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Business and Economics > Investments: Stocks

You are looking at 1 - 10 of 11 items for :

  • Type: Journal Issue x
  • Corporate Finance and Governance: Government Policy and Regulation x
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Cover IMF Working Papers
Carbon Policy and Stock Returns: Signals from Financial Markets
Martina Hengge
,
Ugo Panizza
, and
Richard Varghese
Understanding the impact of climate mitigation policies is key to designing effective carbon pricing tools. We use institutional features of the EU Emissions Trading System (ETS) and high-frequency data on more than 2,000 publicly listed European firms over 2011-21 to study the impact of carbon policies on stock returns. After extracting the surprise component of regulatory actions, we show that events resulting in higher carbon prices lead to negative abnormal returns which increase with a firm's carbon intensity. This negative relationship is even stronger for firms in sectors which do not participate in the EU ETS suggesting that investors price in transition risk stemming from the shift towards a low-carbon economy. We conclude that policies which increase carbon prices are effective in raising the cost of capital for emission-intensive firms.
Keywords:
Carbon Emissions; Carbon Prices: Climate Change; Transition Risk; Stock Returns; carbon Policy surprise; investors price; carbon intensity; climate mitigation policy; EU ETS; Greenhouse gas emissions; Stocks; Asset prices; Climate change; Europe; Global; Emissions trading; stock return; carbon policy; EU Emissions Trading System; Climate policy
Cover Staff Discussion Notes
Insolvency Prospects Among Small-and-Medium-Sized Enterprises in Advanced Economies: Assessment and Policy Options
Mr. Federico J Diez
,
Mr. Romain A Duval
,
Jiayue Fan
,
Jose M Garrido
,
Sebnem Kalemli-Ozcan
,
Chiara Maggi
,
Mr. Maria Soledad Martinez Peria
, and
Mr. Nicola Pierri
The COVID-19 pandemic has increased insolvency risks, especially among small and medium enterprises (SMEs), which are vastly overrepresented in hard-hit sectors. Without government intervention, even firms that are viable a priori could end up being liquidated—particularly in sectors characterized by labor-intensive technologies, threatening both macroeconomic and social stability. This staff discussion note assesses the impact of the pandemic on SME insolvency risks and policy options to address them. It quantifies the impact of weaker aggregate demand, changes in sectoral consumption patterns, and lockdowns on firm balance sheets and estimates the impact of a range of policy options, for a large sample of SMEs in (mostly) advanced economies.
Keywords:
Insolvency; Bankruptcy; “Quasi” Equity Injections; Small- and medium-size enterprises; COVID-19; insolvent firm; cash position; equity injection; illiquid firm; firm exit; cash flow; Solvency; Small and medium enterprises; Stocks; Financial statements; Southern Europe; Asia and Pacific
Cover IMF Working Papers
Stock Market Liquidity in Chile
Mr. Luis Brandao Marques
Chile has a large but relatively illiquid stock market. Global factors such as global risk appetite and monetary policy in advanced economies are key cyclical determinants of liquidity in Chilean equities. Evidence from a cross-section of emerging markets suggests strong protection of minority shareholders can help improve stock market liquitidity. Currently, illiquid in Chilean may have to pay 3½ percent more as cost of equity. Corporate governance should be improved, namely through the adoption of a stewardship code.
Keywords:
WP; market liquidity; liquidity regime; investor protection; corporate governance; liquidity premium; liquidity service; liquidity cost; aggregate liquidity; Liquidity; Stock markets; Stocks; Liquidity management; Global
Cover IMF Working Papers
Unstash the Cash! Corporate Governance Reform in Japan
Ms. Chie Aoyagi
and
Mr. Giovanni Ganelli
Japan’s high corporate savings might be holding back growth. We focus on the causes and consequences of the current corporate behavior and suggest options for reform. In particular, Japan’s weak corporate governance—as measured by available indexes—might be contributing to high cash holdings. Our empirical analysis on a panel of Japanese firms confirms that improving corporate governance would help unlock corporate savings. The main policy implication of our analysis is that comprehensive corporate governance reform should be a key component of Japan’s growth strategy.
Keywords:
WP; firm; cash holding; holding; cash; Japan; corporate cash holdings; corporate governance; vestee company; governance index; company disclosure; governance attributes covering; Currencies; Market capitalization; Stocks
Cover IMF Working Papers
Unforeseen Events Wait Lurking: Estimating Policy Spillovers From U.S. to Foreign Asset Prices
Mr. Tamim Bayoumi
and
Mr. Trung T Bui
Event studies are used to analyze the impact of U.S. financial, fiscal, and monetary policies from US to foreign asset prices across a range of G20 countries and Switzerland. The initial announcement that the Administration supported tighter regulation of banks led to a generalized fall in advanced economy bank shares compared to local equity markets. For later Dodd-Frank announcements, however, falls in U.S. bank equity prices were accompanied by increases in U.K. and Swiss valuations, implying a potential for regulatory arbitrage. Turning to macro policies, the 2008/9 fiscal and monetary stimulus packages generally supported foreign activity, while the impact of similar stimulus in 2010 is less clear.
