Issue #2 (Volume 20 2023)

This paper explores market efficiency in the Ukrainian stock market to determine whether there are differences between traditional and ESG indices. Different data properties related to market efficiency are explored: persistence (R/S analysis is used for these purposes), stationarity (ADF tests), normality (Kolmogorov-Smirnoff, Anderson-Darling test, etc.), resistance to market anomalies (Day of the week effect, abnormal returns and patterns they generate are tested using parametrical and non-parametrical statistical tests), etc. Database includes daily data from 2 conventional Ukrainian stock market indices (UX and PFTS) and ESG index (WIG Ukraine) over the period 2015–2022. The following hypothesis is tested in this paper: ESG indices are more efficient than traditional ones. The findings suggest that there are no significant differences between traditional and ESG indices: they have the same persistence, stationarity, do not fit normal distribution and are not influenced by explored market anomalies. So, despite the fact that companies listed in the ESG index are more transparent and thus characterized by lower information asymmetry, they are more liquid and popular among investors, ESG index is not more efficient than traditional ones. This might be the result of unfair practices called “washing” aimed at signaling the active ESG involvement with actual absence of it. This means that many ESG companies are actually traditional. To prevent such practices, the ESG reporting regulation needs to be revised.

Acknowledgment
Alex Plastun gratefully acknowledges financial support from the Ministry of Education and Science of Ukraine (0121U100473).

Sharia fintech lending grew up at the teenage stage and has successfully taken a strategic place in the Indonesian loan market. Adopting the economics of information and signaling theory, this paper investigates the probability of successful crowdfunding. Using cross-section data, this study analyzes 1,153 funded projects on Ammana.id platform, a well-known Indonesia’s sharia P2P lending. This study runs OLS regressions to examine the effect of loan information (ranking, estimated profit shares, and financing duration) on the amount of crowded funding. This finding support both theories, that the information about the loan is a signal in determining the success of project funding. Ranking and duration of financing significantly affect the success of the P2P sharia lending platform, nevertheless profit share estimation is not significant. Loans that operated in short, tend to raise more funding, and vice versa. Loan ranking can provide the lender with instant information about the borrowers’ condition. Lenders tend to avoid low rankings loans due to the potential failure of loan payments. This study also found a surprising result that the coefficient of profit sharing is positive for Islamic funding but insignificant. This result shows that material gain is not the main issue for investors, but the elements of trust and justice are nobler according to Islamic beliefs. This study proves that loan information as a low-cost signal can be used by investors to make the best decision and reduce adverse selection problems. The findings support the strategic growth of Islamic platforms to build a sustainable Islamic investment and maintain financial stability.

Acknowledgments
Appreciation is given to the General Directorate of Higher Education, Research and Technology, Ministry of Education, Culture, Research and Technology, and the Institute for Research and Community Service of Universitas Islam Nahdlatul Ulama (Unisnu) Jepara, Indonesia.

The purpose of the study was to analyze the effectiveness of technical trading strategies in trading stocks of selected Indian companies represented in the Nifty 50 Index. The research was done using secondary data from January 2022 to August 2022. Hourly share prices of 14 largest companies as per market capitalization from 14 different sectors from the Nifty 50 Index were considered as a part of the study. Simple Moving Average, Exponential Moving Average – Relative Strength Index and Bollinger Bands – Relative Strength Index – strategies considered in the study. It was found that strategy based on Bollinger Bands and Relative Strength Index performed the best. Performance was considered with respect to both the number of stocks having a net profit and the number of stocks that were able to outperform the buy-and-hold strategy for the time period considered. The study considered several combined strategies and performance indicators, whereas previous studies used limited indicators. Out of the 14 stocks considered, the Simple Moving Average strategy was able to generate net profit for 8 stocks and it outperformed the buy-and-hold strategy for 6 stocks, Exponential Moving Average – Relative Strength Index strategy generated net profit for 6 stocks and it outperformed the buy-and-hold strategy for 5 stocks, and the Bollinger Bands – Relative Strength Index generated net profit for 11 stocks and it outperformed the buy-and-hold strategy for 10 stocks. The Bollinger Bands – Relative Strength Index strategy was able to outperform as it was more dynamic and entered and exited positions actively.

