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.

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. © 2003 Elsevier Science Inc. All rights reserved.

Using the Agglomerative Method of Hierarchical Clustering as a Data Mining Tool in Capital Market

The purpose of this paper is to explain the notion of clustering and a concrete clustering method- agglomerative hierarchical clustering algorithm. It shows how a data mining method like clustering can be applied to the analysis of stocks, traded on the Bulgarian Stock Exchange in order to identify similar temporal behavior of the traded stocks. This problem is solved with the aid of a data mining tool that is called XLMiner™ for Microsoft Excel Office.

The impact of perceived corporate environmental performance on the behavior of capital market decision makers : analysis of food industry companies

Environmental protectionism and sustainable development has been gaining increased attention among governments, investors and consumers alike. As a result, firms are facing growing pressure from the various stakeholders to improve their environmental performance. This study is focusing on the food industry, which in recent years has been a subject of increased scrutiny due to their role in resource consumption, waste generation and unsustainable production practices. Our research is aiming to examine how the financial community evaluates the environmental stewardship of food industry companies as proxied by market reactions in response to environmental news. Are all company related environmental news items evaluated equally, and which financial and non-financial firm-specific attributes can influence market responses? Have there been changes in reactions on the stock exchange in the past two decades?

Formalization of the informal venture capital market - Business angel networks and syndicates

Business angels are natural persons who provide equity financing for young enterprises and gain ownership in them. They are usually anonym investors and they operate in the background of the companies. Their important feature is that over the funding of the enterprises based on their business experiences they can contribute to the success of the companies with their special expertise and with strategic support. As a result of the asymmetric information between the angels and the companies their matching is difficult (Becsky-Nagy – Fazekas 2015), and the fact, that angel investors prefer anonymity makes it harder for entrepreneurs to obtain informal venture capital. The primary aim of the different type of business angel organizations and networks is to alleviate this matching process with intermediation between the two parties. The role of these organizations is increasing in the informal venture capital market compared to the individually operating angels. The recognition of their economic importance led many governments to support them. There were also public initiations that aimed the establishment of these intermediary organizations that led to the institutionalization of business angels. This study via the characterization of business angels focuses on the progress of these informational intermediaries and their ways of development with regards to the international trends and the current situation of Hungarian business angels and angel networks.

Conglomerate structure and capital market timing

We examine the effects of keiretsu structure on capital market-timing. Keiretsu groups offer a hybrid structure between fully integrated conglomerates and stand-alone firms. We find that past market conditions affect the capital structure of keiretsu firms more than they affect the capital structure of unaffiliated firms. The decision to issue equity is more correlated with market conditions for keiretsu members than it is for unaffiliated firms. The stock returns of keiretsu firms following the issuance of equity decrease with the size of the issuance. These results suggest that keiretsu members time the issuance of equity more so than stand-alone firms.

UMA ANÁLISE DA RELAÇÃO ENTRE VARIÁVEIS MACROECONÔMICAS E O COMPORTAMENTO DAS AÇÕES DE MAIOR LIQUIDEZ DO ÍNDICE IBOVESPA

As ações de maior liquidez do índice IBOVESPA, refletem o comportamento das ações de um modo geral, bem como a relação das variáveis macroeconômicas em seu comportamento e estão entre as mais negociadas no mercado de capitais brasileiro. Desta forma, pode-se entender que há reflexos de fatores que impactam as empresas de maior liquidez que definem o comportamento das variáveis macroeconômicas e que o inverso também é uma verdade, oscilações nos fatores macroeconômicos também afetam as ações de maior liquidez, como IPCA, PIB, SELIC e Taxa de Câmbio. O estudo propõe uma análise da relação existente entre variáveis macroeconômicas e o comportamento das ações de maior liquidez do índice IBOVESPA, corroborando com estudos que buscam entender a influência de fatores macroeconômicos sobre o preço de ações e contribuindo empiricamente com a formação de portfólios de investimento. O trabalho abrangeu o período de 2008 a 2014. Os resultados concluíram que a formação de carteiras, visando a proteção do capital investido, deve conter ativos com correlação negativa em relação às variáveis estudadas, o que torna possível a composição de uma carteira com risco reduzido.

