Group Of Investors Research Articles

Forecasting firm growth resumption post-stagnation

Our study forecasts the likelihood of firms resuming growth after periods of stagnation or declining sales. We employ machine learning methods, including Random Forest, LightGBM, and CatBoost, alongside logistic regression models. To address class imbalance, we incorporate oversampling techniques such as SMOTE, ADASYN, and SMOTEENN. We focus on two key indicators—Precision (predictive accuracy) and Recall (completeness of prediction)—to meet the needs of different investor groups. The performance of our models is evaluated using metrics such as accuracy, precision, recall, F-score, and RocAUC, with Venkatraman's test applied for model comparison. Our key findings reveal that CatBoost achieves a predictive accuracy of 65–67 %, significantly outperforming random firm selection, which yields only 13–17 % accuracy. The combination of the CatBoost method with the SMOTEENN technique notably enhances Recall values, reaching 58–63 %, a critical metric for large investors and policymakers. Our study offers a methodological approach to better understand and forecast the trajectories of firms engaged in open innovation.

Institutional investor cliques and stock price efficiency: Evidence from China

We investigate the impact of coordinating groups of institutional investors (cliques) on stock price efficiency in China. Employing the Louvain algorithm, we identify institutional investor cliques based on their holding networks and observe strongly correlated trading behaviors among clique members. Our baseline findings document that institutional investor clique ownership impedes stock price efficiency. We also provide a potential mechanism suggesting that this impediment effect arises from reduced information acquisition by clique members. Our additional analyses suggest that the inefficient stock prices induced by institutional cliques may exacerbate stock bubbles and increase the stock price crash risk.

Moderating Effect of Investor Demand on the Relationship between Institutional Investors Participation and Flipping Activity

This paper examines the moderating effect of investor demand on the relationship between institutional investors’ participation and flipping activity of Malaysian IPOs. Measured with proxy, flipping activity seems to be the least risky way to optimize returns from IPOs. If done excessively, flipping activity could produce a damaging effect on the aftermarket performance of the new shares. Issuers and underwriters could restrict availability of shares to flip by strategically allocating a larger proportion of IPOs to institutional investors. This strategy could work because this group of investors is perceived to be “loyal” as they tend to keep their shares for a long-term investment. However, the impact of restricting supply of IPOs in the immediate aftermarket could aggravate the situation if the IPOs are highly demanded. The shift of the demand curve to the right when supply curve has shifted to the left induces a new equilibrium at a higher price level. Further price appreciation will make investors be more tempted to flip to optimize their returns, pushing flipping activity to its maximum level. Using 247 Malaysian IPOs covering the period from January 2000 to December 2012, this study finds that investor demand does moderate the negative relationship between institutional investors’ participation and flipping activity.

Characteristics of Domestic Individual Investors in Vietnam Stock Market

Individual investors in the Vietnamese stock market have many different characteristics from individual investors in stock markets in other countries, especially developed countries. Outstanding features include: (1) domestic individual investors always occupy the leading position and dominate the market; (2) the transactions of this type of investors have the potential to change the market structure; However (3) they are strongly influenced by stock market sentiment and (4) most investors are still very young, have little experience, and have limited investment and capital management knowledge. leading to major fluctuations in the market that stem from this group of investors.

Market turbulence and investor decision-making in currency option market

This research delves into the effects of recent crises on investor behavior within the currency options market, particularly focusing on the relationship with underlying exchange rates. Analyzing daily EUR/USD currency call pair data from May 4, 2011, to June 19, 2023, we employ a genetic algorithm to calculate stochastic volatility in line with the Garman and Kohlhagen model. Through the application of the STAR model, we identified shifts in investor behavior across various crisis periods. These shifts are linked to inherent asymmetries in the time series data, illustrating the diverse strategies of different investor types, such as fundamentalists and chartists. Our findings reveal how each investor group tailors its approach to these market asymmetries, showcasing distinct strategies and responses to fluctuating market conditions and crises. This study contributes to the financial literature by offering a more nuanced understanding of how crises influence investor behavior and the dynamics of currency markets. Ultimately, it sheds light on the complexities of investor behavior during economic challenges.

