Secondary Stock Market Research Articles

Applicaition and Evaluation of the Value Investing Approach

In tandem with China's economic expansion, there has been a notable rise in per capita disposable income, fostering an influx of individual investors into the securities market. This surge is underpinned by improved transaction mechanisms, with individuals now comprising the primary market participants. However, challenges persist as investment discipline wanes amidst a backdrop of heightened randomness and exorbitant high-frequency operation fees. Consequently, the development of China's secondary stock market remains nascent, fraught with uncertainties, and prone to frequent instances of frustrated investments. The burgeoning popularity of Warren Buffett's value investment theory signals a paradigm shift, with investors increasingly gravitating towards identifying undervalued stocks for sustained returns. Nonetheless, ordinary retail investors grapple with a dearth of investment knowledge, compounded by the intricacies of different industries, thus impeding their ability to effectively apply professional analysis methods. To bridge this gap, this paper endeavours to synthesize prevailing empirical analysis methods commonly employed across diverse industries. Through a comprehensive literature review and reference analysis, it seeks to provide insights aimed at enriching investors' comprehension and application of value investment principles. By elucidating practical approaches, this research contributes to the broader discourse on investment value, fostering a more nuanced understanding within the context of China's evolving securities market landscape.

Considerations for Investing in the Secondary Stock Market

The primary purpose of this research is to examine major aspects of investing. This study employed a causal-comparative research approach to assess correlation and regression, using data collected from 385 respondents involved in secondary market support via a non-probability sampling frame and a purposive sample method. Investment choice is the dependent variable, whereas firm image, accounting information, personal financial demands, and herding are the independent variables. The correlation and regression analyses found high statistical significance between corporate image and 12investment choice. At the same time, there is a positive correlation between the investment choice and each independent variable. The herding factor is a subsequent significant variable for the investment decision. At the same time, the importance of meeting one’s financial obligations is far less substantial. The results of a one-way ANOVA demonstrated that gender, age, and educational background had no modest influence on investing activities. The research concluded that investors base their decisions on a firm’s image; thus, businesses must devise strategies to improve their public image. There is much room for investigating more compact elements that determine behavior.

Do Institutional Group Holding Anomalies Drive Broad Market Trends?

This paper focuses on the behaviour of institutional investors in the Chinese stock market and quantifies their “group holding” behaviour. Using the Shannon entropy in network systems, the authors measure institutional investors' stock holdings strategy and internal private information transmission. A time-varying parametric vector autoregressive model between institutional behaviour and secondary stock market trends in China is constructed. The time-varying nature of the variables, response functions, and linkage mechanisms are explored and studied. The results of the data suggest that institutional investors' stock holdings and private information transmission have different mechanisms of influence on stock market trends. In terms of direction, they may diverge; in terms of size, institutional investors' “real money” is more impactful than “gossip”; in addition, they are asymmetrical in their stage of development and heterogeneous in different market conditions.

Exploring the Irrational Sentiment of Individual Investors in China's Secondary Stock Market

Exploring the Irrational Sentiment of Individual Investors in China's Secondary Stock Market

