Opportunities to Increase Financial Well-Being by Investing in Environmental, Social and Governance with Respect to Improving Financial Literacy under COVID-19: The Case of Latvia

The latest studies reveal that the COVID-19 pandemic has pushed investors in developed economies to focus more on the value attached to environmental and social responsibilities. Unfortunately, socially responsible investment and compliance with environmental, social and governance criteria are not given enough priority in Latvia at present. The purpose of the study is to investigate how the COVID-19 pandemic has influenced the willingness of Latvians to invest in assets that meet environmental, social and governance (ESG) criteria and factors influencing investors’ choice based on their financial literacy. Different views on sustainable investments, socially responsible investments and the relevance of environmental, social and governance criteria from private investors’ perspectives were analyzed to identify factors influencing investment decisions in favour of sustainable investments. Quantitative analysis was carried out to reveal the regularities between financial literacy, the willingness to invest to meet the ESG criteria and the level of education and income of the Latvian population, as well as their savings/investment experience. Such statistical methods as descriptive statistics and hypothesis testing were applied to perform an analysis of the results. The authors’ findings include the importance of sustainable investing to Latvian society, changes of attitude towards ESG investing in different private investors’ groups under the COVID-19 crisis, and the effects of these changes on the financial well-being of the population and, on the basis of these findings, have come to the conclusion that the willingness to invest in the assets that follow environmental, social and governance criteria depends on the level of education, savings/investment experience and income level.

How Venture Capital Influences High-tech Enterprises’ IPO: External Factors versus Internal Growth

There is huge potential for China to transform and upgrade its traditional manufacturing sector, and high-tech enterprises in manufacturing industries stand out. This study contributes to the literature on how venture capital affects technology-based Enterprises’ IPO by evaluating the characters between the two parties. According to the symmetric information theory, certification theory and enterprise property rights theory, the first round of risk financing enterprises from 2010 to 2019 is taken as a research sample to empirically analyze the impact of venture capital and corporate growth on firm listing events. The results show that the investment experience of venture capital institutions, when matched appropriately to firms’ specific growth, will facilitate and accelerate the IPO process. Thus the matching degree between the two are significantly positively related to the company's IPO. Under the premise of low growth of the company, venture capital has a significant impact on the listing of the company. As the growth of the company increases, the impact of venture capital on the listing of the company is gradually reduced. Venture capital institutions with overseas backgrounds are more inclined to promote the IPO of invested international companies. Finally, we discuss the implications based on the results of the empirical analysis, and make suggestions for venture capital institutions and companies.

Determinants and effects of Chinese foreign direct investment in the economy of Ukraine

The article analyzes Chinese foreign direct investment in the economy of Ukraine at the present stage. China is as an important partner for Ukraine, not only in the field of foreign trade and investment but also for the implementation of the strategic vector of Ukraine’s economic development and its integration into the modern world economy. The empirical study shows that Chinese investors receive additional incentives to invest in Ukraine if there is a prior positive investment experience, increasing market potential and openness, and economic freedom. As Ukraine is generally perceived as a path to European markets, the signing of the Association Agreement with the EU is a positive factor. However, Chinese investors’ readiness to support corruption schemes in the Ukrainian economy arouses concern. Therefore, in order to enhance and improve the structure of investment flows from China, it is necessary to take a number of measures to overcome corruption.

Structured product investment behavior in low-interest rate environments

Purpose This study aims to investigate the impact of interest rates, the underlying asset and investment experience on the investment behavior of Japanese retail investors toward structured products (SPs). Design/methodology/approach Three treatments are constructed through internet-based survey experiments: interest rate, underlying asset framing and investment experience treatments. The interest rate treatment includes high- and low-interest rate environments. The underlying asset framing treatment includes equity and foreign exchange rates for the SP. The investment experience treatment includes experienced and inexperienced respondents for SPs. Findings The main finding of this study concerns the effect of the interaction between low-interest rates and investment experience. Specifically, SP-experienced investors tend to choose SPs in a low-interest rate environment and prefer equity-linked SPs, even though such SPs are overpriced. This finding is useful for financial regulators in formulating policies that protect retail SP investors in low-interest rate environments worldwide. Originality/value This study is the first to measure the sensitivities of investment behavior regarding the relative attractiveness of SPs to low-risk straight bonds, given interest rates, the underlying asset and investment experience. It provides evidence to support the development of SP regulations.

Financial literacy or investment experience: which is more influential in cryptocurrency investment?

