Mubashir Ali Khan, Josephine Tan Hwang Yau, Asri Marsidi and Zeeshan Ahmed
This study aims to examine the effect of corporate risk disclosure on investment efficiency. This study also seeks to contribute to existing literature of corporate risk…
Abstract
Purpose
This study aims to examine the effect of corporate risk disclosure on investment efficiency. This study also seeks to contribute to existing literature of corporate risk disclosure by investigating voluntary and mandatory risk disclosure and its effect on the investment efficiency.
Design/methodology/approach
This study used two measures of corporate risk disclosure, level and quantity of corporate risk disclosure. A content analysis approach is adopted for non-financial Malaysian firms over the period 2010–2018.
Findings
The empirical results show that level of corporate risk disclosure leads toward efficient investment, whereas quantity of corporate risk disclosure causes inefficient investment when firms disclose more voluntary risks. Further, categorizing corporate risk disclosure into mandatory and voluntary risk disclosure, this study finds that voluntary risk disclosure tends to have higher investment inefficiency, while no evidence was found for mandatory risk disclosure.
Originality/value
This paper contributes to narrow stream of research investigating corporate risk disclosure through level and quantity contributing to the understanding of the level and quantity of risk disclosure in determining organizational investment efficiency.
Details
Keywords
Maqsood Ahmad, Qiang Wu, Yasar Abbass and Shakeel Ahmed
Conventional theories of financial management are notably inconspicuous when considering the influence of heuristic-driven biases and fundamental and technical anomalies on…
Abstract
Purpose
Conventional theories of financial management are notably inconspicuous when considering the influence of heuristic-driven biases and fundamental and technical anomalies on institutional investors' investment decision-making performance and market efficiency, particularly, in emerging Asian economies. This study aims to explore the mechanism by which heuristic driven biases (i.e. cognitive heuristic biases and recognition-based heuristic biases) influence institutional investors' investment decision-making, investment performance and perceived market efficiency, with a mediating role of fundamental and technical anomalies and the moderating role of financial knowledge in Pakistan.
Design/methodology/approach
Data were collected through a survey completed by 180 institutional investors trading on the Pakistan Stock Exchange. Structural equation modeling was used to analyze the data and test the hypotheses.
Findings
The results suggest that heuristic-driven biases have a significant negative influence on perceived market efficiency and investment performance and a significant positive effect on investment decisions of institutional investors. Fundamental and technical anomalies appeared to mediate these relationships. The results also revealed that financial knowledge moderates these relationships.
Originality/value
This study pioneers research on the links among heuristic-driven biases, financial knowledge, fundamental and technical anomalies and institutional investors' decisions and performance. This adds to the understanding of the role that heuristic-driven bias plays in investment management activities and enhances the appreciation of various behavioral aspects and their influence on investment decision-making and performance in an emerging market. It also contributes to the literature on behavioral finance, specifically the role of heuristics in investment strategies, which is still in its initial stage in developed countries, let alone in developing countries. The current research contributes to the literature by defining heuristic-driven biases as antecedents and fundamental and technical anomalies as intervening variables for irrational investment decision-making and poor investment performance. In addition, this study underlines the significance of utilizing financial knowledge to manage the antecedents and repercussions of fundamental and technical anomalies.