DEVELOPMENT FEATURES OF THE UKRAINIAN STOCK MARKET AS A COMPONENT OF STATE FINANCIAL SECURITY

Introduction. Peculiarities of functioning and structure of the stock market of Ukraine play an important role in ensuring the state economic security and, in particular, financial. The purpose of the article is to analyze the state and features of the modern stock market of Ukraine, to investigate its impact on the state of financial security of the country. Results. Imbalances in the primary securities market are due to the small number and volume of issues, as well as the predominance of issuers of state banking institutions and state corporations, which carried out the issue to keep banks at the required level of capital and replenishment. The volume and number of bond issues are significantly lower compared to stocks. There are currently four exchanges in Ukraine, but primary stock market operations are focused on the PFTS. The secondary securities market of Ukraine is more developed in Ukraine (the total amount of transactions is more than 90% of the volume of exchange contracts during the entire analyzed period). Transactions are carried out mainly on stock exchanges – PFTS and “Perspective”. The trend of the results of the secondary stock market has improved (significantly decreases the value of indicators – linear deviation, variance, oscillation coef­ficient), however, the value of the oscillation coefficient still indicates a lack of homogeneous and balanced environment. Approximations to the state of homogeneity can be characterized by stock exchange contracts concluded on government bonds. At the same time, the volume of concluding exchange contracts is generally insignificant, and the share of exchange contracts on government bonds in total is approaching almost 100%; therefore, it can be concluded that the entire stock market is characterized by significant heterogeneity and imbalance. Conclusions. The stock market of Ukraine does not fulfill its key function – investment. The stock market of Ukraine is characterized by pronounced imbalances. At the same time, it should be emphasized that the structure of the stock market is characterized by dynamic processes, so the creation of a fully balanced environment can not be a priority. The stock market of Ukraine mostly serves the needs of the public sector of the economy and in no way contributes to the de­velopment of not only the real but also the financial sector of the economy. That is, the security of the stock market is directly related to the security of debt and budget, which are components of the financial security of the state.

Computational intelligence model based on GA-BP neural network

Since the birth of the secondary stock market, the prediction of the stock price trend has become a research direction concerned by many people. Aiming at the problem of non-stationary and non-linear stock price forecasting, this paper builds a computational intelligence model to improve the neural network with genetic algorithm. The results show that, compared with other models, the GA-BP neural network model proposed in this article can effectively improve the prediction of the rise and fall of the HS300 index, and the withdrawal range is small when the market falls. The research of this paper enriches the method of financial time series data analysis, which can not only provide decision-making reference for investors, but also help to enhance the cognition of financial market rules. The model can significantly reduce the forecast error and improve the model fitting ability.

Stock market drivers of retail investors’ sentiment – facets and new evidences from India

Purpose The determinants of investors’ sentiment based on secondary stock market proxies in many empirical studies are reported. However, to the best of our knowledge, no study undertakes investor sentiment drivers developed from primary survey measures by constructing an investor sentiment index (ISI) in relation to market drivers to date. This study aims to fill this research gap by first developing the ISI for the Indian retail investors and then examining which of the stock market drivers impacts such sentiment. Design/methodology/approach The ISI is constructed using the mean scores of eight statements as formulated based on popular direct investor sentiment surveys undertaken across the world. Then, we use the multiple regression approach overall and for top 33.33% (high-sentiment) and bottom 33.33% (low-sentiment) investors based on the responses of 576 respondents on 18 statements (proxying eight study hypotheses) collected in 2016. Moreover, the demography-based classification based investors’ sentiment is examined to make our results more robust and in-depth. Findings On an overall basis, the IPO activities/issues and information certainty, trading volume and momentum and institutional investors’ investment activities market drivers significantly and positively impact retail investors is examined. However, only IPO activities/issues and information certainty influences both high- and low-sentiment investors. It is intriguing to report that nature of the stock markets show conflicting results for high- (negative significant) and low- (positive significant) sentiment investors. Originality/value The construction of the ISI from primary survey measure is for the first time in Indian context in relation to investigating the stock market drivers influential to retail investors’ sentiment. In addition, hypothesized market drivers are also unique, each representing different fundamental and technical characteristics associated with the Indian market.

Metode procene vrednosti akcija i kreiranje vrednosti za akcionare

This paper analyzes the methods of determining the value of the shares, which are among the most used financial instruments. The company's shares are transferable in the capital market, according to the regulations of a particular state, where the price is formed according to the principles of supply and demand. The interest of the investor will depend on a number of parameters-the length of the stock owning, its affinity to the shares of renowned companies that give stable dividends, the tendency to risk with new, growing companies, and the affinities for the shares of companies that are planning serious investment ventures, etc. Despite the fact that there are certain visible value parameters, such as bookkeeping or market price, they are often insufficient to properly evaluate the value and possible profit for investors who opt for their purchase. Therefore, models for evaluating higher or lesser complexity of the discounting dividends, discounting cash flows, as well as series of relative valuation models have been developed. These valuations are important during the life of a joint stock company, during the first emission, subsequent recapitalization, as well as when making investment decisions on the secondary stock market.

