Issue #3 (Volume 16 2019)

The research examines the role of discussion in investors’ decision in a step-by-step information setting. Several studies present that disclosure strategy stimulates order-effect bias, but simultaneous information decreases the impact of that bias. This bias makes people weigh more heavily to recent observations than they do to older ones. Using step-by-step information, a recency effect is expected to be found. This study uses an experimental method. The participants are the representation of non-professional investors in the stock market because of a lack of knowledge and experience. Participants are also a reflection of the customer easiness in registering to be stock traders. The role of discussion between participants is a new feature of this experiment. After evaluating participants’ decision in a discussion, the experiment shows that an individual’s choice after discussion produces more bias, although they already learn the information before the discussion. The research finds that (1) using the within-subject sample, group discussion produces overvaluation (undervaluation) in positive (negative) sequential information, (2) there is bigger price revision when negative sequential information is presented. This study suggests disclosure strategies for companies. Considering a recency bias, companies must present step-by-step information when they disclose good news, but they must avoid step-by-step disclosures when giving bad news. The second practical implication is for investors; they need to think about the benefits of joining an investor club, since the discussion exacerbates recency bias. These results are expected to contribute to finance literature.

Retracted on August 17, 2020 by the Journal’s owner and Publisher. Type of retraction – plagiarism.
There wasn’t a request for this retraction, but the reason for investigation of plagiarism fact was the Russian Academy of Sciences Committee’s report “Predatory Journals at Scopus and WoS: Translation Plagiarism from Russian Sources”: https://kpfran.ru/wp-content/uploads/plagiarism-by-translation-2.pdf” dated August 12, 2020. The publishing house has familiarized itself with the report. The article by Alexey Mikhaylov, Natalia Sokolinskaya and Evgeniy Lopatin (2019). Asset allocation in equity, fixed-income and cryptocurrency on the base of individual risk sentiment. Investment Management and Financial Innovations, 16(2), 171-181. doi:10.21511/imfi.16(2).2019.15 was mentioned in this report. It is noted that translation plagiarism was detected in this article - http://wiki.dissernet.org/wsave/IMFI_2019_2_1publ.html.
Due to this the publishing house carried out an investigation on possible cases of plagiarism of all articles of these authors (Alexey Mikhaylov, Natalia Sokolinskaya and Evgeniy Lopatin) published in “Business Perspectives” journals.
When the manuscript "Oil incomes spending in sovereign fund of Norway (GPFG)" was submitted to the Journal for consideration, the authors signed the Cover letter and attested to the fact that their manuscript is an original research and has not been published before. Then, the manuscript was accepted for consideration by the Managing Editor and was tested for plagiarism using the iThenticate and Unicheck programs. Plagiarism was not detected. On August 12, 2020 the Russian Academy of Sciences Committee’s presented the report. Editorial staff decided to re-test all articles of mentioned authors for plagiarism using the iThenticate and Unicheck programs – the programs didn’t show the plagiarism, then the articles were tested for translation plagiarism by the experts of “Business Perspectives” and plagiarism was detected (plagiarism and paraphrases from Russian-language sources).

According to the results of the investigation, the Publisher and owner of the journal decided to retract this article because of plagiarism on August 17, 2020.
The authors were notified of such a decision.

Volatility Target (VolTarget) strategies as underlying assets for options embedded in investment-linked products have been widely used by practitioners in recent years. Available research mainly focuses on European-type options linked to VolTarget strategies. In this paper, VolTarget-linked options of American type are investigated. Within the Heston stochastic volatility model, a numerical study of American put options, as well as American lookback options linked to VolTarget strategies, is performed. These are compared with traditional American-type derivatives linked to an equity index. The authors demonstrate that using a Volatility Target strategy as a basis for an embedded American-type derivative may make any protection fees significantly less dependent of changing market volatilities. Replacing an equity index with the VolTarget strategy may also result in reducing guarantee fees of the corresponding protection features in a highly volatile market environment.

