Financial Market Performance Research Articles

Efficiency of communities and financial markets during the 2020 pandemic.

This paper investigates the relationship between the spread of the COVID-19 pandemic, the state of community activity, and the financial index performance across 20 countries. First, we analyze which countries behaved similarly in 2020 with respect to one of three multivariate time series: daily COVID-19 cases, Apple mobility data, and national equity index price. Next, we study the trajectories of all three of these attributes in conjunction to determine which exhibited greater similarity. Finally, we investigate whether country financial indices or mobility data responded more quickly to surges in COVID-19 cases. Our results indicate that mobility data and national financial indices exhibited the most similarity in their trajectories, with financial indices responding quicker. This suggests that financial market participants may have interpreted and responded to COVID-19 data more efficiently than governments. Furthermore, results imply that efforts to study community mobility data as a leading indicator for financial market performance during the pandemic were misguided.

Openness, economic uncertainty, government responses, and international financial market performance during the coronavirus pandemic

This study explores the impact of COVID-19 on financial markets controlled by macroeconomic and administrative factors. As natural experimentation, we employ panel data analysis to test 50 stock market indices from January 01 to August 20, 2020. The findings suggest daily growth of COVID-19 confirmed cases have considerable adverse effects on stock returns and positive impacts on investment risks across markets. The government prompt interventions offset adverse impacts of the pandemic. Market reactions to the outbreak and authority responses information are more momentous in more developed economies due to their better information efficiency. The country-specific features of globalisation, uncertainty, healthcare system readiness, and economic development levels appear to have substantial impacts on equity market reactions. Financial markets in countries with higher levels of globalisation, economic policy and financial uncertainty experience more chaos during the pandemic. While those hostile effects are less significant in countries with robust healthcare systems.

Auditors, Underwriters, and Firm Owners’ Interaction in an IPO Environment: The Case of OECD Nations

This study explores the effects of interactions among key stakeholders, i.e., auditors, underwriters, and firm owners on IPOs’ first-day returns in selected OECD nations. It also examines the alteration effects of legal origin (Common law and Civil law) on the relationship between the interacted key stakeholders and IPOs’ first-day returns. A total of four thousand one hundred and sixty-four IPOs from twenty-eight OECD nations are included in this study. Since it is cross-sectional data, a two-stage least square regression is applied. The empirical outcomes indicate that, in general, the interacted reputable underwriters and auditors have a positive impact on IPOs’ first-day return. The relationship is modified between common law and civil law nations, whereby in civil law nations, no significance is demonstrated except for the interaction between the reputable auditors and underwriters. In the common law nation, interactions between reputable auditors and ownership retention have an impact on IPOs’ first-day return. The research findings provide outlooks into an IPO framework for issuers, investors, and regulators. Issuers may want to weigh carefully the costs and benefits of hiring credible auditors and underwriters when going public as they act as signaling agents. As for the investors, they should take into consideration the involvement of reputable underwriters and auditors and the degree to which the IPO firms retain ownership, as the interactive effects give clear signals on firm valuation and IPOs’ first-day returns. Regulators may find the findings informative concerning the creation of a more organized regulatory and financial system that could lead to a deeper and more open financial market.

Simulation of emotional differences in the structured query language for databases of financial markets

Subject. The article addresses a simulation in the structured query language (SQL) for the Bloomberg information base, the scientifically grounded tools for measuring emotions in markets in the face of financial and pandemic crisis and market imbalances, in addition to classic financial indicators, the creation of analytical tools based on state-of-the-art software tools that integrate the latest advances in behavioral finance and in financial and coefficient analysis, machine learning technologies, and open financial market data. Objectives. The aim is to create a usable toolkit for balanced evaluation of financial and economic situation of companies, based on the analysis of the main Russian and foreign modern means to measure emotions. Methods. The study employs methods of induction, deduction, and modeling. It demonstrates the link between methods and methodologies with new technical means of modern information systems. Results. The paper studies the effect of the heuristics of insufficient reaction and heuristics of excessive self-confidence, using the examples of market drawdown. I developed and implemented a model, using the behavioral finance tools as a factor in stabilizing financial decisions. Conclusions. New software and hardware tools enabled to identify and measure the actions of the heuristics of financial market participants. Financial analysts, when applying the new capabilities of modern information systems for programming and creating user models with required parameters and extensive database, will have new opportunities in the described models. The procedure for collecting and processing the original information required for valuation is simplified.