The effects of China’s split-share reform on firms’ capital structure choice

ABSTRACTChina’s split-share structure reform in 2005–2006 mitigates agency conflicts between controlling shareholders and minority shareholders and thus may bring substantial changes to corporate financing behaviour. This article examines the impact of that reform on the capital structure decisions of firms by applying a variety of trade-off and pecking-order models. Using data from 1176 non-financial Chinese listed firms during the period 2000–2012, we present empirical evidence indicating that equity tracks the financing deficit better than debt in Chinese firms, a finding which is not consistent with pecking-order theory. This phenomenon is more prominent after 2006 as share reform increases trading activity in the secondary stock market and improves the transparency of financial markets. In addition, Chinese firms have an optimal leverage ratio and they adjust below-target leverage ratios faster than above-target leverage ratios after the implementation of share structure reform, although they make symmetric adjustments towards the target leverage ratio before 2007. Finally, recent share reform has prompted Chinese firms to more quickly address the divergence of actual leverage ratios from long-term target levels, but has slowed their response to short-term target leverage divergence.

The Impact of IPO on the Secondary Stock Market—An Empirical Research

The IPO market can achieve financing function of the stock market after the IPO listed companies enter the securities market circulation. The IPO market and the secondary stock market complement each other and there is a strong relationship between them. In the study of the impact of the secondary stock market for the IPO market, based on supply and demand theory, the stock market expansion is a bad news which will lead to huge financing unilateral fall. This article mainly studies the impact of IPO on the secondary stock market. On the basis of theoretical analysis, we use linear regression model based on least-square method to explore the relationship between them, and confirm that the IPO issues have negative impact on the stock market retunes. When the external factors in the model and controlling factor within the model maintain equilibrium, the changes of the stock market rate of return caused by IPO financing are very significant. Stock market returns of IPO financing have considerable flexibility. At the end of the paper, some suggestions are put forward to strengthen the construction of the issuer integrity, the exit mechanism of listed companies and strengthen the supervision of matter and afterwards.

The Effects of China's Split-Share Reform on Firmss Capital Structure Choice

The Split share Structure Reform in year 2005-2006 raises the curtain for China's secondary privatization. It mitigates the agency conflicts between controlling shareholders and minority shareholders and, thus, brings substantial changes to China’s financing behaviors. This paper aims to examine its impact on firms’ capital structure decisions by applying a variety of trade-off and pecking order models. Using data from 1,176 non-financial Chinese listed firms during the period from 2000 to 2012, we present empirical evidence indicating that: firstly, equity tracks the financing deficit better than debt in Chinese firms, which is not consistent with the pecking order theory. This phenomenon is more prominent after year 2006 as the shares reform increases the trading activities in the secondary stock market and thus alleviates the asymmetric information problems. Secondly, the partial adjustment model suggests that Chinese firms have an optimal leverage ratio and they adjust below-target leverage ratios faster than above-target leverage ratios after the implement of the shares structure reform although they make a symmetric adjustment towards the target leverage ratio before year 2007. The implication is that the share-split structure reform reduces the agency costs and costs of upward leverage adjustment, leading to a faster target reversion for firms with below-target leverage ratio but not for those with above-target leverage ratio. Thirdly, the error correction model reveals that before the reform Chinese firms make dynamic adjustment towards target leverage at an asymmetric rate, with stronger and faster response to the changes in target leverage than to past divergence from long-run target leverage ratio. In the post-reform period, however, Chinese firms have made a symmetric adjustment towards the desired leverage as they correct the divergence of their actual leverage ratios from the long-run target level at a faster speed while they do not significantly speed up their response to the short-run target leverage changes. All these results further support the applicability of dynamic target adjustment models.

Informational Feedback, Adverse Selection, and Optimal Disclosure Policy

ABSTRACTFaceless trading in a secondary stock market not only redistributes wealth among investors but also generates information that feeds back to real decisions. Using this observation we re‐evaluate the “leveling‐the‐playing‐field” rationale for disclosure to secondary stock markets. By partially preempting traders' information advantage established from information acquisition, disclosure reduces private incentives to acquire information, resulting in two opposite effects on firm value. On one hand, this narrows the information gap between informed and uninformed traders and improves liquidity of firm shares. On the other hand, this reduces the informational feedback from the stock market to real decisions. This tradeoff determines the optimal disclosure policy. The model explains why firm value can be higher in an environment that simultaneously promotes disclosure and private information production and why growth firms are endogenously more opaque than value firms.

