Equity Share Research Articles

The creation and further development of the corporate structure based on processes of mergers and acquisitions

The article explores the issue of privatization based on processes of mergers and acquisitions. The analysis of the stages of the integration of the companies on the basis of reorganization processes. Addresses the issue of financing the operations consolidation companies. The special role in the creation and further development of the corporate structures occupy the processes of mergers and acquisitions. The basis of the integration of the companies using the processes of mergers and acquisitions, business development and the investment component of the mechanism of realization of association of companies with accounting and evaluation of effectiveness data, corporate action for participants of the integration process. However, the practice of creating and developing corporate structures based on the processes of merger and acquisition companies indicates that is not developed fully the organizational mechanism of the data management processes at an early stage, as well as the methodology of estimation of efficiency of corporate development in terms of mergers and acquisitions. One of the most significant reasons for this situation, there is insufficient processing phase of the mechanism of corporate procedures for mergers and acquisitions of the aggregated results of the integration process and the overall efficiency of corporate development. Analysis of the content of integration processes on the basis of merger and acquisition companies allowed to highlight the most important typological signs data processes, which should include: the type of integration of the companies; national affiliation of companies that join together; the attitude of companies towards mergers and acquisitions; how to combine building companies; the terms of mergers and acquisitions; mechanism for mergers and acquisitions; the nature of the integration of the companies. As a result of the fact that integration processes based on mergers and acquisitions require substantial financial resources, as well as complex further complex corporate changes company-initiated, correct and accurate evaluation and selection of companies for mergers and acquisitions is a condition of effectiveness data integration processes. Valuation of the company for the purpose of merger and acquisition can be carried out within the methods and models of the two major approaches: the valuation of the company; evaluation of the value of the company equity share in equity or stake. The peculiarity of the decision-making on the use of a particular method of financing transactions in the merger and acquisition companies is the need to determine not only the efficiency of financing structure for the absorbing side, but also external conditions, in which the acquiring company. Such external conditions that influence the choice of a particular financing structure include: conditions of taxation of the holders of the target company, the nature of the market assessment of future mergers and acquisitions, the degree of asymmetry of a distribution of information between absorption and the target company. Decision on restructuring of the activities of the corporate structure in the form of mergers and acquisitions is, above all, achieving greater efficiency of companies within the new corporate merger. Evaluation of the effectiveness of the development of the corporate structure in terms of mergers and acquisitions can be defined on the basis of two fundamental approaches differ: a prospective and retrospective.

International joint venture and welfare-improving tariff-tax reforms

This paper examines the welfare effects of two tariff-tax reforms—point-by-point and world-price-fixing—under an asymmetric duopoly in the presence of an international joint venture (IJV). If the host government implements a point-by-point reform, the welfare effect is highly relevant to the domestic rival's profit margin and the equity share of the host partner in the IJV. Welfare may increase based upon the extent of share threshold. If the government implements a world-price-fixing reform, together with profit-shifting effect, the reform will reduce welfare in the host country. Furthermore, an increase in the domestic rival's profit margin strengthens welfare loss.

The Household Equity Share and Expected Market Returns

The “Household Equity Share” (HEShare), the share of the household sector's equity and credit assets allocated to equities, is a negative predictor of excess returns on the US stock market. When the household sector has a higher equity share, future excess returns to equities are lower on average. This predictability is robust to the definition of the asset classes, first versus second half of sample, and adjusting for finite sample bias. HEShare outperforms many popular forecasters of market returns, including the cyclically adjusted price-earnings ratio, the equity share in new issuances, and the consumption-wealth ratio. Our results suggest that household holdings of financial assets play an important role in setting asset prices and risk premia.

ANALISIS PERBEDAAN RELEVANSI NILAI DARI NILAI BUKU EKUITAS DAN LABA PER LEMBAR SAHAM TERHADAP HARGA SAHAM PADA PERIODE SEBELUM DAN SESUDAH PENERAPAN SAK BERBASIS IFRS

This study was conducted to examine whether the implementation of GAAP-IFRS based results of any difference relevance of equity book value and share earnings, using the market price of the stock as the dependent variable, the equity book value and share earnings as an independent variable, and the periods before and after the application of GAAP-based IFRS. The analysis uses panel data regression analysis with random effects models. This research was conducted on 51 manufacturer companies listed on the Stock Exchange the period prior to the application of IFRS-based IFRSs 2008-2010 and after the application of GAAP-IFRS based in 2012-2014. The study found that in the period of after the implementation of GAAPIFRS based the relevance of equity book value increased against the market price of the shares, while the relevance of share earnings experienced a significant decrease in stock market prices

The impact of market share and banking sector indicators to the profitability of Islamic commercial banks in Indonesia

This research has aimed to provide the empirical evidence from the impacts of market share of depositor funds, market share of financing, Total Equity and Size to the profitability (ROA) of Sharia commercial banks in Indonesia. Data used in this paper is secondary data panel with the samples are 4 Sharia commercial banks in Indonesia and in the period of 2010-2015. Data had been analyzed using the data panel regression. According to the result of research, it can be concluded that market share of depositor funds, Total equity and Size have positive and significant impacts to ROA, while the market share of financing has a negative and insignificant relationship to ROA.

