scholarly journals Management’s choice of tone in letters to shareholders: sincerity, bias and incentives

2021 ◽  
Vol 24 (2) ◽  
pp. 202-219
Author(s):  
Dominika Hadro ◽  
Karol Marek Klimczak ◽  
Marek Pauka
Keyword(s):  
Stock Market ◽  
Institutional Investors ◽  
Rational Expectations ◽  
Ownership Concentration ◽  
Market Incentives ◽  
Monitoring Activities ◽  
Management Reporting ◽  
A Company ◽  
Biased Information

El objetivo de este artículo es identificar los factores que impulsan las decisiones de los directivos en materia de información en un entorno caracterizado por la concentración de la propiedad y la escasa aplicación de la ley. Investigaciones anteriores indican que el tono de la carta a los accionistas está correlacionado con los resultados. Sin embargo, el tono puede estar sesgado hacia lo positivo cuando una empresa es muy sensible a los incentivos del mercado de valores o está controlada por inversores mayoritarios. El sesgo puede reducirse gracias a las actividades de supervisión de los inversores institucionales en las empresas de capital cerrado. El estudio tiene dos implicaciones importantes. En primer lugar, cuando los directivos sesgan el texto, pierden la capacidad de comunicar noticias positivas sobre su empresa. En el marco de las expectativas racionales, los inversores pueden detectar el sesgo basándose en los incentivos situacionales conocidos y desestimar la información sesgada. En segundo lugar, los resultados sugieren que los directivos manipulan el tono estratégicamente, y no de forma inconsciente, para satisfacer las necesidades de los principales grupos de accionistas. This paper aims to identify the drivers of management reporting choices in a setting characterized by ownership concentration and weak enforcement. Previous research indicates, that tone of the letter to shareholders is correlated with performance. However, tone can be biased towards the positive when a company is highly responsive to stock market incentives or controlled by majority investors. Bias can be reduced by the monitoring activities of institutional investors in closely held companies. There are two major implications of the study. First, when managers bias the text, they lose the ability to communicate positive news about their company. Under rational expectations investors can detect bias based on known situational incentives and disregard the biased information. Second, the results suggest that managers manipulate tone strategically, rather than unconsciously, to satisfy the needs of key shareholder groups.

scholarly journals Ownership concentration and investment sensitivity to market valuation

2015 ◽  
Vol 13 (1) ◽  
pp. 1228-1240
Author(s):  
Ghada Tayem
Keyword(s):  
Stock Market ◽  
Capital Investment ◽  
Ownership Concentration ◽  
Firm Level ◽  
Stock Market Development ◽  
Concentrated Ownership ◽  
Market Signals ◽  
The Impact ◽  
A Company ◽  
Institutional Feature

During the past decade, Jordan has undertaken substantial reforms aiming at restructuring its stock market in order to strengthen its role in promoting investment and allocating capital efficiently. This paper empirically investigates the impact of stock market development on capital investment at the firm level by assessing the investment-q sensitivity. In addition, this paper examines the impact of concentrated ownership, a salient institutional feature of listed Jordanian companies, on the investment-q sensitivity. The findings of this study indicate that investments by Jordanian firms respond significantly and positively to market signals. Furthermore, the results show that a company responds more efficiently to market signals as ownership concentration increases, which suggests that large ownership stakes align the interests of large shareholders with those of the firm.

Pricing models of shares of Russian companies and their practical application

2019 ◽  
pp. 48-76 ◽  
Author(s):  
Alexander E. Abramov ◽  
Alexander D. Radygin ◽  
Maria I. Chernova
Keyword(s):  
Stock Market ◽  
Institutional Investors ◽  
Factor Model ◽  
Investment Strategies ◽  
Pricing Models ◽  
Foreign Portfolio Investment ◽  
Market Portfolio ◽  
Stock Market Performance ◽  
Long Time ◽  
Russian Stock Market

The article analyzes the problems of applying stock pricing models in the Russian stock market. The novelty of the study lies in the peculiarities of the methodology used and the substantive conclusions on the specifics of the influence of fundamental factors on the pricing of shares of Russian companies. The study was conducted using its own 5-factor basic pricing model based on a sample of the most complete number of issues of shares of Russian issuers and a long time horizon, from 1997 to 2017. The market portfolio was the widest for a set of issuers. We consider the factor model as a kind of universal indicator of the efficiency of the stock market performance of its functions. The article confirms the significance of factors of a broad market portfolio, size, liquidity and, in part, momentum (inertia). However, starting from 2011, the significance of factors began to decrease as the qualitative characteristics of the stock market deteriorated due to the outflow of foreign portfolio investment, combined with the low level of development of domestic institutional investors. Also identified is the cyclical nature of the actions of company size and liquidity factors. Their ability to generate additional income on shares rises mainly at the stage of the fall of the stock market. The results of the study suggest that as domestic institutional investors develop on the Russian stock market, factor investment strategies can be used as a tool to increase the return on investor portfolios.