Dynamic Spillover Effects between the US Stock Volatility and China’s Stock Market Crash Risk: A TVP-VAR Approach

Due to the increasing linkage of China and the US stock markets today, we constructed a TVP-VAR model to study the dynamic spillover effects between the US stock volatility and China’s stock market crash risk. We found dynamic spillover effects are constantly strengthening between US stock volatility and China’s stock market crash risk: when the US stock volatility increases, China’s stock market crash risk increases. In addition, the gradual improvement of financial market openness in China, the short-term capital outflow from China, and the depreciation of the RMB exchange rate will increase China’s stock market crash risk. And, the impacts of short-term capital outflow from China are more significant. Further, the increase in China’s stock market crash risk will lead to the decline of the US stock volatility, which may be due to the flight to quality.

Influencing mechanism of strategic flexibility on corporate performance: the mediating role of business model innovation

ABSTRACT This paper explores the internal mechanism of corporate strategic flexibility on corporate performance. Through the empirical test of 197 Chinese enterprises, the empirical test is performed on the statistical hypothesis using the statistical method of SEM and linear regression. We find that the corporate strategic flexibility has a significant positive impact on its financial performance and market performance, and business model innovation has a significant positive impact on corporate financial performance and market performance, and efficiency-centred business model innovation plays a partial mediating role between strategic flexibility (resource flexibility and coordination flexibility) and corporate financial concentration; novelty-centred business model innovation plays a fully mediating role between resource flexibility and corporate market performance, and a partial mediating role between coordination flexibility and corporate market performance.

FDI inflow and financial channels: international evidence before and after crises

PurposeExtending on the resource-seeking foreign direct investment (FDI) hypothesis, this paper aims to uncover the potential relationship between financial and non-financial channels and inward FDI before and after the global financial crisis.Design/methodology/approachThe sample includes 561 year-country observations on 33 developed and developing countries during 2001 and 2017. This study investigates several determinants such as inflation, gross domestic product growth, exchange rate, trade openness, financial openness, Sharpe ratio and country market capitalization, using ordinary least squares, fixed effects and system generalized method of moments.FindingsThe results indicate a negative relationship between inflation and financial openness with FDI inflow while market capitalization and exchange rate were positively connected to FDI inflow. All three financial channels of FDI inflow: financial market size, financial openness and Sharpe ratio significantly influenced FDI inflow. Moreover, inflation, financial openness and Sharpe ratio imply a meaningful impact on the FDI inflow of developed and developing countries, with a relatively stronger influence during the post-crisis periods. Asymmetric impact tests also revealed similar results.Research limitations/implicationsThese findings offer an impression that financial market development channels may significantly boost FDIs in developing and, as well as developed countries. With special reference to the developing countries, a disciplined financial market and financial openness may help attract more FDIs.Originality/valueImpact of the financial crisis on FDI inflows while observing the impact of the financing channels in developing and developed countries is rare in the academic domain. This study forwards that a structured and open financial market may help in recovering from the financial crisis.

A meta-analytical study on the association of human resource management practices with financial, market and operational performance

Purpose: This article draws on the meta-analysis technique to systematically analyse and compare the association of human resource management (HRM) practices with financial, market and operational performance.Design/methodology/approach: An exhaustive search of HRM-performance link resulted in a final sample (k) of 24 independent studies. For this purpose, Comprehensive Meta-Analysis (Version 3.0) software was used. Heterogeneity of the studies was determined using Q-statistic with a p-value, I2, T2 and Tau. As the degree of heterogeneity was very high, random effects model was selected to estimate the mean of effects. Lastly, publication bias was studied using graphical and statistical methods.Findings/results: The results revealed the average correlational (r) association of HRM practices with financial performance, market performance and operational performance as 0.305, 0.434 and 0.311, respectively. More specifically, HRM practices have the strongest association with market performance.Practical implications: The results statistically quantify the association between HRM practices and organisational performance measures for developing desired knowledge, skills and abilities to generate higher and improved performance. The results of this study provide HR managers with evidence that right investment in human resources does significantly contribute to the bottom line; they should make better and higher allocation of the resources for HRM.Originality/value: To the best of our knowledge, this study is the first to meta-analytically examine the varying association of HRM with three distinct organisational performance measures.

