Stock Price Growth Research Articles

Analysis of Divided Policy and Its Impact on Shareholders Wealth Maximization in Nigerian Firms (A Study of Brewery Industry)

The study evaluated dividend policy and measured its impact on shareholders’ wealth maximization in Nigerian firms (a study of brewery industry). A cross-survey research design was adopted and secondary data extracted from the published annual reports of the firms studied. The statistical tool used was a multi-regression analysis and t-test for hypotheses testing and data analysis with the aid of SPSS version 20. The result in Guinness Nigeria Plc., indicated the irrelevance of dividend policy. From the result, the DPS, EPS and NAPS which were the explanatory variables, had no positive impact on the market value per share (MPS) both collectively and individually. The result from Nigeria Breweries Plc., proved dividend policy is relevant to an extent to which earnings per share and net asset per share are positively affected. The F-ratio was 0.000 which shows a significant positive impact on the MPS. The earnings per share and net asset per share were also significant except the dividend per share which had no impact on the market value per share. The implication is that the growth in stock prices is not always a function of dividend payment.

Has the Fed Responded to House and Stock Prices? A Time-Varying Analysis

In this paper we use a structural VAR model with time-varying parameters and stochastic volatility to investigate whether the Federal Reserve has responded systematically to asset prices and whether this response has changed over time. To recover the systematic component of monetary policy, we interpret the interest rate equation in the VAR as an extended monetary policy rule responding to inflation, the output gap, house prices and stock prices. We find some time variation in the coefficients for house prices and stock prices but fairly stable coefficients over time for inflation and the output gap. Our results indicate that the systematic component of monetary policy in the US: i) attached a positive weight to real house price growth but lowered it prior to the crisis and eventually raised it again and, ii) only episodically took real stock price growth into account.

Monetary Policy and Asset Prices: A Markov‐Switching DSGE Approach

SummaryThis paper estimates a Markov‐switching dynamic stochastic general equilibrium model by incorporating stock prices in monetary policy rules in order to identify the Federal Reserve's stance toward them. Based on the data from 1984:Q1 to 2009:Q2, I find that historical evidence of the policy reaction toward stock prices is weak except for the stock market bubble of the 1990s. A counterfactual exercise shows that the rapid growth in stock prices during that period would have been significantly higher if monetary policy had been independent of the stock market. However, unconditional macroeconomic volatility increases with the degree of policy responsiveness toward stock prices. Copyright © 2017 John Wiley & Sons, Ltd.

Has the Fed Responded to House and Stock Prices? A Time-Varying Analysis

In this paper we use a structural VAR model with time-varying parameters and stochastic volatility to investigate whether the Federal Reserve has responded systematically to asset prices and whether this response has changed over time. To recover the systematic component of monetary policy, we interpret the interest rate equation in the VAR as an extended monetary policy rule responding to inflation, the output gap, house prices and stock prices. We find some time variation in the coefficients for house prices and stock prices but fairly stable coefficients over time for inflation and the output gap. Our results indicate that the systematic component of monetary policy in the US, i) attached a positive weight to real house price growth but lowered it prior to the crisis and eventually raised it again, and ii) only episodically took real stock price growth into account.

주가연계사채(ELB)의 투자효율성에 관한 연구

본 연구의 목적은 주가연계사채(ELB)의 제시수익률에 대해 달성가능 정도를 분석하여 ELB 문제점을 도출하고, ELB 투자방안에 대한 방향성을 제시하고자 한다. 연구방법은 2015~2016년에 발행된 ELB 구조를 2010년 1월부터 2016년 6월까지 추정수익률을 분석하며, 최소보장수익률, 최고한도율, 참여율과 실제수익률 간의 상관관계와 회귀분석을 실시한다. 분석결과는 주가상승률이 최고상승률 한도를 벗어나지 않아서 주가상승률에 의해서 은행금리수준보다 높은 2%이상의 수익률을 달성할 확률은 20%에도 미치지 못하며, ELB 상품의 평균추정수익률은 1.49%에 불과하여 은행의 2015년 수신금리인 1.72% 보다 낮아서 ELB의 실현가능수익률이 기대치에 미치지 못한다. 최소보장수익율과 ELB 수익률의 상관계수는 0.843, 최고한도수익율과 ELB 수익률의 상관계수는 0.279로 산출되어 ELB 수익률과 최소보장수익율 간에 상관관계는 매우 높다. 시사점은 ELB 실제수익률이 은행예금금리 보다 높지 않으며, 주가상승률이 최고한도 이내에 있을 확률이 낮을 것이다. The purpose of this paper is to see what the problem is and what the direction of the Investment of ELB is after this study has analyzed an achievable possibility for a suggested yield of ELB. It analyzes estimated yields from January in 2010 to June in 2016 for ELB Structures issued during 2015~2016. It carries correlation analysis and regression analysis between ELB yield and minimum guarantee yield, maximum stock price growth limit, participation rate. As the study result, a probability of achievement over 2% yield was below 20% as stock price growth had been inside maximum limit. An estimated average yield of ELB was 1.49% and it was lowed than 1.72% of Bank Deposit in 2015. So a realized yield was not satisfied the expected yield. As the correlation coefficient between ELB yield and minimum guarantee yield was 0.843, the correlation coefficient between ELB yield and maximum limit yield was 0.279, the correlation of minimum guarantee yield was high. The suggestion is that the a realized yield of ELB is lower than Bank Deposit interest and that the probability of stock growth inside maximum limit is low.

