scholarly journals Informative content of insider purchases: evidence from the financial crisis

2014 ◽  
Vol 6 (1) ◽  
pp. 26-45 ◽  
Author(s):  
Aydin Ozkan ◽  
Agnieszka Trzeciakiewicz
Keyword(s):  
Corporate Governance ◽  
Financial Crisis ◽  
Stock Returns ◽  
Empirical Analysis ◽  
Insider Trading ◽  
Global Financial Crisis ◽  
Executive Directors ◽  
Content Type ◽  
The Impact ◽  
The Empirical Analysis

Purpose – The purpose of this paper is to investigate the impact of insider trading on subsequent stock returns in the UK, with a specific focus on the impact of the global financial crisis of 2007-2008 on the relation between CEO and CFO stock purchases and returns. Design/methodology/approach – The empirical analysis uses 10,230 purchases executed in 679 UK firms by 1,477 directors during the period from 2000 to 2010. Subsequent market-adjusted stock returns are regressed on a set of firm-specific accounting, market and corporate governance variables as well as the characteristics of CEOs and CFOs. Additionally, the analysis distinguishes between the opportunistic and routine trades. Findings – The findings reveal that the position of the trading director and the nature of their trades are important in determining the impact on returns of insider trades. In particular, CEO purchases are on the whole more informative than CFO purchases and opportunistic purchases. The trades in the post-crisis period have a greater impact on subsequent stock returns. Research limitations/implications – The empirical analysis is limited to the trades made by two executives. Future research should consider inside trades by all directors and distinguish between executive and non-executive directors. Also, a behavioral measure should be developed to test if the financial crisis affected the trading behavior of directors and whether directors use insider trading strategically to signal information to the market. Practical implications – The impact of directors’ dealings on stock returns is not homogeneous. Financial analysts and investors should pay more attention to different types of trades and the identity of trading director. Originality/value – This paper, to the authors’ knowledge, provides the first attempt that combines in the same framework the identity and personal attributes of trading executive directors, firm-level corporate governance features, the nature of purchase transactions and the trading period characteristics. Furthermore the empirical analysis is carried out during a period that also covers the recent global financial crisis period and its immediate aftermath.

scholarly journals Antecedents of voluntary corporate governance disclosure: a post-2007/08 financial crisis evidence from the influential UK Combined Code

2016 ◽  
Vol 16 (3) ◽  
pp. 507-538 ◽  
Author(s):  
Mohamed H. Elmagrhi ◽  
Collins G. Ntim ◽  
Yan Wang
Keyword(s):  
Corporate Governance ◽  
Financial Crisis ◽  
Fixed Effects ◽  
Global Financial Crisis ◽  
Theoretical Perspective ◽  
Data Sets ◽  
Outside Directors ◽  
Content Type ◽  
Listed Firms ◽  
The Impact

Purpose The purpose of this study is to investigate the level of compliance with, and disclosure of, good corporate governance (CG) practices among UK publicly listed firms and consequently ascertain whether board characteristics and ownership structure variables can explain observable differences in the extent of voluntary CG compliance and disclosure practices. Design/methodology/approach This study uses one of the largest data sets to-date on compliance and disclosure of CG practices from 2008 to 2013 containing 120 CG provisions drawn from the 2010 UK Combined Code relating to 100 UK listed firms to conduct multiple regression analyses of the determinants of voluntary CG disclosures. A number of additional estimations, including two stage least squares, fixed-effects and lagged structures, are conducted to address the potential endogeneity issue and test the robustness of the findings. Findings The results suggest that there is a substantial variation in the levels of compliance with, and disclosure of, good CG practices among the sampled UK firms. The authors also find that firms with larger board size, more independent outside directors and greater director diversity tend to disclose more CG information voluntarily, whereas the level of voluntary CG compliance and disclosure is insignificantly related to the existence of a separate CG committee and institutional ownership. Additionally, the results indicate that block ownership and managerial ownership negatively affect voluntary CG compliance and disclosure practices. The findings are fairly robust across a number of econometric models that sufficiently address various endogeneity problems and alternative CG indices. Overall, the findings are generally consistent with the predictions of neo-institutional theory. Originality/value This study extends, as well as contributes to, the extant CG literature by offering new evidence on compliance with, and disclosure of, good CG recommendations contained in the 2010 UK Combined Code following the 2007/2008 global financial crisis. This study also advances the existing literature by offering new insights from a neo-institutional theoretical perspective of the impact of board and ownership mechanisms on voluntary CG compliance and disclosure practices.