Local Versus Foreign Banks: Capital Structure and the Financial Crisis

Our paper examines the bank capital structure of French domestic and foreign banks. There are an apparent link between foreign presence and the capital structure of domestic firms. We check if the capital structure of a foreign banks is significantly different from domestic banks. Our dataset comprises 170 banks operating in the French market over the period 2000-2012. We estimate models with generalized method of moments (GMM). Our results show differences in the effect of most factors on the banks’ share of equity, according to the domestic and foreign banks. We find that specific bank’s characteristics and macroeconomic factors affect significantly the capital structure of domestic than foreign banks. All these findings are sensitive after taking into account the recent financial crisis. Thus, the foreign banks operating in France tend to be less debt level in crisis period and more profitable than French domestic banks.

Toward an Optimal Asset Allocation for Charitable Remainder Trusts

Economic theory, relevant research, and a Monte Carlo model are used to develop investment guidelines for charitable remainder unitrusts (CRUTs). Investment for CRUTs should involve a significant share of equities, with as much as 70 percent allocated to equities for long-term CRUTs. Adjusting allocations as payout beneficiaries get older is unnecessary given the nature of CRUTs, donors, and simulated outcomes. The authors propose that a fixed asset allocation be used instead of one that changes over time and that CRUTs with higher payouts should use a more aggressive asset allocation (more equities).

A Price Theory of Silicon Valley

I present a model of technology entrepreneurship in which “engineers” choose to either found a startup as an entrepreneur, pursuing a single business idea — obtaining seed funding from VCs in exchange for equity — or join an established startup as an employee. The model predicts the number of startups formed and their success probability. It also predicts the wages of engineers, the share of equity retained by founders, the fraction of engineers pursuing entrepreneurship, and the profits of successful startups. The model characterizes the total output of the entrepreneurial system and the social value of the marginal entrepreneurial venture.

Portfolio Choices Over the Life-Cycle and the Cyclical Skewness of Labor Income Shocks

I study the implications of skewness in labor income risk for portfolio choices over the life-cycle. First, I show that French households that face higher left-skewness have lower equity holdings. Then, I calibrate a life-cycle model that incorporates the cyclical skewness observed in US data. The negative effect of skewness on the equity share counteracts the low beta of labor income shocks, in particular for households with modest financial wealth relative to human capital. In the baseline calibration, and holding variance constant, skewness turns upside down the predicted life-cycle profile of the equity share and produces a hump-shaped relationship with age.

Managing opportunism in international joint ventures: The role of structural and social mechanisms

Building on transaction cost economics (TCE) and social exchange theory (SET), we develop an integrated framework in which reducing opportunism requires two sets of mechanisms: (1) structural mechanisms of symmetric dependence, symmetric equity share and resource complementarity, and (2) social mechanisms of trust, communication and cultural adaptation. The framework is tested empirically using web-survey data collected from 89 IJVs established by Nordic firms in Asia, Europe and America. Empirical data analysis based on structural equation modelling shows that TCE proposed mechanisms of symmetric dependence and resource complementarity, and SET proposed mechanisms of trust, communication and cultural adaptation reduce opportunism. Contrary to expectation, the structural mechanism of symmetric equity share does not reduce opportunism. In addition, interesting results are found related to interaction effects between social and structural mechanisms in relation to reducing opportunism.

