Issue #4 (Volume 15 2018)
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ReleasedDecember 26, 2018
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Articles30
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91 Authors
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163 Tables
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68 Figures
- accounting
- adoption
- analysis
- Autoregressive Integrated Moving Average (ARIMA)
- back-testing
- blockchain technology
- board diversity
- board independence
- book-tax difference
- capital raising
- cash flows
- clawback provisions
- compensation committee quality
- complexity
- convergence of the international standards
- corporate social responsibility
- corporate social responsibility (CSR)
- cryptocurrencies
- cyclically-adjusted budget balance
- decision matrix
- decision model
- digital economy
- discretionary accruals
- dividend
- dividend pay-out
- dividend policy
- earnings management
- economic bubbles
- economic growth
- endogeneity
- energy futures markets
- enhanced index tracking
- enterprise value
- Equity market
- estimation
- evaluation
- Expected Shortfall
- fair value accounting
- Fama decomposition measure
- finance
- financial and economic security
- financial and tax due diligence
- financial institutions
- financial market
- financial performance
- financial services
- financial statements
- financial technology
- FinTech
- fiscal consolidation
- fiscal policy
- fiscal stimuli
- foreign direct investment
- foreign direct investment (FDI)
- foreign director
- fund characteristics
- fund performance
- government spending
- harmonized indicator system
- historical simulation
- I-distance
- inclusion
- Indian auto component manufacturing companies
- indicators of financial and economic security
- Indonesia Stock Exchange (IDX)
- Initial Coin Offering (ICO)
- innovation
- innovative companies
- insurance
- integral index
- investment
- investment attractiveness
- investment decisions
- investment environment
- investment flows
- investment properties
- investment security
- investor strategies
- Jordanian industrial companies
- legal support
- Level 3 fair values
- leverage
- liquidity
- management
- management decisions
- managerial ownership
- market risk
- MCDM
- monitoring function
- Monte Carlo
- multi-agent systems
- multi-parameter
- multivariate analysis
- mutual funds
- mutual fund sale flows
- Nasdaq Composite Index
- normality
- opportunistic financial reporting
- ownership structure
- performance evaluation
- profitability
- project selection
- public policies (PP)
- quantile regression
- ranking
- real activities manipulation
- real estate market
- recognition criteria
- region
- risk
- Saudi Arabia
- security
- security factors
- shrinkage covariance matrix
- solvency
- South Africa
- SRI-KEHATI Index
- startups
- state regulator
- statistic
- structural models
- sustainability
- taxation
- tax avoidance
- tax compliance systems
- taxes
- technical analysis
- territorial attractiveness (TA)
- tourism
- tourism infrastructure
- tourism system
- tourist potential
- trading
- UK
- Ukraine
- Value at Risk
- variance covariance
- venture capital
- Vietnam listed firms
- weights constraints
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The relationship between the Nasdaq Composite Index and energy futures markets
Investment Management and Financial Innovations Volume 15, 2018 Issue #4 pp. 1-16
Views: 1209 Downloads: 147 TO CITE АНОТАЦІЯThis paper sheds light on the relationship between the Nasdaq Composite Index and a newly proposed Energy Futures Conditions Index (EFCI). While various financial conditions indices provide information about the financial stability of a country, the existence of an energy condition index, using futures markets, is scarce. Using weekly data over the period 1992–2017, this paper introduces an energy futures index using principal component analysis and test its predictability over the Nasdaq Composite Index. The EFCI captures 95% of the variability inherent in crude oil, heating oil and natural gas futures’ total reportable positions. Stability in forecast errors over different lags suggests a one week lag is sufficient to forecast weekly Nasdaq Composite Index. 95% prediction levels support that the estimated model captures actual equity market index values, except for the 2000 technology bubble. Distributions of level data were non-normal, not serially correlated and homoscedastic under the whole sample period, with diagnostics on pre and post technology bubble crisis showing mixed results. While differencing ensured homoscedastic errors in the forecasting model, Granger causality supported non-causality from both energy futures and equity markets, suggesting no evidence of cross market information flows.
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An evaluation and comparison of Value at Risk and Expected Shortfall
Investment Management and Financial Innovations Volume 15, 2018 Issue #4 pp. 17-34
Views: 1244 Downloads: 254 TO CITE АНОТАЦІЯAs a risk measure, Value at Risk (VaR) is neither sub-additive nor coherent. These drawbacks have coerced regulatory authorities to introduce and mandate Expected Shortfall (ES) as a mainstream regulatory risk management metric. VaR is, however, still needed to estimate the tail conditional expectation (the ES): the average of losses that are greater than the VaR at a significance level These two risk measures behave quite differently during growth and recession periods in developed and emerging economies. Using equity portfolios assembled from securities of the banking and retail sectors in the UK and South Africa, historical, variance-covariance and Monte Carlo approaches are used to determine VaR (and hence ES). The results are back-tested and compared, and normality assumptions are tested. Key findings are that the results of the variance covariance and the Monte Carlo approach are more consistent in all environments in comparison to the historical outcomes regardless of the equity portfolio regarded. The industries and periods analysed influenced the accuracy of the risk measures; the different economies did not.
