Issue #2 (Volume 18 2021)

Following the COVID-19 breakout, investment in shares, mutual funds, and life insurance are witnessing a growing trend in India. Hence, examining the determinants of investor preferences is necessary to maintain a positive trend. This study analyzes the impact of investor motives and awareness on investor preferences using the data collected from 753 Indian investors in 2020. Factor analysis grouped the investment motives into six categories, namely Nature of investments, Future financial needs, Investor personal characteristics, Safety and stability of investments, Investor behavioral aspects, and Investor’s options. The regression model used to find the impact of the investment motives and the awareness on the investor preferences explains 52.3% of changes in investor preference. Investment factors like Nature of investments, Investor personal characteristics, Investor behavior, Investor options, Awareness of mutual funds, and shares have a significant impact on investor preferences. Further, the awareness level of mutual funds and the stock market are the major variables contributing to Investors’ preference rather than identified investment factors. Investors’ personal characteristics like knowledge, confidence, ability, responsibility, and belief negatively influence investor preferences. This study adds to the existing literature by analyzing investment motives and preferences during the pandemic.

The month of Ramadan is anticipated to influence the behavior of the stock market, where the environment in Ramadan is different from other months. During the Ramadan month, transformations in the social life of people are quite apparent and significant, and the overall economic activity tends to decelerate as the number of working hours decreases. This paper aims to explore the impact of the Ramadan month on the stock market returns, volatility, and trading volume on the Tunis Stock Exchange (TSE) between September 2009 and July 2019. To achieve these objectives, the Generalized Autoregressive Conditional Heteroskedasticity (GARCH) technique and the ordinary least squares regression are used. The results show that the impact of the Ramadan month on the daily returns is positive and statistically significant at a 1% level. It is also found that the impact of the Ramadan month on the volatility and trading volume is negative and statistically significant. The findings can help domestic and foreign investors and regulators to better comprehend the Tunisian stock exchange and investor behavior. Moreover, this research can help investors to develop their trading strategies.

The unprecedented outbreak of COVID-19 has affected every aspect of the human life, be it health, social, or economic dimensions. The anxiety and uncertainty wobbled the economies of affected countries worldwide. This study attempts to quantify the impact of COVID-19 on the performance of major stock markets of G-7 nations vis-à-vis BRICS nations. An event study methodology is employed to capture the effect of the systematic event in the form of Buy and Hold Abnormal Returns (BHAR) and Average Buy and Hold Abnormal Returns (ABHAR). The study considers a 90-day observation window, consisting of six sub-event windows after the COVID-19 news up-doves the world, and 120 days prior to the selected event date to estimate average expected returns. BHAR values in the four event windows are statistically significant, covering stock markets from panic and nosedive to their correction and recovery. ABHAR values reported are significantly negative in the event window ranging from –0.15% to –38.43% for G-7 and –0.06% to –37.12% for BRICS nations. Despite similar ABHAR trends, the BHAR values and correlation matrix exhibit a diverse reaction in BRICS nations compared to the highly synchronized reaction in the G-7 group of nations in the COVID period.

This study explores whether ownership structure (comprising ownership concentration, foreign, managerial, and institutional ownership) affects intellectual capital disclosure (ICD) in Southeast Asia’s largest stock market and Indonesia’s emerging economy. The sample includes 323 public firms listed on the Indonesia Stock Exchange (IDX) from seven industries between 2008 and 2017, or 2,634 firm-year observations. Data were analyzed using the ordinary least squares (OLS) regression with robust standard errors. The results show that ICD is positively related to ownership concentration. A negative and substantial relationship was found for both foreign and managerial ownerships, while the institutional ownership variable had a negative and insignificant impact. Overall, the results show robust conclusions regarding the impact of the ownership structure on ICD. The findings of this investigation could be taken into account by capital market authorities such as the Indonesia Stock Exchange (IDX) to raise awareness of intellectual capital and improve ICD practices.

Acknowledgment
The researchers are grateful for the valuable responses from two unnamed reviewers and discussion respondents at Mulawarman University. We also thank the Indonesia Stock Exchanges (IDX) and The Indonesia Capital Market Institute for providing the annual report.