scholarly journals FINANCIAL CRISIS AND LOCAL BANKS: A REVIEW OF BANK-FIRM RELATIONSHIPS IN ITALY

2017 ◽  
Vol 14 (3) ◽  
pp. 249-258 ◽  
Author(s):  
Andrea Quintiliani
Keyword(s):  
Financial Crisis ◽  
Empirical Analysis ◽  
Research Question ◽  
Banking System ◽  
Relationship Lending ◽  
Critical Elements ◽  
Risk Return ◽  
The Impact ◽  
The Relationship ◽  
The Empirical Analysis

This paper focuses on bank-firm relationship in an economic deeply changing environment. The objectives of the paper are two-fold: to understand, compared to the overall banking system, if the lending activities and economic-financial performances of Italian local banks have changed after the outbreak of the financial crisis; and to understand what are the conditions that allow to develop a model of a local bank capable of supporting the development routes of SMEs, by an appropriate risk/return profile. In order to answer the first research question, the paper presented an empirical analysis, covering the period 2007-2011, of Italian Cooperative Credit Banks (a particular category of local banks) compared with the system of bank groups with operability spread over much of the Italian territory and not. The empirical comparative analysis has the aim to see the effects of the crisis on the relationship bank-firm through the reading of the impact on the dynamics of lending and on the profiles of structure, riskiness, profitability and efficiency of the banks under examination. In order to provide an answer to the second research question, the paper provides some insight of evolutionary nature reflection in the bank-firm relationship. In accordance with the doctrinal postulates of the relationship lending the empirical analysis shows how the financial then real crisis has not induced Cooperative Credit Banks to restrict credit to local firms. The survey evidences have however highlighted some critical elements that are reflected inevitably on the local bank’s risk-return profile. Based only on quantitative data of statement, the empirical analysis represents a limit in this kind of research. This paper is useful to stimulate the debate of experts as well as to focus on the studies of local banks in particular in the light of their anti-cyclic role. Even if abounding in subjects about local banks and relationship lending literature faces only marginally the effects of global crisis on business profiles of local banks.

Bank mergers and acquisitions in Greece: the financial crisis and its effect on shareholder wealth

2019 ◽  
Vol 16 (2) ◽  
pp. 273-296 ◽  
Author(s):  
Ioannis Tampakoudis ◽  
Michail Nerantzidis ◽  
Demetres Subeniotis ◽  
Apostolos Soutsas ◽  
Nikolaos Kiosses
Keyword(s):  
Financial Crisis ◽  
Mergers And Acquisitions ◽  
Financial Stability ◽  
Global Financial Crisis ◽  
Shareholder Wealth ◽  
Conclusive Evidence ◽  
Wealth Effects ◽  
Bank Mergers ◽  
Content Type ◽  
The Impact

Purpose The purpose of this paper is to investigate the wealth implications of bank mergers and acquisitions (M&As) in the unique Greek setting given the triple crisis phenomenon – banking, sovereign debt and economic crises – that prevailed after the global financial crisis. Design/methodology/approach The study examines bank M&As and bank transactions over the period from 1997 to 2018, as well as government-assisted M&As during the crisis. The wealth effects of bank M&As are assessed using both univariate and multivariate frameworks. Findings Findings show a neutral crisis effect on the valuation of M&As upon their announcement. However, the authors provide conclusive evidence that M&A completions are value-destroying events for acquiring banks during the crisis, far worse than in the pre-crisis period. Greek banks also fail to create value from government-assisted mergers. The results suggest that the financial stability and the prevention of further deepening of the Greek crisis with possible contagion effects were achieved at the expense of shareholders and taxpayers. Originality/value To the authors’ knowledge, this is the first study that examines the impact of the Greek triple crisis on the wealth effects of bank M&As and bank transactions. Also, the study provides first evidence with regard to the economic impact of government-assisted M&As in the European context.

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

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

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

scholarly journals Evolution of German corporate governance (1995-2014): an empirical analysis

2019 ◽  
Vol 19 (5) ◽  
pp. 1042-1062
Author(s):  
Andreas Rühmkorf ◽  
Felix Spindler ◽  
Navajyoti Samanta
Keyword(s):  
Corporate Governance ◽  
Financial Crisis ◽  
Global Financial Crisis ◽  
Governance System ◽  
Content Type ◽  
Convergence Process ◽  
Corporate Governance System ◽  
Anglo American ◽  
The Stability ◽  
The Global Financial Crisis