Keywords:
WP; yield; price; Event studies; policy announcements; interntational asset price transmission; equity price; fed funds rate; equity return; treasury yield; excess return; market condition; yields matter; equity price indicator; bank excess return; Treasury yield; Emerging and frontier financial markets; Bond yields; Stocks; Unconventional monetary policies; Asset prices; Global; Europe; Africa
Cover Staff Discussion Notes
Contingent Capital: Economic Rationale and Design Features
Ceyla Pazarbasioglu
,
Ms. Jianping Zhou
,
Mrs. Vanessa Le Lesle
, and
Michael Moore
The causes of the global financial crisis were multi-faceted but revealed still unresolved weaknesses in national and international financial oversight and resolution frameworks. In particular, many governments in the crisis-hit countries had to provide unprecedented levels of support to contain the crisis and protect financial stability. These interventions have not only contributed to a significant increase in sovereign exposures but, in many countries, they have also risked weakening market discipline and worsening moral hazard.
Keywords:
SDN; capital; equity capital; share price; capital ratio
Cover IMF Working Papers
Financial Frictions, Investment, and Institutions
Yishay Yafeh
,
Mr. Kenichi Ueda
, and
Mr. Stijn Claessens
Financial frictions have been identified as key factors affecting economic fluctuations and growth. But, can institutional reforms reduce financial frictions? Based on a canonical investment model, we consider two potential channels: (i) financial transaction costs at the firm level; and (ii) required return at the country level. We empirically investigate the effects of institutions on these financial frictions using a panel of 75,000 firm-years across 48 countries for the period 1990 - 2007. We find that improved corporate governance (e.g., less informational problems) and enhanced contractual enforcement reduce financial frictions, while stronger creditor rights (e.g., lower collateral constraints) are less important.
Keywords:
WP; external finance; rate of return; product market; Financial Friction; investment; institution; corporate governance; creditor rights; adjustment cost; required rate of return; inflation rate; investment decision; investment efficiency; cash flow; replacement cost; debt cost; investment adjustment cost; investment literature; costs of investment; Inv. Adj. cost; Financial frictions; Competition; Commodity markets; Stocks; Global
Cover IMF Working Papers
The Impact of the Regional Cross-Listing of Stocks on Firm Value in Sub-Saharan Africa
Olatundun Janet Adelegan
This paper examines the impact of regional cross-listing on stock prices. The sample consists of sub- Saharan African firms that have cross-listed during the period 1992-2008. Using event study methodology, the study finds positive abnormal returns around the date of the regional cross-listing of stocks. The positive announcement period effect, together with the normal post cross-listing performance, shows that regional cross-listing increases firm value. Overall, this provides evidence that firms benefit from listing outside their home market and need to be taken into consideration by SSA country authorities as they seek a regional approach to stock market development. Thus, policy makers of both the countries of primary listing (home country) and secondary listing (host country) need the right policy handles to conceptualize, facilitate and steer regional cross-listing efforts by firms. Through complementary policy-based efforts, policy makers can set the stage for regional cross-listings and harness the numerous related benefits.
Keywords:
WP; company; stock market; listing
Cover IMF Working Papers
The Equity Premium Puzzle, Ambiguity Aversion, and Institutional Quality
Mr. Abbas Mirakhor
and
Mr. S. Nuri Erbas
With cross-section data from 53 emerging and mature markets, we provide evidence that equity premium puzzle is a global phenomenon. In addition to risk aversion, equity premium may reflect ambiguity aversion. We explore the sources of equity premium using some pertinent fundamental independent variables, as well as the World Bank institutional quality indexes and other proxies for the degree of ambiguity in the sample countries. Some World Bank and other indexes are statistically significant, which indicates that a large part of equity premium may reflect investor aversion to ambiguities resulting from institutional weaknesses.
Keywords:
WP; equity premium; stock return; asset return; return differential; equity returns up; Risk and Knightian Uncertainty; Ambiguity Aversion; Stocks; Stock markets; Emerging and frontier financial markets; Market capitalization; Securities markets; Global
Cover IMF Working Papers
Asian Equity Markets: Growth, Opportunities, and Challenges
Mr. Charles Frederick Kramer
,
Miss Catriona Purfield
,
Ms. Hiroko Oura
, and
Andreas Jobst
Asian equity markets have grown significantly in size since the early 1990s, driven by strong international investor inflows, growing regional financial integration, capital account liberalization, and structural improvements to markets. The development of equity markets provides a more diversified set of channels for financial intermediation to support growth, thus bolstering medium-term financial stability. At the same time, as highlighted by the May-June 2006 market corrections, the increasing role of stock markets potentially changes the nature of macroeconomic and financial stability risks, as well as the policy requirements for dealing with these risks.
Keywords:
WP; market; Singapore; U.S. dollar; Equity markets; Asian financial markets; financial integration; financial stability; international capital markets; market integration; cash market activity; market liquidity; Hong Kong SAR market; market infrastructure; equity price; market openness; asset price fluctuation; market development; market liberalization; market downturn; market reaction; Stock markets; Stocks; Emerging and frontier financial markets; Asset prices; Mutual funds; Asia and Pacific; Global; Africa; Middle East