The study empirically investigates two theories that claim to explain the low-risk effect in Indian equity markets using a universe of stocks listed on the National Stock Exchange of India (NSE) from January 2000 to September 2018. Leverage constraints and preference for lottery are two major competing theories that explain the presence and persistence of the low-risk effect. While the leverage constraints theory argues that systematic risk drives low-risk anomaly and therefore risk should be measured using beta, lottery demand theory claims that irrational investor’s preference towards stocks with lottery-like payoffs is responsible for the persistence of the low-risk effect, and risk should be measured by idiosyncratic volatility. However, given that most of the risk measures are highly correlated, it is not easy to precisely measure a specific theory’s contribution to explaining the low-risk effect. The study constructs the Betting against correlation (BAC) factor to measure the contribution of leverage constraints to the low-risk effect. It further constructs the SMAX factor to untangle the contribution of lottery preference theory. The results show that leverage constraints theory predominantly explains the low-risk effect in Indian markets. This study contributes significantly to the body of literature, as this is the first such study on the Indian market, one of the major emerging markets, especially when the debate on theories explaining the low-risk effect is yet to settle.

This paper provides a practical, empirical and theoretical framework that allows investment managers to evaluate stock exchanges’ market quality when choosing among different plausible international trading venues. To compare trading exchanges, it extends the hypothesis of market microstructure invariance to trading across exchanges. A measure ω, the ratio of the market-wide volatility to microstructure invariance, is introduced. The paper computes ω for the exchanges around the world. Its value for the NSE (India) is 24.5%, the Korea Exchange (Korea) is 7.9%, the Shanghai Exchange (China) is 3.5%, and the Shenzhen Exchange (China) is 4.4%, which is significantly different from that of major exchanges in the USA (NYSE – 0.8%, NASDAQ – 1.3%) and Europe (LSE (UK) – 0.4). This country risk dimension clearly identifies which equity exchanges cannot hold their own direct correlational hedges and therefore mandatorily require derivative positions, and has significant implications for the decision making of global long-short equity asset allocators in the Asian listed equity markets.

World practice shows that non-state pension funds (NPFs) are not only a tool for supplementary pensions, but also a source of significant investment in the economy. This study aims at determining the investment potential of 65 Ukrainian NPFs currently functioning in the country. The analysis of Ukrainian NPFs has shown their insignificant role as an investment resource (the volume of their assets is 0.09% of GDP). At the same time, NPFs operate with significant funds (UAH 3.1 billion in 2019), but the lack of a developed stock market and effective financial instruments in the country narrows the opportunities for their investment activities. A study of the structure of NPF assets allocation showed that it is far from optimal in terms of investment portfolio diversification and is very conservative – almost 85% of invested NPF assets are government guaranteed securities and funds in bank deposit accounts. But in the context of tightening the requirements for disclosure of information on the activities of NPFs, promoting the stock market development, formation of reliable mechanisms to protect depositors’ pension savings,and formation of an effective investment portfolio, NPFs in Ukraine

Globalization and IT progress are expanding the possibilities of using various financial instruments to create a personal investment portfolio. The purpose of the study is to differentiate the investment portfolio by the level of income of Ukrainian citizens and its impact on the effectiveness of personal finance management. Analysis of indicators of state and current investment trends allowed identifying the optimal ratio of profitability and risk in financial decisions of individuals by diversifying the investment portfolio, creating personal reserves, localizing investment instruments and minimizing the use of credit resources.
The result of the study is the development and justification of criteria that an investor should meet during the investing. In particular, the formation of an individual investment portfolio depending on personal income allows everyone to justify an effective personal investment policy, taking into account the available investment tools.
The paper covers the approaches to the formation of a person’s investment portfolio, depending on the level of his or her income. The paper also examines the need to form an optimal investment portfolio, depending on the real financial opportunities of a person.

This study is aimed at investigating the volatility dynamics and the risk-return relationship in the South African market, analyzing the FTSE/JSE All Share Index returns for an updated sample period of 2009–2019. The study employed several GARCH type models with different probability distributions governing the model’s innovations. Results have revealed strong persistent levels of volatility and a positive risk-return relationship in the South African market. Given the elaborate use of the GARCH approach of risk estimation in the existing finance literature, this study highlighted several weaknesses of the model. A noteworthy property of the GARCH approach was that the innovation distributions did not affect parameter estimation. Analyzing the GARCH type models, this theory was supported by the majority of the GARCH test results with respect to the volatility dynamics. On the contrary, it was strongly unsupported by the risk-return relationship. More specifically, it was found that while the innovations of the EGARCH (1, 1) model could account for the volatile nature of financial data, asymmetry remained uncaptured. As a result, misestimating of risks occurred, which could lead to inaccurate results. This study highlighted the significance of the innovation distribution of choice and recommended the exploration of different nonnormal innovation distributions to aid with capturing the asymmetry.

