International Journal of Financial Studies

22 pages, 349 KiB

Open AccessArticle

Audit Expectation Gap in the External Audit of Banks in Mozambique

by

Osvaldo Massicame

,

Helena Coelho Inácio

and

Maria Anunciação Bastos

Int. J. Financial Stud. 2023, 11(4), 138; https://doi.org/10.3390/ijfs11040138 - 15 Nov 2023

Viewed by 485

Abstract

The function of the external audit, largely as a result of the scandals and financial crises that have occurred, has been the subject of debate and criticism. This aspect has fostered discussions around the Audit Expectation Gap, which, in short, is understood as [...] Read more.

The function of the external audit, largely as a result of the scandals and financial crises that have occurred, has been the subject of debate and criticism. This aspect has fostered discussions around the Audit Expectation Gap, which, in short, is understood as the differences in expectations between the audit’s results and what is expected from it. In this context, the present study aimed to evaluate the existence of the Audit Expectation Gap in the external audit of banks in Mozambique. For this purpose, auditors, regulators/supervisors, managers and financial staff from banks and companies were surveyed. The results showed statistically significant differences in the opinions of respondents regarding matters related to the scope and objective of the audit, materiality and risk, and different aspects of responsibility. Thus, evidence was obtained that, in addition to reviewing audit regulations for Mozambican credit institutions and financial companies, there is a need for clarification of matters such as the level of security in external audits (which cannot be absolute); the responsibilities of management and auditors in areas such as assessing and reporting compliance with the ratios and prudential limits imposed by the Bank of Mozambique; assessing the suitability of risk management at the bank; and the prevention, detection and reporting of fraud. Full article

(This article belongs to the Special Issue Accounting and Financial/Non-financial Reporting Developments)

18 pages, 294 KiB

Open AccessArticle

Corporate Digital Transformation and M&A Efficiency: Evidence Based on Chinese Listed Companies

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Int. J. Financial Stud. 2023, 11(4), 137; https://doi.org/10.3390/ijfs11040137 - 14 Nov 2023

Viewed by 391

Abstract

In order to help enterprises to achieve high-quality development and improve the capital market regulatory policies by supporting with more factual basis from China, this paper conducts research on clarifying impact mechanism of digital transformation on M&A efficiency of listed companies. Taking the [...] Read more.

In order to help enterprises to achieve high-quality development and improve the capital market regulatory policies by supporting with more factual basis from China, this paper conducts research on clarifying impact mechanism of digital transformation on M&A efficiency of listed companies. Taking the mergers and acquisitions of listed companies from 2007 to 2021 as a research sample, the influence mechanism of the digital transformation degree of companies on their M&A efficiency was studied. The research results show that the digital transformation of listed companies will improve their M&A efficiency. Digital transformation will reduce the degree of mispricing stocks of M&A companies, curb conflicts between managers and agents of M&A companies, and improve their M&A efficiency. Further research finds that the promotion effect of digital transformation on M&A efficiency is more significant in non-state-owned companies, with a higher degree of financing constraint and high analyst attention. In the future, regulatory authorities should actively promote the digital transformation of listed companies, curb mispricing and management agency problems in the capital market with digital governance, and improve the efficiency of mergers and acquisitions in the capital market. This paper not only provides a more factual basis on concrete case from China but also enriches the related empirical analysis on corporate digital transformation and M&A efficiency. Full article

17 pages, 501 KiB

Open AccessArticle

Assessing the Performance and Risk-Adjusted Returns of Financial Mutual Funds

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Int. J. Financial Stud. 2023, 11(4), 136; https://doi.org/10.3390/ijfs11040136 - 09 Nov 2023

Viewed by 442

Abstract

In this study, we provide a comprehensive examination of the performance of financial (specialty sector financial) mutual funds over a 23-year period, a much longer time frame than what has been analyzed in previous literature. To fully understand the performance of these mutual [...] Read more.

