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The peak of tensions between Russia and Ukraine occurred on 24 February 2022, the day the first attacks were carried out. This event caused turmoil on global financial markets, especially the G20 countries including Indonesia. Commodity sectors such as coal on the IDX gained sentiment from the outbreak of this event. This research uses an event study approach and will focus on the reaction of the Indonesian capital market in the coal sub-sector when the military conflict between Russia and Ukraine broke out. Market reaction in this study will be measured by abnormal returns and trading volume activity. This study used 29 samples from coal issuers. Data obtained from the IDX.CO.ID website. This study found that abnormal returns and trading volume activity in the coal sub-sector experienced significant differences between before and after the conflict occurred.

Clean technology (cleantech) is becoming increasingly important as firms and industries seek to address challenges around the global scarcity of resources and also achieve wider social and environmental goals. Yet there are underlying problems with how capital markets respond to this increasing demand for new and innovative cleantech investments. In this article, we use a large U.K. dataset to first consider the extent to which firms engaging with cleantech increase their demand for external capital. We then consider how different types of debt and equity financiers deal with this demand for funds. Our key findings are that: 1) businesses engaging with clean technologies have a higher demand for external capital and 2) these demands are not being fully met by traditional providers which forces firms to seek out alternative and nontraditional sources of finance.

We show that foreign capital liberalization reduces capital misallocation and increases aggregate productivity for affected industries in India. The staggered liberalization of access to foreign capital across disaggregated industries allows us to identify changes in firms' input wedges, overcoming major challenges in the measurement of the effects of changing misallocation. Liberalization increases capital overall. For domestic firms with initially high marginal revenue products of capital (MRPK), liberalization increases revenues by 23%, physical capital by 53%, wage bills by 28%, and reduces MRPK by 33% relative to low MRPK firms. The effects of liberalization are largest in areas with less developed local banking sectors, indicating that inefficiencies in that sector may cause misallocation. Finally, we propose an assumption under which a novel method exploiting natural experiments can be used to bound the effect of changes in misallocation on treated industries' aggregate productivity. These industries' Solow residual increases by 3–16%.

Resumen A partir de información empírica del sector minero del Perú, se propone un modelo que relaciona el conflicto social, la licencia social para operar, y el valor de las empresas extractivas para contribuir a la comprensión de la dinámica socioempresarial del sector extractivo. Las variables que se utiliza en el modelo son el precio de las acciones mineras, el registro oficial de los conflictos, y las licencias sociales. Por medio de una regresión lineal multivariada, se encuentra que el incremento de los conflictos sociales disminuye el valor de las empresas, y que la licencia social para operar tiene un efecto positivo sobre esta variable; además, modera el impacto del conflicto en el valor de la empresa. El estudio confirma empíricamente las relaciones sociales y económicas entre empresas extractivas y comunidades, y orienta a directivos, políticos y autoridades sobre acciones para prevenir conflictos. También contribuye a cerrar la brecha de estudios empíricos en países con menor nivel de desarrollo. Clasificación JEL: C51; G12; P28. Abstract Based on empirical information from the Peruvian mining sector, a model is proposed that relates social conflict, social license to operate, and the value of extractive companies, in order to contribute to the understanding of socio-entrepreneurial dynamics of the extractive sector. The variables used in the model are the price of mining shares, the official record of conflicts, and social licenses. Using multivariate linear regression, it is found that the increase in social conflicts decreases the value of the companies and that the social license to operate has a positive effect on this variable; moreover, it moderates the impact of the conflict on the value of the company. The study empirically confirms the social and economic relationships between extractive companies and communities, and guides managers, politicians, and authorities to prevent conflicts. It also contributes to closing the gap of empirical studies in less advanced countries. Resumo Com base em informações empíricas do setor de mineração peruano, propõe-se um modelo que relaciona o conflito social, a licença social para operar e o valor das empresas extrativistas para contribuir para a compreensão da dinâmica social empresarial do setor extrativo. As variáveis utilizadas no modelo são o preço das ações de mineração, o registro oficial de conflitos e as licenças sociais. Por meio de uma regressão linear multivariada, verifica-se que o aumento dos conflitos sociais diminui o valor das empresas, e que a licença social para operar tem efeito positivo sobre essa variável; além disso, modera o impacto do conflito no valor da empresa. O estudo confirma empiricamente as relações sociais e econômicas entre empresas extrativistas e comunidades e orienta gestores, políticos e autoridades para prevenir conflitos. Contribui também para fechar a lacuna de estudos empíricos em países menos avançados.

Employing a unique and hand-collected sample of 648 true sale loan securitization transactions issued by 57 stock-listed banks across the EU-12 plus Switzerland over the period from 1997 to 2010, this paper empirically analyzes the relationship between true sale loan securitization and the issuing banks’ non-performing loans to total assets ratios (NPLRs). We provide evidence for an NPLR-reducing effect during the boom phase of securitizations in Europe suggesting that banks in our sample (partly) securitized NPLs as the most risky junior tranche and did not (fully) retain NPLs as a reputation and quality signal towards less informed investors in imperfect capital markets. In contrast, we find the reverse effect during the crises period in Europe indicating that issuing banks provided credit enhancement and demonstrated `skin in the game'. Our baseline result remains robust when controlling for endogeneity concerns and a potential persistence in the time series of the NPL data. Moreover, results from a variety of sensitivity analysis reveal that the NPLR-reducing effect is stronger for opaque securitization transactions, for issuing banks exhibiting higher average levels of NPLRs and for banks operating from non-PIIGS countries. In addition, a reduction of NPLRs through securitization is observed for issued collateralized debt obligations, residential mortgage-backed securities, consumer and other unspecified loans as well as for non-frequently issuing, systemically less important and worse-rated banks. Our analysis offers essential insights into the loan risk allocation process through securitization and provides important implications for the vital debate on reducing NPL exposures and the process of revitalizing and regulating the European securitization market.

