ◽  
Author(s):  
Naima Lassoued ◽  
Mouna Ben Rejeb Attia ◽  
Houda Sassi
Keyword(s):  
Emerging Markets ◽  
Earnings Management ◽  
Ownership Structure ◽  
Audit Quality ◽  
Emerging Market ◽  
Middle Eastern ◽  
Convincing Evidence ◽  
Loan Loss ◽  
African Countries ◽  
Content Type

Purpose The purpose of this paper is to investigate whether ownership structure affects earnings management in the banking industry of emerging markets. Design/methodology/approach The empirical study is conducted using a sample of 134 banks from 12 Middle Eastern and North African countries. Econometrically speaking, the study used a panel data regression analysis. Findings The authors found convincing evidence that banks with more concentrated ownership use discretionary loan loss provisions to manage their earnings. The authors also found that state and institutional owners encourage earnings management, while family owners reduce this practice. Practical implications The findings would be valuable for investors since they should take into account ownership structure in order to reach a better investment decision. Moreover, regulatory reforms in emerging markets should push for more transparency about ownership structure, high levels of supervision, and external audit quality. Originality/value This study presents international evidence on the prominent role of owners in earnings management in emerging markets with weak shareholder rights protection.

Measuring the service gaps in the roles of quantity surveyors in the emerging market

2016 ◽  
Vol 23 (5) ◽  
pp. 1111-1131 ◽  
Author(s):  
AbdulLateef Olanrewaju
Keyword(s):  
Emerging Markets ◽  
Construction Industry ◽  
Design Methodology ◽  
Emerging Market ◽  
Supply And Demand ◽  
The Other ◽  
Primary Data ◽  
Content Type ◽  
Practical Implications ◽  
Survey Questionnaires

Purpose – The opportunities that the emerging markets present to the players in the construction industry means that the players need to expand on the scope and size of their responsibilities and duties to the stakeholders. Each of the professionals now demands more specialised and sophisticated services from one another. The other players in the construction industry now require more emerging responsibilities and duties from the quantity surveyors. The purpose of this paper is to examine the roles that “modern” quantity surveyors play by measuring the gaps that exist in the services that the quantity surveyors provide. Design/methodology/approach – Primary data are collected through survey questionnaires. In total, 23 roles played by modern quantity surveyors are identified and addressed to the respondents to rank the rate at which quantity surveyors provide these “emerging” services. The collected data were analysed statistically. Findings – The results of the findings led to the conclusion that the quantity surveyors were not meeting the expectations of other players. Therefore, for competitiveness, quantity surveyors need to better meet demand expectations. Research limitations/implications – This findings of this research are constrained to the services or functions that the quantity provide in the construction industry. Practical implications – This knowledge is valuable to academic institutions that offer quantity surveying programmes, to practicing quantity surveyors, governments, and other players in the construction industry. It will allow quantity surveyors to reconcile supply and demand expectations. Originality/value – There is no known conclusive empirical study on services offered by quantity surveyors in any emerging markets. Therefore, the findings offer a fresh understanding on the services of quantity surveyors not only in Nigeria but elsewhere. While some of the services are common, others are peculiar to emerging markets.

scholarly journals Liquidity Synchronization, Its Determinants and Outcomes under Economic Growth Volatility: Evidence from Emerging Asian Economies

Risks ◽  
2021 ◽  
Vol 9 (2) ◽  
pp. 43
Author(s):  
Syeda Hina Zaidi ◽  
Ramona Rupeika-Apoga
Keyword(s):  
Economic Growth ◽  
Emerging Markets ◽  
Interest Rates ◽  
Emerging Market ◽  
The Philippines ◽  
Country Level ◽  
Market Index ◽  
High Inflation ◽  
Asian Emerging Markets ◽  
Growth Volatility

This study investigates the country-level determinants of liquidity synchronization and degrees of liquidity synchronization during economic growth volatility. As a non-diversifiable risk factor, liquidity co-movement shock spreads market-wide and thus disrupts the overall functioning of the financial market. Firms in Asian markets operate in legal and regulatory environments distinct from those of firms analyzed in the previous literature. Comprehensive analyses of liquidity synchronicity in emerging markets are limited. A major knowledge gap pertaining to Asian emerging markets serves as the primary motivation for this study. Seven Asian emerging economies are selected from the MSCI emerging market index: Bangladesh, China, India, Indonesia, Malaysia, Pakistan and the Philippines for analysis from 2010 to 2019. The empirical findings show high levels of liquidity synchronicity in weaker economic and financial environments with low GDP growth, high inflation and interest rates and underdeveloped financial systems taking the form of low levels of private credit. Liquidity synchronicity is also affected by poor investor protection, political instability, weak rule of law and government ineffectiveness. Moreover, levels of liquidity synchronicity are higher in a period of economic growth volatility.