In this article, updated approach to assess the impact of fiscal decentralization on economic development is offered. The relationship between the proper level of fiscal decentralization and economic growth for 27 advanced and emerging economies in Europe from 1992 to 2017 was evaluated using panel data. In the EU members, Belarus, Georgia and Ukraine expenditures decentralization was more essential than revenue decentralization. The vast majority of the counties from Central and Eastern Europe have increased the level of fiscal decentralization since 1992. It was found that revenue decentralization was associated with lower growth rates, while expenditures decentralization could slightly encourage economic development. The overall decentralization indicator adversely affected the growth, but that interconnection was not robust. The empirical investigation showed significant role of demographic structure and sustainability to ensure economic development. The authors propose the statements for the local authorities to develop the methodical bases of the fiscal policy’s design. In the survey, a balanced approach to the tax and public spending policy’s preparation and planning is presented.

US household debt increased on a yearly basis from 1987 to 2007. In addition, household debt in the USA nearly doubled between 2000 and 2007, from $5.6 trillion to $9 trillion. This came to an abrupt end in 2009 with the crash of the financial market. This paper employs the bound test and Auto-regressive Distributed Lag Model to determine the long-run relationship between US household debt and consumer prices, housing prices, the unemployment rate, and the lending rate. Unit root tests were conducted first to ascertain the stationarity of the variables. E-views 11 was used in the analysis of the data, which was obtained from Q1: 1990 to Q1: 2007 from the International Monetary Fund and the US FED. It was found that in the long run, there is a negative effect of consumer prices and unemployment on US household debt, while house prices and the lending rate would have a positive effect on household debt.

Market forces are not the only influence on currency exchange rates. They can change due to monetary and fiscal policies among other international repercussions. Bitcoin, for its independence from all the central banks worldwide, has a natural shield that will change the direction in the economic policy of the industrialized countries. The research aim is to analyze the influence that indicators and financial assets can have on Bitcoin. The study tries to confirm the reasons why it has begun to be the solution in economies with unstable currencies.
The behavior of the different agents appears as the core of the study. It is creating a backward 5-year work horizon. The data are continuous values, and they are the numerical variables for Pearson correlation analysis. The time series in fixed periods are the basis for the study of projections. Besides, the Relative Strength Index or Relative Strength Index called Welles Wilder is useful in the research. Bitcoin does not get influenced by the Dow Jones, gold price, and Gross Domestic Product (GDP). The independence in the creation of this cryptocurrency could in the long term end up turning it into a currency of world use. As a result, the understanding and management of this cryptocurrency could generate new ways of building the future monetary system. The new direction of the economy will be registered in the blockchain and not in a central bank.

The portfolio of low-volatility stocks earns high risk-adjusted returns over a full market cycle. The annual alpha spread of low versus high-volatility quintile portfolios is 25.53% in the Indian equity market for the period from January 2000 to September 2018. The low-volatility (LV) effect is not an overlap of other established factors such as size, value or momentum. The effect persists across various size buckets (market capitalization). The performance of the low-volatility effect within various size buckets is analyzed using three different portfolio formation methods. Irrespective of the method of portfolio construction, the low-volatility effect exists and it also generates economically and statistically significant risk-adjusted returns. The long-short portfolios across the study deliver exceptionally high and statistically significant returns accompanied by negative beta. The low-volatility effect is not restricted to small or illiquid stocks. The effect delivers the highest risk-adjusted returns for the portfolio consisting of largecap stocks. Though the returns of the portfolio comprising of large-cap LV stocks are lower than the returns of the portfolio comprising of small-cap LV stocks, its Sharpe ratio is higher because of less risky nature of large-cap stocks as compared to small-cap stocks. The LV portfolio majorly comprises of large-cap, growth and winner stocks. But within size buckets, large-cap and mid-cap low LV picks growth and winner stocks, while small-cap LV picks value stocks.