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Empirical evidence on the impact of recent Korean tax reforms
Namryoung Lee , Charles Swenson doi: http://dx.doi.org/10.21511/imfi.15(4).2018.03Investment Management and Financial Innovations Volume 15, 2018 Issue #4 pp. 35-47
Views: 1796 Downloads: 220 TO CITE АНОТАЦІЯIn 2011, Korea required all firms to report all value added tax (VAT) invoices electronically to tax authorities. This unique law provided a natural experiment to examine the effects of this disclosure on income taxes and firms’ related responses. The authors find that this additional required disclosure caused firms to become less aggressive on their income taxes, and that they were unable to pass increased tax burdens forward to consumers or backward to suppliers and labor. To maintain, profitability firms cut research and development (R&D) costs, and this cost cutting was larger for tax aggressive firms. Policy implications of this unintended result are discussed.
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The effect of the ownership structure on earnings management practices
Investment Management and Financial Innovations Volume 15, 2018 Issue #4 pp. 48-60
Views: 2257 Downloads: 286 TO CITE АНОТАЦІЯThe objective of this study is to investigate the effect of the ownership structure, which includes concentration ownership, institutional ownership and foreign ownership in the light of the debt ratio and company size as controlling variables in limiting the earnings management practices of the Jordanian industrial companies for the period 2012–2016. The hypotheses of the study were tested using the multiple regression models. Among the most prominent findings of the study are: the explanatory factor (R2) for the independent and control variables accounts for 38% of the change in the earnings management of the Jordanian industrial companies, moreover, a significant effect of the concentration ownership was found in the limitation of earnings management practices; while, there was no significant influence of institutional ownership and foreign ownership on the earnings management practices in Jordanian industrial companies. Major limitation to this study is the only considered listed industrial Jordanian firms. Thus, the generalization of the results to other sectors and diverse economic conditions and regulations may be constrained. Finally, Jordanian policymaker reform policies motivate companies to increase their interest on concentration ownership structure, as the study showed the significant effect of the concentration ownership in the limitation of earnings management practice.
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Optimal investment decision making on the model of production enterprise with limited resources
Tetiana Ivanenko , Viktor Hrushko , Anatolii Frantsuz doi: http://dx.doi.org/10.21511/imfi.15(4).2018.05Investment Management and Financial Innovations Volume 15, 2018 Issue #4 pp. 61-68
Views: 2045 Downloads: 195 TO CITE АНОТАЦІЯInvestments are among the most important factors of national economic growth. Selection of optimal investment project is the first priority for any enterprise with limited financial resources. This study is dedicated to a choice among mutually exclusive projects, which are impossible to complete partially, so, one project must be chosen and all others must be rejected. An investor must find among all possible projects the one that allows to better achieve all investor’s aims. A mathematical model of multi-purpose multi-criteria investor decision making is proposed for investment project selection problem. Efficiency and riskiness of studied projects are evaluated using such indicators as profit, rate of return, payback period, marginal cost of capital, also taking into account subjective characteristics, namely the investor’s attitude towards financial risks, importance assessment of decision making criteria, etc. Decision making assessment methods for the situations of risk and uncertainty are applied to resolve the problem of optimal project selection, such as Wald’s pessimistic criterion, maximax optimistic criterion, as well as Hurwicz’s, Laplace’s, Bayes- Laplace, Hodges-Lehmann criteria, and Savage’s minimax risk criterion. Calculations carried out and results obtained indicate that the best investment project chosen that way will provide the highest absolute profit, despite certain disadvantages such as lower rate of return, longer payback period and higher risk than other projects.
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The relationship between corporate social responsibility and earnings management: accounting for endogeneity
Investment Management and Financial Innovations Volume 15, 2018 Issue #4 pp. 69-84
Views: 4586 Downloads: 536 TO CITE АНОТАЦІЯThis study examines the relationship between corporate social responsibility (CSR) and earnings management after controlling for endogeneity of CSR. Using a sample of non-financial firms listed on Korean Securities Market between 2002 and 2010, this study finds that ignoring endogeneity biases the estimated relation between CSR and earnings management. Specifically, the results show that the negative and significant relation between CSR commitment and discretionary accruals reported in the previous studies becomes insignificant. However, the negative and significant relation between CSR commitment and real activities manipulation remains significant even when the endogeneity of CSR commitment is taken into account. Therefore, this study provides evidence that proactive CSR engagement significantly affects firm’s practice of real activities manipulation, while it does not affect its practice of discretionary accruals. These results indicate that CSR commitment leads managers to be more responsible in management of operational activities than in accruals management.
