Stock Prices Of Firms Research Articles

Dividend Policy and Share Price Volatility of Listed Construction Firms at the Nairobi Securities Exchange, Kenya

The inherent volatility in all stock market scares low risk takers from the financial market and is capable of deterring investments. One of the factors that drives investors’ reactions to stock pricing is the dividend policy. This study examined the influence of dividend policy on the volatility of stock prices of construction firms listed at the Nairobi Securities Exchange for the period spanning five (5) years from 2019 to 2023. The study was dealt with on the following objectives; to examine the influence of dividend pay-out on share price volatility of listed construction firms at the NSE, Kenya, to determine the influence of dividend yield on share price volatility of listed construction firms at the NSE, Kenya. The study was guided by the: Dividend relevance theory, and dividend irrelevance theory. This study adopted a correlational research design while dealing with the research objectives. A census method was employed in data collection before analysis of the audited financial statements that was downloaded from the firm websites in arriving at detailed and well informed conclusions by employing Multiple regression, Correlation and ANOVA techniques using the Statistical Package for Social Sciences (SPSS) to establish the existence (or lack of it) of the relationship between the independent variables and the dependent variable of the study. The findings revealed that dividend policy influenced share price volatility by; dividend pay-out ratio (r=0.111, β=0.036, t=4.7240); and dividend yield (r= -0.018, β= -0.003, t= 2.7130). The study recommended that potential and existing investors should opt for listed firms in the construction sector with a high dividend payout ratio compared to the earnings generated by the firms; Investors to invest in firms with high dividend payouts. The study achieved its main objective. Keywords: Dividend Policy, Dividend Pay-out, Dividend Yield, Share Price Volatility

Secrecy culture and sensitivity of investment to stock prices: Evidence from emerging markets

This paper investigates the effect of secrecy culture on the relationship between corporate investments and stock prices. We argue that managers from secretive cultures are more likely to rely on stock prices as an additional source of information, thereby leading to greater sensitivity of their investments to stock prices. Consistent with our arguments, we show that firms headquartered in countries with higher levels of secrecy culture exhibit stronger sensitivity of corporate investments to stock prices. Our results hold across various estimation strategies, in different sub-samples and for alternative proxies of secrecy culture and corporate investments. Furthermore, we show that investments exhibit greater sensitivity to stock prices of peer firms in countries that score high on secrecy.

Revisiting the ability of research and development activities to improve value relevance

PurposeThis article aims to evaluate the informativeness of accruals on stock prices. Investors may misinterpret the information contained in accruals and produce accrual anomalies. Accruals accounting improves the quality of financial statements by providing useful information, although it also contains judgments and is less objective than operating cash-flows.Design/methodology/approachWe employ data panel regression analysis to investigate the value relevance of financial information. Our study takes the object of companies listed on the Nasdaq stock exchange (NASDAQ) as the representative of the prominent stock exchange for technology-driven enterprises and entrepreneurs. Expanding the findings, we also use Shanghai Stock Exchange (SSE) data.FindingsOur research finds that accruals are still relevant. However, firms with R&D expenditures reduce the ability of accruals to explain stock prices for non-technology firms and firms without intangible assets. After analyzing only tech firms (and firms with intangible assets), our tests show that R&D expenditures improve the relevancy of accruals. These findings apply to both Nasdaq and SSE.Practical implicationsPractitioners and the investment community get valuable insights into how the recognition and measurement of R&D expenditures affect the value relevance. Information about R&D increases relevancy only in firms with intangible assets and those that operate in the technology industry.Originality/valueOur paper provides benefits by using R&D expenses to affect accruals' informativeness by comparing two countries with different recognition of R&D.

Beyond borders: Interlocking directorships and stock price reactions of Islamic firms

Announcing a director's additional appointments may positively reflect the skills and negatively reflect the workload of the director and, therefore, may influence how investors perceive the shareholder value of the director's home firm. We examine the announcement effect of 276 additional appointments on the stock price of Islamic firms from 2010 to 2022. Event study tests show that the appointment of directors to other firms in Islamic jurisdictions decreases the home firm's stock price, on average. For appointments to non-Islamic firms, the stock price increases in the appointing firm's relative market capitalization, which brings prestigious benefits to the home firms.

Industry effects of corporate environmental and social scandals: Evidence from China

This study employs novel corporate environmental, social, and governance profiles to investigate the industry effects of environmental and social (ES) scandals in China. The findings reveal a notable decrease in stock prices for rival firms during scandal announcements. Further, we document a significant, positive correlation between rivals' ES performance and the abnormal returns over a five-day period surrounding the scandals. This correlation is more pronounced in rivals that disclose ES information. Additionally, relative to high-performing rivals, those with weaker ES performance significantly enhance their ES performance in the following year, driven by the perceived ES value in industry scandals. The findings also underscore the influence of state ownership, external governance environment, and industry competition on the spillover effects of ES scandals via risk channels.

