Factor In Investment Decisions Research Articles

A Study of the Relationship Between ESG Performance and Firm Valuation

This study aims to explore the impact of environmental, social, and governance (ESG) factors on company valuation, providing in-depth analysis from multiple perspectives, including investor expectations, risk management, long-term strategy and brand building, and cost-effectiveness. With the increasing importance of ESG factors in investment decisions, there is a growing demand for sustainable and responsible investments, and strong ESG performance has been shown to have a positive impact on valuation. Additionally, this study analyzes ESG risks and their potential effects on valuation, highlighting effective risk management strategies and explores how environmental sustainability can reduce regulatory risks. Furthermore, the study delves into the relationship between ESG factors and long-term strategy, brand reputation, and cost-effectiveness, supported by empirical research and case studies. Finally, the study summarizes insights for companies and provides recommendations for strategically integrating ESG practices while also discussing future research directions in the field of ESG and valuation. The findings of this study are expected to provide valuable guidance for companies in formulating strategies in ESG practices, promoting sustainable value creation.

Aligning Nigeria’s International Obligations: A Comprehensive Analysis of Environmental Protection within the Industrial Law and Policy Framework

Environmental protection is a global concern but action taken varies widely. The absence of sustainable practices in labour and industrial policies in Nigeria has contributed significantly to environmental degradation. This is due to the non-internalisation of environmental concerns and non-adherence to international environmental laws and obligations, which has led to the absence of environmental protection standards as a factor in investment decisions. Studies have shown that minimising environmental impact is essential for the planet and the long-term success and reputation of a business. Therefore, in this article it is argued that a comprehensive set of guidelines and procedures to govern operations in areas such as waste management pollution, energy use, and emissions reduction, as well as employee training and engagement in sustainable practices, will minimise environmental footprints and positively impact on communities. Understanding that commitment to international obligations and national policies reflects the belief that business has a crucial role in preserving the environment for future generations, a regular assessment of progress towards meeting these obligations and seeking opportunities for continuous improvement in national laws are recommended. Employing a legal analysis and literature review methodology, the article will outline and review environmental and industrial policies in Nigeria to see what review or amendment options are available in line with the commitments and obligations under international law, while also making inferences from select countries.

Investigating Risk and Return Dynamics in Equities of Selected 10 Firms: A Five-Year Study (2019-2023)

This five-year study (2019-2023) delves into the intricate dynamics of risk and return within equity markets, focusing on ten selected firms listed on the National Stock Exchange (NSE). Through meticulous analysis, leveraging existing literature and empirical evidence, the research aims to empower stakeholders with evidence-based insights to optimize portfolio performance and manage risks effectively. Employing descriptive research methodology, secondary data was collected from various sources including the NSE website, publications, and journals. Statistical tools such as standard deviation and correlation matrices were utilized to assess risk and return profiles. The findings reveal diverse performance trajectories among the selected companies, with some exhibiting stable returns while others experiencing significant fluctuations. The scatter plot analysis highlights a potential positive correlation between risk and return, underscoring the importance of considering both factors in investment decisions. Additionally, the correlation matrix heatmap aids in identifying pairs of companies with complementary return patterns, facilitating portfolio diversification.The study recommends cautious consideration of the risk-return tradeoff, emphasizing the need for investors to align investment strategies with their risk tolerance and financial objectives. By bridging the gap between theory and practice, this research contributes to a deeper understanding of equity market dynamics, providing actionable insights for investors to navigate volatile market conditions effectively.

Unsystematic Risk Management Based on Financial Literacy as a Supporting Factor in Investment Decisions

This research examines financial literacy's influence on investment decisions through unsystematic risk management. The data source used in this research is primary data obtained through a questionnaire. The sampling technique used was purposive sampling, using sample criteria to enter as a research sample. This research involved 88 respondents as research samples. The analytical tool used to carry out statistical tests is SmartPLS. This study found that financial literacy and unsystematic risk management simultaneously had a significant positive effect on investment decisions. Unsystematic risk management has a significant positive effect on investment decisions. Furthermore, unsystematic risk management can mediate the relationship between financial literacy and investment decisions. This study highlights investor behavior in making investment decisions using the theory of planned behavior approach.