How graphical vividness and interactivity in non-financial presentations influence nonprofessional investors

We investigate how graphical vividness and interactivity in displays of non-financial information following poor financial performance affect the judgments of nonprofessional investors. Leveraging the Hamilton and Winchel (2019) model of dual-process theories of persuasion in financial reporting, we hypothesize and find that graphical vividness and interactivity jointly influence nonprofessional investors. Despite negative news in financial information, investors perceive a firm’s performance more positively when favorable non-financial information is presented more vividly and with a user interactivity function. Finally, contributing to theory, we find that effort positively mediates the effects of user interactivity on nonprofessional investors’ judgments and decisions. The results lend empirical support to the Hamilton and Winchel (2019) model of dual-process theories of persuasion in financial reporting and have implications for designers of investor relations websites, investor groups consuming this information, and regulators concerned about the need for standards in the presentation of non-financial information in annual reports.

Beyond financial wealth: The experienced utility of collectibles

We argue that the utility of specific assets, in our case collectibles, is not only derived from the financial outcome, but also from the conditions that prevail until a financial outcome may be realized. Therefore, we derive a multi-attribute utility function that measures financial returns — using a mean-variance utility function — on the one hand, and non-financial returns — using an experienced utility function — on the other. We then reveal the trade-off between financial and non-financial utility by analyzing 363 owners of collectibles. We divide the owners into the group of collectors and the group of investors, based on their self-reported motivation. Our results suggest that collectors receive almost no utility from financial returns, but rather from experience. The opposite is the case for investors. Our findings help to explain the reported financial underperformance of collectibles and suggest to adjust existing models of utility.

Application Of Markowitz and Index Models to Real Markets

After Markowitz put forward the portfolio theory in the 1950s, the modern investment theory was developed, and more related theoretical models were created based on it. To find the optimal portfolio in the market, this paper randomly selects 7 stock types, uses three different constraint methods to show the investment characteristics of different group of investors, and uses Index model and Markowitz model to find efficient frontier and the proportion of asset allocation under the condition of maximum Sharpe ratio and minimum variance. The results show that to achieve the maximum Sharpe ratio and find the best combination, it is necessary to purchase AAPL primarily. Secondly, it chooses to purchase assets with less correlation and relatively large return rate, such as MSFT and WMT. The results in this paper shed lights for investor in selecting potential assets and may provide helpful insight for future investments.

Investors’ demand in Initial Public Offering (IPO): Shariah compliance, corporate governance and macroeconomic factors

Purpose Initial Public Offering (IPO) is a major milestone for a company. It allows a private company to issue shares to a much broader group of investors and become public. But conclusive evidence of the driving forces behind investors’ demand is yet to be identified. Therefore, the major purpose of this study is to assess the level of investors’ demand in IPO and how investors’ demand in IPOs is affected. Design/methodology/approach The study will employ 80 IPO companies of a Muslim-majority country, Bangladesh, starting from 2013 to 2021 with application of linear and quantile regressions. Apart from that, t-test will be used to compare means of groups of Shariah-compliant and non-Shariah-compliant firms and IPOs under fixed-price and book-building mechanism. Findings Oversubscription is higher for IPOs issued through fixed-price method compared to book-building method, but no significant difference is found in oversubscription for Shariah firms compared to non-Shariah firms based on t-tests. The authors found IPO size, firm size, IPO risk, proportion of shares offered to public, and bank interest rate to have significant impact on the IPO demand. Some models found non-Shariah compliance status of IPO companies to be a significant factor for the investors to demand IPO. Quantile regression results found board independence to have a positive association with larger, less-subscribed firms and board size to have a negative relation with IPO demand, for smaller firms with high demand. Research limitations/implications Future studies may apply the findings to other settings, especially into the reasons behind preference for non-Shariah-compliant firms and higher demand for IPOs during higher interest rate. Equity issuing firms and issue managers can benefit from this study by wisely deciding on the proportion of shares for public, issue size and board of director composition. Shariah considerations cannot be ignored given that more information on Shariah compliance is disseminated among investors despite current non-preference for Shariah-compliant IPOs. On the other hand, institutional investors and general investors should consider firm-specific, governance and macroeconomic factors in IPO investment. Likewise, regulators would do well to bring in quality IPOs with characteristics mentioned in this study for ensuring stability of the market. Originality/value The main contribution of the study is identifying determinants of IPO demand: faith, governance, macro issues – understanding whether one or many of the above factors drive investor demand in IPOs of a Muslim-majority country will be the main contribution.