Stock Returns with Four Different Valuation Ratios

In this paper, we investigate whether we can create an excess return or not, by holding ‘adequate investment portfolios.’ No one can have excess returns if the financial market is efficient, as every investor has the same information. However, we often observe the market anomaly phenomena in the real market; a typical example of market anomaly phenomenon is that small firms have higher return in terms of stock price growth. Therefore, using 4 valuation ratios(VRs), PBR, PDR, P/E ratio and PEG ratio, and Fama and French’s(2015, hereinafter FF) five factors, we try to investigate whether we can create excess returns or not. We include these five factors because according to FF(2015), a regression estimator using these 5 factors greatly increases its explanatory power of firm value compared with using FF’s(1993) three factors model. In addition, we also include two more additional variables, firms’ default risk and cash dividends, as controlled variables, alongside FF’s(2015) five factors. This is because after carefully studying previous research and stock price theories, we realize the importance of these two additional controlled variables as stock price determinants. Our 4 VRs are mainly related to the value-investing strategy. Namely, investing an undervalued stock would bring higher stock returns(SRs) in the future, as suggested by many famous fund managers, such as Peter Lynch and Philip Fisher. We also use value weighted(vw) portfolios to investigate the consistence of the directions and strengths of coefficients of model in accordance with different portfolios. The vw portfolios are built by using firm size, 4VRs, and FF’s five factors. If these 4 VRs show a consistent association with SRs in accordance with vw portfolios, we can presume that the relationships between VRs and SR are reliable; and it can be an evidence that investors may have an excess return using the characteristics of VRs. We find that VRs influence SR greatly. In other words, firms with low PBR, PDR and P/E ratios generally have high SRs in the coming year. Among the three VRs, we find that PBR presents the clearest evidence of the existence of market anomaly, followed by PDR and P/E ratios. However, we cannot find any particular relationship between the SR and PEG ratios. We use PEG as we believe that PEG ratio would complement P/E ratios’ week point. However, our results from 3 VRs continuously present that firms with low VRs and high profits generally have high SR. This implies that it is too early to deny the usefulness of PEG. In addition, we likewise find that the PEG ratio has a U-sharp relation to SR. Among the controlled variables, market factor, B/M ratio, investment, and firms’ default risk show strong relationships to the future SR. This suggests that there would be a market anomaly phenomenon in the financial market but the five factors suggested by FF(2015) still are important SR determinants. This paper suggests that there are some relationships between VRs and SR. In other words, there is a high possibility that undervalued stock would raise its price higher than other stocks in the coming years. Our results with VRs and vw portfolios continuously show similar results. This implies that investors who are maintaining the ‘adequate investment portfolios’ would receive a higher income in the coming years. Furthermore, we likewise find that the influence of VRs on SR lasts for many years. implies that investors who are maintaining the ‘right portfolios’ would receive a higher income.

Capital Structure Determinants Based Upon Total Debt, Short- and Long-Term Debt, Industry and Time

We investigate important debt level determinants and whether or not these determinants are affected by industry and time. Continuing from our previous paper, we include short- and long-term debt levels and test whether or not there are differences of key debt level determinants between long- and short-term debt levels. We find that unlike Western firms, short-term debt level takes a bigger portion of total debt level than long-term debt level in Korean firms. Although this is an unusual phenomenon reflecting financial theory, this is the way Korean firms manage their debts. This proves that Korean firms rely more upon short-term debt. We find that not only total debt level, but also short- and long-term debt levels also have target debt levels; and this fact implies that adjusting debt level is firms’ top priority as previous debt levels are related to firm‘s bankruptcy probability and efficient debt management policy. This of course supports the trade-off theory. We also find that previous debt levels, total assets and firms’ earnings are the most important capital structure determinants for firms; and these factors are followed by new investment, dividend and tangible assets. Their associations with DLs (total debt levels, and short- and long-term debt levels) are generally consistent. Namely, DLs are decided by the similar key factors. In addition, cash level change, interest rate and time variables show different directions with DLs between short- and long-term debt levels. They also show different associations with DLs in line with industries and time. Namely, some variables play different roles for firms’ short-term and long-term debt level decision in accordance with industries and time. This paper also suggests that annual stock price growth and R&D expenses have less influence on DLs. We find some evidence that industry and time factors influence debt level shifts, but we admit that we do not have crystal clear structural evidence to prove these influences. Finally, this paper mainly supports the trade-off theory. However, as given evidence of the negative relationship between DLs and earnings, we could also partially support the pecking order theory. However, we do not find evidence that support the market timing theory.