Quest on Determinants of Stock Price in Nepal: Evidence of Microfinance Sector Share Listed in NEPSE

Stock markets are crucial for economic prosperity, capital formation, and sustainable economic growth. It facilitates resource flow, investment opportunities, pooling funds, sharing risk, and wealth transfer between savers and users. This paper investigates the determinants of stock price traded in Nepal's secondary market through NEPSE, focusing on the microfinance sector. The study uses descriptive, analytical, and inferential research to analyze the determinants of microfinance companies' market prices. The econometric model's coefficient of variation value is 0.90, indicating that 90 per cent change in the market price of the microfinance company is defined by the explanatory variables included in the model. Market price per share is positively correlated with earnings per share, return on equity, price-earnings ratio, and book value, while inversely correlated with floating share size. Independent variables like earnings per share, price-to-earnings ratio, and floating shares are statistically significant. However, other fundamental aspects of equity, such as book value per share and return on equity, are not statistically significant. This highlights the importance of considering company-specific factors in investment decisions in Nepalese capital markets. In conclusion, there is serious gap of financial literacy from the part of vast majority of market participant lacking investment optimization.

The Impact of Inflation on Real Estate Investment Perfomance And Effective Investment Decisions

Purpose: This study aims to examine the impact of inflation on key variables of real estate investment performance and investment decisions. Theoretical Reference: This paper considers several models of real estate investment performance indicators because the effect of inflation on key variables of real estate investment performance is an important factor in investment decisions. Since effective investment decision is key to avert investment loss especially during inflation period, this paper follows the suggestions by Otegbulu (2022) and Georgiv, et al (2002) that property incomes and values are not static during periods of inflation bur responds to economic dynamics, and could infact trigger favourable investment opportunities in real estate. This paper therefore follows these models/suggestions of Otegbulu (2022) and Geoargiv, et al, (2002) to examine several real estate investment to offer appropriate reflection of how inflation impacts of incomes from real estate investment. Method: Data collected were analysed using Pearson Correlation Analysis to determine the relationship between inflation rate and real estate investment performance (measured by annual returns). Regression analysis was also employed on the data to determine the level of contribution or degree of impact of inflation on real estate performance. Also data collected on the exchange rate and real estate performance over the study period were analysed using Pearson Correlation Analysis to determine the relationship between exchange rate and real estate investment performance (measured by annual returns on investment). Regression analysis was also employed on the data to determine the degree of impact of exchange rate on real estate investment performance. Data collected for the analysis and hypotheses testing were secondary data over a period from 2005 – 2022. Result: The study reveals that real estate investment market generates average total annual returns of 21.39% under average inflation rate of 12.5%. The test statistics (Pearson Correlation) results shows that the higher the inflation rate, the lower the performance of the real estate investment. Also, the study reveals that as inflation persists causing exchange rate fluctuations, the test statistics (Pearson Correlation) results shows that higher exchange rate causes lower performance of real estate investment. This could be because more than 90% of the real estate construction materials in the study are imported. Conclusion: It is clear and obvious that inflation impacts highly on real estate and capable of distorting projections in property investment. Rational investors must therefore factor in inflation risk in investment decisions. The study has shown that inflation has significant impact on annual returns of real estate and consequently affects investment performance. The study concluded that the higher the inflation, the lower the performance of the real estate investment and that the continuous rise in inflation rate reduces the purchasing power of the local currency leading to local currency devaluation. Also, it was concluded that higher exchange rate causes lower performance of the real estate in terms of annual returns. Research Implications: One of the major implications of the findings from this study is that as inflation raises the volatility of local currency which adversely affect the cost of construction, real estate investment performance is hindered. The risk element increases which could lead to project cost over-run, abandonment or increased vacancy rate. Investors become skeptical in making investment decisions because of uncertainties. Policy makers should put in place policies and guidelines that will attract cross-border investors who can take advantage of the local currency devaluation to improve their real estate investment portfolios. Originality/Value: The relationship between inflation rate, exchange rate and real estate performance (measured by rate of returns on the investment) is of great concern for real estate practitioners and investors. The study is original well thought efforts of the authors as contribution to real estate practice and education in developing economies currently being threatened by rising inflation. It is believed that this study will be very useful to global investors who will like to invest in the study area in particular and other emerging markets in general.

The relative significance of behavioural finance factors in the investment decisions of Australasian REITs

