Types Of Investors Research Articles

Dividend-tax avoidance trade and its impact on the stock market

This study uncovers a unique dividend-tax avoidance trade that allows high-bracket investors to circumvent taxation on dividend income. As the first comprehensive analysis, we examine diverse investor types, implementation techniques, and the implications for stock prices. Utilizing unique account-level trading data from the Taiwan Stock Exchange, we present empirical evidence highlighting the activities of traders in both the stock and warrant markets. These traders simultaneously sell stocks, buy call warrants before the ex-dividend day, and close their positions afterward. Our findings reveal that this behavior frequently occurs in stocks with issued warrants and low imputation tax-credit ratios. Additionally, we observe substantial disparities in trading behaviors among diverse investor types, including foreign institutions, investment trusts, dealers, domestic institutions, and retail investors. The empirical results indicate that dividend-tax-avoidance trades negatively affect stock prices before dividend payments.

Entrepreneurial finance in Europe and the Russian war against Ukraine

AbstractPrior research has investigated how the prices of stocks and commodities as well as inflation levels have been affected by the Russian war against Ukraine. So far, however, we know little about the impacts of the war on the entrepreneurial finance sector. Prior research on the effects of unexpected exogenous crisis events on entrepreneurial finance suggests a strong negative impact on new and follow-on funding for entrepreneurial ventures. Our study regards the Russian war against Ukraine as an unexpected exogenous crisis event and explores its impact on the entrepreneurial finance sector. It goes beyond a mere sentiment and impact analysis and also explores the underlying reasons and mechanisms as well as potential response and coping strategies employed by entrepreneurial finance investors. Based on two surveys of European venture capital (VC) and private equity (PE) investors, we find that the war had a strong negative impact on the two types of investors and their respective funds. Both VC and PE investors report more risk-aversion of limited partners (LPs) and LPs leaving the market as important challenges resulting in an overall lower willingness of LPs to invest. This applies in particular to banks, insurance funds, and pension funds. On the portfolio firm level, securing equity financing and maintaining liquidity were considered pressing issues. Overall, the situation seems to be more difficult for portfolio companies of VC as compared to PE investors. For the former, the financing- and liquidity-related issues seem to be more existential and survival-threatening. Responding to these challenges, both VC and PE investors altered their industry focus and put more emphasis on entrepreneurial experience. Financial investment selection criteria such as financial valuation, profitability, and cash- as well as revenue-generating capacity also increased in importance. Again, differences between VC and PE investors exist. Our study has implications for entrepreneurial finance theory and practice and concludes with an agenda for research on the impacts of the Russian war against Ukraine on entrepreneurial finance.

Institutional investor behaviour and the energy transition: A complexity framework for accelerating sustainable finance from UK investors

Despite sustainable investment flows having increased significantly over the past decade for transforming the current energy system, a large investment gap remains. This research explores the complex links between institutional investors' expectations on the speed of the energy transition and their sustainability-related investment behaviours. Through in-depth semi-structured interviews with institutional investors, we construct a complex system model using a causal mapping approach, illustrating complex relationships within the sustainable investment system. Our contribution involves the development of multi-layer cognitive maps for different types of institutional investors, followed by a composite causal map that dissects key investment behaviours and investor expectations. Results reveal interlinked concepts influencing investment behaviour and highlight feedback loops with potential amplifying effects on investor expectations and investment behaviour. Two critical feedback loops emerge: 1) the interplay between political and financial support for the energy transition and the associated cost, and 2) the intricate relationship between sustainability factors and asset valuation. Addressing these interconnected issues simultaneously and monitor negative feedback loops that may curtail sustainable finance flows are vital. The results reveal heterogeneities amongst institutional investors such as fiduciary duties, stranded assets, the importance of fossil fuels in the energy system. In sum, our insights provide a foundation for holistic energy policies and a reference system for evaluating policies aimed at accelerating green finance.

