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Political news and stock market reactions: evidence from Turkey over the period 2008–2017

Abstract

The primary objective of the study is to examine the impact of political news (good and bad news) on the returns and volatility of Borsa Istanbul 100 Index (BIST-100). Sample data cover the period from January 2008 to December 2017. The main sample was divided into two subperiods to insulate the dominating impacts of both the 2008 Global Financial Crisis and 2013 Federal Reserve Tapering on Turkish stock markets. The daily stock market data were collected from the Electronic Data Delivery System (EVDS) web service, while political news headlines were collected from the Guardian newspaper. Different nonlinear volatility models (symmetric and asymmetric Generalized AutoRegressive Conditional Heteroskedasticity [GARCH]-type models) were used to model and estimate BIST-100 volatility in response to political news. The findings of the paper highlight four main results. First, there seems to be a significant impact of political news on the returns and volatility of BIST-100 index. Second, negative shocks derived from bad news tend to have a significant impact on the returns and volatility of BIST-100, while positive shocks derived from good news do not tend to have any significant impact on the returns, but decreased returns volatility. Third, political news, both good and bad, can affect stock return and stock return volatility in different directions, and this direction is time-varying. Fourth, the findings strongly reveal the presence of “Leverage Effect” in the returns of BIST-100 index. Therefore, one can say that political uncertainty is still a problem for the Turkish stock market.

Open access
Testing trade-off theory and pecking order theory under managerial overconfidence

Abstract

We address our research to the problem of managerial overconfidence and financing behavior. The aim of the paper is, hence, to ascertain the pattern of financing decisions of overconfident managers and identify the relevant capital structure theory (trade-off or pecking order theory) that can be used to explain financing decisions of overconfident managers. We collected a sample of 145 private companies. The degree of overconfidence was distinguished by surveying the managers on overestimation, overplacement, and overoptimism. The financial data covers the period of 2010–2015. We calculated static ratios of capital structure and uncovered the determinants of capital structure. We then unveiled the target debt ratios using Fama and French methodology and identified the difference between target and actual debt ratios. We also calculated the value of deficit and the sources of financing according to Shyam-Sunder and Myers. We found that the companies managed by overconfident managers use higher value of equity and display similar debt ratios. They also utilize reverse pecking order preference—trying to use internal funds and then turning to equity. Moreover, we noted that companies managed by overconfident managers come closer to target debt ratios and implement more risky fixed assets financing strategies. The significance of our research is that we contribute to the understanding of capital structure decisions by taking into account behavioral biases and conducting comprehensive research on both static and dynamic capital structure.

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Board characteristics and earnings forecasts accuracy in IPO prospectuses

Abstract

Using a sample of 104 companies that conducted initial public offering (IPO) on the Warsaw Stock Exchange between 2006 and 2016, we investigated the relationship between the accuracy and bias of the earnings forecast disclosed in the IPO prospectus and the firm corporate governance attributes. Applying multiple Ordinary Least Squares (OLS) regressions models, we focused on the role of the board size, the percentage of women on the board, the board age diversity measure, and the proportion of shares owned by the members of the board. Generally, our findings show that some characteristics of management and supervisory board improve the usefulness of earnings forecasts’ credibility. Especially, a more diversified board in terms of age and higher management ownership results in more accurate forecasts. This is the first study giving an insight into the role of supervisory and management board characteristics on precision of earnings forecasts revealed in the prospectus by Polish IPO companies.

Open access
Changes in the fiscal policy of EU states after the 2008 crisis

Abstract

The aim of this article is an extensive presentation of the fiscal policy conducted by the EU states in the years 2008–2015. The analysis concerns the legal regulations introduced at the EU level by the European Parliament and the Council, as well as the fiscal policies of governments of particular states. The first part of the article analyzes basic macroeconomic data in EU states concerning the level of debt, the level of gross domestic product (GDP) redistribution, and the level of economic growth in the analyzed period. The second part discusses the legal acts adopted by the European Parliament and the Council (the so-called ‘sixpack’ and the European Fiscal Compact), aimed at improving macroeconomic balance and ensuring supervision over the proper functioning of national finances. The third part analyzes the discretionary fiscal policies pursued in EU states. The main conclusions of this article are as follows: (i) EU countries recorded higher national debt levels and debt growth rates between 2008 and 2015 than most non-EU Organisation for Economic Co-operation and Development (OECD) countries; (ii) despite legal measures taken by the European Council and the European Commission in the form of the sixpack and the European Fiscal Compact, and despite discretionary fiscal measures such as in the form of the European Economic Recovery Plan, five EU countries (Cyprus, Greece, Italy, Portugal, and Spain) have experienced a steady increase in their national debt levels; and (iii) deep reforms in the composition and level of government expenditure are a prerequisite for reducing national debt levels and for achieving satisfactory economic growth in these countries.