Financial intermediation and economic growth: the post-liberalization Indian experience

The paper is concerned with the relationship between economic growth and financial intermediation, in particular stock market development, in post-liberalization India. It identifies three possible relationships: (a) the relationship between growth of manufacturing and growth of the stock market; (b) the relationship between growth of the stock market and growth of traditional financial intermediaries like banks; (c) the relationship between the growth of the primary stock market and that of the secondary stock market. These three relationships are empirically tested using Indian data. While the growth of turnover in the stock market is found to be positively correlated with the change in the growth of manufacturing and the growth of sales of new shares is found to positively affect the secondary market, evidence on the relationship between sales of new shares and traditional banking activities is mixed. The primary stock market is found to crowd out bank deposits, but crowd in bank credit.

Informational Feedback Effect, Adverse Selection, and the Optimal Disclosure Policy

Trading in a secondary stock market not only redistributes wealth among investors but also generates information that guides subsequent investment. We provide a positive theory of disclosure that reflects both functions of a secondary market. By making private information public, disclosure reduces private information acquisition and levels the playing field. However, a leveled playing field has two opposite effects on firm value. On one hand, it ameliorates adverse selection among investors and improves the liquidity of firm shares. On the other hand, it could also impede investment efficiency because less information is produced by the market and used by decision makers. This trade-off determines the optimal disclosure policy. Our theory generates new testable predictions and reconciles disclosure with other parts of securities regulation that encourage private information production.

Prospektus Perusahaan dan Keputusan Investasi: Studi Empiris Perusahaan yang Terdaftar di Bursa Efek Jakarta

This paper reports the result of the empirical investigation on the usefulness of company prospectuses for investment decisions. The invesment decisions are measured in terms of initial returns for the investment decision in the primary stock market, and 15-day mean adjusted returns after Initial public offering for the investment decision in the secondary stock market. The data of the prospectus used are accounting and non-accounting information. Based on the sample of 91 firm-year observations, the result shows that non-accounting information of the prospectus is relevant for the investment decision in the primary stock market. As well, both accounting and non-accounting information is useful for the investment decision in the secondary stock market. Eventhough some ceveats appear in the study and preclude the generalization, the results are robust. Key Words: Underpricing, initial return, mean adjusted return, underwriter, auditor, listing period, standard diviation, company age, percentage of offered stock value, profitibility, financial leverage, solvability, and investment decisions.

The deregulation of capital markets in France

This paper investigates how the deregulation of French capital markets affected corporate investment in the 1980s. Access to public financial markets may be less important in countries that have traditionally relied on institutional investors to finance their corporate investment projects. This should be true for France where, contrary to the US, banks and government agencies have always been involved in firms’ long term activities. In this study, French firms are categorized based on their ownership structure and trading characteristics. Two investment models are augmented with measures of corporate liquidity in order to test the role of internal funds on investment. Empirical results show that only small French firms trading on the secondary stock market have to rely on liquid assets to finance their capital expenditures. French firms with strong bank ties avoid this constraint since they are allowed to maintain higher debt levels.

Stock Market Efficiency and Economic Efficiency: Is There a Connection?

ABSTRACTIn a capitalist economy, prices serve to equilibrate supply and demand for goods and services, continually changing to reallocate resources to their most efficient uses. However, secondary stock market prices, often viewed as the most “informationally efficient” prices in the economy, have no direct role in the allocation of equity capital since managers have discretion in determining the level of investment. What is the link between stock price informational efficiency and economic efficiency? We present a model of the stock market in which: (i) managers have discretion in making investments and must be given the right incentives; and (ii) stock market traders may have important information that managers do not have about the value of prospective investment opportunities. In equilibrium, information in stock prices will guide investment decisions because managers will be compensated based on informative stock prices in the future. The stock market indirectly guides investment by transferring two kinds of information: information about investment opportunities and information about managers' past decisions. However, because this role is only indirect, the link between price efficiency and economic efficiency is tenuous. We show that stock price efficiency is not sufficient for economic efficiency by showing that the model may have another equilibrium in which prices are strong‐form efficient, but investment decisions are suboptimal. We also suggest that stock market efficiency is not necessary for investment efficiency by considering a banking system that can serve as an alternative institution for the efficient allocation of investment resources.