Interest rates are central determinants of saving and investment decisions. Costly financial intermediation distort these price signals by creating a spread between the interest rates on deposits and loans with substantial effects on the supply of funds and the demand for credit. This study investigates how interest rate spreads affect climate policy in its ambition to shift capital from polluting to low-carbon sectors of the economy. To this end, we introduce financial intermediation costs in a dynamic general equilibrium climate policy model. We find that costly financial intermediation affects carbon emissions in various ways through a number of different channels. For low to moderate interest rate spreads, carbon emissions increase by up to 7 percent, in particular, because of lower investments into the capital intensive clean energy sector. For very high interest rate spreads, emissions fall because lower economic growth reduces carbon emissions. If a certain temperature target should be met, carbon prices have to be adjusted upwards by up to one third under the presence of capital market frictions.

Seasoned equity offerings (SEOs) and return of capital (ROC) are activities carried out by listed companies in the capital market. The decision of the company manager to engage in SEOs and ROC is actually in the scope of the agency mechanism. This paper explores the characteristics of SEO and ROC companies and whether SEOs and ROC will affect the company's performance and whether the agency problem will (partially) mediate the impact of SEOs and ROC on company performance. We use the annual data of domestic (Taiwan) listed companies from the Financial Supervisory Commission website and the Taiwan Economic Journal for the 2000–2018 period and adopt the Fama-French three-factor asset pricing model to hierarchical regression analysis to study the mediating role of the agency problem. The empirical results support that SEO companies are mostly in the expansion or growth stage and SEOs reduce company performance, both in the short term and long term. After considering free cash flow, the effect of SEOs on performance declines. The results support that ROC companies are mostly in decline stage and ROC increases long-term company performance. However, free cash flow does not affect the performance of the companies engaging in ROC. This research combines SEO and ROC data, and it is based on the perspective of the agency problem so that we can understand the impact on company performance.

Between 2003 and 2006, the Federal Reserve raised rates by 4.25%. Yet it was precisely during this period that the housing boom accelerated, fueled by rapid growth in mortgage lending. There is deep disagreement about how, or even if, monetary policy impacted the boom. Using differences in exposure to the deposits channel of monetary policy, we show that Fed tightening induced a large reduction in banks’ deposit funding, which led banks to contract portfolio mortgage lending by 32%. However, this contraction was largely offset by substitution to privately-securitized (PLS) mortgages, led by nonbank originators. Fed tightening thus induced a shift in mortgage lending away from stable, insured deposit funding toward run-prone and fragile capital markets funding with little impact on overall lending. We find similar results during the most recent tightening cycle over 2014–2017 when PLS lending reemerged.

Shari’ah mutual funds has its own charm than other types of mutual funds. Shari’ah mutual funds is not limited only to Muslims as the general public, who are already seeing the benefits of investment that is based on the choice of sector and company specific criteria more promising and minimize risk. Islamic mutual funds are able to contribute the confidence of investors amounted to 3.31% in 2011, 4.31% in 2012 and 3.79% in 2013. So the value of the confidence of investors on mutual fund products sharia to 2013 is still around 3-4% . As for growth on Islamic mutual funds into one of the capital market products showed an increase in value in 2012 amounted to 3.79% later in the year 2013 to 4.32%. Investment portfolio management works based framework (framework) for investment management which covers the planning, implementation, evaluation, and adjustment. In mutual funds, investment managers responsible for investment activities, which includes the analysis and selection of investment types, and perform the necessary actions for the benefit of investors. Form of mutual fund performance measurement Shari’ah assessed net asset value (NAV) of the sub weekly. Showed a good performance rekasadana Shari’ah when in a period of return obtained is more positive. Keywords ; Reksadana Syari’ah, Manajemen Portofolio, Nilai Aktiva Bersih (NAB)

Although extant literature investigates the role of sell-side equity analysts in capital markets, most studies do not consider that sell-side equity analysts often work in hierarchical teams. Lead analysts manage a team of associate and junior analysts who participate in the team’s tasks. Building on the delegation theory in the management literature, we hypothesize and find a division of labor between lead and associate analysts, where lead analysts are more likely to delegate tasks (1) that are less significant, (2) that are simpler, (3) when the workload of the lead analyst increases, and (4) when the associate analyst is more competent. Our results further suggest that associate analysts play a significant role in forecasting. By contrast, lead analysts are the main contributors to the qualitative aspects of analyst reports and are more likely to participate in earnings conference calls. Overall, our study documents the significant role of associate analysts in forecasting and the division of labor between lead and associate analysts. This paper was accepted by Brian Bushee, accounting.

This study seeks to understand how environmental, social, and corporate governance (ESG) affects business performance and the diversification effect of cross-border mergers and acquisitions (M&A) by examining 129 events on cross-border M&A in the Korean Stock Price Index (KOSPI) market representing emerging capital markets between 2012 and 2018 in 38 target countries. The findings indicate that better ESG engagement has a positive effect on the business performance of cross-border M&A, supporting stakeholder theory and confirming that ESG can serve as a strategy for boosting business efficiency in cross-border M&A. The findings also confirm that diversification in cross-border M&A leads to a diversification discount on business performance, negatively affecting acquiring firms, but that ESG engagement can mitigate the diversification discount as a friendly channel. The study's main contribution is providing empirical evidence that ESG can serve as a friendly channel through which to address the diversification discount issue.