Influence of Governing Mechanism on Financial Performance: A Study on Royal Bank of Bhutan and Bank of Ceylon

Generally ownership of banks in developing countries is dominated by the state of respective countries. Some researchers claim that that nearly 42 percent of the equity of top ten banks belonged to the state while few researchers contend that such government ownership of banks is detrimental to the growth. However, some studies show that developing countries continued to maintain high share of equities in top banks. However, the gravity of criticism against these banks, according to some empirical studies, had been lessened by the high profit abilities of these banks. Since there are majority of countries governed by democratically elected governments few governed by monarchical rule of governments, this study attempt to explore the structure of financial performance of state owned banks in respective governing mechanisms raising the research question, ‘ does form of governing mechanism influence the structure of financial performance of state owned banks’. To address this question, this study selects two leading state owned banks in respective countries; Sri Lanka (democratic form of government) and Bhutan (monarchical form of government) to examine financial performance of banks using CAMEL framework for five years (2009 to 2013 ). Analysis of financial performance which was extracted from Annual Reports of last five years shows that there is no significant difference between capital adequacy ratios. But profitability ratios of Bank of Bhutan are much higher than that of Bank of Ceylon. Although liquidity and asset quality were not compared due to non-availability of data in Bank of Bhutan Annual Reports, management quality is much higher in state bank in Bhutan. Although Bank of Bhutan has comparatively shorter years of experience (47 years), the Bank has utilized financial resources more efficiently than Bank of Ceylon which has comparatively longer history (75 years). Therefore this study concludes that intervention of democratically elected government in Sri Lanka may have greater influence on fund utilization/investment decisions.

Selective imitation of compatriot firms: Entry mode decisions of emerging market multinationals in cross-border acquisitions

This research investigates imitation in cross-border acquisitions (CBAs) by emerging market multinationals (EMNCs) in terms of the equity share sought in such acquisitions. Earlier acquisitions by peer compatriots and by developed-market multinationals (DMNCs) are both models for imitation, but the former are more similar and potentially relevant. Analysis of 608 CBAs by Chinese firms between 1987 and 2008 supports the above argument. Further, it reveals that state-owned Chinese firms are less likely to imitate in general. Both state-owned and privately-owned Chinese acquirers are most likely to imitate privately-owned Chinese acquirers previously invested in the same environment. For state-owned Chinese acquirers, more frequent pursuit of a particular target share by earlier state-owned Chinese acquirers decreases rather than increases the likelihood of a later state-owned Chinese investors buying a similar share.

The Impact of the Opinions of the Independent Auditors on the Investor Decisions in Banking Sector: An Empirical Study on the Banks Operating in Turkey

The opinion of the independent audit has significant importance in decreasing the information risk and increasing the reliability of the information submitted in the financial tables that form the basis of the decisions reached by financial information users. This study is focused on at which degree the individual and institutional investors with whom the banks are in trading relationship is be affected by the opinions of the auditors given as a result of an independent audit. Whether the deposits imbursed by the people and institutions to the banks as the processes reflecting the trading relations of the banks, the credits they get and the total assets that are affected depending on them, net interest income, trading profit/loss and net profit/loss items and the prices of equity share are affected from these opinions has been examined in the study, The scope of data includes activities of 10 different banks operating in Turkey between the years 2006-2014 have been examined and dynamic panel data model has been used. In the study, it is shown that the independent audit report opinions reinforce the investor decision in the same direction based on given variables.

Locus of Control and Investment in Risky Assets

We show that household heads with a strong internal economic locus of control are more likely to hold equity and hold a larger share of equity in their investment portfolio. This relation holds when we control for economic preferences and possible confounders such as financial literacy, overconfidence, optimism, trust, and other personality traits. We argue that this relation is driven by a link between internal economic locus of control and a lower perception of the risk of investing inequity. Those with a strong internal economic locus of control perceive less variance in equity, making these investments more attractive.

DOW Theory in Assessing Equity Share Price Movement

An endeavor to sketch the kick off point of technical analysis would ferociously lead to Dow Theory. Despite more than 100 years old, Dow Theory continues to be the foundation of technical analysis. Dow Theory stands upon the philosophy that the equity share price reflects every significant factor which affects volume of trade, exchange rates, commodity prices, etc. In other words, the daily closing price demonstrates the psychology of all players associated with a particular marketplace. The aim of the theory is to determine the changes in the movement of the market. In view of above, the current study is aimed to revisit the effectiveness of Dow Theory in assessing stock price movement. Though Dow Theory has some weakness, it always important to an analyst who follows technical analysis. Essentially, Dow Theory is the idea of emotions in the marketplace, which remains the components of market trends. The study concludes that, the basic areas of Dow Theory continue to stay functional and applicable to variety of situations.