PurposeThe purpose of this study was to investigate how financial literacy and investment experience impact cryptocurrency investment behavior and explore which factor is more influential in cryptocurrency investment.Design/methodology/approachUsing a sample of US individual investors from the 2018 National Financial Capability Study Investor Survey, a three-step hierarchical logistic regression was conducted following a model-comparison approach. In addition, a mediation analysis was conducted using the Karlson−Holm−Breen (KHB) method to further explore the mediating effect of investment experience between financial literacy and cryptocurrency investment.FindingsThis study found that while both financial literacy and investment experience were positively associated with investing in cryptocurrencies, investment experience was more influential in cryptocurrency investment. The findings also demonstrated that investment experience, especially risky asset holding, had a significant mediating effect between subjective financial knowledge and cryptocurrency investment behavior.Practical implicationsThe findings of this study offer insight to researchers by providing a deeper understanding of the determinants of cryptocurrency investment in the United States. This study also provides detailed implications for financial institutions, financial professionals and policymakers to guide rational cryptocurrency investment behavior.Originality/valueThis study is one of the initial attempts to explore the determinant factors in cryptocurrency investment, an area that has rarely been studied in the literature.

VC investors’ venture screening: the role of the decision maker’s education and experience

We assess whether and how VC investors’ education and experience influence their screening decisions of potential investee candidates. Empirically, we perform an experimental choice-based-conjoint (CBC) analysis with 564 individual VC investors. Our results highlight that the level and field of education, as well as the decision maker’s investment and entrepreneurial experience, moderate the relative importance of different screening criteria. More specifically, we find that international scalability seems to become more important for decision makers with higher education and those with entrepreneurial experience. Whereas decision makers with a background in natural science focus on the value-added of the product or service, engineers seem to value a break even profitability and focus less on the management team. Investment experience, on the other hand, leads to a stronger focus on the management team. Our study contributes to the literature investigating the influence of human capital characteristics of the decision maker in venture financing. Practical implications exist for entrepreneurial ventures seeking financing and for risk capital investors making investments in such ventures.

Persistence is futile: Chasing of past performance in repeated investment choices

When deciding where to invest, individuals choose mutual funds based on recent past performance, despite standard mandated disclaimers that "past performance does not guarantee future results." Investors would receive better long-term returns by choosing funds with lower fees. We explored the impact of fees and past performance on realistic mutual fund selections across three preregistered repeated choice experiments (N=1,600), while manipulating the presence of disclaimers between-participants. Participants persistently chased past performance despite the opportunity to learn about the futility of this strategy during sixty repeated decisions with feedback. The standard regulatory-mandated disclaimer did not help most participants, compared to giving no advice at all, and was even counter-productive for participants with low levels of financial literacy. An alternative disclaimer which explicitly highlighted the advantages of fee minimization reliably helped participants. We show how individuals who lack both financial literacy and prior investment experience are the most susceptible to making poor mutual fund choices, and can benefit the most from behavioral interventions such as the new disclaimer tested here. We discuss how these results generalize into real-world investment decisions, and how to design more efficient disclaimers that can be used beyond investment choices.

Major Shareholders' Investment Background and Corporate Investment Behavior — Based on Evidence from China's Private Listed Companies

Investment behavior is one of the three major financial decisions of a company. Based on this, this paper takes China's private listed enterprises from 2004 to 2017 as samples, and through literature review and empirical analysis, studies the influence of the major shareholder's investment background on the company's investment behavior. It is found that the investment background of the major shareholder is positively correlated with the cash outflow from the company. At the same time, the major shareholders with investment experience tend to choose the pyramid shareholding structure with financing advantages. After the introduction of shareholding structure, the above positive relationship has a significant change: the internal capital market brought by the pyramid shareholding structure can promote the major shareholder with investment background to find more potential investment opportunities and promote the scale of cash outflow from the company's investment, while the direct shareholding structure can inhibit the promotion effect. To sum up, the investment background provides the major shareholder with subjective motivation and ability to conduct investment, while the pyramid shareholding structure creates objective conditions for him to some extent. The research conclusion of this paper enriches the theoretical research on the high-level echelon theory and the motivation of the existing corporate investment behavior, and provides some reference significance for the investors in the capital market to judge the investment decisions of the company and identify the sustainable development and expansion ability of the company.

AN ANALYSIS OF FINANCIAL PERFORMANCE AND INVESTOR’S EXPERIENCE OF INDIAN RENEWABLE ENERGY INDUSTRY

The development of the renewable energy industry is an important support for the sustainable development of the social economy. It is strategic significance in economic and national security is immeasurable. The process of cultivating, developing, and upgrading the renewable energy industry in India is a comprehensive system that includes finance, resources, technology, and management. Renewable energy finance is a new area of public policy that requires innovation and research that will have a significant impact on investors in the World. Till today, many researchers think renewable energy is an issue of science and engineering, but the future of renewable energy is no longer about science and technology; it's all about access to finance. The renewable energy sector in India is growing rapidly and presents an opportunity for strong financial returns. The present research paper aims to know the financial performance of selected renewable energy companies of the Indian renewable energy industry through various financial ratios. The financial performance of any industry is effect to their respective industrial investors. Hence, investors' experience is analyzed. A specific group of investors who invest in the renewable energy industry is selected and posed a structured questionnaire to know their investment experience in the renewable energy sector in India. JEL Classification Codes: F36, P17, G23, Q29, Q43, L7