PurposeReferring to “behavioural finance” and “normative model” theories, this study explores the relative significance of behavioural heuristic biases in the investment decisions of real estate investment trusts (REITs) when compared with the conventional normative decision factors, with an ultimate aim to identify the significant behavioural factors that should be avoided to ensure rational asset acquisitions and market efficiency.Design/methodology/approachA triangulation approach was adopted. Qualitative multiple case studies were conducted, with four cases selected from Australian and New Zealand REITs across the industry, to identify what normative and behavioural finance factors are involved in investment decisions. This formed the basis for the subsequent expert review survey to explore how significant the behavioural factors were manifested in the judgement when compared with the normative factors.FindingsThree out of four theoretical behavioural factors manifested themselves in the investment decisions: investor sentiment, anchoring factors and overconfidence. The overall impact of these three behavioural factors was that they were as significant as normative factors in investment decisions. The heuristic availability of information was found to have no significant effect on experienced REIT fund managers.Research limitations/implicationsThe findings were based on four multiple cases and an expert review survey of six frontline fund managers, which form a baseline upon which further research can be conducted to widen the scope of research to cover all REITs in Australasia so that the results can become more robust to benefit the entire market in the region.Practical implicationsAs behavioural factors are significant in the decision-making process, REIT fund managers should raise awareness to avoid the significant behavioural factors identified, in particular investor sentiment, which was found to be the most significant one.Originality/valueThis study confirms the relative significance of behavioural factors in property investment decisions within the context of Australasian REITs and alerts fund managers to the ways they should follow to ensure rational investments and market efficiency. It also extends the scale of existing studies to cover not only Australia but also New Zealand for the benefit of the entire Australasian market.

Behavioral Biases and Investment Decisions of SMEs Managers: Empirical Analysis within the Moroccan Context

This article examines the impact of overconfidence, optimism, risk aversion, mimicry and intuition biases on the investment decisions of Moroccan SMEs managers. The study was based on a sample of 133 SMEs managers, who were randomly selected to ensure the representativeness of the results. Analysis showed that optimistic managers tend to make investment decisions more frequently, while those who are more risk-averse adopt a more cautious approach. Mimicry was also identified as an influential factor in investment decisions, with executives likely to be influenced by the choices of their peers. Furthermore, intuition bias was also identified as a positive factor in the investment decision-making process, enabling managers to capitalize on their experience and tacit knowledge for more appropriate and timely choices. However, overconfidence showed no significant effect on investment decisions. These findings have important implications for the managers of Moroccan SMEs, enabling them to better understand the factors influencing their investment decisions, and to optimize the allocation of their financial resources for the sustainable growth of their businesses.

State Activism and Federal Power: Economic Sanctions, Foreign Direct Investment and Environmental, Social and Governance Laws

This article analyzes the proliferation of state laws regulating business activities that cross state and national borders, including economic sanctions, foreign investment and the use of environmental, social, and governance factors in investment decisions. Such activities have long been the domain of the federal government and the implementation of these regulations at a state level causes confusion for businesses and conflicts with existing federal laws. This article concludes that many of these laws likely are preempted by the Supremacy Clause as well as the federal government’s exclusive authority to act on behalf of the nation with regard to foreign affairs.

Investor gambling preferences and stock returns: evidence from the Shanghai A-share markets

PurposeThis study aims to examine the relationship between investor gambling preferences and stock returns, using data for all firms listed in Shanghai A-share market during 2016 and 2021.Design/methodology/approachThis study employs price and trading volume data to capture the behavioral characteristics and gambling preferences of investors. Using the Fama-French three-factor and five-factor models to estimate benchmark returns, this study investigates whether investing in gambling stocks can yield positive excess returns.FindingsThe study reveals that stocks identified as gambling stocks generate high returns in the month they are identified as such but subsequently experience a significant drop in excess returns compared to non-gambling stocks over the following one to six months. These results are found to be consistent across different methods used to classify gambling stocks and across various industry sectors.Research limitations/implicationsThis research provides insights into the risk-return tradeoff of different stock types and the factors that fuel irrational investment behavior. This research underscores the importance of considering the behavioral elements of investment, particularly in emerging markets where individual investors have a significant impact.Practical implicationsThis study advises investors to avoid adopting a gambler or speculative mindset and instead make well-informed and calculated investment decisions that are in line with investors financial objectives and risk appetite. This approach can help create a more stable and sustainable financial market.Originality/valueThis study provides new evidence on the relationship between gambling preferences and future stock returns in financial markets and sheds new light on the important role of irrational factors in investment decisions.

Mechanism for Increasing Rating of ESG-Factors of Construction Investment Life Cycle

Environmental, social and governance (ESG) issues are a key factor in investment decisions due to their rise in the public and corporate area. It is well known that integration of environmental, social and corporate governance (ESG) makes companies in the construction industry less vulnerable to economic, technological, political and regulatory risks, which results in diminishing cash flow volatility and enhances profitability at all phases of construction investment life cycle. Currently, there are a number of ways to include ESG factors in construction investment life cycle. One of the fundamental ways is "green" construction. Russian and foreign researchers consider green building to be an integral part of the global ecosystem, which is characterized by being environmentally-friendly, energy and resource efficient. Analysis of modern scientific literature reveal certain issues of "green" construction, most of which arise due to enhanced investment costs compared to conventional construction projects. Based on this, it is relevant to look into the market of modern green construction in Russia, outline directions of its development and overview modern technologies used in green construction. The authors propose ways to assess efficiency of green construction and estimate pace of development of the ESG factors of construction investment life cycle.

