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The objective of this paper is to investigate the effect of working capital efficiency (WCE) and its components on the composite financial performance of a sample of Indian firms.

Our sample includes 796 non-financial listed firms from 2015–16 to 2021–22. Sample firms’ profitability, liquidity, solvency, cash flow management, and financial and operational leverage have been used to classify them into companies with high composite financial performance (HCFP) and with low composite financial performance (LCFP) by using K-Means Clustering technique. A composite financial performance score (CFPS) of 1 has been assigned to HCFP and 0 to LCFP. We have used logistic regression models with fixed effect to estimate the effect of cash conversion cycle (CCC) and its components, i.e. inventory days, accounts receivable days and accounts payable days on CFPS in the presence of control variables such as growth, leverage, firm size, and age.

The study finds that CCC and inventory days are inversely associated with CFPS. This finding shows that the firms’ WCE leads to superior financial performance on a composite basis.

The research findings are based on samples drawn from the population of the listed Indian non-financial companies. Since the operation, financial practices, working capital policies, and management styles of firms vary greatly among nations, the results of this study should be extended to firms in other countries after taking into account the degree of resemblance to the sample firms.

The findings of this study hold significant value for industry practitioners, as they provide guidance in determining the optimal allocation of funds for working capital and devising strategies for effectively managing inventory levels, credit sales, and vendor payments in order to increase the overall value of the company. This study aims to help investors in building their investment portfolios by identifying companies with superior composite financial performance. Investors can enhance the construction of their investment portfolios by strategically selecting companies that demonstrate superior overall performance.

The results of our study will help companies improve their WCM strategies to enhance their overall value, and their significance increases manifold during economic downturns. Business firms that perform well by efficiently managing their working capital have a multiplier effect on the economy and society at large in the form of GDP contribution, labor income, taxes to the government, investment in capital assets, and payments to suppliers.

To understand the impact of WCE on firms’ performance, the extant working capital literature focuses on some specific characteristics such as profitability, valuation, solvency, and liquidity. The limitation of employing a single parameter is its inability to present the comprehensive performance evaluation of firms. This study is among the earliest studies that focus on the holistic evaluation of WCE's impact on the composite performance of a company.

The commodity and equity derivatives have a close resemblance between them in trade practices and mechanisms, which makes it easy for the investors to combine these two assets classes for building up their portfolio. The diversification of investment among asset classes builds some relation between them. The integration of market within a country is necessary to bring in a smooth and balanced economic growth. Thus, the purpose of this paper is to examine the spillover between the equity and commodity futures markets which will be helpful not only for the investors but also for the policy makers, producers and the regulators.

To examine the spillover between the equity and commodity market, the major benchmarking indices of these markets, namely COMDEX of MCX, Dhaanya of NCDEX and NIFTY 50 of NSE, were chosen. NIFTY 50 index was chosen as representative of equity market due to its composition of most active constituent stocks than any other broad market index of Indian stock market. As the commodity market indices are not been traded, their constituent commodities were taken for the study. Thus, 11 MCX-COMDEX constituents such as Gold, Silver, Copper, Zinc, Aluminum, Nickel, Lead, Crude oil, Natural gas, Kapaskhali and Mentha oil and eight NCDEX-Dhaanya constituents such as Castor seed, Chana, Cotton seed oilcake, Jeera, Mustard seed, Refined soy oil, Turmeric and Wheat futures prices were taken against the NIFTY 50 futures prices with daily trading data for ten years starting from January 1, 2006 till December 31, 2015 to analyze their spillover effect. The return series data were used to test the spillover between equity and commodity futures market as it gives the crux of investors’ diversification through the Vector Autoregression (VAR) model and verified with Impulse Response Function by testing the null hypothesis, H₀, that there is no return spillover between the equity and commodity futures market.

