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Articles 1 - 30 of 55
Full-Text Articles in Business
State-Contingent Overconfidence : Application To Bank Loans, Sze Nam Chan
State-Contingent Overconfidence : Application To Bank Loans, Sze Nam Chan
Lingnan Theses and Dissertations
Overconfidence (arrogance or overestimation of one’s ability) has often been viewed in the finance literature as a character trait that is stable over time. This paper, however, provides a first attempt to show that overconfidence can be state-contingent, that is, the level of overconfidence among overconfident individuals could be influenced by an external shock such as a financial crisis and a change in regulation, for example, the adoption of Sarbanes-Oxley Act (SOX). Both our experimental (based on psychological approach on over-precision) and empirical results using more than 4500 manager-year observations through controlling different personal and firm characteristics show that individual …
Informed Institutional Shareholding : Evidence From Political Promotion, Chi Zhang
Informed Institutional Shareholding : Evidence From Political Promotion, Chi Zhang
Theses & Dissertations
Are institutional investors informed to the political promotion events? This paper examines the informed trading of institutional investors in the context of political promotion. Institutional investors have superior information environment compared to retail investors. It can establish private information channel with firm management, financial analysts, regulatory bodies and other types of institutions. Since contemporary economic activities are more or less influenced by politics, promotion of important officials can bring favorable local economic development opportunities to companies. If institutional investors are informed to the political promotion events, they are supposed to react in advance of the occurrence of promotion events. We …
Geographic Distance And The Impact Of Investor Sentiment On Stock Prices, Yan Yang
Geographic Distance And The Impact Of Investor Sentiment On Stock Prices, Yan Yang
Theses & Dissertations
Based on China’s stock market, this study investigates how firms’ geographic distance from a financial center affects the sensitivity of stock prices to investor sentiment. I find that firms located closer to a financial center are more affected by investor sentiment than firms located far from a financial center. This distance effect holds for different geographic cutting boundaries and after excluding firms located in financial centers. Besides, using China’s High Speed Railway (HSR) as an exogenous shock, I find that HSR connection significantly decreases the effect of geographic distance on the sentiment-driven stock price relationship. In addition, firms with shorter …
Insurance And Self-Protection For Increased Risk Aversion, Jian Zhang
Insurance And Self-Protection For Increased Risk Aversion, Jian Zhang
Theses & Dissertations
We re-examine the classic problem of risk aversion and self-protection in this paper. In the beginning of this paper, we conduct comparative statics of risk aversion and prevention efforts based on the mono-periodic two states model of choice under risk. We show this new condition is effective with self-insurance-cum-protection model (Lee, 1998), in which the decision maker's activities to prevent the risk can sever both as self-insurance and self-protection. We suggest a new condition that increased risk aversion induces more prevention activities. This new condition requires only one assumption concerning fear of ruin coefficient, marginal effect of SICP activity on …
The Role Of Islamic Finance In Economic Development, Nora Khan
The Role Of Islamic Finance In Economic Development, Nora Khan
Lingnan Journal of Banking, Finance and Economics
Islamic financial institutions have been growing rapidly in the past few years. Islamic finance refers to investments that are permissible in accordance with Sharia, the Islamic law. Sharia law views money as a measuring tool for value and not an “asset” itself. “It does not permit receipt and payment of riba(interest), gharar(excessive uncertainty), maysir(gambling), short sales or financing activities that it considers harmful to society” (IMF website). Interest, a form of income from money, is therefore prohibited. For example, the income obtained from banks must come from the gain or loss of the enterprises they underwrite and not from interest …
Fdi And Manufacturing Industry In Asia, Luyi Jin
Fdi And Manufacturing Industry In Asia, Luyi Jin
Lingnan Journal of Banking, Finance and Economics
The study finds that China’s manufacturing still maintained a growth level from 2003 to 2013. However, the growth has been declining. The rapid development of ASEAN economies led to the rise of the emerging manufacturing countries which have slowly adjusted and found their own advantages in challenging China.
