Singapore Stock Exchange Research Articles

Lessons from the Demise of the Brent Crude Oil Futures Contract on the Singapore Exchange

This paper highlights the lessons drawn from the demise of the Brent Crude Oil futures contract that was traded on the Singapore Stock Exchange (SGX). We analyze the market microstructure of the contract prior to its failure—specifically, the number of trades, trading volume, open interest, bid–ask spread, and volatility. We find a steady decline in the mean volume, open interest, and number of trades as the contracts near their demise. The bid–ask spread of the contract also widens. Investigations of the mutual offset feature of the Brent Crude Oil futures contract between SGX and the International Commodity Exchange (ICE) provides evidence that trading volume, open interest, and the number of trades increase significantly during 4:00–5:45 PM local time when mutual offset is available.

Implementation of Corporate Governance in Emerging Markets: Indonesia Stock Exchange and Singapore Stock Exchange

The objective of this study is to examine the execution of corporate governance in manufacturing sector firms listed on Indonesia and Singapore's stock exchanges. The study reveals that an increase in the frequency of audit committee meetings has a substantial and favorable impact on Indonesia's financial performance. Conversely, in the case of Singapore, there is a notable adverse impact on financial performance. However, the presence of an independent board of commissioners, a higher frequency of commissioner’s meetings, a more significant percentage of managerial share ownership, and the magnitude of the Board of Commissioners have a substantial adverse impact on ROA. Conversely, the frequency of board commissioner meetings and the extent of managerial share ownership hurt Tobin's Q. The presence of an independent board of commissioners and the number of commissioners on the Board does not substantially impact Tobin's Q. In the case of Singapore, the presence of an independent board of commissioners, the size of the Board, the frequency of board meetings, and the overall percentage of managerial share ownership do not have a noteworthy impact on ROA. Conversely, the quantity of Board of Commissioners meetings has a favorable impact on Tobin's Q. The overall proportion of ownership held by managers negatively impacts Tobin's Q. Both the autonomy of the Board of Commissioners and its size do not substantially influence Tobin's Q.

Analisis Integrasi Dinamis Pasar Modal Indonesia terhadap Pasar Modal ASEAN Pasca Berlakunya Masyarakat Ekonomi ASEAN

This research intends to understand the dynamic integration of the Indonesian capital market with the ASEAN Capital Market before and after the implementation of the MEA (ASEAN Economic Community) or AEC. The sample used in this observation is a series of data collected in the period January 2011 to December 2015 before the MEA was implemented and January 2016 to December 2022 after the MEA was implemented, while the capital markets studied were the Indonesian Stock Exchange, Kuala Lumpur Stock Exchange, Stock Exchange Singapore, Philippine Stock Exchange and Thai Stock Exchange. This research analyzes the dynamic integration of the Indonesian capital market towards ASEAN after the implementation of the MEA using the Orthogonal Generalized Autoregressive Conditional Heteroscedasticity (OGARCH) method which can manifest the level of integration in a measurable way. The results of this research are that there is co-movement among the ASEAN capital markets studied, however, not all ASEAN capital markets are fully integrated. The results of this observation also found that the Indonesian Stock Exchange, Kuala Lumpur Stock Exchange, Thailand Stock Exchange and Singapore Stock Exchange were integrated but the Philippine Stock Exchange was not. The Philippine Stock Exchange tends to be segmented rather than integrated.

ESG Performance and State Ownership in Firm Valuation: Perspectives from Singapore Companies

This study examines how Environmental, Social, and Governance (ESG) performance and state ownership affect firm valuation in Singapore and determines if the effects of ESG on firm valuation are more pronounced in state-owned companies. The data comprises 51 companies listed on the Singapore Stock Exchange with complete ESG and financial information during the five-year period from 2018 to 2022. This study finds that only social practices positively and statistically significantly affect stock prices. Overall ESG values, and the other two dimensions of ESG appear not to be statistically significant. State ownership appears to positively and significantly affect the stock price. The finding suggests that the Singapore government’s substantial influence over corporate practices could accentuate the difference in market perception of ESG efforts between SOEs and companies. The study provides useful and practical implications to policymakers, managers and investors, which affect firm financial and operational performance.

How does earnings management impact annual report readability?

