Financial Market Theory of Development – evidence from Palestine and Israeli Stock Exchanges

This study is compelled by the motivation to find out potential equilibrium and dynamic relationships involving two neighboring stock exchanges - Palestine Stock Exchange (PEX) and Tel Aviv Stock Exchange (TASE). Based upon Financial Market Theory of Development, we attempt to explore the degree of integration between the two exchanges using Engle-Granger Cointegration procedures (1987). Data were collected on monthly basis over sample period from January 1998 till February 2012. The empirical results from bivariate Error Correction Model (ECM) reveal a statistically significant long-term relation between the two exchanges. However, the results from Granger Causality tests indicate absence of short-term relationships between them. To unveil Granger Causality in a dynamic context, we use out-of-sample testing via Impulse-Response Functions (IRF) and Variance Decompositions (VDC.) Interestingly, both tests show that performance of TASE does affect its archrival

The Usefulness of Management Report On Investments Decision-Making In Egypt

The main aim of this study is to investigate the investors’ perceptions on the usefulness of disclosure provided in the Management Report in supporting their investment decisions, in the context of the 2014 new listing rules’ requirements in the Egyptian market. Thus, the users’ preferences were compared with the disclosure level in the MRs prepared by the listed companies in order to understand the level of coherence. Prior literature suggested that the financial crisis in 2008 has highlighted the inadequacy of the financial report in matching the users’ needs, while the narrative and commentary sections in MR can play an important role in maximizing the usefulness of accounting information. A mixed method approach was adopted in accordance with the following steps; In the first step, a survey was carried out by formulating questions that cover both mandatory and voluntary disclosures items in the MR. The targeted sample of respondents included all Egyptian banks and insurance companies (as institutional investors) along with the financial analysts who worked at the stockbrokerage firms. The collected responses consisted of thirty-six of respondents who were working in institutional investors firms, and seventy-eight of respondents who were working as financial analysts. The main findings of the survey revealed that some voluntary information was more useful than the mandatory information, which highlights a gap between the regulation requirements and the users’ information needs. Moreover, the respondents considered the information related to ownership structure to be more important than the information on risks and forward-looking performance, while the information related to board composition, audit committee, and CSR and environmental performance were regarded as less useful items in the MR. In the second step, we analysed 782 MRs that cover five years; two years under the old regulation and three years under the new regulation. This analysis was aimed to compare the users’ needs (as obtained in the previous model) with disclosure level provided in MRs. The findings showed that the general level of disclosure in MR has increased significantly after switching to the new regulation. However, the results indicated that the companies do not fully commit to requirements of the mandatory disclosure, as that listed companies do not disseminate that many of the ‘very useful’ information in MR, even if voluntarily. While the results clearly showed that level of mandatory disclosure has increased after applying the new regulation, the contrast was noticed in the voluntary disclosure. These contrasts in the findings refer to the initial role of regulatory bodies in matching the users’ needs through increasing the extent of mandatory disclosure to include much of the items seen to be very useful to them. Lastly, to provide further understanding, an additional regression model was carried out to examine the impact of firm-characteristics on disclosure level in MRs. The results showed that the presence of state ownership, cross-listing, and manufacturing activities have significant positive impacts on the disclosure provided in MR and its main sections and subsections. On the other hand, the age, size, profitability, and leverage had mixed findings throughout the different sections and subsections of MR

Exploring the effect of terrorist attacks on markets

The aim of this paper is to explore the determinants of terrorist unexpected events and if these events can affect economic markets. Based on the existing literature and the methodologies already been used, our purpose is to draw some attention to specific events, which may create losses to investors or even to countries. Specifically, after a thoughtful consideration of the existing relative studies, we discuss a number of empirical findings concerning the main determinants of terrorism. In particular, religions and especially fanatics is the most common determinant followed by the economic perspective of an attack. We show that the more democratic and developed countries are inclined to decrease the spread on the returns. Relying on these empirical findings, we discuss the implied policy implications and the necessary further research

Exploring the effect of terrorist attacks on markets

The aim of this paper is to explore the determinants of terrorist unexpected events and if these events can affect economic markets. Based on the existing literature and the methodologies already been used, our purpose is to draw some attention to specific events, which may create losses to investors or even to countries. Specifically, after a thoughtful consideration of the existing relative studies, we discuss a number of empirical findings concerning the main determinants of terrorism. In particular, religions and especially fanatics is the most common determinant followed by the economic perspective of an attack. We show that the more democratic and developed countries are inclined to decrease the spread on the returns. Relying on these empirical findings, we discuss the implied policy implications and the necessary further research

