Equity Funds Research Articles

Research on the Influencing Factors of Private Equity IPO Exit Returns

After more than three decades of rapid development of the private equity investment industry, China has now grown into an important pillar force indispensable to supporting the real economy. Among them, the exit link, as one of the three indispensable links in the operation of private equity funds, determines whether the private equity funds can realize value-added and exit smoothly, which is the ultimate goal of the whole investment activities. This paper compiles the relevant researches on the exit returns of listed companies in recent years, summarizes the factors and characteristics affecting the exit returns of China's IPOs, and the research results show that the realization of maximizing the exit returns of IPOs requires the joint efforts of investee companies, private equity investment institutions and macro policies.

Problems and Solutions Arising from Principal Agent in Private Equity Investment Funds

Entrusted agency plays an important role in private equity funds. Through entrusted agency, it can realize the professional and standardized services of enterprises, and effectively establish the relationship between enterprises and investors. However, at the same time, the defect of the delegate agent leads to a certain risk in this operating mechanism. Based on the perspective of entrusted agents in private equity, this article systematically introduces the problems and reasons behind entrusted agents in private equity investment funds by sorting out relevant research results, and how to avoid risks and protect interests. For the risks of information asymmetry, contracts can be signed and sent. In the way of people's supervision and improvement of the law, for the risk of supervision, regular reporting can be adopted and the third party can be reasonably used for evaluation. For market risks, the corresponding legal mechanism can be improved. This study is of great significance for strengthening and improving the efficiency of fund operation and promoting the healthy development of enterprises.

Організаційно-економічні засади диверсифікації структури капіталу підприємств аграрного виробництва

Diversification and changes in the capital structure play an essential role in the agricultural industry’s reform, affecting the country’s productivity, competitiveness, and food security. Optimizing the equity and debt capital ratio helps increase enterprises’ investment attractiveness and financial stability. In this regard, the research aims to define and justify the organizational and economic principles of diversification of the capital structure of agricultural enterprises. The main principles of the transformational processes of the agro-industrial industry, caused by the diversification of the structure of capital forms, have been formed. The advantages of directing the diversification of the capital of enterprises in the direction of the growth of part of the equity capital are substantiated, which include increasing the financial stability of the enterprises of the industry, improving the productivity of production activities, reducing the risks associated with the credit load, increasing the investment attractiveness of enterprises, increasing competitiveness, improving long-term development prospects agricultural industry. The main directions of activating the growth of the equity capital of agro-industrial enterprises are proposed, which include expansion of equity financing, use of financial instruments, implementation of enterprise restructuring, optimization of costs in the direction of reduction, improvement of the productivity of the enterprise’s production activities, introduction of leasing and crowdfunding into financial activities. It is substantiated that the strategy for the development of enterprises in the agro-industrial sector of Ukraine during the crisis should focus on technological restructuring, long-term investments, and capitalization. Improving infrastructure that supports economic growth, job creation, and food security while considering environmental and health concerns plays an important role. Keywords: diversification, equity capital, loan capital, optimization, competitiveness, agricultural production enterprises.

Equity financing during the Covid-19 economic downturn

Equity financing during the Covid-19 economic downturn

Defaults on government guaranteed loans by potential high growth firms: Evidence from the COVID-19 period

Equity finance is used to fund innovative and growth-oriented businesses because of its resilience during economic downturns and investors' willingness to undertake higher risks compared to other financing. During the pandemic, 6500 equity-funded firms obtained government-guaranteed loans from traditional banks and new lenders. Our analysis of the determinants of loan default revealed that new lenders experienced a significantly higher default rate than the main banking sector. Additionally, firms funded by equity crowdfunding have a higher loan default rate than those backed by other equity providers. We explore the factors influencing defaults and variations by lender and investor type.