In this study, we provide a comprehensive examination of the performance of financial (specialty sector financial) mutual funds over a 23-year period, a much longer time frame than what has been analyzed in previous literature. To fully understand the performance of these mutual funds, we consider multiple factors, including risk-adjusted performance, both unconditional and conditional multifactor analysis, and market timing and selectivity. Financial mutual funds have higher risk-adjusted performance than the overall market and financial sector benchmarks. However, fund alphas are not different from zero, and managers do not exhibit market timing or security selection abilities. Our analysis not only includes the overall performance of these mutual funds, but we also delve into sub-samples before and after the 2008 financial crisis and during the recent Coronavirus pandemic. Full article

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23 pages, 551 KiB

Open AccessArticle

Implementing Toll Road Infrastructure Financing in Indonesia: Critical Success Factors from the Perspective of Toll Road Companies

by

Muhammad Fauzan

,

Heri Kuswanto

and

Christiono Utomo

Int. J. Financial Stud. 2023, 11(4), 135; https://doi.org/10.3390/ijfs11040135 - 09 Nov 2023

Viewed by 545

Abstract

Having effective and efficient financing is one of the most critical steps in accelerating public infrastructure development, including toll roads. This study aims to identify critical success factors (CSFs) for implementing toll infrastructure financing in Indonesia. Thirty-three CSFs have been identified from the [...] Read more.

Having effective and efficient financing is one of the most critical steps in accelerating public infrastructure development, including toll roads. This study aims to identify critical success factors (CSFs) for implementing toll infrastructure financing in Indonesia. Thirty-three CSFs have been identified from the literature review. A Delphi survey was conducted involving a panel of experts in the infrastructure industry. Based on the survey, it is known that the internal rate of return, affordability, investment decisions, commercial banks, financing costs, interest rate risk, control of cash flow, contract scope, and principles of risk transfer are important factors for implementing toll infrastructure financing in Indonesia. This study fills research gaps by developing a CSF model for successful toll road infrastructure financing in Indonesian PPPs, considering private perspectives and aiming to provide insights for investors and enhance understanding of country profiles in developing countries. The focus on toll road implementation in Indonesia contributes to a comprehensive understanding of CSFs for PPPs in the country. Full article

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15 pages, 1088 KiB

Open AccessArticle

The Impact of Monetary Policy on the U.S. Stock Market since the COVID-19 Pandemic

by

Willem Thorbecke

Int. J. Financial Stud. 2023, 11(4), 134; https://doi.org/10.3390/ijfs11040134 - 08 Nov 2023

Viewed by 553

Abstract

Inflation in 2021 and 2022 grew much faster than the Federal Reserve expected. The Fed downplayed inflation in 2021 and then increased the federal funds rate by 500 basis points between March 2022 and May 2023. This paper investigates how this unprecedented tightening [...] Read more.

Inflation in 2021 and 2022 grew much faster than the Federal Reserve expected. The Fed downplayed inflation in 2021 and then increased the federal funds rate by 500 basis points between March 2022 and May 2023. This paper investigates how this unprecedented tightening has impacted the stock market. To do so, it estimates a fully specified multi-factor model that measures the exposure of 53 assets to monetary policy surprises over the 1994 to 2019 period. It then uses the monetary policy betas to gauge investors’ beliefs about monetary policy between 2020 and 2023. The results indicate that changing perceptions about monetary policy multiplied uncertainty and stock market volatility. Full article

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18 pages, 1241 KiB

Open AccessArticle

Machine Learning to Forecast Financial Bubbles in Stock Markets: Evidence from Vietnam

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Int. J. Financial Stud. 2023, 11(4), 133; https://doi.org/10.3390/ijfs11040133 - 08 Nov 2023

Viewed by 422

Abstract

Financial bubble prediction has been a significant area of interest in empirical finance, garnering substantial attention in the literature. This study aims to detect and forecast financial bubbles in the Vietnamese stock market from 2001 to 2021. The PSY procedure, which involves a [...] Read more.

Financial bubble prediction has been a significant area of interest in empirical finance, garnering substantial attention in the literature. This study aims to detect and forecast financial bubbles in the Vietnamese stock market from 2001 to 2021. The PSY procedure, which involves a right-tailed unit root test to identify the existence of financial bubbles, was employed to achieve this goal. Machine learning algorithms were then utilized to predict real-time financial bubble events. The results revealed the presence of financial bubbles in the Vietnamese stock market during 2006–2007 and 2017–2018. Additionally, the empirical evidence supported the superior performance of the random forest and artificial neural network algorithms over traditional statistical methods in predicting financial bubbles in the Vietnamese stock market. Full article

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20 pages, 1780 KiB

Open AccessArticle

Cultural Influence on Corporate Sustainability: A Board of Directors Perspective

by

Diana Escandon-Barbosa

,

Jairo Salas-Paramo

and

José Luis Duque

Int. J. Financial Stud. 2023, 11(4), 132; https://doi.org/10.3390/ijfs11040132 - 06 Nov 2023

Viewed by 512

Abstract

This research aims to analyze the triple moderating effect of the board of directors in the country culture of a firm and its influence on the relationship between organizational innovation and organizational learning in corporate sustainability. A survey of 400 exporting companies of [...] Read more.