The management policy for Taiwan's corporate social responsibility (CSR) reporting was changed from elective to partial mandatory. Some companies that have already submitted their reports are also required to undergo assurance provided by accountants. The present study explores the influences of Taiwan's partial mandatory disclosure and partial mandatory assurance management policies for CSR reports on firms' investment to cash flow sensitivity which is used to measure the information transparency of the capital market. The results showed that investment to cash flow sensitivity decreased after mandatory disclosure and mandatory assurance. This implies that the partial mandatory disclosure and the partial mandatory assurance policies for CSR reports have a positive influence on mitigating information asymmetry and agency problems being experienced by firms. It also indicates that Taiwan's partial mandatory disclosure and partial mandatory assurance policies for CSR reports aid in increasing information transparency of its capital market.

The purpose of this paper is to determine whether environmental, social, and governance (ESG) practices affect corporate financial performance (CFP) indicators at Turkish listed companies. The impact of ESG disclosures on the firm-level CFP of companies listed on the Borsa Istanbul Corporate Governance Index (XKURY) over the period 2007–2017 is investigated using the corporate governance principles of the Capital Markets Board and Global Reporting Initiative (GRI) environmental indicators. The contribution of this study is that it explores the influence of twenty independent ESG variables, comprising company disclosures, on CFP in an emerging market. The results of the study reveal a negative effect of environmental disclosures on CFP. Stakeholder involvement in management contributes to operational efficiency in the social dimension of ESG. Provisions related to shareholder rights and the board of directors has a positive impact on CFP in the governance dimension.

This paper analyzes the swap-covered interest parity condition by comparing US Treasury bonds with USD-denominated foreign assets replicated using cross-currency basis swaps. We find that the deviations of these yield spreads declined substantially after the financial crisis, suggesting that the swap-covered interest parity still holds. To reconcile our paradoxical findings with the previous literature that insists upon the failure of covered interest parity, we empirically confirm that the regulatory costs of cross-currency basis swaps are cancelled out by the costs of swaps spread under swap-covered interest parity.

Ratings seem increasingly central to the regulatory system of modern capitalism and therefore to governments everywhere. Getting credit ratings “right” therefore seems vitally important to many observers. But in pursuing improvement in the rating system one needs to appreciate the challenges and limits to rating. This article argues, after due attention to the origins and work of the agencies, that our expectations of the agencies are founded on a limited rationalist or machine-like understanding of the workings of capital markets. A more appropriately social (and dynamic) view of markets makes the challenge of effective rating even more daunting. The increasingly volatile nature of markets has created a crisis in relations between the agencies and governments, which increasingly seek to monitor their performance and stimulate reform in their procedures.

Firm value is the company's performance which is reflected by the stock price which is formed by the demand and supply of the capital market which reflects the public's assessment of the company's performance. Several factors that can affect firm value include good corporate governance, corporate social responsibility, and sustainability reports. This study aims to analyze the influence of Good Corporate Governance, Corporate Social Responsibility, and Sustainability Report on Firm Value on the Indonesia Stock Exchange. The research population is manufacturing companies listed on the Indonesia Stock Exchange. The sample in the study of 46 companies was determined based on the purposive sampling method. The results showed that good corporate governance, corporate social responsibility had no effect on firm value while the sustainability report had no effect on firm value. The limitations and suggestions in this study are that this study uses a manufacturing company with an observation period of three years. Further researchers are expected to increase the observation period and increase the number of samples to expand the research results. For further research it is expected to develop and multiply the variations of the independent variables used such as environmental performance, company size

We investigate a firm’s information acquisition and voluntary disclosure decisions regarding demand forecast information. We study the interaction among the firm, its supplier, and the external capital market investors who assess the firm’s interim equity price. We first analyze when it is beneficial for the firm to acquire demand forecast information, and if such information is acquired, when the firm should disclose it to the supplier and investors. Then, we investigate how the firm’s information acquisition and disclosure decisions influence the investors’ and the supplier’s pricing strategies. We show that the optimal information disclosure policy for the firm is highly dependent on the corporate myopia level (CML): when the CML is low, the firm discloses low demand information only; when the CML is medium, the firm always withholds demand information; and when the CML is high, the firm discloses high demand information only. Our findings provide a novel plausible explanation to firms’ non-disclosure behaviors commonly observed in practice and highlight the importance of considering the interaction between the supply chain and the capital market.

Using a theoretical model, we develop an institution-based version of the Linder hypothesis for horizontal FDI; FDI is more likely to occur among countries with smaller institutional distance. We then use firm-level data to estimate the effect of institutional distance between China and the countries that host its FDI on horizontal outward FDI (OFDI) of Chinese multinational enterprises (MNEs). High-dimensional fixed effects (HDFE) estimation shows that the overall institutional distance has a positive effect on China's OFDI, which does not support the institution-based version of the Linder hypothesis. The positive effect of institutional distance on OFDI does not vary significantly across China's state-owned enterprises (SOEs) and private-owned enterprises (POEs). Further analysis based on four sectoral institutional distances shows that the effect of public sector and labour market institutional distances on OFDI of MNEs is negative and this effect is stronger for POEs than SOEs, which supports the institution-based version of the Linder hypothesis for horizontal FDI. However, the effect of the goods and services sector institutional distance and capital market institutional distance on horizontal OFDI is positive. The impact of the goods and services sector institutional distance on OFDI of SOEs is stronger than for POEs. While unravelling the black box of institutional effects, we find significant asymmetries in the effect of sectoral institutions on OFDI. We also find that the effect varies in size across ownership structures.

Using a sample of 14,245 firm-year observations from 2,579 listed firms in the Chinese capital market, this study investigates whether board directors with an educational background in science, technology, engineering, and mathematics (STEM) are associated with greater corporate innovation. The results suggest that such directors have significant beneficial effects on corporate innovation activities. This study provides novel empirical evidence supporting resource dependence theory and extends the labor economics literature regarding the value of STEM graduates for corporate innovation. The findings have significant implications for policymakers and practitioners, showing that firms with a strategic focus on innovation may find it beneficial to appoint more directors with a background in STEM.