A meta-analytical study on the association of human resource management practices with financial, market and operational performance

Purpose: This article draws on the meta-analysis technique to systematically analyse and compare the association of human resource management (HRM) practices with financial, market and operational performance. Design/methodology/approach: An exhaustive search of HRM-performance link resulted in a final sample ( k ) of 24 independent studies. For this purpose, Comprehensive Meta-Analysis (Version 3.0) software was used. Heterogeneity of the studies was determined using Q-statistic with a p -value, I 2 , T 2 and Tau. As the degree of heterogeneity was very high, random effects model was selected to estimate the mean of effects. Lastly, publication bias was studied using graphical and statistical methods. Findings/results: The results revealed the average correlational ( r ) association of HRM practices with financial performance, market performance and operational performance as 0.305, 0.434 and 0.311, respectively. More specifically, HRM practices have the strongest association with market performance. Practical implications: The results statistically quantify the association between HRM practices and organisational performance measures for developing desired knowledge, skills and abilities to generate higher and improved performance. The results of this study provide HR managers with evidence that right investment in human resources does significantly contribute to the bottom line; they should make better and higher allocation of the resources for HRM. Originality/value: To the best of our knowledge, this study is the first to meta-analytically examine the varying association of HRM with three distinct organisational performance measures.

Income Inequality in Small States and the Caribbean: Stylized Facts and Determinants

Rising income inequality has emerged as a major policy issue facing policymakers, but there is a dearth of empirical work on inequality in small states, including the Caribbean. Despite data limitations, the empirical analysis using a sample of small states finds that increased openness and deeper economic integration including financial market openness is associated with lower income inequality, whereas elevated debt levels limit fiscal space and are associated with higher income inequality. An important policy implication is that well targeted social sector spending aimed at improving education and health indicators will support increased redistribution and reduce income inequality.

Income Inequality in Small States and the Caribbean

Rising income inequality has emerged as a major policy issue facing policymakers, but there is a dearth of empirical work on inequality in small states, including the Caribbean. Despite data limitations, the empirical analysis using a sample of small states finds that increased openness and deeper economic integration including financial market openness is associated with lower income inequality, whereas elevated debt levels limit fiscal space and are associated with higher income inequality. An important policy implication is that well targeted social sector spending aimed at improving education and health indicators will support increased redistribution and reduce income inequality.

FINANCIAL PERFORMANCE FOR LOCAL COMPANIES : POLITICAL EVENT STUDY IN SURABAYA

The purpose of this research is to determine the differences of financial performance and market performance before, as at, and after direct election for local government executive. This research picks 28 Surabaya based listed companies as samples based on purposive sampling method with several criteria during local government election. Method of hypothesis testing uses multivariate analysis of variance (manova) and Kruskal Wallis test with three groups of periods, which are before, as at, and after the direct election for local government executive. The results show that there is no significant financial performance of local based company in Surabaya caused by direct local government election measured by current ratio, working capital turnover ratio, debt to asset and return to asset ratio. The market performance test shows that the there is significant difference of company’s abnormal return before, as at, and after the direct election for local government executive. Furthermore, the abnormal return after the direct election for local government executive was significant higher than as at the election year.

Sustainability in the Web 3.0: How to Assess ESG Characteristics on Smart-Contract Blockchain Ecosystems

The object of study in current Environmental, Social and Governance (ESG) research is often the firm or its management. Of particular interest is also the link between ESG and its impact on financial market performance. I extend existing literature introducing concepts to measure ESG issues for smart-contract blockchains and their ecosystems. Legally, such platforms are often foundations, not for-profit companies. Rather than company management’s decisions and the analysis of related risks, three novel elements emerge: technology, mechanism design and community, take centre-stage in the decentralized context. I propose one environmental metric (Consensus Algorithm), a social metric (Gini coefficient) and one governance metric (Validator risk index) to start the discourse around assessment of ESG issues on smart contract blockchains and their ecosystems.