Purpose This paper aims to address the evolution of corporate governance in Germany with a particular regard to whether there can be observed a gradual convergence to a shareholder primacy corporate governance system. Design/methodology/approach To investigate a potential shift of the German corporate governance system to an Anglo-American tiled corporate governance system, the authors have empirically assessed on a polynomial base 52 separate company and corporate governance variables for 20 years (1995-2014). Findings This research suggests that a gradual convergence has taken place prior to the global financial crisis. However, the results suggest that the convergence process experienced a slowdown in the aftermath of the global financial crisis, which may be linked to the stability of the German corporate governance system during the global financial crisis and the political environment during this time. Originality/value This paper contributes to the research by not only analysing the development of the German corporate governance system but also identifying new reasons for this development and explaining why a new convergence process may be observed in the future again.

scholarly journals The Basel accords, capital reserves, and agricultural lending

2019 ◽  
Vol 79 (1) ◽  
pp. 27-47 ◽  
Author(s):  
Gary W. Brester ◽  
Myles J. Watts
Keyword(s):  
Financial Crisis ◽  
Global Financial Crisis ◽  
Capital Requirements ◽  
Unintended Consequences ◽  
Portfolio Diversification ◽  
Content Type ◽  
Return On Equity ◽  
Reserve Requirements ◽  
The Impact ◽  
Capital Reserves

Purpose The safety and soundness of financial institutions has become a leading worldwide issue because of the recent global financial crisis. Historically, financial crises have occurred approximately every 20 years. The worst financial crisis in the last 75 years occurred in 2008–2009. US regulatory efforts with respect to capital reserve requirements are likely to have several unintended consequences for the agricultural lending sector—especially for smaller, less-diversified (and often, rural agricultural) lenders. The paper discusses these issues. Design/methodology/approach Simulation models and value-at-risk (VaR) criteria are used to evaluate the impact of capital reserve requirements on lending return on equity. In addition, simulations are used to calculate the effects of loan numbers and portfolio diversification on capital reserve requirements. Findings This paper illustrates that increasing capital reserve requirements reduces lending return on equity. Furthermore, increases in the number of loans and portfolio diversification reduce capital reserve requirements. Research limitations/implications The simulation methods are a simplification of complex lending practices and VaR calculations. Lenders use these and other procedures for managing capital reserves than those modeled in this paper. Practical implications Smaller lending institutions will be pressured to increase loan sector diversification. In addition, traditional agricultural lenders will likely be under increased pressure to diversify portfolios. Because agricultural loan losses have relatively low correlations with other sectors, traditional agricultural lenders can expect increased competition for agricultural loans from non-traditional agricultural lenders. Originality/value This paper is novel in that the authors illustrate how lender capital requirements change in response to loan payment correlations both within and across lending sectors.

Market efficiency and the global financial crisis: evidence from developed markets

2018 ◽  
Vol 35 (3) ◽  
pp. 362-385 ◽  
Author(s):  
Omid Sabbaghi ◽  
Navid Sabbaghi
Keyword(s):  
Financial Crisis ◽  
Market Efficiency ◽  
Global Financial Crisis ◽  
Weak Form ◽  
Content Type ◽  
Developed Markets ◽  
The Usa ◽  
Econometric Tests ◽  
The Impact ◽  
Empirical Investigations

Purpose This study aims to provide one of the first empirical investigations of market efficiency for developed markets during the recent global financial crisis. Design/methodology/approach Using the Morgan Stanley Capital International (MSCI) country indices as proxies for national stock markets, the study conducts a battery of econometric tests in assessing weak-form market efficiency for the developed markets. Findings The inferential outcomes are consistent among the different tests. Specifically, the study finds that the majority of developed markets are weak-form efficient while the USA is the sole equity market to be commonly diagnosed as weak-form inefficient across the different tests when using full period data spanning the January 2008-November 2011 period. However, when basing the analysis on one-year subsamples over the identical time period, this study fails to reject weak-form market efficiency for all of the developed markets and presents evidence consistent with the Adaptive Market Hypothesis as described by Urquhart and Hudson (2013). When applying technical analysis for the case of the USA over the full study period, the results indicate that the return predictabilities can be exploited for some horizon of variable length moving average (VMA) trading rules. Originality/value This study provides one of the first empirical investigations of market efficiency for developed markets during the recent global financial crisis using an extended set of econometric tests. The study contributes to the existing body of empirical research that formally assesses the impact of a financial crisis on stock market efficiency and underlines the significance and relevance of examining market efficiency through subsample analysis.

