The Effect of Unsuccessful Past Repurchases on Future Repurchasing Decisions

2021 ◽  
Author(s):  
Geoffrey C. Friesen ◽  
Noel Pavel Jeutang ◽  
Emre Unlu
Keyword(s):  
Stock Market ◽  
Negative Impact ◽  
Career Concerns ◽  
Stock Repurchases ◽  
Negative Outcomes ◽  
Effect Factors ◽  
Lifetime Experience ◽  
Idiosyncratic Shocks ◽  
Robust Evidence

We find that managers are less likely to repurchase stocks when they lose money on past stock repurchases but find no robust evidence that past gains on repurchases influence future repurchasing activity. This asymmetric sensitivity is strongest for young CEOs and those with the shortest tenure. Also, future repurchases are more sensitive to past repurchase losses for CEOs whose previous lifetime experience with the stock market is unfavorable. The sensitivity of future repurchases to past losses costs firms, on average, about 3.7% per year. When this cost is decomposed into systematic and idiosyncratic components, we find that nearly half (1.8%) comes from mistiming idiosyncratic shocks. Past losses on repurchases have a significant and negative impact on the CEO’s future bonus and increase the likelihood that future CEO termination is involuntary. We also find that negative outcomes from past repurchases encourage the subsequent use of dividends. Our findings suggest that outcomes of past repurchases have economically significant consequences through both nonbehavioral (career concerns) and behavioral (snakebite effect) factors. This paper was accepted by Tyler Shumway, finance.

scholarly journals STOCK MARKET PERFORMANCE AND THE AUGMENTATION OF FRONTIER ECONOMIES: A Comparative Scrutiny of Nigeria & Mauritius

2016 ◽  
Author(s):  
Edesiri Godsday Okoro
Keyword(s):  
Stock Market ◽  
Financial Services ◽  
Negative Impact ◽  
Market Performance ◽  
Modus Operandi ◽  
Market Capitalization ◽  
Paired Samples ◽  
Economic Progress ◽  
Stock Market Performance ◽  
Fail Safe

<p><em>This paper provides a comparative analysis on stock market performance and augmentation of frontier economies: Nigeria and Mauritius. Using a Paired-Samples T-test statistical modus-operandi, data of Market Capitalization and Gross Domestic Product were obtained from the Central Bank of Nigeria Statistical Bulletin and Annual Financial Services Commission Statistical Bulletin of Mauritius during 2006-2010. The findings revealed that stock market performance for Mauritius was superior to Nigeria and same for GDP. In addition, the negativity shows that stock market performance has a negative impact on economic progress in Nigeria and Mauritius. This may be due to the fact that frontier markets give attention to money market while relegating stock market to the background. </em><em>On this note, since stock market contributes significantly to economic growth, efforts by both governments should be that of developing policies aimed at further strengthening stock market. These policies should not be ‘written-policies’ but policies that can be put into practice. Also, market capitalization can be stimulated by encouraging investments in stock market. This can be done by ensuring investors are fail-safe of their investments. When investors perceive a safety of their investment, they may want to commit their resources and in turn make the economy to flourish.</em></p>

scholarly journals Effects of Pandemics on Corporate Innovation: Evidence From the Chinese Firms

2021 ◽  
Vol 9 ◽  
Author(s):  
Ci Zhang ◽  
Yilin Hu ◽  
Leping Huang ◽  
Yajie Huang
Keyword(s):  
Fixed Effects ◽  
Negative Impact ◽  
Uncertainty Measure ◽  
Chinese Firms ◽  
Government Subsidies ◽  
Management Efficiency ◽  
Corporate Innovation ◽  
Robust Evidence ◽  
Innovation Behavior

This paper examines the effects of the pandemics-related uncertainty on corporate innovation in Chinese firms. For this purpose, the recent uncertainty measure of pandemics, the Pandemics Discussion Index (PDI), is used. The findings from the fixed-effects estimations show the negative impact of the PDI on corporate innovation. Government subsidies, operation profits, and total exports also positively affect corporate innovation. In addition, firms' management efficiency promotes corporate innovation. These results hold when the Blundell-Bond estimations are utilized to address potential endogeneity. Various robustness analyses, such as considering the lagged PDI and the lagged controls, are also conducted. Consequently, the main results remain robust. Thus, this paper provides novel and robust evidence on the negative impact of pandemics on Chinese firms' corporate innovation behavior.