Liquidity is a firm’s ability to pay its current obligations as they come due and thus remain in business in the short run, which reflects the ease with which assets can be converted to cash. The objective of working capital management (WCM) is to minimize the cost of maintaining liquidity while guarding against the risk of insolvency, working capital policy applies to short-term decisions, and capital structure finance applies to long-term decisions.
Several studies have been conducted on the impact of WCM on cash holding levels. The impact of WCM on liquidity and cash holding levels is analyzed in this study. The study also makes a comparison between large- and small-scale firms. Panel data for 62 Jordanian industrial firms covering an eleven-year period (2006–2016) have been analyzed. The descriptive analysis indicates that large firms hold more cash than small firms, as well as more debt, cash flow and growth.
The findings of the data set indicate that WCM, as a variable (working capital net of cash), is a strong predictor of firm cash holding levels. When a firm has several cash substitutes, it will maintain low cash levels. The separate analysis shows that there are significant differences between small- and large-scale firms for determinates related to cash holding levels. Firm size and cash flow ratios were strong predictors of cash holding levels for both samples.

A number of studies in environmental disclosure have suggested that corporates accountable for environmental responsibility practice have lower cost of capital. However, this relationship has not yet been discovered in Vietnam. The purpose of this study is to examine the relationship between environmental disclosure and the equity cost of 115 non-financial companies listed on Vietnamese stock market from 2014 to 2017 with 460 observations. This study uses the panel data regression model (the fixed effects model (FEM) and the random effects model (REM)) to assess the impact of environmental disclosure on the equity cost of listed companies in Vietnam. Content analysis method according to GRI guidelines is used to measure the level of the environmental responsibility practice and Easton’s model (2004) is used to estimate firms’ ex ante cost of equity. The research results show that the level of environmental information disclosure of listed companies in Vietnam is not high and there is a negative relationship with statistical significance between the environmental disclosure and cost of equity of listed companies in Vietnam. The findings suggest that environmental practice can be profitable and beneficial to Vietnamese listed companies. Therefore, companies in Vietnam need to change their awareness of social and environmental responsibility practices. This study also shows that the suitable model for listed companies in Vietnam is the FEM.

Dividend policy has been puzzling for researchers for decades. The level of dividend varies not only across industries, but also across countries. This research analyzes the dividend policy of Indonesian public companies, in particular it examines the partial effect of cash ratio, debt ratio, company size, profitability, and asset growth on cash dividend policy in Indonesia Stock Exchange from 2008 to 2015. A total of 102 companies was used as a sample. The samples are divided into four groups: (1) a group of companies paying changeable dividends (Change group), (2) a group of companies paying continuous dividends, but then stop paying dividend (Omission group), (3) a group of companies that initially do not pay the dividends, but then continuously paying dividend (Initiation group); and (4) a group of companies paying constant dividends (Constant group). Results of hypotheses testing using multiple regression analysis show that profitability and asset growth affect dividend policy in all company groups. Company size affects dividend policy in the Change, Initiation, and Constant groups. Debt ratio influences dividend policy only in the Change group.

The study goal is to investigate the effect of cash specific accounting information on the capital investment decisions. To this end, the researcher used a prepared questionnaire to selected companies in Jordan. The main result of the study has shown that there is a significant effect of three kinds of accounting information, which are related to expected cash flows: 1) data on scrapped assets at the end of investment, 2) information on money coming in and out, and 3) information on cash saving by tax (outflows). Capital investment decisions show an increased consciousness by companies and have an importance of accounting information effect. This will significantly extend in the progress of capital investment decisions in companies. The main recommendation was to use the information on accounting, such as cash flows obtained from the asset at the end of their life. Also, information on cash coming in and out of companies, and information on cash saving by outflows (tax) have a significant effect on decisions related to capital investment.

Stock markets over the world have become more interconnected due to activities of foreign investors in search for alternative financial assets and markets to invest in order to diversify their portfolio. Stock market indices and index returns have been known to reflect linkages between different markets. This study assesses the extent of correlation of stock market index returns in West Africa and those of the United States of America (US) and United Kingdom (UK) from 2008 to 2016. The correlation between the index returns for the entire sample period and yearly samples were considered for Nigeria, Ghana, the BRVM, the USA and the UK. The indices selected for the five countries considered are the Nigerian All-Share Index, Ghanaian Composite Index, the BRVM Composite Index, the Financial Times 100 Index and the Standards and Poor’s 500 Index. Daily index returns data were used for the study and analyzed using correlation and multiple regression analysis. Findings revealed that the returns of the pairs of the United States of America (US) and the United Kingdom (UK) exhibited stronger positive correlation with each other than the other market pairs in the study both in the entire sample period and the yearly sub-period analysis. The correlations between the other market pairs were either positively or negatively weak or very weak indicating more diversification opportunities.