The investors move from equity to commodity when there is a threat in equity market and vice versa, thereby diversify their risk for those commodities which are vulnerable to global and domestic pressures in the economy. Investigating the spillover between equity and commodity market gives an insight of market integration effect. A nation can achieve its economic growth easily when its markets are integrated.

The commodity indices are still notional indices in the market; therefore, individual constituent commodities of commodities indices were considered with the benchmarking equity futures index, which is one of the limitations of the study.

The integration of market within a country is necessary to bring in a smooth and balanced economic growth.

Most of the past studies dealt only with few commodities and equities and not with the broad-based benchmarking indices. This paves way for enquiry into the commodity and equity markets integration with the major constituent commodities traded in the economy. Hence, this paper looks into the presence of spillover between the equity and commodity markets. The VAR model is verified with the impulse response function which explains the reaction of any dynamic system in response to a pulse change in another. The impulse response function is presented graphically for easy and better understanding.

The purpose of this paper is to examine the mimicking behaviour of institutional investors in the stock market.

The study focusses on examining the herding behaviour among institutional investors in the stock market by considering the bulk and block trade on the constituent NIFTY 50 index during the period 2005–2015 using Lakonishok–Schleifer–Vishny (1992) model. The study also aims to find out whether their herding behaviour is intentional or unintentional in nature.

The findings of the study showed no sign of herding behaviour in the market; out of 50 constituent stocks of NIFTY 50, there was significant herding in 15 stocks, with buy herding in 11 stocks and sell herding in four stocks, and remaining 35 stocks were totally free from herding behaviour. In addition, the results proved that the herding behaviour observed on the stocks is of unintentional in nature.

Present study is limited to the use of constituent stocks of the Benchmarking Index NIFTY 50.

This study is the first attempt to investigate the herding behaviour of institutional investors in the market using bulk and block trade and also to explore their intent in herding behaviour.

The academic literature has examined why bank runs happen based on the work of 2022 Nobel Prize-winning economists Diamond and Dybvig. They have found the source of banking/financial crisis in terms of mismatch between liabilities (deposits being short term and savers wanting to short-term access to their money) and assets (long term and illiquid). The Lakshmi Vilas Bank (LVB) crisis intensified when it came under Prompt Corrective Action (PCA) of the Reserve Bank of India (RBI). This situation provides the opportunity to study whether the elements embodied in the theoretical models like Diamond and Dybvig hold true for LVB crisis. This study aims to examine the reasons for the demise of LVB in India using DuPont financial model, peer group analysis and time series structural break in crucial financial parameters.

The study examines the reason for insolvency of LVB using financial ratios, financial models (DuPont), financial distress model (Z-score) and asset-liability management. The study also adopts univariate structural break models using quarterly financial data covering the key financial measures used in the RBI’s PCA framework.

LVB crisis is like Diamond–Dybvig model, in the sense, savers requiring short-term access to their money (liquidity for their deposits) on the information of high non-performing assets, which further deteriorates the illiquid nature of loan portfolio (assets) of banks. The study finds its profit margin (net interest margin and non-interest margin) and managerial efficiency had started deteriorating since 2018. The study finds that LVB’s main weakness lies in its limited credit appraisal ability, its monitoring and weak internal controls. Lending to sensitive sectors (like real estate, capital markets and commodities) and exposure to large business groups also contributed to its weakness. The study also finds huge, elevated asset-liability mismatch, especially in the short-term maturity buckets. Using univariate econometric time series model, the study also confirms financial weakness being evident much earlier than the time when resolution was undertaken by the RBI through PCA.

The study has implications for analysing and monitoring financial distress of banks. The study also has implications for devising banking regulation and supervision.

The study brings in a perspective of the banking regulations using the application of PCA framework on a listed private sector bank. The authors combine an accounting ratio model and combine risk measures that could identify the incipient risks in a bank. The authors believe this will help in refinement of banking regulations and better monitoring mechanisms.

The purpose of this paper is to examine industry herding among the institutional investors and to find whether their herding behaviour is intentional or unintentional.