This research aims to analyze the triple moderating effect of the board of directors in the country culture of a firm and its influence on the relationship between organizational innovation and organizational learning in corporate sustainability. A survey of 400 exporting companies of different commercial products from Colombia, Peru, Ecuador, and Bolivia was used to carry out this research. We used the structural equations model to explore the analysis of the causal and moderation relationships between the variables under study. As a result, it was found that the influence of the board of directors of a firm is essential for innovation processes because they drive their results to corporate sustainability. This last approach is due to the strategic approach adopted by large companies. In the case of SMEs, it was not possible to demonstrate that the board of directors has such a degree of influence. In the case of the moderating effect of the board of directors on the country’s culture, it was possible to observe that the board of directors becomes a factor in the firm’s performance despite its geographical location, which determines the influence of culture on its operation in corporations such as SMEs. Full article

(This article belongs to the Special Issue Making Green from Green: The Truth about Sustainable Finance)

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10 pages, 269 KiB

Open AccessArticle

The Differential Effects of Internal Control Teams on Investment Decision Making Based on Industry Competition

by

Hyunjung Choi

Int. J. Financial Stud. 2023, 11(4), 131; https://doi.org/10.3390/ijfs11040131 - 03 Nov 2023

Viewed by 287

Abstract

This study investigates how a company’s internal control team affects their investment decision making, considering the level of industry competition within the South Korean capital market. A model obtained from the literature was employed to test the hypothesis. When industry competition is low, [...] Read more.

This study investigates how a company’s internal control team affects their investment decision making, considering the level of industry competition within the South Korean capital market. A model obtained from the literature was employed to test the hypothesis. When industry competition is low, the quantitative adequacy of internal control staff increases the likelihood of investment when the risk of underinvestment is high, and it decreases the likelihood of investment when the risk of overinvestment is high. However, this is not the case when industry competition is fierce. Qualitative adequacy of internal control staff—expertise—has a significant effect on investment decision making when industry competition is high, but has no significant effect when industry competition is low. These results suggest that investors should consider the quantitative and qualitative adequacy of internal control staff along with the level of industry competition when evaluating the investment efficiency of a company. Full article

(This article belongs to the Special Issue Accounting and Financial/Non-financial Reporting Developments)

27 pages, 570 KiB

Open AccessArticle

Extreme Value Theory Modelling of the Behaviour of Johannesburg Stock Exchange Financial Market Data

by

Maashele Kholofelo Metwane

and

Daniel Maposa

Int. J. Financial Stud. 2023, 11(4), 130; https://doi.org/10.3390/ijfs11040130 - 03 Nov 2023

Viewed by 688

Abstract

Financial market data are abundant with outliers, and the search for an appropriate extreme value theory (EVT) approach to apply is an endless debate in the statistics of extremes research. This paper uses EVT methods to model the five-year daily all-share total return [...] Read more.

Financial market data are abundant with outliers, and the search for an appropriate extreme value theory (EVT) approach to apply is an endless debate in the statistics of extremes research. This paper uses EVT methods to model the five-year daily all-share total return index (ALSTRI) and the daily United States dollar (USD) against the South African rand (ZAR) exchange rate of the Johannesburg stock exchange (JSE). The study compares the block maxima approach and the peaks-over-threshold (POT) approach in terms of their ability to model financial market data. The 100-year return levels for the block maxima approach were found to be almost equal to the maximum observations of the financial markets of 10,860 and R18.99 for the ALSTRI and the USD–ZAR, respectively. For the peaks-over-threshold (POT) approach, the results show that the ALSTRI and the USD–ZAR exchange rate will surpass 17,501.63 and R23.72, respectively, at least once in 100 years. The findings in this study reveal a clear distinction between block maxima and POT return level estimates. The POT approach return level estimates were comparably higher than the block maxima estimates. The study further revealed that the blended generalised extreme value (bGEVD) is more suitable for relatively short-term forecasting, since it cuts off at the 50-year return level. Therefore, this study will add value to the literature and knowledge of statistics and econometrics. In the future, more studies on bGEVD, vine copulas, and the r-largest-order bGEVD can be conducted in the financial markets. Full article

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15 pages, 2207 KiB

Open AccessArticle

Evaluation of Factors Contributing to the Effectiveness of Internal Audit Quality in Pakistani Commercial Banks

by

Madiha Afzal

Int. J. Financial Stud. 2023, 11(4), 129; https://doi.org/10.3390/ijfs11040129 - 02 Nov 2023

Viewed by 657

Abstract

The Pakistani banking sectors facing numerous challenges because of poor internal audit quality. Internal audit quality has long been a source of contention. The current study examines the factors that affect internal audit quality in Pakistani commercial banks. Internal audit quality evaluated through [...] Read more.