This article analyzes the correlation between compliance to the Austrian Code of Corporate Governance and financial success of Austrian stock listed companies. It uses a sample of 52 Austrian companies that are listed on the Vienna Stock Exchange and corporate data collected from company publications such as annual reports, financial reports, corporate governance reports and company websites. Three accounting measures – return on assets, return on equity and net profit margin – were chosen in order to proxy the financial performance of a company. The period under review ranges from 2008 to 2016, whereas particular attention is given to the years 2010 to 2016. A corporate governance compliance score has been established on the comply or explain basis and recommendation rules of the Austrian Code of Corporate Governance in order to measure a company’s ability of implementing ‘good’ corporate governance practices. In line with research for other countries, this study finds no statistical evidence that a correlation exists between high compliance to the Austrian Code of Corporate Governance and financial success of companies listed on the Austrian Stock Exchange. The paper highlights the uniqueness of the Austrian Corporate Governance system when compared to other systems and gives arguments why companies comply with corporate governance recommendations.

The impact of news on individual investor decision is explicit as investors need to update, adapt and forecast returns with constraints of time, uncertainty and resources to be successful. The aim is to understand and review the influence of news on individual investor’s decision making in stock markets and identify the impact of different type of news on individual investor’s decision making in stock markets, assess the behavioral reaction and investment decisions made by investors before and after there is news item, identify the linking effect on behavioral theories and biases, develop a generalized decision making conceptual model to understand the impact of news on investor’s reaction, decision and its linkages along with the behavioral bias. Theoretical basis/methodology for processing of news by investors is assumed to be based on Broadbent’s filter theory (1958) and due to cognitive informational inefficiency of investors it assesses the attention and the investor’s reaction of overreaction and underreaction, which do not comply with efficient market hypothesis theory. The reasons for its noncompliance are found by relating it with behavioral theories. The results explain how investor screens with filters and give attention to news only when it affects their portfolio or investment objective and strategies. It is concluded that investor’s decision making depends on degree of information penetration, information content, information influence, specific internal factors and generic external and on investors prevailing at that given circumstances. This gives us the solution to comprehend the investor’s reaction, decision and unresolved reversals, short- and long-term overreaction.

This study examined if the Nigerian agricultural output has spurred economic growth and the best fit agricultural financing gap model for growing the economy. The study explored the dynamics of different technicality approach that stepwise regression has to offer. From the seven baskets of predictors – agricultural guaranteed finance to oil palm, cocoa, groundnuts, fishery, poultry, cattle, roots and tubers – the step fitted three predictors: roots and tubers, cocoa and poultry based on “a b” parameter with the highest “t-stats” and significant p-value and subsequently executed the model using stepwise regression analysis with the help of Statistical Package for Social Sciences (SPSS) version 23. The dataset covers a thirty-six year period from 1981 to 2017. The source of the data is from the Central Bank of Nigeria 2018 statistical bulletin. The findings showed that individually, root and tubers has the most contributory impact on economic growth with 81 percent. Jointly followed is cocoa at 87 percent and poultry at 90 percent. The study thus recommends a comparative cost advantage to financing agriculture with the most impactful contribution to economic growth based on the model.

