Investment In Assets Research Articles

Does accounting information identify bubbles for Fama? Evidence from accruals

Economists have long observed that stock price bubbles are associated with corporate overinvestment. We study the ex-ante identification of bubbles (i.e. stock price booms followed by busts) by examining industry-level investments in net operating asset (NOA) accruals and stock returns for 49 countries around the world. Consistent with overinvestment in operating assets being key to bubble formation, we document five findings: (1) NOA accruals positively forecast the eventual crash of an industry price run-up; (2) NOA accruals negatively forecast stock returns following a run-up; (3) NOA accruals are positively associated with investor sentiment; (4) higher NOA accruals forecast more disappointing earnings relative to analysts’ expectations for run-up industries; and (5) NOA accruals are sharply stronger predictors of crashes, returns and analyst forecast errors following run-ups compared to other periods. Our results provide the first evidence that accounting information identifies stock price bubbles and suggest that financial statements are important for detecting and anticipating industry- and market-level inefficiencies.

Wealth shocks and portfolio choice

We use new euro area representative data from the Consumer Expectations Survey (CES) to elicit household-specific propensities to invest and consume out of positive wealth shocks. Using a randomized assignment of hypothetical lottery gains ranging from €5,000 to €50,000 and a realistic menu of consumption, saving and asset choices, we estimate the causal effect of wealth shocks on risky asset ownership and conditional asset shares. Wealth shocks have a positive effect on stockholding (between 8.4 and 12.8 percentage points increase in participation for the largest wealth shock). The majority of households do not participate in the stock market, even after a large increase in wealth. The conditional asset share invested in risky assets is constant for wealth shocks up to €20,000, and edges up slightly (by at most 2 %) for larger prizes. Our evidence is consistent with constant relative risk aversion for the majority of risky asset investors, while we also find important heterogeneity in the level of risk aversion across individuals.

Digitalisasi Mempengaruhi Kinerja Perusahaan: Peran dari Bisnis Model Inovasi (Evidence from Indonesia)

Advances in digitalization provide various opportunities to innovate and create value. It is hoped that this research can be a reference for academics and practitioners that companies need to prioritize investment in digital assets and technology that are integrated in innovative business processes so that they can create value and improve company performance. This research aims to determine the influence of digital operations capabilities and digital integration capabilities through the role of business model innovation in improving company performance. This research method uses purposive sampling on industrial companies in 2020-2022 with 120 data with a panel data regression model. The research results show that digital operational capabilities, digital integration capabilities and efficient business model innovation are not able to mediate digital operational capabilities and company performance. However, the efficiency of the innovation business model is able to mediate the relationship between digital integration capabilities and company performance

Cryptocurrency Investment in Indonesia

Objective - Different countries have different policies towards cryptocurrencies. In Indonesia, cryptocurrency is prohibited as a means of payment or transaction. The prohibition is stated in Bank Indonesia Regulation (PBI) Number 18/40/PBI/2016 concerning the Implementation of Payment Transaction Processing. However, cryptocurrencies are recognized as long-term commodities or investment assets, so their supervision is carried out by the Commodity Futures Trading Supervisory Agency (bappepti) and regulated in Bappebti Regulation No. 7 of 2020 concerning the Determination of the List of Crypto Assets that Can be Traded on the Crypto Asset Physical Market. This study aims to analyze the differences in return and risk on the 5 cryptocurrencies with the largest market capitalization in Indonesia. Methodology/Technique - This research uses quantitative methods with a descriptive approach, and secondary data is used. The population in this study consisted of 383 cryptocurrencies that were legal and registered with Bappepti from 2020 to 2022. The sample was determined using purposive sampling to determine the top 5 cryptocurrencies with the largest market capitalization during the observation period from January 2020 to September 2022. The data analysis technique used the Kruskal-Wallis test. Findings - The results showed no significant differences in return and risk between Bitcoin, Ethereum, Tether, BNB, and USD coins. Empirically, this study proves that each cryptocurrency has the same risk and return. Novelty - This research was conducted in Indonesia with regulations that may differ from other countries towards cryptocurrencies. As a long-term commodity investment asset, this study finds empirical evidence that each cryptocurrency has the same risk and return. Type of Paper: Empirical JEL Classification: G11; G18; G28 Keywords: Cryptocurrency; Investment; Return; Risk; Bappepti Reference to this paper should be referred to as follows: Dewi, D.M; Faizal, I; Sambe, T.A. (2024). Cryptocurrency Investment in Indonesia, Acc. Fin. Review, 9(1), 32 – 41. https://doi.org/10.35609/afr.2024.9.1(1)