This study explores the evaluation of investment attractiveness of Ukraine’s economy. The following factors are analyzed: the social significance of the sector, the coefficient of support for the sectoral development, the coefficient of production efficiency, the index of fierce competition, and the inflation index. The results of applying the calculation of the average value of the weighting factor within a particular sector and the method of the sum of sets show that the most significant influence on the investment attractiveness of the economy sector are factors of economic efficiency and support of the sector by the state. The study is based on the development and calculation of an integrated indicator of sectoral attractiveness. This approach makes it possible to take into account a set of factors and more accurately describe the existing priorities of a particular sector of the economy. The conclusion is that that the most attractive sectors in Ukraine are industry, trade, transport and communications, as well as financial activities. The education sector remains the least attractive for investment. It is estimated that its attractiveness does not exceed 10% of the threshold. Unattractive for investments sectors will need special attention from the government. Correcting the current situation and attracting additional investment in such areas can significantly reduce the burden on the state budget. The findings of this investigation can be used in order to expand the existing tools for the formation of economic policy of Ukraine and improve the practice of evaluation of sectoral investment.

Acknowledgements
This article was prepared and funded within the research theme “Strategy of structural reorientation of Ukraine’s economy in the conditions of a pandemic” reg. No. 0121U109608 of Economic Theory and Competitive Policy Department of Kyiv National University of Trade and Economics.

The aim of this study is to investigate the effect of a firm’s size, asset growth, asset tangibility, and financial leverage on profitability for all listed corporate firms in Jordan using unbalanced panel data (time series and cross-sectional) regression analysis for a sample of 1,663 observations over the period from 2011 to 2018. The overall results show a significant positive effect of a firm’s size and asset growth on profitability. However, asset tangibility presents a significant negative effect on profitability, while financial leverage has an insignificant positive effect on profitability. An analysis of each of the main sectors also point to a consistently positive effect of a firm’s size on profitability, while the results for growth in assets and financial leverage are nearly consistent with overall findings, but not those for asset tangibility. Furthermore, the sub-sample industry analysis reveals mixed results due to the different industry shapes and structures. This study is expected to be of value to firm managers, investors, researchers, and regulators.

The emergence of the COVID-19 pandemic has undoubtedly caused many perturbations, at the same time hindering the functioning and operation of enterprises from various industries, which, due to the often inability to conduct business, found themselves in a very difficult financial situation, with a difficult ability to settle their liabilities. Too high share of receivables that are not settled in a timely manner can result in various problems for enterprises, including, in particular, financial problems that can lead to large-scale bankruptcy. Considering a huge number of connections between individual entities, the bankruptcy of one may pose a risk of a wave of bankruptcy of others. The paper aims to analyze the impact of the COVID-19 pandemic on the payment situation of Polish enterprises. The research was conducted on the basis of an analysis of data on the payment situation of Polish enterprises from selected industries. Basic descriptive statistics was used in the study to characterize the material. The non-parametric Wilcoxon pair order test, which is the equivalent of the Student’s t-test for related variables, was used for the research. The research proved that at enterprises from almost every industry, the value of debts at the end of the second quarter of 2020 was higher than in the first quarter. It can therefore be concluded that the outbreak of the pandemic contributed to an increase in arrears, which, in turn, resulted in an increased risk of doing business. The greater the share of arrears with contractors, the greater the risk of financial problems at the enterprise, and hence the increased risk of bankruptcy.

