Kamal Upadhyaya, Raja Nag and Demissew Ejara
The purpose of this paper is to study the impact of the 2016 presidential election polls on the stock market.
Abstract
Purpose
The purpose of this paper is to study the impact of the 2016 presidential election polls on the stock market.
Design/methodology/approach
The empirical model includes daily stock returns as the dependent variable and past asset prices, 10-year treasury rates, opinion polls and VIX (market uncertainty) as explanatory variables with a one-year lag. The model was estimated using two sets of daily polling data: from July 1, 2015, to November 8, 2016, and from June 1, 2016, to November 8, 2016. Additional descriptive statistics, such as means and standard deviations, were also calculated.
Findings
The estimated results did not reveal any statistically significant effects of opinion polls in favor of one candidate over another on stock returns. Simple statistical tests, however, show that the market performed better when Trump held a polling advantage over Clinton.
Originality/value
To the best of the authors’ knowledge, this is the only study that has examined the effects of the 2016 presidential election polls on the US stock market. This study adds value to the understanding of the relationship between election polls and the stock market in the USA.
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Kidist Jiffar Dessalegn, Demissew Diro Ejara and Habtamu Berhanu Abera
The purpose of this paper is to investigate the effect of bank activity restrictions and stringent capital regulation on bank operating efficiency in commercial banks from…
Abstract
Purpose
The purpose of this paper is to investigate the effect of bank activity restrictions and stringent capital regulation on bank operating efficiency in commercial banks from Sub-Saharan Africa (SSA) countries.
Design/methodology/approach
The study adopts the dynamic model two-step system general method of moment (GMM) estimation techniques. The purposive sampling method is used to select the sample from the SSA population. The dependent variable is bank efficiency, and the independent variables are stringent bank capital regulation and bank activity restrictions. Bank activity restrictions and capital stringency are indexed based on the bank regulation and supervision survey of 2002–2021. Secondary data are collected from the Global Financial Development Database, Bank Regulation and Supervision Database for the period 2002–2021.
Findings
The empirical findings suggest a significantly negative relationship between restricted financial regulation and bank efficiency. Strict capital regulation and activity restrictions lead banks to become inefficient.
Originality/value
To the best of the authors’ knowledge, this study is among the few study on regional level financial regulation effect on bank operating efficiency and it provides empirical evidence on the existing literature through a different estimation technique. The authors expand the existing understanding of the relationship between bank regulations and bank efficiency in the SSA region using major regulatory variables in detail in the estimation models. The rationale behind using such variables is that the region’s banking systems are heavily concentrated and typically inefficient in financial intermediation, and the diversity of financial institutions is limited.
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Tony Carter and Demissew Diro Ejara
The purpose of this paper is to export the idea of “Core Competency Based Valuation”. Wireless network operations services companies have exploded in importance and face…
Abstract
Purpose
The purpose of this paper is to export the idea of “Core Competency Based Valuation”. Wireless network operations services companies have exploded in importance and face unprecedented challenges in valuing them. This article considers how one firm's managers are enhancing their value through better performance and decision making to input long‐term value, along with the industry growth and highly favorable customer response to their quality products and services.
Design/methodology/approach
This fairly extensive, yet focused paper, was based on accepted financial valuation procedures, due diligence from visit with managers and relevant market data. This paper also reflects other critical valuation quantitative information concerning their considerable business activity and excellent future prospects in the “sales deals pipeline” such as Nokia, a key customer development, that should be reflected in any detailed report regarding valuation.
Findings
Effective management requires that the emphasis return to fundamentals, even if it makes analysts unhappy in the short‐term. For managers, DCF tools will continue to be important. However, history also shows that on occasion market valuations can and do deviate. They can benefit that way only if they understand the real underlying values. Managers need to keep their focus on discounted cash flow and all those factors in the company and marketplace that reflect the firm's capabilities and opportunities.
Originality/value
What makes wireless firms, and especially new wireless firms, different? First, they usually have not been in existence for more than a year or two, leading to a very limited history. Second, their current financial statements reveal very little about the component of their assets – expected growth – that contributes the most to their value. Third, these firms often represent the first of their kind of business. In many cases, there are no competitors or a peer group against which they can be measured.
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The purpose of this paper is to offer a “how to” guide for applying Merton’s (1987) valuation adjustment for incomplete information, which depends on market capitalization…
Abstract
Purpose
The purpose of this paper is to offer a “how to” guide for applying Merton’s (1987) valuation adjustment for incomplete information, which depends on market capitalization, idiosyncratic risk and extent of investor ownership.
Design/methodology/approach
The paper illustrates Bodnaruk and Ostberg’s (2009) formula for Merton’s adjustment, and presents some example empirical estimates of the adjustment for some US stocks.
Findings
The adjustment estimates are material for many example stocks, particularly volatile stocks with a low percentage of shares held by institutional funds. However, the adjustment estimates are modest for many other stocks, including some smaller cap. stocks.
Research limitations/implications
Measuring the model’s inputs requires using some judgment, particularly regarding the investor ownership variable. The paper will hopefully help stimulate useful empirical research on adjustment estimates and on best practices for applying the model.
Practical implications
The paper may encourage more use of the incomplete-information adjustment in practice, which should lead to improved discount rate estimates in valuation analyses.
Originality/value
No other “bridge the gap” coverage of the incomplete-information adjustment is available in textbooks or the applied literature.