Shareholder Equity Research Articles

How Does Shareholding by Passive Institutional Investors Impact the Corporate Governance of European Firms?

ABSTRACTResearch Question/IssueThe passive investment (PI) trend, characterized by the increasing inflow of investment funds into PI strategies, has resulted in an increase in the share of corporate ownership held via investments in PI strategies. This paper investigates this trend's consequential impact on European companies' corporate governance (CG).Research Findings/InsightsWe find that higher ownership by passive institutional investors (PIIs) is associated with fewer female directors, reduced independence in audit and nomination committees, and higher executive pay, negatively impacting CG. Nevertheless, our findings show that PIIs can increase the probability that a company has a policy regarding the adequate experience of board members and equal treatment of shareholders.Theoretical/Academic ImplicationsWe hypothesize that the level of ownership could be the missing link connecting mixed theories about the impact of ownership by PIIs on the CG of companies they invest in. A curvilinear relationship between the two could allow conflicting theories to coexist in one framework. We find weak evidence for a curvilinear relationship, but this relationship may become more prevalent if PII ownership of European companies increases because of regulatory changes.Practitioner/Policy ImplicationsSome critics have proposed limiting PII voting rights, but our findings suggest that the effect of PII ownership may become less negative beyond a certain level of ownership and that PIIs may play a positive role in enhancing board experience and shareholder equity policies. Restricting PIIs may not necessarily be beneficial for the CG of companies they invest in.

The impact of new VAT enforcement on financial performance: Evidence from Saudi Arabia non-financial listed companies using the event study and ARMA model

This paper examines the influence of the new 15 % Value Added Tax (VAT) enforcement on non-financial listed companies in Saudi Arabia. By comparing financial data from 2019, before the VAT implementation and the COVID-19 pandemic, with data from 2020, during both the VAT increase and the pandemic, the research aims to uncover the consequences of this tax policy change. Utilizing charts, tables, and an event study analysis approach with the Autoregressive Moving Average (ARMA) model, we investigated key financial indicators such as Shareholders' Equity (SE), Total Income (TI), Total Revenues (TR), Net Income (NI), Total Expenses (TE), Other Changes in Operating Activity (COA), and Cash at the End of the Period (CEP). The findings reveal significant financial impacts, highlighting companies' challenges due to the increased tax burden. Shareholders' Equity dropped from an average of 11.55 million to 4.57 million, and Total Income and Total Revenues decreased from approximately 1.73 million to 316,234 and from 1.95 million to 331,605, respectively. Net Income sharply declined from 406,109 to 74,624, and Total Expenses decreased from about 1.18 million to 223,495. Other Changes in Operating Activity shifted from a negative mean of −168,936 to a positive 523,520, and Cash at the End of the Period fell from 1.99 million to 666,663. These results suggest that the VAT increase has significantly strained companies' financial performance, emphasizing the need to consider such tax reforms carefully, particularly in developing countries. The study concludes that while the VAT increase aims to enhance government revenues, it imposes substantial financial strain on companies, potentially leading to long-term economic repercussions. Policymakers should consider these implications and implement practical measures to optimize the VAT system and support business resilience in the face of such reforms.

Impact of Non-performing Corporate Assets on Shareholder’s Equity and Return on the Application of AI and Block Chain Technologies

One of the major challenges for banks, NPAs have an adverse impact on profitability, stability, and shareholders' equity. The current study, therefore, is an attempt to explore the impact of NPAs on shareholders' equity and returns, with special emphasis on the application of AI and block chain technologies as innovative solutions to the problem. It considers takaful principles in examining Fintech Corporations characterized by high NPAs and focuses on the main external and internal factors behind NPAs high interest rates, inadequate monitoring, natural calamities, willful defaults, recession, and unhealthy competition. The study uses AI-based predictive analytics to project potential NPAs and proactive measures in enhancing asset management processes. Block chain helps to introduce transparency and security of financial transactions, providing an immutable ledger that will help in creating accurate record-keeping and auditability. Taken together, these technologies offer robust solutions for the management of NPAs, risk reduction, and financial stability. Results underline the huge impact AI and block chain can have in attenuating the negative impact of NPAs on shareholder equity and returns. These technologies, therefore, stabilize and make the banking sector more effective by addressing these interrelated external and internal factors. This research thus follows the journal's focus on the implementation and management of advanced information systems to improve socio-economic environments related to the potentials AI and block chain can bring into the process of financial management.