Developing environmental sustainability policy – How financing and subsidies are influencing green innovation in mineral extraction industries in China

Mineral extraction is regarded as a pollution-intensive industry and is confronted with multiple environmental sustainability challenges. This issue poses an existential crisis for mineral extraction due to continued global pressure to adopt more sustainable practices in their functioning. Despite its importance, there is a notable gap in the literature regarding how these companies encounter financial challenges, particularly in the context of high-risk, long development cycles, and the unique double externalities associated with green innovation. This research, leveraging panel data from 2016 to 2023, aims to fill this gap by examining whether Chinese mineral extraction companies demonstrate distinct preferences for specific financing sources and by evaluating the role of government in facilitating their green innovation activities. Our findings indicate that such companies utilize a mix of internal and external financing to support their green innovation projects. It is observed that the influence of external finances channels, namely government subsidies, equity financing and debt financing, on green innovation progressively weakens, a conclusion supported by multiple robustness checks. Furthermore, the study highlights the crucial role of government subsidies in motivating publicly listed companies to enhance their green innovation activities through debt and equity financing, thereby contributing to a more equitable and sustainable development paradigm in the Global South.

Analysis of The Implementation of Government Accounting System in The District Office of North Gunungsitoli

The purpose of this study is to find out how the government accounting system is implemented at the Gunungsitoli Utara District Office. The population is the financial report at the Gunungsitoli Utara District Office in 2023. The sample taken in this study is the financial report at the Gunungsitoli Utara District Office in 2023. The data analysis technique uses a qualitative descriptive method. Based on the results of the study on the preparation of annual financial reports, the Gunungsitoli Utara District Office has prepared its annual financial report in accordance with Government Regulation Number 71 of 2010 concerning Government Accounting Standards and Regulation of the Minister of Home Affairs Number 13 of 2006 concerning Guidelines for Regional Financial Management, with details 1. The Budget Realization Report presents the realization of income and expenditure compared to its budget for one budget year, 2. The balance sheet presents assets, liabilities and equity funds at the end of the budget year., 3. Notes to the Financial Statements.

Actively managed equity mutual funds in emerging markets

In this study, we analyze the performance of mutual fund managers who operate in emerging markets. Emerging stock markets differ from mature markets in significant ways, such as weak prosecution for insider trading, poor corporate governance practices, and a lack of liquidity, which create market inefficiencies that active investment strategies can exploit. We evaluate conditional alphas and multiple measures of liquidity, with a focus on equity funds that invest in emerging markets to achieve abnormal returns. Our analysis shows that smaller funds are significantly impacted by liquidity and that conditioning for public information has a significant effect on the distribution of returns. We find evidence of positive abnormal returns, which suggests that active management in emerging markets can be profitable.

Scale diseconomies and capacity in fund management: variation across equity markets

PurposeWe model the relation between excess returns, fund size and industry size for active equity funds.Design/methodology/approachWe study and contrast four markets – global equities, emerging markets, Australia core and Australia small caps – and use the results to investigate the extent to which funds deviate from estimated capacity.FindingsWe uncover a significantly negative relation between returns and both fund size and industry size across all markets. The estimated percentage of funds operating above versus below capacity varies both across markets and over time, as does the role played by fund size versus industry size. We find a greater prevalence of funds operating significantly below than above capacity, in contrast to findings for US equity mutual funds. Significant deviations from estimated capacity persist for a median of between two and six quarters.Originality/valueOur main contribution is to show that the dynamics governing deviations from capacity for active equity funds vary across markets.

Analisis Komparatif Kinerja Reksadana Saham & Reksadana Indeks Berdasarkan Metode Sharpe, Treynor, dan Jensen

Mutual fund get investors attention cause the risk rate are smaller than the other investment instrument, its because mutual fund are managed by a reliable party on investment called professional management. Different types of mutual funds offer different ranks of risk and return. This study use secondary data and independent sample t-test analysis technique with computer assist program SPSS 13 to compare performance between equity fund that use active management strategies and mutual fund index that use passive management strategies. Test result show that performance between equity fund and mutual fund index measured using sharpe, treynor and jensen methods are don’t have significant performance differences. So investors are free to invest their money on equity fund instrument or mutual fund index, cause its return and risk are similar.