This paper uses a Multiple Attribute Decision Making (MADM) model to improve the out-of-sample performance of a naïve asset allocation model. Under certain conditions, the naïve model has out-performed other portfolio optimization models, but it also has been shown to increase the tail risk. The MADM model uses a set of attributes to rank the assets and is flexible with the attributes that can be used in the ranking process. The MADM model assigns weights to each attribute and uses these weights to rank assets in terms of their desirability for inclusion in a portfolio. Using the MADM model, assets are ranked based on the attributes, and unlike the naïve model, only the top 50 percent of assets are included in the portfolio at any point in time. This model is tested using both developed and emerging market stock indices. In the case of developed markets, the MADM model had 24.04 percent higher return and 53.66 percent less kurtosis than the naïve model. In the case of emerging markets, the MADM model return is 90.16 percent higher than the naïve model, but with almost similar kurtosis.

This paper deals with the ever-increasing issue of bankruptcy prediction in distressed economies. Specifically, the aim of this study is to create a model by establishing a new set of predictor variables, which achieves significant discrimination among listed manufacturing firms in Greece, by using multivariate discriminant analysis (MDA). An equally balanced matched sample of 28 Greek-listed manufacturing firms was used in this study covering the distressed period from 2008 to 2015 (including all firms that went bankrupt between 2008–2015). It is found that the quick ratio, cash flow interest coverage, and economic value added (EVA) divided by total assets are significant for predicting bankruptcy in Greece. The discriminant analysis (DA) model comprised the aforementioned variables and correctly classified 96.43% of grouped cases 1 year before bankruptcy. The adjusted DA prediction model for two and three years before bankruptcy used the same variables and correctly classified 92.86% and 89.29% of grouped cases, respectively. Consequently, this mix of financial ratios achieved strong classification accuracy even three years before bankruptcy, captivating an overall picture of a firm’s financial health and providing a powerful tool for decision making to investors and risk managers in the banking section and economic policy makers.

Social protection has long been a relevant subject of scientific debate. Its development is interrelated with the study of fiscal factors (collection of social contributions), establishment of major social protection vectors, and confirmation of hypotheses about the link between social protection policy and the resulting socio-economic indicators.
The purpose of the paper is to study the impact of public funding of social protectionon social indicatorsusing the example of Eurozone countries. To this end, a number of economic and mathematical methods of analysis were applied to process panel data of seventeen countries for the last fifteen years, including the calculation of the relative rate of variation, regression dependence statistics, and cluster analysis.
The study established the irrelevance between the scope of the fundingof spending on social protection and social contributions (coefficient of determination R2=0.255). As illustrated, social indicators are determined not only by the amount of funding of social spending, but also by the structure of the social protection system, in particular, the focus on assistance to families with children and disability compensation (coefficient of determination R2>0.3). The general level of public funding for social spending items results in the 69% income inequality index andis behind 58% of non-economic parameters affecting life quality. The information outlined in the papercan serve as a basis for the formation of social and budgetary policy, as well as the revision of the structure and scope of social protection funding toensure an efficient impact on the quality of life of the population.

The effective functioning of the banking sector has a key impact on the stability of economic growth. The study is aimed at monitoring the banking sector development and identifying causality between the banking sector and economic growth. The methodological tools of the research are Principal component analysis, causal relationship, and vector regression modeling. The empirical study is based on the World Bank databank by eight components (for integral analysis) and seven indicators (for causality analysis). The study presents an improved algorithm for monitoring the level of banking sector development based on calculating the integral coefficient. According to assessment, the level of banking sector development and realization of its potential in Ukraine is low and significantly inferior to the EU countries; in 2000–2019, the development of the banking sector in Ukraine was 0.061-0.153. The results obtained confirmed the large discrepancy in the development of Ukraine’s banking sector with some EU countries (the highest lag values were observed with the Czech Republic and Poland). The causality analysis revealed a strong favorable relationship between the level of development of the banking sector in Ukraine and GDP per capita (0.796), a moderate one – with foreign direct investment (0.400), and a reverse relationship with the level of national poverty (0.678). This study is of practical value for identifying two possible trajectories of a country’s development, namely, sustainable development and economic turbulence, and has allowed forming a conceptual vision of the role of the banking sector in achieving social and economic goals.

