Disinvestment in Indian central public sector enterprises: a performance improvement measure

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Priya Mandiratta ◽  
G.S. Bhalla
Keyword(s):  
Public Sector ◽  
Stock Market ◽  
Stock Exchange ◽  
Random Effect ◽  
Market Mechanism ◽  
Rank Test ◽  
Net Income ◽  
Content Type ◽  
Negative Results ◽  
The Impact

PurposeThe purpose of this study is to represent an attempt to empirically capture the impact of disinvestment on the financial and operating performance of 26 Bombay Stock Exchange (BSE) listed central public sector enterprises (CPSEs) in India which got divested through stock market mechanism during the time period of 2000–2014.Design/methodology/approachThrough ratio analysis different ratios such as return on assets, return on equity, net income efficiency, debt equity, dividend payout and employment levels have been computed. Pre- and post disinvestment performance of these firms is examined through Wilcoxon signed-rank test. The present research endeavors to examine the impact of disinvestment through random effect panel data models in order to control the effect of other firm specific variables.FindingsThe overall results of the study indicate statistically significant fall in profitability ratios. The empirical results have not witnessed positive effect of disinvestment on the profitability of the CPSEs; rather, this effect has found to be negative. The possible reasons behind these negative results could be poor pre disinvestment financial health of CPSEs, negative rate of return on capital employed by PSEs and inefficiency which need to be tested empirically by future researchers.Originality/valueThe fact that government-owned firms are typically less proficient or at least less gainful than private-owned firms is widely hypothesized. Therefore, the disinvestment policy aims at dropping the participation of the public sector in the economic actions of the country in order to support the private sector. The present study is a first of its kind to study the impact of disinvestment on the profitability of the firms, which got divested through stock market mechanism since the year 2000 by applying both univariate and multivariate analysis.

Do Indian stock market sentiments impact contemporaneous returns?

2018 ◽  
Vol 7 (3) ◽  
pp. 332-346
Author(s):  
Divya Aggarwal ◽  
Pitabas Mohanty
Keyword(s):  
Stock Market ◽  
Stock Returns ◽  
Temporal Dynamics ◽  
Stock Exchange ◽  
Principal Component ◽  
Stock Index ◽  
Content Type ◽  
Investor Sentiments ◽  
Indian Stock Market ◽  
The Impact

Purpose The purpose of this paper is to analyse the impact of Indian investor sentiments on contemporaneous stock returns of Bombay Stock Exchange, National Stock Exchange and various sectoral indices in India by developing a sentiment index. Design/methodology/approach The study uses principal component analysis to develop a sentiment index as a proxy for Indian stock market sentiments over a time frame from April 1996 to January 2017. It uses an exploratory approach to identify relevant proxies in building a sentiment index using indirect market measures and macro variables of Indian and US markets. Findings The study finds that there is a significant positive correlation between the sentiment index and stock index returns. Sectors which are more dependent on institutional fund flows show a significant impact of the change in sentiments on their respective sectoral indices. Research limitations/implications The study has used data at a monthly frequency. Analysing higher frequency data can explain short-term temporal dynamics between sentiments and returns better. Further studies can be done to explore whether sentiments can be used to predict stock returns. Practical implications The results imply that one can develop profitable trading strategies by investing in sectors like metals and capital goods, which are more susceptible to generate positive returns when the sentiment index is high. Originality/value The study supplements the existing literature on the impact of investor sentiments on contemporaneous stock returns in the context of a developing market. It identifies relevant proxies of investor sentiments for the Indian stock market.