This paper sheds light on the financial crisis of 2008–2010 in eleven emerging Eastern European economies (EE11): Armenia, Azerbaijan, Belarus, Bulgaria, Georgia, Kazakhstan, the Kyrgyz Republic, Moldova, Romania, Tajikistan and Ukraine. The aim is twofold. In the first place it seeks to find out if the financial instability hypothesis, as put forward by Minsky and Kindleberger, is a valid explanatory factor for the crisis. Secondly, it tries to map if general institutional frameworks of these countries were developed in order to stand against the factors leading into the financial crisis.
To answer these research problems the paper maps cycles of three parameters representing the real economy, i.e. gross domestic product, manufacturing output and unemployment and four parameters representing the financial markets, i.e. money supply, credit volumes, inflation and government debt. The cycle approach is carried out with the help of a structural time series analysis to isolate cycles in time series. The paper concludes that there were substantial positive financial cycles previous to the financial crisis mirrored by similar cycles in the real economy.
Similarly, the results show negative cycles in the same parameters during the years of crisis. It seems that an uncontrolled increase in money and credit caused the economy to overheat and thereafter contract into financial and real economy crises.
Also, the paper compiles twelve different indices of institutional development. These are standardized and presented in an institutional development matrix, showing that the general institutional framework for the eleven economies was weak previous to and under the meltdown of the economies.
The construction of an integrated institutional development index on the basis of the same twelve parameters confirms institutional shortcomings, which may have made the economies less able to guard themselves from a crisis initiated by both domestically and internationally financial instability.

This study delves into the herding and bubble detection in the volatility domain of a capital market underlying. Furthermore, it focuses on creating heuristics, so that common investors find it relatively easy to understand the state of the market volatility. Hence, it can be termed that this study is focused on the specific financial innovation regarding bubble and herding detection coupled with investor awareness. The traces of possible volatility bubble emerge when it is positioned against its own lags (both lag1 and lag2). The volatility trigger indicated clear traces of herding and an embedded parabola function. Continuous and repetitive parabola function hinted at a subtle presence of “fractals”. Firstly, the detrended fluctuation analysis has been used with its multifractal variant. Secondly, the regularized form of Hurst calculation and analysis have been used. Both tests reveal the traces of nascent bubble formation owing to prominent herding in CNX Nifty HFT environment. They also indicate a clear link with Hausdorff topological patterns. These patterns would help to create heuristics, enabling investors to be aware of possible bubble and herd situations.

The article examines the influence of the current stage of economy digitalization on the financial inclusion in Ukraine. The purpose is to assess the level of financial inclusion in the country, to determine the dominant influence of price and non-price barriers to access to financial services for the Ukrainian population when compared to other world countries and to define which part of the adult population is able to join the formal financial services system through the use of innovative channels and financial service systems. Based on the methodological approaches proposed by the World Bank and the G20 Financial Inclusion Indicators, the authors analyze the real traditional and digital access opportunities of the general public to financial services in Ukraine compared to other countries across the world. Particular emphasis is placed on overcoming existing non-price barriers that impede formal financial inclusion of the Ukrainian population. The research findings stress the need to adhere to the basic principles of digital financial inclusion in order to regulate activities of financial institutions and their agents in the digital provision of financial services, strengthen regulatory control over the use of innovative financial products and service systems, and protect the rights of consumers of financial services in Ukraine.

Despite the fact that the government is the main actor of economic development, it also invites private parties to be actively involved in the economic development. The main objective of public and private investment is economic development. But the ultimate goal of investment and economic development itself is to improve the welfare of the community. This study seeks to investigate the effect of private and public investment on economic growth. Furthermore, it also investigates the impact the investment on the community welfare either directly or indirectly through economic growth by way of analyzing the data on private and public investment, economic growth, and the human development index of local governments in Indonesia for the period from 2012 to 2016. Hypotheses were tested using PLS (Partial Least Squares). The results show that both private and public investment directly influence economic growth and indirectly affect the welfare of the people through economic growth. Direct test results also show the positive effect of economic growth on community welfare.

