Nigeria will seek to ride out capital market pressure

2015 ◽  
Keyword(s):  
Capital Market ◽  
Content Type ◽  
Market Pressure

Headline NIGERIA: Regulators seek to ride out market pressure

scholarly journals The future of financial markets and regulation: what strategy for Europe?

foresight ◽  
2014 ◽  
Vol 16 (2) ◽  
pp. 95-108 ◽  
Author(s):  
Jean-Baptiste Gossé ◽  
Dominique Plihon
Keyword(s):  
Financial Markets ◽  
Capital Market ◽  
Financial Stability ◽  
Design Methodology ◽  
Financial Integration ◽  
Content Type ◽  
Realistic Option ◽  
The Future ◽  
Unstable Environment ◽  
Insight Into

Purpose – This article aims to provide insight into the future of financial markets and regulation in order to define what would be the best strategy for Europe. Design/methodology/approach – First the authors define the potential changes in financial markets and then the tools available for the regulator to tame them. Finally, they build five scenarios according to the main evolutions observed on the financial markets and on the tools used by the regulator to modify these trends. Findings – Among the five scenarios defined, two present highly unstable features since the regulator refuses to choose between financial opening and independently determining how to regulate finance in order to preserve financial stability. Three of them achieve financial stability. However, they are more or less efficient or feasible. In terms of market efficiency, the multi-polar scenario is the best and the fragmentation scenario is the worst, since gains of integration depend on the size of the new capital market. Regarding sovereignty of regulation, fragmentation is the best scenario and the multi-polar scenario is the worst, because it necessitates coordination at the global level which implies moving further away from respective national preferences. However, the more realistic option seems to be the regionalisation scenario: this level of coordination seems much more realistic than the global one; the market should be of sufficient size to enjoy substantial benefits of integration. Nevertheless, the “European government” might gradually increase the degree of financial integration outside Europe in line with the degree of cooperation with the rest of the world. Originality/value – Foresight studies on financial markets and regulation are quite rare. This may be explained by the difficulty to forecast what will be their evolution in the coming decades, not least because finance is fundamentally unstable. This paper provides a framework to consider what could be the best strategy of regulators in such an unstable environment.

Road to default: Tracoma holding Berhad Bai Bithaman Ajil Debt securities (BaIDS)

2015 ◽  
Vol 5 (5) ◽  
pp. 1-6
Author(s):  
A.M. Hafizi ◽  
Shahida Shahimi ◽  
Mohd Hafizuddin Syah Bangaan Abdullah ◽  
M. Badrul Hakimi Daud
Keyword(s):  
Learning Outcomes ◽  
Capital Market ◽  
Credit Rating ◽  
Subject Area ◽  
Capital Requirements ◽  
Fund Raising ◽  
Case Scenario ◽  
Worst Case ◽  
Content Type ◽  
Analytical Skills

Subject area Islamic Finance and Investment Study level/applicability Level of program/audience: Advanced undergraduate and postgraduate. Courses Intermediate and Advanced Finance, Economics, Islamic Economics & Finance, Islamic Banking & Finance, Islamic Capital Market and other relevant courses. Specifictopics/syllabus Capital markets instruments, conventional or Islamic. Case overview This case focuses on Tracoma Holding Berhad Bai Bithaman Ajil Debt Securities (BaIDS) amounting to RM 100 million which was issued by Tracoma Holding Berhad in 2005. It was the first issuance of a sukuk (Islamic debt securities or bond) by the company. The proceeds were used to finance its growth and to repay existing bank borrowings and capital requirements. This case is interesting, as it allows students to study the bai bithaman ajil sukuk structure and issuance process in the Malaysian capital market. It also provides basic financial transaction and credit rating of sukuk which requires analytical skills. Being a debt-based facility, the sukuk was subjected to credit rating evaluation by the MARC, the rating agency appointed by the company. Further downgrading of the sukuk meant it would lead to the worst-case scenario. Some actions needed to be taken to solve this issue; therefore, the CFO suggested an urgent meeting with the sukuk holders. Expected learning outcomes The students should be able to: understand the issuance process and the principle of BBA (bai bithamin ajil) in sukuk structure; understand reason(s) methods of fund raising by firm and the allocations of fund; understand the sukuk default issue; analyze the reasons for sukuk default; understand the importance of debt securities credit ratings; and identify investors' protection in the case of sukuk default. 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.