Home country underdevelopment and internationalization

2017 ◽  
Vol 27 (3) ◽  
pp. 217-230 ◽  
Author(s):  
Alvaro Cuervo-Cazurra ◽  
Ravi Ramamurti
Keyword(s):  
Emerging Markets ◽  
Comparative Advantage ◽  
Home Country ◽  
Emerging Market ◽  
Content Type ◽  
Emerging Market Multinationals ◽  
Economic Underdevelopment ◽  
Conceptual Paper ◽  
Practical Implications ◽  
At Home

Purpose The purpose of this study is to use the rise of emerging-market multinationals as a vehicle to explore how a firm’s country of origin influences its internationalization. Design/methodology/approach This paper is a conceptual paper. Findings We argue that the home country’s institutional and economic underdevelopment can influence the internationalization of firms in two ways. First, emerging-market firms may leverage innovations made at home to cope with underdeveloped institutions or economic backwardness to gain a competitive advantage abroad, especially in other emerging markets; We call this innovation-based internationalization. Second, they may expand into countries that are more developed or have better institutions to escape weaknesses on these fronts at home; we call this escape-based internationalization. Research limitations/implications Comparative disadvantages influence the internationalization of the firm differently from comparative advantage, as it forces the firm to actively upgrade its firm-specific advantage and internationalize. Practical implications We explain two drivers of internationalization that managers operating in emerging markets can consider when facing disadvantages in their home countries and follow several strategies, namely, trickle-up innovation, self-reliant innovation, improvisation management, self-reliance management, technological escape, marketing escape, institutional escape and discriminatory escape. Originality/value We explain how a firm’s home country’s comparative disadvantage, not just its comparative advantage, can spur firms its internationalization.

Conditional stock liquidity premium: is Warsaw stock exchange different?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Szymon Stereńczak
Keyword(s):  
Emerging Markets ◽  
Stock Returns ◽  
Stock Exchange ◽  
Emerging Market ◽  
Market Liquidity ◽  
Investment Horizon ◽  
Liquidity Premium ◽  
Stock Liquidity ◽  
Content Type ◽  
Bear Market

Purpose This paper aims to empirically indicate the factors influencing stock liquidity premium (i.e. the relationship between liquidity and stock returns) in one of the leading European emerging markets, namely, the Polish one. Design/methodology/approach Various firms’ characteristics and market states are analysed as potentially affecting liquidity premiums in the Polish stock market. Stock returns are regressed on liquidity measures and panel models are used. Liquidity premium has been estimated in various subsamples. Findings The findings vividly contradict the common sense that liquidity premium raises during the periods of stress. Liquidity premium does not increase during bear markets, as investors lengthen the investment horizon when market liquidity decreases. Liquidity premium varies with the firm’s size, book-to-market value and stock risk, but these patterns seem to vanish during a bear market. Originality/value This is one of the first empirical papers considering conditional stock liquidity premium in an emerging market. Using a unique methodological design it is presented that liquidity premium in emerging markets behaves differently than in developed markets.

scholarly journals Evaluating the impact of corporate logos towards corporate reputation

2017 ◽  
Vol 20 (2) ◽  
pp. 158-180 ◽  
Author(s):  
Pantea Foroudi ◽  
Khalid Hafeez ◽  
Mohammad M. Foroudi
Keyword(s):  
Emerging Markets ◽  
Cultural Values ◽  
Attribution Theory ◽  
Corporate Reputation ◽  
Emerging Market ◽  
Corporate Image ◽  
Customer Relationship ◽  
Corporate Communications ◽  
Content Type ◽  
The Impact

