Investor Awareness Research Articles

The impact of regulatory risks of ESG integration on the sustainable development of power companies

Subject. The article focuses on modern trends in the integration of sustainable development drivers into the substantiation of investment decisions, related regulatory risks and their impact on the sustainable development of companies in the energy and fuel sector. Objectives. I study the global advancement of responsible investment through the sustainable development concept and determine how regulatory risks of the integration of environmental responsibility factors, social responsibility and administrative efficiency into the investment decision-making process on the sustainable development of power companies. Methods. The study relies upon the analysis and synthesis, detailed elaboration and generalization, comparison, abstraction, analogy, index method, systems, strategic and risk-based approaches. Results. The article demonstrates how the sustainable development concept currently evolves and is getting updated. I found the unstoppable evolution of the regulatory and legislative framework, which encourages sustainability projects, and business practice including ESG factors into the investment decision-making process. The article substantiates the role of the responsible investment mechanism and the impact of regulatory risks of ESG integration on the sustainable development of power companies. I show what results can be achieved by analyzing ESG performance of an oil and gas corporation via Thomson Reuters, which helps to assess ESG risks for the company, its investors, and other key stakeholders. Conclusions and Relevance. The integration of ESG factors into the investment decision-making process ensures the adequate awareness of investors, helps mitigate ESG risks, increases the reasonableness of decisions investors make, and raises the quality and completeness of ESG data disclosure in corporate reporting. Regulatory risks of the ESG integration stem from companies’ breaches in effective regulations and rules on ESG performance and result in negative legislative and economic consequences. Therefore, I make suggestions on the analysis of sustainability factors and indicators, which pursues the mitigation of ESG risks of power companies and their investors, and ensures the efficiency of investment decisions.

Investment motives and preferences – An empirical inquiry during COVID-19

Following the COVID-19 breakout, investment in shares, mutual funds, and life insurance are witnessing a growing trend in India. Hence, examining the determinants of investor preferences is necessary to maintain a positive trend. This study analyzes the impact of investor motives and awareness on investor preferences using the data collected from 753 Indian investors in 2020. Factor analysis grouped the investment motives into six categories, namely Nature of investments, Future financial needs, Investor personal characteristics, Safety and stability of investments, Investor behavioral aspects, and Investor’s options. The regression model used to find the impact of the investment motives and the awareness on the investor preferences explains 52.3% of changes in investor preference. Investment factors like Nature of investments, Investor personal characteristics, Investor behavior, Investor options, Awareness of mutual funds, and shares have a significant impact on investor preferences. Further, the awareness level of mutual funds and the stock market are the major variables contributing to Investors’ preference rather than identified investment factors. Investors’ personal characteristics like knowledge, confidence, ability, responsibility, and belief negatively influence investor preferences. This study adds to the existing literature by analyzing investment motives and preferences during the pandemic.

Sustainability rating and moral fictionalism: opening the black box of nonfinancial agencies

PurposeThe purpose of this paper is to explore the practices, challenges and ethical issues underlying the fabric and dissemination of corporate sustainability ratings.Design/methodology/approachBased on 36 semi-structured interviews with sustainability rating practitioners, the study shows the trade-offs, ethical judgments and customizable aspects involved in rating practices, which cannot rely only on formal and predefined methods.FindingsIn contrast with the official optimistic rhetoric about the rationality and rigor of sustainability rating methods, agencies face serious challenges in the measurement and comparison of performance in this area, particularly in terms of the aggregation of scattered and fuzzy indicators, commercial pressures and the availability, materiality and reliability of the information collected. Despite these concerns, sustainability ratings do appear to be useful in improving corporate responsiveness and increasing investor awareness of the complex and difficult-to-measure aspects of nonfinancial reports.Practical implicationsRating agencies should collaborate to set up common indicators that would be easier for firms to produce and should better separate their sustainability rating production activities from other services they offer to companies (e.g. consultancy).Originality/valueThis study contributes to the literature on the measurement and promotion of corporate sustainability by analyzing rating practices through the lens of moral fictionalism, which here refers to the human tendency to build ethical judgments on fictional but convenient and useful representations.

Whom to educate? Financial literacy and investor awareness

We conducted an experiment and survey in Shenzhen, China, to measure individuals' risk preferences, financial literacy, and the effect of a financial education program. A proportion of individuals may be unaware of the high risk associated with a high-return financial product and thus may purchase financial products inconsistent with their risk attitudes. Participating in our education program significantly reduced individuals' tendency to hypothetically invest in high-risk products, especially for those who are risk-averse. Therefore, rather than randomly assigning the education program to investors, we suggest that risk-averse investors be targeted. We find that the responses to standard financial literacy questions are not related to individuals' awareness of the link between high risk and high return, calling for a newly designed question of financial literacy as proposed in our study.

