Investor Perceptions Research Articles

Impacts of FinTech funding announcements on traditional banks: An event study analysis

This paper investigates how traditional banks' stock prices react to FinTech funding announcements, addressing a notable research gap. Using event study methodology with the MSCI index as a benchmark, we analyze stock price responses of European traditional banks from 2010 to 2019. Both parametric t-tests and non-parametric generalized sign tests are employed to assess the impact. Grounded in signaling theory, we hypothesize that FinTech funding events signal increased competition and strategic uncertainty, affecting investor perceptions of traditional banks. Our findings indicate that FinTech funding announcements significantly influence traditional bank stock prices, with digital lending FinTechs having a more substantial impact compared to digital capital raising and digital payment FinTechs. This study highlights the differentiated investor response to FinTech competition, providing insights into the strategic challenges and market dynamics between traditional financial institutions and FinTech startups.

Investment Decision Behavior of Indian Retail Investors with Respect to IPOs

Retail investors consider time horizon, liquidity, risk, and return while making investing decisions in IPOs in order to achieve their financial goals. But limited financial literacy, information overload, emotional decision- making, lack of diversification, high transaction costs, and regulatory complexity are some of the difficulties Indian ordinary investors face while investing in IPO. Examining the variables influencing Indian retail investors' investment choices and decision-making procedures in IPOs is the primary purpose of this research. The researcher collected data from primary sources. The data was collected from 92 investors using a random sample method. The stated hypotheses were assessed at the 0.05 level of significance using the ANOVA test. Various aspects of IPOs, such as brand, profitability, financial standing, product offerings, size, industry track record, price bands, promoter track record, and risks, play an important role in forming investor perceptions on the basis of occupation. The result also states that there are significant differences in means of various groups of respondents on the basis of annual savings observed for the brand and reputation of the IPO-issuing company, while for other factors, there are no significant differences in means. Key Words: Investment Decision, Initial Public Offerings, Indian Retail Investors, Investment behaviour

Exploring the relationship between ESG Practices and Financial Performance of Vietnamese Companies

This study investigates the relationship between ESG practices and financial performance among the top 100 companies in Vietnam, as listed in the VN100 Index during 2017-2023. The authors use the Pooled OLS, Fixed Effects Model, and Random Effects Model approaches. The analysis reveals no statistically significant relationship between ESG and financial performance. The findings underscore the influence of traditional financial factors such as firm age, firm size, financial leverage, and economic growth rate, highlighting their importance in financial assessments. This paper adds to the increasing body of research on ESG performance in emerging markets by arguing that to promote deeper ESG integration, there is a need for increased regulatory support as well as investor education. The increasing influence of global sustainability norms necessitates an understanding of these dynamics within emerging markets such as Vietnam to align corporate strategies with investor expectations and international standards. Additional research is suggested to track how ESG factors affect financial performance as market conditions and investor perceptions shift.

The impact of sustainable development on the relevance of accounting information and financial activities: Evidence from Thailand.

This study investigates the impact of sustainable development on the relevance of accounting information and financial activities of companies listed on the Stock Exchange of Thailand (SET). The results reveal that earnings per share and book value per share have a positive effect on market value, implying that higher earnings signal strong financial performance, thereby attracting more investor interest. Short-term and long-term debt financing have a negative effect on market value, suggesting that debt financing leads to increased financial risk. Current asset and fixed asset investments have a positive effect on market value by signaling confidence in operational performance. Dividend payouts have a positive effect on market value, demonstrating a commitment to returning value to investors, resulting in a stronger firm reputation and investor perception. However, firms that adhere to sustainable development guidelines face more complex dynamics. The results show that both earnings per share and book value per share have a negative effect on market value, suggesting that while they report high earnings per share and book value per share, these financial metrics cannot alleviate investor skepticism regarding sustainability as a cost of the firm. Short-term debt financing has a positive effect on market value because it provides a flexible and efficient way to fund sustainable investments without diluting equity or incurring long-term debt obligations, while the implications of long-term debt financing and current asset investments are insignificant. Furthermore, the significant positive effect of fixed asset investment underscores the potential long-term benefits of sustainability, despite high initial costs. Lastly, the non-significant negative impact of dividend payouts on market value suggests that the overall effect may also depend on various factors. These results support the idea of efficient market theory, which posits that investors may have negative reactions to what they perceive as financial burdens, diminishing the importance of positive financial metrics and altering market value. This study recommends that policymakers should carefully design regulations and incentives to support sustainable investments. Such approaches may include establishing specific funds, tax incentives, subsidies, and soft loans. Additionally, policymakers need to promote transparency and consistent reporting on the long-term financial benefits of sustainability, which can help reduce investor skepticism and foster a more positive market response. Finally, firms should clearly communicate their long-term sustainability efforts and benefits to investors and various stakeholders, leading to a positive interpretation of the firm's commitment to sustainable development.

