An empirical investigation of the effect of rights issue announcements on share returns and the determinants of abnormal returns on the Kuala Lumpur Stock Exchange

This thesis examines the effect of rights issue announcements on stock prices by companies listed on the Kuala Lumpur Stock Exchange (KLSE) between 1987 to 1996. The emphasis is to report whether the KLSE is semi strongly efficient with respect to the announcement of rights issues and to check whether the implications of corporate finance theories on the effect of an event can be supported in the context of an emerging market. Once the effect is established, potential determinants of abnormal returns identified by previous empirical work and corporate financial theory are analysed. By examining 70 companies making clean rights issue announcements, this thesis will hopefully shed light on some important issues in long term corporate financing. Event study analysis is used to check on the efficiency of the Malaysian stock market; while cross-sectional regression analysis is executed to identify possible explanators of the rights issue announcements' effect. To ensure the results presented are not contaminated, econometric and statistical issues raised in both analyses have been taken into account. Given the small amount of empirical research conducted in this part of the world, the results of this study will hopefully be of use to investors, security analysts, corporate financial managements, regulators and policy makers as well as those who are interested in capital market based research of an emerging market. It is found that the Malaysian stock market is not semi strongly efficient since there exists a persistent non-zero abnormal return. This finding is not consistent with the hypothesis that security returns adjust rapidly to reflect new information. It may be possible that the result is influenced by the sample, consisting mainly of below average size companies which tend to be thinly traded. Nevertheless, these issues have been addressed. Another important issue which has emerged from the study is that there is some evidence to suggest that insider trading activity existed in this market. In addition to these findings, when the rights issue announcements' effect is compared to the implications of corporate finance theories in predicting the sign of abnormal returns, the signalling model, asymmetric information model, perfect substitution hypothesis and Scholes' information hypothesis cannot be supported.

Changes at the BCLA

As we welcome 2014 we say goodbye to 2013 and I must start with an apology to authors who have submitted papers to CLAE and seen a delay in either the review process or the hard copy publication of their proofed article. The delays were caused by a major hike in the number of submissions to the journal in 2012 that increased further in 2013. In the 12 months leading to the end of October 2011 we had 94 new paper submissions, and for the same period to the end of 2012 the journal had 116 new papers. In 2012 we were awarded an impact factor for the first time and following that the next 12 month period to the end of October 2013 saw a massive increase in submissions with 171 new manuscripts being submitted. This is nearly twice as many papers as 2 years ago and 3 times as many as when I took over as Editor-in-Chief. In addition to this the UK academics will know that 2014 is a REF year (Research Excellence Framework) where universities are judged on their research and one of the major components of this measure remains to be published papers so there is a push to publishing before the REF deadline for counting. The rejection rate at CLAE has gone up too and currently is around 50% (more than double the rejection rate when I took over as Editor-in-Chief). At CLAE the number of pages that we publish each year has remained the same since 2007. When compiling issue 1 for 2014 I chose the papers to be included from the papers that were proofed and ready to go and there were around 200 proofed pages ready, which is enough to fill 3½ issues! At present Elsevier and the BCLA are preparing to increase the number the pages published per issue so that we can clear some of this backlog and remain up to date with the papers published in CLAE. I should add that on line publishing of papers is still available and there may have been review delays but there are no publishing online so authors can still get an epub on line final version of their paper with a DOI (digital object identifier) number enabling the paper to be cited. There are two awards that were made in 2013 that I would like to make special mention of. One was for my good friend Jan Bergmanson, who was awarded an honorary life fellowship of the College of Optometrists. Jan has served on the editorial board of CLAE for many years and in 2013 also celebrated 30 years of his annual ‘Texan Corneal and contact lens meeting’. The other award I wish to mention is Judith Morris, who was the BCLA Gold Medal Award winner in 2013. Judith has had many roles in her career and worked at Moorfields Eye Hospital, the Institute of Optometry and currently at City University. She has been the Europe Middle East and Africa President of IACLE (International Association of Contact Lens Educators) for many years and I think I am correct in saying that Judith is the only person who was President of both the BCLA (1983) and a few years later she was the President College of Optometrists (1989). Judith was also instrumental in introducing Vivien Freeman to the BCLA as they had been friends and Judith suggested that Vivien apply for an administrative job at the BCLA. Fast forward 29 years and in December 2013 Vivien stepped down as Secretary General of the BCLA. I would like to offer my own personal thanks to Vivien for her support of CLAE and of me over the years. The BCLA will not be the same and I wish you well in your future plans. But 2014 brings in a new position to the BCLA – Cheryl Donnelly has been given the new role of Chief Executive Officer. Cheryl was President of the BCLA in 2000 and has previously served on council. I look forward to working with Cheryl and envisage a bright future for the BCLA and CLAE. In this issue we have some great papers including some from authors who have not published with CLAE before. There is a nice paper on contact lens compliance in Nepal which brings home some familiar messages from an emerging market. A paper on how corneal curvature is affected by the use of hydrogel lenses is useful when advising patients how long they should leave their contact lenses out for to avoid seeing changes in refraction or curvature. This is useful information when refracting these patients or pre-laser surgery. There is a useful paper offering tips on fitting bitoric gas permeable lenses post corneal graft and a paper detailing surgery to implant piggyback multifocal intraocular lenses. One fact that I noted from the selection of papers in the current issue is where they were from. In this issue none of the corresponding authors are from the United Kingdom. There are two papers each from the United States, Spain and Iran, and one each from the Netherlands, Ireland, Republic of Korea, Australia and Hong Kong. This is an obvious reflection of the widening interest in CLAE and the BCLA and indicates the new research groups emerging in the field.