The study uses Lakonishok et al. (1992) model to examine the presence of industry herding behaviour among institutional investors. To determine whether the herding observed is intentional or unintentional, herding measure is regressed with volatility, volume, beta and return. The period of the study is from 1 April 2005-31 March 2015.

The findings of the study showed that though institutional investors have herding tendency towards most of the industries, in the overall period industry herding was not significant. The herding found in some industrial sectors was linked to economic performance of those sectors in India during the period of study and hence the herding was unintentional in nature.

This is the first attempt to study industry herding among institutional investors and their intent in Indian market ever since the country opened its market to foreign investors in a big way. Present study is limited to the use of only bulk/block data instead of the entire trading data for the period.

This study is the first attempt to investigate industry herding behaviour of institutional investors in the market using their bulk and block trading data. The herding observed in well performing industries has been shown to be unintentional and hence rational. The results indicate that the entry of big institutional investors, including foreign institutions into the Indian market has not destabilised the market by irrational herding.

The Minerals and Petroleum Resources Royalty Act (MPRRA) became effective on 1 March 2010. This legislation may have a significant impact on employment, foreign investment and future exploration in the South African mining industry. This article reports on a critical analysis of the MPRRA prior to its implementation in order to identify aspects that may impact adversely on the South African mining industry and would require further research after the implementation of the MPRRA. Based on the findings, the authors recommend that the impact of the level of royalties levied as well as the mechanism to promote downstream beneficiation be researched to establish whether the legislators ought to reconsider these provisions in the light of their impact on the mining industry.

This study aims to investigate the effect of mandatory international financial reporting standards (IFRS) adoption on the risk disclosure quality by listed European insurers.

The study used a content analysis of the annual reports and consolidated accounts of 13 insurance companies listed in the European market between 2002 and 2007 based on two regulatory frameworks, Solvency and IFRS.

The results showed a significant effect of the mandatory adoption of IFRS and a clear improvement in the quality of risk disclosure. Moreover, risk disclosure is positively associated with the size of the company.

The authors can consider the relatively limited size of the sample as a limitation of this study. Moreover, the manual content analysis used to be considered subjective.

The findings of this study provide useful insights to professional and regulatory bodies about the consequences of IFRS adoption to enhance transparency and particularly risk disclosure.

The research contributes to the existing literature. First, the authors have shown that companies are improving in the quality of risk disclosure even before 2005. Second, the authors have shown that the year 2005 is distinguished by a marked improvement in disclosure trends, with companies aligning themselves with coercive and mimetic regulatory forces. Third, the authors highlight the significant effect of mandatory IFRS adoption even in highly regulated industries, such as the insurance industry.

This paper aims to examine the impact of the daily growth rate of COVID-19 cases in the USA (COVIDg), the Federal Fund Rate (FFR) and the trade-weighted US dollar index (USDX) on S&P500 index daily returns and its 11 constituent sectors’ indices for the time period between January 22, 2020, until June 30, 2020.

The study uses the multivariate generalized autoregressive conditional heteroscedasticity (MGARCH) model to gauge the impacts over the whole period of study, as well as over two sub-periods; first, January 22, 2020, until March 30, 2020, reflecting uncertainty in the US markets and second, from April 1, 2020, until June 30, 2020, reflecting the lockdown.

Results of the MGARCH model reveal a negative and significant relation between COVIDg and S&P500 index daily returns over the first sub-period and the whole study period in the following sectors, namely, communications, consumer discretionary, consumer staples, health, technology and materials. Yet, COVIDg showed a positive and significant relation with S&P500 index daily returns during the second time period in the following sectors, namely, communication, consumer discretionary, financial, industrial, information technology (IT) and utilities. Besides, USDX showed a negative significant effect on S&P500 index daily returns and on the daily return on each of its 11 constituent sectors over the second sub-period and the whole period. Further, FFR showed a significant effect only in the second sub-period, specifically, a negative effect on the daily return of the financial sector and a positive effect on the daily return of the technology sector index. Nevertheless, FFR had a positive significant effect on the daily return of the utilities sector index for the whole period under study.