Financial inclusion and Financial Performance: The interplay role of capital adequacy requirements in Egyptian Banks

PurposeFinancial inclusion aims to provide affordable financial services, including banking, loans, equity, and insurance products, to underserved populations. This study aims to examine the moderating effect of a bank’s capital adequacy ratio (CAR) on the nexus between financial inclusion (FI) and a bank’s financial performance (FP) in the Egyptian setting.Design/methodology/approachThe study uses two empirical linear mixed models (LMM) to test the moderation effect of a bank’s CAR on the association between FI and FP. The study sample comprises 360 bank quarter-observations of 10 listed banks in the Egyptian Stock Exchange (EGX) from 2013 to 2021.FindingsThe findings show that the bank’s CAR strengthens the association between FI dimensions, namely, deposit growth, loan growth, and the number of employees, and the bank’s FP with contradicted directions.Research limitations/implicationsThis study provides policymakers insights into the crucial role of complying with banking regulation, namely, the capital adequacy ratio (CAR) and expanding financial inclusion practices to enhance and improve the bank’s FP. Thus, encouraging more strategies and facilities toward financial inclusion.Originality/valueDue to the scarcity of financial inclusion literature in emerging economies, this paper extends FI literature by highlighting the moderation impact of a bank’s CAR on the relationship between FI dimensions and FP in the Egyptian banking sector. Consequently, this study clarifies this beneficial relationship, which may have significant implications for restoring the challenges faced by the Egyptian economy following the critical events it went through, which, in turn, impacted the country’s poor and vulnerable.

Alternative Alpha Seeking Strategy with EVA Long‐Short: Evidence from the Korean Stock Market*

AbstractEconomic value added (EVA) is a useful concept for creating investment strategies for fund managers and scholars. This paper analyzes an alpha‐seeking strategy with EVA. We use a long‐short portfolio with high EVA and low EVA stocks. Using the normalized EVA, we construct a portfolio from the first to the fifth quintile and test the effectiveness of the strategy with the Carhart four‐factor model. We find the following: (1) The portfolios with high EVA stocks outperform those with low ones; (2) EVA‐based long‐short portfolio generates 6.5% return per annum. This paper provides an empirical basis for launching a new equity fund with EVA in Korea. This strategy suggestion could also be extended to introduce new EVA investment strategies in other global markets.

Tail risk and excess return of mutual funds: loss-premium balance hypothesis

ABSTRACT This paper studies the relationship between tail risk exposure and mutual fund returns using samples from January 2007 to December 2022. The T R jl calculated by Generalized Extreme Value Distribution captures the negative correlation between returns and tail risk, with a one-standard-deviation increase (0.0119) leading to 0.24% decrease in three-factor alpha quarterly. T R jl also captures the nonlinear effect in short term, yet the nonlinearity diminishes due to the reversal of the return-risk exposure curve of equity funds in long term. We propose Loss-Premium Balance Hypothesis, positing that risk loss and premium effect are dominant under different tail risk exposures, respectively.

Performance Evaluation and Risk Analysis of Mutual Funds: Insights from Recent Trends and Technological Advancements

Mutual funds, as a popular investment vehicle, pool resources from multiple investors to create diversified portfolios managed by professionals. This study explores the performance of mutual funds by analyzing various types, including equity, bond, and balanced funds, and their associated risks. Utilizing both primary and secondary data, the research evaluates mutual funds based on returns, investment patterns, and risk factors. It also examines the impact of recent technological advancements and regulatory changes on fund performance. The study highlights the benefits of mutual funds, such as diversification and professional management, while addressing potential risks including market, credit, and interest rate risks. By assessing the effectiveness of different mutual funds, the research aims to guide investors and improve capital allocation. The findings provide insights into how mutual funds contribute to individual financial goals and broader economic stability

Who funds zombie firms: Banks or non-banks?

Analyses of zombie firms have emphasized the role of bank financing as the reason for zombie survival. This conclusion was made despite no comparative analysis of the sources of external finance for zombie firms. This paper provides the first analysis of that sort using Finnish data. Banks are not found to fund zombie firms by more than other types of funders when shares of the credit market are taken into account. Among different types of funding sources, only the relationship between equity funding and zombie status is found to be statistically significant. While bank funding is found to be associated with a longer zombie lifetime, equity funders are found to prolong zombie lifetime by greater extent than other sources. The choice of zombie definition - of which there are many in the literature - is not uncontentious and plays a role in determining the economic significance of coefficient estimates.