Construction companies are very dependent on the projects carried out by a company. Therefore, measuring whether a company is distressed or non-distressed can be done by looking at the ratios derived from the components of the financial statements from both the balance sheet and the company’s profit and loss. This study offers a new method for measuring financial distress in companies with Artificial Neural Networks (ANN). The model provided comes from several financial ratios in 17 construction companies listed on the Indonesia Stock Exchange. The model is expected to produce the best model by showing the lowest prediction error rate. The results showed that the best ANN model has 25 inputs, 20 hidden layer neurons, and 1 best model output. The model obtained will be tested directly on the sample used; the results are that 6 construction companies in Indonesia have financial distress and 11 non-distress problems. This result proves that the best model obtained can predict the level of financial distress of companies with a small error rate to produce 6 companies identified as financially distressed. This result can be a warning for companies to increase revenue by adding new projects to get out of financial distress status. Traditional financial distress models such as Altman, Zmijewski, Springate, and Fulmer, which have become researchers’ guidelines for measuring financial distress, can be added to the ANN 25-20-1 model as a comparison to strengthen the research results.

Although several studies on the integration of diverse stock markets have been conducted in the financial literature, most of them have focused on the integration and volatility spillovers across established stock markets. The present study explores the dynamics of integration and volatility spillover across gold, oil, forex, and stock markets during four significant events in India: the pre-changed government regime, the post-changed government regime, the post-Brexit referendum date, and the COVID era. Daily data from 2010 to 2022 is divided into four categories using the Chow test. This is done to examine if these events’ financial turmoil affects market interconnectivity. The unit root test determines data stationarity. The ARCH LM test examines series volatility clustering, and the BEKK GARCH test examines market volatility spillover. Results indicate that gold cannot be considered a hedge or safe haven. Secondly, market interconnectedness increased during the crisis period. Third, domestic political and geopolitical conditions globally do not increase the scale of spillover amongst financial assets, though they impact the spillover’s magnitude. The results of this study have several important implications for portfolio diversification and risk management.

The purpose of this study is to investigate the relationship between pay disparity and a company’s investment inefficiency, and to explore the moderating influence of investment in internal control personnel on this relationship. The global concern over pay disparity has intensified as executive compensation soars to unparalleled heights, while employee wages remain static. Utilizing a fixed-effect regression model and analyzing 5,407 observations from Korean listed companies between 2018 and 2020, the study shows a positive association between pay disparity (coef = 0.034, p-value < 0.01) and investment inefficiency, with pay disparity increasing the level of investment inefficiency by fostering overinvestment. Furthermore, the study shows that the interaction term between pay disparity and quantitative (coef = –0.246, p-value < 0.01) and qualitative (coef = –2.104, p-value < 0.01) investments in internal control personnel is negative and significant, indicating that the positive link between pay disparity and investment inefficiency is lessened when there is a higher quantitative and qualitative investment in internal control personnel. By offering a more comprehensive understanding of the conflicting evidence about the impact of pay disparity and the role of investment in internal control personnel in moderating the negative effect of pay disparity on investment efficiency, this study contributes to the existing literature. The findings of the study suggest that companies aiming to minimize investment inefficiency should consider not only addressing pay disparity but also investing in internal control personnel.