The Effect of Profitability, Operating cash flow, Economic Value Added and Firm Size on Stock Return

The return that investors will receive is one of the main factors in investment decisions. The higher the promised return, the more motivated investors will be in investing. This study aims to analyze the effect of ROA, OCF, EVA, and firm size on stock returns in manufacturing. The population of this study is manufacturing enterprise listed on the Indonesia stock exchange from 2018 to 2021, using the purposive sampling method. This research uses quantitative methods with data sources from the company's financial statements. The number of samples obtained was 125 companies. The analysis used is descriptive statistical analysis and multiple regression analysis. The results showed that return on assets, operating cash flow, economic value added, and company size were effective predictors in assessing the increase in stock returns in manufacturing enterprises during the study year. The implications of this research can be used in the development of stock return theory. Additionally, it can serve as a preference in the decision-making process for both investors and companies.

A probabilistic-based framework for the integrated assessment of seismic and energy economic losses of buildings

Structural safety and environmental sustainability are major factors in investment decisions for building systems, but are rarely considered simultaneously. Recent research efforts have redressed this by developing assessment methodologies and technical solutions for integrated energy efficiency and seismic performance. These studies are typically limited to existing buildings and retrofit interventions at global building scale, whereas an effective framework could and should be part of the design process of either new or existing buildings at both building and component scales. This paper proposes a probabilistic-based assessment framework to assess the building performance in terms of integrated economic losses and support the selection of resilience-enhanced solutions. The proposed methodology is validated through its application to reinforced concrete case-study buildings consisting of traditional vs low-damage earthquake-resistant technologies coupled with energy efficiency strategies. Seismic and energy risk assessment analyses are performed accounting for both modelling uncertainties and earthquake/weather variability. Probabilistic distributions of the integrated economic losses are finally derived to compare the design solutions in terms of risk and reliability. The research outcomes demonstrate the effectiveness of the probabilistic approach for decision-making in building projects. Specifically, it is found that the economic losses can be highly underestimated (greater than40 %) in the single domains (energy or seismic); greater savings and return on investment can be achieved when the seismic safety is involved in the design process; probabilistic distributions and reliability/risk values can represent an effective tool to assess and compare design solutions.

The Ascent of Geopolitics: Scientometric Analysis and Ramifications of Geopolitical Risk

ABSTRACT In recent years, geopolitical risk (GPR) has been a crucial factor in investment decisions and stock markets. Therefore, we explore the research on the GPR by employing bibliometric and scientometric analytical techniques. We find 366 scientific contributions in December 2021 from the Scopus database by searching ‘Geopolitical risk’ in abstracts, keywords, and titles. Our findings show that GPR research has gained momentum in the last three years. Specifically, the journal Defence and Peace Economics has one of the highest numbers of research and citation on GPR. Authors in Asia also dominate the GPR literature. Overall, this study contributes to the literature by presenting the existing research that may give new insights for prospective studies in GPR.

Personal Finance Decisions with Untruthful Advisors: An Agent-Based Model

Investors usually resort to financial advisors to improve their investment process until the point of complete delegation on investment decisions. Surely, financial advice is potentially a correcting factor in investment decisions but, in the past, the media and regulators blamed biased advisors for manipulating the expectations of naive investors. In order to give an analytic formulation of the problem, we present an Agent-Based Model formed by individual investors and a financial advisor. We parametrize the games by considering a compromise for the financial advisor (between a sufficient reward by bank and to keep her reputation), and a compromise for the customers (between the desired return and the proposed return by advisor), and incorporating the social psychological concepts of truthfulness and cognitive dissonance. Then we obtain the Nash equilibria and the best response functions of the resulting game. We also describe the parameter regions in which these points result acceptable equilibria. In this way, the greediness/naivety of the customers emerge naturally from the model. Finally, we focus on the efficiency of the best Nash equilibrium.