scholarly journals Stock split, unseasoned equity offering, and firm value: evidence from the Korean stock market

2016 ◽  
Vol 13 (3) ◽  
pp. 105-109
Author(s):  
Chune Young Chung ◽  
Kangjin Ju ◽  
Doojin Ryu
Keyword(s):  
Stock Market ◽  
Firm Value ◽  
Negative Impact ◽  
Stock Splits ◽  
Equity Offerings ◽  
Korean Stock Market ◽  
Stock Split ◽  
Before And After ◽  
The Difference ◽  
Equity Offering

This study examines the extent to which announcements of stock splits and unseasoned equity offerings (capital increase without consideration) affect firm values in the Korean stock market. The authors find that, based on analyses of the cumulative abnormal return (CAR) around the announcement dates, CARs are significantly positive for both corporate events. This result suggests that both events are positive in relation to the firm’s value. The authors also examine whether the performance of firms that execute stock splits and/or unseasoned equity offerings differs from that of firms that do not, before and after their announcement dates; we do so by using the difference-in-difference test. The results indicate that a stock split is unrelated to improved firm performance following the announcement, and that an unseasoned equity offering can even have a negative impact on performance. Hence, the presence of stock splits and unseasoned equity offerings does not seem to support the signaling hypothesis, which predicts firms’ positive performance following an announcement

scholarly journals Do negative events really have deteriorating effects on stock performance? A comparative study on Tesla (US) and Nio (China)

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Yi Xuan Lim ◽  
Consilz Tan
Keyword(s):  
Stock Market ◽  
Cognitive Biases ◽  
Time Series Data ◽  
Negative Impact ◽  
Series Data ◽  
Stock Performance ◽  
Content Type ◽  
Short Run ◽  
Remedial Actions ◽  
Processing Errors

PurposeBoth investors and the stock markets are believed to behave in a perfectly rational manner, where investors focus on utility maximization and are not subjected to cognitive biases or any information processing errors. However, it has been discovered that the sentiment of the social mood has a significant impact on the stock market. This study aims to analyze how did the protest event of Tesla happened in April 2021 have a significant effect on the company's stock performance as well as its competitors, Nio, under the competitive effect.Design/methodology/approachThe research is based on time series data collected from Tesla and Nio by employing 10 days, 15 days and 20 days anticipation and adjustment period for the event study. This study employed a text sentiment analysis to identify the polarity of the sentiment of the protest event using the Microsoft Azure machine learning tool which utilizes MPQA subjective lexicon.FindingsThe findings provide further evidence to show that a company-specific negative event has deteriorating effects on its stock performance, while having an opposite effect on its competitors.Research limitations/implicationsThe paper argues that negative sentiments through social media word of mouth (SWOM) affect the stock market not just in the short run but potentially in the longer run. Such negative sentiments might create a snowball effect which causes the market to further scrutinize a company's operations and possibly lose confidence in the company.Originality/valueThis study explores how the Tesla's protest event at Shanghai Auto Show 2021 has a significant impact on Tesla's stock performance and prolonged negative impact although Tesla implemented immediate remedial actions. The remedial actions were not accepted positively and induced a wave of negative news which had a more persistent effect.

scholarly journals THE IMPACT OF OIL PRICE ON STOCK MARKET:EMPIRICAL EVIDENCE FROM US

2021 ◽  
Vol 9 (1) ◽  
pp. 330-337
Author(s):  
Shanaz hakim , Tugut Tursoy,
Keyword(s):  
Stock Market ◽  
Crude Oil ◽  
Negative Impact ◽  
Positive Impact ◽  
Oil Price ◽  
P Value ◽  
Crude Oil Price ◽  
Crude Oil Prices ◽  
Interactive Relationship ◽  
The Impact