This paper analyzes the relation between the announcement discount and the post-merger valuation of merger and acquisition transactions (MA and proposes that the two are linked by the implications of the information asymmetry hypothesis of Myers and Majluf (1984). We track the information asymmetry, value, and synergies of M&As over a three-year post-merger window. The analysis demonstrates that the announcement discount is proportional to the rise in information inequality around the announcement date (not the pre-merger information asymmetry). The announcement discount is also positively related to the post-merge gains which grow in tandem with the gradual decline in information asymmetry and improvements in internal capital market efficiencies, market power, and access to capital markets. Collectively, our findings suggest that M&As instigate a temporary spike in information inequality that results in temporary loss in shareholders' wealth. Over time, synergies materialize, information inequality fades away, and value improves. Our results are robust to several variations in specifications and assumptions including Heckman two-stage self-selection model. Our proposition suggests that management and outside investors should not be swayed by initial market reaction to deal announcements because the true gains of M&As materialize in the long-run. Nevertheless, management should disclose adequate information about future synergies to mitigate the market's initial negative reaction.

I identify effects of financial constraints on firms' product pricing decisions, using a sample of insurance groups (conglomerates) that contain both life and P&C (property & casualty) subsidiaries. P&C subsidiaries' losses can tighten financial constraints for the life subsidiaries through internal capital markets. I present a model that predicts following P&C losses, premiums should fall for life policies that initially increase insurers' statutory capital, and rise for policies that initially decrease capital. Empirically, I find that P&C losses cause changes in life insurance premiums as my model predicts. The effects are concentrated in more financially constrained groups. Evidence also indicates that life subsidiaries increase capital transfers to P&C subsidiaries following larger P&C losses. These results hold when instrumenting for P&C losses using data on weather damages, implying that P&C losses do cause changes in life insurance premiums and internal capital transfers. My findings suggest that when financial constraints tighten, firms change product prices to relax the constraints, and how prices change depends on the initial impact of selling the products on firms' financial resources.

Research aims: This paper discusses the effect of financial literacy and automatic investment technology on intention to invest in the capital market during the early pandemic.Design/Methodology/Approach: The research population was students studying economics and finance in institutions located in Yogyakarta Special Region Province. The sample of 384 respondents was obtained through questionnaires distributed online. To test the impact of financial literacy and automatic investment technology on intention to participate in the capital market, multiple linear regression was used.Research findings: The researchers found that financial literacy and automatic investment technology affected students’ intention to invest in the capital market. The number of students with a moderate level of financial literacy score dominated, followed by the students with low and high literacy scores. Besides, students’ background in economic and finance appeared inadequate to solely determine the financial literacy score.Theoretical contribution/Originality: This paper contributes to the investment area, especially related to the automatic investment technology “Robo advisor,” that is still rarely studied yet, which will be a significant issue in the future. It also provides empirical results, which explain the investment intention through financial literacy. Moreover, this study was conducted during the massive growth of investors in Indonesia during the pandemic.Practitioner/Policy implication: This study provides a useful reference to the financial sector, especially the capital market. Inclusive programs regarding financial literacy should be expanded for wider society to enhance their knowledge and dismiss lack of confidence in capital market participation. Private sectors providing automatic investment technology are suggested to continue developing a more convenient application to be accessible by a broader range of society.Research limitation/Implication: The research included only students as the sample; hence, further research may use a larger area of the sample with various backgrounds and ages. Other determinants, such as norms, environment, risk, and more advanced financial literacy measurement, can also be added to enrich future studies and literature.

Whether capital market opening improves the price discovery efficiency of stock market is an important issue. Shanghai-Hong Kong Stock Connect (hereafter, SHKSC) is a milestone event in the opening up of China’s capital market. Based on SHKSC, using the method of PSM + DID, we study the impact of capital market opening on the price discovery efficiency from two dimensions-stock price information content and price reaction speed to information. Our research shows that capital market opening did not increase stock price information content, but speed up the reaction of price to information. Therefore, capital market opening improves capital market’s price discovery efficiency in terms of response speed of stock price to information. Further analysis shows that capital market opening affects stock price reaction speed through improving market information environment and reducing insider trading, but it has not yet had a substantial impact on listed companies’ earnings quality, which is the main participant in the capital market, and therefore has failed to influence the stock price information content. In order to maximize the effectiveness of capital market opening, it is necessary to introduce more effective policies to improve the information disclosure quality of listed firms and reduce the level of insider trading.

Despite the advantages of debt, a significant number of firms that have an established leverage policy deliberately become all-equity. These firms eliminate a substantial amount of long-term debt as the average firm’s leverage ratio is approximately 30 percent at the year-end prior to debt elimination. Firm-level “shocks” such as CEO turnover and changes in credit ratings cannot explain the dramatic recapitalization decision. Consistent with the tradeoff theory, firms that eliminate debt have lower benefits (less tax shield benefits, agency costs) and higher costs (probability of financial distress, access to capital markets, etc.) of leverage in the three prior years compared to a matched sample. We also find that the factors influencing the decision to eliminate all debt is different from those to significantly reduce leverage or to have very low debt levels. Firms primarily finance the approximately $70 million of average long-term debt eliminated using proceeds from sales of relatively unproductive assets and from equity issues. Interestingly, over half of these firms issue significant amount of new debt within three years of becoming all-equity. Firms with lower liquidity and non-debt tax shields, higher potential overinvestment agency costs, and those that issue equity at the debt elimination year are more likely to relever quickly.

