The Performance of Canadian Listed Cannabis Equities: 1996-2020

This research investigates the investment performance of Canadian listed cannabis stocks. Canada legalized medical marijuana in 2001, following the initiation of medical marijuana authorization by some states in the US starting in 1996, and completely approved cannabis products in 2018. Investing in the 89 Canadian cannabis equities (listed on the Toronto Stock Exchange, Canadian Securities Exchange, Toronto Venture Stock Exchange, and Over-the-Counter Market) as an industry portfolio, based on weekly returns for the 1996 to 2020 period, generated high mean returns, standard deviation, positive skewness, and kurtosis. Robustness tests taking the winsorised returns (deleting the top and bottom 10 percent of returns) produced qualitatively similar results. Further, both the portfolio alpha and beta were extremely high. More so, the Canadian cannabis portfolio garnered excess returns when compared to the Standard and Poor’s Toronto Stock Exchange Composite Index. Money managers, financial analysts, and investors should contemplate including Canadian listed  cannabis stocks based on their high investment return. 

Non-GAAP Financial Measures: Evidence From Canada

This paper investigates non-GAAP financial measures voluntarily reported by Canadian companies listed on Toronto stock exchange (TSX) and Toronto Ventures Exchange (TSXV) for the year 2017. Non-GAAP measures are those that do not adhere to the requirements of generally accepted accounting principles (GAAP) and are used to communicate those aspects of firms’ operations which the firms see as relevant for the users of financial statements. This study is an exploratory research which describes current firm practices in reporting non-GAAP financial measures among three industry groups, namely Real Estate, Blockchain/Cryptocurrency and Cannabis firms. This paper also assesses the quality of non-GAAP financial disclosures in accordance with the regulatory guidance. The study is motivated by recent regulatory proposals issued by the Canadian Securities Administrators (CSA), under the National Instrument NI 52-112 and by the Accounting Standards Board (AcSB) pertaining to reporting non-GAAP performance measures. The main contribution of this study is a detailed content analysis of a sample of Canadian firms. My analysis of hand collected data from the Management Discussion and Analysis (MD&A) indicates a plethora of reported “non-GAAP financial measures” disclosed by companies. The analysis also indicates that firms are falling short on parameters such as understandability, comparability, standardization, consistency and persistence of non-GAAP financial measures which are essential under the existing guidelines, and that regulation of non-GAAP financial measures would be beneficial. The study’s findings may be relevant to regulators for formulating guidance on reporting non-GAAP measures and identifies areas of potential future studies in the area of non-GAAP financial measures. Keywords: Non-GAAP financial measures, Non-GAAP earnings, Pro forma earnings, Non-IFRS measures, Street earnings, Core earnings, Adjusted earnings and NI 52-112.

Non-GAAP Financial Measures: Evidence From Canada

This paper investigates non-GAAP financial measures voluntarily reported by Canadian companies listed on Toronto stock exchange (TSX) and Toronto Ventures Exchange (TSXV) for the year 2017. Non-GAAP measures are those that do not adhere to the requirements of generally accepted accounting principles (GAAP) and are used to communicate those aspects of firms’ operations which the firms see as relevant for the users of financial statements. This study is an exploratory research which describes current firm practices in reporting non-GAAP financial measures among three industry groups, namely Real Estate, Blockchain/Cryptocurrency and Cannabis firms. This paper also assesses the quality of non-GAAP financial disclosures in accordance with the regulatory guidance. The study is motivated by recent regulatory proposals issued by the Canadian Securities Administrators (CSA), under the National Instrument NI 52-112 and by the Accounting Standards Board (AcSB) pertaining to reporting non-GAAP performance measures. The main contribution of this study is a detailed content analysis of a sample of Canadian firms. My analysis of hand collected data from the Management Discussion and Analysis (MD&A) indicates a plethora of reported “non-GAAP financial measures” disclosed by companies. The analysis also indicates that firms are falling short on parameters such as understandability, comparability, standardization, consistency and persistence of non-GAAP financial measures which are essential under the existing guidelines, and that regulation of non-GAAP financial measures would be beneficial. The study’s findings may be relevant to regulators for formulating guidance on reporting non-GAAP measures and identifies areas of potential future studies in the area of non-GAAP financial measures. Keywords: Non-GAAP financial measures, Non-GAAP earnings, Pro forma earnings, Non-IFRS measures, Street earnings, Core earnings, Adjusted earnings and NI 52-112.