This study is relevant to investors who wish to diversify their investment portfolio by investing in U.S.-based investment companies that invest in specific Pacific Basin countries to better understand the diversification benefits of such investments. The purpose is to examine the daily returns of selected U.S.-based, country-focused (Pacific Basin) investment companies to see if those returns accurately reflect the changes of the equity indices of the corresponding Pacific Basin market on the following trading day. The method used is that the reactions of daily investment company returns compared to U.S. market daily returns are examined for Japan, South Korea, and Australia for the period 2006–2010. These return reactions are compared to the home-country returns. Next, for the period from 2011 to 2015, the examination is broadened to include U.S.-based investment companies that invest in Taiwan, Singapore, China, and Indonesia. The results show that investment company share prices on “day t” tend to overreact to changes in the S&P 500 on “day t”, relative to “day t+1” changes in the corresponding Pacific Basin market index – often by more than 100%. Finally, the study shows that on “day t+1” these investment company share prices exhibit a reversal. These findings indicate that the diversification benefits of investing in these Pacific Basin investment companies are reduced due to this increased volatility. S&P 500 returns are accompanied by significantly larger returns on the Pacific Basin investment company shares than are actually realized in the home country on the following day, suggesting that the diversification benefits are not being fully realized.

Investment activity, followed by household and external savings, often plays a decisive role in strengthening the financial status of individual investors, as it contributes to further increases in wealth. This study analyzes the investors’ investment motives and actions to find better investment strategies and to do a systematic review of the investment behavior available for both short- and long-term individual investors. The study is mainly focused on factors and priorities influencing investment decisions. The data were obtained using the questionnaire approach from 201 individual investors within the age group from 18 to 80 from different parts of India. Every individual investor’s risk-tolerant score has been calculated on the basis of the investors’ holistic behavior, namely, investors with high-risk appetite, investors with a moderate and low-risk appetite. Non-parametric tests are applied to evaluate the behavioral approach of investors that are differently correlated to these factors. T-test is used to distinguish between the population mean of short-term and long-term investors’ risk-taking ability and priority of safeguarding the principal over return preference, rather than identified investment factors. As a result of the study, the factors influencing the investors’ decisions were found: income level, market participation experience and risk-return proportions, rather than age, gender, risk-taking ability and investment priority. This study enhances the existing literature by analyzing income, risk-return proportion and investment experience factors that influence investment decisions.

In recent years, the aviation industry in the Asia-Pacific region has experienced rapid growth. Despite facing thin and volatile profit margins, the region’s airlines continue to expand their capacity by using high financial leverage, raising concerns of whether they are utilizing such financial leverage effectively and how it affects their stock performance. Using the global Malmquist productivity index and the conditional value-at-risk measure, this study investigates the financial performance of 22 Asia-Pacific-based airlines during 2016–2019. The empirical results reveal that only three full-service airlines were able to maintain continued improvement in financial efficiency during the sample period. The excessive use of financial leverage among low-cost carriers is documented. To assess the sources of financial inefficiency, this study decomposed the global Malmquist productivity index into two components: efficiency change and technical change. The results show that while there was a trend toward efficiency catch-up among the carriers, the number of airlines that demonstrated sufficient technical change declined significantly, indicating the need to implement technological innovation to deliver better financial outcomes. Regarding the airline’s stock return performance, airlines that achieved continuously superior performance in deploying financial resources also saw the lowest downside risk in their stock returns, reinforcing the importance of devoting more attention to indebtedness and the effectiveness with which financial resources are used. The findings of this study offer suggestions to airlines in managing their capital structure and enhancing their financial stability.

This paper investigates five leading equity market anomalies – size, value, momentum, profitability, and asset growth, for four Western European markets, namely, Germany, France, Italy and Spain, from January 2002 to March 2018. The study tests whether these anomalies reverse under different macro-economic uncertainty conditions, and evaluates if strategies based on time diversification can be formed using these equity market anomalies. Market anomalies were tested using four major asset pricing models – the Capital Asset Pricing Model, the Fama-French three-factor model, the Carhart model, and the Fama-French five-factor model. Macro-economic uncertainty was tested using two proxies, namely VIX and default premiums. Time diversified strategies were examined by estimating Sharpe ratios of combined portfolios formed by combining winner univariate portfolios. Value effect in Germany, Size effect in France and Profitability effect in Italy and Spain provide the highest unadjusted returns on long side strategies. No significant reversal of these anomalies was found under different macroeconomic uncertainties. Asset pricing tests show that CAPM works well for Spain and Italy, while Carhart’s model explains returns in Germany. The Fama-French five factor model does not seem to be a good descriptor of asset pricing for data. No suitable model for explaining asset returns is identified for France. Finally, it is observed that some of the equity market anomalies seem to be countercyclical and therefore provide time diversification opportunities. The study has implications for academicians, investors, and policy makers by providing insights for developing profitable investment strategies and highlighting the efficacy of alternative models as performance benchmarks.