Open access
Coevolution of environmental sustainability orientation and strategic alliance learning in green supply chain management

Abstract

The main aim of this paper is to show how green supply chain (SC) environmental sustainability orientation and strategic alliance learning coevolve over time. Our position is that the level of interfirm learning is a determinant of the formations and mastery mechanisms evolving in a green SC. Therefore, this study discusses the environmental sustainability of the learning processes of firms’ alliances during the life cycle of the alliances. This is done in order to encourage firms to follow green innovation and green SCs through enhancing their environmental performance and increasing their competitive advantage in the global market. In addition, this study develops a research structure and test hypotheses on the basis of survey data from 342 Taiwanese firms listed on the stock market. The results indicate that green knowledge acquisition plays a prominent role in the performance of firms’ alliances, especially when implemented in a green SC management (SCM) context. Moreover, according to one of the main findings, as companies evolve through the different phases of the alliance life cycle, their situation shows high potential for creating knowledge sharing through their exploration capabilities. Finally, when firms focus their internal organizations on learning and environmental requirements, they become better able to expand their learning capacity as well as to build and maintain a sustainable competitive advantage.

Open access
Determinants of sales profitability for Polish agricultural distributors

Abstract

Due to volatile micro- and macroeconomic conditions and increasing competition, companies experience great difficulties in attaining required profitability. The objective of this paper is to identify the profitability determinants for Polish agricultural distributors in a recent period, i.e., 2006–2016. The potential determinants of profitability identified during the course of literature review and after interviews with industry experts are classified into internal and external. With the use of Spearman correlation ranks and regression analysis of figures relating to 24 Polish agricultural distributors, the following internal profitability determinants are identified: age, size, working capital components, indebtedness, salaries, and sales margins. Additionally, the study confirmed the influence of the following selected external profitability determinants: market share, unemployment rate, and several industry-specific variables. This paper proposes the first set of sales profitability determinants for Polish agricultural distributors. The results of this study are interesting for industry-level management.

Open access
Editorial
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End users’ motivations as a key for the adoption of the home energy management system

Abstract

Development of renewable energy means that there is a growing demand for technology that helps to manage and consume it in an optimal way, using more energy when it is produced on sunny/ windy days, preferably at the place of production, and avoiding long-distance transmission. This opens the field for solutions based on the Internet of Things (IoT) technologies, advanced demand management, and the concept of smart energy. The creation of a smart home energy management system (HEMS), which will help end users to manage the produced electricity, was the goal of the project entitled “e-balance – Balancing Energy Production and Consumption in Energy Efficient Smart Neighbourhoods”. Research with potential users carried out within the project showed that the existence of such systems in the home environment redefines the concept of electricity, which becomes tangible and always present in sight. Users also expected that the system would significantly reduce their electricity bills, an expectation which is not always confirmed by economic simulations. This means that the final solution will have to take account of other types of motivation and engagement, e.g., environmental ones. The paper presents conclusions from quantitative and qualitative research conducted within the “e-balance” project in Poland, Portugal, and the Netherlands.

Open access
Modern interregional migration: evidence from Japan and Poland

Abstract

This paper provides data-based analyses of recent interregional migration considering the examples of Japan and Poland. The analyses are conducted against the background of the general demographic and economic situations of both countries, in particular, regional disparities and economic growth. They aim at describing migrants’ behavior in Japan and Poland through a model consistent with the New Economic Geography (NEG) theory. Inspired by the model originally proposed by, the study constructs a migration model coherent with the NEG framework and tests the behavioral hypothesis. Interestingly, in both Japan and Poland, migrant behavior is responsive to stimuli stemming from the two following mechanisms: the relationship between the level of income inequalities and net migration toward capital regions; and similarly, the relationship between income inequalities movement and gross domestic product growth rate.

Open access