Impact of Environmental, Social and Governance (ESG) Factors on Stock Returns of Emerging Markets

Empirical evidence indicates that environmental social and governance (ESG) practices are associated with firm financial performance, but little is covered about investors’ attention towards stock performance. In this paper, we conduct a test of the relationship between ESG performance disclosures and the firm’s financial or capital market performance. We choose a stratified sample of large-cap firms across 8 sectors drawn from the S & P 100 during the period 2016 to 2021. The changes in ratings, namely, governance, environment, exhibit a small but significant impact on the stock’s performance during the periods. Our results show that few of the ESG disclosures are positively related and dominate over the usual firm-level determinants of ROA (Return on Assets). We find governance practice is more significant than climate disclosures. These outcomes are robustly demonstrated on use cases of top stocks with investor safety recommendations. The results could have useful implications for investors, fund managers and regulators.

The impact of the intellectual capital components on firm’s performance in emerging markets

The objective of this research is to review, analyse, and provide empirical evidence about the impact of the intellectual capital (IC) characteristics on the firm performance on listed 26 companies in Tunisian Stock Exchange for the years 2010–2019. 260 companies were taken as a sample of this research using the purposive sampling method. The efficiency of intellectual capital was measured using the value added intellectual coefficient (VAIC) method developed by Pulic (2000). The research method used was multiple linear regression analysis. Our empirical analysis substantiates the fundamental role of IC components in improving the financial and stock market performance of listed Tunisian companies. The results obtained on the human capital efficiency variable contribute to improving the market of Tunisian listed companies and confirm the role attributed to human capital in the knowledge economy and even the basic hypothesis of the VAIC method. Investors do not place any importance on the following variables: structural capital, human capital and the efficiency of structural capital during market valuation. Future research is suggested to use cross-country companies as the sample.

The Impact of Lean Transformation on the Organizational Performance: The Case of Public Utilities in Greece

Purpose: Lean Management concerns a strategy or philosophy aiming at saving resource practices and curtailment of public expenses, with ultimate objective of the enhancement of the organizational performance. By extension, the successful integration of the Lean Management leads to positive organizational results, such as higher quality, along with improved financial, environmental and business market performance. Although a lot of studies related to the effect of Lean production on the organizational performance have been conducted, empirical findings that examine the case of the public sector are absent. Additionally, there is no precise mechanism through which the Lean Management determines the organizational performance of the public utility companies. The above mentioned research gap is examined with this research, given that it investigates the influence of the Successful Lean Management on the Organizational Performance (Environmental Performance, Financial Performance, Business Performance) in public utilities in Greece. Research Methodology: The research method combines bibliographic research and empirical—with quantitative method—through a case study. More specifically, via quantitative approach, which was based on sample research with standardized questionnaire, performed in two of the biggest and most important public utilities in Greece, the Public Power Corporation S.A. (PPC S.A.) and the Athens Water Supply and Sewerage Company (EYDAP S.A). Findings: Quantitative findings from this illustrated that the successful transformation towards the Lean principles/saving resources affects positively the Business Market Performance, the Environmental and the Financial Performance. Limitations: Main restrictions of the current study are the capitalization of random sample and the strict focus on Greek public utilities that function under conditions of competition. Consequently, whichever generalizations for the whole Public Sector as well as for businesses of the private sector it would be better to be avoided, as they differ concerning their structural and functional features and their organizational culture.

Could Etfs Make Stock Markets More Vulnerable to Systemic Liquidity Shock? – Evidence From Emerging Asia

Using a dataset on ETFs ownership of stocks in nine Emerging Asian markets, we find that stocks with a higher ETF ownership exhibit a greater commonality in liquidity to other stocks in the same market. The effect increases with the level of ETFs arbitrage activities, supporting the hypothesis that ETFs arbitrage mechanism is the source of commonality in liquidity. We also find that the effect is asymmetric; ETFs exert a stronger influence when stocks’ liquidity decline. These findings are supported by a cross-market analysis, as we show that the effect is larger in market where stocks have more common exposures to ETFs, while tightened capital market condition could also amplify the effect of ETF ownership. Increased financial market openness, on the other hand, may ease the potential systemic impact. ETFs ownership of stocks also increases the commonality in liquidity of stocks across markets. The cross-markets impacts by ETFs present a channel via which financial market integration through ETFs could lead to a build-up of systemic liquidity risks and increase the vulnerability of liquidity shock spill-over to stock markets.