The analysis of this research focuses on the interactive relationship among the fluctuation of crude oil prices, the real GDP and the stock market of United State. This empirical investigation uses data is in between 1990 and 2018 with the Vector Auto-regression (VAR) analysis, and multiple regressions with its assumption were used in order to analyses data.  Findings, oil price and economic growth are very important determinates of stock market in US because the p-value of this were less than the common alpha α =0.05. For instance, the crude oil price had positive impact on stock market because for each unit increasing of crude oil price, the stock market will increase by (0.276901) after holding all other variable constant. However, we find that GDP has negative impact on the participations of increasing the stock market.

scholarly journals Repercussions of COVID-19 on the Indian stock market

2021 ◽  
Vol 5 (S1) ◽  
pp. 1495-1509
Author(s):  
Dhananjay Ashri ◽  
Bibhu Prasad Sahoo ◽  
Ankita Gulati ◽  
Irfan UL Haq
Keyword(s):  
Stock Market ◽  
Financial Markets ◽  
Banking Sector ◽  
Oil And Gas ◽  
Negative Impact ◽  
Long Run ◽  
Short Run ◽  
Indian Stock Market ◽  
The Impact ◽  
Daily Returns

The present paper determines the repercussions of the coronavirus on the Indian financial markets by taking the eight sectoral indices into account. By taking the sectoral indices into account, the study deduces the impact of virus outbreak on the various sectoral indices of the Indian stock market. Employing Welch's t-test and Non-parametric Mann-Whitney U test, we empirically analysed the daily returns of eight sectoral indices: Nifty Auto, Nifty FMCG, Nifty IT, Nifty Media, Nifty Metal, Nifty Oil and Gas, Nifty Pharma, and Nifty Bank. The results unveiled that pandemic had a negative impact on the automobile, FMCG, pharmaceuticals, and oil and gas sectors in the short run. In the long run, automobile, oil and gas, metals, and the banking sector have suffered enormously. The results further unveiled that no selected indices underperformed the domestic average, except NIFTY Auto. 

scholarly journals Portfolio Flows into Indonesia: Push or Pull?

2016 ◽  
Vol 62 (2) ◽  
pp. 121
Author(s):  
Chaikal Nuryakin ◽  
Edith Zheng Wen Yuan ◽  
I Gede Putra Arsana
Keyword(s):  
Stock Market ◽  
Vector Autoregression ◽  
Negative Impact ◽  
Credit Default Swap ◽  
Structural Vector Autoregression ◽  
Stock Market Index ◽  
Pull Factors ◽  
Portfolio Flows ◽  
Stock Market Performance ◽  
Structural Vector

This paper focuses on the dynamic of the portfolio flows into Indonesia. The result of Structural Vector Autoregression (SVAR) model reveals that push factors is more dominant than pull factors in explaining portfolio flows into Indonesia. Portfolio flows into Indonesia are positively correlated with regional’s stock market performance and negatively correlated to the federal funds rate. On the pull factors, domestic risk (the Credit Default Swap spread) is more dominant than domestic return (the BI rate) in explaining the flows. Thus, it is important for authorities to have more focus on domestic risk–relative to rate of return–in managing portfolio flows. In addition, the negative impact of the lagged Indonesia stock market index to the capital flows indicates a counter cyclical investment behavior of global investors. AbstrakStudi ini mengkaji dinamika arus investasi portofolio Indonesia. Hasil dari model Structural Vector Autoregression (SVAR) menunjukkan bahwa "faktor pendorong" lebih dominan dibandingkan "faktor penarik" dalam menjelaskan pergerakan arus investasi portofolio. Arus investasi portofolio ini berkorelasi positif dengan kinerja pasar saham regional dan berkorelasi negatif dengan tingkat suku bunga the Fed. Untuk faktor penarik, risiko domestik (CDS) menjadi faktor yang dominan dibandingkan imbal hasil (BI rate) yang menguatkan pentingnya manajemen risiko perekonomian domestik dalam stabilisasi arus investasi portofolio. Lebih lanjut, studi ini juga mengindikasikan adanya perilaku kontra siklikal dari investor global.Kata kunci: Arus Investasi Portofolio; SVARJEL classifications: F32; G11

scholarly journals Stock Market Investment and Inflation: Evidence from the United States and Canada