Effects of Investment Competition Rate by Investor Type on Short- and Long-term Stock Returns in the Korean IPO Market

This study empirically investigates whether the investment competition rate by investor type (institutional demand prediction competition rate, general public offering competition rate, and employee stock subscription rate) in the Korean IPO market is informative in predicting future stock prices after IPO. The results of analyzing the IPO sample from 2001 to 2021 are as follows. First, we find that firms with a high competition rate for institutional demand forecasting have more efficient public offering prices and an increased external monitoring effect, reducing long-term underperformance anomalies. Second, we find that firms with high public offering subscription rates show increased short-term overreaction behavior after an IPO and increased underperformance anomalies in the long term. Third, we find that firms with a high employee stock subscription rate partially reduce long-term underperformance for two years after their IPO. Overall, this study’s results empirically show that non-financial information (investment competition rate) available in the IPO market is useful for evaluating the quality of IPO firms and predicting future performance.

R&D investments in emerging market firms: the role of institutional investors and board interlocks

Despite the increase in institutional investor shareholdings in emerging market firms, their impact on R&D investments has received scant attention in the literature. By integrating agency and resource dependence perspectives, we examine the role of different types of institutional investors and their interactions with board interlocks in shaping their preference for R&D investment in their portfolio firms. We test our hypotheses on a sample of 2,478 Indian firm‐year observations from 2005 to 2019, using various estimation techniques. Our results indicate that different categories of institutional investors have distinct preferences for R&D investment. Specifically, we find that ownership by both foreign institutional investors and mutual fund investors negatively impacts R&D investments in firms. While board interlocks positively moderate the impact of institutional investors such as banks and financial institutions and foreign institutional investors on R&D investments in firms, this moderation is negative in the case of mutual fund investors and R&D investments in firms. We contribute to the understanding of the determinants of R&D investments in emerging market firms, with a specific focus on institutional investor ownership and add to the nascent literature on the interaction between two forms of governance, i.e., ownership and board characteristics, in shaping this firm strategy.

Prospect theory and asset allocation

We study the asset allocation of an investor with prospect theory (PT) preferences. First, we solve analytically the two-asset problem of the PT investor for one risk-free and one risky asset and find that the reference return and the level of risk aversion or risk seeking (diminishing sensitivity) affect differently less ambitious and more ambitious investors: the less ambitious investor decreases her exposure to the risky asset when increasing her reference return or the level of diminishing sensitivity, while the more ambitious investor increases her exposure to the risky asset when increasing her reference return or the level of diminishing sensitivity. However, both less and more ambitious investors decrease their exposures to the risky asset when increasing their degrees of loss aversion. In a comprehensive sensitivity analysis, we investigate how different aspects of the PT investor’s preferences contribute to her risk taking, performance and happiness. We observe, for instance, that the investor’s happiness decreases with her increasing level of ambition. Second, we perform simulations to examine concrete solutions of the theoretical two-asset problem for different types of the PT investor and for different characteristics of the risky asset and find that the assumption of skewness, as opposed to symmetry, changes the optimal investment in the risky asset. Third, we empirically investigate the performance of a PT portfolio when diversifying among a stock market index, a government bond and gold, in Europe and the US. We focus on investors with PT preferences under different scenarios regarding the reference return and the degree of loss aversion and compare their portfolio performance with the performance of investors under mean–variance (MV), linear loss averse and CVaR preferences. We find that, in the US, PT portfolios significantly outperform MV portfolios (in terms of returns) in most cases.