Network evolution and the spatiotemporal dynamics of knowledge sourcing

Knowledge accessing from external organisations is important to firms, especially entrepreneurial ones which often cannot generate internally all the knowledge necessary for innovation. There is, however, a lack of evidence concerning the association between the evolution of firms and the evolution of their networks. The aim of this paper is to begin to fill this gap by undertaking an exploratory analysis of the relationship between the vintage of firms and their knowledge sourcing networks. Drawing on an analysis of firms in the UK, the paper finds some evidence of a U-shaped relationship existing between firm age and the frequency of accessing knowledge from certain sources. Emerging entrepreneurial firms tend to be highly active with regard to accessing knowledge for a range of sources and geographic locations, with the rate of networking dropping somewhat during the period of peak firm growth. For instance, it is found that firms tend to less frequently access knowledge sources such as universities and research institutes in their own region during a stage of peak turnover growth. Overall, the results suggest a complex relationship between the lifecycle of the firm and its networking patterns. It is concluded that policymakers need to become more aware that network formation and utilisation by firms is likely to vary dependent upon their lifecycle position.

Trading-up on unmet expectations? Evaluating consumers’ expectations in online premium grocery shopping logistics

Geography and retail store locations are inherently bound together; this study links food retail changes to systemic logistics changes in an emerging market. The later include raising income and education, access to a wide range of technologies, traffic and transport difficulties, lagging retail provision, changing family structure and roles, as well as changing food culture and taste. The study incorporates demand for premium products defined by Kapferer and Bastien [2009b. The Luxury Strategy. London: Kogan Page] as comprising a broad variety of higher quality and unique or distinctive products and brands including in grocery organic ranges, healthy options, allergy free selections, and international and gourmet/specialty products through an online grocery model (n = 356) that integrates a novel view of home delivery in Istanbul. More importantly from a logistic perspective our model incorporates any products from any online vendors broadening the range beyond listed items found in any traditional online supermarkets. Data collected via phone survey and analysed via structural equation modelling suggest that the offer of online premium products significantly affects consumers’ delivery logistics expectations. We discuss logistics operations and business management implications, identifying the emerging geography of logistic models which respond to consumers’ unmet expectations using multiple sourcing and consolidation points.

Online grocery provision resistance:understanding urban (non-)collaboration and ambiguous supply chain environments

This chapter investigates the resistance by institutional actors in ambiguous supply chain environments for online grocery provision. Recent studies have shown that significant shifts in urban geographies are increasing consumers' expectations of online retail provision. However, at the same time there is also growing evidence that the collaborative practice in online grocery provision within the urban supply chains is resisted. That these trends are found despite growing demand of online provision highlights both the difficulty of bringing geographically dispersed supply partners together and the problems associated with operating within and across ambiguous environments. Drawing upon twenty-nine in-depth interviews with a range of institutional actors, including retail, logistics, and urban planning experts within an urban metropolis in an emerging market, we detail the different ways that collaboration is resisted in online retail provision. Several different patterns of resistance were identified in (non-) collaboration notably, ideological, functional, regulatory and spatial. © 2011, IGI Global. C.

Externalizing, internalizing and fostering commitment:the case of born-global firms in emerging economies

This paper examines the HR practices of mature born-global firms from 29 emerging economies. Through an examination of large scale survey data the paper questions the extent to which firm size impacts the employment of temporary workers, the employment of skilled workers and the extent of employee training. Findings suggest that as firm size increases the use of temporary workers decreases, the number of skilled workers increases and the number of employees receiving training also increases. The paper highlights how born-global firms are able to shift away from externalized, market-based approaches towards more internalized, commitment-based approaches in order to survive, adapt and grow.