Contemporary Dynamics of Angel Investment: A Comparative Analysis Between Traditional and IMC Proficient MSMEs of Metro Manila

The rise of the MSMEs has started their competition and showed potential to the market as they take off and open possibilities for the angel investors to gain interest. This study aims to identify which underlying factors of IMC Engaged and Non-IMC Engaged MSMEs influence the angel investment decision. Specifically, determining MSMEs Marketing Effectiveness, comparing the current internal and external business performance factors between IMC Engaged and Non-IMC Engaged MSMEs, and the Angel Investor's Decision to Invest towards it. Exploratory sequential mixed method design and Descriptive statistics were used in this study. Coding and thematic analysis were used to categorize all the qualitative responses. Linear regression analysis determined the effect and linear relationship between the dependent variable and independent variables. The independent t-test was utilized to test significant differences within the hypotheses. As a result, IMC Engaged MSMEs imposed a significant relationship in Marketing Attractiveness, Internal, and External Business Performance factor with a score of 0.017, 0.022, and 0.030, respectively. Conversely, Non-IMC engaged MSMEs only have a significant difference with Internal Business Performance Factors with a score of 0.032, while External Factors and Marketing effectiveness failed to have significant differences. As per the Angel Investor's decision to invest, there was no significant relationship between the Marketing Attractiveness and the Angel Investor's decision to Invest with a score of 0.06. Meanwhile, Internal and External Business Performance Factors imposed significant relationships with a score of 0.045 and 0.005, respectively. It is recommended to the IMC Engaged MSMEs to upscale their marketing efforts to become a determining factor in Investment Decision. While Non-IMC Engaged MSMEs must improve their External Business Performance Factors. Lastly, Angel Investors must consider the marketing efforts in Investment Decisions.

Sentiment analysis towards listed companies in the energy sector on the example of the WIG-Energia index on the WSE

The study consists of an experiment performed with the use of sentiment analysis, which allows to determine whether the introduction of the sentiment indicator is useful in a model that uses machine learning mechanisms to forecast changes in the price behaviour of companies in the energy sector.The aim of the study has been achieved by comparing the quality of the confusion matrix for the model in which the indicator resulting from the sentiment analysis was used with the model without this indicator. The study has shown that sentiment analysis is not a particularly useful tool in the analysis of stock exchange data of companies in the energy sector, which shows that sentiment analysis cannot be a decisive factor in investment decisions concerning companies in this sector.

Research on the Causes and Economic Consequences of Factor Crowding in China's Capital Market ——Take the Phenomenon of Grouping of Public Funds as an Example

The factors driving stock returns in investment activities have been a hot topic of research in modern finance. Previous researchers have proposed several multi-factor models for the drivers of stock returns in investment activities to improve the decision models of specific influencing factors in investment decisions. Based on research on public funds' grouping behavior in investment decision-making, this paper analyzes a series of decision behaviors of fund managers in the context of factor strategy crowding. Therefore, we identify the specific influences and behavioral contexts in which fund managers make investment decisions and provide a specific analysis of fund managers' investment decision opinions under factor strategy crowding, illustrating the economic mechanisms involved.

Green Investment: Incorporate Environment, Social, And Government Factors In Investment Decision

There are two types of investors, the first is the type of investor who focuses on return on investment and the second type is the investor who pays attention to Environmental, Social, and Governance (ESG) values in investing. This requires management to make adjustments to create a competitive advantage. One of the frameworks used to measure the competitive advantage of a company is the Porter framework. However, Porter's framework needs to be supplemented with ESG values to capture the value creation process in today's business environment. This research is applied research by applying the existing framework in the field. In this case, the framework used consists of two, namely the Porter framework and the LST integration framework. The ESG framework is implemented at the industrial level using industrial divisions based on industrial divisions in the Indonesia Stock Exchange. This study focused on the raw material production sector, namely agriculture, and mining. This study showed that ESG factors affected the competitive advantage of companies and industries. If a company in an industry ignores the value of ESG, the company will experience a decrease in competitiveness. Meanwhile, if the industry does not pay attention to the ESG factor, the industry will experience a decline compared to other industries that pay attention to the ESG factor.

Investasi hijau: mengintergrasikan faktor enviromental, social dan governance dalam keputusan investasi

Purpose: This research tries to integrate ESG factors in investment decision making in Indonesia. Research methodology: This research is applied research in which an existing framework is applied to a new environment. This study shows that the ESG factor can be applied in making investment decisions in Indonesia. It requires integration using multiple sources because companies in Indonesia are still not required to provide full disclosure regarding ESG factors. Results: The two industries in this study, namely the agriculture and mining industries, have similarities and both of them can benefit from applying social values ​​to their business operations. When a company has a social impact, the community will support its existence because without the company, their socio-economic activities will be disrupted. Thus, it will be in the interest of the community and parties dealing with the company to maintain the company's existence. In the end, the conflict of interest will disappear and goal congruence will arise. When this condition is achieved, the company will be able to operate more optimally and increase its value. Limitations: This research limited to Indonesia context especially the agricultural and mining industry and their social context. Contribution: This research contributes on applying Porter Framework together with Responsible investment. Keywords: Porter, Responsible investment, Social economy, Government