The main conclusions of this paper are twofold. First, China will soon lose her low labor cost competitive advantage and needs to look for new strategy or industrial upgrades. Second, the current pattern of international division of labor will last for a fairly long period that developing countries will continue to serve …
Portfolio Recallocation And Exchange Rate Dynamics, King Chun Wong
Portfolio Recallocation And Exchange Rate Dynamics, King Chun Wong
Lingnan Journal of Banking, Finance and Economics
This empirical paper aims to review a previous literature entitles “Portfolio Reallocation and Exchange Rate Dynamics”. The literature stated that including financial market structure can provide a micro-foundation to complement other macro-based models for exchange rate dynamics which typically are meaningful for the medium and long terms but not satisfactory for the short run. The model in the literature offers another way to look at exchange rate dynamics that is significant in the short run and more practical in nature. Undoubtedly, many investors in the financial market, such as traders, dealers, fund managers, and speculators who adjust their portfolio components …
How Do Cdos And Cdss Influence The Crisis Of 2008, Martin Buffet
How Do Cdos And Cdss Influence The Crisis Of 2008, Martin Buffet
Lingnan Journal of Banking, Finance and Economics
Everybody has heard about the “subprime” crisis but do we really know how it occurred and why this phenomenon had such an impact on our economies. One aspect of the answer to this question lies in the trade of credit default swaps (CDSs). These financial products led to less transparency in the markets and to a very collectively vulnerable financial system. This created a vicious circle that had not been anticipated by our financial regulators. In this paper, we will discuss how it occurred and what could have been done to avoid, or at lease reduce, the impact of these …
The Study Of Enhanced Performance Measurement Of Mutual Funds In Asia Pacific Market, Juzhen Li
The Study Of Enhanced Performance Measurement Of Mutual Funds In Asia Pacific Market, Juzhen Li
Lingnan Journal of Banking, Finance and Economics
This empirical paper will compare the result by running Costa and Jakob's models (2010) using mutual funds in Asia Pacific market excluding Japan. Costa and Jakob's paper, Enhanced Performance Measurement of Mutual Funds: Running the Benchmark Index through the Hurdles, is highly related to this empirical paper and is generally based on Carhart's four-factor model (Carhart, 1997) with US securities market data. Apart from the comparison between Asia Pacific market excluding Japan and US market, further research on auxiliary and heteroscedasticity will also be conducted.
Will Analysts Learn From Other Analysts Who Possess Superior Private Information, Hangyuan Shi
Will Analysts Learn From Other Analysts Who Possess Superior Private Information, Hangyuan Shi
Theses & Dissertations
Based on a valuable testing venue in China where listed companies are required to disclose corporate site visit records of financial analyst to the public, this study examines whether analysts will learn from visiting analysts' forecasts that contain superior private information. I find that visiting forecasts tend to attract more analysts to issue forecasts in their aftermath than the prior forecasts issued by the same analysts but without conducting corporate site visit (non-visiting forecasts). The following effect is weaker when the visiting forecasts are more informative. In addition, other analysts’ forecasts following the visiting forecasts tend to move closer to …
Ipo Markets In Asia Financial Centers : How The Different Ipo Locations Affect Firms’ Stock Prices, Yuanzhen Jiang
Ipo Markets In Asia Financial Centers : How The Different Ipo Locations Affect Firms’ Stock Prices, Yuanzhen Jiang
Lingnan Journal of Banking, Finance and Economics
For most of non-listed corporations when they are confronting the issues of cutting capital cost, to increase the base of their investors, to develop the firm business quicker, or even to diversify the pool of investors, one of the most important alternatives that the executives and shareholders of these corporations may think is to do IPO (Initial Public Offering); which could be done in the domestic or in the foreign IPO markets. This paper firstly introduces the situation and differences among different IPO markets in Asia major financial centers that includes Mainland China, Hong Kong and Singapore. Then it will …
Should Hong Kong Maintain A Linked Exchange Rate System?, Hoi Yin Tsoi
Should Hong Kong Maintain A Linked Exchange Rate System?, Hoi Yin Tsoi
Lingnan Journal of Banking, Finance and Economics
The linked exchange rate was implemented in 1983. This paper finds that over these 32 years, this system did bring lots of benefits to Hong Kong. Nevertheless, as Hong Kong is a vastly different place now relative to what it was 32 years ago, the costs for the adoption of the link outweigh the benefits so this system is no longer suitable for Hong Kong. It is suggested that in order to serve the best interest of Hong Kong, it should not maintain the linked exchange rate system and should switch to the managed floating exchange rate system.