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Ranking of firms by performance using I-distance method
Investment Management and Financial Innovations Volume 15, 2018 Issue #4 pp. 85-97
Views: 1828 Downloads: 481 TO CITE АНОТАЦІЯThe objective of this article is to rank firms by their financial performance using statistical I-distance method, which has the ability to determine both ranking and important factors. For this purpose, the method was first applied to 110 Turkish industrial firms without any sectorial separation and then to 7 different sectors, and various findings about firms, sectors and variables were obtained. The I-distance method is used to get rid of the high correlation between variables during the analysis. The reason for choosing the I-distance method is that it allows you to sort the variables by importance and eliminate insignificant variables, as well as take into account correlations between variables. The authors believe that the method is superior to other alternative methods thanks to these qualities. Through a number of analyses, it was possible to see positions of firms both within the whole sample and their own sectors. Furthermore, this method provided valuable information on which factors were important in assessing firms’ financial performance. It has been observed in the analyses that the most effective factors in ranking firms and separating them from each other were profitability ratios, and the fact that liquidity and financial leverage ratios are not effective at all. When examined from a sectoral perspective, the nonmetal mining sector and the chemical, petroleum and plastic sectors seem to be better than other sectors in the performance rankings.
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The association between foreign directors and opportunistic financial reporting
Investment Management and Financial Innovations Volume 15, 2018 Issue #4 pp. 98-112
Views: 3147 Downloads: 204 TO CITE АНОТАЦІЯThis study examines the effect of foreign directors in the board of directors on the monitoring function by analyzing the association between foreign directors and opportunistic financial reporting. The authors address this question by examining the effect of the foreign directors in the board on firms’ discretionary accruals and book-tax difference. The researchers analyze by using Korean firm data for the years 2001–2014 as Korea is one of the few countries that nepotism is strong within the board, providing the ideal setting to analyze the effect of foreign directors on the monitoring function of the board. The authors find that foreign directors have a positive effect on the monitoring function of the board, as discretionary accruals and book-tax differences of firms with foreign directors are lower than those without foreign directors. Further, the researchers find that the positive effect of foreign directors on the monitoring function is more pronounced if foreign directors are independent directors or expertise in accounting or finance. Overall, the findings support the view that foreign directors in the board increase the board diversity, which increases the independence of the board and so the monitoring function.
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Fiscal stimuli and consolidation in emerging market economies
Investment Management and Financial Innovations Volume 15, 2018 Issue #4 pp. 113-122
Views: 1735 Downloads: 159 TO CITE АНОТАЦІЯThe Great Recession has imposed vital limitations on the policy maker’s ability to react to further economic challenges. In this article, the authors set a purpose to assess the expediency and the size of fiscal consolidation or expansionary measures for countries with emerging markets depending on economic dynamics. The data on the episodes of large changes in fiscal policy, representing both fiscal stimuli and consolidation in Ukraine and in the EU countries with emerging market economies from 2001 to 2017, were evaluated. The authors examined the main reasons of fiscal policy’s volatility and its impact on economic growth. The countries with low and medium level of institutional framework for fiscal policy formulation could face permanent deficit and public debt problem. Episodes of expansionary fiscal adjustments based on government revenues cuts and spending increases were more effective compared with those that were entirely based on spending increases. Empirical investigation showed that successful fiscal consolidation measures obligatory included the government primary spending reduction. In those cases, the budget deficit-to-GDP and public debt-to-GDP ratios were declined. Medium-term priorities to develop the methodical bases of fiscal policy design were justified.
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Multi-agent modeling and simulation of a stock market
Mohamed Amine Souissi , Khalid Bensaid , Rachid Ellaia doi: http://dx.doi.org/10.21511/imfi.15(4).2018.10Investment Management and Financial Innovations Volume 15, 2018 Issue #4 pp. 123-134
Views: 2235 Downloads: 1101 TO CITE АНОТАЦІЯThe stock market represents complex systems where multiple agents interact. The complexity of the environment in the financial markets in general has encouraged the use of modeling by multi-agent platforms and particularly in the case of the stock market.
In this paper, an agent-based simulation model is proposed to study the behavior of the volume of market transactions. The model is based on the case of a single asset and three types of investor agents. Each investor can be a zero intelligent trader, fundamentalist trader or traders using historical information in the decision making process. The goal of the study is to simulate the behavior of a stock market according to the different considered endogenous and exogenous variables. -
Technical analysis testing in forecasting Socially Responsible Investment Index in Indonesia Stock Exchange
Dolly Parlagutan Pulungan , Sugeng Wahyudi , Suharnomo Suharnomo , Harjum Muharam doi: http://dx.doi.org/10.21511/imfi.15(4).2018.11Investment Management and Financial Innovations Volume 15, 2018 Issue #4 pp. 135-143
Views: 1726 Downloads: 214 TO CITE АНОТАЦІЯThis study aims to examine whether the Autoregressive Integrated Moving Average (ARIMA) model is appropriate to be applied in the Indonesia Stock Exchange, especially for the socially resposible investment stocks. For the ARIMA model combines the autoregressive and moving average method, so it is viewed as a useful tool to predict the stock prices. Those methods are frequently used methods to forecast the stock prices. The data used in this study were daily SRI-KEHATI Index during the period of June 8, 2009 to July 17, 2017. The results showed that the daily SRI-KEHATI Index data were not stationary data, thus this data needed to be transformed. The transformation was done by using the first seasonal differencing transformation process. After being transformed, those data became stationary. Furthermore, this study found that ARIMA (3,1,1) was a model, which might be appropriate and fit with the data condition. This method was also relevant to be applied in the Indonesia Stock Exchange in order to forecast the stock prices.