Economic performance of the pairing-off poverty alleviation between China’ cities

This study evaluates the economic performance of China's East-West pairing-off poverty alleviation, a policy enacted in 2016 aiming to eradicate absolute poverty by 2020 through substantial fiscal transfers from the assisting cities to the assisted impoverished counties. Employing a counterfactual framework and analyzing data from 2013 to 2018, this research assesses the economic performance of China's East-West pairing-off poverty alleviation. Our findings reveal a negative impact of the fiscal pressure burdened by the assisting cities on their economic performance. Meanwhile, the allocation of anti-poverty funds to the assisted counties does not exhibit a significant impact on their economic outcomes. The mechanism analysis suggests that the fiscal pressure experienced by the assisting cities shows negative impacts on fixed assets investment, innovation activities, and economic growth expectations. Further analysis indicates a negative relationship between the policy and the growth of secondary industry and rural income in the eastern regions, while simultaneously identifying a positive impact on the enterprises' financial burden. These results underscore the complex economic trade-offs inherent in poverty alleviation strategy transferring fiscal funds from developed regions to less developed regions and call for a global understanding of pure cash transfer programmes' impacts.

The construction of urban cultural and creative industries using deep learning and information management

The ongoing transition within the Chinese economy assumes a pivotal role in shaping the landscape of the cultural and creative industries (CCI). Renowned for its environmentally sustainable attributes, coupled with high productivity, CCI has garnered considerable attention across diverse societal strata. This study endeavors to delineate the determinants influencing the developmental trajectory of CCI, with a focal point on City A as the primary subject of investigation, juxtaposed against Cities G, D, B, H, and X for comparative analysis, leveraging developmental data from the year 2021. Initially, the study elucidates the conceptual framework underpinning CCI and its intrinsic significance in facilitating urban metamorphosis. Subsequently, the positive impact of CCI through deep learning and information management technology is emphasized, and a cultural and creative recommendation model based on LSTM algorithm is constructed. Through performance evaluation, the recommendation accuracy for cultural and creative projects reaches 94.74 %. A robust developmental assessment model for CCI is then constructed via meticulous factor analysis of pertinent influencers. Employing factor analysis techniques, the study identifies two primary determinants exerting sway over CCI development: sustainable profitability factors and cultural influence factors. Noteworthy among the factors influencing CCI development within City A are fixed asset investment, cultural industry financing, the proliferation of university-based research institutions, and per capita cultural expenditure by residents. Of these, fixed asset investment, cultural industry financing, and the density of university research institutions prominently impinge upon sustainable profitability, with a discernible impact weight of 0.738 in the evaluative framework of CCI development, thus significantly shaping its trajectory. Moreover, consumer psychological factors, particularly market consumption patterns, are observed to exert a discernible influence on CCI evolution. This study augurs fresh insights into the realm of CCI development, infusing it with renewed vigor and vitality. Moreover, it underscores the inherent interdependence and positive correlation among the various research factors, offering novel perspectives and methodologies germane to the advancement of urban CCI.

The Impact of Intangible Assets on Capital Structure in Asia

Past studies find evidence that the level of intangible assets is positively related to corporate borrowing in the United States. This paper explores the relationship between intangible assets and capital structure for Asian countries. We identify a positive relationship between intangible asset investment and debt levels throughout Asia. Unlike in the United States, this positive relationship appears to be significant for non-Goodwill and Goodwill intangible assets. Further, we find that the magnitude of this relationship is significantly greater for developed Asian countries than for developing ones. We explore explanations for this difference related to firm size, firm age, cash flow volatility, and a firm’s likelihood to default on its debt.

A framework for the management of retail assets

PurposeThe retail investment landscape in the UK has drastically changed. Understanding owners’ responses to this structural change is critical to gain insight into protecting investment performance. This paper identifies and evaluates the tactics and strategies being adopted.Design/methodology/approachThis paper employs a mixed methods research approach, using data collected from semi-structured interviews with professionals involved in the retail investment process. This is supplemented by secondary market data analysis.FindingsThe paper assesses the practical responses made by retail property owners/managers, structured around emerging sub-themes. Actions include mitigating short-term risks through greater use of temporary tenants/licensees and independent retailers, preparing generic “white box” retail space to capture remaining tenant demand, exploiting the tenant mix to provide “the retail experience,” and applying new technologies and processes in a sector where systematic risk remains high. A new framework for retail asset management has been developed.Research limitations/implicationsThis study contributes to the retail asset management literature and understanding of the way the contemporary retail landscape is shaping investment management behaviour.Practical implicationsThe developed framework provides guidance to real estate managers developing a retail real estate management strategy and will help them recognise tactics to better support the evolving retailing market.Originality/valueThe new framework adds new insights to understanding the process for managing retail assets and the actions necessary for asset managers to address economic/functional obsolescence and sustain asset investment values.