This study examines the relationship among the price variables in the Thailand stock market, the foreign exchange market, the international gold market, and the crude oil market. Specifically, the study investigates whether (1) there exists a long-run equilibrium among oil price, gold price, foreign exchange, and the stock market index in Thailand, and (2) there is any dynamic effect of each asset market on other asset markets. All asset price series have shown both upward and downward trends over the study period. All monthly series in four markets from January 2000 to December 2018 are nonstationary and are integrated of order one. Then, the Johansen cointegration test is employed. The normalized cointegrating coefficients are negative. Such empirical result reveals that a significant long-run relationship exists among price variables in all asset markets, so that each asset class acts as a hedge against each other. The Granger causality test shows that the causations run from the stock price to the foreign exchange rate and the international gold price to the foreign exchange rate. Other short-run relationships have no significant causal links.

This paper studies how to construct and compare various optimal portfolio frameworks for investors in the context of the Vietnamese stock market. The aim of the study is to help investors to find solutions for constructing an optimal portfolio strategy using modern investment frameworks in the Vietnamese stock market. The study contains a census of the top 43 companies listed on the Ho Chi Minh stock exchange (HOSE) over the ten-year period from July 2010 to January 2021. Optimal portfolios are constructed using Mean-Variance Framework, Mean-CVaR Framework under different copula simulations. Two-thirds of the data from 26/03/2014 to 27/1/2021 consists of the data of Vietnamese stocks during the COVID-19 recession, which caused depression globally; however, the results obtained during this period still provide a consistent outcome with the results for other periods. Furthermore, by randomly attempting different stocks in the research sample, the results also perform the same outcome as previous analyses. At about the same CvaR level of about 2.1%, for example, the Gaussian copula portfolio has daily Mean Return of 0.121%, the t copula portfolio has 0.12% Mean Return, while Mean-CvaR with the Raw Return portfolio has a lower Return at 0.103%, and the last portfolio of Mean-Variance with Raw Return has 0.102% Mean Return. Empirical results for all 10 portfolio levels showed that CVaR copula simulations significantly outperform the historical Mean-CVaR framework and Mean-Variance framework in the context of the Vietnamese stock exchange.

Personal income tax (PIT) is one of the most important taxes in Ukraine due to its economic, social and political role. With its help, one can regulate the investment process, the level of real incomes and maintain stability in society. However, the potential of this tax in Ukraine is not fully used. The purpose of the study is to identify the main problems of PIT and further directions of its implementation as an instrument of social policy. Laffer’s tax theory, on the dependence of economic efficiency of taxation on lower tax rates and the degree of progressiveness of taxes, was taken as a conceptual line of research. Consideration of world trends in the practice of PIT allowed tracing its evolution and choose the methods of its optimization that are acceptable for Ukraine. The use of comparative and statistical analyses, grouping, structural modeling method, index method and systematization of results allowed formulating the author’s version of the income taxation reform in Ukraine. The introduction of a progressive taxation scale should take into account the quality of tax administration, the availability of tax benefits, deductions and loans, the amount of fines, and public perception of the tax system in addition to quantitative results. The proposed family taxation, based on the differentiation of taxpayers by their marital status, actual solvency through the introduction of family rates and the establishment of progressive rates of personal income tax, will fully implement the principle of social justice in the distribution of income.

The study examines if specific characteristics of funds influence the performance of Saudi equity mutual funds. Previous research has explored various aspects of mutual funds. However, the Saudi Arabia literature focuses on evaluating the funds’ performance. Hence, this study seeks to close this gap by providing a framework to explain the equity fund performance. Several risks adjusted performance measures are applied such as Jensen’s alpha, lower partial moment alpha, Sharpe ratio, LPM-Sharpe ratio using the dynamic panel specification over the period 2010–2019. Based on the LPM alpha, the risk-adjusted return analysis reveals that the Saudi equity funds outperformed their benchmark over the full sample period. The empirical results show that major fund-specific characteristics such as fund size, past performance, and flow explain future performance. Besides, the evidence confirms that Saudi funds benefit from the economies of scale and expertise, while funds requiring higher levels of initial investment tend to exhibit lower performance levels. These findings provide investors and fund managers with useful information to make the optimal investment decisions in the mutual fund industry.