UMA ANÁLISE DA RELAÇÃO ENTRE VARIÁVEIS MACROECONÔMICAS E O COMPORTAMENTO DAS AÇÕES DE MAIOR LIQUIDEZ DO ÍNDICE IBOVESPA

As ações de maior liquidez do índice IBOVESPA, refletem o comportamento das ações de um modo geral, bem como a relação das variáveis macroeconômicas em seu comportamento e estão entre as mais negociadas no mercado de capitais brasileiro. Desta forma, pode-se entender que há reflexos de fatores que impactam as empresas de maior liquidez que definem o comportamento das variáveis macroeconômicas e que o inverso também é uma verdade, oscilações nos fatores macroeconômicos também afetam as ações de maior liquidez, como IPCA, PIB, SELIC e Taxa de Câmbio. O estudo propõe uma análise da relação existente entre variáveis macroeconômicas e o comportamento das ações de maior liquidez do índice IBOVESPA, corroborando com estudos que buscam entender a influência de fatores macroeconômicos sobre o preço de ações e contribuindo empiricamente com a formação de portfólios de investimento. O trabalho abrangeu o período de 2008 a 2014. Os resultados concluíram que a formação de carteiras, visando a proteção do capital investido, deve conter ativos com correlação negativa em relação às variáveis estudadas, o que torna possível a composição de uma carteira com risco reduzido.

The effect of the Lehman Brothers bankruptcy on the performance of Chinese sectors

We investigate the effect of the news announcement of the Lehman Brothers (LBs) bankruptcy on the performance of Shanghai Stock Exchange (SSE) sectors. Unlike the assumption in the literature that firms are homogenous, we address the unknown issue: Does LBs bankruptcy have a heterogeneous effect on stock returns of sectors listed on SSE? We find statistically insignificant effect of LBs bankruptcy on the performance of energy and financial sectors while most of the other sectors suffered significantly. Thus, our results highlight the heterogeneous effect of LBs bankruptcy on different sectors and at different time intervals surrounding the event.

El exceso de confianza y el statu quo dentro de la estructuración de capital: una perspectiva de las finanzas corporativas del comportamiento

El presente artículo, presenta un análisis de las decisiones de estructuración de capital de la compañía Merck Sharp & Dome S.A.S, desde la perspectiva de las finanzas comportamentales, comparando los métodos utilizados actualmente por la compañía seleccionada con la teoría tradicional de las finanzas, para así poder evaluar el desempeño teórico y real. Incorporar elementos comportamentales dentro del estudio permite profundizar más sobre de las decisiones corporativas en un contexto más cercano a los avances investigativos de las finanzas del comportamiento, lo cual lleva a que el análisis de este artículo se enfoque en la identificación y entendimiento de los sesgos de exceso de confianza y statu quo, pero sobre todo su implicación en las decisiones de financiación. Según la teoría tradicional el proceso de estructuración de capital se guía por los costos, pero este estudio de caso permitió observar que en la práctica esta relación de costo-decisión está en un segundo lugar, después de la relación riesgo-decisión a la hora del proceso de estructuración de capital.

Bubble geometry and chaotic pricing behaviour

This paper is a deductive theoretical enquiry into the flow of effects from the geometry of price bubbles/busts, to price indices, to pricing behaviours of sellers and buyers, and back to price bubbles/busts. The intent of the analysis is to suggest analytical approaches to identify the presence, maturity, and/or sustainability of a price bubble. We present a pricing model to emulate market behaviour, including numeric examples and charts of the interaction of supply and demand. The model extends into dynamic market solutions myopic (single- and multi-period) backward looking rational expectations to demonstrate how buyers and sellers interact to affect supply and demand and to show how capital gain expectations can be a destabilising influence – i.e. the lagged effects of past price gains can drive the market price away from long-run market-worth. Investing based on the outputs of past price-based valuation models appear to be more of a game-of-chance than a sound investment strategy.