The impact of research and development and marketing costs on the profitability of pharmaceutical companies of Tehran Stock Exchange using panel data 2001-2013

2016 ◽  
Vol 10 (4) ◽  
pp. 467-476 ◽  
Author(s):  
Yahya Bayazidi ◽  
Enayatollah Homaie Rad ◽  
Mehdi Mojahedian ◽  
Mehdi Toroski ◽  
Azita Nabizadeh ◽  
...  
Keyword(s):  
Panel Data ◽  
Research And Development ◽  
Stock Exchange ◽  
Random Effect ◽  
Patent Law ◽  
Pharmaceutical Companies ◽  
Content Type ◽  
Marketing Costs ◽  
The Impact ◽  
D Investment

Purpose The main aim of this study is to investigate the effects of marketing and costs and research and development (R&D) investments on profitability of pharmaceutical companies of Iran. Design/methodology/approach In this study, pharmaceutical companies that have been accepted in Tehran Stock Exchange until March 19, 2013 were investigated. Random-effect panel data estimator was used for this purpose. Findings The findings indicate that variables such as company size, capital-to-total asset ratio and debt-to-asset ratio have an effect on profitability. But, company life, advertising cost and R&D investment are ineffective on profitability. Originality/value Legal issues like not having patent law and pricing mechanism are reasons for the ineffective relationship between R&D and marketing costs and its effect on profitability of the Iran pharmaceutical industry.

Factors influencing liquidity position of Indian manufacturing companies

2020 ◽  
Vol 10 (2) ◽  
pp. 243-260
Author(s):  
Amit Tripathy ◽  
Shigufta Hena Uzma
Keyword(s):  
Manufacturing Industry ◽  
Stock Exchange ◽  
Cash Holdings ◽  
Emerging Economy ◽  
Market Mechanism ◽  
Manufacturing Companies ◽  
Content Type ◽  
Factors Influencing ◽  
Indian Context ◽  
The Impact

PurposeThe purpose of this paper is to investigate the increasing demand for corporate liquidity and examines the various factors influencing the cash position of firms in India. The financial policy to hold cash gained impetus after the financial crisis when the companies faced a severe cash crunch. However, the firms operating in emerging nations have an imperfect market mechanism with stringent regulatory norms. Thus, this paper attempts to examine the determinants of corporate cash holdings in an emerging country like India.Design/methodology/approachThe paper focuses on the impact of various factors (leverage, firm size, profitability, growth along with other variables), on the cash structure of all the manufacturing companies listed on the Bombay stock exchange. The study employs panel data methodologies over a sample of 323 firms over a period of eight years from 2010 to 2017.FindingsSignificant estimators affecting cash holdings of a firm are the size of a firm, debt levels, tangibility, sales growth and research and development expense. Overall, the study finds evidence on the existence of Pecking Order theory in explaining the determinants of cash holdings in the Indian market.Research limitations/implicationsThe study attempts to explore the critical determinants of cash in the Indian context which can be useful for managers and academicians to understand how the key theories of cash holdings operate in an emerging economy like India.Originality/valueIndia is an emerging economy and has recently gained global attention and has become a hotspot for foreign investments. Thus, this paper explores pieces of evidence on the critical factors affecting cash holdings in India. The study would provide an understanding of the existing cash policy in the Indian context and attempts to find the changes in the financing structure adopted by the manufacturing industry in the given period.

The impact of fair value estimates on audit fees: evidence from the financial sector in Jordan

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Rateb Mohammad Alqatamin ◽  
Ernest Ezeani
Keyword(s):  
Positive Relationship ◽  
Stock Exchange ◽  
Random Effect ◽  
Audit Fees ◽  
Fair Value ◽  
Financial Information ◽  
Content Type ◽  
External Auditors ◽  
The Right ◽  
The Impact

PurposeThis study investigates the association between the estimates of fair value and external auditor's fees.Design/methodology/approachBased on a sample of 32 Jordanian financial companies listed on the Amman Stock Exchange (ASE) over the period 2005–2018. We employ random effect models to test our hypothesis.FindingsWe found a positive relationship between audit fees and the proportion of fair value assets, which implies that external auditors are more likely to spend more effort for complex estimates, thereby increasing audit fees. We examined the relationship between audit fees and three levels of fair value inputs and found a positive relationship between the level of effort spent on assessment of higher uncertainty fair value inputs and audit fees. The findings are consistent with the expectation that more audit effort is required in a highly regulated environment due to the possibility of a higher cost of litigation.Practical implicationsThe findings of this study could be beneficial for a number of users of financial information, such as investors, regulators, auditors. This group of users might consider the results of this study when they are using a company's financial information, and consequently, better able to make the right decisions.Originality/valueAlthough prior studies have researched fair value, no study to date among developing countries has investigated its relationship with audit fees. This study, therefore, provides new empirical evidence that the complexity and risk of fair value estimates significantly influences auditors' motivation to expend additional effort, resulting in higher audit cost.