Climate Change Disclosure: An Empirical Study On The Oil & Gas Companies Listed on Toronto Stock Exchange (TSX)

This research investigates the current state of disclosure on the climate change issues of the oil & gas companies listed on the Toronto Stock Exchange (TSX). Using a sample of 58 companies, I conduct a content analysis of their publicly available documents and develop a disclosure index. The study demonstrates that there is a significant association between the level of disclosure of climate change issues (disclosures index) and the board of director’s effectiveness (measured by Board Shareholder Confidence Index) for Canadian oil & gas companies. This study also explores the association between firms’ value and the level of climate change disclosure. The empirical evidence indicates that the investors take the extent of disclosures on climate changes into considerations when they assess the market value of the firms. This study contributes to environmental accounting literature because it examines the relationship between climate change disclosures and corporate governance. From a practical point of view, the outcome of this analysis will help Canadian Securities Administrator (CSA) to have insight into climate change disclosures practices and provides a frame of references for developing related disclosures requirement.

Climate Change Disclosure: An Empirical Study On The Oil & Gas Companies Listed on Toronto Stock Exchange (TSX)

This research investigates the current state of disclosure on the climate change issues of the oil & gas companies listed on the Toronto Stock Exchange (TSX). Using a sample of 58 companies, I conduct a content analysis of their publicly available documents and develop a disclosure index. The study demonstrates that there is a significant association between the level of disclosure of climate change issues (disclosures index) and the board of director’s effectiveness (measured by Board Shareholder Confidence Index) for Canadian oil & gas companies. This study also explores the association between firms’ value and the level of climate change disclosure. The empirical evidence indicates that the investors take the extent of disclosures on climate changes into considerations when they assess the market value of the firms. This study contributes to environmental accounting literature because it examines the relationship between climate change disclosures and corporate governance. From a practical point of view, the outcome of this analysis will help Canadian Securities Administrator (CSA) to have insight into climate change disclosures practices and provides a frame of references for developing related disclosures requirement.

Racial Diversity in Publicly Traded Companies

This article shares some of the results of a thesis investigating the relationship between the racial diversity of the board of directors in Canadian companies that traded on the Toronto Stock Exchange (TSX). The central question addressed was how organizational factors affect the racial diversity of board membership. The thesis expanded on a prior study that modelled gender diversity on boards of directors by focusing on the recommended area of racial diversity in the Canadian environment. Though many companies do not share their diversity details, using multiple regression analysis, the results showed that there was more racial diversity on larger boards. From a population of about 3,000 companies, the researchers identified a sample of 148 companies, with all the required parameters. This sample contained 1,246 board members, where 9.4% (117 board members) were visible minorities. The ANOVA analysis of the model demonstrated that it was a suitable tool to conduct the investigation. However, the variables did not show any strong significance.

Racial Diversity in Publicly Traded Companies

This article shares some of the results of a thesis investigating the relationship between the racial diversity of the board of directors in Canadian companies that traded on the Toronto Stock Exchange (TSX). The central question addressed was how organizational factors affect the racial diversity of board membership. The thesis expanded on a prior study that modelled gender diversity on boards of directors by focusing on the recommended area of racial diversity in the Canadian environment. Though many companies do not share their diversity details, using multiple regression analysis, the results showed that there was more racial diversity on larger boards. From a population of about 3,000 companies, the researchers identified a sample of 148 companies, with all the required parameters. This sample contained 1,246 board members, where 9.4% (117 board members) were visible minorities. The ANOVA analysis of the model demonstrated that it was a suitable tool to conduct the investigation. However, the variables did not show any strong significance.

The impact of domestic portfolio diversification strategies in Toronto stock exchange on Canadian textile manufacturing industry

The aim of this research study is to examine the impact of domestic portfolio diversification strategies in Toronto Stock Exchange (TSX) on Canadian textile manufacturing industry in order to obtain attractive investment opportunities. Dissipation of benefits of globally diversified portfolios due to overwhelming convergence among the international and regional stock markets around the globe have given rebirth to the idea of domestic portfolio diversification particularly after the global financial crisis of 2008. Textile industry in Canada is challenging but can achieve higher performance based on Toronto Stock Exchange behavior. Therefore, this is a complex applied research focused on investigating TSX as standalone stock market for domestic diversification opportunities. For this purpose, correlation coefficients, pairwise cointegration, multiple cointegration and causality of sectors in TSX have been examined. The empirical results show that majority of the sectors in TSX do not share high correlation with each other and they are also not highly cointegrated. These empirical findings indicate that TSX presents attractive opportunities for domestic portfolio diversification.