The Pakistani banking sectors facing numerous challenges because of poor internal audit quality. Internal audit quality has long been a source of contention. The current study examines the factors that affect internal audit quality in Pakistani commercial banks. Internal audit quality evaluated through potential factors such as competence, objectivity, performance, board audit committee support, and independence. Along with these factors, a questionnaire designed to determine the nature of the problems confronting Pakistani commercial banks. 102 questionnaires disseminated among the chief internal auditor, chief financial officer, board audit committee, and managers of 26 listed commercial banks. The impact of the factors on internal audit quality investigated using a binary logit regression model and multiple correspondence analyses. Findings show that performance, competence, and objectivity factors are statistically positively significant that influenced internal audit quality to improve it. This research helps improve the internal audit quality in Pakistani commercial banks. Full article

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22 pages, 408 KiB

Open AccessArticle

Does Economic Policy Uncertainty Explain Exchange Rate Movements in the Economic Community of West African States (ECOWAS): A Panel ARDL Approach

by

Maud Korley

and

Evangelos Giouvris

Int. J. Financial Stud. 2023, 11(4), 128; https://doi.org/10.3390/ijfs11040128 - 01 Nov 2023

Viewed by 521

Abstract

Research proposes that economic policy uncertainty (EPU) leads to exchange rate fluctuations. Given that African countries experience higher levels of uncertainty in developed/emerging markets, we examine the extent to which domestic and foreign EPU affect exchange rates for a panel of 12 ECOWAS [...] Read more.

Research proposes that economic policy uncertainty (EPU) leads to exchange rate fluctuations. Given that African countries experience higher levels of uncertainty in developed/emerging markets, we examine the extent to which domestic and foreign EPU affect exchange rates for a panel of 12 ECOWAS countries covering the period 1996–2018. In order to account for non-stationarity, cross-sectional dependence, and heterogeneity, the paper employs the dynamic heterogeneous panel approach. The ECOWAS has a dual currency arrangement ranging from a common currency union (CFA) to floating exchange rates (Non-CFA). To account for this, this study splits the sample data into CFA and Non-CFA areas. In addition, this study considers the role of the global financial crisis in the exchange rate-EPU nexus. Our results show that domestic EPU has a positive effect on exchange rates in the long run for Non-CFA areas. Different from the existing literature, our results suggest that domestic EPU does not explain exchange rate fluctuations in the short run. For all countries, foreign EPU leads to appreciation in the long run and depreciation in the short run. Interestingly, foreign EPU has a more dominant effect on exchange rate fluctuations in the selected countries than domestic EPU. This may reflect the weak institutional framework in these countries, which allows external fluctuations to have a greater impact. Moreover, this could be attributed to the increase in foreign capital flows during the sample period. Thus, these countries must develop effective policies to effectively absorb these external shocks. Results are robust to different proxies of EPU. Full article

21 pages, 1984 KiB

Open AccessArticle

An Empirical Analysis of the Dynamics Influencing Bank Capital Structure in Africa

by

Ayodeji Michael Obadire

,

Vusani Moyo

and

Ntungufhadzeni Freddy Munzhelele

Int. J. Financial Stud. 2023, 11(4), 127; https://doi.org/10.3390/ijfs11040127 - 01 Nov 2023

Viewed by 540

Abstract

Financial institutions, particularly banks, have long grappled with the dilemma of structuring their capital optimally. This process, commonly referred to as capital structure decision-making, is of paramount importance, especially within the financial services sector, where strict regulations are imposed by reserve and central [...] Read more.