Robust Portfolio Optimization with Environmental, Social, and Corporate Governance Preference

This study addresses the crucial but under-explored topic of ambiguity aversion, i.e., model misspecification, in the area of environmental, social, and corporate governance (ESG) within portfolio decisions. It considers a risk- and ambiguity-averse investor allocating resources to a risk-free asset, a market index, a green stock, and a brown stock. The study employs a robust control approach rooted in relative entropy to account for model misspecification and derive closed-form optimal investment strategies. The key contribution of this study includes demonstrating, using two sets of empirical data on asset returns and ESG ratings, the substantial influence of ambiguity on optimal trading strategies, particularly highlighting the differential effects of market, green, and brown ambiguities. As a by-product of our analytical solutions, the study contrasts ambiguity-averse investors with their non-ambiguity counterparts, revealing more cautious risk exposures with a reduction in short-selling positions for the former. Furthermore, three types of investors who employ popular suboptimal strategies are identified, together with two loss measures used to quantify their performance. The findings reveal that popular strategies, not accounting for ESG and misspecification in the model, could lead to significant financial costs, with the extent of loss varying depending on those two factors: investors’ ambiguity aversion profiles and ESG preferences.

Trading behavior by foreign and domestic investors

Purpose- Momentum, a well-known anomaly in financial markets, has garnered considerable attention from both academicians and market participants due to its implications for the market efficiency hypothesis and investment plans of investors. While momentum trading can yield excess returns, it is not a possible strategy for all investors because if one segment of investors employs a momentum trading strategy to profit from their trades, it requires another type of investor to take the opposite position to clear the market. Methodology- I investigate the momentum trading behavior of investors in different segments of Borsa İstanbul. Specifically, I focus on the momentum trading behavior among local and foreign investors and private and institutional investors. Findings- The results show that foreign investors’ stock holdings are positively associated with past returns inferring momentum trading while domestic investors are contrarians. Further analysis of domestic investors’ investing strategies reveals that the contrarian trading of domestic investors is mainly driven by individual investors. Conclusion- The results show that foreign investors’ stock holdings are positively associated with past returns inferring momentum trading while domestic investors are contrarians. Also, the contrarian trading of domestic investors is mainly driven by indvidual investors. Keywords: Momentum trading, investor behavior, foreign investor, domestic investor, panel data JEL Codes: G40, G11, G14

CSR disclosure and investor social preferences: heterogenous investor responses to media reports on corporate greenwashing

Purpose There is emerging evidence in the accounting literature that investors react negatively to corporate greenwashing. But does that hold for all investors, or do different types of investors react differently? This paper aims to study retail investors’ responses to media reports on corporate greenwashing and how these responses depend upon the investors’ social value orientation. The authors argue that media reporting on corporate greenwashing negatively affects the rationale for allocating funds to firms engaging in greenwashing. The authors also expect this reaction to be stronger for prosocial investors compared to proself investors. Design/methodology/approach The authors conduct an online experiment with 229 participants representing retail investors in the German-speaking countries. Findings The results show that retail investors who received media reports on deceptive disclosure invest more funds in the company that does not engage in greenwashing (and less in the firm that engages in greenwashing) than investors who did not receive these reports. The authors’ results provide novel evidence that this effect primarily holds for investors with a prosocial value orientation. Finally, the authors’ data show that lower trust in the firm that engages in greenwashing partially mediates the effect of media reports on investor choices. Originality/value The authors provide unique evidence how different types of investors react to media reports on greenwashing. The authors find that moral motives, rather than risk-return considerations, drive investor responses to greenwashing. Overall, these findings support the important function of the media as an intermediary in stock market participation and highlight the pivotal role of individual traits in investors’ responses to greenwashing.

Analysis of Representative Stocks in the UK Supermarket Industry

This essay provides a comprehensive analysis of three major supermarket stocks: Marks & Spencer (M&S), Sainsbury's, and Tesco. The analysis focuses on evaluating the risks, profitability, market ratios, and suitability for different types of investors. M&S exhibits the highest level of risk, while Tesco and Sainsbury's appear to be more stable. M&S is the most profitable stock, followed by Tesco and Sainsbury's. In terms of market ratios, M&S shows potential undervaluation and growth opportunities, Sainsbury's offers a high dividend yield, and both Sainsbury's and Tesco display positive momentum. The preferred stock choices for different types of investors are Sainsbury's for value investors, M&S for growth investors, Tesco for index investors, and Sainsbury's for income investors. These results are used for different investors to analyze and decide which company they will invest to earn more profit in its operation.