scholarly journals Detection of structural regimes and analyzing the impact of crude oil market on Canadian stock market: Markov regime-switching approach

2022 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mohammadreza Mahmoudi ◽  
Hana Ghaneei
Keyword(s):  
Stock Market ◽  
Crude Oil ◽  
Stock Return ◽  
Stock Exchange ◽  
Markov Switching ◽  
Stock Index ◽  
Var Model ◽  
Content Type ◽  
Oil Market ◽  
The Impact

Purpose This study aims to analyze the impact of the crude oil market on the Toronto Stock Exchange Index (TSX). Design/methodology/approach The focus is on detecting nonlinear relationship based on monthly data from 1970 to 2021 using Markov-switching vector auto regression (VAR) model. Findings The results indicate that TSX return contains two regimes: positive return (Regime 1), when growth rate of stock index is positive; and negative return (Regime 2), when growth rate of stock index is negative. Moreover, Regime 1 is more volatile than Regime 2. The findings also show the crude oil market has a negative effect on the stock market in Regime 1, while it has a positive effect on the stock market in Regime 2. In addition, the authors can see this effect in Regime 1 more significantly in comparison to Regime 2. Furthermore, two-period lag of oil price decreases stock return in Regime 1, while it increases stock return in Regime 2. Originality/value This study aims to address the effect of oil market fluctuation on TSX index using Markov-switching approach and capture the nonlinearities between them. To the best of the author’s knowledge, this is the first study to assess the effect of the oil market on TSX in different regimes using Markov-switching VAR model. Because Canada is the sixth-largest producer and exporter of oil in the world as well as the TSX as the Canada’s main stock exchange is the tenth-largest stock exchange in the world by market capitalization, this paper’s framework to analyze a nonlinear relationship between oil market and the stock market of Canada helps stock market players like policymakers, institutional investors and private investors to get a better understanding of the real world.

Stock mispricing and investment decisions: evidence from Pakistan

2018 ◽  
Vol 16 (4) ◽  
pp. 725-741
Author(s):  
Usman Muhammad ◽  
Sana Saleem ◽  
Anwar ul Haq Muhammad ◽  
Faiq Mahmood
Keyword(s):  
Stock Exchange ◽  
Random Effect ◽  
Investment Decisions ◽  
Corporate Investment ◽  
Capital Expenditures ◽  
Content Type ◽  
Financial Firms ◽  
Stock Mispricing ◽  
The Impact

Purpose This study aims to examine the impact of stock mispricing on corporate investment decisions by taking the sample of non-financial firms listed on the Pakistan Stock Exchange during the period of 2008-2014. Design/methodology/approach To measure the mispricing, this study decomposes the market-to-book ratio into mispricing and growth components and measures corporate investment by capital expenditures. Fixed and random effect panel regression models are used to estimate the results. Findings Results of the study show that firms issue overvalued equity to finance the capital expenditures. Consistent with other studies, the relationship between stock mispricing and investment is more prominent in the financially constrained firms. In addition, cash flow investment sensitivity is higher in financially unconstrained firms. Practical implications Nonetheless, the results give important implications to the Pakistan Stock Market on how the mispricing enhances the welfare by relaxing the financial constraints and allowing the managers to make investment in profitable projects that otherwise go non-funded. These findings have interesting implications for further research in the literature of finance and also help in economic policy-making. Originality/value This study finds the impact of stock mispricing on corporate investment decisions by considering the role of market timing in the context of Pakistan.

