An empirical analysis of internal and external factors of stock pricing: evidence from Indonesia

Political risk is prevalent in Nigeria and tends to influence business outcomes and the stability of the banking system. As a result of this study, it was determined whether political risk matters to the performance of the banking sector in Nigeria. The effect of political risk on different banks’ performance measures, such as return on assets, return on invested capital, credit risk and stock price, were examined in a panel of 12 selected commercial banks for the period 2006–2018. Data was analyzed using a two-stage system of generalized method of moments. The results provided evidence that the effect of political risk on bank performance depends on the performance proxies. Specifically, political risk was found to be negatively related to banks’ returns on invested capital and positively related to deteriorating credit risk. Hence, it can be concluded that political risk induces poor banking system performance in Nigeria. The study provides a critical insight into the management of a country’s political systems in terms of their potential to create unfavorable conditions for banking systems to thrive.

This study aims to examine the IFRS compliance in Jordanian banks and its relation to stock prices. The impact of compliance with International Financial Reporting Standards (IFRS) on stock prices in Jordanian banks is a rarely researched subject in accounting and finance, but whether IFRS compliance has a serious impact on stock prices, particularly in developing countries, is still unknown. Numerous factors in developing countries, such as cultural, political, and economic circumstances, can create different effects for IFRS compliance from those seen in developed countries.
This paper concludes that IFRS compliance negatively affects stock prices, and firm size has a positive relationship with stock prices in Jordanian banks. The paper has significant implications for IFRS compliance research on stock prices, particularly across Jordanian banks, in responding to recent calls to bridge the gap that has been identified as a result of the revolutions in the Middle East. This study has been carried out in order to attract investors to avoid opposite results compared with prior literature that has studied the same subject. Hence, there are essential implications for the way in which successful IFRS compliance can be positively associated with stock prices in Jordanian banks.

Previous researchers have found conflicting results between CSI and firm financial performance. This paper moves this debate further by examining the extent to which corporate social investment (CSI) relates with corporate financial performance (CFP) from a developing country perspective. The main aim of the paper was to determine the relationship between CSI, stock price, sales turnover and return on equity (ROE) amongst the socially responsible investing (SRI) companies in the Johannesburg Stock Exchange. CSI data on the SRI companies were collected from companies’ integrated reports from 2011 to 2015. Therefore, a cross-sectional panel data arrangement was applied and the analysis was conducted using the ordinary least square (OLS). Tested at an alpha level of 0.05, the regression result produced a probability level of P < 0.01 for share price and sales turnover; and P = 10 for return on equity. Therefore, the findings revealed a strong positive and significant linkage between the SRI companies’ social investment, share price and sales turnover and no significant linkage with return on equity. These findings are consistent with previous literature findings reviewed in the paper on similar research conducted in developed countries, which showed positive and negative relationships. Findings from the literature indicate that various factors may account for conflicting results, which includes inter alia, time coverage, size of data, location, market sustainability awareness and culture. The paper contributes by revealing that whilst CSI may trigger improvement in stock price and sales turnover of SRI companies, the sales turnover might not necessarily result in boost in profit level that could engender enough return on equity within a short period time. The conflicting results from the literature is indicative of the inclusiveness in research between CSI and firm performance. Hence, the paper recommends further research to examine the relationship within a longer period of time using new sample of companies and other methods of analysis.