This research investigates the relationship between earnings management and annual report readability for companies listed on the Singapore Stock Exchange (SGX). Research on earnings management (EM) and the ability to read the annual report play a crucial role for investors as well as other stakeholders. The extent of earnings management can be determined based on annual reports. The analysis is based on the data of 251 domestic companies listed on the SGX from 2016 to 2021. Regression analysis of panel data was conducted using STATA version 15 software in this research. The result shows that companies with more aggressive earnings management tend to make annual reports more complex and, hence, less readable. In addition, the study also shows that the impact of earnings management on the annual report readability for enterprises of different sizes, profits, ages, and levels of financial distress is the same. Theoretically, the findings of this research for a developed financial market in Asia (Singapore) further confirm and reinforce the findings about the relationship between earnings management and report readability. In addition, one may draw important practical implications for investors as well as stakeholders in general; in particular, stakeholders may have more evidence for suspicions about earnings management whenever the annual reports become more difficult to read and understand.

Increasing Company Value: The Role of Profitability and Capital Structureand Tax Avoidance as Mediation

Firm value is an important factor in the view of investors as well as a form of success for managers in managing the company. In addition to success for managers, company value can also have an impact on increasing stock prices. The purpose of this study is to see how the influence of capital structure, profitability and tax avoidance on firm value. The samples selected in this study were 59 technology sector companies listed on the Stock Exchange and the Singapore Stock Exchange for the period 2017 to 2022. The sampling technique used in this study was to use side non-probability using a purposive sampling method. Data analysis in this study uses path analysis with the help of Smart-PLS software to test the proposed model. The results of this study indicate that the three variables consisting of capital structure, profitability and tax avoidance have a significant positive effect on firm value. Likewise, the role of tax avoidance was found to be a variable that mediates between capital structure and profitability on firm value.

PERAN KOMITE AUDIT DALAM HUBUNGAN ANTARA METODE NILAI WAJAR DENGAN BIAYA AUDIT: STUDI KASUS DI ASEAN

This research discusses the impact of the fair value method on fixed assets, audit fees, and audit committees in ASEAN. The samples of the research are 277 manufacturing companies listed in the Indonesia Stock Exchange, Malaysia Stock Exchange, Singapore Stock Exchange, Philippine Stock Exchange, and Thailand Stock Exchange from 2014 to 2016. The results of the study found that companies that use the fair value method through a revaluation model to measure their fixed assets have higher audit fees than those that use the historical cost method. In addition, there is a moderation effect of audit committee competencies on the relation of fair value method to audit fee. The findings prove that the accounting and financial competencies of the audit committees reduce audit fees imposed on companies using the fair value method for fixed assets.

Disclosure of Governance, Ownership Structure, Earnings Quality, and Future Performance (Evidence from Indonesia and Singapore)

<p>This study analyzes the effect of institutional ownership structure and earnings quality on the future performance of companies with governance as a moderating variable in Indonesian and Singaporean companies. The company's future performance in general will usually be represented in the financial statements. Earnings quality is an important benchmark for companies to determine the quality of company accounting information. Institutional ownership is sharing ownership owned by an institution or business entity. Institutions here can mean ownership by banks, foundations, investment fund managers, pension fund managers, and others. Good Corporate Governance is corporate governance that explains the influence between various participants in the company that determines the direction of the company's future performance. The sample used in this study are companies listed on the Indonesia Stock Exchange and Singapore Stock Exchange from the period 2018 to 2020. This study uses a multiple linear regression model. The results show that institutional ownership structure has a significant positive effect on Future Performance and governance. as an independent variable shows a significant positive result on Future Performance.</p>

Capital structure and speed of adjustment: the impact of environmental, social and governance (ESG) performance

