Casablanca Stock Exchange Research Articles

Private Equity Funded Firms IPOs Short-term Performance Descriptive Analysis: Case of Casablanca Stock Exchange (CSE)

The underpricing phenomenon has been well recognized in all the stock markets in the world. This study aims first to analyze the existence of underpricing issue of Moroccan IPOs, and then to measure this performance on a sample of 13 funded firms listed in Casablanca stock market from 2000 to 2018. The results show that the performance increases from 18,1% the 1 st day to reach 37% the 30 th day Keywords: private equity, IPO, underpricing, JEL Classification: G10, G11, G15, G20, G23, G24, G31, G32 DOI: 10.7176/RJFA/12-4-06 Publication date: February 28 th 2021

Corporate Cash Holdings and Agency Conflicts: Evidence from Moroccan Developing Market

The topic of corporate cash holdings has received relatively little attention from academic researchers. However, this decision has always been at the center of interest of any company seeking to improve its performance. This article aims to examine the relationship between agency costs related to managerial discretion and cash holdings by Moroccan companies. In order to do this, we will mobilize both agency theory and free cash flow theory. To date, and to our knowledge, no research has been conducted on the cash flow of Moroccan companies in the light of agency theory. This study contributes to cash holdings research in Morocco by exploring the reasons for holding cash through a sample of Moroccan non-financial companies that are listed on the Casablanca Stock Exchange for a period of 12 years (from 2007 to 2018). This research uses econometric models based on a positivist approach with a hypothetical-deductive method. Our results show that there is a strong positive relationship between cash holdings and cash flow. It also turns out that the liquidity of these companies is significantly negatively affected by the debt leverage and the growth opportunities of the company.

Big Data Analytics Influence on Financial Performance and Market Value: Intellectual Capital as a Proxy

Big data (BD) analytics is emerging as a valuable innovative research area for academics and professionals, showing the substantial requirement in an information-motivated economy focused on knowledge for answers to the market issues. It isn’t simple to effectively utilize the emerging technology, and it’s actually more difficult to evaluate the BD involvement in enhancing company performance. Furthermore, empirical research exploring the effects on financial performance and market value of the BD remain limited. In evaluating its impact on firm value, this research suggested employing the companies intellectual (IC) capital as a substitute for the BD efficiency deployment. This research utilized the VAIC technique to determine IC, through its principal constituents: capital employed efficiency, structural capital efficiency, human capital efficiency and subsequently applied the SEM method to examine the model fit. The data in this research comprise 29 Moroccan firms registered on the Casablanca Stock Exchange (CSE). These firms are part of 8 sectors: Food producers and processors, banks, Insurance, building and construction materials, participation and promotion real estate, distributors, mining, hardware, software and IT services. The chosen information covering a period of six years, from 2013 to 2019. The test findings indicated that capital employed efficiency and human capital efficiency affect positively and significantly the financial performance and market value.

Determinants of corporate cash holdings: Evidence from the Moroccan market

Determining cash holdings is amongst the most important financial decisions made by heads of corporations. This decision relies on theoretical convictions and views as well as firm specific characteristics. This article analyzes the determinants of cash management in Moroccan corporations. By mobilizing all the theories of optimal financial structure, our research attempts to focus on the field of knowledge in the financial management of cash surpluses. No analysis has been carried out concerning cash and cash equivalents in Moroccan firms. These results could, therefore, contextualize the existing knowledge in this research theme and better understand the behavior of companies and their main trends in terms of cash flow, as well as the objectives and motivations of managers. The sample studied consists of 42 Moroccan companies, which are all publicly traded on the Casablanca Stock Exchange over 13 years (2007-2019). This research uses an empirical econometric study based on a positivist approach with a hypothetical-deductive method. We use panel regression analysis and perform all the necessary tests to determine the exact nature of this dataset. Our results show some evidence that a strong positive correlation exists between liquidity level and cash-flow as well as family shareholding. It is also found that the cash holdings of these companies are significantly negatively affected by how large or small the firm is, working capital requirement, debt leverage, as well as growth opportunity of the firm.