Evaluating the effect of investor culture on internal control reporting and investor perceptions of disclosure credibility

Investors expect internal control reports to improve disclosed information credibility by demonstrating effective risk management, compliance, and transparency. Investment culture influences these expectations by shaping risk perception, emphasizing long-term stability, and setting standards for corporate governance. Thus, investment culture emphasizes robust internal control to enable a more thorough evaluation of investment opportunities. This study examines the relationship between internal control reporting and investor perception of disclosure credibility mediated by investor culture. The survey approach involved 166 respondents from 57 Jordanian brokerage firms. The partial least squares (PLS) method was used for analysis. The results showed that investor perception of disclosure credibility was influenced by internal control reporting as PV 0.000 and that investor culture positively mediated between the two variables as PV 0.000. Investors thus rely on internal control reporting to ensure the credibility of disclosure and aid their investment decisions. This study provides foundational knowledge to policymakers to design successful internal control reporting policies and support systems. Acknowledgment I’m indebted to the University of Tabuk – KSA for the support of this article.

ANALISIS REAKSI PASAR ATAS PENGUMUMAN STOCK SPLIT SELAMA MASA PANDEMI COVID 19 (STUDI PADA PERUSAHAAN YANG TERDAFTAR DALAM BURSA EFEK INDONESIA)

This study looked at how the market responded to company announcements of stock splits made during the COVID-19 epidemic. This test was repeated since there were more prospective investors and many issuers divided their shares as a result of the COVID-19 epidemic, which increased the number of corporate activities. This study was.carried.out at the Indonesia Stock Exchange, and samples from 21 businesses were selected using a purposive sampling strategy and a.non probability sampling method. An event window of seven days is used in this investigation. The documentary methodology was employed in this study to collect data. Quantitative data was employed in this study, and secondary data sources were chosen as the type of data. The data analysis approach. According to the analysis's findings, there was a market response to the news of the stock split during the COVID-19 epidemic, as shown by abnormal returns. This demonstrates that company stock split announcements have a considerable beneficial informational impact on investor perceptions and decision making in the capital market. A company's shares are more liquid when there are more transactions on them.

Decision-Making Amid Economic Uncertainty: Exploring the Key Considerations of Commercial Property Investors

This study explored the key considerations of commercial property investors acting under conditions of economic uncertainty across the following three dimensions: market fundamentals, institutional, and behavioural factors. Over the past few decades, a series of exogenous shocks to the global economy has impacted property performance, investment volumes, and investor perceptions. Acknowledging that uncertainty further complicates investment decision-making, a mixed-methods research approach was adopted to examine the perspectives of 5 experts and 412 property investors. The findings revealed that, while most investors express negative responses to uncertainty and adopt more cautious attitudes, others are more aggressive and attempt to capitalise on emerging opportunities. Market fundamentals are not the only key consideration; access to information and investors’ behaviour all impact how decisions are made under these conditions. In particular, wealthy and more experienced investors make more comprehensive decisions, considering all three dimensions, while aggressive investors may disregard data in favour of intuition. Behavioural biases such as the bandwagon effect and fear of missing out (FOMO) all influence decisions and are sometimes exacerbated by media narratives. Practically, these considerations underscore the complexity of decision-making under conditions of uncertainty and how different investors attempt to navigate market volatility.