Influence of Inflation Rate to Stock Price Growth among Diversified Companies in the Philippines

Influence of Inflation Rate to Stock Price Growth among Diversified Companies in the Philippines

PENGARUH PENERAPAN GREEN ACCOUNTING TERHADAP KINERJA PERUSAHAAN

The purpose of this research is to analyze the implementation of green accounting and to find an impact of application of green accounting toward earning and stock price growth in Indonesian Industri. Industri activities oftentimes give some bad impact to environment surroundings such as natural devastation and the changes of culture, social and economic. Green accounting is a realization of corporate social responsibility to relieve the impact. The implementation of green accounting can give good image for the company however preliminary research found not many companies are implementing green accounting. This research will use quantitave approach and different test or paired T-test will use for statistical testing, in order to test the research assumptions. Variable of this research are Green accounting, Earning per Shares and Stock Price Growth. This research is expected will contribute for the development of green accounting theory and enhancement of the implementation of green accounting especially in Indonesian Industri on Asian Economic community era.

Bank Credit, Asset Prices and Financial Stability: Evidence From French Banks

This paper analyses the effect of asset prices on credit growth in France and tries to disentangle credit demand and supply factors, both for the whole 1993-2010 period and during periods of financial instability. Using bank-level panel data at a quarterly frequency, stock price growth is shown to have a significant effect on lending growth over the whole period, but without credit supply factors being singled out. By contrast, housing price growth has a significant effect during periods of financial instability only, even after controlling for credit demand effects. These results show that credit demand factors do play a large role but also provide evidence of tighter credit constraints on households in financial instability periods.

Bank Credit, Asset Prices and Financial Stability: Evidence from French Banks

This paper analyses the effect of asset prices on credit growth in France and tries to disentangle credit demand and supply factors, both for the whole 1993-2010 period and during periods of financial instability. Using bank-level panel data at a quarterly frequency, stock price growth is shown to have a significant effect on lending growth over the whole period, but without credit supply factors being singled out. By contrast, housing price growth has a significant effect during periods of financial instability only, even after controlling for credit demand effects. These results show that credit demand factors do play a large role but also provide evidence of tighter credit constraints on households in financial instability periods.

Shortcomings of Compensation Philosophies

Shortcomings of Compensation Philosophies

The response of household incomes to stock price and GDP growth by income quantile†

How household incomes respond to GDP and stock price growth is important for an understanding of the economic costs of business cycles and the driving forces of income inequality over time. This article examines to what extent household incomes react differently across income distribution quantiles and time. It employs U.S. Panel Study of Income Dynamics data for the period 1979–2000 and quantile regression techniques. Significant differences are found in how household incomes respond across income quantiles. For the same income quantiles, large differences are identified when the time period 1979–1987 is compared to 1988–2000. †The content of the article reflects the personal opinion of the authors and should not be associated with FedEx Services or any of its affiliated companies.

Determinacy, Stock Market Dynamics and Monetary Policy Inertia

This note deals with the stability properties of an economy where the central bank is concerned with stock market developments. We introduce a Taylor rule reacting to stock price growth rates along with inflation and output gap in a New-Keynesian setup. We explore the performance of this rule from the vantage of equilibrium uniqueness. We show that this reaction function is isomorphic to a rule with an interest rate smoothing term, whose magnitude increases in the degree of aggressiveness towards asset prices growth. As shown by Bullard and Mitra (2007, Determinacy, learnability, and monetary policy inertia, Journal of Money, Credit and Banking 39, 1177-1212) this feature of monetary policy inertia can help at alleviating problems of indeterminacy.

Wall Street Reaction to Women in IPOs

The authors examine the effect of having women on the top management teams of initial public offering (IPO) firms on the organizations' short- and long-term financial performance. Looking at three different samples, the authors found that trend data indicated IPO firms were gaining in the number of women they employ in their top management teams. Using data from 534 IPO firms, results suggest one reason why the trend is growing; women appear to have a positive association with the firms' short-term performance (Tobin's Q, which is market price to book value per share), 3-year stock price growth, and growth in earnings per share. Possible reasons for the positive effect of women on performance include better innovation and problem-solving processes in more diverse top management teams and the possibility that, on average, the women on these teams are higher performers than are the men on the same teams.

