nep-cfn New Economics Papers
on Corporate Finance
Issue of 2019‒07‒22
five papers chosen by
Zelia Serrasqueiro
Universidade da Beira Interior

  1. The differences of corporate governance influence on state-owned enterprise and non-state-owned entrerprise’s performance: the case of Indonesia By Irine Herdjiono
  2. Mixed Signals: Investment Distortions with Adverse Selection By R. Matthew Darst; Ehraz Refayet
  3. Security Analysis: An Investment Perspective By Kewei Hou; Haitao Mo; Chen Xue; Lu Zhang
  4. Benchmarking Operational Risk Stress Testing Models By Filippo Curti; Marco Migueis; Rob T. Stewart
  5. Opportunities and Challenges of Sharia Technology Financials in Indonesia By Mujahidin, Muhamad

  1. By: Irine Herdjiono (Economy and Business Faculty, MusamusUniversity in Indonesia)
    Abstract: This research aims to analyze the influence of audit committee, institutional ownership, and managerial ownership towards company’svalue. Moreover, it also analyzes the differencesof influenceon state-owned enterprise (SEO)and non SEO companieswhich are registered in Indonesian Stock Exchange. The sample consists of 48 SEO companies and 36 non SEO companiesin Indonesian Stock Exchange. Purposing sampling method is used in this research. The used technique data analysis is linear regression. The result of this research shows that audit committeehassignificant influence on SEO value, while in non SEO it does not influenceperformance. In SEOcompanies, institutional ownership does not influence company value while in non SEOcompany it does. Managerial ownership does not show any influenceson both SEOand non SEOcompanies. This research is the first research which compares the impact of corporate governance implementation on Indonesia SEOand non-SEOcompanies’value. This research implies that strengtheningcorporate governance aspects between SEOand non SEOcompaniesin order to increase the company’svalueis needed.
    Keywords: corporate governance, audit committee, institutional ownership, managerial ownership
    JEL: D4 G30
    Date: 2019–05
  2. By: R. Matthew Darst; Ehraz Refayet
    Abstract: We study how adverse selection distorts equilibrium investment allocations in a Walrasian credit market with two-sided heterogeneity. Representative investor and partial equilibrium economies are special cases where investment allocations are distorted above perfect information allocations. By contrast, the general setting features a pecuniary externality that leads to trade and investment allocations below perfect information levels. The degree of heterogeneity between informed agents' type governs the direction of the distortion. Moreover, contracts that complete markets dampen the impact of pecuniary externalities and change equilibrium distortions. Implications for empirical design in credit market studies and financial stability are discussed.
    Keywords: Asymmetric Information ; Cost Of Capital ; Credit Default Swaps ; Investment ; Pecuniary Externality ; Signalling
    JEL: D82 E44 G32 D52 D53
    Date: 2019–06–21
  3. By: Kewei Hou; Haitao Mo; Chen Xue; Lu Zhang
    Abstract: The investment theory, in which the expected return varies cross-sectionally with investment, expected profitability, and expected growth, is a good start to understanding Graham and Dodd’s (1934) Security Analysis. Empirically, the q^5 model goes a long way toward explaining prominent equity strategies rooted in security analysis, including Frankel and Lee’s (1998) intrinsic-to-market value, Piotroski’s (2000) fundamental score, Greenblatt’s (2005) “magic formula,” Asness, Frazzini, and Pedersen’s (2019) quality-minus-junk, Buffett’s Berkshire, Bartram and Grinblatt’s (2018) agnostic analysis, as well as Penman and Zhu’s (2014, 2018) and Lewellen’s (2015) expected-return strategies.
    JEL: G12 G14 G31 M41
    Date: 2019–07
  4. By: Filippo Curti; Marco Migueis; Rob T. Stewart
    Abstract: The Federal Reserve’s Comprehensive Capital Analysis and Review (CCAR) requires large bank holding companies (BHCs) to project losses under stress scenarios. In this paper, we propose multiple benchmarks for operational loss projections and document the industry distribution relative to these benchmarks. The proposed benchmarks link BHCs’ loss projections with both financial characteristics and metrics of historical loss experience. These benchmarks capture different measures of exposure and together provide a comprehensive view of the reasonability of model outcomes. Furthermore, we employ several approaches to assess the conservatism of BHCs’ stress loss projections and our estimates for the conservatism of loss projections for the median bank range from the 90th percentile to above the 99th percentile of the operational loss distribution.
    Keywords: Benchmarking ; Operational Risk ; Stress Testing
    JEL: G28 G21 G32
    Date: 2019–05–28
  5. By: Mujahidin, Muhamad
    Abstract: This article describes how the opportunities and challenges of FinTech Sharia in the face of the industrial revolution 4.0. By using a negation approach, this study concludes that FinTech Sharia which is the development of technological innovations that are in accordance with sharia provisions and becomes a solution to avoid interest transactions. The synergy between the Islamic financial sector and information technology innovation should also be a challenge as well as an opportunity for all actors in the Islamic finance industry to catch up with the conventional financial industry.
    Keywords: Financial Technology, FinTech, FinTech Sharia, Islamic Finance
    JEL: A10 E40 G21 G23 G30 O14 O32
    Date: 2019–07–04

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