Financial institutions, particularly banks, have long grappled with the dilemma of structuring their capital optimally. This process, commonly referred to as capital structure decision-making, is of paramount importance, especially within the financial services sector, where strict regulations are imposed by reserve and central banks in alignment with global Basel guidelines. This study unveils the key factors that determine the capital structure choices of African banks, using panel data encompassing 45 listed banks across six nations that had embraced the Basel III Accord spanning the years 2010 to 2019. The study used the system-generalised moment methods (sys-GMM) estimator to fit the formulated panel data regression model. The study findings showed positive associations between ZSCORE, an indicator of bank financial stability, and net interest margin ratio (NIMR) with bank leverage (TCTE). In addition, the results revealed positive correlations between earnings volatility (EV), profitability (P), and risk (R) with bank leverage (TDCE). This suggests that profitable banks are inclined to favour debt financing, a phenomenon driven by their ability to comfortably service debt obligations with free cash flows. This study’s overarching conclusion underscores the dominant influence of the Liquidity Coverage Ratio (LCR) on African bank capital structures. Whether assessing traditional or Basel III-prescribed measures of bank leverage, LCR consistently emerged as the primary determinant. This finding is of significant relevance to bank executives and regulators, offering them essential insights for informed decision-making by considering striking a balance between equity and debt financing based on financial stability, profitability, and risk profiles. Full article

(This article belongs to the Special Issue Bank Funding and Corporate Financial Policies during COVID-19 and FinTech Period)

19 pages, 332 KiB

Open AccessArticle

Bond Issuance as Reputational Signal: Debunking the Negative Perception of Additional Liability

by

Dachen Sheng

and

Heather A. Montgomery

Int. J. Financial Stud. 2023, 11(4), 126; https://doi.org/10.3390/ijfs11040126 - 30 Oct 2023

Viewed by 435

Abstract

This paper examines the determinants of bond issuance in the Chinese market and the influence of capital structure—in particular direct debt finance—on firm performance and the cost of debt. The results reveal that institutional factors in the Chinese market, in particular the involvement [...] Read more.

This paper examines the determinants of bond issuance in the Chinese market and the influence of capital structure—in particular direct debt finance—on firm performance and the cost of debt. The results reveal that institutional factors in the Chinese market, in particular the involvement of the financial authority permission process during bond issuance, enhance the credibility of firms that are able to successfully issue bonds. Empirical analysis of Chinese listed manufacturing firms over the period from 2010 to 2021 demonstrates that firms with higher outstanding levels of bonds perform better and face lower costs of both bond and nonbond direct finance. We interpret this as bond issuance approval serving as a signal to markets of an implicit government guarantee on firms that are approved to issue bonds. The agency problem is analyzed using propensity-score matching and Logit analysis, revealing a trade-off between the principal–agent conflict and conflicts of interest among different shareholders when power is very concentrated through CEO duality: the CEO simultaneously serves as the chairman of the board. In large firms, as measured by total assets, the cost-reducing effect of the principal–agent problem being mitigated by CEO duality outweighs the agency costs arising from conflicts of interest between large and small shareholders, leading to an increased likelihood of successful bond issuance. However, in large firms, as measured by market capitalization, where share ownership is likely more diversified, this effect diminishes. In conclusion, this paper posits that policymakers ought to investigate strategies for granting preferential treatment to high-growth, small to mid-sized enterprises, enabling them to secure funding through direct debt financing. Full article

16 pages, 400 KiB

Open AccessArticle

Large-Scale Portfolio Optimization Using Biogeography-Based Optimization

by

Wendy Wijaya

and

Kuntjoro Adji Sidarto

Int. J. Financial Stud. 2023, 11(4), 125; https://doi.org/10.3390/ijfs11040125 - 26 Oct 2023

Viewed by 464

Abstract

Portfolio optimization is a mathematical formulation whose objective is to maximize returns while minimizing risks. A great deal of improvement in portfolio optimization models has been made, including the addition of practical constraints. As the number of shares traded grows, the problem becomes [...] Read more.

Portfolio optimization is a mathematical formulation whose objective is to maximize returns while minimizing risks. A great deal of improvement in portfolio optimization models has been made, including the addition of practical constraints. As the number of shares traded grows, the problem becomes dimensionally very large. In this paper, we propose the usage of modified biogeography-based optimization to solve the large-scale constrained portfolio optimization. The results indicate the effectiveness of the method used. Full article

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12 pages, 298 KiB

Open AccessArticle

Digital Credit and Its Determinants: A Global Perspective

by

Tu D. Q. Le

,

Thanh Ngo

and

Dat T. Nguyen

Int. J. Financial Stud. 2023, 11(4), 124; https://doi.org/10.3390/ijfs11040124 - 25 Oct 2023

Viewed by 597

Abstract

Digital credit has gained much attention from academic researchers, practitioners, and policymakers worldwide. This study empirically evaluates the determinants of digital credit using cross-country data from 2013 to 2019. The conventional ordinary least square regression with fixed effects estimator is used to investigate [...] Read more.