FINANCIAL MARKET’S ROLE IN DETERMINING THE VALUE OF INTERNATIONAL BUSINESS INTANGIBLE ASSETS

As humanity moves into the era of digital technologies and the knowledge economy, the importance of intangible assets in the global economy and international business has been increasingly recognised. Amid the forced virtual communication resulting from the lingering effects of the COVID-19 pandemic, as well as the social conflicts and cyber-attacks associated with Russia's hybrid war in Ukraine, the value of intangible assets such as reputation, investor and customer loyalty, consumer data, branding, intellectual expertise and copyrights has taken on new importance and relevance. The purpose of the research is to improve the conceptual and methodological foundations for determining the nature and value of intangible assets of leading international companies, in particular, their undisclosed components, based on the use of financial market data. Research methodology. The study is based on systems analysis, analysis and synthesis, statistical and graphical methods. These methods were used primarily to identify the structure of the intangible assets of leading international companies, highlighting the interrelationships between the formation of the gap between the external (financial market) and internal (balance sheet) value of companies' shares and the value of their intangible assets. The publication supports the assumption that the identified gap between the market capitalisation and shareholder's equity of an individual company represents the undisclosed part of intangible assets that is not available in the company's official statements. This gap includes such components as reputation, trust and loyalty of customers and investors, brand strength, etc. Given the dynamic development of the international business sphere, the critical importance of flexibility, speed of decision-making, and the need for investors to obtain the most up-to-date information about the company's potential, including the value of its intangible assets, the proposed approach can serve as an effective decision-making tool and an alternative means of determining the real value of a company's intangible assets.

Do controlling shareholders' equity pledges exacerbate the stock price crash risk? -A study based on margin trading and securities lending transactions in China's securities market

It clarifies the influence mechanism of controlling shareholders' equity pledges, margin trading and securities lending, and stock price crash risk from the perspective of corporate governance, etc. This paper establishes a main and interaction effect regression model to empirically test the impact mechanism of controlling shareholders' equity pledge on stock price crash risk and the moderating effect of margin trading and securities lending in the process of this impact based on the measures of stock price crash risk, controlling shareholders' equity pledge level, as well as margin trading and securities lending transaction size, using China's A-share listed companies from 2010 to 2020 as the sample. It finds that: (i) The higher the controlling shareholder's equity pledge ratio of listed companies, the lower the stock price crash risk. (ii) There is no significant effect of margin trading and securities lending transactions on stock price crash risk. (iii) Securities lending transactions have a positive moderating effect in the impact of controlling shareholders' equity pledges on stock price crash risk, but the moderating effect of margin trading transactions is insignificant.

The Role of Shareholder Management and Market Management in the Enterprise Operations Management-Enterprise Performance Relationship

This research aims to explore the moderating roles of shareholder management and market management in the relationship between operational management and firm performance. By conducting an empirical analysis of 1929 U.S. companies from 2015 to 2023, the results demonstrate that shareholder management capability and market management capability significantly moderate this relationship. Specifically, higher shareholder management capability optimizes firm performance by enhancing the efficiency of shareholder equity utilization and increasing decision-making flexibility, while higher market management capability improves performance by effectively responding to market fluctuations and demand changes. The findings support the financial management perspective of global strategy, emphasizing the importance of efficient financial resource management in international firms. This research provides new insights into the complex roles of shareholder management and market management in enhancing firm performance, particularly in the context of U.S. companies.