The impact investing ecosystem is currently in its infancy in Ukraine. The aim of the paper is to identify the problems of impact investing development in Ukraine and to propose the ways to develop the ecosystem of social investment in the country. In the course of the research, general scientific methods of analysis were used: formal, logical, and comparative. Results of the research suggest that theory and practice of state regulation in Ukraine still lack the conceptualized mechanisms of impact investing and the corresponding institutional environment. On the other hand, there is a high level of interest and engagement in it from both the public and potential and current investors. The data obtained prove the importance of civil society cooperation in creating a favorable ecosystem of impact investing to maximize its integration into the economy. The development of impact investing ecosystem in Ukraine depends on certain socio-economic and legal barriers at an initial stage such as: low level of public understanding about the problem, absence of clear legal regulation and uncertainty of the “rules of the game” at the legislative level, openness and publicity of enterprises, which is not a characteristic feature of the economic environment in the country today. Furthermore, effective directions and mechanisms for development of the impact investing ecosystem are proposed.

In the context of countries integration into the world economic space, agricultural sector is one of the priorities and strategically important sectors of the national economy. Development of instruments aimed to increase investment potential of this sector is therefore an important component of the country’s economy growth. The article proposes a science-based model of the impact of the agricultural sector on the economic development level of countries trying to move towards European integration.
It was found that the employment rate (+58.4) has the largest influence on the rate of GDP change in the studied group of countries (Ukraine, Moldova, Georgia, Armenia). The impact of the gross value added of the manufacturing sector on its economic growth is positive (+44.6). The negative foreign direct investment ratio in the model (–40.3) may be due to the fact that the indicator in the studied countries is still largely influenced by the intervention of the state mechanism, significant uncertainty and risk, which is a deterrent to the overall economic development. An important result of the study was that foreign direct investment had a negative impact on economic growth in developing countries. Further development of the investment potential of a country’s agricultural sector provides for a radical acceleration of scientific and technological progress and, on this basis, a reduction in the cost of a unit of agricultural products and food and an increase in their competitiveness in the domestic and world markets.

The study examines the link between exchange rate volatility and foreign portfolio in Nigeria using data that covers the period 1996Q1 to 2016Q4. The theoretical framework used is the return and creditworthiness model, which is based on the push and pull factors theory. In achieving the objective, the study adopted the vector autoregressive model in ascertaining the dynamics between exchange rate volatility and foreign portfolio investment in Nigeria. Also, the study examines the impact of exchange rate innovations (shocks) on foreign portfolio investment and equally assesses how induced variations in foreign portfolio investment are decomposed among the variables in the model. It was also found that exchange rate volatility and market capitalization significantly and largely explain the variations in foreign portfolio investment. The impulse response analysis shows that foreign portfolio investment was more responsive to standard deviation shocks in market capitalization and exchange rate, implying that these variables were more responsible for the dynamism in FPI. As the horizons expand, shocks to market capitalization and exchange rate increase foreign portfolio investment, whereas shocks to GDP and inflation made foreign portfolio investment dwindle. In the same manner, in decomposing the induced variation in foreign portfolio investment, forecast error shocks in market capitalization, exchange rate and GDP explain more of the variation in foreign portfolio investment.

This paper provides the relationship between macroeconomic variables, including exchange rate, BI rate and inflation, and stocks performance, particulary bluechip stocks listed in LQ45 index in Indonesia Stock Exchange. The study particularly gives insights on bluechip stocks listed in LQ45 stock price index in Indonesia Stock Exchange between 2015 and 2017. The data were obtained from various sources during the period, including the Indonesia Stock Exchange (IDX), the Central Bank of Indonesia (BI), and the Ministry of Trade. This study followed a Vector Error Correction Model (VECM) attempting to estimate the relationship between variables both in the short term and in the long term. The findings of the study showed that in the long run, exchange rate, BI rate and inflation have a negative impact on stock market performance, particularly on LQ45 index in Indonesia Stock Exchange. It implies that an increase in macroeconomic variables results in the decline of stock market performance. Meanwhile, in the short run, two variables, namely the exchange rate and inflation, positively affect stock market performance in Indonesia. On the contrary, the relationship between BI rate and stock market performance showed a negative correlation. These findings have significant implication for the understanding of how macroeconomic variables affect the stock market performance, particularly LQ45 price index in Indonesia Stock Exchange.