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Critical financial and accounting issues of early-stage innovative enterprises
Investment Management and Financial Innovations Volume 15, 2018 Issue #4 pp. 144-157
Views: 1795 Downloads: 564 TO CITE АНОТАЦІЯWhile the most important financial and accounting issues of early-stage enterprises with fast growth potential (startups) are widely covered in practice-oriented literature, academic studies do not deal with this subject. In the author’s opinion, this subject should receive more attention in academic writing, as inappropriate financial management can make it more difficult for startups to raise capital at a later stage of operation and, thus, to grow further. This paper is based on a sample of financial and tax due diligences of Hungarian startups. The authors intended to present some of the issues identified and relevant also to startups operating outside Hungary. The sample shows that due to a loss making operation in the early years, this type of companies can quickly use up their equity and, therefore, they need continuous ownership (equity) financing. The sample demonstrates that debt financing is not a viable option for this group of companies, the only option for them is venture capital financing. The authors confirmed the positive relation between startups and R&D&I. In their opinion, compliance with the rules and the optimization permitted by the rules themselves is highly significant for startups to manage their high upfront losses and to attain their general aim to raise investment capital. The financial and tax due diligences at startups allowed to identify several inappropriate practices due to complicated accounting and tax laws.
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Performance evaluation of Saudi equity mutual funds: Fama decomposition model
Sumathi Kumaraswamy , Ibrahim Al Ezee doi: http://dx.doi.org/10.21511/imfi.15(4).2018.13Investment Management and Financial Innovations Volume 15, 2018 Issue #4 pp. 158-168
Views: 1556 Downloads: 893 TO CITE АНОТАЦІЯThis paper is in pursuit of analyzing and elongating prior research on the performance evaluation of mutual funds by a comparative analysis with three categories of 82 Saudi equity funds during 2011 to 2016 using Fama’s decomposition model. The paper also made an attempt to explore the relationship with the risk reward ratio to the relative performance measure in predicting the future performance of the Saudi equity fund returns. The empirical results show that Saudi local equity funds perform better followed by Arabian and international/global equity funds in terms of expected signs and diagnostic tests.
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Initial Coin Offering (ICO) evaluation model
Investment Management and Financial Innovations Volume 15, 2018 Issue #4 pp. 169-182
Views: 2701 Downloads: 1463 TO CITE АНОТАЦІЯHigh-tech companies operating in the field of blockchain technology use the Initial Coin Offering (ICO) to raise start-up capital. It is a fairly new, non-standardized and poorly regulated way of collecting start-up funding that can bring high yields to investors in the short term, but investors also have to be ready to take on high risks. The purpose of this article is to define a decision model for the evaluation of ICO projects, which provides a systematic, transparent, methodological approach to making decisions on investing in them. For that purpose, the authors analyzed a number of factors, which directly or indirectly influence the successful implementation of ICO projects, and the researchers extracted the most important among them (model parameters). In order to build the decision model, used a qualitative method for the hierarchical multi-parameter evaluation of DEX, which using symbolic parameters and combining functions in the form of if-then rules ensures the most freely and flexible combining assessment parameters into a uniform model. In the article, the use of proposed decision model was tested in practice on multiple ICO processes. The article details the decision-making process in the case of CargoX, and also summarizes the results of the evaluation of ICOs Tokens.net, BitClave, Neuromation and WePower.
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An analysis of a mean-variance enhanced index tracking problem with weights constraints
Wanderlei Lima de Paulo , Marta Ines Velazco Fontova , Renato Canil de Souza doi: http://dx.doi.org/10.21511/imfi.15(4).2018.15Investment Management and Financial Innovations Volume 15, 2018 Issue #4 pp. 183-192
Views: 1416 Downloads: 124 TO CITE АНОТАЦІЯIn this paper, the authors deal with a mean-variance enhanced index tracking (EIT) problem with weights constraints. Using a shrinkage approach, they show that constructing the constrained EIT portfolio is equivalent to constructing the unconstrained EIT portfolio. This equivalence allows to study the effect of weights constraints on the covariance matrix and on the EIT portfolio. In general, the effects of weights constraints on the EIT portfolio are different from those observed in the case of global minimum variance portfolio. Finally, the authors present a numerical asset allocation example, where the S&P 500 index is used as the market index to be tracked using a portfolio composed of ten stocks, in which the constrained EIT portfolio shows a satisfactory performance when compared to the unconstrained case.
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Investment attractiveness of the Ukrainian tourism system
Margarita Boiko , Myroslava Bosovska , Nadiia Vedmid , Liudmila Bovsh , Alla Okhrimenko doi: http://dx.doi.org/10.21511/imfi.15(4).2018.16Investment Management and Financial Innovations Volume 15, 2018 Issue #4 pp. 193-209
Views: 1777 Downloads: 195 TO CITE АНОТАЦІЯGlobal and crisis transformations result in structural and functional changes in the tourism system, which combines resource potential, infrastructure, tourism entities, institutional structures, and consumers. For Ukraine, with its high tourist potential, tourism development is a significant factor after the crisis recovery of the economy. Overcoming the disparities in the tourism system functioning, shaping optimal business models of its development, increasing the sustainability and efficiency of the tourism entities functioning impose an objective need for investment. Investment attractiveness is one of the key characteristics causing the investor’s interest in financing the project, including the tourist one.