The Impact of Political Contributions and Election Bets on Abnormal Stock Returns and Shareholder Equity in Taiwan's Presidential Elections

The Impact of Political Contributions and Election Bets on Abnormal Stock Returns and Shareholder Equity in Taiwan's Presidential Elections

Major shareholder equity pledge and litigation risk

This study analyzes the impact of significant shareholder equity pledges on litigation risk, and the results show that significant shareholder equity pledges contribute to the elevation of corporates' litigation risk and that increased information transparency can reduce litigation risk when a major shareholder's equity is pledged. This study conducted robustness and endogeneity analyses, which also support the conclusion.

Major shareholder equity pledges and the risk of stock price crash based on external audit quality

This study selects China's listed A-share firms from 2006 to 2022 as the research object to investigate the relationship between an equity pledge by a major shareholder and the risk of the company's stock price collapse. A significant negative correlation is found between equity pledges by major shareholders and the risk of share price collapse; equity pledges affect the risk of share price collapse through the firm's R&D investment.

Share Price Sensitivity Towards Dividend Announcement on Nifty Listed Companies

Dividend announcement is one of the key factors that influences the fluctuation in the share prices. The dividend is the cost of capital to equity shareholders. In recent years the securities and exchange board of India (SEBI) has initiated a number of reforms to make the Indian stock market at par with developed stock markets of the world. Dividend signals information to investors about the firm’s future performance. The impact of dividend announcements on share prices is likely to vary depending on the specific circumstances of each company and the overall market environment. On the one hand, dividend announcements can signal to investors that a company is financially strong and has a positive outlook for the future. The purpose of this project is to observe whether dividend announcement has impact on share prices of the Nifty listed companies. The objective of this study is to know the impact of dividend announcement on share price in Nifty Listed Companies. In order to achieve the objective of the study, the secondary data was collected through NSE Website. After the data collection, the data was analysed using Paired t-Test. The major findings from the project are few of the companies show impact of Dividend Announcement while most companies don’t show impact of Dividend Announcement. So, it can be concluded that the overall, there is no impact of Dividend Announcement on Share price of Nifty Listed Companies. Investors should carefully consider a company’s overall financial health, dividend policy and long-term growth prospects before making investment decisions based on dividend announcements.

Can the readability of an annual report forecast negative earnings surprises?

This study examines the relationship between the readability of an annual report and negative earnings surprises. Using logit regression, we find that less clear reports can predict unexpected negative earnings. This relationship persists even after accounting for deviations greater than 50 %. Furthermore, this effect is more pronounced for firms with less balanced shareholder equity and nonstate-owned enterprises. Our findings suggest that ambiguous disclosures can serve as early warning signals for investors, with important implications for regulatory oversight.

Foreign institutional ownership stability and stock price crash risk

This study investigates the impact of foreign institutional investors (FIIs) on stock price crash risk in India. Panel regression findings reveal that higher levels of FII holdings, signifying positional trading, exacerbate crash risk. Conversely, increased stability of FII holdings, indicative of active monitoring, diminishes crash risk. Notably, FIIs’ buying interest does not influence crash risk, affirming that their risk mitigation arises from active monitoring and not from curbing selling pressure. Further analysis reveals that FII stability reduces crash risk only when controlling shareholder (i.e., promoter) equity holding is low. This promoter effect is driven by domestic promoters and not foreign promoters.

Controlling shareholder's equity pledge and corporate financialization

This paper selects China's A-share listed firms from 2011 to 2022 as a research sample to investigate whether the equity pledge behavior of controlling shareholders of listed firms has an impact on the financialization of firms. The study finds that equity pledges exacerbate the financialization of firms; investor sentiment plays a mediating role in the impact of controlling shareholders' equity pledges on firms' financialization behavior; and the correlation between controlling shareholders' equity pledges and firms' financialization is more significant in firms with lower financing constraints than in firms with higher financing constraints.