Does public poverty alleviation concern help economic development in impoverished counties: evidence from urban agglomerations in China

ABSTRACT This article focuses on public poverty alleviation concern in urban agglomerations and explores how they impact the economic development of impoverished counties using Chinese city-level public poverty alleviation concern data. The empirical results reveal that public poverty alleviation concern positively affects the GDP of impoverished counties. The positive effect of these concern primarily relies on (i) the intensive marginal effect that enables firms in impoverished counties to achieve improved market performance and increased capital returns, subsequently expanding both enterprise production and investment; and (ii) the extensive marginal effect that promotes enterprise inflow, growth of societal fixed assets investment, and creation of more job opportunities in impoverished counties. Additionally, the public poverty alleviation concern effect is more pronounced when spatial transaction costs and urban primary index of urban agglomeration are lower. The results highlight the significance of public poverty alleviation concern in the economic development of impoverished areas. The findings have important implications for policymakers in other emerging economies seeking to achieve sustainable poverty reduction and regional coordination of urban agglomerations.

Pengaruh Nilai Tukar, Inflasi, Suku Bunga Bi Dan Dow Jones Index Terhadap Indeks Harga Saham Gabungan Di Bursa Efek Indonesia Periode 2018-2022

The development of financial asset investment in the capital market is growing quite rapidly, starting from the ease of making sales and purchases but also the low capital required to start investing in the capital market. However, in the capital market, especially the stock exchange, it is an investment instrument that has a high risk and high return, so investors must be selective in determining which share issuer to buy by considering factors that can influence share prices on the Indonesian Stock Exchange. Some of them include exchange rates, inflation, BI interest rates and the Dow Jones index. Therefore, this research was carried out to analyze the influence of exchange rates, inflation, BI interest rates and the Dow Jones index on the composite stock price index in 2018-2022 with the data used being a monthly time series with a sample size of 60 months. This research uses a quantitative approach with the analytical techniques used in this research, namely descriptive statistical analysis, classical assumption tests and multiple linear regression tests which were processed using the E-Views version 12 program. With results showing that the exchange rate has a significant negative effect on the stock price index combined, then for inflation, BI interest rates and the Dow Jones index there is a partially significant positive influence on the composite stock price index on the Indonesia Stock Exchange.

The Impact of Financial Development, Net Foreign Assets and Domestic Businesses on Export Performance: A case of Singapore Economy

The effects of financial sector liberalization; foreign assets, domestic businesses in the form of listed companies and domestic manufacturing, and real interest rate on export performance of Singapore economy are tested by using ARDL bounds testing approach by covering period from 1978-2023. The empirical results suggest that liberalizing financial sector and foreign assets significantly accelerate export performance. This study considers two proxies for domestic businesses – listed companies and manufacturing. The results uncover the significantly expansionary effects of both indicators of domestic businesses on export performance. Lastly, real interest rate is adversely affecting export performance in Singapore. This study suggests that by expanding domestic businesses; increasing investments in foreign assets, liberalizing financial sector and reducing real interest rate can give boost to exports in Singapore.

Positioning corporate real estate to drive competitive advantage and facilitate corporate goals

Actively managing a corporate real estate (CRE) portfolio as a strategic asset may not ‘make’ the profit and loss (P&L) but failing to do so can certainly break it. A robust CRE function enhances the organisation’s competitive stance, enabling it to control costs and step up rapidly to embrace new business opportunities. This paper is directed to senior executives whose remit is to foresee and then mitigate risk to the business as well as to periodically benchmark the return on investment of company assets as marked to market. It urges senior management, especially chief financial officers (CFOs), to recognise the value and risk of CRE and to involve their CRE team in asset strategy planning. It draws on the authors’ experience and conversations with CRE leaders, as well as examples of how a strong CRE function can mitigate risk, enhance the corporation’s competitive advantage, seize opportunities, realise hidden value and staunch bleeding P&Ls. It outlines a model structure for corporations seeking to position the corporate real estate function to control risk and participate in asset strategy planning for real estate assets they own or lease in support of their core business. The paper’s premise is that CRE is a strategic asset whose cost, deployment of capital and risk demand an appropriately active management model that promotes business goals and protects against the significant risks inherent in these long-term, illiquid assets. Nonetheless, in many organisations, real estate is handled as a routine administrative function and static cost centre far removed from senior decision makers. Target audiences are CFOs, controllers and private equity operating partners typically in medium-sized companies that are planning or undergoing significant growth, leading to increasing complexity, growing portfolios and higher transaction volumes. It is equally appropriate for executives who insist on being actively involved in real estate decisions to protect their P&Ls and forestall being ‘stuck’ with either too expensive, poorly located or ill-configured real estate with few options to fix it. The concepts described also apply to companies with larger portfolios that need to exert oversight and/or cost control due to evolving market conditions.