Rule of law and preventing fraud in Nigeria’s capital market

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Uchechukwu Nwoke ◽  
Ibenaku Harford Onoh
Keyword(s):  
Rule Of Law ◽  
Capital Markets ◽  
Capital Market ◽  
Critical Evaluation ◽  
Subject Area ◽  
The Body ◽  
Content Type ◽  
The Rule Of Law ◽  
Body Of Knowledge ◽  
Fresh Insight

Purpose The purpose of this paper is to critically analyse the correlation between the rule of law and the efficient functioning of capital markets. It attempts to examine the Nigerian capital market and how the rule of law can be used to prevent fraud and promote the proper functioning of the market. Design/methodology/approach The paper adopts the doctrinal approach through a critical evaluation of concepts. Using existing literature in the subject area, it evaluates the inter-connectedness between law and the capital market and how the rule of law is an important instrument in capital market development. Findings The paper finds that there have been numerous infractions of the rule of law by capital market actors, leading to stultification in the growth and development of this sector of the Nigerian economy. Originality/value The paper offers a fresh insight into the correlation between the rule of law and capital markets. By critically assessing the inter-connectivity between the two concepts, it extends the body of knowledge in this area by showing how the operations of the Nigerian capital market could be improved through the proper application of the rule of law.

Organized Labor and Inventory Stockpiling

2021 ◽  
Author(s):  
Sophia J.W. Hamm ◽  
Boo Chun Jung ◽  
Woo-Jong Lee ◽  
Daniel G. Yang
Keyword(s):  
Capital Market ◽  
Bargaining Power ◽  
Investment Decision ◽  
Organized Labor ◽  
Costs And Benefits ◽  
Investment Decision Making ◽  
Major Stakeholder ◽  
Information Spillover ◽  
Labor Negotiations ◽  
Market Pressure

We document that managers stockpile excess inventory to mitigate the operational risk posed by labor unions and to maintain bargaining power in labor negotiations. Inventory levels are higher for union firms and are incrementally higher preceding the renegotiation of collective bargaining agreements with unions. Inventory stockpiling at union firms is more salient when capital market pressure for transparency or information spillover from peers constrains managers from using disclosure strategies. We further show that managers weigh the costs and benefits of inventory stockpiling, as holding excess inventory due to the presence of a union is negatively associated with future profitability but provides the benefits of avoiding a stockout and mitigating negative outcomes from a strike. Our findings highlight the importance of a major stakeholder, i.e., labor, in managers' investment decision-making.

Interest on equity and capital structure in the Brazilian context

2014 ◽  
Vol 10 (1) ◽  
pp. 39-53 ◽  
Author(s):  
João Zani ◽  
Eduardo Tomedi Leites ◽  
Clea Beatriz Macagnan ◽  
Márcio Telles Portal
Keyword(s):  
Capital Structure ◽  
Capital Market ◽  
Empirical Literature ◽  
Published Data ◽  
Net Income ◽  
Initial Sample ◽  
Content Type ◽  
Tax Benefits ◽  
Main Determinants ◽  
The Impact

Purpose – The interest paid on own capital can benefit companies in the Brazilian capital market as it can be considered a business expense and is, therefore, deductible as a corporate tax. The purpose of this paper is to assess the impact of interest on equity (IOE) on capital structure decisions. Design/methodology/approach – The initial sample consisted of 524 publicly traded companies from different industries in the Brazilian capital market that were listed on Bovespa. Companies in the finance, insurance and funds industries were excluded from the sample due to the unique features of these financial intermediaries. Some companies in the initial sample were excluded due to a lack of published data, inactivity during the sample period, etc. Thus, the paper excluded those companies that did not have valid observations or failed to publish them. The final sample included 370 companies and covered the nine-year period from 1998 through 2006. Findings – To this end, the authors identified the main determinants of capital structure and analyzed, through panel data, the relationship of IOE in addition to other determinants of capital structure, such as size, profitability, investment opportunities, risk, sales growth, real interest rate and real exchange rate, in corporate debt. The novel contribution of this study is the inclusion and analysis of the IOE in studies on the determination of capital structure of Brazilian companies. A new capital structure scenario was created when Law No. 9.249/95 required changes in legislation, ceasing the restatement of balance sheets and allowing companies to compensate their stockholders through IOE. Before this change, companies could only benefit from the tax benefits of debt, using debt capital. Now, they can also benefit from the use of equity because, by requiting equity through the IOE, deductions of income tax and social contributions on net income are allowed by tax law because the IOE may be considered a financial expense. Originality/value : The authors were not able to find any other publication of a similar study in a review of the extant empirical literature.