Foreign Capital and Finland : Central government's first period of reliance on international financial markets, 1862-1938

The main objective of the study is to evaluate the Finnish central government s foreign borrowing between the years 1862 and 1938. Most of this period was characterised by deep capital market integration that bears resemblance to the liberal world financial order at the turn of the millennium. The main aim is to analyse the credit risk associated with the state and its determination by evaluating the world financial market centres perception of Finland. By doing this, the study is also expected to provide an additional dimension to Finland s political and economic history by incorporating into the research the assessments of international capital markets regarding Finland during a period that witnessed profound political and economic changes in Finnish society. The evaluation of the credit risk mainly relies on exchange-rate risk free time series of the state s foreign bonds. They have been collected from quotations in the stock exchanges in Helsinki, Hamburg, Paris and London. In addition, it investigates Finland s exposure to short-term debt and Moody s credit ratings assigned to Finland. The study emphasises the importance of the political risk. It suggests that the hey-day of the state s reliance on foreign capital markets took place during last few decades of the 19th century when Finland enjoyed a wide autonomy in the Russian Empire and prudently managed its economy, highlighted in Finland s adherence to the international gold standard. Political confrontations in Finland and, in particular, in Russia and the turbulence of the world financial system prevented the return of this beneficial position again. Through its issuance of foreign bonds the state was able to import substantial amounts of foreign capital, which was sorely needed to foster economic development in Finland. Moreover, the study argues that the state s presence in the western capital markets not only had economic benefits, but it also increased the international awareness of Finland s distinct and separate status in the Russian Empire and later underlined its position as an independent republic.

Cooperative and market-based solutions to pollution abatement problems

This work concerns itself with the possibility of solutions, both cooperative and market based, to pollution abatement problems. In particular, we are interested in pollutant emissions in Southern California and possible solutions to the abatement problems enumerated in the 1990 Clean Air Act. A tradable pollution permit program has been implemented to reduce emissions, creating property rights associated with various pollutants.

Before we discuss the performance of market-based solutions to LA's pollution woes, we consider the existence of cooperative solutions. In Chapter 2, we examine pollutant emissions as a trans boundary public bad. We show that for a class of environments in which pollution moves in a bi-directional, acyclic manner, there exists a sustainable coalition structure and associated levels of emissions. We do so via a new core concept, one more appropriate to modeling cooperative emissions agreements (and potential defection from them) than the standard definitions.

However, this leaves the question of implementing pollution abatement programs unanswered. While the existence of a cost-effective permit market equilibrium has long been understood, the implementation of such programs has been difficult. The design of Los Angeles' REgional CLean Air Incentives Market (RECLAIM) alleviated some of the implementation problems, and in part exacerbated them. For example, it created two overlapping cycles of permits and two zones of permits for different geographic regions. While these design features create a market that allows some measure of regulatory control, they establish a very difficult trading environment with the potential for inefficiency arising from the transactions costs enumerated above and the illiquidity induced by the myriad assets and relatively few participants in this market.

It was with these concerns in mind that the ACE market (Automated Credit Exchange) was designed. The ACE market utilizes an iterated combined-value call market (CV Market). Before discussing the performance of the RECLAIM program in general and the ACE mechanism in particular, we test experimentally whether a portfolio trading mechanism can overcome market illiquidity. Chapter 3 experimentally demonstrates the ability of a portfolio trading mechanism to overcome portfolio rebalancing problems, thereby inducing sufficient liquidity for markets to fully equilibrate.

With experimental evidence in hand, we consider the CV Market's performance in the real world. We find that as the allocation of permits reduces to the level of historical emissions, prices are increasing. As of April of this year, prices are roughly equal to the cost of the Best Available Control Technology (BACT). This took longer than expected, due both to tendencies to mis-report emissions under the old regime, and abatement technology advances encouraged by the program. Vve also find that the ACE market provides liquidity where needed to encourage long-term planning on behalf of polluting facilities.