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1 – 10 of 287Marcellin Makpotche, Kais Bouslah and Bouchra M'Zali
This paper aims to investigate the long-run financial and environmental performance of corporate green bond issuers, worldwide.
Abstract
Purpose
This paper aims to investigate the long-run financial and environmental performance of corporate green bond issuers, worldwide.
Design/methodology/approach
The data includes 259 corporate green bond issuers from 2013 to 2020. The authors adopt the matching approach, using the nearest neighbor method to select the control firms. The event-time approach is used to examine corporate green bond issuers’ long-run stock market performance, and robustness tests are conducted using the calendar-time method. The authors examine green bond issuers’ long-run environmental performance and carbon dioxide (CO2) emissions using difference-in-differences estimations.
Findings
In contrast with the earlier long-run event studies, our results reveal that multiple-time issuers, and issuers operating in industries where the natural environment is financially material, perform financially in the long term relative to the control firms. The authors also document that corporate green bond issuers reduce their CO2 emissions, and improve their resource use efficiency and environmental performance, in the long run.
Originality/value
To the authors’ knowledge, this is the first study that looks at the long-run effect of corporate green bond issuance on firms’ stock market performance. It has the particularity to document that corporate green bond issuance is beneficial for investors and positively affects the environment. Our findings help us understand that firms do not issue green bonds for greenwashing.
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Sean A.G. Gordon and James A. Conover
We investigate whether external investment banks or internal key IPO insiders such as company directors and officers, venture capitalists and institutions that hold an IPO's stock…
Abstract
We investigate whether external investment banks or internal key IPO insiders such as company directors and officers, venture capitalists and institutions that hold an IPO's stock serve as effective monitors of IPO investments over the post-IPO period. We measure median changes in each group's holdings for the sample, finding large changes in these values during a long-run holding period. We find that long-run buy-and-hold returns (BHARs) are positively related to the lead investment bank underwriter reputation and the gross spread demonstrating that the external monitoring by investment banking firms increases the post-IPO firm's value. Holding the underwriter reputation constant, we find that the BHARs are positively related to the gross spread, also indicative of the value of monitoring by external investment banks.
Nischay Arora and Balwinder Singh
The purpose of this paper is to study the pattern of long-run performance of small and medium enterprises (SMEs) initial public offerings (IPOs) and examine the firm- and…
Abstract
Purpose
The purpose of this paper is to study the pattern of long-run performance of small and medium enterprises (SMEs) initial public offerings (IPOs) and examine the firm- and issue-related determinants of long-run performance of SME IPOs in India.
Design/methodology/approach
The 3 6, 9 and 12 months share returns of Indian SME IPOs is studied using event time methodologies, i.e. buy and hold returns, cumulative abnormal returns and wealth relatives on a sample of 375 SME IPOs issued during February 2012 to May 2018. Additionally, ordinary least square regression has been used to investigate the determinants of long-run performance of SME IPOs on a reduced sample of 104 because of non-availability of price observations.
Findings
The findings reveal that Indian SME IPOs exhibit long-run overperformance contradicting the international evidences of underperformance, and this overperformance is significantly evident using buy and hold abnormal return (BHAR). Furthermore, based on the divergence of opinion hypothesis, fads theory and windows of opportunity hypothesis, the results reveal that on one hand, issue size and oversubscription negatively affect BHAR, while on the other hand, auditor reputation, underwriter reputation, hot market, underpricing, inverse of issue price, profits prior to listing positively affect long-run performance. However, firm age, firm size, debt equity ratio, volatility and long-run performance computed through BHAR lacks significant relationship.
Research limitations/implications
The study relied on event time methodology of measuring aftermarket performance of one year because of the limited availability of price offerings. Hence, the study could be extended to analyze aftermarket returns over a period of three to five years to enable reaching the vivid conclusions. Calendar time methodology may also be used to compute abnormal returns.
Practical implications
The results based on the study provides an implication to the investors by providing them an opportunity to bank higher long-run returns by engaging in active and timely trading strategies. Nevertheless, the results also show that investors should be cautioned while taking investment decisions.
Originality/value
The study contributes to rising body of international literature by analyzing the larger and recent sample of IPOs issued from 2012 to 2018 listed on SME exchange.
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Yasir Abdullah Abbas, Nurwati A. Ahmad-Zaluki and Waqas Mehmood
This paper aims to examine the relationship between the community and environment disclosures and the long-run share price performance of Malaysian initial public offering (IPO…
Abstract
Purpose
This paper aims to examine the relationship between the community and environment disclosures and the long-run share price performance of Malaysian initial public offering (IPO) companies.