Equilibrium strategies in a defined benefit pension plan game with regime switching

This paper studies the optimal management of an aggregated overfunded pension plan of defined benefit type as a stochastic differential game in a Markovian regime-switching environment. In this asymmetric two-player game, the worker participants act collectively as a single player that claims a share of the surplus, and the sponsoring firm acts as the player who cares about the investment of the surplus fund assets. We formulate the game model in two scenarios, and use the dynamic programming technique to derive the coupled Hamilton-Jacobi-Bellman equations in each scenario. Furthermore, we propose an efficient algorithm that incorporates a kind of quasi-Newton method and the Runge-Kutta scheme to obtain the equilibrium strategies. Finally, we employ a numerical example to verify our algorithm and analyze the impact of model parameters.

Kelly Criterion Extension: Advanced Gambling Strategy

This article introduces an innovative extension of the Kelly criterion, which has traditionally been used in gambling, sports wagering, and investment contexts. The Kelly criterion extension (KCE) refines the traditional capital growth function to better suit dynamic market conditions. The KCE improves the traditional approach to accommodate the complexities of financial markets, particularly in stock and commodity trading. This innovative method focuses on crafting strategies based on market conditions and player actions rather than direct asset investments, which enhances its practical application by minimizing risks associated with volatile investments. This paper is structured to first outline the foundational concepts of the Kelly criterion, followed by a detailed presentation of the KCE and its advantages in practical scenarios, including a case study on its application to blackjack strategy optimization. The mathematical framework and real-world applicability of the KCE are thoroughly discussed, demonstrating its potential to bridge the gap between theoretical finance and actual trading outcomes.

PROSPECTS FOR REGULATION OF ACCOUNTING AND TAXATION OF VIRTUAL ASSETS IN UKRAINE

Introduction. The advent of virtual assets has brought both challenges and opportunities, reshaping global financial systems and necessitating updated regulatory, accounting, and taxation frameworks. Ukraine stands at a critical juncture, integrating these digital innovations into its legal and financial infrastructure while aligning with global standards. Purpose. This article aims to provide a thorough examination of Ukraine’s developing frameworks for the regulation, accounting, and taxation of virtual assets. It assesses the effectiveness of current strategies and identifies areas for enhancement to ensure a robust integration of virtual assets into Ukraine's financial system. Methods. The research employs a comparative analysis method, juxtaposing Ukraine's frameworks with global standards. This approach is supported by a review of recent academic literature and regulatory reports, offering a comprehensive perspective on the adaptation processes and methodologies applied in the integration of virtual assets. Results. The findings reveal that while Ukraine has made significant progress, particularly with the adoption of the "Law on Virtual Assets," gaps remain in fully securing a stable and transparent virtual asset market. The study highlights the need for continual regulatory updates and the adoption of international accounting standards to manage the complexity and volatility of virtual assets. Conclusion. Ukraine’s proactive regulatory adaptations position it to potentially lead in the integration of virtual assets globally. Continued alignment with international standards and responsive updates to regulatory frameworks are essential to harness the economic benefits and mitigate associated risks. This ongoing evolution will support Ukraine's strategic positioning in the global digital economy and foster a stable environment for innovation and investment in virtual assets.

Experiences, demand for risky investments, and implications for price dynamics

Personal experiences can impact investors’ risk taking, and this can explain market phenomena such as time-varying risk premia, asset price bubbles or wage–price spirals. Establishing the link from individual experiences to market outcomes is challenging, as together with experiences, several decision-relevant factors simultaneously change. The present work investigates the impact of prior experiences on subsequent investments in a laboratory experiment without confounds, which allows for the control of various factors that usually are correlated with experience. The results show that high (low) previously experienced outcomes lead to more (less) investment in a risky asset, even in a condition where experiences do not provide new information and should be ignored. A reinforcement learning model captures the observed individual behavior and allows us to explain market price dynamics. The experience effect on risk taking informs behavioral theories of markets and provides a cognitive explanation for trend-following and self-enforcing market dynamics.