Corporate angels: A new breed of investors in the funding landscape for technology-based start-ups

This paper examines corporate angels, small businesses that provide equity capital directly to unquoted ventures and become minority shareholders. Corporate angels have been largely ignored in entrepreneurial finance research. This novel study examines corporate angels' investment practices, goals and challenges by means of a combination of qualitative cases and a survey of 87 corporate angels. From our analysis, we conclude that due to their knowledge and experience of technology and industry, combined with their active involvement in the investments, corporate angels can be an important source of seed and early-stage financing for technology-based start-ups, particularly with regard to technological and market knowledge and experience. Corporate angels’ investment activity also leads to knowledge inflows to the corporate angel firms in terms of organizational and cultural development of the firms. With this paper we shed light on a new and unexplored investor group that is important in the changing landscape of entrepreneurial finance.

Foreign Institutional Ownership and Earnings Management

This study investigates the relationship between foreign institutional ownership (FIO) and earnings management (EM) using 552 firms of non-financial sector companies that publish annual financial reports for 2015–2021. We use ordinary least squares (OLS) for equation estimation. The results show that, overall, FIO has a negative impact on earnings management. Tests were also conducted on the FIO group: banks, insurance, pension fund mutual funds, and securities companies. The test results indicate that each group of institutional investors has a negative effect except for securities companies, which positively impact earnings management. The positive influence of securities firms shows that securities firms are more focused on trading strategies than managerial controls. The findings of this study are expected to contribute to the corporate governance literature and the quality of financial reporting. Institutional ownership as a corporate governance mechanism is expected to control earnings management which can reduce the quality of financial reporting. Keywords: institutional ownership, earnings management, agency theory

The impact of solar PV subsidies on investment over time - the case of Sweden

Over the past decade, different economic incentives have been created to increase investments in solar photovoltaics (PV). Although research outlines that investors in renewable electricity technologies (RET) are heterogeneous, policies have not taken this into account when designing subsidy programs. This paper aims to analyse the relationship between policy incentives and the willingness to invest in PV systems for different investor groups, including households, companies, associations, and public organizations. Using data from all applications to the capital subsidy program for PV in Sweden between 2009 and 2021, we analyse the impact of the subsidy level on investments over time. Our analysis shows that the subsidy has had a positively significant impact for households and private companies as investor groups. However, we also found that other variables have had a significantly positive or negative effect on the willingness to invest for different investor groups. This stresses the need of going from “one size fits all” policies to policies that better adapted to different investor characteristics. To meet the urgent need to accelerate the diffusion of RETs, our results show the impact of investor heterogeneity on policy responsiveness and provide avenues for the design of targeted policies.