Market Reactions to Dividend Declaration on Equity Share Price and Volume with Particular reference to Bombay Stock Exchange, India

Stock price movement with respect to dividend announcements is an important issue that attracted many academicians and scholars in emerging stock markets over decades. This study was undertaken to test the validity of the application of Dow Theory in the contemporary situation of Indian stock market by investigating the market reactions to dividend announcements on equity price and traded volume. All companies listed in the eleven sectoral indices in Bombay Stock Exchange have been selected for this study. The study covers all 851 dividend announcements made by these companies from the financial year 2009–10 to 2013–14. This study uses secondary data on daily share price and traded volume published by Bombay Stock Exchange to study their impact due to declaration of dividend. This research has adopted the Event Study methodology to find out the abnormal average return on account of dividend declaration. This study found that, dividend announcements have made significant impact on share price and traded volume during the event window. Also the tenets of Dow Theory were validated and discussed in this study. The mean abnormal average return and traded volume during the post event announcement is higher than the pre event announcement.

Kwity depozytowe jako instrument finansowania przedsiębiorstw krajów Next 11

Next 11 countries: Bangladesh, Egypt, Indonesia, Iran, Pakistan, Philippines, Mexico, Nigeria, South Korea, Turkey and Vietnam – are considered as a group of countries that will begin the next cycle of growth in emerging markets. The economic development of these countries would not be possible without ensuring sufficient funding companies through the banking system and capital markets. Next 11 countries are characterized by a variety of financing structures, with different proportions of the share of equity and foreign. Many companies from these countries decide to raise capital in the market depositary receipts. Most of the countries depositary receipts Next 11 is issued in the United States (NYSE, NASDAQ) and Europe (London, Luxemburg). Issuers from Next 11 countries have a significant share on the global depositary receipt markets, accouting for the majority of trading value and trading volume.

TECHNOLOGY INCUBATORS AND INSTITUTIONAL DEVELOPMENT

Globally, technology business incubator (TBI) has become a growing initiative to promote the entrepreneurship. Recently TBIs has gained significant attention from research scholars and play a vital role to facilitate the development of entrepreneurial society. The institutions are established and leadership is groomed via entrepreneurial society. Moreover, entrepreneurial culture encourages the entrepreneurial society for economic development, innovation, technology competitiveness and sustainable job creation. A government backed TBI, Plan9, is presented to highlight the significance towards developing an entrepreneurial society in a developing country context, Pakistan. Plan9 has introduced unique practices with a broad vision for a sustainable entrepreneurial growth. University industry linkages are created, entrepreneurial education and training programs for social awareness are operationalized, innovative ideas are encouraged and financial innovation without equity share and funding support are designated. This paper presents a comprehensive spotlight over the dynamic capabilities and entrepreneurial culture of plan9. Furthermore plan9 is encouraging to promote entrepreneurial society, institutional development and leadership. Lastly this research recommends that the other TBIs should be initiated by the collaboration of government and private sector to nurture the entrepreneurial society.

Venture capital, staged financing and optimal funding policies under uncertainty

Our paper presents a dynamic model of entrepreneurial venture financing under uncertainty based on option exercise games between an entrepreneur and a venture capitalist (VC). In particular, we analyze the impact of multi-staged financing and both economic and technological uncertainty on optimal contracting in the context of VC-financing. Our novel approach combines compound option pricing with sequential non-cooperative contracting, allowing us to determine whether renegotiation will improve the probability of coming to an agreement and proceed with the venture. It is shown that both sources of uncertainty positively impact the VC-investor's optimal equity share. Specifically, higher uncertainty leads to a larger stake in the venture, and renegotiation may result in a dramatic shift of control rights in the venture, preventing the venture from failure. Moreover, given ventures with low volatility, situations might occur where the VC-investor loses his first-mover advantage. Based on a comparative-static analysis, new testable hypotheses for further empirical studies are derived from the model.

Hyperbolic discounting and life-cycle portfolio choice

AbstractThis paper studies how hyperbolic discounting affects stock market participation, asset allocation, and saving decisions over the life cycle in an economy with Epstein–Zin preferences. Hyperbolic discounting affects saving and portfolio decisions through at least two channels: (1) it lowers desired saving, which decreases financial wealth relative to future earnings; and (2) it lowers the incentive to pay a fixed cost to enter the stock market. We find that hyperbolic discounters accumulate less wealth relative to their geometric counterparts and that they participate in the stock market at a later age. Because they have lower levels of financial wealth relative to future earnings, hyperbolic discounters who do participate in the stock market tend to hold a higher share of equities, particularly in the retirement years. We find that increasing the elasticity of intertemporal substitution, holding risk aversion constant, greatly magnifies the impact of hyperbolic discounting on all of the model's decision rules and simulated levels of participation, allocation, and wealth. Finally, we introduce endogenous financial knowledge accumulation and find that hyperbolic discounting leads to lower financial literacy and inefficient stock market investment.