Analysis of Investors’ Choices in Technology Companies

This paper examines how to analyze which technology companies are suitable for different types of investors through various financial indicators. First, this paper chooses four technology companies, namely Tesla, Tencent, Microsoft and Apple. Next, Yahoo searches for various profit and loss metrics for several companies and groups these metrics into three categories, including risk, profitability and market ratio. Finally, reasonable suggestions are given by analyzing the investment preferences of nine kinds of investors. The nine types of Investors are price/earnings to growth ratio investors (PEG investors), discounted cash flow Investors (DCF investors), income investors, value investors, index investors, momentum investors, insider investors, ratio analysis and stock buyer. According to the analysis results, PEG investors and DCF investors may choose Tesla, while DCF investors and income investors may choose Tencent. In addition to index investors, other investors are likely to choose Microsoft. Apple is likely to be picked by PEG investors, value investors and momentum investors. The research significance of this paper is to help investors who lack certain financial knowledge to choose their own types of stocks, and to describe the characteristics of different types of investors to help investors judge which investment method is suitable for them.

How Investors Choose Assets Among Pfizer, Walgreens, and CVS

Investment is one of the most important economic activities, and a reasonable investment method can help investors continuously obtain stable returns and complete the process of wealth accumulation. The healthcare industry, as a technology and capital-intensive industry, has always been a favored area for investors. This study selected three companies, Pfizer, Walgreens, and CVS, and analyzed financial data from different perspectives, including risk, profitability, and market ratio; Based on these data, this study determined the investment preferences of several types of investors in three companies, and the results showed that value and return investors would invest in Pfizer and Walgreens, while stock repurchase investors would invest in CVS. The analysis in this article is crucial for helping people determine which type of stock to invest in, thereby improving their chances of outperforming the market.

The investment choices of different investors for energy companies

This research delves into the dynamic field of energy investment by investigating how different types of investors make choices regarding energy companies, employing a combination of literature analysis, data collection, and quantitative methods to explore the preferences of distinct investor categories. The central research question revolves around discerning the investment inclinations of diverse investor segments and constructing tailored investment portfolios based on their preferences, using a systematic framework encompassing data collection, data analysis, and interpretation stages. The study's main findings reveal distinct investor preferences within the energy sector, shedding light on the types of enterprises that align with different investor profiles, and thus, enabling the construction of bespoke investment portfolios that cater to these preferences. The conclusions drawn from this research hold significant application value in guiding investors, both individual and institutional, in optimizing their energy investments, fostering sustainable energy practices, and contributing to the continued evolution of the global energy landscape.

Single-family rental (SFR) investor types, property conditions, and implications for urban neighbourhoods: evidence from Memphis, Tennessee

Over the last decade the American single-family rental (SFR) market experienced consequential financialisation. The American SFR industry was once dominated by more local, smaller ‘mom-and-pop’ landlords. Despite this, little is known regarding the different types of SFR investors, what types of properties different investor types buy, and what types of neighbourhoods are targeted by different investor types. This article examines a majority-Black American city, Memphis, Tennessee. A city impacted significantly by the subprime mortgage crisis and this subsequent rise in SFR investors in the years that followed. Using multivariate statistics, we find institutional investors are less likely to buy a property in relatively poorer condition than categorically smaller investors. Moreover, institutional actors are more likely to purchase an SFR if it is newer, lower-valued, and located in a neighbourhood with relatively large Black or Hispanic populations and a lower-poverty rate. These findings challenge some of the existing SFR investor literature and have implications for urban planning, research, and policy.