The essence, determinants of influence and characteristic features of investment attractiveness of the Ukrainian tourism system are substantiated. The investment attractiveness of the tourism system is proposed to be considered as a complex feature of conditions and advantages that form its ability to attract investment resources based on the availability of their needs, unique tourist potential, favorable environment for ensuring the efficient functioning of the tourism system and guaranteeing the investor profit and reduced risks of investing.
The article considers basic preconditions to form the investment attractiveness of the tourism system, which include unique strategic opportunities, to shape a favorable institutional environment and provide a background for an investor concerned and a system of guaranteeing the expected result.
Given the need for complex consideration of the tourism system’s investment attractiveness, a methodology based on the calculation of integrated indicators for estimating the effectiveness and prospects for the development of tourism systems in the Ukrainian regions is used. In the method considered, it is proposed to take into account not only financial aspects, but also the resource potential, its development level, the growth rates of tourism entities activities, and the prospects for the tourism system development. In general, indicators and criteria for the tourism system investment attractiveness are classified into four groups: the efficiency of investment, the effectiveness of the tourism system development, the prospects for the tourism system development, the environment and the potential for its development.
According to the method developed, the integral indicator of investment attractiveness of the tourism systems of Ukrainian regions has been calculated, and the regions are differentiated according to the level of investment attractiveness. Estimation of the investment attractiveness of Ukrainian tourism systems allows to determine their rating, differentiate them according to the maturity level of complementary preconditions to form and develop tourist potential and serves as a basis for potential investors in investment decisions-making.
Using the results of determining the level of investment attractiveness of tourism systems of Ukraine’s regions over time will help identify trends, and, accordingly, serve as a guide for potential investors in strategic proposition space of regions which are investment recipients. -
Effects of financial statements information on firms’ value: evidence from Vietnamese listed firms
Investment Management and Financial Innovations Volume 15, 2018 Issue #4 pp. 210-218
Views: 2410 Downloads: 386 TO CITE АНОТАЦІЯThe paper studies the effects of information reporting in financial statements on values of Vietnamese firms. The study uses panel data with 1,070 observations from 214 firms, which are listed in the stock market of Vietnam in the period from 2012 to 2016. Multiple regression results show that the growth, firm size, profitability, auditing quality and timelineness are positively related to firm values, whereas the capital structure, auditing explanation negatively affect that indicator. The paper also indicates the inconsistency in measuring firms’ value by different measures including EV, Tobin’s Q or share price. Moreover, the research results reflect that measuring firms’ value by EV is more appropriate. The results of empirical research are instructive for enterprises to improve the usefulness of information in financial statements, thereby enhancing enterprises’ values.
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Financial sustainability management of the insurance company: case of Ukraine
Ruslana Pikus , Nataliia Prykaziuk , Mariia Balytska doi: http://dx.doi.org/10.21511/imfi.15(4).2018.18Investment Management and Financial Innovations Volume 15, 2018 Issue #4 pp. 219-228
Views: 3505 Downloads: 293 TO CITE АНОТАЦІЯIn the current conditions of the Ukrainian economy, which is characterized by crisis phenomena and frequent changes in legislation, the insurance organizations are facing a number of difficulties in maintaining their financial sustainability. Moreover, these processes take place under the increased requirements for solvency of insurers. However, a significant part of domestic insurance companies is financially unstable, which is conditioned not only by the lack of funds, but also by the low level of management. This situation hinders the further development of the insurance market in Ukraine and has a negative impact on all areas of the domestic financial system and prevents it from successful integration into the European financial field. In order to address this problem, it is necessary to distinguish the key groups of risks that affect the financial sustainability of insurance organizations, among which there are the following: insurance, strategic, market risk, risk of inefficient capital structure, risk of limiting the insurance company’s liquidity, tax risk, investment risk, operational risk, the risk of ineffective organizational structure of the enterprise, and information risk. It should be noted that under conditions of changing environment, the impact of these risks only increases, and therefore the task of minimizing the impact of these risks on the activities of insurance companies is highly important. Accordingly, the authors of the article proposed a four-stage strategy to manage the financial sustainability of the insurance company, the purpose of which is to identify the risks of limiting the insurer’s financial sustainability, their qualitative and quantitative assessment, as well as the development and implementation of appropriate measures to minimize and eliminate unacceptable consequences.
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The influence of financial technologies on the global financial system stability
Galyna Azarenkova , Iryna Shkodina , Borys Samorodov , Maksym Babenko , Iryna Onishchenko doi: http://dx.doi.org/10.21511/imfi.15(4).2018.19Investment Management and Financial Innovations Volume 15, 2018 Issue #4 pp. 229-238
Views: 2477 Downloads: 1017 TO CITE АНОТАЦІЯThe analysis of the financial technologies introduction has proved that their application over-complicates the institutional structure of the global financial system. As a result, usual functional relationships cease to operate, new institutes and interdependencies appear, and systemic risks increase. In this context, the system instability increases, resulting in a transition to a new institutional status. The analysis of the financial technologies impact on the stability of financial system shows that the lack of institutional support for new financial technologies is the most important catalyst for the financial industry destabilization and the formation of financial bubbles in various market segments.