Do images help? The impact of proenvironment photographs and graphs in environmental disclosures on investor perceptions and willingness to invest

AbstractThis study investigates the effects of proenvironment photographs and graphs in environmental disclosures on potential investors' perceptions and willingness to invest, considering the moderating role of a company's environmental performance. An online experiment was conducted with experienced investors, where participants evaluated a hypothetical company with varying environmental performance outcomes (negative or positive) presented in different formats (text only, text with photographs, or text with graphs). The results indicate that proenvironment images enhance perceived environmental responsibility for companies with negative environmental performance, whereas processing fluency is improved when the image type aligns with environmental performance. Moreover, perceived environmental responsibility mediates the impact of images on the willingness to invest in negative performance contexts. In contrast, processing fluency mediates this effect for graphs in positive performance contexts. These findings offer guidance for company managers in effectively presenting environmental data and highlight the potential risks for policy‐makers regarding the misuse of images.

The Effect of Egyptian Investor Perceptions on a Firm's Worth

The Effect of Egyptian Investor Perceptions on a Firm's Worth

Investor Perception of Corporate Social Irresponsibility (CSiR) and Investing Decisions

The study examines a behavioral finance paradigm, where investors incorporate emotional/expressive and financial factors. The impact of emotional ties to the firm’s products and an expressive factor such as corporate social irresponsibility (CSiR) are examined to determine whether their investment decisions are based on them. We find that investors make decisions that are wealth maximizing as well as emotional/expressive. Moreover, we find that our respondents believe corporate profits should not come from using the cheapest labor nor from engaging in CSiR behavior, and they would be less likely to invest in such a firm.

The Effect of Net Profit on Cash Dividends and Stock Prices as Intervening Variables in Mining Sub-Sector Companies Listed on the Indonesia Stock Exchange 2018-2022

A positive increase in net profit can cause the stock price to rise, because this increase in stock price can affect investor perception and managerial decisions, including certainty regarding future dividend distribution. This study aims to assess the influence of net profit and cash dividends on stock prices as intevening variables. In this study, the data used is panel data, which is a combination of time series data and cross section data. The time series data used is 2018-2022. The population in this study is all mining sub-sector companies listed on the Indonesia stock exchange. The determination of the sample in this study was carried out using the purposive sampling method, with the main criterion of LQ45 index companies. The results of this study found that Net Profit has an effect on Cash Dividends, then Cash Dividends have an effect on Stock Prices.

CEO Pay Cuts and Investors’ Perceptions of Earnings Quality

SYNOPSIS The pay of a CEO is often cut in poorly performing firms to prod the CEO to work harder and restore profitability. Using earnings response coefficients (ERCs) as a proxy for investor perceptions of earnings quality, we find that ERCs decline following CEO pay cuts. Furthermore, firms with weaker oversight mechanisms and those subject to higher credibility concerns have a greater decline in ERCs following CEO pay cuts. We also offer weak evidence that credit rating agencies might perceive CEO pay cuts as impairing earnings quality. Our results suggest that pay cuts incentivize CEOs to boost earnings in the short run, and investors might perceive reported earnings as more likely to be opportunistic and of lower quality. A key implication of our study is that it provides evidence to support that the market views a CEO’s pay-cut status as vital information in appraising the earnings quality of a firm. Data Availability: The data that support the findings of this study are available from author Ting-Kai Chou upon request. JEL Classifications: G34; M41; M52.

Exploring Market Dynamics: A Qualitative Study on Asset Price Behavior, Market Efficiency, and Information Role in Investment Decisions in the Capital Market

This qualitative study explores market dynamics, asset pricing behavior, market efficiency, and the role of information in investment decisions within the financial markets. The research aims to provide insights into the underlying motivations, perceptions, and experiences of market participants, offering a comprehensive understanding of these complex phenomena. Employing qualitative methods such as semi-structured interviews and textual analysis, data was collected from a diverse range of participants including investors, financial analysts, and market regulators. The study found that market dynamics are influenced by various factors including investor sentiment, economic indicators, regulatory changes, and technological advancements. Behavioral biases among investors, such as herd mentality and overconfidence, challenge traditional theories like the efficient market hypothesis (EMH), indicating the presence of market inefficiencies. Moreover, information plays a central role in shaping investor perceptions and driving market trends, though concerns exist regarding the reliability of information sources in the era of social media and algorithmic trading. The study underscores the importance of investor education, diversified investment strategies, transparency, and regulatory interventions in fostering fair, efficient, and resilient financial markets. Moving forward, addressing these issues will be crucial for informed investment decision-making and advancing our understanding of financial market dynamics.