Exploratory Study on the Impact of the Transition to IAS/IFRS on Moroccan Groups <br/>—Case of Performance Indicators

Since the entry into force of IAS/IFRS in 2005, the issue of the impact of IAS/IFRS on economic and financial performance has been a complex debate in EU member countries. Indeed, several studies have been carried out in this context, such as Spain (Callao et al., 2007), France (Boukari & Richard, 2007), Canada (Blanchette et al., 2011) … With the exception of the research carried out by Ahsina et al. in 2014, the analysis of the impact of the adoption of IFRS on companies listed on the Casablanca stock exchange has so far remained non-existent in the case of Morocco. As a result, our article aims to study and analyse the impact of the first “IFRS 1” transition on the 16 listed groups on the Moroccan financial market. The results show that there is no significant difference between the financial statements prepared in accordance with Moroccan standards and those prepared in IFRS. The results of our research show that the transition from Moroccan accounting standards (CGNC) to international accounting standards (IAS/IFRS) does not have significant consequences during the first transition period.

The impact of mandatory IFRS adoption on earnings management: Evidence from Morocco: A multinomial logit approach

The purpose of this paper is to investigate whether the transition to IAS/IFRS deters or facilitates greater earnings management (Earnings smoothing), and assess the level of earnings management according to the accounting standards applied by companies listed on the Moroccan stock market. To achieve this goal, a logistic regression model is proposed to explain the effect of IFRS adoption in the Moroccan context. A quantitative study is carried out using a sample of 74 firms listed in the Casablanca Stock Exchange over a period of five years (2010-2015). As a result, we find convincing evidence that the implementation of IFRS contributed to less earnings management compared to the local accounting standards. This study should be of interest to regulators and policymakers as they are expected to assess the impacts of adopting IFRS.

Study of Stock Markets and Investor Behaviour: Case of the Casablanca Stock Exchange

The emergence of a new stream of research, behavioral finance, linking market behavior and human psychology, seeking to study cognitive biases related to investor behavior that are not explained by traditional financial theory, has opened up several avenues of research related to the behavior of stock market actors and their effects on stock markets. Our empirical study focuses, on the one hand, on the identification of the stock market crises that affected the Casablanca Stock Exchange during the period 2000-2020 and, on the other hand, on the measurement of investors' sentiment on the Moroccan stock market, to verify that the indicator of investors' sentiment is consistent with stock market crises and to find that investors' sentiment is at the origin of the Moroccan stock market crises as defined by Granger. This provides new evidence on the important role played by investor sentiment in the transmission of stock market crises.

The Relationship Between Predictability and Earnings Volatility: The Case of Companies Listed on the Casablanca Stock Exchange

The study of the predictability of accounting results is extremely important for investors as well as for the various stakeholders of listed companies. The objective of this work is to study the relationship between the predictability of earnings and their volatility. In principle, the volatility of earnings is supposed to reduce its predictability. However, the existing literature, based on short-term horizon, fails to provide convincing results (Sloan, 1996; Lev and Thiagarajan 1993; Abarnell & Bushee, 1997). Through this work, we first seek to verify the meaning and intensity of the relationship between predictability and volatility, while applying a standpoint of a long-term study. Then, we check the load of each component of the volatility - accounting component or economic component - on the predictability of earnings. Our results confirm our prediction, ie the presence of a negative relationship between volatility and the predictability of earnings. Nevertheless, this capacity decreases with the presence of the extreme values of earnings Keywords: Predictability; volatility; accounting data; Morocco context. DOI: 10.7176/RJFA/11-24-10 Publication date: December 31 st 2020

Wealth redistribution between stakeholders

Corporate social responsibility (CSR) is a very popular concept that hits the headline recently, companies face the obligation, not only to maintain their viability to ensure the sustainability of their business by continuing to create value, but to adopt a mode of governance that combines interests of all stakeholders. A CSR strategy is becoming more and more an obligation than just a wise choice.
 The strong involvement of Moroccan companies in CSR strategies is not by coincidence; but fits perfectly into the Kingdom's strategy, which adheres to the principles of sustainable development and CSR, for a sustainable economy and an inclusive growth.
 The purpose of this empirical study is to examine the shareholder’s engagement and the degree of involvement in CSR strategy, of a sample of 45 Moroccan companies listed on the Casablanca Stock Exchange and belonging to all sectors other than banking, insurance and equity investments, that claim to be socially responsible, through an analysis of the redistribution of their created value towards five categories of primary stakeholders, that are: lenders of funds, customers, suppliers, shareholders and employees.