The ways to reduce the negative impact of financial technologies on the financial system stability (such as development of international prudential standards; revision of the licensing regime for financial companies; “regulatory sandboxes”, which test new technologies, business models and algorithms underlying the Fintech innovations; legal regulation of ownership of digital tokens; and clear definition of the blockchain technology in various areas of life, etc.) have been proposed. -
The interaction between governance, social responsibility, and territorial attractiveness: an application of “the structural equation modeling approach”
Hosn el Woujoud Bousselmi , Lorena Caridad , Nuria Ceular Villamandos doi: http://dx.doi.org/10.21511/imfi.15(4).2018.20Investment Management and Financial Innovations Volume 15, 2018 Issue #4 pp. 239-257
Views: 1027 Downloads: 220 TO CITE АНОТАЦІЯThe purpose of this article is to present and test a conceptual framework that describes how the government’s commitment in improving corporate social responsibility (CSR) practices promotes the attraction of foreign direct investment (FDI) in Tunisia. As such, this conceptual framework inspires the existence of an interaction between the improvement of CSR practices by public policies (PP), and the attraction of FDI. In this regard, this study applied structural equation modeling (SEM) to empirically test this proposed model. It finds that the Tunisian government is valuing CSR and considering it as an investment. It presents examples of instruments, PP and tools that encourage to adopt CSR practices, thus, enhancing the attraction of FDI, which will have a positive impact on the growth of the country in terms of wealth creation, jobs and poverty reduction.
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Inflows and outflows of mutual funds: a performance comparison of funds offered by traditional banks, insurance companies and mutual fund companies
Investment Management and Financial Innovations Volume 15, 2018 Issue #4 pp. 258-272
Views: 1147 Downloads: 176 TO CITE АНОТАЦІЯThe transformations in internet technology and financial innovation have led to the prevalence of direct finance, causing indirect finance to contract and concerns among traditional banks and insurance channel operators to seek transformation to innovate traditional services with advanced technology applications. The research compares the sales revenue flows of traditional banks, insurance companies, and mutual fund institutions, using quantile regression methods with five mutual fund factors: Jensen’s indexes, expenses, risks, sizes, and turnover rates. The sample statistics from 2001 to 2016 were evident, showing the results that sales revenue flows of bank and insurance companies did not decrease when compared to institutional fund investors, but instead, grew substantially, owing to the significant relationship of better technological services and financial innovation by banks and insurance companies. The research contribution is to point out that financial industry should focus, review and strengthen its most competitive core services inside, which are less challenged by outside competitors. By adhering to financial innovation and internet technology, it is still possible for traditional banks and insurance channels to gain substantial market shares with concentration on their core competitive services.
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The effects of managerial ownership, leverage, dividend policy in minimizing agency problem
Alni Rahmawati , M. Moeljadi , Djumahir , Sumiati doi: http://dx.doi.org/10.21511/imfi.15(4).2018.22Investment Management and Financial Innovations Volume 15, 2018 Issue #4 pp. 273-282
Views: 1643 Downloads: 297 TO CITE АНОТАЦІЯThe research intends to minimize agency conflict through causality effects of managerial ownership, leverage, and dividend policy, where agency conflict is still interesting issue to discuss, as it concerns the principals’ and agents’ interests. The research covers 33 go-public manufacturers in Indonesia Stock Exchange. It involves 198 samples in the period 2010–2015. It applies saturation sampling and balanced panel data. For analysis model, it applies Granger bidirectional/simultaneity analysis, with variables of managerial ownership, leverage and dividend policy.The research shows that: 1) there is no bidirectional causality between managerial ownership and leverage (5%); 2) there is no bidirectional causality between managerial ownership and dividend policy (5%); 3) there is no bidirectional causality between leverage and dividend policy (10%).
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Assessment of financial and economic security of the region (based on the relevant statistics of the Donetsk region)
Bogdan Derevyanko , Liudmyla Nikolenko , Irina Syrmamiik , Yevgen Mykytenko , Iosif Gasparevich doi: http://dx.doi.org/10.21511/imfi.15(4).2018.23Investment Management and Financial Innovations Volume 15, 2018 Issue #4 pp. 283-295
Views: 1277 Downloads: 148 TO CITE АНОТАЦІЯIn the article, the indicators of financial and economic security of Donetsk region are analyzed. The task of setting statistical estimation of financial and economic security of the region in modern conditions is based on the official materials of the State Statistics Service. For the possibility of further econometric modeling and forecasting, only quantitative indicators are used. This approach limits the number of evaluated indicators, but is considered the most objective. The analysis of financial and economic security is carried out in the context of two spheres of regional development: economic and social. The conducted analysis of the dynamics of the main socio-economic indicators of development of the Donetsk region for the period 2012–2016 allowed to identify the main trends characterizing the development of the region’s economy; provide an assessment of the financial and economic security of the region and identify some “problematic” places of financial and economic security in Donetsk region. Some of the most acute problems were identified in the assessment of financial and economic security and the features of state-legal provision of financial and economic security in the present conditions, as well as the proposed algorithm for monitoring the financial and economic security of the region. The analysis allowed to identify some “bottlenecks” of financial and economic security in the Donetsk region and to demonstrate that close attention and monitoring are required by the level of capital investments, the level of unemployment and the share of households with incomes per month below the legal living wage. The study enables to minimize the risks to form effective directions in assessing the financial and economic security of the region and proposes to optimize on a legal basis the whole mechanism for ensuring the financial and economic security of the region. As a result, the research revealed the most acute problems in assessing the financial and economic security of the region and proposed an appropriate algorithm for monitoring its level.