Earnings Growth: The Two Percent Dilution

Two important concepts played a key role in the bull market of the 1990s. Both represent fundamental flaws in logic. Both are demonstrably untrue. First, many investors believed that earnings could grow faster than the macroeconomy. In fact, earnings must grow slower than GDP because the growth of existing enterprises contributes only part of GDP growth; the role of entrepreneurial capitalism, the creation of new enterprises, is a key driver of GDP growth, and it does not contribute to the growth in earnings and dividends of existing enterprises. During the 20th century, growth in stock prices and dividends was 2 percent less than underlying macroeconomic growth. Second, many investors believed that stock buybacks would permit earnings to grow faster than GDP. The important metric is not the volume of buybacks, however, but net buybacks—stock buybacks less new share issuance, whether in existing enterprises or through IPOs. We demonstrate, using two methodologies, that during the 20th century, new share issuance in many nations almost always exceeded stock buybacks by an average of 2 percent or more a year.

INEQUALITY, INCENTIVES, AND OPPORTUNITY

Measured inequality has increased tremendously between the 1960s and 1990s, not only in the United States but throughout the majority of industrial nations. Wages among people of the same race and gender have become less equal. The hours worked by men have fallen, and the drop has been more pronounced among those who earn lower wages—as a result, inequality in labor income, which is the product of the wage rate and hours worked, has increased relative to inequality in wage rates. Moreover, among married couples, employment of the wives of high-income men has increased until these wives are approximately as likely to be employed outside the home as are the wives of low-income men, who have always worked for wages. In addition, due to assortative mating, wage rates of husbands and wives are positively correlated, and it is clear that the growth in inequality of labor incomes among families has outstripped the growth in inequality in individual labor income. Finally, only the highest-income families have savings in excess of home equity and company-sponsored pensions, which implies that inequality in wealth among families has been exacerbated by the growth in stock prices.

Nonlinearities, cyclical behaviour and predictability in stock markets: international evidence

In this paper we employ the STAR (smooth transition autoregressive) model to investigate potential nonlinearities and cyclical behaviour in the stock prices of seven major industrial countries (the G-7). Tests reject linearity for all stock markets. The estimated nonlinear models suggest that stock price growth rates are characterised by asymmetric cycles in most countries, with the speed of transition between the expansion and contraction regimes being relatively slow for all countries. The implied transition probabilities detect satisfactorily the main contraction regimes in stock markets. STAR-based noncausality tests indicate only a small number of interactions between the stock markets. Our evidence on out-of-sample forecasting suggests that forecast gains can be made by exploiting the nonlinear structure of STAR models.

ECONOMIC ANALYSIS OF R&D PROJECTS: AN OPTIONS APPROACH

ABSTRACT An emerging trend in research and development (R&D) project valuation is the use of options approach, which permits a more flexible assessment of the future growth opportunities in the entire process. The traditional DCF method when naively applied fails to capture all the future opportunities that create value, thereby resulting in an under investment in R&D. The options approach is more appropriate in a world of uncertainty because it views an R&D project as an initial investment that creates future follow-on commercial opportunities that are undertaken only if the initial R&D project is successful. Valuation of R&D projects is usually complex due to substantial uncertainties at different project phases, including the R&D phase and commercialization phases. Several recent papers on real options indicate that valuations of R&D projects based upon an options approach have been neglected by the finance community. To help correct this deficiency, we develop a valuation model that incorporates the risk-free arbitrage features of the binomial option pricing model into a decision tree framework. We apply the model to Gillette's new MACH3 project to illustrate how one can use the options approach rather than the conventional DCF method to value an R&D investment involving the introduction of a new product. In addition, we demonstrate how valuation can be linked to a company's stock price to make more-meaningful economic decisions in the real world. Our approach enhances traditional economic analysis methods and thinking by linking capital budgeting decisions and stock prices within an options framework. The purpose is to demonstrate value of future opportunities for companies that strive to maintain stock price growth. In doing so, we challenge the typical engineering economic analysis that views engineering projects in isolation, thereby creating a big gap between theory and practice.

Higher Third-Quarter Revenues Help Boost Biotechnology Stocks

Biotechnology company stocks are experiencing new strength. In the week following the Presidential election, the stocks of at least a dozen prominent companies rose between 15 and 35% in value. This is a big change for biotechnology stocks—they have remained pretty much in the doldrums since April. Also contributing to the growth in stock prices have been recent third-quarter reports of strong revenues for many companies, new regulatory positions that look positive for both the biopharmaceutical and agricultural sides of the industry, and a belief that the incoming Clinton Administration will look favorably on high-technology areas. One week after the election, the National Association of Securities Dealers Automated Quotations (NASDAQ) national market for over-the-counter stocks, on which most biotechnology companies' stocks trade, rose about 5% to a new composite index high of 635. By the end of that week, stock prices dipped briefly when investors sold stocks to make profits. At the same time, the ...