The government has implemented various tax incentive policies to support the generation and growth of corporate profits, leading to what is known as an implicit tax. In actuality, there is no implicit tax phenomenon because this phenomenon occurs in a perfectly competitive market where there are no barriers to entry, transaction costs, or transaction friction. Since most Chinese companies are owned by the Chinese government and are not fully capitalist markets, the possibility of more implicit taxes is not expected to occur. Therefore, the purpose of this study is to investigate whether the Chinese government’s ownership of enterprises and the global financial crisis have had an effect on the realization of the implicit tax phenomena. The results of this study are as follows. First, the pre-tax return on equity (PTROE) of listed Chinese companies had a statistically significant positive relationship with the pre-tax subsidy on equity (PTSE). Second, for companies with a higher level of Chinese government-owned interest, PTROE had a statistically significant positive relationship with PTSE; so this result shows that Chinese companies receive tax benefits, but an implicit tax in the market is not realized. Third, during the global financial crisis, the PTROE of Chinese companies showed an insignificant negative relationship with PTSE. In addition, companies owned by the Chinese government showed an insignificant negative relationship between PTROE and PTSE during the global financial crisis. This study provides policy implications that government ownership equity and macroeconomic events influence the level of freedom in a market economy.

The purpose of this paper is to examine the determinants of financial performance, firm liquidity and financial leverage of Indian listed firms. This study uses both static models (pooled, fixed, and random effects) and Generalized Moment Methods (GMM). Financial leverage (FINLE) is defined by the ratio of total liabilities to total assets, whereas the current ratio and the quick ratio are used as firm liquidity factors. Further, a set of financial performance determinants such as return on assets, profit after tax, return on capital employed, return on equity, and Tobin-Q are used as independent factors. The results indicated that profit after tax, return on equity, return on capital employed, and Tobin-Q are the most significant financial success variables that influence financial leverage of Indian listed companies. Furthermore, profit after tax, return on capital invested, return on equity, and Tobin-Q are considered to have a substantial effect on financial leverage among the financial success indicators. In the case of firm liquidity, the findings show that the current ratio and the quick ratio have a substantial effect on the financial leverage of Indian listed companies.

Geopolitical tensions between nations play a crucial role in triggering volatility and affecting the investors’ behavior in stock markets. This empirical work attempts to detect the traces of herding and bubble embedded in the Indian stock indices of CNX Nifty 50 and CNX Nifty 100 (both in High-Frequency Trading domains) during the latest events of geopolitical tensions escalated between India-China and India-Pakistan. An event window approach is employed to capture the impact of these events on herding behavior and information uncertainty in the considered stock indices. Multifractal Detrended Fluctuation Analysis (MFDFA) is applied to compute the Hurst value in all the trading days of the event window. The results of both indices exhibit conclusive evidence of herding and bubble formation during the overall period of geopolitical tensions between India-China and India-Pakistan. However, the degree of herding in the stock indices intensifies to a profound pattern when the tensions between India and China escalated into deadly violent clashes, and also during the heightened tensions between India and Pakistan that eventually ended up in airstrikes across the boundaries. The overall level of information uncertainty depicted by entropy is within control. The volatility in these stock indices has been confirmed to follow a unidirectional pattern.

Acknowledgements
The authors express their sincere thanks of gratitude to Dr. Bikramaditya Ghosh (Professor, Department of Finance and Analytics, RV Institute of Management, Bangalore, India) for his instrumental role in encouraging and motivating them to accomplish this research task. The authors also extend their sincere thanks to Dr. Manu K.S. (Assistant Professor, School of business and management, CHRIST (Deemed to be university), Bangalore, India) for his continued support throughout this empirical investigation.