Stock Market Efficiency and Economic Efficiency: Is There a Connection?

In a capitalist economy prices serve to equilibrate supply and demand for goods and services, continually changing to reallocate resources to their most efficient uses. However, secondary stock market prices, often viewed as the most 'informationally efficient' prices in the economy, have no direct role in the allocation of equity capital since managers have discretion in determining the level of investment. What is the link between stock price informational efficiency and economic efficiency? We present a model of the stock market in which: (i) managers have discretion in making investments and must be given the right incentives; and (ii) stock market traders may have important information that managers do not have about the value of prospective investment opportunities. In equilibrium, information in stock prices will guide investment decisions because managers will be compensated based on informative stock prices in the future. The stock market indirectly guides investment by transferring two kinds of information: information about investment opportunities and information about managers' past decisions. The fact that stock prices only have an indirect role suggests that the stock market may not be a necessary institution for the efficient allocation of equity. We emphasize this by providing an example of a banking system that performs as well.

Venture capital in Western Europe

Western Europe is in the process of an entrepreneurial renaissance. An integral part of this renaissance is the emergence of a venture capital industry in Europe. Although the venture capital institution in Europe is very much modeled along the lines of its American counterpart, it is significantly smaller in size both in absolute terms as well as in relation to the size of the economy. Substantial differences in venture capital activity are also found to exist within Europe,it is most prevaient in the United Kingdom, France, and Netherlands. Surprisingly, it is less developed in West Germany, particularly given the size of this country's economy. Venture capital in Western Europe shares some characteristics with that in the United States. Its investment focus is in high technology, and syndication between funds is common. Unlike the United States, however, banks are a major source of venture capital funds. Surprisingly, in spite of the economic integration to which the European Community aspires, the mobility of venture capital across national boundaries is low. The authors try to explain differences in venture capital activity in several countries of the European Community by examining four aspects of each country's environment. In particular, the size of the technology sector, the cultural influence on entrepreneurial risk-taking, the government's policy to stimulate risk capital and entrepreneurship. and finally, the ability of venture-backed firms to turn to publicly traded markets as a source of future financing. One common factor shared by the three countries with the highest level of venture capital activity is the presence of a secondary stock market geared to the needs of a small, relatively new venture contemplating an initial public offering. The Unlisted Securities Market in the United Kingdom, the Seconde Marché in France, and the Parallel Market in the Netherlands serve these needs and provide the mechanism by which venture capitalists can liquidate their equity position after the venture is quoted on these financial markets. To the venture it provides access to public financing for funding continued growth. In the United Kingdom and Netherlands, the business enterprise has historically been regarded as a tradeable entity and hence the concept of ownership by passive investors is well accepted. In France, where this is a relatively recent phenomenon, the government has played a strong role in stimulating an interest in stock market investing in general. It has also created some extremely attractive fiscal incentives for investors in venture capital funds.

Secondary Stock Market Performance of Initial Public Offers, Hong Kong, Singapore and Malaysia: 1978–1984

Journal of Business Finance & AccountingVolume 14, Issue 1 p. 65-76 Secondary Stock Market Performance of Initial Public Offers, Hong Kong, Singapore and Malaysia: 1978–1984 Steven M. Dawson, Steven M. Dawson the author is Professor of Finance at the University of Hawaii and a former Visiting Professor at the National University of Singapore and the Chinese University of Hong Kong.Search for more papers by this author Steven M. Dawson, Steven M. Dawson the author is Professor of Finance at the University of Hawaii and a former Visiting Professor at the National University of Singapore and the Chinese University of Hong Kong.Search for more papers by this author First published: March 1987 https://doi.org/10.1111/j.1468-5957.1987.tb00529.xCitations: 87AboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinkedInRedditWechat Citing Literature Volume14, Issue1March 1987Pages 65-76 RelatedInformation