Digital credit has gained much attention from academic researchers, practitioners, and policymakers worldwide. This study empirically evaluates the determinants of digital credit using cross-country data from 2013 to 2019. The conventional ordinary least square regression with fixed effects estimator is used to investigate the factors affecting the growth of digital credit. Our study highlights that the regulatory frameworks of anti-money laundering and terrorist financing, the economy’s innovative capacity, and financial development are significant factors affecting the development of digital credit, especially fintech credit. However, the findings indicate that only the innovation capacity is more critical to the expansion of bigtech credit. Nonetheless, our results provide some important implications for market participants and the authorities in promoting digital credit. Accordingly, this study contributes to the literature on the growth of digital credit when considering the critical roles of money laundering and terrorist financing frameworks and innovation capacity. Full article

32 pages, 5076 KiB

Open AccessArticle

A Bibliometric Analysis of the FinTech Agility Literature: Evolution and Review

by

Abdelkebir Sahid

,

Yassine Maleh

,

Shahram Atashi Asemanjerdi

and

Pedro Antonio Martín-Cervantes

Int. J. Financial Stud. 2023, 11(4), 123; https://doi.org/10.3390/ijfs11040123 - 20 Oct 2023

Viewed by 697

Abstract

Bibliometric analysis is crucial in understanding the evolution of research trends and knowledge in various fields. This study applies bibliometric analysis to explore the growth of the research paradigm on agility in the FinTech literature, using co-citation analysis and bibliographic coupling of selected [...] Read more.

Bibliometric analysis is crucial in understanding the evolution of research trends and knowledge in various fields. This study applies bibliometric analysis to explore the growth of the research paradigm on agility in the FinTech literature, using co-citation analysis and bibliographic coupling of selected articles. Based on this bibliometric analysis, the evolution of research on agility in the FinTech domain has been prepared, focusing on the literature related to FinTech agility between 1984 and 2022. In this study, we also address the limitations of individual analyses from Scopus and Web of Science (WOS) and propose a comprehensive approach by merging the two research databases. The results reveal significant disparities between authors, publication influences, and keyword occurrences between the WOS and merged databases. Our research highlights the importance of combining a database approach in bibliometric studies, providing valuable insights for scholars, researchers, and stakeholders. Finally, the in-depth bibliometric analysis demonstrates the significance of “FinTech agility” in the rapidly evolving FinTech sector. Financial technology companies’ agility, or ability to adapt quickly, is the foundation of their success and innovation. Full article

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13 pages, 285 KiB

Open AccessArticle

Blockholdings, Dividend Policy, Stock Returns and Return Volatility: Evidence from the UAE

by

Umar Butt

and

Trevor William Chamberlain

Int. J. Financial Stud. 2023, 11(4), 122; https://doi.org/10.3390/ijfs11040122 - 16 Oct 2023

Viewed by 682

Abstract

This paper examines the relationship between the presence of blockholdings and stock returns and return volatility in the United Arab Emirates. Earlier studies report mixed results for the direction of the relationships across both developed and emerging markets. This study focuses specifically on [...] Read more.

This paper examines the relationship between the presence of blockholdings and stock returns and return volatility in the United Arab Emirates. Earlier studies report mixed results for the direction of the relationships across both developed and emerging markets. This study focuses specifically on these relationships in a dividend policy framework. This study further investigates the role of blockholder type by distinguishing between government, individual and corporate blockholders. Our results indicate that blockholder ownership reduces stock return volatility for both non-dividend-paying and dividend-paying stocks, does not impact returns and is not perceived as expropriating the wealth of other investors. We also conclude that the blockholders do not exhibit rent-seeking behavior through the extraction of dividends and investors in UAE firms embrace the role of blockholders and the reinvestment of profits. Full article

(This article belongs to the Special Issue Cross-Cultural Corporate Governance, Firm Performance and Firm Value)

17 pages, 314 KiB

Open AccessArticle

The Impact of Family Ownership on Capital Structure and Business Performance

by

Lenka Stryckova

Int. J. Financial Stud. 2023, 11(4), 121; https://doi.org/10.3390/ijfs11040121 - 10 Oct 2023

Viewed by 710

Abstract

Financial decision making in family companies is a topical issue that has arisen from an awareness of the significant impact of family businesses on the economies of individual countries. This article deals with the capital structure and business performance of family firms in [...] Read more.