We detail how to extract factor risk, return, and correlation assumptions from a set of asset-class risk, return, and correlation assumptions. Such capital market assumptions are key tools in institutional and high net worth investment operations. Using an institutional investment consultant’s asset-class assumptions, we use our technique to evaluate the implied factor loadings for a demonstration asset class, hedge funds, and find that much of their return comes from factor exposures. Our analytical approach offers useful insight to the veracity of capital market assumptions, key inputs to investment decision making.

The topic about institutional investor being a monitoring role has been widely discussed but different results exist in previous empirical studies. Along with their progressively development, institutional investors are now playing more important role in Chinese capital market. Using samples from Chinese capital market, this paper collects fraud data and data of mutual funds’ ownership in listed firms between 2008 and 2015 to examine the monitoring function of institutional investors against accounting fraud. To go deep into the monitoring incentives of investors that fall into different categories, mutual funds are further classified as heterogeneous groups according to their investment strategy and investment durations. The monitoring role of mutual funds in different groups and their influence as the disincentive to accounting fraud of listed firms are investigated in the paper. Mutual fund ownership is found to be able to curb the incidence of accounting fraud. Active mutual funds are able to conduct more effective monitoring when compared with passive mutual funds. It is also reported that short-term mutual funds are more significant than long-term mutual funds in monitoring. Policy makers may need to normalize institutional investments by quantified indicators or in other reasonable ways. Key words: Accounting fraud, institutional investors, investment duration, monitoring role.

We develop a flexible and bias-adjusted approach to jointly examine skill, scalability, and value added across individual funds. We find that skill and scalability (i) vary substantially across funds, and (ii) are strongly related as great investment ideas are difficult to scale up. The combination of skill and scalability produces a value added that (i) is positive for the majority of funds, and (ii) approaches its optimal level after an adjustment period possibly due to investors' learning. These results are consistent with theoretical models in which funds are skilled and able to extract economic rents from capital markets.

Portfolio theory mainly studies how to optimize the allocation of assets under the premise of maximizing expected returns and minimizing investment risks. In view of the instability of the financial market, a diversified investment portfolio can help control the loss of the investment portfolio. In addition to paying attention to the safety and return of asset allocation, we cannot ignore the liquidity of assets, that is, their liquidity. Adding high-liquidity products to asset allocation, such as equity investment, can better control the financial cash flow in response to emergencies. One of the ways to make assets flow is to securitize assets and sell them to the market. In order to revitalize the stock assets, good investment efficiency is a necessary choice for financial investment. Various financial products and their derivatives continue to enter people’s vision. There are many financial products in reality, and optimizing the investment portfolio can bring high economic benefits. The purpose of this paper is to study the application of optimization algorithms in financial portfolio problems. (1) Monetary policy remains prudent and neutral. It is not easy to expect flooding, but flexibility is required in complex situations. (2) Financial resources are tilted towards innovation and transformation and capital markets, which is beneficial to the development of capital markets in the medium and long term. (3) Unblocking the transmission mechanism is conducive to lenient credit and tapping the wrong killing opportunities in private enterprise debt. (4) Banks and other financial institutions have moderate pressure to give benefits to entities, but in the long run, the interests of the two are consistent. (5) Finance risk prevention will continue, orderly breaking the rigid exchange and reshaping the financial structure and ecology. (6) The pace of opening up of the financial industry has accelerated, and the bond market investor structure has improved. In this paper, we establish different optimization schemes to compare and study the portfolio problem and then use MATLAB to solve the modeling and programming problem, calculate the highest return rate and the lowest risk value before and after optimization, and then make a comparative analysis to get a better optimization scheme. The results show that the genetic algorithm model is superior to the quadratic programming method in terms of risk control. The minimum risk of portfolio optimization through genetic algorithm has been reduced by about 40%, and the maximum return has increased by about 25%. The comprehensive optimization effect is better than the quadratic planning method and ultimately can obtain higher economic benefits. It can be seen that the optimization algorithm is of great significance for the comparative study of financial portfolio problems.

In this study, we examine whether a country’s implementation of major corporate governance reforms affects firms’ cross-listing activities. Cross-listing is important in overcoming international investment barriers and thus it is worth investigating whether enhanced corporate governance at the country level contributes to the integration of international capital markets. Using a difference-in-differences (DiD) research design, we predict and find that following the implementation of corporate governance reforms in their home countries, firms are more likely to engage in cross-listing activities and tend to cross-list in host countries with stronger investor protection and more developed markets than those in countries with no reforms in the same period. The results from country-level cross-sectional tests indicate that this effect is greater for firms in home countries with weaker investor protection and less developed stock markets in the prereform period. The reforms also have a stronger effect on firms subject to less analyst following and greater external finance dependence. Finally, we find a stronger association between cross-listing activities and institutional ownership after the reforms. Taken together, this study increases understanding of the trade-off between cross-border capital supply and demand. Our finding suggests that country-level corporate governance plays an important role in facilitating the supply of cross-border capital, which in turn incentivizes firms to cross-list. Our study also offers policy implications for national stock exchanges and securities regulators by suggesting that countries without well-developed capital markets should strengthen their corporate governance to improve firms’ ability to raise external financing and attract cross-border capital flows. https://doi.org/10.1111/1911-3846.12729. Free access to accepted manuscript provided by Wiley: https://onlinelibrary.wiley.com/share/author/P8FHMDUKPZVF5NM7N9R2?target=10.1111/1911-3846.12729

The high cost of capital for firms conducting medical research and development (R&D) has been partly attributed to the government risk facing investors in medical innovation. This risk slows down medical innovation because investors must be compensated for it. We analyze new and simple financial instruments, Food and Drug Administration (FDA) hedges, to allow medical R&D investors to better share the pipeline risk associated with FDA approval with broader capital markets. Using historical FDA approval data, we discuss the pricing of FDA hedges and mechanisms under which they can be traded and estimate issuer returns from offering them. Using various unique data sources, we find that FDA approval risk has a low correlation across drug classes as well as with other assets and the overall market. We argue that this zero-beta property of scientific FDA risk could be a main source of gains from trade between issuers of FDA hedges looking for diversified investments and developers looking to offload the FDA approval risk. We offer proof of concept of the feasibility of trading this type of pipeline risk by examining related securities issued around mergers and acquisitions activity in the drug industry. Overall, our argument is that, by allowing better risk sharing between those investing in medical innovation and capital markets more generally, FDA hedges could ultimately spur medical innovation and improve the health of patients.