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Assessing the dynamics of fintech in Indonesia
Investment Management and Financial Innovations Volume 15, 2018 Issue #4 pp. 296-303
Views: 1949 Downloads: 514 TO CITE АНОТАЦІЯFinancial technology or commonly known as fintech is relatively a new thing in Indonesia. This article is attempting to capture the dynamics of such technology in Indonesia. This paper was aimed to help researchers and academics who are interested in studying the phenomenon of fintech more broadly. This study is descriptive and exploratory by nature. Data were gathered from secondary sources, as well as interviews with practitioners, policy makers, and users. Data were collected during the period from 2016 to 2018, which was divided into several different stages. The results of the study show that fintech is more than just a phenomenon, it cannot be compared to other start-ups, and has the potential to fundamentally change the business and economic landscape.
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Risks and possibilities of the effect of financial inclusion on managing the financial security at the macro level
Nataliia Zachosova , Olena Herasymenko , Аnnа Shevchenko doi: http://dx.doi.org/10.21511/imfi.15(4).2018.25Investment Management and Financial Innovations Volume 15, 2018 Issue #4 pp. 304-319
Views: 1258 Downloads: 318 TO CITE АНОТАЦІЯThe financial security state of the country directly depends on the amount of resources available in the financial system. Internal sources of financing of the economic and social needs may deprive the government of the necessity seek opportunities for obtaining external borrowings, which lead the country to the loss of financial autonomy. The financial inclusion of the population and business entities into the process of using financial products and services will stabilize the situation in the financial market by obtaining additional financial resources by its professional participants. At the same time, the lack of control of this process can lead to new threats for financial security at micro and macro levels. In view of this, the purpose of the study is to specify the opportunities and risks of financial inclusion for the financial security of financial intermediaries and the state as a whole. The object of the study was the level of financial inclusion, a set of factors that affect it, and a list of the consequences that its change may have for financial security. As the theoretical basis of the study, the reporting materials of financial market regulators were used, as well as information obtained from the application of such methods of scientific research as the analysis by which the level of financial inclusion in different sectors of the financial market was established, and the expert method implemented through surveys and questionnaires. Its use enabled to get a quantitative assessment of the level of financial inclusion of the population and economic entities. As a result of the study, the possible, positive consequences, risks and challenges of financial inclusion for the financial component of economic security are specified and systematized. The practical significance of the results of the survey is the possibility of developing on their basis the mechanisms for stimulating and controlling the level of financial inclusion by the financial market national regulators.
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Evaluation of investment environment security in Ukraine
Ganna Blakyta , Nataliia Guliaieva , Iryna Vavdijchyk , Olena Matusova , Anastasia Kasianova doi: http://dx.doi.org/10.21511/imfi.15(4).2018.26Investment Management and Financial Innovations Volume 15, 2018 Issue #4 pp. 320-331
Views: 1013 Downloads: 182 TO CITE АНОТАЦІЯWorld economic crises, internal economic and political instability have led to declining the level of investment attractiveness and investment security of Ukraine. The aim of the article is to propose an integral index in order to assess investment environment security and determine factors affecting the investment environment security of Ukraine. The suggested assessment is based on the data of World Bank’s indexes with the following blocks of factors: the availability of economic freedom, favorable organizational conditions for doing business, political and legal freedom, supply of resources and infrastructure development. The assessment of Ukrainian investment environment security and its Western neighbors – the European Union member states – has shown that it has lowest rank and highest volatility in Ukraine. The article identifies a direct statistical relation between the volume of foreign direct investment flows in Ukraine and the indicator of political stability and the absence of violence in the country. The main reasons of investment attractiveness reduction in Ukraine were as follows: conservative attitude of investors towards risks due to political instability, manifestations of violence and terrorism; deterioration of the overall financial situation of enterprises, which are the recipients of investments. The article substantiates that conditions for the investment attraction and secure environment in Ukraine have not been formed yet. The system of indicators and criteria for assessing the level of investment environment security should be expanded.