U.S. oil company stock returns and currency fluctuations

2015 ◽  
Vol 41 (9) ◽  
pp. 974-994 ◽  
Author(s):  
Andre Mollick ◽  
Khoa H Nguyen
Keyword(s):  
Financial Crisis ◽  
Stock Returns ◽  
Structural Breaks ◽  
Oil And Gas ◽  
Global Financial Crisis ◽  
Oil Price ◽  
Content Type ◽  
Oil Companies ◽  
Daily Data ◽  
Oil And Gas Sector

Purpose – The purpose of this is paper is to pay a closer look at the 2008-2009 financial crisis (and its aftermath) and analyzes stock returns of nine major US oil companies as well as the oil and gas sector under daily data from January 1992 to April 2012. Design/methodology/approach – The authors adopt the arbitrage pricing theory model to examine the relationship between stock returns and their influences including oil price return, yield spreads, and US dollar index return. The authors also provide a test for structural changes in each regression model of return series to capture for multiple breaks. To examine the asymmetric effect of oil price returns on stock returns, the authors separate oil price returns series into two series: positive changes in oil price and negative changes in oil price. Findings – The authors find stock returns of oil companies as well as the oil and gas sector are positively affected by oil prices and have stronger effects in the downward direction. Interestingly, The authors find the effects of oil price movements on stock returns increase over time. The authors examine the possibility that investors wishing to hedge against a weakening USD invest in US oil companies and find that more than half of these companies benefit from a weaker USD against the JPY, while all strongly benefit from a weaker USD against major currencies. Originality/value – The authors employ daily data for two-decade period including the last global financial crisis. Due to the long-term period covered in this study, sequential Bai-Perron tests are used to detect structural breaks of stock return series. In addition, the data-dependent procedures result in good specifications throughout with white-noise processes in almost all cases.

South Korea’s economy will suffer less than most

2020 ◽  
Keyword(s):  
Financial Crisis ◽  
Government Spending ◽  
Service Sector ◽  
Global Financial Crisis ◽  
Gdp Growth ◽  
Export Markets ◽  
Content Type ◽  
Political Conflicts ◽  
The Impact ◽  
At Home

Significance The impact exceeds that of the 2008-09 global financial crisis, when GDP grew 0.8% in 2009. Much hinges on how fast massive stimulus measures kick in at home, and how major export markets fare. Impacts The service sector, hitherto a weaker driver of GDP growth than exports, will get a relative boost. Political conflicts will intensify as to whether unprecedented government spending is appropriately targeted, or fiscally sustainable. Moon’s government will use COVID-19 as cover for measures it was committed to in any case, and as an excuse if performance falls short.

scholarly journals Alternative measures for predicting financial distress in the case of Malaysian Islamic banks: assessing the impact of global financial crisis

2020 ◽  
Vol 11 (9) ◽  
pp. 1827-1845
Author(s):  
Mehmet Asutay ◽  
Jaizah Othman
Keyword(s):  
Financial Crisis ◽  
Financial Distress ◽  
Global Financial Crisis ◽  
Islamic Banks ◽  
Content Type ◽  
Macroeconomic Variables ◽  
Explanatory Variables ◽  
Alternative Funding ◽  
The Global Financial Crisis ◽  
The Impact

Purpose The global financial crisis of 2008 still has an impact on the financial systems around the world, for which funding liquidity has been mentioned as one of the main concerns during that period. This study aims to consider the impact of and extent to which the funding structure of Islamic banks along with deposit structure, macroeconomic variables, other bank-specific variables, including alternative funding mix variables (in terms of funding structure measured as financing/deposit ratio), could play a part in explaining the financial conditions and predicting the failures and performances of Islamic banks in the case of Malaysia under the distress created by the global financial crisis. Design/methodology/approach Multivariate logit model was used with a sample including 17 full-fledged Islamic banks in Malaysia for the period from December 2005 to September 2010 by using quarterly data. Findings This study found that the funding mix variable (financing/deposit ratio), the composition of deposits, alternative bank-specific variables and alternative funding mix variables are statistically significant. In contrast, none of the macroeconomic variables is found to have a significant impact on bank liquidity. In the final models, the variables that showed significant performance were selected as explanatory variables. The results of McFadden R-squared for both selected models showed an excellent fit to predict the Islamic banks’ performance. Originality/value This empirical study contributes to the literature in two ways: to the best of the authors’ knowledge, this is the first study to examine the role of the funding structures of Islamic banks in determining their performance; and it also examines the effect of deposit composition (the mudharabah and non-mudharabah deposits) on Islamic banks’ performance.

Sign in / Sign up

Export Citation Format

Share Document