scholarly journals Impact of gold and oil prices on the stock market in Pakistan

2020 ◽  
Vol 25 (50) ◽  
pp. 279-294
Author(s):  
Aiza Shabbir ◽  
Shazia Kousar ◽  
Syeda Azra Batool
Keyword(s):  
Stock Market ◽  
Stock Returns ◽  
Stock Exchange ◽  
Structural Break ◽  
Oil Prices ◽  
Current Data ◽  
Small Sample ◽  
Data Set ◽  
Content Type ◽  
The Impact

Purpose The purpose of the study is to find out the impact of gold and oil prices on the stock market. Design/methodology/approach This study uses the data on gold prices, stock exchange and oil prices for the period 1991–2016. This study applied descriptive statistics, augmented Dickey–Fuller test, correlation and autoregressive distributed lag test. Findings The data analysis results showed that gold and oil prices have a significant impact on the stock market. Research limitations/implications Following empirical evidence of this study, the authors recommend that investors should invest in gold because the main reason is that hike in inflation reduces the real value of money, and people seek to invest in alternative investment avenues like gold to preserve the value of their assets and earn additional returns. This suggests that investment in gold can be used as a tool to decline inflation pressure to a sustainable level. This study was restricted to use small sample data owing to the availability of data from 1991 to 2017 and could not use structural break unit root tests with two structural break and structural break cointegration approach, as these tests require high-frequency data set. Originality/value This study provides information to the investors who want to get the benefit of diversification by investing in gold, oil and stock market. In the current era, gold prices and oil prices are fluctuating day by day, and investors think that stock returns may or may not be affected by these fluctuations. This study is unique because it focusses on current issues and takes the current data in this research to help investment institutions or portfolio managers.

Tunisian revolution and stock market volatility: evidence from FIEGARCH model

2015 ◽  
Vol 41 (10) ◽  
pp. 1112-1135 ◽  
Author(s):  
Ahmed Jeribi ◽  
Mohamed Fakhfekh ◽  
Anis Jarboui
Keyword(s):  
Stock Market ◽  
Financial Services ◽  
Stock Exchange ◽  
Leverage Effect ◽  
Stock Market Volatility ◽  
Political Uncertainty ◽  
Content Type ◽  
Stock Indices ◽  
Tunisian Revolution ◽  
The Impact

Purpose – Previously elaborated research works, dealing with the political uncertainty effect on stock market, have been primarily concerned with such political events as terrorist attacks, elections, wars, natural catastrophes and financial crashes. Such little research has been concerned with civil uprisings and revolutionary movements, as crucial sources of political uncertainty. The purpose of this paper is to study the impact of political uncertainty (resulting from the Tunisian Revolution) on the volatility of major sectorial stock indices in the Tunisian Stock Exchange (TSE). Design/methodology/approach – The authors apply the fractionally integrated exponential generalized autoregressive conditional heteroscedasticity model (FIEGARCH), which helps maintain a direct shock-persistence as well as a shock asymmetric volatility measurement. This model is applied to the daily returns relevant to nine sectorial stock indices and to the Tunisian benchmark index (TUNINDEX) with respect to three sub-periods (before, during and follows the Tunisian Revolution). Findings – The reached findings suggest that the shock impact throughout the Revolution period on construction, industries, consumer services, financial services, financial companies indices’ sectorial and the TUNINDEX return volatilities have proven to be permanent, while its persistence on the other indices has been discovered to be transitory. In addition, the achieved results appear to reveal a low leverage effect on all indices. This result seems to be very important since the Tunisian Revolution turns out to have a very important effect on the TSE. Originality/value – The paper’s empirical contribution lies in using the FIEGARCH approach to model the Tunisian sectorial indices’ volatility dynamics, persistence degree and leverage effect. This contribution goes a long way in helping regulators and international investors to further recognize the extent to which political instability does participate in affecting the TSE.

scholarly journals Impact of Accounting Ratios on Stock Market Price of Listed companies in Colombo Stock Exchange

2021 ◽  
Author(s):  
Chandrasegaran Larojan
Keyword(s):  
Regression Analysis ◽  
Stock Market ◽  
Stock Exchange ◽  
Pearson Correlation ◽  
Random Effect ◽  
Market Price ◽  
Fixed Effect ◽  
Effect Regression ◽  
The Impact ◽  
Accounting Ratios