SUSTAINABILITY-ORIENTED INNOVATION, TECHNOLOGIES & FINANCE IN CONSTRUCTION: A MULTI-CRITERIA METHODOLOGY

Considering the efforts to adjust the great demand of the civil construction in the developing countries and the economic interests of the sector, in line with current sustainable trends, this article presents a methodology to support the planning and decision making of construction companies. An analysis of the elements involved in the process, their interaction and proposed application priorities are evaluated using the AHP (Analytic Hierarchy Process) method as a multi-criteria decision support tool. The results obtained allow us to observe the parameters that guide the decision-making of the managers in the construction sites, the impact of low productivity and limited investments in innovation and processes, which still adopts the traditional methods of construction. However, exists a margin that is sustainable, without major financial impact, through the management and encouragement of the environmental awareness of investors, entrepreneurs and construction workers. The actions that interfere with the process and its application priorities in construction are related, within the context of innovation, technology and finance oriented to sustainability. Supported by the concepts of management and SOI (Sustainability-oriented innovation) topics, a discussion of the civil construction scenario in Brazil is carried out through the economic, social, technological and managerial issues typical of developing countries, guided by the strong trends in the macro-economics adjustments and rational use of natural resources in the coming decades. It highlights the main challenges of the sector and presents a analysis, planning, decision-making approach and collective impact actions that could support the development actions of the sector, in order to reduce the distance from the concepts of environmental awareness and attitudes existing in developed countries.

Measure the Awareness of Individual Investors on Investment Practice in Land Investments

As India's economy as a whole has become more technologically advanced, so too has the land industry. Demand for commercial real property to construct homes and factories has increased as a consequence of rising business opportunities and the movement of workers to these sectors. Real estate projects are affected by demand from individuals, hotels, and the entertainment sector. The focus of this study is on the factors that drive, inform, and reward individual land investors. The research method is descriptive, and it's used to look at many different aspects of real estate investing.

Disclosure-Driven Social Engagement in Supply Chains

Problem definition: We empirically examine the effect of buying firms' disclosures of their efforts to mitigate forced labor and human trafficking in their supply chains on their supplier's actual labor outcomes. Triggered by several scandals involving well-known firms in 2020, major regulatory actions are ongoing in addressing forced labor in supply chains through increased buyer disclosures. However, many question whether disclosure alone would be effective in generating real outcomes, and there is little empirical research on whether buyer disclosure could translate into supplier-size net improvements. Methodology and Results: We use the passage of the California Transparency in Supply Chains Act (CTSCA) as a regime shift in the intensity of disclosures and compare negative forced-labor incidents in (1) suppliers of the disclosing buyers and (2) otherwise-identical suppliers of matched control firms not subject to the CTSCA. We find that 64% of firms subject to CTSCA make the requisite disclosures, and suppliers of these firms realize a substantial reduction---up to 56%---in actual negative incidents post-CTSCA, despite having nearly identical pre-CTSCA incident levels and trends to suppliers of control firms. We provide countervailing evidence against firms' improving their supply chain profiles irrespective of CTSCA, and evidence consistent with disclosing firms' undertaking more aggressive supply-chain-focused investments to mitigate the increasing reputational risks of inaction. We further find that consumer proximity and institutional equity ownership is predictive of both the disclosure decision itself and the level of detail in the disclosures. Managerial implications: Although disclosure mandates do not automatically result in full compliance, they could serve as an effective way of encouraging firms to more actively shape their supply chains' ESG profiles. Further regulations should be designed with the goal of increasing consumer and investor awareness---and thus the reputational risks of inaction---in mind.

Пространственная диффузия азиатских прямых инвестиций в североевропейских странах Европейского союза

The first publications on the spatial diffusion of foreign direct investment (FDI) appeared in the 1970s-1990s. Since then, many of their provisions have been repeatedly criticized as outdated and inconsistent with the empirical evidence of the current stage of globalisation. Previously, only examples of ‘newcomers’ to internationalisation were used to illustrate distinct phases in the expansion of transnational companies and their effort to first establish themselves in major economic centres, as the factor of gradually growing awareness of potential investors began to play an important role. This article aims to show the persistent character of FDI spatial diffusion patterns and their correlation with the existing hierarchy of cities. In our research, we used the example of Asian companies working in the Baltic countries, Finland, Sweden and Denmark, newcomers to internationalisation, not affected by the ‘neighbourhood effect’, and contrasted them with Western European investors. We confirmed the validity of the hierarchical wave model of the FDI spatial diffusion with the dominance of metropolitan urban agglomerations. It was also found that mergers and acquisitions are dominant forms of FDI in developed countries. Their ascendancy leads both to a distortion of the geographical pattern of subsidiaries networks of investor companies and to the intention of investors to sell their assets in provinces and move their head offices closer to capital cities. Consequently, there is a simplification of the structure of businesses, which is typical of the earlier stages of the FDI spatial diffusion.