Heuristic decision-making and behavioral heterogeneity in the Chinese stock market

ABSTRACT This paper applies a heuristic decision-making approach to a heterogeneous agent model (HAM) with two types of investors and use the heuristic HAM to investigate excess volatility in the Chinese stock market. In this heuristic HAM, we use simple moving averages instead of complex capital asset pricing models to assess the benchmark fundamentals which play an essential role in valuing the excess volatility of financial markets. We test the model using historical observations of China securities index 300. Our estimation results show that the model can replicate observed price dynamics and the estimated market sentiment matches the booms and busts well. Our analysis of the most volatile episodes, in particular, the 2008 financial crisis, the 2015 Chinese stock market crash, and the COVID-19 epidemic, further corroborates the existence of behavioural heterogeneity in the Chinese stock market. This work offers several implications for assessing the risk in financial markets and measuring the stability of the financial system.

Decrypting the specifics of professional football club investments: Why? What? How? An integrative review

PurposeSince the beginning of the 2000s, investors have more frequently invested into professional football clubs, thereby radically changing the industry landscape. This review's purpose is to analyze and synthesize the state of research to understand motives, roles and implications of football club investors, and to provide recommendations for further research.Design/methodology/approachThe paper presents an integrative literature review by identifying relevant English articles based on the search terms investor, owner, investment, ownership, shareholder and stakeholder in combination with soccer or football. Around 2,431 articles were reviewed. A total of 129 relevant articles was analyzed and synthesized within eight subject areas.FindingsInvestors in professional club football is a young research stream with a clear European focus. Investor motives and roles are diverse and implications are multidimensional. Investors mostly aim for indirect returns rather than pure profit- or win-maximization.Research limitations/implicationsFootball clubs comprise an own investment class for which the identified, unique specifics must be considered to develop a financially successful investment model. Thorough academic research of investors' inherent characteristics, investor-club pairings and the pillars of long-term strategies for successful investor-club liaisons are avenues of future research. Furthermore, the results illustrate the need for research outside of Europe.Originality/valueThe paper is the first systematic, integrative review of existing literature in the domain of equity investments into professional club football. The findings genuinely show that, depending on the investor type and ownership structure, investors have a wide impact in professional club football.

When the Dragon comes Home to Roost: Chinese Investments in the EU, National Security, and Investor–State Arbitration

Abstract The gradual rise of China as an economic, normative, and lending power has resulted in more protectionist measures in areas of the world that traditionally championed economic liberalization. Currently, 21 out of 27 European Union (EU) Member States have national laws or measures in place for the screening or review of foreign investments. However, such restrictive national measures can result in investment treaty-based arbitration under the existing bilateral investment treaties concluded by 26 EU Member States with China, as evidenced by the recent arbitration initiated by Huawei against Sweden. Therefore, this article assesses whether EU Member States are likely to see a spike in investor–State arbitral claims initiated by Chinese investors as a result of the former’s investment screening measures. To achieve this aim, the article first looks at the bilateral investment treaties (BIT)-level variables that can influence the initiation of arbitration against EU Member States, such as the presence and type of investor–State arbitration (ISA) clauses, the types of investments being made, the coverage of the pre- and/or post-establishment phases, or the inclusion of ‘non-precluded measures’ clauses. This is then followed by a look at other variables, such as the decreasing number of Chinese foreign direct investment into EU countries, the treatment of Chinese investors in recent high-profile cases, and the importance of security alliances. The article concludes that those EU States are at a higher risk of being respondents in arbitrations initiated by Chinese investors whose BITs with China include modern ISA clauses, cover the pre-establishment phase, and lack non-precluded measures clauses. However, EU States should wait for the outcome of the Huawei v Sweden arbitration before deciding whether the amendment or termination of the existing BITs with China is needed.