The existence of a research gap compared to previous studies related to the effect of the relationship between institutional ownership and investment opportunity set on firm value in Indonesia is interesting to review. This study aims to reveal the relationship of these influences by adding capital structure as a moderating variable that serves to strengthen it against firm value. The research variables are the ratio of market value to book value of assets, institutional ownership, debt-to-equity ratio and free cash flow. The research timeframe is 2019–2021, using data taken from companies in the manufacturing sector in the Indonesian Capital Market (IDX). Data sampling was carried out using the purposive sampling method. Data analysis to determine the relationship of these effects and hypothesis testing were performed using multiple regression. The empirical research findings indicate that the investment opportunity set has a positive effect on increasing firm value, while capital structure has a negative effect on decreasing it. Institutional ownership and free cash flow do not determine firm value, so free cash flow does not serve as a control variable. The main finding of this study is revealing that capital structure plays a role in strengthening the effect of the relationship between investment opportunity sets on firm value.

Acknowledgments
This research is an independent study that is not funded by donor agencies.

The aim of this study is to examine the effects of illiteracy and unemployment on financial inclusion in rural areas of Nigeria between 2017 and 2022. Most rural areas in developing countries have high illiteracy and unemployment rates, creating challenges for researchers to measure the inclusiveness of financial services and products. This study examined the effect of illiteracy and unemployment on the inclusiveness of financial services and products in rural areas of Nigeria. The ex-post facto research design, systematic sampling, dummy for latent variables (erratic power supply and insecurity in rural areas), and autoregressive distributed lag (ARDL) techniques were employed. The result showed that the coefficient estimate for the illiteracy rate is negative (-0.5318), indicating that higher illiteracy is associated with lower financial inclusiveness, and the coefficient estimate for unemployment rate is also negative (-2.1977) and statistically significant, suggesting that the higher unemployment rate is associated with financial inclusiveness. These findings indicate that a decline in the delivery of financial services in developing nations attest to illiteracy and unemployment. This study concluded that there is a need to improve education and employment rates in rural areas of developing countries to achieve optimal inclusiveness of financial services and products.

Shareholders of listed firms are guaranteed reasonable security prices due to enhanced firm value, which translates to global wealth creation. However, firms’ value has declined globally. Therefore, this paper uses a causal-comparative design and panel data regression model to explore the nexus between corporate governance, asset structure, and value of Kenyan-listed firms from 2010 to 2019. Secondary data were extricated from audited financial reports of 51 firms. As hypothesized, the results show a positive relationship between board composition and firm value with a regression coefficient (0.17, p < .05). The composition of the audit committee is positively associated with firm value with a regression coefficient of (0.629, p < .05). A tangible and notable correlation exists between protecting shareholders’ rights and firm value with a regression coefficient of (0.28, p < .05), while financial disclosure was significant with a regression coefficient of (1.15, p < .05). Plant, property and equipment positively and significantly affect firm value with a regression coefficient of (2.10, p < .05), while financial assets had (0.28, p < .05), which was significant. Current assets positively and significantly affect firm value with a regression coefficient of (1.87, p < .05). Finally, the results reveal a positive but insignificant correlation between firm size and value with a regression coefficient of (0.22, p < .05), while the relationship between firm age and value is negative but insignificant with a regression coefficient of (–0.003, p < .05). The study recommends that sufficient managerial effort be directed towards corporate governance and asset structure to maximize shareholder value.

With the outbreak of COVID-19, the Chinese government implemented the “zero-COVID” policy as a measure to curb the spread of the virus. The different measures of the policy include widespread testing, contact tracing, and strict quarantine and isolation protocols. In view of recent changes in COVID-19 trends and other economic indicators, the Chinese government withdrew significant provisions of the zero-COVID policy in China. The present study investigates the sectoral performance of the Chinese stock market after the withdrawal of the zero-COVID policy. The study considers eighteen sectoral indices of the Shenzhen Stock Exchange of China as a sample and applies the event study methodology to study the impact of the policy withdrawal on the stock prices performance. The results of the study indicate that sectors such as hotel, consumer staples, the financial sector, real estate, media, and culture have reported significant positive movement after the withdrawal of the zero-COVID policy, while other sectors such as consumer discretionary, energy, healthcare, information technology, manufacturing, mining, technology, telecom, transportation, utilities, wholesale, and retail have shown insignificant reactions. These results also indicate that when the COVID-19 outbreak happened in China, different sectors of the economy reacted negatively except the retail and wholesale sectors, while with the withdrawal of the zero-COVID policy by the Chinese government, the reaction of investors is optimistic as different sectors are reporting either positive reactions in the stock price movement or no reaction.