Financial decision making in family companies is a topical issue that has arisen from an awareness of the significant impact of family businesses on the economies of individual countries. This article deals with the capital structure and business performance of family firms in the Czech Republic, as there is still a significant gap in family business research and empirical verification. This study aims to investigate Czech family businesses’ corporate financing practices and compare them with population data from all active companies. The literature distinguishes between the positive and negative impacts of family ownership on capital structure and performance. Our empirical findings hypothesise that family businesses are more leveraged than non-family firms and vice versa. At the same time, a slightly positive impact from family influence on firm financial performance is indicated. This study uses descriptive statistics to detect family influence on corporate capital structure and financial performance regarding business sectors. The results of this study indicate that Czech family firms are less indebted than all/non-family businesses, and that they have proved to be more profitable in terms of ROEs and ROAs. Furthermore, significant differences in financial characteristics have been identified not just between individual business sectors but also between sample family firms and all/non-family firms within one business sector. Full article

18 pages, 1893 KiB

Open AccessArticle

Behavioral Biases and Investment Decisions of SMEs Managers: Empirical Analysis within the Moroccan Context

by

Khaoula Benayad

and

Mohammed Rachid Aasri

Int. J. Financial Stud. 2023, 11(4), 120; https://doi.org/10.3390/ijfs11040120 - 04 Oct 2023

Viewed by 804

Abstract

This article examines the impact of overconfidence, optimism, risk aversion, mimicry and intuition biases on the investment decisions of Moroccan SMEs managers. The study was based on a sample of 133 SMEs managers, who were randomly selected to ensure the representativeness of the [...] Read more.

This article examines the impact of overconfidence, optimism, risk aversion, mimicry and intuition biases on the investment decisions of Moroccan SMEs managers. The study was based on a sample of 133 SMEs managers, who were randomly selected to ensure the representativeness of the results. Analysis showed that optimistic managers tend to make investment decisions more frequently, while those who are more risk-averse adopt a more cautious approach. Mimicry was also identified as an influential factor in investment decisions, with executives likely to be influenced by the choices of their peers. Furthermore, intuition bias was also identified as a positive factor in the investment decision-making process, enabling managers to capitalize on their experience and tacit knowledge for more appropriate and timely choices. However, overconfidence showed no significant effect on investment decisions. These findings have important implications for the managers of Moroccan SMEs, enabling them to better understand the factors influencing their investment decisions, and to optimize the allocation of their financial resources for the sustainable growth of their businesses. Full article

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23 pages, 390 KiB

Open AccessArticle

The Impact of Lending Relationships on the Lead Arrangers’ Retained Share

by

Alemu Tulu Chala

Int. J. Financial Stud. 2023, 11(4), 119; https://doi.org/10.3390/ijfs11040119 - 04 Oct 2023

Viewed by 707

Abstract

The lead arrangers of syndicated loans often have lending relationships with the borrowers, while other lenders participating in the syndicate largely engage in an arm’s length transaction. Relatively little is known about how these relationships affect the shares of syndicated loans that the [...] Read more.

The lead arrangers of syndicated loans often have lending relationships with the borrowers, while other lenders participating in the syndicate largely engage in an arm’s length transaction. Relatively little is known about how these relationships affect the shares of syndicated loans that the lead arrangers retain in their portfolio. Using a random sample of 10,328 syndicated loans made to 7316 nonfinancial U.S. firms over the period 1987 to 2013, this paper investigates the impact of lending relationships on the shares of loans retained. The results show that lending relationships are associated with a significant reduction in retained shares. These results are robust to alternative estimation techniques, such as propensity score matching and binary endogenous treatment models, which are employed to address endogeneity concerns. Furthermore, the results provide additional evidence that the existence and strength of lending relationships lead to decreased retained shares, particularly for non-top-tier lead arrangers. Moreover, the findings also demonstrate that when lead arrangers have lending relationships with borrowers, they retain significantly smaller shares whether the loans are made to informationally opaque, small, or speculative-grade-rating firms. Overall, the findings of this paper have important implications for lenders seeking to reduce their risk exposure in syndicated loans. Full article

20 pages, 402 KiB

Open AccessArticle

Does Family Ownership Moderate the Relationship between Board Diversity and the Financial Performance of Saudi-Listed Firms

by

Ayman Hassan Bazhair

and

Hamid Ghazi H Sulimany

Int. J. Financial Stud. 2023, 11(4), 118; https://doi.org/10.3390/ijfs11040118 - 04 Oct 2023

Viewed by 666

Abstract

This paper explores the moderating role of family ownership in the relationship between board diversity and financial performance. The study sampled data of 98 Saudi non-financial companies from 2012 to 2021. The data were analysed using fixed effect regression, while a generalised method [...] Read more.