This study explores the association between family influence in firms and stock market returns in Germany, a country with a less investor-friendly corporate governance system where shareholders cannot directly influence top managers. The study forms portfolios of firms with and without the influence of families as shareholders or members of the firm’s legal bodies. The models estimate portfolio returns from 2003-2013 using a four-factor model. Results suggest that corporate governance is highly correlated with stock returns in Germany. Specifically, they document a significant relationship between family influence and firm valuation. Firms with stronger family influence via voting rights and board-participation are found to have a higher firm value (annualized excess return: 0.48%-6.00%). The study interprets this to mean that families may improve a firm’s internal corporate governance, as their strong motivation and ability to become actively engaged in a firm’s daily operations or to assume a monitoring role distinguishes them from other corporate blockholders. The results add to those of an increasing number of publications finding a positive association between strong family governance and performance. They contribute to a year-long scholarly exploration of performance differences among family and non-family businesses, mainly by defining the former by mere ownership. The study combines a large set of governance provisions into a novel, transparent, and replicable index of family involvement and then estimates the empirical relation with market performance. The index captures influence via shareholder voting rights, considers direct influence of owners on day-to-day operations, and controls for indirect influence via supervisory board.

Acknowledgment
The authors acknowledge support by the Open Access Publication Funds of the HTWK Leipzig.

The published financial statements are considered one of the most important sources of information that investors rely on in forecasting stock performance or even judging the organization’s ability to cover short-run liabilities. Cash flows play a core role in maintaining a high market value for its shares. Hence, this study came to analyze the explanatory value of the cash flow statement in explaining stock volatility (SV) in the Qatar financial market. Study data were collected using published financial statements from a sample of 44 Qatari-listed companies throughout 2013–2019. A panel cross-sectional data technique using the E-views program was used to analyze the data. The study results show there is a positive and significant impact of cash flows from operating CFO activities on SV, indicating that the higher change in CFO increases stock volatility. This means that operating cash flows give significant information to investors, and it is reflected in the stock price movements directly. Also, the cash flow from CFF financing activities has a positive and significant effect on SV. This means that CFF affects stock prices, causing greater changes and fluctuation in stock returns. This is because one of the major components of CFF is dividends, which affect directly stock prices and stock returns. In contrast, there is an insignificant effect of CFI on SV, which may indicate that investors do not build their investment decisions based on CFI. Accordingly, the cash flow from investing activities failed to explain the stock volatility of the listed Qatari companies.

The effective implementation of innovations is broadly determined by the ways of their financing, among which project funding is particularly important today. This paper examines the impact of project funding on the innovative growth of the state in the EU countries and Ukraine in the context of sustainable development. Using theoretical and empirical methods, this study identifies and systematizes traditional and innovative forms of sustainable innovation project funding, which are practically used by the EU member states and Ukraine. Based on statistical methods, data analysis for the period from 2014 to 2020 and indicators characterizing the participation of countries in the largest European project funding program Horizon 2020 and other similar programs, the study revealed a close relationship between the conditions created by the state for participation in project funding programs and indicators of innovation activity and the climate of the state. The study allowed determining that funding from international sources, including funds from leading European institutions, which support the dissemination of sustainable innovations, can be a good alternative for innovation project funding under limited domestic resources. The study concluded that diversification of sources and forms of project funding, use and support from the state influences and accelerates the development of innovation infrastructure in a country (clusters, business incubators etc.), as well as the interaction between various participants in a sustainable innovation process (state, regions, large enterprises, small and medium-sized businesses, communities).

This study examines the adaptive behavior of South African Rand (ZAR) exchange rate against its major trading partners, the US Dollar (USD) and the Chinese Yuan (CNY) over the period 1999-2020. The study uses a rolling parametric linear variance ratio (VR) test, nonparametric linear runs test, and non-linear Brock, Dechert and Scheinkman (BDS) test to determine time-varying predictability and regression analyses to assess the effect of market conditions. The results show that the foreign exchange market was found to be inefficient based on the VR tests, but efficient with very few windows of inefficiency based on the runs test and BDS test. In addition, apart from the GDP, none of the market conditions studied is associated with non-parametric linear and nonlinear predictabilities. The study draws two main conclusions. Firstly, the South African foreign exchange market is adaptively efficient. Secondly, foreign exchange market efficiency is primarily driven by the level of economic growth. Practically, it will be difficult for investors to exploit the few windows of predictability in the South African foreign exchange market by focusing mainly on the market conditions studied.