In the last decades, risk-based portfolio construction techniques have enjoyed a widespread diffusion in the financial community. This study aims at evaluating how these portfolio construction techniques produce different results depending on whether the segmentation of the stock market investment universe is based on sectorial or geographical criteria. An empirical analysis, applied on the global equity market, is carried out by making use of the typical and most advanced statistical and financial evaluation measures. Geographical segmentation is carried out in relation to the listing market, while sectorial segmentation is made in relation to the productive sectors to which individual companies belong. Our comparative analysis provides substantially coherent results, demonstrating a significant preference for the sectorial criterion compared to the geographic one. In conclusion, this result can be attributed to the subdivision of the investment universe into sectorial indices characterized by greater internal coherence and better external differentiation, in addition to the lower concentration of sectorial segmentation compared to the geographical one.

One of the most crucial tasks for the national economies development both in European countries and Ukraine is stimulating and ensuring sustainable economic growth. For this purpose, all states develop an innovative sphere and use financial different instruments. The aim of the article is determining the impact of financial instruments and innovations on business environment development of the national economy of Ukraine in comparison with European countries in order to create successful and effective business environment in Ukraine for foreign investments. The paper examines the impact of foreign direct investments and domestic loans on the Global Innovation Index 2018 using two-factor analysis of variance. The null hypothesis of an interaction effect (factor A (foreign direct investments, net inflows) and factor B (domestic loans of financial sector) doesn`t exert an interaction effect on result Y (Global Innovation Index)) was rejected. Also the combination of foreign indicators, direct investments and domestic loans has a significant impact on the Global Innovation Index. Practical recommendations should provide a comprehensive approach to assessing the use of financial instruments in order to encourage the investments. Thus, overcoming the uneven distribution of innovations and investments should provide using the global financial resources.

The sovereign credit rating provides information about the creditworthiness of a country and thereby serves as a tool for investors in order to make right decisions concerning financial assets worth investments. Thus, determination of a sovereign credit rating is a highly complex and challenging activity. Specialized agencies are involved in rating assessment. So, it’s essential to analyze the efficiency of their work and seek out easily accessible tools for generating assessments of such ratings. The objective of this article is to find out whether sovereign credit rating can be reliably estimated using trends of selected macroeconomic indicators, despite the fact that sovereign credit rating is most likely influenced by non-economic factors. This can be used for strategic considerations at national and multinational levels. The relationships between sovereign credit rating and the trends of macroeconomic indicators were examined using statistical methods, linear multiple regression analysis, cumulative correlation coefficient, and multicollinearity test. The data source used is comprised of selected World Bank indicators meeting the conditions of completeness and representativeness. The data set has shown a cumulative correlation coefficient value greater than 95%, however at 100% multicollinearity. This is followed by the gradual elimination of indicators, but even this did not allow achieving acceptable values. So, the conclusion is that rating levels are not explainable solely by the trends of economic indicators, but other influences, e.g. political. However, the fact that the statistical model yielded acceptable results for five and fewer indicators allowed a regression equation to be found that gives good estimates of a country’s rating. This allows, for example, predicting of ratings relatively easy by forecasting the development of selected macroeconomic indicators.

The risk of bankruptcy is affected by many different factors. Therefore, identifying the groups of factors affecting bankruptcy risks, especially financial performance factors, are important and necessary. The study focused on the impact of financial performance on the bankruptcy risk of real estate companies listed on Vietnam’s stock exchange. Research data were collected from 44 real estate companies listed on Vietnam’s stock exchange from 2011 to 2017 with 308 observations. The study was conducted by the quantitative method based on the logistic regression model with the help of SPSS 25 specialized software. The research results show that Return on Assets (ROA), Return on Equity (ROE) and Total Asset Turnover (TAT) have significant reverse effects on bankruptcy risk, while Operating Profit Margin (OPM) is not a relevant factor. The accuracy rate of the overall predictive model is 90.9%. This study extends the scope of literature on the impact of financial performance on the bankruptcy risk of real estate companies. Moreover, this study offers the model of bankruptcy risk prediction of the listed real estate companies in Vietnam and recommends effective solutions to improve business efficiency, limit and prevent financial risks for listed real estate companies in Vietnam.