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The opportunities of engaging FinTech companies into the system of cross-border money transfers in Ukraine
Yuriy Petrushenko , Liudmyla Kozarezenko , Aldona Glinska-Newes , Maryna Tokarenko , Maryna But doi: http://dx.doi.org/10.21511/imfi.15(4).2018.27Investment Management and Financial Innovations Volume 15, 2018 Issue #4 pp. 332-344
Views: 1257 Downloads: 618 TO CITE АНОТАЦІЯDespite the increasing role of cross-border payments within the globalization processes and rapid growth of venture sector, an issue of its implementation remains to be a debatable point for many countries. The paper identifies disruptive challenges for financial institutions need to adapt. The research investigates the value and the investment flows structure as most obvious indicators of FinTech and describes types of payments relationships there. The paper considers relationships between enterprises, financial institutions and individuals, which are formed in digital payments. To understand the difference between regular cross-border money transfers and P2P cross-border money transfers with TransferWise, both mechanisms were researched and the benefits underlined. For Ukraine, the improvement of existing cross-border payments system with FinTech is a crucial challenge. That is why it is important to focus on providing knowledge for people, supporting start-ups in the sector and learning the best implementation practices. A great example of cross-border payments of FinTech in Ukraine is TransferWise. The difference between regular cross-border money transfers and peer-to-peer (P2P) money transfers appears in its benefits, such as lower and more expectable transfer fee, mid-market exchange rate, less transaction period. By transforming existing cost structures and mitigating market imperfections, they provide innovative services that meet the users’ needs for speed, trust, low cost, usability, security and transparency. The results show high potential of FinTech for cross-border payment processing.
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The relationship between compensation committee quality and the voluntary adoption of clawback provisions
Hui-Wen Hsu , Liu-Ching Tsai , Chaur-Shiuh Young , Chia-Hui Chen doi: http://dx.doi.org/10.21511/imfi.15(4).2018.28Investment Management and Financial Innovations Volume 15, 2018 Issue #4 pp. 345-355
Views: 811 Downloads: 140 TO CITE АНОТАЦІЯThis paper examines how compensation committee quality is related to the voluntary adoption of clawback provisions. Because fair value information has some reliability issues, this paper further examines whether the amount of Level 3 fair values affect the relationship between compensation committee quality and the voluntary adoption of clawback provisions. Using a sample drawn from the U.S. firms from 2008 to 2015, the results show that the compensation committee quality is positively related to the voluntary adoption of clawback provisions. Additionally, the positive relationship between compensation committee quality and the voluntary adoption of clawback provisions is more pronounced for firms with higher Level 3 fair values.
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Empirical evidence on the determinants of dividend pay-outs in the auto components sector in India
Suman Chakraborty , Sandeep S. Shenoy , Subrahmanya Kumar N. doi: http://dx.doi.org/10.21511/imfi.15(4).2018.29Investment Management and Financial Innovations Volume 15, 2018 Issue #4 pp. 356-366
Views: 1276 Downloads: 320 TO CITE АНОТАЦІЯDeterminants of dividend policy have been a topic of debate in the academic literature for several decades, but the studies have not been able to give a concluding result on the topic. Existing literature reveals that one of the most challenging decisions, dividend payout, is affected by multiple determinants thereby impacting the value of stock, among which proficatibility, capital structure and level of cash flows are identified to be significant factors. The aim of this study is to evaluate empirically the determinants of dividend payout among the companies in the Indian auto components sector which are listed in major Indian bourses. This paper constitutes a modest attempt to explore the relationship between dividend policy (dividend pay-out ratio) of the companies and the variables representing profitability, capital structure, investments, liquidity and cash flows. The other salient feature of the study is that it examines casual relationship of financial performance, operational efficiencies and investment strategies on decision of paying the dividend. ANOVA, correlation analysis and regression analysis have been used to explore the relationship between the identified variables. The study finds that the dividend policy of the companies in the Indian auto components sector is largely influenced by the operating profit, cash from operations, proportion of cash from operations used for financing the investment activities and the proportion of equity in the capital structure of the companies. The study addresses the Indian auto components sector, which is not researched much, and suggests rejuvenation in dividend policy after accounting a derived variable of cash flow to capital expenditure, as identified relevant to the group of auto manufacturers selected for the study.
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Methodological approaches to investment property valuation
Olena Fomina , Olena Moshkovska , Olena Prokopova , Nataliya Nikolenko , Svitlana Slomchynska doi: http://dx.doi.org/10.21511/imfi.15(4).2018.30Investment Management and Financial Innovations Volume 15, 2018 Issue #4 pp. 367-381
Views: 1190 Downloads: 276 TO CITE АНОТАЦІЯIncrease in number of the investment property items available in both domestic and international markets, present-day European integration processes, as well as existing differences in statutory provisions in force (controversial essentials of the investment property identification as an asset and ambiguity of implementation of the methodological approaches to the investment property valuation) have stipulated the need for improvement of the hierarchy of the investment property item fair value recognition and measurement criteria. Proposed identification methods will contribute into amplification of the synergy effect of the investment property item accounting and management due to improvement of quality and fairness of the information data on certain assets of the establishment. Methodology for the investment property valuation and changed value reporting format were worked out based upon critical analysis of the scientific professionals’ main approaches to the investment property fair value measurement as provided for by statutory requirements to disclosure of the asset related information. Findings made and recommendations worked out on consideration of the harmonized indicator system implementation have thereafter found the practical use in the investment property item management efficiency assessment model.