Purpose This study aims to examine the impact of sustainable practices as proxied by the environmental, social and governance (ESG) score on capital structure. It also investigates whether ESG performance influences the speed of adjustment (SOA) to target leverage in firms. Design/methodology/approach The sample covers 116 non-financial firms listed on the main stock exchanges from five Southeast ASEAN countries (Bursa Malaysia, Indonesia Stock Exchange, Philippines Stock Exchange, Singapore Stock Exchange and Stock Exchange of Thailand) over the period 2012–2019. The study adopts the OLS regression and system-GMM estimators to perform the data analysis. Findings The authors show that the ESG score is positively associated with book leverage, suggesting that firms increase their debt capital through sustainable practices. However, they find that the ESG score is negatively associated with market leverage across our model estimations. The authors also reveal that environmental, social and governance pillar scores produce about 7.82%, 2.88% and 0.47% SOAs, respectively, higher than the SOA of the traditional SOA without the ESG factor. The aggregate ESG score has about 3.41% SOA higher than the baseline SOA without the ESG factor. Practical implications This study is of interest to investors, corporate firms and policymakers. The study demonstrates that the ESG score increases the firm’s SOA to target leverage. By disaggregating the ESG score, the authors establish that ESG pillar scores produce higher SOAs than the traditional SOA (without ESG), with the environmental score inducing the fastest SOA. Practically, the study implies that environmentally sustainable activities reduce environmental transaction costs, benefit firms through better information transparency and enhance a trustful climate between the firm and suppliers of capital. Therefore, this study demonstrates that firms do not only incur the cost of disseminating ESG information but also benefit from lower information asymmetry and a higher SOA with better tax-deductible advantages. Social implications The findings have combined advantages for both stakeholders and directors who monitor and manage the firms’ resources to improve the quality of ESG practices and initiatives. Originality/value To the best of the authors’ knowledge, this study is among the first to establish that sustainable practices induce higher debt capital. Secondly, unlike prior research focusing on the cost of capital, the authors examine whether ESG performance affects capital structure patterns. Thirdly, it documents the extent to which sustainable practices influence the SOA towards target leverage in firms. The authors contribute to corporate finance literature that firms reach faster to their target leverage in the presence of ESG performance. Theoretically, through the notion of the stakeholder proposition, the study establishes that the firms’ pursuance of stakeholder goals further enhances the prediction of the trade-off theory.

Determinant Earnings Quality, Size of Companies Registered In Indonesia, Malaysia, America and Singapore

The industrial revolution 4.0 at this time requires companies to interact directly with the global market. The intense global competition we are facing includes the economic sector which is growing rapidly accompanied by technological developments. The purpose of this research is to examine the influence of the factors that influence earnings quality. the data analysis technique used in this study is multiple linear regression analysis. The population in this study are companies listed on the Indonesia Stock Exchange, the Kuala Lumpur Stock Exchange, the United States Stock Exchange and the Singapore Stock Exchange. Data collection used a purposive sampling method, with a total sample of 52 with a quota of 13 samples for each country. The independent variables of this study are Leverage and Profitability, the dependent variable of this study is Earnings Quality. The results showed that the Leverage and Profitability variables had no effect on earnings quality in all categories of this study, while Size Companies were able to moderate the effect on earnings quality in Indonesia and Malaysia.

Determinant of earnings response coefficient on the Indonesian and Singaporean stock exchanges during the COVID-19 pandemic

Earnings response coefficient (ERC) is one of the important things for companies and investors, as it reflects a company’s good value. The COVID-19 pandemic, which is happening globally, has greatly affected capital market conditions and companies in general. It is necessary to examine what factors affect ERC significantly to provide an overview to the company while maintaining the good name of the company. This study aims to analyze the effect of firm growth, leverage, information asymmetry, and systematic risk on ERC with dividend payout ratios as moderating on the Indonesia Stock Exchange and Singapore Stock Exchange. The study uses a quantitative approach with secondary data in the form of companies’ annual reports. Population was made up of food and beverage and tobacco manufacturing companies in 2018–2020. It consists of 38 JASICA index companies on IDX, and 33 SGX index companies on SGX. The results showed that, firstly, leverage and systematic risk had a significant negative effect on ERC. Second, firm growth and information asymmetry have no effect on ERC. Third, dividend payout ratio can weaken a positive influence of information asymmetry on ERC. Fourth, dividend payout ratio failed to moderate a positive effect of firm growth and a negative effect of leverage and systematic risk on ERC. All variables have no significant statistical difference between the two stock exchanges. These results indicate that a company must improve the performance and quality of information; pay attention to obligations, mitigate and manage risk to obtain optimal ERC.

Healthcare Companies Performance before and during Covid-19: Empirical Evidence from 150 companies in Indonesia, Malaysia, and Singapore

The aim of this study is analyzing the effects of Economic Value Added (EVA) and Cash Value Added (CVA) on firm performance, also analyzing whether COVID-19 pandemic affected the firm performance of listed healthcare companies in South-east Asia countries significantly. The objective of this study is to see if healthcare sectors company are really a better option for investors in this time, especially because of the emergence of COVID-19. The firm performance in this study was measured with Market Value Added (MVA). This study took samples of listed healthcare companies from three South-east Asia countries, Indonesia, Malaysia, and Singapore. The study samples included 16 samples from 16 Indonesian Healthcare companies listed in the Indonesia Stock Exchange (IDX), 13 samples from 19 Malaysian Healthcare companies listed in the Bursa Malaysia, and 23 samples from 33 Singaporean Healthcare companies listed in the Singapore Stock Exchange (SGX), the total samples used were of 150 companies. The samples used in this study are from selected companies representing the whole segment. All samples were based on the informations provided in their annual report ended per 31 December. Multi regression analysis method was applied in this study to determine the effects of COVID-19 pandemic on the listed healthcare companies’ performance. Based on the tests conducted for this study, it is found that EVA and CVA have a positive significant effect on MVA. However, there was no significant difference found between MVA before and during COVID-19 pandemic.