The Price of Corporate Social Irresponsibility at Seasoned Equity Offerings: International Evidence

We examine the effect of corporate social responsibility engagements signaled through negative environmental and social (E&S) incidents on equity financing via seasoned equity offerings (SEOs) across 25 countries. The results show that negative E&S incidents significantly aggravate SEO underpricing, increasing cost of equity capital. We assess potential explanations from the perspective of corporate reputation risk and regulatory risk. We find support for both channels. Social reputation acts as a buffer against reputation risk arising from the E&S risk events while strong country-level E&S policies inflict regulatory risk to violating firms following E&S incidents leading to adverse E&S effects at SEOs. Further analysis reveals that the adverse pricing effects of firm E&S risk are driven by the social awareness of institutional and retail investors. We also find that the impact is negligible with the presence of larger blockholders. Managers appear to pre-empt the adverse effects by reducing the likelihood of equity financing in wake of negative incidents. Finally, there are rich cross-country variations in the pricing effects of E&S risk whereby common law countries and those with strong investor protection and individualistic but low power distance cultures suffer most from the adverse E&S incidents around SEOs.

The Relationship between Awareness and Retail Investors' Investment Intentions in the Indian Corporate Bond Market

Despite a long history, many committee recommendations, and ongoing changes, the Indian corporate bond market remains modest. Corporate Bond Market in India is majorly dominated by institutional investors and with lack of participation retail investors? participation due to due to a lack of awareness and understanding of the product. As a result, the purpose of this study is to determine the amount of retail investor awareness of corporate bonds, as well as the relationship between awareness and investment intention in corporate bonds. A questionnaire-based survey with a sample size of 400 respondents is being undertaken. The study's findings show that the majority of respondents have just average or below average awareness of corporate bonds, and that there is a substantial association between awareness and corporate bond investment intention. Keywords: Corporate Bonds, Awareness Level, Investment Intention, SEBI, CRISIL

Global Pricing of Carbon-Transition Risk

Companies are exposed to carbon-transition risk as the global economy transitions away from fossil fuels to renewable energy. We estimate the market-based premium associated with this transition risk at the firm level in a cross-section of over 14,400 firms in 77 countries. We find a widespread carbon premium—higher stock returns for companies with higher levels of carbon emissions (and higher annual changes)—in all sectors over three continents, Asia, Europe, and North America. Short-term transition risk is greater for firms located in countries with lower economic development, greater reliance on fossil energy, and less inclusive political systems. Long-term transition risk is higher in countries with stricter domestic, but not international, climate policies. However, transition risk cannot be explained by greater exposure to physical (or headline) risk. Yet, raising investor awareness about climate change amplifies the level of transition risk.

Foreign Investment Under the Spotlight of Home Media

Foreign investors’ information disadvantage is often viewed as a key impediment to their investment. This study questions whether foreign investors’ home media mitigates this information barrier by investigating the relation between U.S. mutual fund ownership and U.S. media coverage of local stocks in their host countries. Using a large sample of 38 host countries, we document a positive association between U.S. mutual fund ownership in a local stock and the coverage of U.S. major news providers on that stock. We find that home media-covered stocks incur lower information acquisition costs and gain greater investor awareness from U.S. investors. The home media effect is most salient in host countries with low quality information environments, supporting a novel home media effect that foreign investors tend to rely on their home market media coverage as an information source. The home media effect helps explain the prominent international finance anomaly regarding the dependence of firm returns on home and foreign market factors.

The evaluation pattern of Indian investors on role of stockbrokers to determination of investment decision

In India, during 1995-1996, equity turnover on BSE was 50,064 Cr. and it was increased to 854,845 Cr. during 2014-2015. It shows the increase in the transaction in the stock market. The share brokers are helpful to investor for investing in the various financial instruments in the market and guide for the safety investment in current and future. With this background, this study examined the awareness of investors towards stockbrokers and behaviour of individual investors towards stockbrokers. Also the study includes the style of investment of individual investors, the reason for changing the stockbrokers and at which stage, individual investors are depending on stockbroker for investment decision. This study conducted in Mumbai city and primary data was used. Many investors are aware about stockbroker functions, but 100% literacy towards stockbroker is not there in the Mumbai city.