The Microstructure of Mis-Selling: Financial Investment Markets and Regulation in Korea

Financial consumer protection has been ever strengthened around the world after the Global Financial Crisis. Nonetheless, there occurred mis-selling events that caused massive damage to financial consumers and mis-selling still accounts for the largest proportion of financial consumer disputes and complaints recently filed in Korea. Based on the regulatory framework in Korea, this study aims to explore the microstructure of mis-selling, that is, the major influential factors and their interactions. For this, an analytical model is proposed concerning the suitability principle and explanation duty in financial investment markets. The model consists of three basic components: the types of investors, a financial services company’s objective of profit maximization, and the damage compensation structure set by the regulator. Using the model, the simulation results provide meaningful implications. Strict liability turns out to be effective to prevent mis-selling. The suitability principle is more prone to be violated than the explanation duty and therefore more emphasis should be placed on the former in terms of efficient regulation. Furthermore, this study found a meaningful link between business conduct regulation and financial education, which are the two pillars in financial consumer protection.
 
 Received: 4 October 2023 / Accepted: 19 Dcember 2023 / Published: 5 January 2024

ПОРІВНЯЛЬНА ХАРАКТЕРИСТИКА ВІЙСЬКОВИХ ОБЛІГАЦІЙ ЯК ДЖЕРЕЛА ФІНАНСУВАННЯ ВІЙСЬКОВИХ ПОТРЕБ У США ТА УКРАЇНІ

The history of the introduction of war bonds as a source of financing for various wars in the United States is presented. The share of tax revenues and funds from the sale of military bonds to finance military expenditures is graphically shown. A tendency to reduce the share of military loans among the sources of financial support for military expenditures and to shift the focus to tax revenues is identified. The role of war bonds in financing military expenditures during World War II is described in detail. The main characteristics of military bonds in the United States are presented: maturity, face value, interest rate, and investors. The work of the government to popularize military bonds in the United States is described. The article characterizes military bonds for financing military needs in Ukraine during the period of occupation of part of the territories of Donetsk and Luhansk regions by Russian mercenaries in 2014 and during the full-scale invasion in 2022–2023. The ways the government has simplified the process of purchasing military bonds, including through the Diia app, are described. The structure of financing defence and security expenditures in 2022–2023 is graphically presented. The dynamics and structure of tax revenues, military bonds, and non-tax revenues as sources of financing military expenditures are analyzed. The focus is on the redemption of military bonds by the NBU through the issue of hryvnia in 2022. It is proved that the effectiveness of the sale of military bonds in the United States and Ukraine depends on the level of patriotism of the population, its trust in the government and faith in victory. The common features of bonds issued in the United States and Ukraine in wartime by the following features are presented: the purpose of bonds issuance, investors' motives, the selling price, and placement of bonds on the stock market. The distinctive features based on the following criteria are identified: currency of bond placement, face value of the bond, types of investors, bond maturity, bond yield, frequency of bond placement in the primary market, and government agencies responsible for bond placement and promotion. It is proved that the issue of military bonds provides countries with the opportunity to attract financial resources for the long term, which allows them to plan and finance strategic military projects, purchase weapons and other military equipment.

Harnessing Green Bonds for Sustainable Development: An Empirical Impact and Insight

The study aims to discuss the role of green bonds in financing sustainable development projects, highlighting their significant positive impact on resource mobilization, attracting different types of investors and achieving ecological as well as social results. Making financial returns line up with good ecological results improves the transparency and credibility of financed projects. However, within the sustainable finance space, green bonds are shown to be a strong instrument despite some variation in their influence on societal development and dependence on regulatory frameworks. The findings from this study confirm theoretical assumptions that integrating environmental, social, and governance (ESG) aspects into financial decision making would channel capital to initiatives with substantial sustainability benefits. In conclusion, this analysis suggests that more comprehensive studies should be undertaken to overcome limitations associated with sample size; reliance on self-reported data; and the fact that it is a cross-sectional survey. Henceforth, future research should focus on longitudinal analyses; comparative evaluations of sustainable finance instruments; and more objective measures of impact so as to provide deeper knowledge about long-term effects and general consequences of green bond issues.