Introducing international accounting standards to an emerging capital market: relative familiarity and language effect in Egypt

The purpose of this study is to assess the effect of relative familiarity and language accessibility on the International Accounting Standards (IASs) disclosures when IASs are first introduced in an emerging capital market. The study focuses on the annual reports of listed non-financial companies in Egypt when IASs were first introduced. The method used applies a disclosure index measurement to a sample of listed company annual reports and evaluates relative compliance with IASs in relation to corporate characteristics. The results show that for relatively less familiar requirements of IASs, the extent of compliance is related to the type of audit firm used and to the presence of a specific statement of compliance with IASs. A lower degree of compliance with less familiar IASs disclosure is observed consistently across a range of company characteristics. Consideration of agency theory and capital need theory would lead to prior expectation of a distinction in disclosure practices between different categories of companies. The results were, therefore, counterintuitive to expectations where the regulations were unfamiliar or not available in the native language, indicating that new variables have to be considered and additional theoretical explanations have to be found in future disclosure studies on emerging capital markets.

Differences in market-oriented behaviour levels across firms' domestic and export marketing operations:a study of antecedents and consequences

Researchers are beginning to recognise that organisations often have different levels of market orientation across different aspects of their operations. Focusing on firms involved in export marketing, this study examines how market-oriented behaviour differs across firms' domestic and export marketing operations. In this respect, the study is the first of its kind since it investigates three main issues: (1) to what extent do differences exist in firms' levels of market-oriented behaviour in their domestic markets (i.e., their domestic market-oriented behaviour) and in their export markets (i.e., their export market-oriented behaviour), (2) what are the key drivers of such differences, and (3) what are the performance implications for firms of having different levels of domestic and export market-oriented behaviour. To shed light on these research questions, data were collected from 225 British exporting firms using a mail questionnaire. Structural equation modelling techniques were used to develop and purify measures of all construct of interest, and to test the theoretical models developed. The results indicate that many of businesses sampled have very different levels of market orientation in their domestic and exporting operations: typically, firms tend to be more market-oriented in their domestic markets relative to their export markets. Several key factors were identified as drivers of differences in market orientation levels across firms' domestic and export markets. In particular, it was found that differences were more pronounced when: (i) interfunctional interactions between domestic marketing and export marketing are rare, (ii) when domestic and export marketing follow asymmetric business strategies, (iii) when mutual dependence between the functions is low, (iv) when one or other of the functions dominates the firm's sales, and (v) when there are pronounced differences in the degree to which the domestic and the export markets are experiencing environmental turbulence. The consequences of differences in market-oriented behaviour across firms' domestic and export markets were also studied. The results indicate that overall sales performance of firms (as determined by the composite of firms' domestic sales and export sales performance) is positively related to levels of domestic market-oriented behaviour under high levels of environmental turbulence in firms' domestic markets. However, as domestic market turbulence decreases, so to does the strength of this positive relationship. On the other hand, export market-oriented behaviour provides a positive contribution to firms' overall sales success under conditions of relatively low export market turbulence. As the turbulence in export markets increases, this positive relationship becomes weaker. These findings indicate that there are numerous situations in which it is sub-optimal for firms to have identical levels of market-oriented behaviour in their domestic and exporting operations. The theoretical and practical implications of these findings are discussed.

Policy, economic federalism, and product market entry:the Indian experience

Productivity growth has long been associated with, among other things, contestability of markets which, in turn, is dependent on the ease with which potential competitors to the incumbent firms can enter the product market. There is a growing consensus that in emerging markets regulatory and institutional factors may have a greater influence on a firm's ability to enter a product market than strategic positions adopted by the incumbent firms. We examine this proposition in the context of India where the industrial policies of the 1980s and the 1990s are widely believed to be pro-incumbent and pro-competition, respectively, thereby providing the setting for a natural experiment with 1991 as the watershed year. In our analysis, we also take into consideration the possibility that the greater economic federalism associated with the reforms of the 1990s may have affected the distribution of industrial units across states after 1991. Our paper, which uses the experiences of the textiles and electrical machinery sectors during the two decades as the basis for the analysis, finds broad support for both these hypotheses.

Institutions, resources, and entry strategies in emerging economies

We investigate the impact of market-supporting institutions on business strategies by analyzing the entry strategies of foreign investors entering emerging economies. We apply and advance the institution-based view of strategy by integrating it with resource-based considerations. In particular, we show how resource-seeking strategies are pursued using different entry modes in different institutional contexts. Alternative modes of entry—greenfield, acquisition, and joint venture (JV)—allow firms to overcome different kinds of market inefficiencies related to both characteristics of the resources and to the institutional context. In a weaker institutional framework, JVs are used to access many resources, but in a stronger institutional framework, JVs become less important while acquisitions can play a more important role in accessing resources that are intangible and organizationally embedded. Combining survey and archival data from four emerging economies, India, Vietnam, South Africa, and Egypt, we provide empirical support for our hypotheses.