Asset pricing theory suggests that the correct proxy for the market portfolio should contain both the debt and equity claims of the economy, whereas prevailing empirical studies fail to include the debt claim. Motived by the discrepancy between the theoretical and empirical models and the difficulty in constructing proxies, the study uses the Credit Default Swaps (CDS) market index as a proxy for the debt market and empirically tests its explanatory power in explaining stock return variations. Employing panel regression and Fama-MacBeth regression of all publicly traded U.S. companies from 2005 to 2020, the study finds a negative relationship between CDS index returns and stock returns. On average, a one standard deviation increase in CDS index return is associated with a 0.02% decrease in daily stock returns. Results of two-stage regressions show that the estimated systematic credit risk is positively priced in stock returns with similar economic magnitude as the well-documented beta risk. These results support asset pricing theories in the inclusion of debt claim and the risk-return tradeoff, while contradicting the credit risk puzzle documented in prior studies.

This study analyzes and examines the factors influencing the intention to use loan facilities from formal financial institutions. This study was carried out quantitatively using the Structural Equation Modeling (SEM) method with the population of large chili farmers in 19 districts in Jember Regency as the region with the best large chili productivity in Indonesia. The results obtained from 116 respondents indicate that the construct of situational temptation does not affect subjective norms. In addition, formal financial institution financing positively affects attitudes toward behavior and subjective norm on intention to use loan facilities, but not on the perceived behavior. Meanwhile, the intention was positively influenced by attitude, subjective norm, and perceived behavior control. The factor with the most significant effect on the intention is perceived behavior control (t-statistics = 4.940). This shows that control of perceived behavior towards intention to use loan facilities from formal financial institutions has the most significant influence among other variables.

Acknowledgment
The authors would like to thank the Directorate of Research, Technology, and Community Service from the Ministry of Education, Culture, Research, and Technology of the Republic of Indonesia, which provided research grants, namely Higher Education Excellence Basic Research (Penelitian Dasar Unggulan Perguruan Tinggi/PDUPT) in 2022-2024.

The aim of this paper is to identify the behavioral and psychologic biases that may affect the investment decisions of individual investors in Bangladesh. This study considered behavioral anomalies such as Cognitive Dissonance, Regret Aversion, Loss Aversion, Overconfidence, Hindsight, Illusion of Control, Herd instinct, Self-attribution and Representativeness, and analyzed how significantly each of these would prevail by preventing investors from making rational decisions when investing. The research has been developed through a structured questionnaire and analyzing the survey results collected from 196 individual investors involved in Dhaka Stock Exchange. Factor analysis on a behavioral approach was conducted to analyze the responses. The outcome reveals that investors are not rational, and that there is a significant impact of the different behavioral biases, particularly cognitive dissonance (0.8005), regret aversion (0.7793), loss aversion (0.7418) and illusion of control biases (0.7260) on the investment decisions of investors in Bangladesh. Moreover, the most influential of four factors extracted jointly can explain 55.63% of the variance of the variables. Finally, the factor loading values show that all nine hypotheses can be rejected, which makes it clear that all the designated psychological biases exist in the investment decision of DSE investors.