Investor attention and environmental performance of Chinese high-tech companies: the moderating effects of media attention and coverage sentiment

In the context of China’s rapid economic development, corporate pollutant emissions are increasing, underscoring the imperative for further enhancement of corporate environmental performance. Given the significance of high-tech enterprises in the environmental domain, this study examines the impact of investor attention on the corporate environmental performance of Chinese high-tech enterprises. This study utilized data from 463 high-tech enterprises in mainland China from 2011 to 2022 and employed the dynamic panel generalized method of moments (GMM) technique. The findings indicate that investor attention has a negative impact on the corporate environmental performance of high-tech enterprises. This research also finds that both media attention and coverage sentiment mitigate the negative relationship between investor attention and environmental performance of high-tech firms. Heterogeneity analysis reveals that in the sample of IT service industry, heightened media attention exacerbates the negative impact of investor attention on corporate environmental performance, and media coverage sentiment exhibits no significant moderating effect. Within samples of non-polluting and state-owned enterprises, increased media coverage sentiment amplifies the negative impact of investor attention on corporate environmental performance. This paper suggests that policymakers should foster a media environment that supports accurate and thorough environmental reporting while businesses should proactively engage with media to align investor perceptions with sustainable environmental practices.

The measurement of fraud perception of investors and the mediating effect of risk aversion: the case of crypto assets

Purpose This study aims to gain a new perspective on auditing by measuring investors’ fraud perception and to reveal the necessity of increasing individuals’ fraud perception by determining the effect of fraud perception on the intention to invest in crypto assets from the investor’s perspective. Design/methodology/approach As part of this quantitative research, a survey was conducted on individuals residing in Türkiye and aged 18 years and above through a convenience sampling method. A total of 446 participants were included in the study. The data collected was analyzed using the partial least squares-variance based structural equation modeling (PLS-SEM) method using the SmartPLS program. Findings Fraud perception causes individuals to be more risk-averse and reduces their intention to invest in crypto assets. At the same time, it has been observed that risk-averse individuals have lower intention to invest in crypto assets. According to the results of the mediating effect analysis, risk aversion behavior partially mediates between the fraud perception and the intention to invest in crypto assets. Among the emotions, only fear increases risk aversion behavior. Among the personality traits, extroversion and openness to experience personality traits reduce risk aversion behavior, whereas neuroticism personality traits increase the intention to invest in crypto assets. Originality/value In an environment where traditional auditing activities are insufficient, increasing investors’ perceptions of fraud can reduce fraud-related losses. In this context, to the best of the authors’ knowledge, the present study might be among the first to investigate the impact of individuals’ perceptions of fraud on their investment intentions in crypto assets.

Impact of Flooding and Drought Risks on the Cost of Bond Financing for Water Utilities.

The global water cycle has experienced significant changes due to the interplay of climate shifts and human activities, resulting in more frequent and severe droughts and floods. These shifts have started to impact the operational efficiency of water treatment and delivery systems. This, in turn, has implications for the economic performance of these assets and the climate-impacted cost of their financing through the issuing of municipal bonds. Analyzing a decade of water bond data (2009-2019), this study offers empirical evidence for the impact of flood and drought risks on bond investor demand to offset water risks. The results reveal that bond markets factored in coastal flood risks between 2013 and 2019, adjusting by 3-6 basis points (bps) per risk score unit, and riverine flood risks from 2009 to 2013, with a 5-11 basis points increase per risk score unit. These effects were primarily driven by bonds issued in the Pacific Coast and Great Plains regions, respectively. In contrast, the pricing of drought risks in the bond market followed a more nuanced pattern. Additionally, we show the channeling effects of water consumption and investor perceptions of climate change on water risk pricing in the bond market. These findings have significant implications for water risk management in the public sector as regions with heightened water risk exposure are perceived as riskier by market participants, leading to a higher cost of capital for municipalities and water agencies.