The Impact of Selected Financial Ratios on Economic Value Added: Evidence from Croatia

Traditional financial performance measures should be extended to provide additional information to stakeholders. One such extension is the economic value added (EVA). It shows residual profit above the cost of financing, both creditors and equity financing. This paper elaborates on the impact of selected financial ratios on EVA to total assets and EVA to capital employed using the 20-year aggregated data of non-financial business entities operating in Croatia. It answers the research question of which of the selected financial ratios impacts the above-mentioned EVA-based ratios. Applying dynamic panel data modeling using the generalized method of moments technique resulted in the derivation of two models. The human capital efficiency ratio was statistically significant in both models, positively affecting EVA/total assets and EVA/capital employed. In contrast, the debt ratio and net profit margin were significant only in the second model, where EVA/capital employed was a dependent variable. The research results indicate that the debt ratio affects EVA/capital employed negatively while the net profit margin has a positive effect, confirming the existing research. Total liabilities/earnings before interest, taxes, depreciation and amortization, and total asset turnover were not found to be significant in either of the two models.

Endorsement and firm financing: Evidence from government venture capital market in China

This study investigates the effect of government venture capital (GVC) investment on firm financing and its underlying mechanism, utilizing 31,299 firm-year observations from 2008 to 2022 in China. The findings reveal that GVC investment enhances target firms’ equity financing, and it is the "stamp of endorsement" by the GVC investment that enhances equity financing for firms. Through a series of tests, the mechanism for the impact of GVC investment on equity financing is established via increased government subsidies and reduced cost of equity. In addition, firms with higher market awareness about GVC and privately-owned firms benefit more in enhancing their equity financing; this further confirms that financing enhancement originates from the government's role through endorsement mechanism in venture capital investment. The results remain robust after several robustness checks.

Gender Disparities in Entrepreneurial Equity Financing – A Systematic Literature Review

Gender Disparities in Entrepreneurial Equity Financing – A Systematic Literature Review

The Impact of COVID-19 Pandemic on the Private Equity Valuation

As the downward pressure on the world economy increases, the financial industry continues to suffer, especially private equity funds. In recent years, the frequent occurrence of major special events and hot news around the world cannot help but make people doubt whether these special events will have an impact on the valuation of private funds. This paper takes COVID-19, the most typical and influential special event in recent years, as an example, combined with various data during COVID-19, to discuss the impact of the epidemic on private equity valuation models and the private equity market. This paper finds that the COVID-19 pandemic has severely affected the valuation accuracy of discounted cash flow method and made the valuation of the market method lower than the true value of the company. While sectors such as real estate, tourism and hospitality and logistics have been severely negatively impacted by COVID-19, the pandemic has boosted sectors such as fintech, healthcare, pharmaceuticals and biotechnology. After the test of this epidemic, investors and management teams need to make timely adjustments to valuation models, while taking into account long-term market trends and industry changes, more prudently evaluate investment opportunities, and make sound investment decisions.

The Career Orientation Impact in the Livelihood of Rural High School Learners: A Case of Selected High Schools Waterberg District, South Africa

This study analyses how career orientations can help rural high school learners to become more self-directed and flexible in developing their careers in today's dynamic world of work. Career counsellors are needed in schools to guide the way learners subjectively make sense of their self-perceived talents and abilities. The study used a qualitative approach to obtain information about how career orientation can change the lives of rural high school learners. The purposive sampling technique was used to choose rich information from rural high school learners and teachers, councillors, and the surrounding employers/educational institutions in Waterberg District. Data analysis was done through inductive thematic data analysis where themes and categories emanated. The outcome of the study considered the fundamental aspects to develop career paths, career orientation programs, changing the mind set and the impact of career orientation in rural high schools. The product of the study will be shared with all four schools, nearby employers, and the Department of Education, Waterberg District in Limpopo province. The outcomes of the study might help in dealing with persistent educational obstacles like broader educational equity and public funding for developmental career orientation programs that face many youth and adults in rural communities. It is recommended that policy developers establish career orientation models that would benefit the livelihood of rural high schools.