Design/methodology/approach
This study used secondary data through the content analysis of the annual reports and DataStream of 115 sampled IPOs listed on Bursa Malaysia from 2007 to 2015. The present study incorporated weighted least squares and quantile least squares to evaluate the relationship between the community and environment disclosures and IPO performance.
Findings
The results show a positive and significant relationship between the extent and quality of community disclosures and IPO performance; while the extent and quality of environment disclosures have a negative and positive relationship, respectively, with IPO performance. These results suggest that community and environmental activities can be considered an effort to enhance Malaysian IPOs.
Practical implications
These results suggest that Malaysian IPO companies should be involved consistently in corporate social responsibility disclosure, i.e. community and environmental activities, as they have a significant impact on the performance of Malaysian IPOs. The findings can facilitate financial institutions and regulatory agencies in driving companies to be more responsible regarding community and environmental disclosures.
Originality/value
To the best of the authors’ knowledge, this study provides new insights into the relationship between the community and environment disclosures and the performance of Malaysian IPO companies.
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Robert Martin Hull, Sungkyu Kwak and Rosemary Walker
The purpose of this paper is to determine if hedge fund variables (HFVs) are associated with short-run daily buy and hold abnormal returns (BHARs) for a 30-day window around…
Abstract
Purpose
The purpose of this paper is to determine if hedge fund variables (HFVs) are associated with short-run daily buy and hold abnormal returns (BHARs) for a 30-day window around announcement dates for seasoned equity offerings (SEOs).
Design/methodology/approach
This paper utilizes the event study metric that computes BHARs. These BHARs are used in a regression model as dependent variables with HFVs and nonhedge fund variables (NFVs) as independent variables. For regression tests, standard errors are clustered at the month level.
Findings
This paper offers three new findings. First, HFVs are significantly associated with SEO BHARs. Second, HFVs are capable being associated with stronger statistical significance compared to NFVs. Third, not using HFVs can produce an omitted-variable bias.
Research limitations/implications
This paper does not have information on which individual hedge funds use a strategy during the month of the offering but only the proportion of hedge funds that do. A research implication is the proportion can be associated with SEO BHARs in a fashion predicted based on a long or short position.
Practical implications
Hedge funds can use trading strategies to capitalize on established patterns of price behavior.
Social implications
Hedge funds enjoy a trading advantage over smaller investors.
Originality/value
This paper is the first study to document the association between hedge fund stratagems and stock returns around a major corporate event. It shows researchers should consider institutional trading strategies when studying the market response to a major corporate event.
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Kartick Gupta, Stuart Locke and Frank Scrimgeour
The analysis aims to explore how momentum return changes with alternative computational methods and the extent to which the portfolio structure is important in the momentum…
Abstract
Purpose
The analysis aims to explore how momentum return changes with alternative computational methods and the extent to which the portfolio structure is important in the momentum context.
Design/methodology/approach
The focus reflected in the prior research emphasises the method used by Jegadeesh and Titman and various extensions to test whether momentum returns exist. This study uses alternative methods of buying previous Winners and short‐selling previous Losers to determine if this significantly changes the returns.
Findings
The current study clarifies the impact of several contributory factors that impact upon estimated momentum returns. The large sample of cleaned data upon which this study is based provides a higher degree of confidence that the findings are sound and not just a statistical anomaly.
Practical implications
The research is important from a practitioner perspective as details of momentum return are presented for each country using different methods, providing information regarding the most profitable country in which to invest and whether the momentum return is sustainable under different formative approaches.
Originality/value
One of the important contributions of this study is a detailed empirical analysis, presenting results in a global context rather than on a single country basis.
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Abhishek Kumar and Seshadev Sahoo
Anchor investor (AI) regulation was introduced in 2009 by the Indian market regulator Securities and Exchange Board of India to facilitate the price discovery process during the…
Abstract
Purpose
Anchor investor (AI) regulation was introduced in 2009 by the Indian market regulator Securities and Exchange Board of India to facilitate the price discovery process during the book-building mechanism. This study aims to examine the aftermarket pricing performance of initial public offering (IPO) firms over the long-run period of up to 36 months after the listing date in the anchor investor regime.
Design/methodology/approach
The post-issue performance of 129 Indian IPOs issued from 2009 to 2014 is studied by using buy and hold abnormal returns, cumulative abnormal returns and wealth relatives approaches. This study presents the aftermarket performance indicators of Indian IPOs along with the comparative analysis between anchor-backed and non-anchor-backed IPO categories. Using multiple regression analysis, this study identifies the firm-level variables and issue characteristics that can explain long-term IPO performance.
Findings
This study reports that Indian IPOs continue to underperform in the long run in the anchor regulation era as well. However, anchor-backed IPOs are reported to underperform lesser than the IPOs not backed by anchor investment. Additionally, this study documents that the variables, i.e. offer size, grade, post-issue promoter holding and IPOs issued during hot IPO periods, are significant in explaining the 36-month aftermarket performance.