Digital Gold and Gold Exchange Traded Fund have emerged as an electronic option for investment in gold in India. The purpose of this study is to determine influential factors forming the perception and level of awareness of individuals toward investing in Digital Gold and Gold Exchange Traded Fund, and also analyze the relationship among these influential factors. Data for this quantitative analysis were obtained from a self-administered 5-point Likert questionnaire of 158 respondents who are individual investors investing in either Digital Gold or Gold Exchange Traded Fund to achieve the objectives of the study. Principal Component Analysis has been adapted as a dimension reduction technique to identify the factors impacting the decision of investing in Gold Exchange Traded Fund and Digital Gold. The factors that induce investors to invest in Digital Gold and Gold Exchange Traded Fund as identified in this study are conduciveness, security, and ease of accessibility. The factors that compel investors not to invest in Digital Gold and Gold ETFs are lack of contentment, operational challenges, lack of awareness, brokerage expenses, and infeasibility. The results disclosed that variables such as lack of satisfaction and lack of knowledge have higher factor loadings of 0.997, which indicates that investors are required to be more educated about the Digital Gold and Gold Exchange Traded Fund. Securities and Exchange Board of India, Reserve Bank of India and other regulatory authorities in India may consider regulation of Digital Gold so that it can be accepted as a trustworthy source of investment.

The increasing prevalence of IFRS adoption has resulted in enhanced transparency, accounting quality, and comparability of financial information among firms, especially in emerging markets worldwide, including India. Nonetheless, the question of whether the adoption of IFRS has led to improved firm performance persists. To address this question, this study examines the impact of transitioning from India’s GAAP-based accounting standards to IFRS-converged standards (Ind AS) on non-financial firms’ performance from 2013 to 2022. The empirical findings reveal that the convergence of Indian accounting standards with IFRS significantly improves firm performance, as demonstrated by a positive coefficient of 0.0166 for Ind AS in the fixed-effect model. The study also validates the original empirical findings using the return on equity (ROE) measure of firm performance, which yielded a coefficient of 0.0197, further confirming that the adoption of Ind AS leads to an increase in the performance of Indian firms. These results contribute new insights to the existing IFRS literature and have implications for policymakers and managers.

Relevant value is important for information users to make business decisions, and stock prices have an essential relationship to the value relevance about enterprises. The paper aims to investigate the earnings and book value influences on the value relevance of 144 Vietnamese listed enterprises. Selected data are non-financial enterprises with a wide range of industries to ensure representativeness on the Vietnamese stock market. The research implements stakeholder and signaling theory to explain the hypotheses of the model related to earnings per share and book value per share. Time series data are analyzed for three years from 2018 to 2020. The quantitative method is applied to test hypotheses. The results determine that the fixed effects model is suitable. The results also show that the earnings per share positively affect the stock price, but book value per share has a negative impact on the stock price. The paper provides some policy suggestions for investors to make reasonable decisions using relevant information about listed enterprises in Vietnam.

The investment world today is vying for profit from investing in cryptocurrencies, so this encourages young people, especially students, to invest in cryptocurrencies, but financial literacy, herding behavior, and risk perception are things that influence investment decisions. The aim of this study was to identify the factors that influence students’ decisions to invest in cryptocurrencies. The research method used is quantitative, using questionnaires distributed to students in Bali; the sample in this study was active students currently studying at universities in Bali, Indonesia, totaling 179 samples; questionnaires were distributed using the Google form and analyzed using Warp PLS. The results show that investment decisions, herding behavior, and risk perception are all significantly and positively influenced by financial literacy. Perceived risk and herding behavior have a significant influence on investment decisions. Perceived risk and herding behavior can partially mediate financial literacy on investment decisions. The influence of financial literacy on investment decisions will be stronger if it is through perceived risk with a coefficient value of 0.412 and herding behavior with a coefficient value of 0.422. Based on the study’s conclusion, it is important for investors, especially students, to prioritize improving their financial literacy before investing in cryptocurrencies. Additionally, investors should be aware of the potential impact of herding behavior and perceived risk on their investment decisions and take steps to mitigate their influence.

