CEO Personal Attributes and Corporate Decisions

This thesis examines the effect of CEOs’ personal attributes on CEOs’ optimistic behaviour and further investigates their effect on corporate leasing and hedging decisions. We integrate behavioural finance with management, leadership and psychological approaches to provide a better understanding of the influence of personal attributes on CEO optimistic behaviour and decision making. By investigating 248 CEOs who worked with the UK FTSE 100 firms from 2000 to 2013, we find that CEO personal attributes (traits, skills & experiences, and networking) do cultivate CEOs’ optimistic behaviour (acquisitiveness in the Mergers and Acquisitions (M&A) market). CEO personal traits that were examined in this study are age, gender, nationality and marital status. We find (chapter 2) that for CEO personal traits; younger, male, married and UK nationality CEOs are likely to be optimistic. CEO skills and experiences (e.g. their educational background (MBA, or PhD holder), founder status, financial literacy, duality, tenure as CEO, and emoluments) have also been found to have significant positive relationships with CEO optimism. In the case of CEO networking attributes, we examine CEOs’ internal networking (tenure with the firm, and internal promotion), and CEO external networking ties (external directorships, and social networking prestige) and find that CEO networking ties have a significant positive influence on triggering CEO optimistic behaviour. In addition, we propose three personal attributes indexes, namely Traits Index (TI), Skills and Experiences Index (SEI), and Networking Index (NI). Once again all the indexes have a significant influence on cultivating CEO optimistic behaviour. This thesis adds to the growing literature on behavioural finance by proposing an alternative proxy to managerial optimism (chapter 2) – the CEO Optimism Index (CEOOI) - and by investigating the influence of CEOOI on corporate decisions such as corporate leasing (chapter 3) and hedging decisions (chapter 4). This study uses manually collected information relating to Mergers and Acquisitions, Stock Option exercise behaviour, Insider Transaction and CEO personal attributes. In addition, we also manually collected data on operating lease, finance lease and total lease for corporate leasing analysis (chapter 3) and the derivative instruments data for a study of corporate hedging (chapter 4). The results (chapter 3) suggest that optimistic CEOs tend to use more lease financing. This finding is in line with the notion that optimistic CEOs are reluctant to raise external funding by issuing new equity as they believe that the capital market tends to undervalue their firms (Heaton, 2002). Additionally, since optimistic CEOs are highly confident of their own ability to bring in future earnings, they are unwilling to share the potential earnings with new equity holders and avoid this by choosing lease financing (lease is a type of debt). Hedging decisions results (chapter 4) indicate that optimistic CEOs employ more financial derivatives to hedge potential firm risks. Optimistic CEOs have high self-confidence, are committed to the firm’s good outcome and believe they themselves can control the firm’s future earnings; hence they use derivative instruments to control and reduce the firm’s cash flow volatility to deliver more predictable outcomes. Our findings provide evidence that CEOs’ personal attributes and optimistic behaviour affected corporate leasing and hedging decisions. Our study suggests that recognizing the presence and importance of CEO personal behaviour will help bridge the gap between the theory and practice of corporate decisions

CFO Attributes and Corporate Risk Management : Evidence from Top 100 Firms in Malaysia

The research aims to investigate the relationship between Chief Financial Officer (CFO) attributes and corporate risk management of the Top 100 Firms in Malaysia. A sample of 8 years from 2012 to 2019 with 704 observations excluding financial firms is used. Corporate risk management is measured by two proxies: hedging decisions and the usage of financial derivatives. The independent variables are CFO attributes (age, gender, education level, professional qualification, tenure, and nationality). This study is controlled with leverage, firm size, profitability, cost of financial distress, and capital expenditure. Panel logistic regression is conducted to analyse the relationship between the CFO attributes and hedging decisions. Based on the main findings, CFO age, gender, education level, and nationality significantly impact corporate risk management. In contrast, CFO professional qualification and tenure do not impact corporate risk management in this study. This research makes a valuable contribution to policymakers by enhancing their understanding of risk management regulations. The study provides crucial insights for Malaysian firms, helping them make informed decisions regarding capital raising, investments, and risk management. Moreover, the findings empower CFOs with valuable knowledge about the relevance of their attributes in effectively managing corporate risk through hedging activities

Impact of Energy Consumption on Economic Growth of Malaysia: Crisis Effect

The study aims to examine the impact of energy consumption on the economic growth of Malaysia by considering the 1997 Asian Financial Crisis and 2009 Global Financial Crisis. Autoregressive distributed lag (ARDL) bounds testing method is adopted to estimate the long run and short run impact for the sample period from 1980 to 2019. Empirical findings show that energy consumption has a positive impact on the economic growth of Malaysia in the long run. Furthermore, the impact of energy consumption on growth intensifies during both financial crisis periods

Does information seeking moderate the relationship between financial loan inclusion and Fintech P2P lending?