EXAMINING EARNINGS MANAGEMENT AND FIRM AGE: A QUANTITATIVE COMPARATIVE STUDY

This paper examines the association of firm age on earnings management (EM). We compared the large samples of 688 and 844 year-observation on listed firms in Indonesia stock exchange (IDX) and Singapore stock exchange (SGX), respectively. SGX is used as a benchmark of South East Asia (SEA) stock market. Despite SGX transaction has the highest rank in SEA stock exchange, yet the firm age average is newer than the IDX counterparts. Panel data regression was employed in analyzing the data. In addition, we conducted an anova pairwise t-test to examine the difference of firm age and EM depedency association in IDX and SGX. The result shows that both on IDX and SGX, firm age have a negative and significant effect towards EM. Moreover, it is found that there is a significant difference between the effect of firm age to EM in the firm listed on IDX and SGX.

COMPARATIVE ANALYSIS OF MARKET OVERREACTION IN INDONESIA AND SINGAPORE STOCK EXCHANGE 2016-2019

This study aims to determine whether there is a market overreaction phenomenon in the Indonesia Stock Exchange which is classified as an emerging market and the Singapore Stock Exchange which is classified as a developed market. This research was conducted in a weekly period during 2016-2019. This study uses sample included in the LQ-45 index for the Indonesia Stock Exchange and the top 30 market cap for the Singapore Stock Exchange. This research found that there was a market overreaction in the Indonesia Stock Exchange, especially the loser portofolio which experienced the strongest reversal. Meanwhile, the significance value in the one sample t-test for the average cumulative abnormal return difference value is not significance. While the results of research on the Singapore Stock Exchange found no market overreaction phenomenon as indicated by a negative and insignificance average cumulative abnormal return difference. The result showed that the Indonesia Stock Exchange has not been efficient where investors tend to overreact in responding to information while investors on the Singapore Stock Exchange are rational.

COMPARATIVE ANALYSIS OF MARKET OVERREACTION IN INDONESIA AND SINGAPORE STOCK EXCHANGE 2016-2019

This study aims to determine whether there is a market overreaction phenomenon in the Indonesia Stock Exchange which is classified as an emerging market and the Singapore Stock Exchange which is classified as a developed market. This research was conducted in a weekly period during 2016-2019. This study uses sample included in the LQ-45 index for the Indonesia Stock Exchange and the top 30 market cap for the Singapore Stock Exchange. This research found that there was a market overreaction in the Indonesia Stock Exchange, especially the loser portofolio which experienced the strongest reversal. Meanwhile, the significance value in the one sample t-test for the average cumulative abnormal return difference value is not significance. While the results of research on the Singapore Stock Exchange found no market overreaction phenomenon as indicated by a negative and insignificance average cumulative abnormal return difference. The result showed that the Indonesia Stock Exchange has not been efficient where investors tend to overreact in responding to information while investors on the Singapore Stock Exchange are rational.

CAPITAL MARKET INTEGRATION OF ASEAN-5 COUNTRIES : AN EMPIRICAL ANALYSIS

The financial integration of South East Asian markets has been an important research topic. Due to the recent global developments in financial markets, the behaviours of these emerging markets are gaining much interest. This research paper empirically analyzes stock market integration of international portfolio diversification across the South East Asian countries, namely Indonesia, Malaysia, Philippines, Singapore and Thailand. The Augmented Dickey-Fuller unit root test has been used to verify the static properties of the market return of ASEAN countries. An analysis of the co-integration among these countries' market return has been done using the Johansen Co-integration Approach. The co-movements between the ASEAN economies were analyzed through the Granger Causality test. The results of the Granger causality tests indicate the interdependence between ASEAN-5 market returns. This suggests a co-movement among ASEAN capital markets, but not all of these ASEAN capital markets were fully integrated. This study also found that the Malaysia Stock Exchange, the Stock Exchange of Thailand, the Singapore Stock Exchange and the Philippines Stock Exchange were fully integrated, but Indonesia Stock Exchange was not. Essentially, this study provides insight for policymakers, portfolio managers, domestic and international investors, risk analysts, and financial researchers to diversify their investment portfolios by combining assets from each ASEAN-5 country.