Fostering firm value: Unpacking the effect of circular economy disclosure via social media

AbstractGrowing environmental concerns and the need to address global challenges such as climate change and resource exploitation have highlighted the relevance of the circular economy (CE) and the importance for companies to communicate circular practices externally. While academic literature has examined the dissemination of CE information, the effects of CE disclosure (CED) remain underexplored. This study aims to fill this gap by exploring, through signaling theory, the influence of CED via social media on firm value. The econometric analysis, based on 366 observations (an unbalanced panel of 133 internationally listed companies for the period 2019–2021), demonstrates that CED via Twitter serves as a powerful market signal, positively influencing investor perception and increasing firm value. This study enlarges the literature relating to the association between non‐financial disclosure and firm value, and the effects of CED. Furthermore, it extends the debate on the use of social media as disclosure tools and broadens the scope of signaling theory.

Perception towards government advisory, perceived risk and willingness to invest in cryptocurrency

The aim of this study is to investigate the link between investor perception regarding government advisories on cryptocurrencies, their perceived risk of cryptocurrencies and their willingness to invest in cryptocurrencies. The link is examined via Partial Least Squares-Structural Equation Modelling (PLS-SEM) using 212 responses gathered from a survey questionnaire distributed to groups related to cryptocurrency investment in social media platforms over a period of around four months. It is found that the investor’s perception regarding government advisories on cryptocurrencies, which are cautionary in nature, have a significant negative impact on their perception of the risk of cryptocurrencies. Perception regarding government advisories reduces the willingness to invest in cryptocurrencies. However, it is also found that perceived risk does not have any significant influence on the willingness to invest in cryptocurrencies, indicating that although risk perception is heightened as a result of the cautionary government advise, this does not result in a significant reduction in the willingness to invest in cryptocurrencies. Hence, perceived risk does not play a significant mediating role in influencing the effect government advisories have on the willingness to invest in cryptocurrencies.

Sustainability and firm value: A multivariate regression analysis in the clothing industry

Firms, recognizing their Corporate Social Responsibility (CSR), are becoming catalysts for societal change by integrating Environmental, Social and Governance (ESG) criteria into their activities. The fashion industry exemplifies this effort, with an increasing number of companies embracing sustainability and ethical practices. In this context, our purpose is to provide a clear and comprehensive picture of the link between sustainability and business performance in the fashion industry. This work presents a Multivariate Regression Analysis, scrutinizing both external perspectives through stock prices and internal perspectives via profitability indices. Our aim is to discern the intricate relationship between sustainability practices and financial performance within the fashion industry, aligning ESG criteria with long-term economic success. Our regression analysis reveals a significant positive correlation between ESG scores and stock prices, indicating investor recognition of ESG performance as a crucial investment criterion. However, when focusing internally on profitability, the ESG score does not exhibit statistical significance, suggesting a yet-to-be-established connection between ESG policies and corporate profitability. This study underscores the evolving role of companies as sustainability promoters, emphasizing the crucial role of ESG performance in shaping investor perceptions. Nevertheless, it also highlights the need for further exploration into the intricate relationship between sustainable policies and corporate profitability. As businesses increasingly embrace sustainability, in fact, it could become paramount for informed decision-making and fostering ethical societal and environmental progress.

Revealing the risk perception of investors using machine learning

Corporate disclosures convey crucial information to financial market participants. While machine learning algorithms are commonly used to extract this information, they often overlook the use of idiosyncratic terminology and industry-specific vocabulary within documents. This study uses an unsupervised machine learning algorithm, the Structural Topic Model, to overcome these issues. Our findings illustrate the link between machine-extracted risk factors discussed in corporate disclosures (10-Ks) and the corresponding pricing behavior by investors, focusing on a previously unexplored US REIT sample from 2005 to 2019. Surprisingly, when disclosed, most risk factors counterintuitively lead to a decrease in return volatility. This resolution of uncertainties surrounding known risk factors or the provision of additional facts about these factors contributes valuable insights to the financial market.