АНАЛІЗ ПЕРСПЕКТИВ ФУНКЦІОНУВАННЯ ПІДПРИЄМСТВ З ІНОЗЕМНИМИ ІНВЕСТИЦІЯМИ В УКРАЇНІ

Formulation of the problem. The post-war recovery of Ukraine requires attracting foreign investment. Attracting foreign direct investments will make it possible to ensure capital investments, annual direct contributions to the economy, new jobs, exports, acquisition of new skills and technologies, innovativeness of economic sectors. The aim of the research is to analyze modern prospects for the development of the process of foreign investment and the functioning of enterprises with foreign investments in Ukraine. The оbject of the research is theoretical and practical approaches to the attraction of foreign investments and the functioning of enterprises with foreign investments in Ukraine. The methods of the research: logical method, method of comparison, methods of induction and deduction, analysis and synthesis, system analysis, correlation analysis. The hypothesis of the research. The volume of foreign investment is directly proportional to the volume of GDP, expenditure on education and labor force and inversely proportional to the income inequality level and unemployment level. The statement of basic materials. Correlation coefficients between the volume of foreign investment and the factors affecting this volume have been determined, which will allow influencing specific key indicators that most stimulate the inflow of foreign investment. The mechanism for attracting foreign investments is presented, covering strategic, intermediate and current goals, a list of forms, methods, objects and tools of influence. The practical significance of the research. The practical implementation of the proposed measures will make it possible to intensify the attraction of foreign investments in Ukrainian enterprises. Conclusions and perspectives of further research. The problem of attracting investments into the economy of Ukraine is related to the lack of motivation to invest, insufficient accumulation of resources by the main groups of investors, a wide outflow of capital abroad, etc. Unfavorable investment climate caused by military actions, occupation of territories and destruction of infrastructure, migration of experienced specialists abroad, extremely unstable economic situation in the country, slowdown of economic reforms, high level of corporate taxation, instability of legislation, corruption, low purchasing power of the population, low predictability of junctures of commodity and raw material markets, significant price fluctuations; imperfection of ownership and shareholding relations, becomes the main obstacle in attracting investments. However, there are undoubtedly attractive factors for investing in Ukraine's economy, including the attractive geographical position determined by the country's location in the center of Europe at the crossroads of trade routes, the presence of an educated workforce, as Ukraine has a very high intellectual and professional level of manufacturers. Also, labor is cheap. Ukraine has favorable conditions for the introduction of high technologies, which is facilitated by the presence of performers with a high intellectual level. Also, relatively cheap raw materials and energy resources, which contributes to the low cost of manufactured goods. The obtained results showed a high dependence between the amount of FDI and the level of GDP in the country (correlation coefficient is 0.82), and a direct interdependence was revealed, which means that with the growth of GDP, the amount of foreign investment will increase, which is logical, because with the growth of GDP, the country is investment attractive for a foreign investor. The high correlation between the volume of foreign investment and the availability of labor in the country (correlation coefficient is 0.79) means that the availability of labor, including skilled labor, is extremely important for the investor (this is also evidenced by the interdependence between FDI and state spending on education in the country ), since the ease of hiring employees and their productivity depend on it.

Aggregate portfolio choice

Important portfolio choice decisions are made for large groups of heterogeneous individual investors. I propose solving the cross-sectional average of the individual Euler equations to find an optimal portfolio for an aggregate of investors under one-size-fits-all constraints. Using a dynamic portfolio choice model to design balanced default funds for 72 hypothetical industry pension plans, the average Euler equations depend on industry-specific per-capita earnings growth and moments of idiosyncratic earnings shocks. Inter-industry heterogeneity in moments of the joint distribution of earnings growth and the return on risky assets, including correlation and cokurtosis, explains the variation in optimal choice variables across industries.

The clientele effects in equity crowdfunding: A complex network analysis

The study develops an original interdisciplinary approach, leveraging complex networks through which it identifies groups of investors and projects in equity crowdfunding, investigates whether clientele effects arise resulting in specific investor-entrepreneur matching, and explores which investor-entrepreneur combinations can lead to the emergence of collective behaviors. Data about campaigns and investors are gathered from Crowdcube to identify investors and company types that populated this leading UK platform during its early years (2011–2016). Results show that the clientele effect exists only between specific investors and project types: serial investors are attracted to innovative companies, whereas high-value and small investors, representing the largest group in the crowd, prefer mature companies in the consumer product industry. Moreover, the study reveals that information exchange in certain matching drives the clientele effect, resulting in collective behavior on specific segments: small investors engage in collective behaviors only when targeting high-tech innovative companies. These findings provide a new view on the clientele effect in equity crowdfunding platforms and the financing of innovative companies.

Which investors support the transition toward a low-carbon economy? Exit and Voice in mutual funds

Reducing portfolio carbon footprints (Exit) and voting in favor of climate-related shareholder proposals (Voice) are among the main actions that investors can take to promote an accelerated transition toward a low-carbon economy. This paper studies three important investor groups that can be instrumental in driving the transition and evaluates their Exit and Voice behavior. I find that the five largest asset managers perform poorly on Exit and Voice over the full sample period but improved on both in more recent years. Only a small fraction of signatories to sustainable investor initiatives are supportive of the transition. Counterintuitively, investors who perform poorly on Exit, perform well on Voice. Finally, I examine the financial consequences of employing Exit and Voice and find that Exit is positively related to risk-adjusted fund returns; however, this is not necessarily attributable to superior skill of fund managers.