The influence of narrative disclosure readability, information ordering and graphical representations on non-professional investors' judgment: evidence from an emerging market

PurposeThis study examines whether manipulation in attributes of corporate narrative disclosures and the use of graphical representations can bias non-professional investors' judgment towards firms' future performance, in an emerging market context.Design/methodology/approachThe authors conduct three different experiments with a 2 × 2 between-subjects design, using accounting and finance senior undergraduate students to proxy for the non-professional investors.FindingsResults show that simple (more readable) disclosures improve non-professional investors' judgment towards firms' future performance. In addition, it is found that non-professional investors are prone to a recency effect from the intentional ordering of narrative information, when using complex (less readable) narratives. However, no primacy effect is found, when using simple (more readable) disclosures. The results further provide evidence that the inclusion of graphical representations, along with the manipulated narrative disclosures, can moderate the recency effect of information order, when using less readable and complex narrative disclosures.Research limitations/implicationsThe results reveal that although the content of corporate disclosures can be objective, neutral and relevant, manipulation in textual features and the use of graphical presentations, can interact to impact how non-professional investors perceive and process the disclosed information. This study provides an Egyptian evidence regarding this issue, as the majority of prior studies concentrate on developed capital markets. In addition, it contributes to prior studies evaluating the appropriateness of the Belief Adjustment Model predictions about the effect of textual presentation order on decision-making, by providing evidence from an emerging market.Practical implicationsResults attempt to increase the awareness of investors and encourage them to use multiple sources of information to avoid the probable bias that can result from management's manipulation of narratives. In addition, the study could be of interest to regulators and standard-setters, where the results reveal the need for guidelines and regulations to guide the disclosure of narrative information and the use of graphical information in corporate reports.Originality/valueTo the best of the authors' knowledge, this is the first study to examine the effect of two impression management strategies in narrative disclosures (readability and information order), along with the use of graphical representations, on non-professional investors' judgment in an emerging market, like Egypt.

Going concern modifications and related disclosures in the Italian stock market: do regulatory improvements help investors in capturing financial distress?

This paper investigates the investor reaction to audit reports containing a going concern modification (GCM) in the Italian market following new amendments regarding auditing regulations and public financial information disclosures. We applied the event study (ES) methodology to short event windows considering Italian listed companies during the period 2009–2015. Our findings partially contradict previous studies revealing a systematic negative impact of GCMs, especially when a GCM is attached to unqualified opinions. We clearly observe that Italian auditors have a strong higher propensity to issue a GCM than to express a qualification. Moreover, we find other interesting results that contradict the mainstream literature, detecting a stronger negative reaction in the case of recurring GCMs and when the modification is issued by non-Big 4 auditing firms. These differences could be explained considering the environmental characteristics of the Italian market such as the ownership structure, governance mechanisms and accounting culture, where minority investors act against ownership in accordance with the type II agency problem. Our empirical results suggest that the domestic and international regulatory amendments during the study period have increased the value relevance of GCMs and the usefulness of financial disclosures. This study might be of interest to practitioners and regulators in regard to contributing to the introduction of further regulatory interventions that will enhance both the informativeness of audit reports and awareness of investors in regard to going concern uncertainty.

Развитие государственно-частного партнерства в Приморском крае: основные тенденции, факторы и перспективы

The article touches upon the problems of public-private partnership which is a relatively new tool for the regional development in Russia due to attracting additional private investments, including foreign ones, directed to the implementation of strategically and socially important projects. Today the development of public-private partnerships in the constituent entities of the Russian Federation remains uneven, there is a lack of private investment in some federal districts, including the Far Eastern Federal District, despite the priorities of the state policy. The rating of the regions of the Far Eastern Federal District by the level of public-private partnership development in 2018-2019 has been presented. There has been studied the development of public-private partnership in Primorsky Krai in comparison with other regions of the Far Eastern Federal District, the meaning of the set of its constituent factors is revealed: development of the institutional environment, regulatory support and experience in implementing projects using public-private partnership mechanisms. The different forms of support for private investors used in Primorsky Krai have been analyzed. The factors hindering the development of public-private partnership in Primorye are formulated: lack of well-functioning mechanisms of communication between business and government in the projects of investment implementation, high risks for the private partners, and difficulties in attracting the required amount of investment. To minimize their action, there have been proposed measures for promoting public-private partnership mechanisms, raising the level of awareness of private investors, creating conditions to minimize risks for a private partner, developing the competencies of state bodies, introducing advanced practices in project preparation and management, expanding the range of projects with a focus on the transport sector.