Failure and Value Creation: A Discriminant Analysis Applied to Moroccan Industrial Companies Listed on the Casablanca Stock Exchange

This article purposes to assess the contribution of shareholder value creation as an explanatory variable for the failure of Moroccan industrial companies listed on the Casablanca stock exchange. It also offers a scoring that reflects the probabilities of the financial difficulties to occur. There were used data for 30 Moroccan industrial companies listed on the Casablanca stock exchange during the period of study from 2010 to 2018. Methodologically, a linear discriminant analysis was employed. The empirical results of the discriminant analysis applied during the period of 2010-2018 show that value creation, liquidity and the size of the company are the most determining variables in classifying companies according to the degree of financial difficulties. Thus, the results received make it possible to create a relationship among recurrent scientific knowledge about forecasting the companies’ failure and empirical findings in the context of Moroccan industrial companies listed on the Casablanca stock exchange.

Hierarchical financing and reality of the financial structure of Moroccan listed companies

PurposeThere is a wealth of literature on the financing structure of a company. For this reason, the authors considered it useful to present a theoretical and empirical literature review of classical and new theories of the financial structure. The purpose of this study is to realize on a panel of 15 nonfinancial Moroccan companies listed on the Casablanca Stock Exchange, over a period of 11 years.Design/methodology/approachThe results obtained indicate that only a few variables from financial theory have an important role in the financing policy of Moroccan companies. The authors have presented the positive role of size and self-financing on the debt ratio. The analysis of the effects of profitability shows in this study that it is negative related on the debt ratio which asserts the predictions of the pecking order theory. Also, the age of the company and the growth opportunities explain the level of indebtedness.FindingsEconometric analysis is used to ascertain the nature of the financial structure of listed companies. For this purpose, a large number of companies listed on the Casablanca stock exchange were used.Originality/valueThe authors have presented the positive role of size and self-financing on the debt ratio. Regarding the influence of profitability, this analysis shows that it is negative related on the debt ratio which asserts the predictions of the pecking order theory. Also, the age of the company and the growth opportunities explain the level of indebtedness.

Ownership identity and firm performance: Pre‐ and post‐crisis evidence from an African emerging market

AbstractThis paper attempts to document the value relevance of the largest shareholders' identity across the recent financial crisis of 2008 in Morocco, one of the most important emerging markets in the Middle East and North Africa (MENA). To examine the impact of ownership identity on firm performance, this study employs panel data analysis. It uses data of non‐financial firms listed on Casablanca Stock Exchange (CSE) between 2004 and 2017. To uncover the hidden facets of the aforementioned relationship and examine how it is shaped by the financial crisis, a pre‐ and post‐crisis analysis is performed. The findings reveal that institutional ownership affects positively firm performance in both, pre‐ and post‐crisis periods. Compared to the pre‐crisis period, investors further recognize and reward the value‐enhancing role of institutional ownership during post‐crisis period. Our analysis suggests that the incentives to expropriate minority shareholders within family‐controlled firms increase during financial market turmoil. Family‐owners switched from protecting to misusing the firm's resources for the sake of preserving their private interests. This research raises awareness for managers of family‐controlled firms to review their corporate governance practices and align them with shareholders' value maximization. Our study suggests that Moroccan authorities must strengthen country‐level governance mechanisms. The failure to accomplish this objective could have severe implications ranging from the inefficient allocation of resources in the economy to the destruction of shareholders' value.