Relationship between Foreign Portfolio Investments (FPI), Domestic Institutional Investors, and Stock Market Returns in India

GIS Business ◽  
2017 ◽  
Vol 12 (6) ◽  
pp. 1-9
Author(s):  
Dhananjaya Kadanda ◽  
Krishna Raj
Keyword(s):  
Stock Market ◽  
Institutional Investors ◽  
Negative Relationship ◽  
Trading Strategies ◽  
Market Returns ◽  
Stock Market Returns ◽  
Foreign Portfolio Investment ◽  
Stock Market Return ◽  
Indian Stock Market ◽  
Feedback Trading

The present article attempts to understand the relationship between foreign portfolio investment (FPI), domestic institutional investors (DIIs), and stock market returns in India using high frequency data. The study analyses the trading strategies of FPIs, DIIs and its impact on the stock market return. We found that the trading strategies of FIIs and DIIs differ in Indian stock market. While FIIs follow positive feedback trading strategy, DIIs pursue the strategy of negative feedback trading which was more pronounced during the crisis. Further, there is negative relationship between FPI flows and DII flows. The results indicate the importance of developing strong domestic institutional investors to counteract the destabilising nature FIIs, particularly during turbulent times.

Ownership as a determinant of chairperson activity: a study of Nordic listed companies

2015 ◽  
Vol 7 (4) ◽  
pp. 412-428
Author(s):  
Tor Brunzell ◽  
Jarkko Peltomäki
Keyword(s):  
Working Hours ◽  
Chief Executive ◽  
Ownership Concentration ◽  
Content Type ◽  
Listed Firms ◽  
Concentrated Ownership ◽  
The Board Of Directors ◽  
The Impact ◽  
The Empirical Analysis ◽  
A Company

Purpose – The purpose of this study is to explicitly focus on the roles of ownership concentration, ownership by the board, the chief executive officer (CEO) and the chairperson in the involvement and capabilities of chairpersons and other governors in their work. Design/methodology/approach – In this study, the authors investigate the impact of the concentration of ownership, the ownership of the board, the CEO and the chairperson on the chairperson’s activity when the roles of the chairperson and the CEO are separated The empirical analysis of this study is based on a survey sent to Nordic listed firms. Findings – The results show that the ownership characteristics of a company are important in determining the chairperson’s working hours, the chairperson’s communication with the CEO and the performance of governance activity. In addition, the authors found that while the ownership of the chairperson and the board of directors and ownership concentration improve governance activity, CEO ownership may undermine governance activity. Research limitations/implications – The primary implication of the study is that both ownership by internal governors and ownership concentration play an important role in determining the involvement of internal corporate governors. Originality/value – The study provides unique evidence that ownership by the chairperson, concentrated ownership and ownership by the board can potentially mitigate the costs of separating the roles of the chairperson and the CEO.

Dynamic prediction of Indian stock market: an artificial neural network approach

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Himanshu Goel ◽  
Narinder Pal Singh
Keyword(s):  
Neural Network ◽  
Artificial Neural Network ◽  
Stock Market ◽  
Institutional Investors ◽  
Time Series Data ◽  
Gradient Algorithm ◽  
Series Data ◽  
Content Type ◽  
Artificial Neural ◽  
Indian Stock Market

Purpose Artificial neural network (ANN) is a powerful technique to forecast the time series data such as the stock market. Therefore, this study aims to predict the Indian stock market closing price using ANNs. Design/methodology/approach The input variables identified from the literature are some macroeconomic variables and a global stock market factor. The study uses an ANN with Scaled Conjugate Gradient Algorithm (SCG) to forecast the Bombay Stock Exchange (BSE) Sensex. Findings The empirical findings reveal that the ANN model is able to achieve 93% accuracy in predicting the BSE Sensex closing prices. Moreover, the results indicate that the Morgan Stanley Capital International world index is the most important variable and the index of industrial production is the least important in predicting Sensex. Research limitations/implications The findings of the study have implications for the investors of all categories such as foreign institutional investors, domestic institutional investors and investment houses. Originality/value The novelty of this study lies in the fact that there are hardly any studies that use ANN to forecast the Indian stock market using macroeconomic indicators.

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