Empirical Study : Shanghai-Hong Kong Stock Connection Sign Of Efficiency Improvement?, Ming Cheung Fok
Empirical Study : Shanghai-Hong Kong Stock Connection Sign Of Efficiency Improvement?, Ming Cheung Fok
Lingnan Journal of Banking, Finance and Economics
Stock market connection encourages local corporations cross-listing in overseas stock markets which will, theoretically, enhance the information flow between countries and the stock market efficiency. In view of a closed economy like China and a free economy like Hong Kong, the announcement of Shanghai-Hong Kong stock connection program seems to be a great opportunity for testing the well-known Efficiency Market Hypothesis (EMH). Employing Capital Asset Pricing Model (CAPM) and the random walk model suggested by previous studies, this paper will present the comparison of market performance before and after the connection as evidences for the hypothesis testing.
An Empirical Analysis Of Factors Influencing China's Real Estate Prices-Based On The Var Model, Pan Xiao
An Empirical Analysis Of Factors Influencing China's Real Estate Prices-Based On The Var Model, Pan Xiao
Lingnan Journal of Banking, Finance and Economics
The real estate industry has an increasingly significant position in our national economy. It is important for real estate investment and national macro-control to analyze the main factors that affect its prices, in order to predict its future movements. In this paper, the dynamic econometric analysis method was used to analyze these macroeconomic factors that influence the real state prices on a empirical research. And the results show that the expected prices of real estate, money supply, real estate development investment and household income are the dominant factors influencing them.
Factors In The Returns On Stock : Inspiration From Fama And French Asset Pricing Model, Yuanzhen Jiang
Factors In The Returns On Stock : Inspiration From Fama And French Asset Pricing Model, Yuanzhen Jiang
Lingnan Journal of Banking, Finance and Economics
Under the inspiration of Fama and French asset pricing model, this paper mainly studies the relationship between the month return of A shares and the factors that may have an effect on the stocks’ month return. It also compares the differences in the reaction of all shares and GEM board shares to these factors. It is important to highlight that these factors include the market, firm size, earnings and book-to-market information. The data used in this project comes from the quarterly data of China stock market from March of 2000 to December of 2011 and was used in panel model …
The Impact Of High-Order Risk Attitudes On Bank's Loan Policy, Yuchen Luo
The Impact Of High-Order Risk Attitudes On Bank's Loan Policy, Yuchen Luo
Theses & Dissertations
It is well known that prudence plays an important role in the process of decision making under uncertainties. However, how prudence affects a bank's decision on extending fixed rate or variable rate loan has not yet been fully examined. In this dissertation, I use definition of second-order expectation dependence to further identify conditions for the risk prudent (imprudent) bank under state-dependent framework to refrain from extending fixed rate loans. Furthermore, using a set of actual data, I apply a recent developed inference procedure for testing positive expectation dependence to demonstrate the significance of my work in empirical applications. In the …
The Impact Of Credit Default Swaps On Corporate Investment Policy, Xinshu Xue
The Impact Of Credit Default Swaps On Corporate Investment Policy, Xinshu Xue
Theses & Dissertations
Credit Default Swaps (CDSs) play an important role in the financial markets. The introduction of CDSs has impacts on the bond market, and the financial characteristics and creditworthiness of the underlying reference entities. When financing is not frictionless, the investment policies of firms are related to their financial conditions. However, whether or how the introduction of CDS will directly affect the investment policy of the firm has not been examined empirically in the literature. To shed light on this issue, my study investigates the relation between credit default swaps trading and corporate investment policy for the listed firms in the …
Management Earnings Forecast Decisions In A Regulated Regime : Evidence From China, Jingyu Yang
Management Earnings Forecast Decisions In A Regulated Regime : Evidence From China, Jingyu Yang
Theses & Dissertations
Since 2000, China has required publicly listed firms to issue management earnings forecasts when they expect extreme changes in earnings or are likely to become loss-making. This study examines managers’ forecast decisions under this unique regulatory environment. I find an increase over time in the proportion of firms issuing voluntary earnings forecasts when they do not expect extreme changes in their earnings or losses. I also find an improvement in the quality—in terms of the precision, accuracy and bias—of both mandatory and voluntary forecasts over time. Further detailed analysis shows that the introduction of the regulation on management earnings forecasts …