The global financial crisis increased corporate world uncertainties. Therefore, to meet these challenges, firms take a more proactive approach to tackling various corporate governance and firm value initiatives and policies. This study aims to explore the moderating effect of capital adequacy on the relationship between board characteristics and the firm value of listed banks in Pakistan. To obtain a more robust empirical model and results, this study incorporates moderator and control variables. This study is based on half-yearly secondary data of 560 sample observations from 2009 to 2021. Multiple regression and panel data estimation techniques were employed for the analysis. The study used firm value as a dependent variable, proxied by Tobin’s Q, along with five independent variables, one moderating variable, and two control variables. The results of this study indicate that a higher capital adequacy ratio (CAR) increases firm value and has a moderating effect on board characteristics and firm value. Low proportions of women and independent directors on board affect firm value. The presence of risk management and audit committees in listed Pakistani banks, on the other hand, increases firm value. The banks in Pakistan have no problem with CEO duality. The study also found that bank size has a positive relationship with firm value, while bank age has a negative relationship with firm value.

The purpose of the study is to develop and test in practice the method of analyzing the relationship between the formation of internally generated goodwill and investment attractiveness of an enterprise based on econometric modeling in order to improve the investment management process. Attracting additional investments, both for Slovakia and Ukraine, requires the identification of promising objects of investment. Assessment of enterprise’s potential cannot be accurately performed on the base of financial statements, which reflect only the state of assets. It is necessary to take into account the prospects for development of this business unit in the future, that largely depends on effective functioning of management system. The success of business processes depends on how rationally managers use the resources of the enterprise and form the structure of assets adequate to the demands of the market. The article considers the problem of estimating the value of enterprises in order to attract investments based on internally generated goodwill, and determines the peculiarities of the formation and types of goodwill of a commercial enterprise. As the main research method, canonical correlation modelling was used to analyze data of Ukrainian machine-building enterprises for the period 2017–2020. As a result, the factors responsible for the formation of internally generated goodwill were identified and classified according to their economic nature. Correlation dependencies between groups of initial and resulting coefficients were calculated and the areas of enterprise management that have the greatest impact on the formation of its market value were identified.

The study investigates the effects of the US unconventional monetary policy on the Vietnamese economy, focusing on the output and price index. Besides, the differences in the response of these indicators to the shock related to non-traditional tools implemented by the US in the Global Financial Crisis and during the pandemic crisis are also explored. By applying the Structural Vector Autoregressive model on the monthly dataset from January 2007 to April 2022, the results show that an expansionary monetary policy of the US by unconventional measures leads to a rise in the output and price index of Vietnam. In addition, risk-taking channels and portfolio rebalancing channels are important in the transmission of the US monetary policy to Vietnam, they cause booms in asset prices via the surge of capital flows. Moreover, another important finding is that the impact of US UMP on the Vietnamese economy during the Global Financial Crisis was generally two times higher than during the epidemic crisis.

The purpose of the study is to examine the impact of corporate governance mechanisms on the financial performance of listed industrial companies in Oman. As the main research method, panel data regression analysis was used to analyze data from 36 Omani industrial companies, listed on the Muscat Stock Exchange for the period 2017–2021. Three regression models were developed using three dependent variables (Return on Assets, Return on Equity, Return on Sales), seven independent variables (Board Size, Independent and Non-executive Board Members, Board Meeting, Chief Executive Officer, Dummy variable for Board Change, Dummy variable for the Secretary on the Board, Dummy variable for Internal Auditor), and two control variables (Leverage, Size of the company). According to the research results, a negative influence of the Board Size and Dummy variable for the presence of the Secretary on the Board on the Return on Assets indicator at 10% and 5% significance level was found; moreover, there is a positive influence of Leverage and Size of the company at the 1% and 5% significance level on Return of Assets. Although, none of the independent variables used has a significant impact on the Return on Equity indicator. Return on Sales is significantly affected only by two control variables, i.e., a negative impact of Leverage at the 10% significance level and a positive impact of the Size of the company at the 10% significance level. The results obtained in the study indicate the imperfection of the corporate governance mechanisms implemented by Omani industrial companies in the field of ensuring financial efficiency.