Empirical Assessment of the Effect of Financial Reporting Components on Investment Decisions of Small and Medium Enterprises in Nigeria

Financial reporting is a critical aspect of business operations that enables companies to communicate relevant financial information to their stakeholders. The primary goal of financial reporting is to provide investors with information that can assist them in making informed investment decisions. Therefore, this study aimed to investigate the effect of financial reporting on the investment decisions of SMEs. The study made use of primary data. Primary data was collected using an interview guide and questionnaires, with respondents being those in charge of making investment decisions in the firm under study or their agents. The questionnaire included both closed-ended and Likert-type questions. 150 questionnaires were administered out of which 100 were completed and returned. In order to ensure the reliability of the measures used in this research, the researcher conducted a random re-test exercise within the population sample of the study. The study findings indicate that financial reporting has a significant impact on the investment decisions of SMEs. The comprehensive income statement, statement of financial position, cash flow statement, and the statement of changes in shareholder's equity were found to have a significant positive effect on investment decisions. This finding implies that investors consider the information contained in these financial statements when making investment decisions. The study results state the importance of including all financial statements in financial reporting, as each statement provides unique information that can be relevant to investors. The study therefore recommended among other things; The Nigerian government and regulatory bodies should strive to improve financial reporting standards for SMEs, SMEs in Nigeria should be encouraged to undergo financial literacy education to improve their understanding of financial statements, the government should provide incentives such as tax breaks and subsidies to SMEs that prepare and disseminate comprehensive financial report.

Controlling Shareholder Equity Pledge and Corporate ESG Responsibility Fulfillment Inhibition or Promotion

Corporate ESG responsibility fulfillment has become an important measure for enterprises to practice low-carbon development concepts at the micro level and promote corporate social responsibility fulfillment and corporate governance. During this process, the behavior of corporate shareholders has also become an important factor affecting the fulfillment of corporate ESG responsibilities. Based on the data of China's A-share listed companies from 2010 to 2022, this paper studies and analyzes the impact of the controlling shareholder's equity pledge behavior on the performance of corporate ESG responsibilities. The study found that the controlling party's equity pledge behavior inhibits the fulfillment of ESG responsibilities; optimizing the internal control environment and increasing corporate social attention can reduce the negative impact of pledge behavior on the fulfillment of ESG responsibilities to a certain extent; in the analysis of corporate heterogeneity, Equity pledge has less inhibitory effect on state-owned enterprises' performance of ESG responsibilities, and the effect on non-state-owned enterprises is more obvious. Based on this, the research puts forward three dimensions of policy suggestions to improve ownership structure, strengthen internal control and strengthen external supervision, in order to bring effective guidance for standardizing enterprise ESG performance.

Capital Structure and Financial Performance of Micro-Finance Institutions in Kenya

Purpose: This research was envisioned to assess the influence of the capital structure on ROE of Micro-financial institutions in Kenya. The research was in search for resolving the following problem; is there a connection between the composition of capital (loan, shareholder’s equity, retained earnings and deposits) and the viability of MFIs? If the firm size has an influence on ROE? The study was motivated by the following capital structure theories, which are the theory of pecking order, Trade-off theory and the theory of Marketing timing.
 Methodology: To define the independent variable, the researcher used a correlation research design. The target demographic of the research was all 14 successful microfinance companies as recognized by the Kenya Microfinance Act as of 2020. The research therefore represented a census survey with a period of 5 years (from 2016-2020). The study's research model consisted of the independent variable loans, shareholder’s equity, retained earnings and deposits and the size of the firm as a moderating variable, determined by the firm’s total asset value, and the following ratios as dependent variables: return on equity. To analyze the results, EViews was used. There was descriptive and inferential statistics execution. Diagnostic results were computed before the data analysis.
 Findings: The results were presented in the form of tables. The inferential statistics with the moderating variable revealed that loan financing has statistical negligible sway on the financial return of MFIs (p=0.9832>0.05). Shareholders equity financing was found to have a statistically significant influence on financial performance of MFIs (p=0.0047<0.05). Retained earnings financing was found to have a statistically significant influence on financial performance of MFIs (p=0.0016<0.05). Deposit financing was found to have a statistically insignificant influence on financial performance of MFIs (p=0.2168>0.05).in this study.
 Unique contribution to theory, practice and policy: The study suggested that MFIs should strike a balance benefits and costs of debt arising thereof in line with the Trade-off theory, fast growing MFIs to utilize more retained earnings in capital structure, more profitable businesses use less shareholder’s equity in capital structure mix and finally positive correlation on deposits indicating similar correlation is likely to exist with financing capital structure. Thus MFIs may consider reviewing these measures so as to enhance performance to serve the low-income earners better in improving the economy. Further studies can be done based on other performance measures like ROA, EPS,Net Interest Margin. The study used a correlation research design for five-year period from 2016 to 2020. Therefore, this study can be replicated using a different methodology and covering a longer period like ten year.