DEVELOPMENT OF INVESTMENT FUNDS IN THE REPUBLIC OF SERBIA

The rapid development of the securities market laid the foundation for the development of investment funds, which were initially established in developed countries before later commencing operations in developing countries. The capital market and investment funds in the Republic of Serbia lag behind developed countries, so the impact of this sector on the development of the domestic economy is still not evident. The experiences of countries with developed financial market show that there is a decreasing market share for traditional intermediaries (such as banks) and as well growing trend in the representation of non-traditional intermediaries, primarily investment funds. However, in Central and Eastern European countries, the last two decades have been marked by increased interest from both experts and the scientific community in the operations of investment funds. Investment funds in the Republic of Serbia show potential after the Covid-19 pandemic, and the authors believe that their role in the domestic financial market is expected to improve in the future. In contemporary market economies, investment funds are rapidly evolving and becoming new, authentic financial intermediaries. Considering that investment funds represent long-term savings, more attention should be paid to raising public awareness and improving the level of financial literacy among citizens regarding the significance of investment funds for economic development in the domestic capital market. Considering mentioned, the first investment funds in the Republic of Serbia emerged only in 2007 and that they are not adequately represented in domestic literature, the authors aim to contribute to filling this gap with this work. In this context, the aim of the paper is to present the chronology of the development of investment funds (number, investment units, net asset value and investment structure) in the Republic of Serbia from 2007 to 2023.

A STUDY ON WORKING CAPITAL MANAGEMENT AND FINANCIAL PERFORMANCE

Efficient working capital management entails planning and controlling current assets and current liabilities in a way that eliminates the risk of being unable to meet short-term obligations and avoiding excessive investment in current assets. The study’s objective is to investigate aavin Products working capital management and financial performance To achieve the objective of the study, this study used data covering the period from 2018–2022. The study's primary data source is secondary data. The study's techniques include ratios, net working capital, comparative, common and trend analysis. On the basis the interpretations are given. The study finds that gross profit, receivables turnover, payable turnover, and working capital turnover affect the financial performance of the manufacturing firms, finally there are some suggestions given that the company should consider in order building them stronger. Keywords: Assets, Financial Performance, Working Capital.

Controlling Shareholders’ Pledge Pressure and Financial Asset Investment: An Empirical Analysis based on Pledge Price

ABSTRACT Unlike existing literature that primarily examines the quantity of share pledges, this study delves into the impact of controlling shareholders’ share pledge pressure on firms’ financial asset investment. Using manually collected pledge price data and focusing on Chinese listed firms from 2007 to 2018, we observe a positive correlation: the higher the controlling shareholders’ share pledge pressure is, the higher the firm’s financial investment will be. Our findings withstand various robustness tests. Channel tests reveal that share pledge pressure expedites financial asset investment by increasing operational and cash flow risks. Moreover, the impact of share pledge pressure on a firm’s financial investment becomes more pronounced when the pledgee is a securities or asset management company, the pledge duration is longer, the controlling shareholder’s pledge ratio is higher, or the firm faces a challenging business environment. This study offers valuable insights for accurately and directly measuring controlling shareholders’ share pledge pressure and underscores the pivotal role of share pledging in firm investment decisions.

Application of Machine Learning Models in Asset Allocation

This study embarks on an exploration of machine learning (ML) models in forecasting the trends of stock indices, with a specific focus on different industries within the Chinese market. Moving beyond the confines of traditional linear regression and standard multi-factor approaches, our research adopts a multi-dimensional analytical framework to decode the complex relationships between various factors and the future returns of industry-specific Exchange-Traded Funds (ETFs) in China. The paper innovatively applies both linear and nonlinear ML models to predict directional shifts in ETF returns, a domain not extensively studied previously. We conduct a thorough comparative analysis of these models, assessing their predictive prowess and dissecting the influence of diverse factors on different industry sectors. This investigation reveals distinct patterns and factor sensitivities unique to each sector, offering new insights into their dynamics. The results are pivotal for asset allocation and investment strategies, as they highlight the nuanced role of ML in financial forecasting. By bridging the gap between traditional financial models and advanced ML techniques, our study presents a novel perspective that enriches the strategic planning in financial markets, especially in the context of the rapidly evolving Chinese economy.