FIRM CHARACTERISTICS AND EARNINGS MANAGEMENT IN LISTED SINGAPOREAN CORPORATIONS

The study aims to examine the association of firms characteristics comprise of firm age, firm size, leverage, and profitability to earnings management (EM). The data is collected from listed Singaporean corporation in Singapore stock exchange (SGX) in the period of 2017 and 2018. Purposive sampling and panel data regression were employed as the sampling and analysis method, respectively. Our results are based on a large sample of 852 firm-year observations. The results show that firm age and firm size significantly affected EM, meanwhile, leverage and profitability indicate insignificant effects to EM. In addition, these results provide information to investors and potential investors regarding future investment decisions.

The Role of Manager Compensation and Integrated Reporting in Company Value: Indonesia vs. Singapore

The disclosure of integrated reporting elements can reduce information asymmetry for investors when valuing a company. This study aimed to empirically evaluate the effect of manager compensation, directly or indirectly, on firm value, through the mediating role of the disclosure of integrated reporting elements. The research sample included manufacturing companies listed on the Indonesia Stock Exchange (IDX) and the Singapore Stock Exchange (SGX). The method of analysis was PLS-SEM, using the WarpPLS 7.0 application. The results showed that compensation significantly affects firm value and the disclosure of integrated reporting elements. Integrated reporting has a significant positive impact on firm value. In addition, the disclosure of integrated reporting can mediate the impact of manager compensation on increasing firm value. This research theoretically supports agency theory, disclosure theory, and signal theory, although it is not fully applicable to each country or region of the sample company. The current research contributes to the understanding of the importance of a company’s integrated reporting disclosure in improving company value among investors. Integrated reporting describes how a company creates value over time. Our results also suggest that regulators should oblige public companies to disclose integrated reporting.

DYNAMIC VOLATILITY SPILLOVERS ACROSS THE EXTENDED GREATER CHINA REGION STOCK MARKETS

The study investigates volatility transmissions of major financial market indices found in the Extended Greater China Region (EGCR): the Shanghai Stock Exchange Index (SSEI), the Hang Seng Stock Exchange Index (HSEI), the Taiwan Stock Exchange Capitalization Weighted Stock Index (TAIEX), and the Singapore Stock Exchange Index (STI). This paper utilizes three Multivariate Generalized Autoregressive Conditional Heteroskedasticity (MGARCH) models to determine variance persistence in the EGCR. The MGARCH approach applies the Baba–Engle–Kraft–Kroner (BEKK) model and the dynamic conditional correlation (DCC) and constant conditional correlation (CCC) estimations. This research found that the SSEI consistently has the highest volatility among the stock markets in the EGCR, and this can be explained by the poor acknowledgment of minority shareholders’ rights or having a weak so-called “common-law” regime. The paper also found that volatilities in the EGCR are determined strongly by their own lagged values more than the product of lagged cross-products of shocks. This means that financial market movements in the EGCR are still strongly influenced by internal factors more than the external influences. The paper contributes to the literature by understanding the potential changes in volatility relationships in low- and high-volatility regimes of the EGCR, which can be used to improve risk management practices and asset allocation techniques in the region.

Corporate Governance Codes and Intellectual Capital: Evaluating the Performance Impacts among Government-Linked Companies in Malaysia and Singapore – A Panel Data Analysis

The objective of this study was to examine and compare the effects of corporate governance (CG) and intellectual capital (IC) between Malaysia Government-Linked Companies’ (M-GLCs) and Singapore Government-Linked Companies’ (S-GLCs) firm performance (FP). Panel data analysis was employed to analyse the impact of CG’s variables and IC’s variables on FP. FP was measured by Return on Total Assets (ROA), Tobin’s Q and Earnings Per Share (EPS). Data was gathered from the website of Bursa Malaysia and the Stock Exchange of Singapore from 2005 to 2018. The sample size of this research was 60 GLCs which comprised of 34 M-GLCs and 26 S-GLCs. There were a total 840 firm year observations. Results indicated that CGs of S-GLCs have greater impact on FP when compared to M-GLCs while the findings of the IC of M-GLCs have greater impact on FP compared to S-GLCs. This research was helpful in offering further insights of CG practices and IC efficiency to the Government, Board of Directors, policy makers, shareholders and stakeholders.