Search results

In financial analysis, forecasting often involves regressing one time series variable on another. However, to ensure that the models are correctly specified, one needs to first test for stationarity, co‐integration and causality. In testing for causality, the variables should be stationary. If non‐stationary, one can estimate the model in difference form, unless the variables are co‐integrated. This article determines whether cash flow and earnings variables are stationary, and which variable causes the other, using econometric analysis. In most cases, cash flow variables are found to cause earnings variables. This is so when the models are estimated in levels. However, when estimated in first differences, the causal relationship tends to be reversed such that earnings cause cash flows. Further study is recommended, whereby panel data could be used to improve the power of the tests.

Understanding which market to invest in for a well-diversified portfolio is fundamental in economies that are highly vulnerable to fluctuations in exchange rates. Extant literature that has considered phenomenon hardly juxtapose the markets. The purpose of this study is to examine the effects of exchange rate volatility on the Stock and Real Estate market of South Africa. The essence is to determine whether the fluctuations in the exchange rate influence the markets prices differently.

The Generalised Autoregressive Conditional Heteroskedasticity [GARCH (1.1)] model was used in establishing the effect of exchange rate volatility on both markets. This study used monthly South African data between 2000 and 2020.

The results of this study showed that increased exchange rate volatility increases stock market volatility but decreases real-estate market volatility, both of which revealed weak influences from the exchange rates volatility.

This study has implication for policy in using the exchange rate as a policy tool to attract foreign portfolio investment. The weak volatility transmission from the exchange rate market to the stock and real estate market indicates that there is prospect for foreign investors to diversify their investments in these two markets.

This study investigated which of the assets market, stock or housing market do better in volatile exchange rate conditions in South Africa.

The purpose of this paper is to re-examine the weak form efficiency of five African stock markets (South Africa, Nigeria, Egypt, Ghana and Mauritius) using various tests to assess the impact of non-linearity effect and thin trading which are prevalent in African markets on market efficiency.

The weekly returns of S&P/IFC return indices for five African countries over the period 2000-2013 were obtained from DataStream and analyzed. The study adopted the newly developed Non-Linear Fourier unit root test advanced by Enders and Lee (2004, 2009) which allows for an unknown number of structural breaks with unknown functional forms and non-linearity in data generating process of stock prices series to test the Random Walk Hypothesis (RWH) for the five markets, and an augment regression model.

In light of the empirical evidence the author(s) using Non-linear Fourier Unit Root Test only fail to reject the RWH for South Africa, Nigeria and Egypt leading to the conclusion that these markets follow the RWH and weak-form efficient whilst Ghana and Mauritius are weak-form inefficient. Besides, evaluating non-linear models without adjusting for thin trading effect shows that, South Africa and Ghana markets are weak-form efficient while Nigeria, Egypt and Mauritius are not. However, after accounting for thin trading effect, the author(s) find that South Africa and Egypt markets follow the RWH. The findings imply that market efficiency results depend on the methodology used.

This paper provides further evidence on stock market efficiency in emerging markets. The finding suggests that thin trading and non-linearity effect influences markets efficiency tests in African stock markets. Thus, recent structural adjustment and liberalization policies have not enhanced stock market operations in Africa. This paper therefore has implications for policy makers and international investors.

The purpose of this study is to investigate market reaction to corporate governance reform pronouncements on board diversity in Kenyan listed firms.

An event study was performed using 240 days pre-event period and an event period that consisted of 25 days pre and 25 days post the March 2016 board diversity reforms announcement in Kenya. The difference in differences (DiD) method was also used for cause–effect analysis for two years before and three years after the March 2016 board diversity reforms announcement. The outcome variable was firm value, whereas the treatment and control groups were Kenyan listed firms and deposit-taking credit unions, respectively.

The event study method found cumulative abnormal returns after the date of the board diversity reforms announcement to be positive and significant. The DiD methods found a positive and significant market reaction to the March 2016 board diversity reforms announcement in Kenya.

This study was limited by the secondary data that was collected and analyzed from financial statements and stock price data from the Nairobi Securities Exchange (NSE). Financial statements have the disadvantage of being affected by the judgment and estimates of their preparers or accountants.

Emerging markets like the NSE are vulnerable to market manipulation by insiders. Efficient stock markets are known to attract more investors who are interested in a trustworthy stock price determination mechanism. The Capital Market Authority should thus continue implementing corporate governance reforms aimed at improving the efficiency of the NSE and the trustworthiness of stock prices therein. The continued reforms thus imply better value for money for the NSE investors.

This study makes an important contribution to literature by combining an event study and DiD analysis to assess market reaction to board diversity reform announcements in emerging markets of sub-Saharan Africa which is a concept that has not been researched before. Past studies have used event studies to investigate the efficiency status of stock markets in sub-Saharan Africa, whereas the current study used an additional method of DiD and hence contributed to literature.