PurposeThe global economy is plagued by an unprecedented shock that has devastated economic growth under the coronavirus pandemic. The prolonged movement control orders, social distancing, and lockdowns have triggered the global economic downturn, disrupted the demand and supply chains, reduced the pool of workforce, and caused many jobs loss. This paper aims to analyze the global economic cost of the coronavirus pandemic, and its current and future implications.Design/methodology/approachBased on contingency theory, this paper provides an in-depth analysis of the current situation on the global economic cost of the COVID-19 outbreak and gives insights from an organizational perspective.FindingsThis paper found that the world has witnessed far-ranging economic consequences due to the coronavirus pandemic in four aspects: (i) decline in personal consumption; (ii) decline in the investments and stock prices in capital market; (iii) decline in government spending in developmental projects and increase in new borrowing; and (iv) decline of exports of goods to international markets.Originality/valueThe novelty lies in investigating the effects of the COVID-19 pandemic on micro and macroeconomic levels — the components of GDP, consumer behavior, business investments, government spending, and global exports. The paper suggests the need for urgent actions by the world leaders to oversee, anticipate, and manage the risks and cushion the economic consequences. It concludes that the flexibility and adaptability of leaders, effectiveness, workforce protection, efficient use of modern technology, including automation and artificial intelligence, would enhance the resilience of supply chains which will support organizations to sustain in this critical time.

In this article, the author discusses current structural research and investment trends that are shaping the future of factor investing. Specifically, the author focuses on three emerging trends: the ongoing evolution of traditional factor models and strategies, recent innovation in data sources and modeling techniques, and the potential disruption from integrating factor strategies into the asset allocation process. Key Findings ▪ Factor models and strategies evolve gradually over time, reflecting the evolution of capital markets and advances in academic theory, data availability, empirical research, and investment practice. ▪ Current innovation efforts in factor investing focus on exploiting new unstructured data sources, applying new data science modeling techniques, and integrating sustainability and climate factors. ▪ Innovation in factor investing is reshaping the traditional asset allocation paradigm by creating new opportunities for investors to express active investment views through a factor allocation process.

The deleterious effect of debt restructuring on banks’ balance sheets and, consequently, on the economy as a whole has been a key policy issue. This paper studies how post-default fiscal policy interacts with this sovereign-bank loop and shape the response of a model economy. Calibration of the model matches characteristics of the Greek economy at the time of the bond exchange. Debt restructuring in place of higher lump-sum taxation or lower nonproductive government spending harms the economy even if no other cost of default is considered. However, the sovereign-debt loop is less costly to the economy than increases in labor or capital taxes to service debt. Even so, if fiscal policy is too responsive, a crowding-out effect inhibits the recovery of capital markets, hence a more conservative fiscal stance is desirable. Thus, how diabolic the post-default sovereign-bank loop is depends to a large extent on the way fiscal policy responds.

Information asymmetry between managers and outside investors creates agency problems and impedes efficient capital allocation. Information disclosure is critical in alleviating information asymmetry in capital markets. This study investigates the effect of information asymmetry on managerial short-termism by examining information disclosure ratings (IDRs). Using real earnings management as a proxy for managerial short-termism, our analysis of a sample of Chinese A-share companies during 2001–2018 indicates that high IDRs mitigate managerial short-termism. The results also indicate that the effect of IDRs in reducing managerial short-termism is driven mainly by stock liquidity. This conclusion holds after consideration of endogeneity and application of two-stage least-squares and generalized method of moments methods, adjustment of the definition of IDRs, consideration of alternative proxies for managerial short-termism, and control for firm characteristics that might affect the extent of managerial short-termism. This study also examines the effects within three subsamples: companies listed on the Shenzhen Stock Exchange main board, small and medium enterprise board, and growth enterprise market board. IDRs substantially reduce managerial short-termism among firms listed on all three boards. These findings indicate that enterprises have corrected previous internal governance problems, and IDRs have helped to improve internal governance through stock liquidity. Therefore, external supervision also helps to reduce the agency problem of managerial short-termism.

While the globalization of production has been a prominent target of anti-globalization backlash, globalized finance has seemed to be much less in the public bull’s-eye. The blueprint for the post-war international economy agreed at Bretton Woods in 1944 envisioned nothing like today’s extensive and fluid global capital market. The demise of the 1946–73 fixed exchange rate system, however, also brought a progressive dismantling of barriers to international financial flows motivated by special-interest politics, national economic competition, and ideology—alongside the benign desire for a more efficient international allocation of capital. Unfortunately, free cross-border financial capital mobility can compromise governments’ capacities to attain domestic economic and social goals in several ways. This essay links the dynamics of financial liberalization to the Teflon-like resilience of finance to backlash so far, and suggests that stronger backlash could emerge if national governments fail to enhance multilateral cooperation to manage the financial commons.