Information Asymmetry, Agency Cost And Stock Liquidity : Evidence From The Split Share Structure Reform In China, Tao Yuan
Theses & Dissertations
The coexistence of tradable and non-tradable shares in Chinese firms has caused severe agency problems and has been the subject of much criticism. In 2005, the Chinese Securities Regulatory Commission launched a reform to eliminate the dual-class share structure and convert non-tradable shares into tradable shares. My thesis examines how the Split Share Structure Reform in China affects the level of information asymmetry of listed firms. The regression results show that the firm-level information asymmetry, measured by the probability of informed trading (PIN), is positively associated to the firm’s proportion of non-tradable shares before the reform, and the PIN decreases …
Performance Persistence Of Institutional Investors In Ipo Market : Evidence From China, Sibo Liu
Performance Persistence Of Institutional Investors In Ipo Market : Evidence From China, Sibo Liu
Theses & Dissertations
Using a dataset consisting of complete bid information for 477 bookbuilt IPOs that took place during Nov 2010 to Oct 2012 in China, I examine whether the performance of institutional investors demonstrates persistence in the IPO market. Building on the adverse selection model as developed by Rock (1986) and a twoperiod analysis, I develop three hypotheses and obtain empirical results that are consistent with the hypotheses. Firstly, I find that the performance of institutional investors continues into the next period. Secondly, I find that the performance persistence exists only for the investors with good past performance but not for investors …
Competition In Hong Kong’S Banking Industry, Lai Yee Chu, Yue Cui, Nan Ye, Yuelin Yan
Competition In Hong Kong’S Banking Industry, Lai Yee Chu, Yue Cui, Nan Ye, Yuelin Yan
Lingnan Journal of Banking, Finance and Economics
This paper tests the competition structure of Hong Kong’s banking industry using the Panzar-Rosse approach and a panel dataset of the largest 20 banks in Hong Kong from 1998 to 2011. The estimation results showed that the competitive pressures were equal across time and across the different sizes of the banks in Hong Kong’s banking industry. Competitive pressures may heighten in the near future as banks will seek to gain competitive edge and they can do so through mergers and acquisitions. Regulations are also slowly being relaxed after the financial crisis in order to boost the economy and more advances …
Assess The Crisis Management Effort Following The Outbreak Of The Subprime Crisis, Yuchen Luo
Assess The Crisis Management Effort Following The Outbreak Of The Subprime Crisis, Yuchen Luo
Lingnan Journal of Banking, Finance and Economics
In this paper, I employ a linear regression model to examine the effectiveness of four microeconomic variables, namely government debt, GDP growth rate, household consumption growth rate and government spending growth rate, in stimulating economic growth. In order to test the effectiveness of expansionary fiscal policy in different macro-environments, countries were first partitioned into low and high government debt categories. In addition, raw dataset was partitioned into two time periods, respectively, representing normal macroeconomic years and recession years. My results suggest that countercyclical government spending has been an effective stimulation tool but its effect was more significant in countries of …
Can The Euro Rival The United States Dollar And Become The World Currency?, Kar Wai Man, Feissal Thomas Germais Mombo Paraga Apengue, Weixin Zhang, Yiqing Tu, Yuan Yuan
Can The Euro Rival The United States Dollar And Become The World Currency?, Kar Wai Man, Feissal Thomas Germais Mombo Paraga Apengue, Weixin Zhang, Yiqing Tu, Yuan Yuan
Lingnan Journal of Banking, Finance and Economics
Due to the outstanding performance of the Euro since its advent, the public may wonder whether the Euro would, one day, replace the US dollar (USD) which has all along been a force to be reckoned with all around the world. By tracing the chain of contributions the USD (the United States of America) and the Euro (European Union) have made to the world economy in the past and at present, we hope to arrive at some conclusions. However, the paper will give primacy to predicting the future trends for them separately.
Democracy And Economic Growth: A Perspective Of Cooperation, Menghan Yang, Li Zhang
Democracy And Economic Growth: A Perspective Of Cooperation, Menghan Yang, Li Zhang
Lingnan Journal of Banking, Finance and Economics
Does democracy cause higher economic growth? We build a model taking culture and interpersonal cooperation into account and find that democracy increases economic productivity through giving people more equal rights, which allows people to build a larger interpersonal network so that they can reduce investment risk and employ high-productivity (high-risk) methods in production.