‘Poverty is well-being deprivation’, declares the World Bank. There is no clear, widely accepted definition of well-being, although the World Bank provides some clues, ‘to be impoverished would be to be starving, to lack shelter, to be unwell and uncared for, and to be illiterate and untutored’. Poor people are subject to uncontrollable situations and denied voice and influence. Psychological empowerment (PE) and gender equality are among the emphasised areas which need to be catered. ‘Psychological’ empowerment, abbreviated as ‘PE’, denotes empowerment at the specific intensity of analysis. It is a multidimensional concept derived from the integration of various dimensions determined by three realms: (a) personality, which includes self-attribution and internal locus of control, (b) cognitive, that contains self-efficacy perception, (c) motivational, which describes the interest in participating in the activity and control of the factors involved. PE shows that people believe their actions are manageable and controlled, that they are transitioning from a condition of learned helplessness to a state of logical hope and optimism. Gender equality is the equivalent involvement of males and females in utter facets of a lifetime. Women's civil rights activities affiliated with the rights movements worked to establish gender equality in place of an essential human right. In many nations, indicators such as the gender-linked development indicators, the gender break index and the gender fairness index provide measurements of complete gender equivalence.

This chapter discusses the positive impact of PE and gender equality on human well-being based on evidence.

This chapter presents the cases of two State-owned companies in Uruguay: ANTEL (telephone company) and ANCAP (oil company). Since 2008, these firms have been preparing value-added statements (VAS), a report that shows how value is distributed to stakeholders.

Qualitative methods, particularly interviews, and analysis of documents.

VAS reporting became a highly accepted practice in both firms. VAS reports help to better explain the impact of public policies implemented through these companies – a situation that seldom happens in a private firm. This accounting practice is also consistent with the political decision of increasing accountability in State-owned firms.

Since it is a case study research, we cannot generalize conclusions. This study has focused on the beginnings of this experience; further research may adopt a longitudinal approach by exploring how this accounting practice evolves over time.

These reports are not much read by external audiences (e.g., members of parliaments, public officials, journalists, NGOs). In a similar vein, these reports have not been used much for internal managerial purposes. The use of VAS reports for both public policy and management purposes remain untapped opportunities to explore.

These companies consider value distribution as a core commitment in their CSR policies and have consequently decided to make that value distribution explicit in a reporting model.

There are few studies about VAS reporting in Latin America.

This study aims to explore the challenges faced by foreign banks in the Kingdom of Saudi Arabia (KSA). It is important to explore the challenges as extant literature provides limited guidelines about this issue.

A mixed-method approach was used by canvassing 71 questionnaires and 36 semi-structured interviews. The sample included senior managers of foreign bank branches working in the Saudi market by the end of 2019. The quantitative data were analyzed using the distribution fitting algorithmic approach, and it is supported by the qualitative data analyzed using the thematic analysis method.

Results indicate that foreign banks encounter various challenges including government policies and regulations, the Saudi legal system, high “Saudization” ratio of the workforce, technological advances, high competition and overall economic change (oil price change). It seems that these challenges represent the KSA’s specific business environment.

This study will advance the extant literature on foreign bank entry with evidence from a unique context. This study could also help regulators, policymakers and bankers to better understand foreign banks’ entry into emerging and developing markets.

Sub-Saharan African (SSA) stock exchanges are imperfect and inefficient. Therefore, orthodox finance theories are unable to completely explain their market returns. Such models mainly identify anomalies when applied to the sub-region. Consequently, this paper develops an original theoretical model to better explain market returns on the sub-continent.

This paper develops an alternate analytical framework that combines adaptive expectations, Keynesian LM model and modified uncovered interest parity (UIP) formulations to address empirical anomalies identified by previous literature when analyzing SSA's inefficient stock markets. Using panel data, the study first computes the fixed as well as random effects regressions and, later, a Generalized Method of Moments (GMM) dynamic panel regression for further empirical analysis.

Both the fixed and random effects regression results indicate that the relative output-money supply disparity and foreign inflation-money supply growth rate spread have positive effects on market returns in SSA. On the other hand, foreign interest rates have an inverse effect. Although the GMM dynamic panel regression has similar results, it additionally finds that market returns in SSA are autoregressive. This suggests that past returns are persistent.

A key implication is that multipliers and transmission mechanisms in SSA may take longer to adjust, thereby limiting short-run market returns. Also, policymakers must encourage a critical mass of firms to list in order to enhance efficiency. Additionally, policy variables significantly influence returns. One limitation is the high market segmentation in SSA. This heightens heterogeneity, emphasizing fixed effects.

Also, the findings of this study may not apply to all emerging economies as SSA economies are highly heterogeneous.

The segmented nature of SSA stock markets may have implications for income inequality and the distribution of resources within the economy. Also, it indicates that there are limits to how firms use capital markets on the sub-continent.

This paper abstracts from the strict ideal market conditions prescribed by modern finance theories and develops an original modified UIP model. It finds that SSA stock markets may be more sensitive to policy variables, instead of determinants postulated by orthodox finance concepts. The study offers opportunities for further critical examination of returns in imperfect frontier markets.

The study investigated the contributions of household farming in palliating the economic effect of COVID-19 during the lockdown period. The study was questionnaire-based involving 510 participants randomly drawn from 17 Local Government Areas in Enugu State. Data were collected on demographic data, household expenditure, farm plots size, crops cultivated, sufficiency and extent farm produce contributed to palliating the effect of COVID-19 shocks. Data analysis used descriptive statistics, PCA and ANOVA. 89% households were fully involved in farming during the lockdown which positively impacted on household economy and especially SDGs 2 and 12. The lockdown improved household food production and pushed towards a positive behavioral change towards food security. 85% households indicated interest in expanding their farm size after the pandemic. Land and capital unavailability were significant barriers to taking farming as a major occupation. Several policy options were proposed to improve food production at household levels to mitigate the impact of COVID-19 crisis on food security.