Impact of relative and absolute financial risks on share prices: a Zimbabwe Stock Exchange perspective
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Author(s)Atanas SixpenceLink to ORCID Index: https://orcid.org/0000-0001-9514-6296
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Olufemi P. AdeyeyeLink to ORCID Index: https://orcid.org/0000-0001-6211-1564
,
Rajendra Rajaram
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DOIhttp://dx.doi.org/10.21511/imfi.17(1).2020.01
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Article InfoVolume 17 2020, Issue #1, pp. 1-14
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169 Downloads
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Creative Commons Attribution 4.0 International License
The impact of financial risks on share prices concerns investors, company executives and accounting standards developers. Investors need this information in delineating their equity valuation models while company executives need the information to make appropriate capital structure decisions. Accounting standards developers use this information in their policy to make accounting standards contemporary.
The authors examine the link between relative and absolute financial risks and share prices using a dynamic panel of non-financial listed companies on the Zimbabwe Stock Exchange after dollarization. Equity investors incurred losses before dollarization, which prompted this investigation into the sphere of financial risks in order to explain share price movements so that investors can use it to minimize losses in the future. Absolute financial risk is measured by the total debt, while debt/equity ratio measures relative financial risk. Market capitalization as a proxy for equity and debt is measured by total liabilities. An average debt/equity ratio greater or equal to one qualifies a firm into the high-risk category while ratios below one imply low-risk firms. Results from two-step System Generalised Method of Moments (GMM) show negative and significant connection between relative risk and share prices across risk categories. The impact of absolute risk on share prices differs by risk category. Firm managers are advised to keep total liabilities below market capitalization in order to enjoy the benefits of low-risk categorization. Debt ratio is a reasonable indicator of value and investors can use it in equity valuation. Mandatory reporting of debt ratios should be considered by accounting standards developers.
- Keywords
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JEL Classification (Paper profile tab)C23, M49, G15
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References15
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Tables4
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Figures6
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- Figure 1. High-risk firms
- Figure 2. Low-risk firms
- Figure 3. Share price-debt ratio
- Figure 4. Share price-total debt
- Figure 5. Share price-debt ratio
- Figure 6. Share price-total debt
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- Table 1. Descriptive statistics
- Table 2. Correlation matrix
- Table 3. Full sample regression results
- Table 4. Regression results for sub-samples
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Interest in universities based on search queries on the Internet
Yulia Bondarenko ,
Solomiya Ohinok ,
Artur Kisiołek ,
Oleh Karyy 
doi: http://dx.doi.org/10.21511/im.17(3).2021.15
Innovative Marketing Volume 17, 2021 Issue #3 pp. 179-190 Views: 2930 Downloads: 164 TO CITE АНОТАЦІЯThe improvement of global Internet access and the COVID-19 pandemic, which necessitated mass testing of online teaching methods, have forwarded the competition between higher education institutions from the regional level and the struggle for the rich student into the competition for students in all countries. The paper aims to determine the influence of the rating of higher education institutions on the interest of Internet users by conducting a comparative analysis of the popularity of the official names of higher education institutions in search queries in Ukraine and Poland. To do this, a comparative analysis of the change in the interest in leading higher education institutions in Ukraine and Poland in search queries in the Google search engine is carried out. The analysis is performed using the Google Trends web application. As a result, it is found that a high position of the university in the national ranking does not guarantee more search queries about it on the Internet by both national Internet users and users from the neighboring country. In general, Internet users continue to be most interested in universities located in their region at the time of the search.
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The effect of IFRS adoption on the value relevance of accounting information: evidence from South Korea
Investment Management and Financial Innovations Volume 16, 2019 Issue #2 pp. 78-88 Views: 1826 Downloads: 296 TO CITE АНОТАЦІЯThis study investigates whether the value relevance of accounting information was changed after IFRS adoption in South Korea. Related prior studies have found mixed empirical evidence depending on research methodologies or research periods. Moreover, the effect of IFRS adoption on value relevance can be different between Korean stock markets (KSE and KOSDAQ) because they have different characteristics. Also, the main financial statements reported by Korean firms had changed from individual financial statements to consolidated financial statements after IFRS adoption. Thus, this study analyzes the effect of IFRS adoption on the value relevance of individual and consolidated accounting numbers expanding research periods (5 years before and after IFRS adoption) and comparing changes in explanatory powers of Ohlson (1995) model on each listing market. The empirical results indicate that the value relevance of Korean listed firms generally decreased after IFRS adoption. However, the value relevance of KSE listed firms decreased, while the value relevance of KOSDAQ listed firms increased after IFRS adoption. In addition, it was found that the effects of IFRS adoption on value relevance of individual and consolidated financial information were different depending on listed markets. This implies that different level of demand for information environment may induce differential effects of IFRS adoption on value relevance.
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The impact of inflation on Islamic banks’ home financing risk: Before and during the COVID-19 outbreak
Faaza Fakhrunnas ,
Yunice Karina Tumewang ,
M. B. Hendrie Anto
doi: http://dx.doi.org/10.21511/bbs.16(2).2021.08
Banks and Bank Systems Volume 16, 2021 Issue #2 pp. 78-90 Views: 1598 Downloads: 655 TO CITE АНОТАЦІЯThe COVID-19 outbreak has had a severe impact on nearly all industries, including Islamic banking, which plays a significant role but is exposed to higher risk. This study aims to evaluate the credit risk that Islamic banks in Indonesia have been exposed to related to home financing before and during the COVID-19 outbreak. Panel data are employed covering the period January 2016 to September 2020 on a monthly basis. The data were analyzed using a dynamic panel approach to present a distinct picture of Sharia-compliant property financing before and during the COVID-19 outbreak. In general, the findings show that the macroeconomic variable reflected by regional inflation has had a different influence in the two periods, with Islamic banks having had much more exposure to macroeconomic risk, specifically in home financing, during the epidemic. In addition, the different influences are also shown by the study results, which show that provinces on Java Island face less risk exposure than those outside Java. In terms of impulse response factors and variance decompositions’ result, before the outbreak, the response of home financing risk to inflation tended to be more stable. However, during the outbreak, the movement has tended to fluctuate more, especially outside Java Island. The same result for variance decompositions shows a similar trend, with inflation tending to have a larger impact during the outbreak.
Acknowledgments
We are grateful to the Direktorat Penelitian dan Pengabdian Masyarakat (DPPM) Universitas Islam Indonesia No. 001/Dir/DPPM/70/Pen.Unggulan/XII/2020 for support and providing a research grant for the study.