Originality/value
This study investigates the long-run aftermarket pricing performance of anchor affiliated IPOs in the Indian market context. Thus, it contributes to the limited primary markets’ research from emerging economies. Further, the results provide fresh evidence reaffirming the credibility of AI as an institutional investor for attestation of quality of the issues.
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Yasir Abdullah Abbas, Nurwati A. Ahmad-Zaluki and Waqas Mehmood
This paper examines the relationship between the extent and quality of the four dimensions of corporate social responsibility disclosure (CSRD) namely community, environment…
Abstract
Purpose
This paper examines the relationship between the extent and quality of the four dimensions of corporate social responsibility disclosure (CSRD) namely community, environment, workplace and marketplace with the long-run share price performance of Malaysian initial public offering (IPO) companies.
Design/methodology/approach
This study utilised secondary data by the content analysis of the annual reports and Datastream of 115 IPOs listed from 2007 to 2015 in Malaysia. The IPO’s performance was determined by calculating the return measures under the equally weighted and value-weighted schemes of the mean abnormal returns and buy-and-hold abnormal returns covering the three years post-listing using the event-time approach.
Findings
The findings demonstrate that Malaysian IPOs experience substantial overperformance and underperformance when both the IPO performance measures are benchmarked against the matched companies and market. The results indicated that the extent and quality of the community and environment CSRD dimensions are positively and significantly correlated to the IPO’s performance. On the other hand, the extent and quality of the workplace and marketplace CSRD dimensions are negatively and significantly correlated to the IPO performance.
Practical implications
Malaysian regulators could benefit from these findings in their endeavour to carry out a reform process on CSRD to improve its quality. The results of this study are important to investors, regulators, non-government organisations, communities and policymakers. They also enhance the understanding of companies about the importance of disclosing greater CSR information to improve their performance and profitability.
Originality/value
To the researchers' best knowledge, this study provides new insights into the association between CSRD and the performance of Malaysian IPO companies, which is considered important.
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Gisung Moon, Hongbok Lee and Doug Waggle
The authors investigate how the stock market reacts to financial restatements using the restatements data from the United States Government Accountability Office (GAO-06-678). In…
Abstract
Purpose
The authors investigate how the stock market reacts to financial restatements using the restatements data from the United States Government Accountability Office (GAO-06-678). In particular, the purpose of this paper is to examine the long-run equity performance of the restating firms, for holding periods of one to five years after the announcements of restatements.
Design/methodology/approach
This paper measures the long-run stock performance of restating firms with the buy-and-hold abnormal returns and time-series regression analyses based on Fama–French’s (1993) three-factor model and Carhart’s (1997) four-factor model.
Findings
The authors find that restating firms significantly underperform in the long run compared with their peers matched by industry, size and book-to-market. Restating firms’ underperformance is confirmed with time-series regression analyses based on Fama–French’s (1993) three-factor model and Carhart’s (1997) four-factor model. Further, the authors find the negative long-run abnormal performance of restating firms is primarily driven by large firms. The authors also report that self-prompted restatements and improper revenue accounting-triggered restatements result in worse long-run abnormal performance.
Originality/value
This paper is the first paper that thoroughly investigates the long-run stock returns of the firms that restate financial statements by fully considering the size effect.
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Reza Yaghoubi, Stuart Locke and Jenny Gibb
This paper aims to illuminate the issue of whether there is a significant difference between long-term abnormal return of acquirers across industries, and which industries achieve…
Abstract
Purpose
This paper aims to illuminate the issue of whether there is a significant difference between long-term abnormal return of acquirers across industries, and which industries achieve better returns.
Design/methodology/approach
This paper investigates whether there is a significant difference between abnormal return of acquirers across industries. The impact of timing of the deal on the acquirer returns is also studied in this paper. In the regression analysis, we control for acquirer’s size along with a number of deal characteristics, such as method of payment, the mode of the acquisition, the diversifying nature of the deal and value of the deal, to examine whether the differences in acquirer returns across industries persist when these factors are taken into account.
Findings
The results of the study propose discrepancy in acquirers’ long-term abnormal returns across industries. While a number of industries, such as petroleum and natural gas, insurance and machinery, experienced significantly positive abnormal performance, others like business services and medical equipment have demonstrated significantly negative long-term returns.
Originality/value
This paper investigates the industry impact on performance of acquirers. The results of this research provide more comprehensive evidence from all of the industries that have been involved in mergers and acquisition deals during the period 1981-2007 so that the returns of different industries can be compared. Most importantly, the evidence rejects the equality of mean abnormal returns across industries at significant levels.
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