Involys: a Moroccan SME playing with African giants

Supplementary materials Teaching notes are available for educators only. Learning outcomes Objective 1 analyse the internationalization process of Involys and compare it with the traditional theoretical analyses; Objective 2 analyse and learn from past successes and failures in Africa, building up a meaningful strategic analysis with a specific focus on: understanding the advantages and disadvantages of size (small and medium-sized enterprise (SME) suppliers/State Institutions customers); understanding the importance of institutional barriers and opportunities in this specific context; understanding and measuring the distances issues and the way they affect the company’s development Objective 3 learn to be creative and concrete in proposing feasible solutions to the Board of Involys. Case overview/synopsis Involys is a medium-sized Moroccan company designing and implementing enterprise resource planning (ERP) systems. It was co-founded in the 1980s by its present chief executive officer (CEO), quite a charismatic individual. As its listing on the Casablanca Stock Exchange, the company has set its main goal to develop its business on the African markets. This is a significant shift in commercial strategy for a company who has built its past success on working with Northern countries. Involys tries with its ERP system to accompany state-level reforms. The case study takes place in 2017, Involys has just lost a significant project in Cameroun, despite significant pre-sale investments, and is trying to build on its success in Gabon to accelerate and improve its competitive position in Africa. The case focusses on the internationalization process of a firm involved in long terms contracts and dealing mainly with institutions such as states or state departments. The issues of sizes, institutional barriers and distance should be specifically addressed in a south-south context. Complexity academic level Master’s degree executive training programs. Subject code CSS 5: International business.

Agency theory and corporate cash holding decisions

Purpose: This article aims to examine the relationship between agency costs related to managerial discretion and cash holdings by Moroccan companies. In order to do this we will mobilize both agency theory and free cash flow theory. To date, and to our knowledge, no research has been conducted on the cash flow of Moroccan companies in the light of agency theory Research methodology: This research uses econometric models based on a positivist approach with a hypothetical-deductive method. Results: Our results show that there is a strong positive relationship between cash holdings and cash flow. It also turns out that the liquidity of these companies is significantly negatively affected by the debt leverage and the growth opportunities of the company. Limitations: we have limited ourselves to the examination of the intrinsic characteristics of the company. We omitted the institutional and legal framework. This would have required an international sample with different jurisdictions and degrees of shareholder protection. Contribution: This study contributes to cash holdings research in Morocco by exploring the reasons for holding cash through a sample of Moroccan non-financial companies that are listed on the Casablanca Stock Exchange for a period of 12 years (from 2007 to 2018). Keywords: Cash holdings, Morocco, Agency theory, Free cash flow theory, Firm-specific variables

Peut-On Expliquer La Volatilite Du Marche Boursier Marocain Par Un Comportement Mimetique Des Investisseurs?

The purpose of this paper is to test empirically, if during the period 2002-2017, the volatility of the Moroccan stock market could be linked to mimetic behavior of investors. On a sample made up of 22 firms listed on the Casablanca stock exchange, we adopted an estimate of this behavior according to the measure of cross sectional absolute deviation CSAD to show that there is no solid evidence on the presence of mimicry at least for the period considered in this study.

Management of Companies Performance: Impact of Immaterial Capital

The authors present their arguments and counterarguments on the issue of Immaterial capital and its impact on companies’ performance. The main purpose of the research is to assess companies’ Immaterial Capital and to measure its impact on stock performance. The article has three main objectives: 1) to define immaterial capital and propose a methodology for its assessment; 2) to determine the proportion of Immaterial Capital created in Moroccan companies listed on the Casablanca stock exchange while using the retained measurement methodology; 3) to verify the impact of Immaterial Capital on stock performance. Systematisation literary sources and approaches for solving the problem of Immaterial Capital assessment indicates that there is no broad consensus on that issue. Indeed, given its multidimensional character, immaterial capital is difficult to measure. It is worth to note that several approaches to assessing that capital, which weighs very heavily on the enterprise’s finances, have been developed. In this paper, the authors propose to measure immaterial capital in Moroccan companies listed on the Casablanca Stock exchange, while using two assessing methods, namely price-to-book and Enterprise Value-based approaches. The paper presents the results of an empirical analysis which showed that a lot of sectors create immaterial wealth, in particular telecommunication sector, cement manufacturer, electricity, hydrocarbon distribution, mining, port services, food and beverages, autos distribution and pharmaceutical sector. The research empirically confirmed that all sectors which have a price to book ratio above 3 generate a positive immaterial capital calculated by the second methodology used. The results of the research can be useful for all companies that want to measure their real wealth and consequently to manage their performance competently. It should be noted that the analyses performed in this article are preliminary only. An extension to unlisted companies is intended so that the generalisation of the results would be possible. Keywords assessment, Casablanca stock exchange (CSE), enterprise value (EV), immaterial capital (IC), listed companies, Price-to-Book Ratio (PBR).