EFFECT OF OWNERSHIP STRUCTURE ON FIRM STOCK RETURNS AND FINANCIAL PERFORMANCE:EVIDENCE FROM THE EGYPTIAN STOCK MARKET

The effect of institutional ownership and ownership concentration on the firm’s stock returns and volatility and financial performance has long been an interesting issue in the international business literature. A lot of debate has been going on regarding the relationship between institutional ownership, ownership concentration, returns, volatility and financial performance. The objective of this thesis is to study the effect of institutional ownership and ownership concentration on firm stock returns and financial performance of the listed companies in the Egyptian Stock Exchange. For this purpose, panel data model is employed. The results from the analysis show that institutional ownership has no effect on ex post stock returns as well as ex ante stock returns. On the contrary, institutional ownership represented by top management and individuals have a negative and significant effect on stock volatility, while employee associations have a positive and significant effect. No significant effect is detected on ex ante risk except for employee associations that have negative and significant effect on ex ante risk. In addition, the results show that institutional ownership has no effect on stock liquidity except employee associations and individuals that have a negative and significant effect on stock liquidity. Finally, the results show that institutional ownership represented by companies, holdings and individuals have negative effect on financial performance represented by ROA and ROE. Also, institutional ownership has no effect on debt to equity ratio except banks that have negative and significant effect and employee associations that have positive and significant effect. The results also show that ownership concentration has no effect on ex post stock returns but it has a positive effect on ex ante stock returns. Also, it has no effect on ex post risk but it has a positive effect on ex ante risk. On the other hand, ownership concentration has a negative and significant effect on stock liquidity. Finally, the results show that ownership concentration has no effect on either financial performance represented by ROA and ROE or debt to equity ratio. As such, the thesis makes an important contribution to the literature, since it tests the impact of ownership type and concentration on ex ante returns and volatility of stocks in Egypt, an emerging country that has been ignored in literature. Also, the analysis extends the literature by decomposing institutional ownership to several types. Moreover, it adds two components of volatility, volatility clustering and persistence, testing their effect on ex post and ex ante risk, which is not dealt by previous studies

Volatility spillover and herding in the Middle East and North African stock markets

The first aim of this thesis is to examine the market behaviour of the Middle East North African (MENA) region. This aim is fulfilled by examining the volatility of eight selected markets representing the MENA region using ARCH/GARCH models. Using the volatility estimated using the GJR-GARCH model, the volatility spillover of the MENA region is investigated using the most commonly used index, the Diebold and Yilmaz (henceforth, DY) (2012) index. The sample period from 2003 to 2018 covers several important events that the region experienced, including the Global Financial Crisis, and the Arab Spring. Using monthly data, the spillover is investigated for the full sample, as well as for pre-, during, and post-crisis periods, in order to quantify the effects of different market conditions. Even though the DY framework is the most commonly used approach, one of the criticisms about this approach is its inability to provide the significance levels of the estimates. The second aim of this thesis is to overcome this criticism by implementing the stationary bootstrap technique in order to provide the significance level of the DY estimates. This is important in interpreting the results and increases the reliability of the drawn conclusions. The results show that there are signs of spillover within the MENA region. However, the total spillover is lower than expected given the strong ties between the eight countries, which leads to further analysis of the divided sample to investigate volatility spillover under different market conditions. The ‘pre-crisis’ subsample contains fewer significant spillover indexes than the full sample, indicating that the spillover is possibly due to the volatile period included in the full sample. In the ‘crisis’ subsample the crisis has clearly increased spillover, with a greater number of significant spillover indexes. Meanwhile, in the ‘post-crisis’ subsample the transmissions remain accentuated by the crises experienced within the MENA region.In addition to the examination of the transmission across the MENA markets, this thesis also sheds light on investors’ behaviour in Egypt. The third aim of this thesis is therefore to examine the existence of herding behaviour in the Egyptian stock market. Egypt witnessed the most significant events during the sample period 2005 to 2019. In consideration of the numerous events that took place, the results show evidence of herding originated in first Egyptian revolution period, persisted in the second Egyptian revolution and economic reform period. Surprisingly, no herding is found during the Global Financial Crisis period. Furthermore, as investors may make similar investment decisions as a response to fundamental market information, it becomes necessary to differentiate between intentional and unintentional herding. Using the Fama-French-Carhart risk factors as a representation of the fundamental factors, the results show that, during periods of stress, such as the Arab Spring, the second Egyptian Revolution and the Economic Reform, there is evidence of unintentional herding. After the first Egyptian revolution the investors became more uncertain and continued to herd intentionally and unintentionally during the second Egyptian revolution and economic reform periods

Cryptocurrencies Bandwagon…Fad wave or Investment Asset? Firm Level Analysis of Panel Data in Egypt

