Investment Analysis and Portfolio Management

25/01/2018

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Sir Sufyan Majid

 

Submitted
by

Hamza
Yaqoob (2255 )

B.Com
(hons) 2014-18

 

 

 

 

 

                           Literature reviews

Journal
of Corporate Finance

Institutional
investor monitoring motivation and the marginal value of cash

Charles
Ward, Chao Yin, Yeqin Zeng states that. The basic purpose of their study was to
degree the outcome of enthused monitoring institutional investors on the
marginal value of cash holdings. By the end of year 2015 the collective cash
holdings stated by non-financial and non-utility firms had touched $2.3
trillion, it was of the non-utility and non financial firms which were listed
on American stock exchange ,New York stock exchange and NASDAQ it represented
22.4% of total firm assets and its was equal to 12.5% of annual US GDP. Firms
might grasp more cash or other liquid assets for the defensive purpose for when
they face higher cash flow doubt, market rivalry, or credit restraints. They
used Baseline regression model. Their sample was limited to the firms with
stock return data from CRSP and annual accounting information from Compustat.
To analyze additional stock returns, they attain the benchmark break points and
benchmark portfolio returns from Kenneth French’s data library. To concept
corporate governance indexes, they used data from Institutional Shareholder
Services. To get the classification of institutional investors, they excerpt
data from Brian Bushee’s personal website. Their sample time is from 1995 to
2015 . Their conclusion was that firms may hold cash because they are indefinite
about their instant future environment, or because they want to recollect the flexibility
to exploit investment chances that may rise suddenly. The retaining of cash may
therefore be likely to be valued positively if investors were confident in the
firms’ managers. However, cash reserves offer managers the possibility to
exploit their agency position and may, therefore, be value dipping when seen by
sceptical investors.

The article is
taken from Elsevier.com

Journal
of Financial Economics

Non-rating
revenue and conflicts of interest

Ramin P. Baghai,Bo Becker states that. Credit
rating agencies delivers very vital information in credit markets, and the
quality of the ratings they offer is significant to the working of the
financial system, for example, by underlying a diversity of monetary contracts
and rules. Examples about the use of credit ratings contain loan contracts,
financial regulation and investment mandates. Their samples are between
2010-2015. They capture data on credit ratings and firms’ industry arrangements
from the Centre for Monitoring Indian Economy 
Prowess database. This foundation of high-quality corporate data has
been used in many current studies. Credit ratings for these firms CRISIL, ICRA,
CARE, Brickwork, and INDRA and are re- ported for each firm at the debt
security level. While specific debt instruments does not carry individual
identifiers in the database, they are classified into instrument categories
such as debentures, long-term loans, and term loans. They emphasis on
non-structured instruments that are allotted medium- or long-term credit ratings
by the agencies. More, they recollect only the ten most common instrument
categories. The resulting sample consists of ten debt instrument categories
Debentures / bonds / notes/ bills; debt; fixed rate unsecured non-convertible
debentures; fund based financial facility/instrument; long term loans;
non-fund-based financial facility/instrument; term loans; cash; cash credit;
and working capital loans. Every observation in their sample is a
firm-agency-year. Panel A displays a frequency distribution of observations
with non- rating services. Their sample extents from years 2010–2015 and covers
26,760 firm-agency-years. There are 7083 firms in their sample, of which 473
get non-rating services at some point in the sample period, corresponding to
1165 observations in their sample. The rest of the panel reports a breakdown by
rating agency; for example, 7.9% of the sample observations with a CRISIL
rating are associated with payments for non-rating services given by CRISIL.
Panel B displays the occurrence of firms with multiple raters in their sample.
19% of the sample corresponds to firms that obtain ratings from more than one
rating agency in a given year

The article is
taken from Elsevier.com

 

Journal
of Corporate Finance

Executive
turnover and the valuation of stock options

Daniel
Klein states that. Primary exercise is an very vital reason for the evaluation
of executive stock options (ESOs) and also for the estimation of American
options. Enforced exercises and regular voluntary exercises inspire a evaluation
concession of ESOs to market dealt options. He examines executive revenue and
voluntary exercises via hazard analysis. He use two main archives for his
examination. For the study of voluntary initial exercise he track executives’
option portfolios using transaction data based on the SEC’s (Securities and
Exchange Commission) corporate insider filings. For the turnover examination he
used annual data on employment periods and reimbursement from ExecuComp. He
used the database from the year 1996 on as in this year the SEC modified its
Securities and Exchange Act of 1934 and extended insider reporting commitments.
In conclusion This paper contributes to the literature of ESO evaluation by
openly modeling two sources of primary exercise. ESOs have a valuation discount
compared to market traded options, for the reason that ESOs are more to be
expected to exercised early and may even forfeiture before maturity. Thus hopes
about the exercise behavior of the executive are a central component for ESO
valuation. The literature on ESO valuation so far has focused on voluntary
exercise as driver for a value discount of ESOs over market traded options

The article is
taken from Elsevier.com

 

 

 

Research
in International Business and Finance

Price
dynamics and speculative trading in Bitcoin

Benjamin
M. Blau states that. Some financial revolutions in money markets have gotten
more attention by regulators and policy makers than the commencement of the
digital coinage Bitcoin. Bitcoin value has raised from a few cents to as high
as $1,132.26 during last year due to which is has become popular for both
consumers and retailers. He collect data consists of price and volume from
Bitcoin charts which gives us the monetary and mechanical data about Bitcoin
network. The start of our sample period is from 17 july 2010 and the end of our
sample time period is 1 june 2014. He will also collect historic exchange-rate
data for 51 other currencies during the same time period from Bloomberg. The
motive behind doing it to give a simple benchmark when investigating Bitcoin
volatility. Some results are noticeable. First, speculative trading and Bitcoin
returns are distinct. However, volatility and Bitcoin returns are positively
correlated. Fascinatingly, He do not find that volatility is positively linked
to speculative trading. If anything, the reverse is true. These results are
robust to both Pearson and Spearman coefficients and specify that speculative
trading in Bitcoin does not contribute to Bitcoin returns or its instability,
per se

The article is
taken from Elsevier.com

International financial
markets and institution

International financial markets and institutions play a very
important role in the development of country. In every country there are are
people who have more money then they required. So they wanted to use it and
there are also people who wanted to use money to do some economic activity but
they do not have required money to do this activity. To solve this issue of
affordability financial markets and institutions play the role of intermediary.
There are different types of financial markets which helps both parties to
interact and make agreement with each other

Ø 
Money
market

Ø 
Capital
market

Ø 
Derivative
market

Institutes

Ø 
Central
banks

Ø 
Banks

Ø 
Stock
exchange

Ø 
Swift

Ø 
Eco

Ø 
Bic

 

 

Financial
Inclusion and Economic Growth in OIC Countries

The
purpose of this study is to know the relationship between financial inclusion
and economic growth in OIC countries. From two to three decades, financial
inclusion got the great attention from researchers, politicians and other
financial stakeholders. Leyshon 
&  Thrift (1993-1995), Collard
(2010) states that financial inclusion has received a great attention and
policy making issue of socially excluded people is emerging now. Kempson &
Whyley (1999) examines the type of people, who are with low income, excluded
from formal financial system in Britain. Naceur & Samir (2007) investigate
the relationship between financial development and economic growth for MENO
(Middle East and North Africa) region. And find that financial development have
negative effect on economic growth. They interpreted that financial development
is a hurdle in economic growth, in MENO region. Pearce (2011) try to explore
thebarries, opportunities and priorities for the improvement of financial
service accessability in MENA and suggest that government and regulatory bodies
should develop a framework for improvement.