Does sustainability matter for Fintech firms? Evidence from United States firms

Purpose This study aims to look at how financial technology (FinTech) companies adhere to sustainable standards in contrast to their counterparts. Following the validation of its new sustainability index, this study looks into the impact of sustainability on the stock performance of FinTech companies. Design/methodology/approach To efficiently test the hypotheses, sample has been collected from the Bloomberg of all FinTech and non-FinTech companies from the USA. The final sample comprises 1,712 company-year observations over the investigation period 2010–2019. The methodology entails ordinary least squares regressions and generalized panel methods of moments (GMM). Findings The results suggest that the developed sustainability index is a valid proxy for sustainability measures and directly relates to stock performance. Besides, the evidence indicates that non-FinTech companies display superior sustainability and stock performance compared to FinTech companies. The present results corroborate with stakeholder theory, which implies that quality sustainability performance will alleviate the agency issue and safeguard the shareholders’ interest. Research limitations/implications Despite the fact that it presents the limitation of not considering other dimensions of financial performance, this research is important as it highlights the sustainability practices by the FinTech and non-FinTech companies, offering insights to researchers, policymakers, regulators, financial reports users, investors, environmental union, employees, clients and society. Originality/value This paper is novel because it is unique in evaluating the sustainability practices in FinTech and non-FinTech firms.

Measuring Islamic Stock Performance in Indonesia with A Modified Sharpe Ratio

Since the late 1960s, one of the stock performance analysis tools commonly used is Sharpe Ratio. The Sharpe Ratio consists of three components, namely stock return, risk-free returns, and stock risk. Many studies approach risk-free returns with interest rates, including when measuring the performance of Islamic stocks, while interest rates are prohibited in the concept of Islamic finance. Moreover, the stock risk is measured by a standard deviation which assumes returns are normally distributed, while many stock returns are non-normally distributed. This paper intends to measure the performance of Islamic stocks listed on the Indonesian Stock Exchange (IDX) for the period of January 2011 to July 2018 using a modified Sharpe Ratio. The ratio is modified by replacing the interest rate with four approaches: eliminating the interest rate, changing with zakah rates, changing with inflation, changing with the nominal gross domestic product, and replacing the risk measurement from Standard Deviation to Value at Risk (VaR). The findings provide almost the same results as the original measurement and thus, show very high suitability for using these models in other circumstances. Therefore, on the concept of Islamic finance, risk-free returns can be measured using these four approaches, especially inflation and GDP. This study also recommends inflation and GDP to measure risk-free returns in the Sharia's Compliant Asset Pricing Model (SCAPM) or Islamic Capital Asset Pricing Model (ICAPM).====================================================================================================ABSTRAK – Pengukuran Kinerja Saham Syariah di Indonesia menggunakan Sharpe Ratio Modifikasi. Sejak akhir 1960-an, salah satu alat mengukur kinerja saham yang biasa digunakan adalah Sharpe Ratio. Model Sharpe Ratio terdiri atas tiga komponen, yaitu return saham, return bebas risiko, dan risiko saham. Return bebas risiko diukur mengunakan variabel suku bunga yang digolongkan riba dan dilarang dalam konsep keuangan islam. Sedangkan risiko saham diukur dengan standar deviasi yang mengasumsikan data berdistribusi normal. Paper ini bertujuan untuk mengukur kinerja saham syariah yang terdaftar pada Bursa Efek Indonesia (BEI) untuk periode Januari 2011 sampai Juli 2018 dengan menggunakan Sharpe Ratio modifikasi. Kajian akan memodifikasi model Sharpe Ratio dengan mencari variabel alternatif penganti suku bunga dengan empat pendekatan, yaitu: menghilangkan variabel suku bunga tersebut, mengganti dengan zakat rate, mengganti dengan inflasi, dan mengganti dengan produk domestik bruto, serta mengganti standar deviasi dengan Value at Risk (VaR) sebagai pengukur risiko saham yang selanjutnya diimplementasikan pada pasar modal syariah di Indonesia periode Januari 2011 - Juli 2018. Hasil kajian menunjukkan kesesuaian yang sangat tinggi untuk hasil pengukuran kelima model tersebut. Dilihat dari kedekatan hasil pengukuran kinerja, kelima model tersebut dapat dikelompokkan menjadi dua, yaitu model dengan tingkat suku bunga, inflasi, dan PDB sebagai kelompok pertama, sedangkan model tanpa suku bunga dan tingkat zakat sebagai kelompok kedua

Social and Economic Drivers of Stock Market Performance in Nigeria

The study examines the effect of the social and economic indicators on the stock market performance in Nigeria between 1981 and 2019. The study employs secondary data from the World Bank and Central Bank of Nigeria using the ordinary least squares as the technique of estimation. Findings show that regarding the economic drivers, interest rate, exchange rate, and inflation rate negatively impact the stock market while only income exerts a positive impact. However, both income and interest rate are significant economic drivers of stock performance. Regarding social drivers, life expectancy, poverty, and population exert a positive impact on stock performance. Similarly, both life expectancy and population are significant social drivers of stock market performance in Nigeria. The study recommends that monetary authorities should be cautious in avoiding discretionary policies that might hike the exchange rate; otherwise, the flow of funds to the stock market will be derailed. Also, the fiscal authority should invest massively in safety nets programmes to enhance the capacity of the growing population and reduce poverty.

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

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.

Relative Strenght Index, Moving Average Convergence-Divergence on Stock Performance and Fundamental Analysis as Moderating

This study aims to determine the effect of Relative Strength Index (RSI) and Moving Average Convergence-divergence (MACD) on stock performers with Debt to Equity Ratio (DER) as a Moderation variable in Financing companies listed on the Indonesian Stock Exchange (IDX). Sampling in the study using purpose sampling method obtained 14 companies with time series data. The analysis method used in this study is multiple linear regression analysis using eview. The results show that Relative Strenth Index (RSI) partially has a positive and significant effect on stock performance, Moving Average Convergence-divergence (MACD) partially has a positive and significant effect on stock performance, Relative Strenth Index (RSI) has a positive and significant effect on stock performance. which is moderated by Debt to Equity Ratio (DER), Moving Average Convergence-divergence (MACD) has a positive and significant effect on the Performance of Shares moderated by Debt to Equity Ratio (DER).