대외자산 수익률 결정요인 분석(The Determinants of Return on External Assets)

본 연구는 개별 국가들을 국제투자의 한 주체로 보고 국가 차원의 순대외자산 포트폴리오를 수익성 측면에서 분석하였다. 이를 위해 먼저 내국인의 해외자산 수익률, 외국인의 국내자산 수익률, 순수익률 등 각국의 대외자산 수익률을 정의하고 산출하였다. 이렇게 산출한 각국의 대외자산 수익률을 바탕으로 정성적 분석 및 실증분석을 실시하여 경제적 함의를 찾고자 했다. As external asset positions increased significantly in both developed and emerging countries due to globalization and financial integration, countries are exposed to capital gains and losses caused by fluctuations in exchange rates and asset values. This study constructs the return rate of external asset position (rate of external) by considering the individual country as the economy's representative agent. Assuming that the foreign asset position is the optimal investment portfolio, the rate of external defined in this study directly measures the country's risk premium. The rate of external is also the excess return of the portfolio that takes a long for foreign assets and a short for foreign liabilities. We observe that advanced economies have a far greater rate of external than emerging countries in general. In comparison, emerging countries have a relatively higher rate of external during crisis periods. Thus, international risk sharing and consumption smoothing mechanism works through external investment. Advanced economies are in a speculator position, while emerging countries are in a hedging position. We also empirically analyze the determinants of the rate of external. The rate of external is higher as the foreign assets' size, and the proportion of risky assets increased. There are negative relationships with the domestic currency value, GDP growth rate, inflation rate, and current accounts. The rate of external is higher as the financial market and institutions developed, and the financial market openness increased. However, these effects are offset in the event of financial instability proxied by the VXO index. Contrary to general expectations, foreign reserves are likely to relate to the return on foreign liabilities rather than foreign assets. The more the foreign reserves, the higher the return on foreign liability. Countries with larger amounts of foreign reserves are more likely to have favorable economic conditions such as trade surplus, higher growth rate, and higher productivity, bringing a higher return rate to foreign investors. These effects, however, disappear in times of financial instability.

Environmental, Social and Corporate Governance (ESG) Diplomacy: The time has come for a Corporate and Financial Social Justice Great Reset

The external shock of the novel coronavirus SARS-CoV-2 has profound impacts around the world for this generation and the following. Although accounting for the most drastic societal shift in modern history, the Coronavirus pandemic also holds the potential of a Great Reset. This paper addresses three trends that have become prevalent in the wake of the Coronavirus pandemic: (1) A rising inequality experienced has led to demands for Corporate Social Justice, namely the corporate engagement in social justice initiatives and action. (2) The finance world has had opportunities to diversify and exchange COVID-struck industries for COVID-profiting market segments and therefore a rising financial market performance versus real economy budget constraint gap has arisen. (3) Governments around the world are pegging economic COVID-19 rescue and recovery aid to pursue noble goals – such as climate change abatement and a transitioning to renewable energy in the United States Green New Deal and the European Green Deal and the European Sustainable Finance Taxonomy. These trends point at the integration of environmental, social and corporate governance in the corporate sector. The aftermath of the crisis is now a time for a great system reset to integrate environmental, social and corporate governance in the corporate and finance sectors. Future economic policy research may be inspired by legal expertise on disparate impact. With respect for current trends of citizen scientists and science diplomacy, public policy work may embrace environmental, social and corporate governance whole-roundedly. While natural behavioral laws were guiding anchors to address inequality during a turbulent time of the pandemic, more rational behavioral insights could nudge people into more equitable growth strategies in a recovering world.

The Impact of Macroeconomic Variables on Financial Market Performance in Egypt: An Empirical Analysis for the period (1980-2018)

The impact of macroeconomic variables on the financial market performance has been a hot topic for decades. Thus, this study focused on investigating the effect of oil price on the financial market performance and used a Vector Error Correction Model estimation technique on Egypt data from 1980 to 2018. the results revealed the long-run causality between the independent variables towards the dependent variable. Still, in the short-run, only Inflation and interest rates have causality effects on financial market performance. Also, the exchange rate and oil price do not have causality running to financial market performance. The results also emphasized that the short-run and long-run causality effects should be considered guidelines for policymakers to avoid misleading macroeconomic strategies in future strategic planning. The speed of adjustment reported from estimating the VECM is (-9.5%). Also, the model was found stable from using both the CUSUM and CUSUMQ statistics