Tax policy and housing prices: evidence from Vietnam using event study approach

Since March 2002, The Motley Fool’s founders, David Gardner and Tom Gardner, have published monthly stock recommendations under Motley Fool’s premium Stock Advisor service. In this paper, the authors investigate whether analysts’ recommendations can add value for investors by examining the performance of portfolios constructed based on Motley Fool’s recommendations. They evaluate the announcement effect on share price corresponding to the publication of stock recommendations. Additionally, the researchers examine holding period returns for a portfolio imitating the actions of Stock Advisor. They find portfolios composed of recommendations through Stock Advisor added value initially upon recommendation and across extended holding periods. Additionally, the authors find that the Stock Advisor sample outperforms other sample portfolios on a risk-adjusted basis and over several subperiods. The findings contribute to the literature on the usefulness of analysts’ recommendations in adding value to investors’ portfolios.

This study examined the response of stock prices on the Indonesia Stock Exchange (IDX) to COVID-19 using an event study approach and the GARCH model. The research sample is the closing price of the Composite Stock Price Index (JCI) and companies that are members of LQ-45 in the 40-day period before the COVID-19 incident, 1 day during the COVID-19 incident (March 2, 2020) and 10 days after, January 6, 2020 – March 16, 2020. Empirical findings prove that abnormal returns react negatively to COVID-19, JCI volatility fluctuates widely during the COVID-19 event, and the GARCH(1,2) model can be used to assess volatility and predict stock abnormal returns in IDX in market conditions infected with COVID-19. The practical implication of the study’s findings for investors is that the COVID-19 event caused stock price volatility, which affects abnormal returns. Therefore, to face the conditions of uncertainty and increased volatility in the future, several lines of risk management are needed in managing a stock portfolio. In addition, it also opens up opportunities for speculators to profit in an inefficient market environment. This study is based on the empirical literature currently being developed to investigate the phenomenon of stock price volatility behavior during COVID-19 on the IDX. The GARCH model used proves that during the COVID-19 pandemic, stock price volatility increases and leads to a decrease in abnormal returns. The empirical findings also validate the efficient market hypothesis theory related to the study of events and the theory of financial behavior related to uncertainty.

While 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.