2021 ◽  
Vol 13 (3) ◽  
pp. 339-365
Author(s):  
Janesh Sami
Keyword(s):  
United States ◽  
Stock Market ◽  
Stock Prices ◽  
The United States ◽  
Distributed Lag ◽  
Autoregressive Distributed Lag ◽  
Long Run ◽  
Goods Market ◽  
Stock Market Investment ◽  
Robust Evidence

This paper examines the long-run relationship between goods prices and stock prices to understand whether stock market investment can help hedge against inflation in the United States (US) and Canada. This study employed an autoregressive distributed lag (ARDL) cointegration test developed by Pesaran, Shin, and Smith (2001), and finds evidence of a positive long-run economic relationship between stock prices and goods prices in both economies over the sample period 1960 to 2019. The long-run elasticity is above one for both economies implying that the developments in the goods market significantly affect the stock market. We undertake a suite of sensitivity checks and find robust evidence that the stock market investment can help hedge against inflation in the United States and Canada.

scholarly journals Stock market liquidity, the great lockdown and the COVID-19 global pandemic nexus in MENA countries

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Anas Alaoui Mdaghri ◽  
Abdessamad Raghibi ◽  
Cuong Nguyen Thanh ◽  
Lahsen Oubdi
Keyword(s):  
Stock Market ◽  
Negative Impact ◽  
Market Liquidity ◽  
Mena Region ◽  
Stock Market Returns ◽  
Content Type ◽  
Mena Countries ◽  
Global Pandemic ◽  
Stock Market Liquidity ◽  
The Impact

PurposeThe purpose of this paper is to investigate the impact of the global coronavirus (COVID-19) pandemic on stock market liquidity, while taking into account the depth and tightness dimensions.Design/methodology/approachThe author used a panel data regression on stock market dataset, representing 314 listed firms operating in six Middle East and North African (MENA) countries from February to May 2020.FindingsThe regression results on the overall sample indicate that the liquidity related to the depth measure was positively correlated with the growth in the confirmed number of cases and deaths and stringency index. Moreover, the market depth was positively related to the confirmed cases of COVID-19. The results also indicate that the liquidity of small cap and big cap firms was significantly impacted by the confirmed number of cases, while the stringency index is only significant for the liquidity depth measure. Moreover, the results regarding sectors and country level analysis confirmed that COVID-19 had a significant and negative impact of stock market liquidity.Research limitations/implicationsThis paper confirms that the global coronavirus pandemic has decreased the stock market liquidity in terms of both the depth and the tightness dimensions.Originality/valueWhile most empirical papers focused on the impact of the COVID-19 global pandemic on stock market returns, this paper investigated liquidity chock at firm level in the MENA region using both tightness and depth dimensions.

The Effect of Capital Structure, Size and Revenue Growth on the Effectiveness of Garment Businesses Listed on Vietnam’s Stock Market

2019 ◽  
Vol 35 (4) ◽  
Author(s):  
Do Huy Thuong ◽  
Tran Luu Ngoc ◽  
Nguyen Thi Phuong Hong
Keyword(s):  
Stock Market ◽  
Capital Structure ◽  
Firm Size ◽  
Business Performance ◽  
Negative Impact ◽  
Short Term ◽  
Return On Equity ◽  
Revenue Growth ◽  
The Impact

Considering the impact of the capital structure on the effectiveness of businesses is extremely important. Therefore, this study is conducted in order to find the influences of capital structure, firm size and revenue growth on the performance of the garment businesses listed on Vietnam stock market in the period of 2013-2018 with the representation of return on equity (ROE). The research with the use of panel data has shown that the ratio of short-term debt on total assets, the firm size and the revenue growth all have positive impacts on business performance. Meanwhile, the ratio of long-term debt on total assets has a negative impact on the performance of garment businesses at the statistically significant level of 5%.

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