Investment Management and Financial Innovations

Journal Information
ISSN / EISSN : 18104967 / 18129358
Current Publisher: LLC CPC Business Perspectives (10.21511)
Total articles ≅ 406
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DOAJ
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Joon Hei Cheung, Kang Sung Hur, Sung Jong Park
Investment Management and Financial Innovations, Volume 16, pp 89-100; doi:10.21511/imfi.16(2).2019.08

Abstract:The purpose of this study is to investigate the cost behavior of research and development (R&D) expenditures. R&D costs can be divided into capitalized R&D expenditures and expensed R&D expenditures. The authors examine the cost behavior of total R&D expenditures, as well as the cost behavior of capitalized and expensed R&D expenditures. In addition, it is investigated how the cost behavior varies depending on company management performance. Research results document that the total cost of R&D and capitalized R&D expenditures are not affected by changes in sales. While the cost of expensed R&D has a positive relationship with sales changes, asymmetric cost behavior does not exist. However, when combined with such factors as successive declines in sales, performance, and economic growth as measured by gross domestic product (GDP), asymmetric cost behavior emerges. In addition, the authors found that companies with high management performance smooth their earnings by expensing R&D expenditures as incurred rather than capitalizing them. For firms with high earnings, cost behavior of total R&D expenditures and capitalized R&D expenditures moves in the opposite direction of sales. That is, companies with high performance have low capitalization ratio of R&D. The results of this study are significant in that they expand the understanding of managers’ behaviors regarding R&D expenditures.
Do Hoon Ki, Wook Bin Leem, Jee Hoon Yuk
Investment Management and Financial Innovations, Volume 16, pp 78-88; doi:10.21511/imfi.16(2).2019.07

Abstract:This study investigates whether the value relevance of accounting information was changed after IFRS adoption in South Korea. Related prior studies have found mixed empirical evidence depending on research methodologies or research periods. Moreover, the effect of IFRS adoption on value relevance can be different between Korean stock markets (KSE and KOSDAQ) because they have different characteristics. Also, the main financial statements reported by Korean firms had changed from individual financial statements to consolidated financial statements after IFRS adoption. Thus, this study analyzes the effect of IFRS adoption on the value relevance of individual and consolidated accounting numbers expanding research periods (5 years before and after IFRS adoption) and comparing changes in explanatory powers of Ohlson (1995) model on each listing market. The empirical results indicate that the value relevance of Korean listed firms generally decreased after IFRS adoption. However, the value relevance of KSE listed firms decreased, while the value relevance of KOSDAQ listed firms increased after IFRS adoption. In addition, it was found that the effects of IFRS adoption on value relevance of individual and consolidated financial information were different depending on listed markets. This implies that different level of demand for information environment may induce differential effects of IFRS adoption on value relevance.
Zarah Puspitaningtyas
Investment Management and Financial Innovations, Volume 16, pp 66-77; doi:10.21511/imfi.16(2).2019.06

Abstract:Signaling theory assumes that it is necessary to signal investors to how they perceive company’s prospects. One of them is dividend announcements. The announcement of dividends is predicted to be a signal for investors in the investment decision making process. This study aims to determine and analyze the effect of dividend announcements, both increases and decreases in dividends, on stock returns. This study is intended to find empirical evidence about market reactions based on signaling theory in Indonesia Stock Exchange on the period 2017. The analysis of this study uses the event study method and hypothesis testing carried out using different test paired sample t-test. The results of this study prove that the market reacts to the announcement of dividends. The market reaction is indicated by the value of abnormal returns, namely abnormal returns in the positive direction when the announcement of dividend increased and abnormal returns in the negative direction when the announcement of dividend decreased. The value of abnormal returns in a positive direction reflects the company’s performance in good condition, and vice versa. This result indicates that dividend announcements are a signal and contain information relevant to investors in the investment decision making process.
Emiliano Ruiz-Barbadillo, Andrés Guiral, Universidad De Cadiz Professor Of Accounting
Investment Management and Financial Innovations, Volume 16, pp 47-65; doi:10.21511/imfi.16(2).2019.05