The impact of the crisis on the S&P500 index can be assessed only with some limitations owing to available global data and the limited time frame of the lock-down.

The study proposes supporting a smooth, functioning and resilient financial system; increasing fiscal measures by the US Government to increase liquidity on constraints; measures by The Federal Reserve to alleviate US dollar funding shortages; support market integrity; ensure continuous transparency and sharing of information; support the health sector, as well as consumer-based sectors that faced demand shocks and facilitate investments in the technology sector.

The originality of this paper lies in the examination of the impact of the novel COVID-19 pandemic on each of the 11 sectors constituting the S&P500 index separately, reflecting how the main economic sectors formulating the US economy reacted to the shock during the peak time of the pandemic to observe a full picture of the economic consequences amid the pandemic.

This paper researches a bidirectional volatility transmission effect between stocks and exchange rate markets in the six East European and Eurasian countries.

Research process involves creation of transitory and permanent volatilities via optimal component generalized autoregressive heteroscedasticity (CGARCH) model, while these volatilities are subsequently embedded in Markov switching model.

This study’s results indicate that bidirectional volatility transmission exists between the markets in the selected countries, whereas the effect from exchange rate to stocks is stronger than the other way around in both short-term and long-term. In particular, the authors find that long-term spillover effect from exchange rate to stocks is stronger than the short-term counterpart in all countries, which could suggest that flow-oriented model better explains the nexus between the markets than portfolio-balance approach. On the other hand, short-term volatility transfer from stock to exchange rate is stronger than its long-term equivalent.

This suggests that portfolio-balance theory also has a role in explaining the transmission effect from stock to exchange rate market, but a decisive fact is from which direction spillover effect is observed.

This paper is the first one that analyses the volatility nexus between stocks and exchange rate in short and long term in the four East European and two Eurasian countries.

This study focuses on Egypt’s recent experience with exchange rate policies, examining the existence of spillover effects of exchange rate variations on stock prices across two different de facto regimes and whether these effects, if any, are asymmetric.

The empirical analysis is carried out using a nonlinear autoregressive distributed lag modeling framework, which permits testing for the presence of short- and long-run asymmetries. Relevant local and global factors are also included in the analysis as control variables. The authors divide the entire sample into a soft peg period and a free float one.

Over the soft peg regime period, both positive and negative changes in EGP/USD exchange rates seem to have a significant impact on stock returns, whether in the short or long run. Short-term asymmetric effects vanish in the free float period, while long-term asymmetries continue to exist. By and large, the authors find that currency depreciation tends to exercise a stronger influence on stock returns than does currency appreciation.

The results offer important insights for investors, regulators and policymakers. With the domestic currency depreciation having a negative impact on stock prices, investors should contemplate implementing appropriate currency hedging strategies to abate depreciation risks and, hence, preserve their expected rate of return on the Egyptian pound-denominated investments. In the current post-flotation era, the government could pursue a flexible inflation targeting monetary policy framework, with a view to both lowering the soaring inflation toward an announced target rate and stabilizing economic growth. The Central Bank of Egypt (CBE) could adopt indirect monetary policy instruments to secure tightened liquidity conditions. Besides, the CBE could raise policy rates to incentivize people to keep their money in local currency-denominated instruments, instead of dollarizing their savings, thereby relieving banks of foreign currency demand pressures. Nevertheless, while being beneficial to the country’s real economy on several aspects, such contractionary monetary measures may temporarily impinge on stock market performance. Accordingly, policymakers should consider precautionary measures that reduce the potential for price distortions and unnecessary volatility in the stock market.

To the best of the authors’ knowledge, the current study represents the first attempt to explore the potential impact of exchange rate changes under different regimes on Egypt’s stock market, thus contributing to the relevant research in this area.