This study investigates the impact of accounting ratios on stock market price of top twenty companies based on the highest market capitalization listed in the Colombo Stock Exchange (CSE). The objectives of this study were to examine the impact of Earnings per Share (EPS) on stock market price; to examine the impact of Dividend per Share (DPS) on stock market price, to examine the impact of Price Earnings ratio (PE) on stock market price and to examine the impact of Market to Book ratio (MB) on stock market price. The panel data was collected from the top twenty companies for the period of five years from 2015 to 2019. EPS, DPS, PE and MB ratios were used as the proxies for the independent variables and stock price was used as the proxy for the dependent variable for this study. In order to perform the inferential analysis Pearson correlation analysis, panel regression with fixed effect, random effect and pooled linear regression were used. Hausman test was adopted in order to choose either random effect regression or fixed effect regression. According to pooled regression analysis, EPS, DPS and PE ratios had positive significant impact on stock market price. MB ratio had a negative significant impact on stock market price. According to fixed effect regression analysis, EPS, PE and MB ratios had positive insignificant impact on stock market price whereas DPS had a positive significant impact on stock market price. This study offers an insight to the potential investors to make the rational investment decisions in the stock market.

An augmented macroeconomic linear factor model of South African industrial sector returns

2020 ◽  
Vol 21 (5) ◽  
pp. 517-541
Author(s):  
Jan Jakub Szczygielski ◽  
Leon Brümmer ◽  
Hendrik Petrus Wolmarans
Keyword(s):  
Stock Market ◽  
South African ◽  
Stock Exchange ◽  
Industrial Sector ◽  
The South ◽  
Macroeconomic Factors ◽  
Content Type ◽  
Factor Analytic ◽  
The Impact ◽  
Sector Returns

Purpose This study aims to investigate the impact of the macroeconomic environment on South African industrial sector returns. Design/methodology/approach Using standardized coefficients derived from time-series factor models, the authors quantify the impact of macroeconomic influences on industrial sector returns. The authors analyze the structure of the resultant residual correlation matrices to establish the level of factor omission and apply a factor analytic augmentation to arrive at a specification that is free of omitted common factors. Findings The authors find that global influences are the most important drivers of returns and that industrial sectors are highly integrated with the global economy. The authors show that specifications that comprise only macroeconomic factors and proxies for omitted factors in the form of residual market factors are likely to be underspecified. This study demonstrates that a factor analytic augmentation is an effective approach to ensuring an adequately specified model. Research limitations/implications The findings have a number of implications that are of interest to investors, econometricians and researchers. While the study focusses on a single market, the South African stock market, as represented by the Johannesburg Stock Exchange (JSE), it is a highly developed and globally integrated market. In terms of market capitalization, it exceeds the Madrid Stock Exchange, the Taiwan Stock Exchange and the BM&F Bovespa. Yet, a limited number of studies investigate the macroeconomic drivers of the South African stock market. Practical implications Investors should be aware that while the South African domestic environment, especially political risk, has an impact on returns, global influences are the greatest determinants of returns. No industrial sectors are insulated from global influences and this limits the potential for diversification. This study suggests an alternative set of macroeconomic factors that may be used in further analysis and asset pricing studies. From an econometric perspective, this study demonstrates the usefulness of a factor analytic augmentation as a solution to factor omission in models that use macroeconomic factors to proxy for systematic influences that describe asset prices. Originality/value The contribution lies in providing insight into a large and well-developed yet understudied financial market, the South African stock market. This study considers a much broader set of macroeconomic factors than prior studies. A methodological contribution is made by estimating and interpreting standardized coefficients to discriminate between the impact of domestically and internationally driven factors. This study shows that should coefficients not be standardized, inferences relating to the relative importance of factors will differ. Finally, the authors unify an approach of using pre-specified factors with a factor analytic approach to address factor omission and to ensure a valid and readily interpretable specification.

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