Cryptocurrency co-investment network: token returns reflect investment patterns

Since the introduction of Bitcoin in 2009, the dramatic and unsteady evolution of the cryptocurrency market has also been driven by large investments by traditional and cryptocurrency-focused hedge funds. Notwithstanding their critical role, our understanding of the relationship between institutional investments and the evolution of the cryptocurrency market has remained limited, also due to the lack of comprehensive data describing investments over time. In this study, we present a quantitative study of cryptocurrency institutional investments based on a dataset collected for 1324 currencies in the period between 2014 and 2022 from Crunchbase, one of the largest platforms gathering business information. We show that the evolution of the cryptocurrency market capitalization is highly correlated with the size of institutional investments, thus confirming their important role. Further, we find that the market is dominated by the presence of a group of prominent investors who tend to specialise by focusing on particular technologies. Finally, studying the co-investment network of currencies that share common investors, we show that assets with shared investors tend to be characterized by similar market behaviour. Our work sheds light on the role played by institutional investors and provides a basis for further research on their influence in the cryptocurrency ecosystem.

Impact of the COVID-19 Market Turmoil on Investor Behavior: A Panel VAR Study of Bank Stocks in Borsa Istanbul

Assuming that investors can be foreign or local, do high-frequency trading (HFT) or not, and submit orders through a bank-owned or non-bank-owned broker, we associated trades to various investors. Then, building a panel vector autoregressive model, we analyzed the dynamic relation of these investors with returns and among each other before and during the COVID-19 market crash. Results show that investor groups have influence on each other. Their net purchases also interact with returns. Moreover, during the turmoil caused by the pandemic, except foreign investors not involved in HFT, the response of any investor group (retail/institutional, domestic investors doing HFT and those not doing HFT, and foreign investors doing HFT) significantly altered. This shows that the interrelation among investor groups is dynamic and sensitive to market conditions.

Individual investor trading and stock returns after the Covid-19 pandemic: Evidence from Korea

This paper reveals a significant attenuation in the previously observed positive association between individual investors’ purchases and stock returns following the Covid-19 pandemic. To investigate these changes, I utilize a comprehensive dataset of daily stock transactions, categorized by investor groups, from the Korean main board market. By employing a difference-in-difference regression model, I find that stocks influenced by the influx of amateur investors or attention-based trading post-pandemic are the key drivers behind this transformation. These findings suggest that policymakers might need to consider implementing systematic liquidity provision programs, such as market-making activities, to fill the liquidity gap created by individual investors.

Сентимент и стадное поведение частных инвесторов: кластерный анализ российского фондового рынка

In this paper, the sentiment of private investors and the divergence of opinions of users of online investment platforms are analyzed as factors in the emergence of herd behavior on the stock market in different clusters. This clusters are formed on the basis of stock exchange information on shares of Russian issuers. The relevance of the study lies in determining the significance of consensus periods and their impact on the behavior of different groups of investors on the Russian stock market depending on different levels of risk taking by investors. Based on the Russian stock market data for the period from 2019 to 2023, 66 discussed Russian stocks were analyzed. To conduct sentiment analysis, an algorithm was applied to collect and automatically classify textual data using machine learning methods. As proxies for private investor sentiment, metrics of logarithmic sentiment and market-wide divergence of opinions on the stocks under discussion were constructed. The testing of the research hypotheses was based on the implementation of clustering and quantile regression analysis methods. As a result, the significant role of divergence of opinions of Internet users in the formation of herd behavior of private investors on shares with lower average return and risk level was determined. It was also found that asset clustering helps to determine the opposite behavior of investors on stocks with higher volatility level. Consensus of opinions in the market is a signal to deviate from the general market trend. Finally, the test of the hypothesis about the significant influence of investor sentiment did not provide sufficient evidence that this kind of sentiment is important for determining herd behavior in the market.