scholarly journals Raising Risk Equity Capital Through a Private Placement Process in Emerging Markets

2018 ◽  
Author(s):  
Elena Ralinska ◽  
Zlatin Sarastov
Keyword(s):  
Emerging Markets ◽  
Equity Capital ◽  
Private Placement ◽  
Risk Equity

scholarly journals Disclosure Frequency, Information Environment, and Cost of Capital under Regulation Fair Disclosure in the Korean Market

2020 ◽  
Vol 12 (14) ◽  
pp. 5856
Author(s):  
Hoshik Shim
Keyword(s):  
Emerging Markets ◽  
Information Asymmetry ◽  
Information Leakage ◽  
Equity Capital ◽  
Information Environment ◽  
Price Ratio ◽  
Corporate Disclosure ◽  
Regulation Fair Disclosure ◽  
Fair Disclosure ◽  
Korean Market

Disclosure policy contributes to improve sustainable corporate information environment by mitigating information asymmetry surrounding companies. Economic theories generally support that more disclosures reduce the level of information asymmetry, increase stock liquidity, and thus decrease the costs of equity capital. However, the effect of corporate disclosure in emerging markets is not clearly predictable because of the potential information leakage prior to disclosure. Considering this issue, this study focuses on the Regulation Fair Disclosure which prohibits selective disclosure. Using the earnings-to-price ratio as a proxy of the costs of equity, the study finds that disclosure frequency is negatively related to the cost of equity capital. However, I do not find evidence that disclosure is negatively related to the implied costs of equity capital (ICOE). The results of the quintile analysis suggest that this inconsistency is attributable to the better information environment of the ICOE sample. The findings of this study have implications for disclosure regulations in emerging markets, given that the existing literature casts doubt on the effectiveness of corporate disclosure in such markets.

Determinants of interest rate in emerging markets

2018 ◽  
Vol 14 (3) ◽  
pp. 267-290 ◽  
Author(s):  
Sulait Tumwine ◽  
Samuel Sejjaaka ◽  
Edward Bbaale ◽  
Nixon Kamukama
Keyword(s):  
Interest Rate ◽  
Emerging Markets ◽  
Emerging Market ◽  
Equity Capital ◽  
Annual Reports ◽  
Data Set ◽  
Reserve Requirement ◽  
Content Type ◽  
Net Interest Margin ◽  
Negative Effect

Purpose The purpose of this paper is to investigate the determinants of interest rate in emerging markets, focusing on banking financial institutions in Uganda. Design/methodology/approach Using the net interest margin model, interest rate was estimated by applying a panel random effects regression method on 24 banks, while controlling for bank-specific factors, industry and macroeconomic indicators. Data were drawn from annual reports provided by Bank of Uganda Depository Corporation survey from 2008 to 2016. Findings The results indicate that liquidity, equity capital, market power and reserve requirement have a positive effect on interest rate. The study further finds that operational efficiency, lending out ratio, concentration, public sector borrowing and private sector credit have a negative effect on interest rate. However, credit risk does not influence interest rate. Research limitations/implications Studied banks are grouped in one panel data set; future studies would focus on the differences in banks and establish how these differences affect interest rate. Future study would also focus on how the determinants of interest rate in Uganda are compared with those of other banks in other emerging market countries. Practical implications Bank managers need to take interest in equity mobilization because it is a reliable and cheaper source of funding bank operations. Banks should emphasize efficient operations to reduce on the cost of doing business. Government should utilize funds borrowed from banks in efficient ways to improve economic growth. The central bank should minimize the use of reserve requirement as a means of controlling money in circulation. Originality/value This is the first paper that uses annual report data from several banks and periods to investigate the determinants of interest rate in an emerging country.

scholarly journals Firm Characteristics And Seasoned Equity Issuance Method: Private Placement Versus Public Offering

2011 ◽  
Vol 17 (3) ◽  
Author(s):  
Hei Wai Lee ◽  
Claudia Kocher
Keyword(s):  
Equity Capital ◽  
Firm Characteristics ◽  
Font Size ◽  
The Public ◽  
Financial Slack ◽  
Private Placement ◽  
Placement Method ◽  
Information Hypothesis ◽  
Public Offering ◽  
External Equity

<p class="MsoNormal" style="text-align: justify; margin: 0in 0.5in 0pt;"><span style="mso-bidi-font-style: italic;"><span style="font-size: x-small;"><span style="font-family: Batang;">This study compares characteristics of firms using the private placement method of issuing common stock with those using the public offering method.<span style="mso-spacerun: yes;">&nbsp; </span>Results show that private placement firms are smaller in size, have more growth opportunities, and have less financial slack than public offering firms.<span style="mso-spacerun: yes;">&nbsp; </span>Their issuance decisions are likely to be driven by their needs for external capital, rather than motivated by overvaluation of their stocks.<span style="mso-spacerun: yes;">&nbsp; </span>These findings are consistent with the information hypothesis, which states that undervalued firms with favorable prospects and little financial slack use the private placement method to resolve the information asymmetry problem when seeking external equity capital.<span style="mso-spacerun: yes;">&nbsp; </span></span></span></span></p>

Valuation Cost of Equity Capital in the Conditions of Economic Instability on Emerging Markets (by the Example of Russia)

2017 ◽  
pp. 383-391
Author(s):  
Elena A. Kolesnichenko ◽  
Vladislav Y. Sutyagin ◽  
Yana Yu. Radyukova ◽  
Valentina V. Smagina ◽  
Inna N. Yakunina
Keyword(s):  
Emerging Markets ◽  
Equity Capital ◽  
Cost Of Equity Capital ◽  
Cost Of Equity ◽  
Economic Instability

scholarly journals The Lucas Paradox and Institutional Quality: Evidence from Emerging Markets

2020 ◽  
Vol 6 (2) ◽  
pp. 561-570
Author(s):  
Muhammad Atiq-ur- Rehman ◽  
Allah Ditta ◽  
Muhammad Atif Nawaz ◽  
Furrukh Bashir
Keyword(s):  
Emerging Markets ◽  
Low Income ◽  
Capital Flows ◽  
Institutional Quality ◽  
Equity Capital ◽  
Neoclassical Theory ◽  
Financial Flows ◽  
Contradictory Behavior ◽  
The Empirical Analysis

The neoclassical theory illustrates that the capital will flow from the capital-rich economies towards the capital-poor states. However, it is generally observed that the capital does not move from high-income to low-income economies. This contradictory behavior of global capital flows is called the Lucas paradox. According to Alfaro, Kalemli-Ozcan, & Volosovych (AKV) model, the Lucas paradox can be entirely explained by the institutional quality. In the light of AKV notion, this paper examines the role of institutional quality in explaining the Lucas paradox. The empirical analysis involves 17 major emerging economies of the world by using panel data for the period 1999-2018. The GMM estimation reveals that the Lucas paradox is explained by the institutional quality in case of FDI flows only. However, institutional quality indicators generally remain unable to explain the paradox in case of portfolio equity capital flows. Moreover, financial development is found to be a significant determinant of portfolio equity flows in the emerging markets. Finally, we suggest that the financial flows to the emerging markets are sensitive to the nature of the capital flows.

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