The role of state ownership on earnings quality: evidence across public and private European firms

2018 ◽  
Vol 19 (2) ◽  
pp. 312-332 ◽  
Author(s):  
Cristina Gaio ◽  
Inês Pinto
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Capital Markets ◽  
Capital Market ◽  
Earnings Quality ◽  
State Ownership ◽  
Public And Private ◽  
Content Type ◽  
Large Sample

Purpose The purpose of this paper is to examine the role of state ownership on financial reporting quality regarding the characteristics of conservatism and earnings management. Design/methodology/approach Using a large sample of public and private European firms during the period 2003-2010, the authors test the hypotheses following Ball and Shivakumar’s (2005) model for conservatism and the modified Jones (1991) model proposed by Dechow and Sloan (1995) for earnings management. To ensure that the results are robust, the authors conduct sensitivity analysis with regard to potential endogeneity and selection bias. Findings The authors find that state-owned firms are less conservative than non-state-owned firms, which is consistent with the idea that there is less need for accounting conservatism due to government protection. The authors also show that capital markets play an important role in shaping the relation between state ownership and earnings management. Among public firms, the authors find that state-owned firms have higher abnormal accruals and worse accruals quality than non-state-owned firms, which suggests that state-owned firms are not immune to capital market pressures. Research limitations/implications The study has two limitations. First, as state-owned and non-state-owned firms face quite different incentive structures, management behavior might be determined by factors that have yet to be identified. Second, prior research results suggest an inverted U-shape relation between ownership concentration and earnings management (Ding et al., 2007). It would be interesting to investigate the impact of different levels of state ownership on earnings quality. Practical implications As the paper investigates the role of state ownership on earnings quality using a sample of European firms, it brings new insights regarding the role of state ownership in accounting quality and firm performance. In addition, it considers the role of capital markets in the relation between the quality of financial reporting and ownership by considering a sample with both public and private firms. Originality/value The study contributes to the debate about state intervention in the corporate sector, by extending the knowledge of the effects of government ownership on earnings quality by using a large sample of European firms. Furthermore, the authors also introduce the effect of capital market forces on managers’ behavior in state-owned and non-state-owned companies by analyzing private and publicly listed firms.

Board performance and its relation to dividend payout: evidence from Malaysia

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ravichandran Subramaniam ◽  
Mahenthiran Sakthi
Keyword(s):  
Board Of Directors ◽  
Capital Market ◽  
Performance Measure ◽  
Corporate Boards ◽  
Minority Shareholders ◽  
Dividend Payout ◽  
Content Type ◽  
Return On Capital ◽  
The Board Of Directors ◽  
Board Performance

PurposeTo examine the board of directors’ performance and if higher performance helps protect minority shareholders in an emerging capital market. Additionally, we determine if the different types of company ownership moderate the level of protection to minority shareholders.Design/methodology/approachThe study develops a measure of board performance with their compensation. And it tests its association with the dividend payout decision of 300 of the largest Malaysian public listed companies (referred to as PLCs) over the period 2008 to 2014.FindingsThe results find that higher board productivity in terms of return on capital employed is associated with higher dividend payout. Additionally, the study finds that the board performance measure interacts with race, ethnicity and gender of the board of directors and CEO duality to affect the dividend payout decision of Malaysian PLCs.Research limitations/implicationsIt is a single-country study of large Malaysian PLCs. And it uses only the governance mechanisms that have been shown in emerging capital markets to have the most significant effect on affecting the relationship between board performance and dividend payout.Practical implicationsThe findings show the importance of inclusivity and diversity in governing State-controlled firms in an emerging capital market.Originality/valueThe findings suggest improving corporate boards’ performance, protecting minority shareholders and contributing to the corporate governance literature. Notably, the study highlights boardroom diversity’s importance to enhance the boards of State-controlled firms’ performance.