Organizational and legal problems of the functioning of the stock market of Ukraine

The presented article examines the problems of formation and development of stock exchange business in Ukraine during the last decade . The variety of scientific and normative views on the definition of the stock market is indicated , as a result of which a conclusion is made about the correctness of a broader perception of this concept , namely as legal relation ship s of exchange participants on placement , circulation , accounting of securities and derivatives . Some statistical information on the current state of the stock market of Ukraine is analyzed , which shows the similarity of the movement of indices of stock exchanges of Ukraine and world countries , positive dynamics of the UX index compared to last year , reduction of the total number of exchange organizations in Ukraine , which should also be assessed positively . I n general , there is a tendency to develop stock relations in Ukraine , which is , however , quite slow . Factors due to which there are obstacles to the sustainable functioning of the country's stock market , which do not allow to effectively perform its functions of capital allocation and constant investment in the economy are considered . Among them : significant dependence of the Ukrainian stock market on the negative impact of global external factors ( pandemic , armed conflicts , political changes , etc .); too high level of capitalization of fuel and energy companies , which leads to the uniformity of exchange goods ( relevant stock s); the impossibility of serious competition of securities of Ukrainian companies with foreign blue chips presented on the Ukrainian Stock Exchange; poor awareness of potential investors about the possibilities of investing in securities as well as the presence of biased information about potential objects of investment in the stock market of the country ; high level of stock market manipulation and violations of investors ' rights , which leads to investors replacing national platforms for stock investments with foreign ones . There is the conclusion about the multilateral issues on becoming of effective stock market exchange relation ship s in Ukraine , the solution of which should begin with the improvement of its legal regulation using , first of all , the economic - legal tool kit .

Determinants of Investment Decisions: A Study of Individual Investors on the Zimbabwe Stock Exchange

This study investigated factors that inform individual investors in their decision-making on the Zimbabwe Stock Exchange. The main objective was to identify and assess the effect of the behavioural factors on investment decisions of individual investors. A quantitative survey of 291 randomly selected individual Zimbabwe Stock Exchange investors was conducted. Multiple regression analysis was used to calculate the correlation coefficient of behavioural factors and investment decision while correlation analysis was used to measure the strength of the relationship between the independent variables. The findings of the study established that the predictor variables had a strong positive association between them and individual investor decision at a significant level of 0.01 and 0.005. The findings of the study revealed that individual investor decisions are influenced by the behavioural factors which are; anchoring, availability, gambler’s fallacy, overconfidence, herding, loss aversion, mental accounting, regret aversion and representativeness. The study recommends the need for improved information on the stock markets dynamics as well as training on investor awareness programmes to support the decision-making abilities of the individual investors on the ZSE to fully play its rightful role in the development of the economy.

Stoxx Europe Indices and Index Premium

With their transparent and rules-based index review policy and surging popularity, Stoxx Europe indices provide an excellent opportunity to study the index inclusion effect in a pan-European setting. Using a dataset spanning the period from 1999 to 2019, we find sizable positive abnormal returns for additions to Euro Stoxx 50. CARs averaged 7% from thirty days before the announcement to the effective inclusion date. No such effects have been observed for Stoxx Europe 600. We find evidence for both downward-sloping demand curves and investor awareness hypotheses.

Risk Management of Industrial Investment Fund in Marine Economic Zone: An Investor Protection Based Study

Wang, X. and Dai, S.-F., 2020. Risk management of industrial investment fund in marine economic zone: An investor protection based study. In: Qiu, Y.; Zhu, H., and Fang, X. (eds.), Current Advancements in Marine and Coastal Research for Technological and Sociological Applications. Journal of Coastal Research, Special Issue No. 107, pp. 33-36. Coconut Creek (Florida), ISSN 0749-0208.The 21st century is the era of marine economy, and the exploitation of marine resources has been widely valued by all countries in the world. Therefore, the marine economy has gradually become an industrial cluster, which has become an important growth point for the development of a country. With the construction of Marine Economic Zone, marine industry investment fund has become an important way of investment industry. However, the development of China's industrial investment fund started late, which caused many problems, such as different scale, low industry maturity and so on. Therefore, there will be many risks in the industrial investment fund of China's marine economic zone. Based on the perspective of investor protection, this paper analyzes the risk management of investment funds in financial practice, which will form a mature system of financial institutions. However, China's marine economic zone has not yet established a comprehensive risk management system, which is a low awareness of investors' risk management. Therefore, this paper analyzes the necessity of the industrial investment fund in the marine economic zone. Then, this paper analyzes the investment fund management mode of the marine economic zone. Finally, this paper puts forward suggestions and measures.