Abstract:Previous event studies find that going concern opinions (GCOs) convey significant information to the market when the audit reports appear to be unexpected. Using the value relevance method, this paper examines the differential impact of expected and unexpected going concern opinions on the market value of US firms for the 2000–2006 time period. The results suggest that while both firms receiving expected and unexpected GCOs suffer a drop in their average market value, the decrease is larger in the case of firms with unexpected GCOs. It is also observed that the market tends to shift the weight they place on earnings to the book value of equity in valuing firms with unexpected GCOs. Specifically, the decrease in the pricing multiple of earnings is larger for the case of unexpected GCOs. This result suggests that GCOs are more informative when they are unexpected. The study complements existing work by exploring whether expected GCOs have any differential valuation impact than unexpected GCOs instead of looking at the informativeness of GCOs alone.
Zainal Abidin Sahabuddin, Bram Hadianto
Investment Management and Financial Innovations, Volume 16, pp 37-46; doi:10.21511/imfi.16(2).2019.04

Abstract:Supervisory board plays an essential role to implement good governance in firm. If this governance is implemented well, the increase in firm value will occur. Related to this statement, the main question that appears is about the number and independence rate of supervisory board members needed to enhance firm value. Besides supervisory board, debt policy holds an important role for firm because of bankruptcy issue. Firm with good governance tries to avoid this issue by decreasing the amount of its debt to create high value.The aim of this study is to test and analyze the effect of board governance, consisting of size and independence of supervisory board, and debt policy on value of non-financial firms forming the Kompas 100 Index on Indonesia Stock Exchange. To be able to generalize results on all non-financial firms forming this index, stratified random sampling method is used to take firms as the sample from the population. Method of data analysis used is fixed effect regression model.This study infers that the number of supervisory board members has no effect on firm value, whereas board independence and debt policy have the effect on firm value: firm with high portion of supervisory board independence and the amount of debt significantly tends to have low value.
Lawrence Uchenna Okoye, Felicia O. Olokoyo, Felix N. Ezeji, Johnson I. Okoh, Grace O. Evbuomwan
Investment Management and Financial Innovations, Volume 16, pp 25-36; doi:10.21511/imfi.16(2).2019.03

Abstract:Inflation is an important macroeconomic issue that has continued to dominate discussions at major economic fora over time. Governments all over the world are concerned about its rising trend because of its pervasive effect on economic performance. One intriguing fact about inflation is that it is both the cause and effect of certain policy actions of government. Several studies have been conducted on the effect of inflation on economic activities in developing and developed nations, but studies on its cause, particularly in developing nations, are scant. This paper aims at identifying major factors that cause inflation in Nigeria. Based on the autoregressive distributed lag (ARDL) estimation method, the study shows empirical support for significant impact of external debt, exchange rate, fiscal deficits, money supply and economic growth on inflation. It further shows previous period or lagged inflation rate as a significant determinant of current inflation rate. However, the study produced no evidence of significant longrun impact of interest rate on the rate of inflation in Nigeria. The study recommends economic reforms that target foreign exchange inflow through increased export trade, as well as a paradigm shift away from deficit budgeting. There is also a need for infrastructural and institutional reforms to eliminate or, at least, minimize the impact of structural inequity on output prices.
Fong-Yi Shen, Yeong-Jia Goo
Investment Management and Financial Innovations, Volume 16, pp 14-24; doi:10.21511/imfi.16(2).2019.02