Along with the development of the times in the capital market experienced several developments such as the existence of the Islamic capital market. Indonesia is one of the countries that has developed a sharia capital market, therefore the role of the government and MUI should be to make legal regulations that regulate and become the basis for capital market activities so that they are in line with sharia principles so that as Indonesian Muslims it is important to know and apply them. This study aims to analyze the legal aspects of the Islamic capital market in Indonesia. The method used in this study is a normative juridical research method with a qualitative approach, analyzing the laws and concepts of the Islamic capital market in Islamic law. The results of the study show that in Indonesia the Islamic capital market was officially launched on March 14, 2003 along with the signing of the MoU and BAPEPAM-LK with the National Sharia Council of the Indonesian Ulema Council (DSN-MUI). In 2003, the DSN-MUI issued a fatwa regarding the permissibility of transactions in the capital market as long as the mechanism and object did not conflict with sharia principles. The fatwas issued by the DSN relate to the general provisions of the sharia capital market, its principles, issuers issuing sharia securities, criteria and types of sharia securities, prohibited transactions and determination of share prices.Keywords: Sharia Capital Market, Sharia Capital Market Law

PurposePrivate equity and venture capital (VC) firms in the capital markets sector invest capital with the primary goal of delivering economic value. However, some firms in the capital markets sector have started to shift this focus to create (i.e. invest in) social value. More specifically, traditional VC firms are starting socially oriented funds, while other firms have emerged to focus solely on investments in social enterprises. These VC firms are contributing to an interesting paradox – performance metrics are not measured by profit alone but also by social innovation. From an architectural perspective, the authors examine the implications of internal design, i.e. how specific strategic and structural factors influence the financial performance of VC firms with a social orientation to determine if these firms really can “do well and do good.”Design/methodology/approachSocial orientation was determined by content analysis of mission statements of the VC firms. Firm strategies, structures and performance were sourced from secondary data. A moderated mediation model was used to test relationships.FindingsResults suggest that (1) socially responsible VC firms adopt distinct foci of social investing that directs their strategic orientation and (2) these various foci have vastly differing effects on the firm's overall performance, strategic decisions made and the architecture of their structural design.Originality/valueThis study is among the first to explore socially responsible VC architectural dimensions, with implications for firm design based on blended measures of success.

Pandemi COVID-19 yang terjadi di Indonesia membawa dampak yang besar bagi pasar modal. Harga saham seluruh sektor mengalami fluktuasi yang signifikan. Sektor properti menjadi sektor yang harga sahamnya paling terpuruk pada tahun 2020. Hal ini terlihat dari pergerakan indeks sektor properti yang mengalami trend cenderung menurun. Pergerakan indeks sektor dipengaruhi oleh pergerakan harga saham perusahaan-perusahaan berkapitalisasi besar (Big-Cap), dimana rata-rata harga saham perusahaan Big-Cap cenderung menurun dibandingkan triwulan IV tahun 2019. Penelitian ini bertujuan untuk mengetahui variabel-variabel apa saja yang memengaruhi harga saham perusahaan Big-Cap sektor properti tahun 2020. Analisis regresi data panel digunakan untuk mengetahui pengaruh PDB, CR, DER, ROE, dan PBV terhadap harga saham perusahaan Big-Cap sektor properti. Hasil penelitian menunjukkan bahwa DER dan ROE berpengaruh negatif, sedangkan PBV berpengaruh secara positif terhadap harga saham perusahaan Big-Cap sektor properti secara signifikan. Variabel CR dan PDB tidak berpengaruh secara signifikan terhadap harga saham perusahaan Big-Cap sektor properti. Oleh sebab itu, investor yang berinvestasi pada saham perusahaan Big-Cap sektor properti perlu mempertimbangkan nilai rasio keuangan, khususnya DER, ROE, dan PBV sebelum mengambil keputusan dalam berinvestasi.

Using an international sample of 2,113 initial coin offerings (ICOs), we explore the role of disclosure and information intermediaries in the unregulated crypto-tokens market. First, we document substantial cross-sectional variation in the voluntary disclosure practices of ventures seeking to raise capital through ICOs, such as the extent of information released in a prospectus-type document called a white paper; releasing the technical source code; and communicating through social media platforms. Second, we find that, even with limited disclosure verifiability, ventures with higher levels of disclosure have a greater ability to raise capital. Finally, we find that this association is stronger in the presence of mechanisms that lend credibility to ventures’ voluntary disclosures, such as internal governance practices or external scrutiny from information intermediaries. Overall, our results suggest that voluntary disclosure and information intermediaries facilitate the functioning of ICOs as an alternative capital market.

We study the role of capital requirements in adjusting market liquidity. Liquidity is necessary as it prevents fire sales and suppresses the risk-shifting problem when a negative shock occurs. However, hoarding excessive liquidity is costly as it crowds out efficient investments. A capital requirement on commercial banks reduces deposit returns. This causes investors to allocate more resources to more efficient capital market investments, improving social welfare. However, an excessively high capital requirement is undesirable because the return from holding liquidity is so low that liquidity provision is insufficient to avoid risk-shifting behaviors. Shadow banks can bypass capital regulation, and strict capital regulation will drive money to shadow banks. Thus, a liquidity shortage emerges because shadow bank securities are less liquid than commercial bank deposits. Policy maker should implement lower capital requirements in the presence of shadow banks.

This study examines the impact of market abuse regulation on the quality of analyst reports in Korea. To compensate for the limitations of the old Capital Market Act, the Market Abuse Regulation provision was incorporated into the revised Capital Market Act and enforced in July 2015. The key feature of the new regulation is that it expands the scope of insider information; punishes not only the direct receiver, but also the n-th receiver of material information that is not released to the public; enables an easier enforcement of punishment becomes easier as the authority can impose monetary penalties without upper limitation. With the samples of analysts issuing reports both in pre- and post-regulation periods, I find that the market abuse regulation decreases the accuracy of analyst and forecast optimism, while it increases forecast dispersion at the analyst level. The effect of the regulation varies with the analysts’ characteristics, such as previous performance, changes in performance, and coverage of firms. Overall, analysts no longer benefit from the selective disclosure of information and have less incentive to maintain their optimism. The evidence indirectly indicates there is no increase in the public information that may substitute the private channels of insider information. Several additional analyses are conducted such as the impact of the regulation on Chaebol-affiliated analysts and the changes in the precision of public and private information and its effect on earnings forecast accuracy after the regulation.