Impact of investor trust on public firms’ stock price efficiency and cost of capital: Insights from a firm-level measure for investor trust

Although studies have suggested that investor trust positively influences stock price efficiency and subsequently reduces the cost of capital for public firms, few studies have employed a direct firm-level measure of investor trust to offer empirical support for this proposition. Because stock prices are more efficient surrounding earnings announcements, we construct this measure by examining how prices change when unexpected earnings reports are provided. Using US market data from 1990 to 2019 to determine how strongly investor trust affects public firms’ stock price efficiency and cost of capital, we find that stock prices of firms with higher investor trust reflect market news more efficiently and predict earnings more accurately. Furthermore, our results suggest that companies trusted more by investors can raise money more cheaply. Collectively, our findings underscore the importance of fostering investor trust as a means of enhancing stock price efficiency and reducing the cost of capital.

The Evaluation of Impacts of Multi Factor Model on TTC Stock Price: a Case in Real Estate Industry in Vietnam

Objectives: The objective of this study is to analyze the impact of macroeconomic factors on the stock price of a real estate firm, specifically Thanh Cong TCC, in Vietnam from 2014 to 2020. The study aims to assess both positive and negative influences of five macroeconomic variables on stock prices and to understand the overall business health reflected by stock fluctuations. Methods: This study utilizes a data collection method involving statistics, analysis, synthesis, comparison, and quantitative analysis to generate qualitative comments and discussion. Econometric methods, particularly regression analysis, are employed to evaluate the quantitative results and assess the impact of macroeconomic factors on stock prices. Results: The quantitative research reveals several key findings. Firstly, the stock price of Thanh Cong TCC (Y) exhibits a negative correlation with the lending rate (R) and GDP growth, indicating that higher lending rates and lower GDP growth negatively impact stock prices. Conversely, there is a positive correlation between stock prices and the risk-free rate (Rf), consumer price index (CPI), and VNINDEX, suggesting that these factors positively influence stock prices. Furthermore, the study identifies GDP growth and lending rates as having the highest impact on firm stock prices. Conclusion: In conclusion, this study highlights the importance of considering macroeconomic factors in understanding stock price fluctuations in real estate firms in developing countries like Vietnam. The findings emphasize the significant impact of lending rates and GDP growth on stock prices, indicating their pivotal role in shaping the business health and overall economic conditions. By recognizing these influences, firms like Thanh Cong TCC can better navigate market dynamics and make informed strategic decisions to enhance their performance and resilience in the face of macroeconomic challenges.

The self-contagion effect of a stock crash on the market response of the auditor’s other client

ABSTRACT This study aims to find out how information regarding a firm’s stock crash affects the stock price of other firms with the same auditor using 3,916 corporations listed in Korean stock market. The result shows that at the time of a stock crash within the industry, information regarding the crash is contagious via the auditor, as the market leverages the information audited for the crashed firm to additionally evaluate the auditor’s other clients within the industry. Moreover, the contagion effect of the crash within the same auditor to other client firms was found to not be related to the information quality of the client firm. When taking out information quality, however, a high positive discretional accruals quality is observed, and the greater the contagion effect of the crash. The results recognize and reflect the future risk of a stock crash for firms with a high amount of positive discretionary accruals due to the opportunistic incentives of managers in the market as well as market participants’ use of crash information audited by the same accounting firm. These results demonstrate that the market appreciates the audit effect on the crash and uses it for actual decision-making.

채권내재등급(BIR)의 가치관련성에 관한 연구

[Purpose]This study aims to analyze whether bond implied ratings affect the value relevance of accounting information by conveying information about firms’ future cash flows, or whether optimistic(pessimistic) information is presented to the capital market and biased investor sentiment intervenes in stock price determination using only certain information. [Methodology]We select a sample of 531 firm－year listed on the KOSPI from 2015 to 2020 for which credit ratings and bond implied ratings is available. They are divided into three groups based on the relative grade of credit ratings and bond implied ratings, and a dummy variable identifying these groups is added to the Ohlson(1995) model. [Findings]The results are as follows. First, we find that the difference between credit ratings and bond implied ratings does not in itself convey information about stock price. However, it does lead to differences in the extent to which accounting information provided by firms is reflected in firms stock price. Second, we observe that for groups with implied bond ratings higher than credit ratings(optimistic), EPS is more relevant and BPS is less relevant compared to other groups. We also observe that for the group with implied bond ratings lower than credit ratings(pessimistic) BPS is more relevant that other groups. These results suggest that investor sentiment generated by implied bond ratings disclosure affect the value relevance of accounting information. [Implications]This study is more closely reflective of the actual process in that it considers the direction of credit ratings as opposed to previous study, which defined rating inflation as the situation where the credith ratings is higher that the bond implied rating and considered it as the object of analysis.