This paper explores the moderating role of family ownership in the relationship between board diversity and financial performance. The study sampled data of 98 Saudi non-financial companies from 2012 to 2021. The data were analysed using fixed effect regression, while a generalised method of moments (GMM) was employed for a robustness test. The empirical evidence suggests that board gender may not have much relevance in enhancing the financial performance of Saudi firms. In contrast, the research findings emphasised that coupled with stringent monitoring from family ownership, foreign directorship, CEO tenure, and board financial expertise may serve as crucial control mechanisms that can minimise agency costs, leading to higher financial performance. This research modelled how the interaction between family ownership and board diversity attributes may determine financial performance. Hence, the study contributes to the body of knowledge by unveiling a more robust control governance mechanism, particularly in developing economies with ineffective markets for corporate controls. Full article

18 pages, 307 KiB

Open AccessArticle

Information Sources for Investment Decisions: Evidence from Japanese Investors

by

Sumeet Lal

,

Abdul-Salam Sulemana

,

Trinh Xuan Thi Nguyen

,

Mostafa Saidur Rahim Khan

and

Yoshihiko Kadoya

Int. J. Financial Stud. 2023, 11(4), 117; https://doi.org/10.3390/ijfs11040117 - 02 Oct 2023

Viewed by 1199

Abstract

Although the traditional sources of financial knowledge in Japan are financial advisors and investment groups, the digital era and artificial intelligence have made other sources of information, such as social media and mass media, more influential. As such, it has become important to [...] Read more.

Although the traditional sources of financial knowledge in Japan are financial advisors and investment groups, the digital era and artificial intelligence have made other sources of information, such as social media and mass media, more influential. As such, it has become important to examine the socioeconomic, demographic, and psychological factors influencing the use of these information sources in the context of investment decisions. However, little research has been carried out to examine such associations using a large-scale nationwide dataset. We fill this gap by utilizing a dataset comprising almost 65,000 active investors from one of the largest online security companies in Japan, ensuring the representativeness and generalizability of our results. We show that active investors are more inclined to use social media and mass media than financial advisors and investment groups. The probit regression model shows that the use of each of the four sources of information is strongly shaped by an individual’s characteristics, which, to some extent, are not mutually exclusive for each source type. The study results imply that the government should regulate and monitor the quality and accuracy of the information disseminated by mass media and social media and educate investors on how to critically evaluate and verify the information that they receive. Full article

29 pages, 4062 KiB

Open AccessArticle

Economic Disruptions in Repayment of Peer Loans

by

David Maloney

,

Sung-Chul Hong

and

Barin Nag

Int. J. Financial Stud. 2023, 11(4), 116; https://doi.org/10.3390/ijfs11040116 - 30 Sep 2023

Viewed by 554

Abstract

Economic disruptions can alter the likelihood of defaults on peer-to-peer loans, causing those impacted to adjust. The option to declare economic hardship and temporarily reduce the payment burden can provide some relief. When this occurs, the borrower’s financial qualifications have changed. The qualities [...] Read more.

Economic disruptions can alter the likelihood of defaults on peer-to-peer loans, causing those impacted to adjust. The option to declare economic hardship and temporarily reduce the payment burden can provide some relief. When this occurs, the borrower’s financial qualifications have changed. The qualities instrumental in successfully securing the original loan terms must be reanalyzed to manage risk. This is a critical point in the life of the loan because the declaration of financial hardship can signal that the borrower’s ability to repay has diminished. We present a novel default detection scheme for borrowers experiencing an economic disruption based on the Two-Class Support Vector Machine, a data classification algorithm for supervised learning problems. The method utilizes data from actual loan records (15,355 loans from 2016 through 2020), specifically from borrowers who declared economic hardship. We provide a detailed description of the default detection process and present results that show defaults among borrowers experiencing financial hardship can be predicted accurately. Full article

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Int. J. Financial Stud., Volume 11, Issue 4 (December 2023) – 23 articles

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