This paper explores the effect of corporate governance on voluntary disclosure. The investigation of the research question was based on hand-collected data from annual reports for a sample of 93 non-financial listed firms on the Athens Stock Exchange for 2017. Using several items to create a voluntary disclosure index, the authors investigate the arguments that ownership structure, board of directors (board) and audit committee affect voluntary disclosure. The results indicate that some corporate governance characteristics (block ownership and board independence) reduce voluntary disclosure, while others (board and audit committee size) increase the extent of disclosure. Additionally, a positive effect on the voluntary disclosure concluded for the size of the firm and the size of the audit firm. The results have implications for capital market regulators and listed firms wishing to reduce conflicts between the firm and its related parties and to strengthen the confidence to the firm’s governance by using corporate governance structures. This paper contributes to the academic debate on the relationship between corporate governance and voluntary disclosure by assessing the effect of ownership structure, board of directors (board) and audit committee on the extent of voluntary disclosure. Key words: Corporate governance, disclosure, voluntary disclosure, ownership, board of directors, audit committee.

This paper seeks to contribute to IFRS literature by examining the effects of adopting international financial reporting standards (IFRS) on stock market performance around the world from the perspective of the diffusion of innovation theory. Using combinations of unique panel data sets from 110 countries around the world spanning 1995-2014, and robust empirical analysis, our study revealed several interesting findings including the following; First, we find a positive association between the late mandatory IFRS adoption and EU stock market integration. Second, our findings indicate a significant negative association between the early IFRS adoption and the following financial indicators: stock market trading volumes, stock market capitalization, stock market turnover, and return. Third, our study revealed an insignificant association between early IFRS adoption and stock price volatility alongside stock market development. Our findings are robust and have important practical and policy implications for regulators and policymakers of multinational corporations.

In the process of production and operation, the funds held by enterprises often do not meet the needs of the expanding production scale, so enterprises usually obtain the required funds by borrowing. However, the financing mode of enterprises is not only limited to borrowing from banks or other financial institutions. With the rapid economic development and the continuous activity of the capital market, the bond market has gradually become an important channel for enterprise financing [1]. In order to improve the layout of the industrial chain, Guangyi Technology has carried out continuous mergers and acquisitions (M&A) since 2013. Due to its limited funds, Guangyi Technology acquired a large amount of funds required for M&A by means of equity pledge. However, the copyright cloud project invested in M&A in the early stage did not achieve the expected results, leading to a frequent breach of equity pledge, which evolved into debt defaults. Therefore, this article takes Guangyi Technology as the research subject and puts forward relevant avoidance suggestions through the evaluation of its debt default risk.

Negara-negara kawasan Asia Tenggara tengah menyongsong integrasi pasar modal. Kehadiran momentum itu, dibutuhkan kondisi ekonomi masing-masing negara yang stabil dan pasar modal yang menarik. Momentum ini juga merupakan kesempatan pasar modal syariah untuk lebih dikembangkan di kawasan ini. Penelitian ini bertujuan untuk menguji pengaruh Foreign Direct Investment (FDI) dan variabel ekonomi makro yakni pertumbuhan ekonomi, inflasi, suku bunga acuan dan nilai tukar terhadap return indeks saham syariah di empat negara ASEAN yaitu Indonesia, Malaysia, Thailand dan Singapura. Periode penelitian sejak kuartal IV tahun 2006 sampai dengan kuartal I tahun 2020. Metode yang digunakan dalam pembuktian empiris pada penelitian ini adalah Autoregressive Distributed Lag Bounds Testing Approach (ARDL). Penelitian ini menemukan hubungan kointegrasi jangka panjang pada semua negara objek penelitian. Dalam hubungan jangka panjang dan dinamika jangka pendek, penelitian ini menemukan adanya variasi hasil dan arah koefisien di 4 negara ASEAN. Kecepatan penyesuaian kembali keseimbangan jika terjadi goncangan berturut-turut Indonesia, Malaysia, Thailand dan Singapura adalah 44.7%, 65.4%, 43.5% dan 50.0% per bulannya.

PurposeThere is ambiguity regarding whether coronavirus disease 2019 (COVID-19) is a boon or bane for the IT services industry. On the one hand, it has created opportunities, especially with the growth of collaborative technologies. On the other hand, many firms have reduced their IT budgets owing to the ongoing recession. This study explores how IT firms have assessed the risk of the pandemic in the early days and informed capital market participants. In addition, it examines the impact of such online disclosures on information asymmetry.Design/methodology/approachThe authors analysed annual reports of publicly listed firms in the USA filed on the Securities and Exchange Commission website in 2020 and examined whether the disclosure scenario of technology firms was different from that of the other industries. Moreover, the risk sentiment of COVID-19-related disclosures was assessed by employing text analytics. Information asymmetry was measured using the bid–ask spread.FindingsOverall, it was found that IT services firms were less likely to discuss the COVID-19 pandemic in their annual reports. Interestingly, it was observed that technology firms that chose to communicate about the pandemic had a lower incidence of words related to risks. Furthermore, communicating about COVID-19 in annual reports calms investors and improves the information asymmetry situation about the firm. Variation in the severity of the pandemic and the responses of state governments was controlled for by employing state-fixed effects in the empirical models.Originality/valueThe authors inform the literature on corporate disclosures and technology and highlight the importance of effectively communicating about the pandemic.