Edifying role of corporate reputation in new issue market: Indian evidence

2019 ◽  
Vol 11 (2) ◽  
pp. 159-170
Author(s):  
Amanpreet Kaur ◽  
Balwinder Singh
Keyword(s):  
Initial Public Offering ◽  
Capital Market ◽  
Corporate Reputation ◽  
Critical Mass ◽  
Ipo Underpricing ◽  
Going Public ◽  
Content Type ◽  
External Agents ◽  
The Impact

PurposeThe purpose of this paper is to examine the relationship between corporate reputation and initial public offering (IPO) underpricing for a sample of 269 IPOs hitting the Indian capital market for the first time during the period ranging from April 1, 2007 to November 8, 2016.Design/methodology/approachThe study is based on secondary data (of 269 Indian companies going public) obtained from websites of capital market, Chittorgarh and Securities and Exchange Board of India (from where prospectus of each company was downloaded individually to extract data on financial variables). The study devises the technique of multivariate regression analysis to arrive at the results.FindingsThe results of the study reveal that corporate reputation serves as a signal to naive investors that assures them of issuer company’s credibility, resulting in lower underpricing. In addition to it, the study also observes the level of gender diversity on Indian boards. It is disappointing to notice low level of female representation on Indian boards and the improvement if any made in the number of female directors on Indian boards is due to provisions of new companies’ act, 2013 that mandates at least one women director on the board of every listed company. Thus, females do not constitute a critical mass on Indian boards.Research limitations/implicationsThe current study scrutinizes the impact of corporate reputation on IPO underpricing only. Furthermore, the study analyzes the underpricing of only book built IPOs. Incorporating both book built and fixed price IPOs could have provided better insights into the issue.Practical implicationsThe study outlines significant implications for managers of issuer company to portray company’s own reputation as a signal instead of showcasing borrowed reputation of external agents at the crucial juncture of going public.Originality/valueMany signals portraying quality of the offering are sent by issuer company in public arena to make IPO launch a successful event. Among many such signals like underwriting reputation, auditor reputation, director’s and CEO’s reputation, the corporate audience has started giving more impetus to issuer company’s own reputation. Thus, financial academia witnessed a paradigm shift from external agents reputation to internal agent’s reputation and now the loci of interest has shifted to company’s own reputation. Giving emphasis to corporate reputation seems more relevant in emerging economies like India where naive investors rely on their own judgments while making investment decision who take clue from various signals to infer quality of the offer. It is momentous to observe whether reputation of the company acts as a conspicuous signal to decipher IPO quality. Furthermore, there hardly exists any empirical research directly examining the impact of corporate reputation on IPO underpricing in the Indian context. Hence, the present study is a modest attempt to fill this gap in literature.

Crisis facilitates policy change, not liberalization

2016 ◽  
Vol 8 (2) ◽  
pp. 248-267 ◽  
Author(s):  
Marshall L. Stocker
Keyword(s):  
Economic Policy ◽  
Policy Change ◽  
Capital Market ◽  
Fixed Effects ◽  
Economic Freedom ◽  
Equity Market ◽  
Market Returns ◽  
Content Type ◽  
Market Sentiment ◽  
Crisis Events

Purpose Crisis events are windows of opportunity during which a country’s leaders may implement economic policy adjustments which change that country’s level of economic freedom and affect the local capital market. This paper aims to investigate the relationship between annual changes in an economic freedom index, six types of crises and equity market returns. Design/methodology/approach The author uses fixed-effects regressions on annual panel data for 69 countries during the period 2000-2010. Findings Banking, domestic debt and inflation crises decrease economic freedom, and an external debt crisis weakly relates to increases in economic freedom. Only banking crises relate to a change in economic freedom in the following year, suggesting that crisis-driven changes in economic freedom happen quickly. Gains in economic freedom are more likely to occur during periods of positive local and global equity returns. Preceding and contemporaneous to increases in economic freedom, a country’s equity market outperforms a global equity index, offering observers a leading indicator for economic policy change. Originality/value The author finds that crises coincide with decreases in economic freedom, while gains in economic freedom happen during periods of positive capital market sentiment. The absence of a relationship between one-year lagged crisis events and changes in economic freedom suggests prior research relating gains in economic freedom to a crisis occurring 5 or 10 years earlier is a relationship which is more complex, non-linear and specific to the selected data period or spurious. Furthermore, relative equity market returns are related to changes in economic freedom, suggesting that equity markets identify which countries have increased economic freedom, long before popular economic freedom indexes are published.

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