Purpose This paper aims to examine the impact of corporate logos on corporate image and reputation in creating competitive advantage in the context of Persia and Mexico as emerging markets. The paper provides an extensive links between corporate logo and its dimension and internal stakeholders’ attitudes towards advertisement, familiarity and recognisability as intermediaries to corporate image and reputation. Design/methodology/approach A qualitative exploratory approach was undertaken, comprising 12 face-to-face interviews and 14 skype in-depth interviews with graphic designers, design, communication and marketing consultant in Mexico and Persia based on attribution theory. Findings The study posits that the more favorable the name, colour, typeface and design of the company logo, the more favorable the attitude Mexican consumers have towards the corporate logo, corporate image and reputation. However, in comparison for Persia these factors have less effect on customers’ judgment and behaviour, towards the corporate logo, corporate image and reputation. The research findings suggest that the selection of colour in a corporate logo is related to its marketing objectives, cultural values, desired customer relationship levels with the organisation and organisation’s corporate communications. Originality/value Corporate logo has received little attention in marketing literature and rarely researched in the context of emerging market. This is the first research of its kind to find the effect of the compound logo in emerging markets of Persia and Mexico. Therefore, this research makes significant contribution towards the corporate visual identity literature by developing of the sphere of influence of the corporate logo and its antecedents and consequences (corporate image and corporate reputation).

CSR engagement and values in a pre-emerging and emerging country context

2018 ◽  
Vol 13 (5) ◽  
pp. 1251-1272 ◽  
Author(s):  
Virginia Munro ◽  
Denni Arli ◽  
Sharyn Rundle-Thiele
Keyword(s):  
Developing Countries ◽  
Social Identity ◽  
Emerging Markets ◽  
Social Identity Theory ◽  
Emerging Market ◽  
Content Type ◽  
Employee Values ◽  
Emerging Country ◽  
Csr Strategy ◽  
Employee Identification

Purpose Internationalization has witnessed rapid growth of multinational enterprises (MNEs) in emerging markets, requiring reflection on how to operate within these markets. The purpose of this paper is to assist MNEs to adapt to these markets, and adopt corporate social responsibility (CSR) strategy with social initiatives (SIs), relevant to stakeholders, including their employees and the communities they reside in. The current paper does this by examining the relationships between employee identification with the organization’s SIs (SI-I) and their engagement in them (SI-E), alongside their perspective on the general importance of CSR (ICSR) and employee values to help with CSR (VCSR). The findings will better prepare managers in pre-emerging and emerging markets to design CSR strategy and SIs relevant to these markets and their communities. Design/methodology/approach Guided by social identity theory, this paper examines local employee identification of SI (SI-I) and engagement in SI (SI-E), in two MNE subsidiaries across varying emerging market levels in developing countries, utilizing a quantitative survey design. Structural equation modeling is utilized to analyze responses of N=544 employees in two South East Asian countries, namely, Indonesia (as an emerging country) and Vietnam (as a pre-emerging country), to determine any differences that may exist between the two countries. Findings The findings reveal that SI identification (SI-I) has a strong effect on employee engagement in SIs (SI-E) and also the importance they attach to organizations conducting CSR (ICSR). However, employee values to help with CSR activities (VCSR) has an effect on Vietnamese employees but not Indonesian employees. Likewise, SI-I mediates the effect between ICSR and SI-E for Vietnamese employees but not for Indonesian, suggesting differences exist between these two developing countries where the less developed country, Vietnam, is defined as pre-emerging and Indonesia as an emerging market (MSCI, 2016). Practical implications An awareness of the differences that may exist across employees in emerging markets will assist managers to design CSR strategy relevant to the level of market emergence of the host country, allowing for better CSR SIs identification and engagement in these countries. Originality/value The research model for this analysis utilizes constructs based on past Identification literature, while including new constructs for this study adapted from past literature, and underpinned uniquely by social identity theory in an International Business setting. The findings indicate differences between emerging and pre-emerging markets for particular constructs, which suggests the importance of considering the market level when implementing MNE CSR strategy. Limited research has been conducted examining the differences between emerging and pre-emerging markets, so further research is required to replicate these findings and provide insight into the differences that may exist for CSR SIs in emerging markets.

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