Stock Prices and COVID-19 Stimulus Policies: Evidence From Tourism and Hospitality Industry

This study examines the impact of economic stimulus policies on tourism-related firms’ stock prices, after movement restriction announcements, and differences in the relationships between economic policy responses and stock prices for large firms vis-à-vis small firms. Using a cross-section data of 888 firms from 56 countries listed on several stock exchanges, we find a positive and significant association between the COVID-19 economic stimulus index and 1- and 2-week average changes in tourism firms’ stock prices after movement restriction announcements. Tourism firms’ stock prices responded favorably to the introduction of macrofinancial packages and monetary policies. This study complements the literature on stock market reactions during the pandemic and contributes to the growing body of literature examining its overall effect.

Sentiment's Stock Impact: Company Size's Role In Stock Price Dynamics

This study aims to present empirical evidence on the impact of investor sentiment on stock prices, test the moderating effect of firm size on the relationship between investor sentiment and stock prices, and examine potential differences in this relationship across firms of varying sizes. The sample for this study consists of 246 companies listed on the main board of the Indonesia Stock Exchange from 2018 to 2022. EViews 12 were used for data processing. The findings of the study suggest that investor sentiment has a positive impact on the stock prices of firms traded on the Indonesia Stock Exchange. Additionally, the relationship between investor sentiment and stock prices is not moderated by company size, although the effect of investor sentiment on stock prices varies across different company sizes.

Political protection: The case of large‐scale oil spills and the stock prices of energy firms

AbstractIn this study, we utilize a sample of publicly traded US energy firms to investigate the stock market responses to 40 large‐scale oil spills. Our findings reveal that the stock prices of extraction and refining firms experience significant declines during the periods surrounding these oil spill incidents, and energy pipeline firms exhibit a relatively smaller decrease. These results underscore the risk exposure shared by all energy firms, irrespective of their direct involvement in the oil spill incident. Furthermore, our study uncovers an intriguing dynamic—the influence of political connections established through lobbying activities. We observe that these political ties serve to significantly mitigate the negative market reactions to oil spills. Our results suggest that, from the market's perspective, firms with political connections are less vulnerable to the impending costs associated with oil spills when compared to their non‐politically connected counterparts.

Non-monotonicity of risk-expected return trade-off in pricing of equity securities: the case of premium board of Nigerian Stock Exchange

PurposeA stylized fact in finance literature is the belief in positive relationship between ex ante return and risk. Hence, a rational investor, by utility preference axiom can only consider committing fund in asset which promises commensurate higher return for higher risk. Questions have been asked as to whether this holds true across securities, sectors and markets. Empirical evidence appears less convincing, especially in developing markets. Accordingly, the author investigates the nature of reward for taking risk in the Nigerian Capital Market within the context of individual assets and markets.Design/methodology/approachThe author employed ex post design to collect weekly stock prices of firms listed on the Premium Board of Nigerian Stock Exchange for period 2014–2022 to attempt to answer research questions. Data were analyzed using a unique M Vec TGarch-in-Mean model considered to be robust in handling many assets, and hence portfolio management.FindingsThe study found that idea of risk-expected return trade-off is perhaps more general than as depicted by traditional finance literature. The regression revealed that conditional variance and covariance risks reveal minimal or no differences in sign and sizes of coefficients. However, standard errors were also found to be large suggesting somewhat inconclusive evidence of existence of defined incentive structure for taking additional risk in the market.Originality/valueIn terms of choice of methodology and outcomes, this research adds substantial value to body of knowledge. The adapted multivariate model used in this paper is a rare approach especially for management of portfolios in developing markets. Remarkably, the research found empirical evidence that positive risk-expected return trade-off, as known in mainstream literature, is not supported especially using a typical developing country data.

Governmental responses and firm resilience during the COVID-19 pandemic: The role of culture and politics

Using data from 180 countries and 24,833 publicly traded firms worldwide, this study examines how cultural and political factors influence the stringency of a government’s response to the COVID-19 pandemic and, in turn, the stock prices of firms and industries operating in a given country. Existing research demonstrates that government behavior during a pandemic can directly or indirectly affect stock prices. This study explores twelve political and cultural characteristics that might influence government policies. Interestingly, our results indicate that democratic and less long-term-oriented countries employ stricter responses to the pandemic. Furthermore, countries with higher individualism, coalition governments, and governments not battling for re-election appear to employ a smoothing strategy: although they implement stringent responses early on, they tend to react less aggressively when the number of COVID-19 cases increases. This study finds that increased stringency has a negative impact on corporate abnormal returns, especially during the early stages of the pandemic. Our study has important policy implications and offers valuable insights to investors: stock price reactions depend on political and cultural factors, industry, and firm characteristics. Most importantly, larger firms with more cash operating in collectivist and politically stable countries are more resilient.