The crypto market is growing rapidly and gaining momentum globally. The current study is tackling the impact of the crypto exchanges on the stock market in Egypt. The author consolidated firm level data from DataStream and Cryptocurrency data from CoinDesk to conduct this study over the period 2014-2020. The methodology is based on Fixed Effect and IV-GMM models to study the differential impact across sectors and firm attributes. Our main findings can be highlighted as follows: (a) cryptocurrencies are substitutes to stocks. (b)Two periods are highlighted in the analysis: 2016 post currency devaluation and COVID-19 pandemic, where the adoption was found to increase. (c) There was a sectoral differential aspect, where stocks of sectors exhibiting the highest risk and return were more prone to be substituted by crypto assets (for instance IT and Telecom) as opposed to stable and low risk sectors (for instance Pharma and Healthcare). (d) Finally, from an attributes perspective the most impacted firms are new entrants, largest firms, the ones with high debt financing (especially long-term debt) and with high leverage as well as the most profitable ones. This study provides three main contributions to the current literature. First, it extends the literature of the Firm theory by introducing crypto market variables as an essential determinant for the firm stock prices and market value trends. Second, the study highlights the differential impact across sector attributes and firm inherent characteristics. Finally, the results of the study show that cryptocurrency market plays a significant role in investors’ portfolio decisions, even in developing countries like Egypt

Macroeconomic and Financial Crisis Management in the Southern and Eastern Mediterranean: Diagnosis and Prospects. CEPS Paperbacks. December 2013

The global financial crisis, which started in the summer of 2007 and deepened in the aftermath of the Lehman failure in September 2008, has led to a virtual collapse in economic activity and increased financial volatility worldwide. For the developing countries, the main channel of transmission has been a drop in external transactions, such as trade, financial and capital flows, and remittances. The emerging economies in the southern and eastern Mediterranean have also faced declining economic activity, although there seems to be considerable variation in the relative magnitude and timing. Most of these economies have shown a delayed but more lasting response to the crisis, driven mostly by their close trade and investment ties with the EU and the Gulf Cooperation Council (GCC) countries. This book explores the fiscal, monetary and financial effects of the crisis in the region and provides an in-depth analysis of the fiscal, monetary and banking policies in the post-crisis era, the viability of their exit strategies and the future of reforms in the region. These analyses not only provide a comprehensive comparison between the countries but also provide a solid basis for assessing future economic and financial developments and reforms in the region

Gramsci in Cairo: neoliberal authoritarianism, passive revolution and failed hegemony in Egypt under Mubarak, 1991-2010

Most existing interpretations of the thought of Antonio Gramsci in International Relations and International Political Economy are strongly influenced by the seminal account provided by Cox in the early 1980s. Recovering the hitherto neglected concept of philosophy of praxis, this thesis departs from the 'Coxian orthodoxy' and develops an alternative understanding of Gramsci that sees hegemony as a combination of coercion and consent emerging from the articulation on three overlapping dimensions, respectively involving the interaction of the economic and the political, the international and the national, the material and the ideational. The potential of this approach is illustrated by examining the unfolding of neoliberal economic reforms in Egypt in the past two decades. It is argued that, firstly, the interaction of economic and political factors produced the emergence of a neoliberal authoritarian regime with a predatory capitalist oligarchy playing an ever greater role. Secondly, articulation across different spatial scales brought about a passive revolution managed by the state with the aim of adapting to the globalising imperatives of capital accumulation without broadening political participation. Lastly, the performative power of neoliberalism as an ideology fundamentally reshaped economic policymaking in favour of the rising capitalist elite. This focus on the shift in class relations produced by – and itself reinforcing – neoliberal reforms allows us to understand how the already waning hegemony of the Egyptian regime under Mubarak gradually unravelled. The rise of the capitalist oligarchy upset relations of force both within the ruling bloc and in society at large, effectively breaking the post- Nasserite social pact. Passive revolution witnessed the abdication to the pursuit of hegemony on the national scale, with the attempt of replacing it with reliance on the neoliberal hegemony prevalent on the international scale. The success of neoliberalism as an ideology did not obscure the increasingly inability of the regime to provide material benefits, however marginal, to subaltern classes. Thus, the affirmation of neoliberalism in Egypt corresponded to the failure of hegemony on the national scale

Internal Audit Quality and Financial Performance: A systematic Literature Review Pointing to New Research Opportunities

L’audit interne est depuis longtemps considéré comme un allié du management stratégique. Il donne aux décideurs et aux gestionnaires des informations et des recommandations leur permettant d’initier des actions pour améliorer la performance de l’organisation. Au cours de ces dernières années, l’évolution de l’audit interne a abouti à la création d’un nouveau concept ; il s’agit du concept de la qualité d’audit interne. Le présent article a pour objectif de comprendre le lien entre la qualité d’audit interne et la performance financière et d’en donner un aperçu à travers les recherches universitaires antérieures. Pour ce faire, une revue systématique de la littérature a été réalisée sur la base d’un échantillon de 37 articles scientifiques et thèses de doctorat sélectionnés à partir de plusieurs bases de données et publiés entre 2009 – 2020. Les résultats de cette synthèse montrent que la qualité d’audit interne et la performance financière sont deux domaines de recherche très débattus qui se caractérisent par une hétérogénéité des théories et des méthodes, avec un besoin évident de constituer un modèle universel intégrant les deux concepts. Cet article met également en évidence les insuffisances existantes dans la littérature tout en proposant des pistes pour les recherches futures dans ces domaines. &nbsp