Abstract:The purpose of this study is to utilize the Three Stage Least Squares (3SLS) of the simultaneous equation estimation approach to revisit the possible cross relationship between IPO initial returns and aftermarket risk. A structural form equation system of IPO initial returns and aftermarket risk equations is estimated first to obtain the structural form coefficients. The analytically derived reduced form coefficients are then calculated to analyze the net effects of each exogenous variable on two endogenous variables. Major findings of this study are as follows. First, the signs of net effects of all exogenous variables on IPO initial returns and aftermarket risk are the same. In other words, any change in exogenous variables, IPO initial returns and IPO aftermarket risk will change in the same direction, i.e., the higher (lower) the IPO initial returns, the higher (lower) the IPO aftermarket risk. Second, the less the degree of corporate governance, the higher the IPO initial returns and aftermarket risk. Third, the higher the market risk or return before IPO, the higher the IPO initial returns and aftermarket risk.
Patrick Ologbenla, Federal Inland Revenue Services Ph.D.
Investment Management and Financial Innovations, Volume 16, pp 1-13; doi:10.21511/imfi.16(2).2019.01

Abstract:The study investigated the factors that determine fiscal behavior in Nigeria. The vulnerability of fiscal policy framework in Nigeria to different shocks and the attendant effects on the behavior of fiscal policy are parts of the reasons that prompted this research work. Annual data between 1980 and 2015 on core fiscal variables such as government revenue, government expenditure, fiscal balance, public debt, as well as other variables such as oil price, exchange rate, and inflation rate commodity price among others, are used. The Auto-Regressive Distributed Lag ARDL estimating technique is used to analyze both the long-run and short-run effects of these variables on fiscal behavior in Nigeria. Findings from the study show that fiscal policy in Nigeria is highly vulnerable to shocks from these variables mostly in the short run. Notwithstanding, variables like government revenue, government expenditure, regime of administration, oil price and commodity price volatilities all have sustained effects till the long-run periods. It was discovered that oil price movements is not the only external factor that has pronounced effects on fiscal behavior, but commodity prices volatility generally constitutes an important influential factor in determination of fiscal policy behavior in Nigeria.
Rajamohan Ramaiah Ramasamy, Sathish Pachiyappan
Investment Management and Financial Innovations, Volume 16, pp 346-364; doi:10.21511/imfi.16(1).2019.27

Abstract:In India, households predominantly prefer to invest their surplus in financial securities, which provide stable return irrespective of whether they beat inflation or help in creating wealth. However, financial planners advise their clients to invest their surplus for long term in risky assets such as mutual funds to generate inflation beating returns. But when households ask for the meaning of long term in a definite number, it varies among the financial advisors. Hence, the study made an attempt to answer this question by calculating the minimum time duration required to generate a minimum positive return for two indices (NIFTY 50, S&P BSE SENSEX) and 6 mutual fund schemes for a period of 23 years and the same two indices (NIFTY 50, S&P BSE SENSEX) and 20 mutual fund schemes for a period of 12 years and found out that the time horizon or the long term to ensure minimum positive return ranges from 5 years to 9 years depending up on the type of fund or the level of risk associated with the mutual fund schemes.
Halyna Voznyak, Taras Kloba, Solomiia Kloba, Lev Kloba
Investment Management and Financial Innovations, Volume 16, pp 365-377; doi:10.21511/imfi.16(1).2019.28

Abstract:The article analyzes the model of financial imbalances in the regions, which allows assessing the effects of implementing various options of the financial regional policy aimed at reducing the depth of the crisis in regional systems, smoothing cyclical fluctuations, leveling the levels of socioeconomic development of the territories. The financial imbalances of regions of Ukraine are estimated on the basis such as indicators of gross regional product, gross regional product per capita, index of physical volume of gross regional product in comparative prices (in the prices of the previous year), economically active population by regions, population incomes, and level of capital investments by region. In the process of assessing the financial imbalances of the regions, a constant study of the structure of the fluctuations of the values of these indicators, was conducted determining the significance of each size in the overall structure and identifying the features of the system development in different ranges.Based on the assessment of financial imbalances in the development of regions, the causes and consequences of significant imbalances in the economic system were identified, and directions for increasing the efficiency of regional policy were proposed. In turn, the assessment of financial imbalances in the regions makes it possible to consider the influence of factors on the development of regions, because in some cases, the regional socioeconomic system perceives positively, in others – negatively. Therefore, it must have elements that contribute to the transformation of its parameters in the conditions of changing environment and, at the same time, ensuring the maintenance of regional stability.