The impact of internal governance mechanisms on financial and stock market performance of listed companies: Evidence from an emerging market

The aim of this paper is to empirically test the impact of internal governance mechanisms on the financial and stock market performance of Moroccan listed companies. Board of directors’ characteristics such as independence and transparency, concentration, and presence of employees in the ownership structure, as well as some cognitive aspects of governance, represent the basis for discussion. Secondary data of a sample of 44 listed companies in the Casablanca Stock Exchange was analyzed using multiple linear regression. The results of this empirical study revealed that the financial and stock market performance of the companies that are captured by the return on equity (ROE) and the market to book ratio (M to B) significantly correlate with the adoption of the hybrid corporate governance approach. The relevance of this study is to enrich researches that deal with corporate governance and its impact on business performance in the context of Moroccan listed companies.

The Covid-19 Pandemic and the Moroccan Financial Market: An Event Study

The history of global health crises has been aggravated by the spread of the new coronavirus pandemic (Covid-19), which caused disruptions in the economic and financial systems of the various countries, particularly the financial markets. This paper examines the impact of the spread of the pandemic, in the Moroccan context, on its financial market from February 24, 2020 to May 5, 2020. We use the day of the outbreak of the state of health emergency in Morocco, March 16, 2020, as the day of the event. In order to evaluate the reaction of the prices of companies listed on the Casablanca Stock Exchange, we use the event study methodology which is based mainly on the calculation of the daily abnormal returns of each company, and cumulate them over an event window in order to test their statistical significance. Our conclusions confirm the negative influence of the Covid-19 pandemic on the Moroccan financial market. We find that the market reactions are more important on short event windows, especially on the days surrounding the date of the event, while the reaction is less important on long event windows.

The financial performance of the investment between social responsibility and irresponsibility-new modeling

The absence of a consensus of the associations among the Socially Responsible Investment (SRI), and the financial performance has comprised a bunch of enterprises that are really ashamed about the acceptance of this precise genre of investment. This performed article would attempt to provide a response to this fundamental question. It is explicit that the extension of SRI impacts the profits of Moroccan labor that is rostered on Casablanca's Stock Exchange. This work endows a reasonable likelihood to evolve the essence of the influence among SRI and the return in an illustrated and obvious methodology. The methodology utilized here is the E. F. Fama, and K.R. French [6] [7] [8] [9] [21] in their articles on the conventional equities between 1992 and 1993. Initially, both authors address the distinction of the Moroccan stocks qualified responsible; then, they re-name the results, that previously launched academic studies, related to the ethics investment on corporate yields. Also, they demonstrate the approaches utilized in their remedies, and the outcomes they have obtained. The research has fruitfully represented that the four-factor model (whereas the fourth variable of SRI was added to the original Fama & French) illustrates the performance. In return, it has been discovered that Social responsibility has a beneficial contribution with less effectiveness for large companies rather than small ones.

A LOOK AT SHORT- AND LONG-TERM NONLINEAR DYNAMICS IN FAMILY BUSINESS STOCK RETURNS LISTED ON CASABLANCA STOCK EXCHANGE

Moroccan family business companies are becoming an attractive investment in Casablanca stock exchange. In this study, presence of fractal and chaos in Moroccan family business stock returns is examined. In particular, return series are analyzed by stationary wavelet transform to decompose original series into long- and short-term variations. Then, detrended fluctuation analysis and artificial neural networks are used to estimate, respectively Hurst exponent and largest Lyapunov exponent. Results from fractal analysis show that short variations in returns are anti-persistent, whilst long variations are persistent. Besides, results from chaos tests reveal that both short and long variations in returns are chaotic. Such conclusions should be taken into account in active portfolio optimization and management.