기계학습기법을 이용한 코스닥 신규 공모주 상장일 시초가 예측에 관한 연구

The purpose of this study is to predict the initial price of new public offering stocks on the listing date for short-term excess returns of public offering stocks due to the IPO underpricing factor. This study seeks to extract the characteristic factors related to the determinants of the public offering price and derive the factors that affect the public offering price. Specifically, for IPOs to be listed on the KOSDAQ market, the public offering price decision influencing factors are derived and artificial intelligence techniques (neural networks, decision trees) are used to build a public offering price prediction model. Research variables related to the public offering price prediction model include sales, net profit, largest shareholder’s share, capital stock, number of listed stocks, sales ratio of old stocks, lead company size, institutional subscription competition rate, general subscription competition rate, mandatory holding commitment rate, distribution Available volume, public offering amount, public offering price, public offering price discount rate, etc. As a result of the study, the main variables to be considered for the prediction of the public offering price were the general subscription competition rate and the public offering price. Variables included in the ranking of importance, such as capital stock, net income, commitment ratio of obligatory holdings, and the largest shareholder's equity ratio, were also extracted as factors to be considered.

Analysis of Financial Performance of Nepalese Commercial Banks using CAMEL Approach

Bank and financial institutions require a method for assessing performance, considering some crucial financial statistics, and identifying strengths and weaknesses. The "CAMEL" model is a effective tool for assessing the performance of bank and financial institution. This model studied Capital adequacy, Asset quality, Management quality, Earnings capacity, and Liquidity condition of sample banks. The study has made a modest attempt to use the CAMEL technique to examine the performance of three commercial banks in Nepal from 2011/12 to 2020/21. Rastriya Banijya Bank, a wholly government-owned, Nepal SBI Bank Limited (NSBIL) joint venture, and Prime Commercial Bank Limited (PCBL), privately owned, were considered as a sample banks for the analysis. The result explained that PCBL and NSBIL could keep their risk-weighted assets at more excellent Tier I and II capital levels, demonstrating their financial soundness. This also revealed that NSBIL could support a higher percentage of well-performing loans. RBBL, NSBIL, and PCBL, all BFIs maintained average returns on shareholder equity and returns on assets. It also found PCBL was first in terms of the ratio of liquid assets to total deposits, followed by NSBIL banks and RBBL. In light of this, this research will be tremendously instructive to academics, researchers, and bank management. They can utilize it to create a financial plan for the effectiveness of the bank performance as a whole.

Literature Review: Pengaruh Kebijakan Dividen Dan Profitabilitas Terhadap Nilai Suatu Perusahaan

Firm value plays an important role in showing the prosperity of shareholders in the company. A company must be profitable to return its assets, shareholder equity, and sales within a certain time frame. This study aims to investigate how profitability and dividend policy impact firm value. The literature review was used in this study as a methodology, which involves collecting and analyzing findings from articles on the subject under discussion. Based on the research conducted, this study concludes that the value of a company is caused by many causes and whether dividend policy and profitability have an impact on the value of the company is still objective depending on the methods, variables, and objects used.

Research on the influence of major shareholder equity Pledge on enterprise risk taking

Equity pledge as a financing method in the financial market is widespread. The pledge of major shareholders' equity may bring risks to the enterprise's operation and market. Therefore, it is of great theoretical and practical significance to study the influence of equity pledge of major shareholders on corporate risk taking. On the one hand, the research of this project can enrich the theory of the influence of equity pledge of major shareholders on corporate risk taking; On the other hand, through the research on the impact of the pledge of major shareholders' equity on the enterprise's risk taking, the paper puts forward suggestions for better regulating the pledge of major shareholders' equity and improving the enterprise's risk-taking level.