Does Okun’S Law Still Hold Today?, Michael Jeffrey White, Lai Yee Chu
Does Okun’S Law Still Hold Today?, Michael Jeffrey White, Lai Yee Chu
Lingnan Journal of Banking, Finance and Economics
Arthur Okun claimed that when a country’s unemployment rate fell, the GDP expanded. This paper investigates the claim of Arthur Okun and the effect of unemployment rates and GDP of a country on each other. Data from three countries, namely, USA, Japan, and France, were tested to see if there was a causal link between the two variables. It was found that the proposed law of Arthur Okun did not hold. In the USA, there was a two way causality link but different directions of effect. France and Japan did not have a causal link between the two variables.
Impact Of Change In Exchange Rate On Foreign Direct Investment: Evidence From China, Weifeng Jin, Qing Zang
Impact Of Change In Exchange Rate On Foreign Direct Investment: Evidence From China, Weifeng Jin, Qing Zang
Lingnan Journal of Banking, Finance and Economics
Based on the monthly data of foreign direct investment (FDI) in China and the index of real effective exchange rate (REER) of RMB during Jan 1997 to Sep 2012, we develop a statistical model in this paper to test the impact of changes in exchange rate in the host country on FDI, with reference to international and domestic research. According to the results of the empirical test, the appreciation of RMB promotes FDI after the reforms in the exchange rate regime in 2005 and this phenomenon is a result from the change in the type of FDI into China in …
How Does Asymmetric Information Relate To Investment Efficiency? Evidence From Analysts' Earnings Forecasts And Daily Stock Trading, Lingmin Xie
Theses & Dissertations
The adverse selection and agency cost theories suggest that the informational transparency of a firm can help to reduce over- or under-investment. This thesis examines how information asymmetry influences firm-level investment efficiency for companies listed in the U.S. market from 1993 to 2009. Information asymmetry is measured by the dispersion and error of the earnings forecasts made by financial analysts. I investigate how information asymmetry affects firms’ proneness to overor under-invest and the firms’ deviations from the investment levels predicted by investment opportunities. To be consistent with the prior literature, I also use the volatility of daily stock returns and …
Institutional Stock Ownership And Corproate Dividend Policy : Evidence From China, Jianghua Shen
Institutional Stock Ownership And Corproate Dividend Policy : Evidence From China, Jianghua Shen
Theses & Dissertations
Agency theory suggests that institutional stockholders are able to influence the dividend policies of listed firms with the underlying objective of reducing a firm’s agency costs. This study explores the causal effects of institutional ownership on dividend policies for the firms listed in China. Using various measures of institutional ownership and dividend policy, I find that mutual fund ownership in a firm causes it to pay out more cash dividends or to initiate cash dividends. These effects are mainly evident in the firms controlled by the state and regional governments and those with relatively high free cash flows. The effects …
The Role Of Credit Ratings On Capital Structure And Its Speed Of Adjustment In Bank-Oriented And Market-Oriented Economies, Michal Wojewodzki
The Role Of Credit Ratings On Capital Structure And Its Speed Of Adjustment In Bank-Oriented And Market-Oriented Economies, Michal Wojewodzki
Theses & Dissertations
This study investigates both the direct and indirect roles of credit ratings (CR) on the capital structures of 1,513 firms operating in 19 countries with different financial orientations and levels of economic development over the 20-year period (1991-2010).
Until recently, it has been common place to classify countries into capital market-based oriented (MB) and bank-based oriented (BB) in terms of their financial systems’ orientation (Antoniou et al. 2008). Traditionally, in MB economies (Australia, Canada, Hong Kong, South Korea, Mexico, the Netherlands, Sweden, Switzerland, Thailand, the U.K., and the U.S.) having a CR helps firms issue equity or bonds. In contrast, …
Hello, Is Anybody There? Corporate Accessibility For Minority Shareholders As A Signal Of Agency Problems In China, Xiaofeng Zhao
Hello, Is Anybody There? Corporate Accessibility For Minority Shareholders As A Signal Of Agency Problems In China, Xiaofeng Zhao
Theses & Dissertations
My thesis examines whether corporate accessibility for minority shareholders, defined as the ease with which minority shareholders are able to contact corporate insiders, can be a signal of the severity of a firm’s agency problems. Using Chinese public listed firms as the testing group, I find that accessible firms are associated with less serious agency problems than is the case for non-accessible firms. Specifically, accessible firms tend to be associated with lower agency costs, lower cost of equity, higher firm valuation, and better operating performance. I also find that accessibility can signal agency problems in firms with different ownership and …