The assets of a business entity that is subject to bankruptcy proceedings form bankruptcy estate. The correct assessment of its value is a necessary pre-condition to save time and cost effective bankruptcy proceedings. The article presents the valuation methods applied in Poland for assets consisting of real estate and movables that collectively constitute the bankruptcy estate. The main objective of this study is to assess the reliability and efficiency of the appraisals of book, market and forced sale value in relation to the possibility of correct estimation of funds obtained from the sale of individual assets in the course of liquidation proceedings. The article presents the results of a study conducted in 15 intentionally selected enterprises in bankruptcy operating on the territory of Lubelskie Voivodeship in Poland. It offers the analysis of applied valuation methods and the description of specific conditions of sale of bankrupt entity’s assets in accordance with legal regulations and applied practices. In particular, it compares the differences in the value of the examined assets determined by different methods and identifies the reasons for these differences. The most important conclusion of the study is the fact that neither the market value nor the book value allow for reliable estimation of the revenues that could be obtained from the sale of the bankruptcy estate, which makes it impossible to determine the probable level of satisfaction of creditors’ claims. The specific nature of sale under bankruptcy justifies the use of the forced sale value despite difficulties connected with its estimation. The basic recommendation is the necessity to supplement the valuation report with the estimation of the forced sale value along with the comprehensive description of the algorithm of its calculation.

This paper presents an empirical evidence of a time-varying relationship between corporate governance and its impacts on stock returns in Thailand. The governance grades assessed by the Thai Institute of Directors are used as governance measurement for the analysis. The parameters estimated by Fama-Macbeth regression indicate that firms with higher governance ratings generate greater expected stock returns in a long run. However, on yearly basis, the positive relationship deteriorates and loses explanatory power in the most of the tested years. The coefficients of governance ratings estimated by fixed effect regression are examined for statistical difference, which confirms that effect of corporate governance on stock returns differs year by year. While there are some distinct years that governance ratings affect stock prices positively, higher governance ratings lead to lower returns in other particular years. The both positive and negative magnitudes of corporate governance’s impact on expected returns do not stay the same over time. Good governance practice at a firm does not always yield positive returns to investors.

This research evaluates the differences in financial performance of enterprises before and after privatization aiming to find out the influence of privatization on the enterprises’ performance. The study is based on the audited financial statements of 105 Vietnamese privatized enterprises privatized in the period from 2005 to 2016. Applying the Wilcoxon signed-rank test, the obtained results prove that after privatization profitability and outputs of investigated firms are significantly higher than prior privatization. However, there is no significant change of leverage. Applying a regression model to evaluate the factors affecting financial performance of firms in the research model, it was found out that the proportion of state ownership, economic growth, operating period, enterprise`s size, and business risk have positive influence on the financial performance of research firms. However, the leverage of these firms has a negative impact on the financial performance. In accordance with the obtained results, this study suggests that the privatization process should be continued regardless of firm size or business type. The government should create fair competition environment, remove incentives and supports for State-Owned Enterprises (SOEs), manage changes in privatized firms, and enforce the legal system.

Nowadays, there is a constant need to build an appropriate system for assessing the company`s value for shareholders, which implies that the company chooses an adequate model based on drivers, which allow making decisions at all management levels associated with investment activity, ensuring an increase in value for owners. The purpose of the article is to improve the methodology for assessing the influence of drivers as a critical element of value-oriented management on the investment activity of companies. The analysis technique consists of two parts. In the first part, regression models of factors influence and cost drivers on the value multipliers and shareholder profits were built. Based on the interpretation of the coefficients obtained, it should be noted that the cost-effectiveness of assets has the most powerful impact on the market value of the company and shareholder`s profitability.
Thus, the presence of sustainable competitive advantages, resulting simultaneously in higher company value and profitability, the variable profitability in its turn does not fully reflect the potential for generating cash flows in the future. In the second part of the analysis, the authors built the probit models of the factors influence and cost drivers on the probability that the value multipliers of the market average values and the total profitability of shareholders are above the market average. Based on the relative strength model of the influence factors and drivers of value on value-based management, the recommendations were formulated.