Effect of firm complexity on forecasting price efficiency

Utilizing a sample of US firms spanning 1996–2021, our study presents robust evidence indicating that the stock prices of complex firms demonstrate improved forecasting price efficiency. Our analyses further uncover decreased accruals and frequent management forecasts as potential mechanisms through which complex firms enhance forecasting price efficiency. Additionally, we observe that certain preexisting conditions, such as firms’ exposure to litigation and environmental penalties, and the presence of Big 4 auditors, increase the likelihood of complex firms improving the information content of their stock prices. Overall, our findings strongly suggest that complex firms increase their efforts to ensure informative stocks.

Military directors and stock price informativeness: What's all the fuss about?

AbstractExploiting a unique hand-built dataset, belonging to non-financial firms, operating in an emerging economy, this study, first of its kind, reports that stock prices of firms with military-experienced board of directors reflect more firm specific information after controlling for board attributes, agent heterogeneity and firm level variation. The results robust to alternative specifications of informativeness and military director proxy support the notion that military-trained directors may enhance transparency in public listed companies and encourage the incorporation of more firm-specific information into stock prices. Further analysis suggests that military directors may enfeeble CEO–board nexus and settle the directional variations at the corporate board level: military directors bring discipline in the board room that translates into rigorous CEO monitoring and improved corporate governance quality.

Friends or Foes: Does the CEO Short Career Horizon Effect Firm Stock Price Crash Risk?

Friends or Foes: Does the CEO Short Career Horizon Effect Firm Stock Price Crash Risk?

The Value Relevance of Earnings and Book Values: A Case from Financial Institutions in Indonesia

Purpose: This study aims to assess the field of the accounting value relevance of earnings and book value on stock prices of banks and financial institutions listed in the Indonesia Stock Exchange. Methodology: Using a sample of available banks and financial institutions listed in the Indonesia Stock Exchange from 2014 to 2021, this paper accommodates the documented accounting information in an emerging market context by using stock price of four months after year-end as a dependent variable. This study used the panel data regression technique on 31 banks and 36 others financial institution during the study period. Findings: This research find that earnings and book value are statistically significant associated with firm stock price. Also, using these variables together is positively related to the firm stock price. Comparatively between banks and financial institutions, these obtain evidence that earnings per share is statistically more value-relevant than book value. Novelty: This research used the financial sector, both banking and other financial institutions, because both types of institutions are intermediary institutions that greatly influence a country's economy.

When attention to climate change matters: The impact of climate risk disclosure on firm market value

Concerns about climate change and its potential economic impact have prompted policymakers and institutions to introduce standards and principles to encourage the disclosure of company risks related to climate change. Past research demonstrated that such disclosure positively impacts firm stock prices. This study analyzes the magnitude and significance of climate risk disclosures within 10-K and 10-Q reports of U.S. companies through the application of novel methods in text mining and social network analysis. Furthermore, it measures the level of attention directed towards climate change at the firm level by analyzing transcripts from earnings conference calls. The study contributes to the literature by investigating the effect of climate risk disclosure on firm market value and considering where such disclosure occurs. The findings demonstrate a positive relationship between climate risk disclosures and firm value. However, this relationship can turn negative when the attention to climate change intensifies. The results of this study are of particular relevance for practitioners and policymakers who are provided with a novel instrument to quantify the magnitude of climate change risk disclosure in textual data. Regulators can identify firms particularly exposed to climate change and create incentives for disclosure, especially when firms may be disincentivized to share information about climate change risks.

Machine Learning and Event Study to Explore the Influence of ChatGPT on Microsoft Stock

In light of the increasingly vital role of Artificial Intelligence (AI) has played in this era, it is imperative to conduct a comprehensive examination of the exact impact of specific event associated with AI on advanced corporations, economies and even countries. This study focuses on analyzing the recent event involving the connection of ChatGPT to Microsoft. To be more specific, this paper employed 3 machine learning models and one Stata model event study to respectively identify the best fitted model and its precise impact. In this work, 3 machine learning have been used, namely Support Vector Regression (SVR), K-Nearest Neighbor categorization algorithm (KNN) and Random Forest, to spot the model that fits the Microsoft stock the best. Initially, data was collected from Yahoo Finance, which is set and indexed in advance. Subsequently, data is individually put to train the 3 models. Ultimately, Mean Square Error (MSE), Root Mean Squared Error (RMSE) and R squared score are calculated with care and compared to obtain the results. Additionally, after collecting the data, a sensible window of event study has been set. Experimental results demonstrated that Random Forest performs the best among the 3 models and the specific event of ChatGPT connecting to Microsoft has a limited effect on the firms stock price.