This research aims to investigate the moderating effect of information-seeking on the positive relationship between loan inclusion and Fintech P2P lending. It exploits how information-seeking plays an important role in the Fintech P2P loan decision. Unlike previous studies, we use primary data from 281 Fintech P2P borrowers to test the hypotheses. We use robust OLS regression and two-stage least square to estimate our model, and reveal three essential findings. First, loan inclusive (the individuals with traditional loan access) has lower Fintech P2P credit than the loan exclusive (those without traditional loan access). Second, information-seeking behavior would lower the Fintech P2P credit ratio. Lastly, information-seeking significantly moderates the relationship between loan inclusion and loans from Fintech P2P lending. It implies that those loan-exclusive individuals would have less Fintech P2P credit if they have high information-seeking

Board Diversity and Sustainability Reporting: Empirical Evidence from Indonesian Listed Banks

Sustainability reporting has gained a significant attention due to its importance for sustainable development goals. Following the increased concern of sustainability reporting in Indonesian business, this study examines the effect of board of commissioner’s diversity on sustainability reporting in Indonesian listed banks. The study explores the topics by following the concept of agency theory. Our study employs secondary data obtained from the annual and sustainability reports from 2014-2018. By using purposive sampling method, the study generates 210 observations in which the analysis is conducted with panel data regression using STATA statistics software. Our study finds that the sustainability reporting implementation of by Indonesian listed banks is still considerably low. There is also no significant improvement since the release of roadmap for sustainable finance in 2014 that enforce sustainability reporting for banking sector. Panel data regression analysis reveals that board’s gender diversity exhibits positive effect on sustainability reporting. Meanwhile, board’s diversity in nationality, age, and education have no significant effect on sustainability reporting practice. The insignificant effect may be due to the fact that the board is still dominated by of local board members, older board members, and board members with business education background. Based on our findings, we suggest the Indonesia Financial Service Authority (OJK) as the capital market regulator to improve firms' understanding about sustainability reporting and apply higher enforcement of its implementation. The OJK can optimize the role of board diversity as it has not contributed significantly to improving sustainability reporting practice. Further, future studies can be improved by employing mixed method by combining quantitative and qualitative analyses and also extending the coverage of the study

HERDING BEHAVIOR IN VOLATILE MARKET REGIMES: AN IN-DEPTH ANALYSIS OF COINS, TOKENS, PANDEMIC, PENNY, AND PRICEY CRYPTOCURRENCIES

This study comprehensively analyzes herding behavior in the cryptocurrency market. First, we conduct an in-depth investigation of herding behavior in the overall cryptocurrency market. Second, we form several groups of cryptocurrencies according to their characteristics and analyze whether each group behaves similarly in volatile market regimes. Third, we investigate whether herding existed in each cryptocurrency group before and during the COVID-19 pandemic. Using a sample of 227 cryptocurrencies constituting nearly 95% of market capitalization, we reveal that herding behavior was absent in the overall sample and sub-samples comprising cryptocurrency groups. Further, the anti-herding behavior implies a contrarian response to the crowd. This anti-herding can be explained from two views: rational behavior of taking profit from market irrationality and irrational behavior due to fear or recency bias

Impact of Government Expenditure, Exchange Rate and Unemployment Rate on Economic Growth of Malaysia

The objective of the study is to investigate the association between government expenditure, exchange rate and unemployment rate on economic growth of Malaysia from 1988 to 2017. All variables in the model are cointegrated with two cointegrating vectors and implies that long-run relationship exist. Granger Causality based on Vector Error Correction Model (VECM) revealed an unidirectional short run causality from government expenditure to economic growth, economic growth to unemployment, unemployment to exchange rate and unemployment to government expenditure. Policies such as fiscal policy and exchange rate policy need to be implemented by policy makers in Malaysia to ensure empowering economic growth

Impact of Trade Liberalization on Economic Growth in Japan: Autoregressive Distributed Lag Model (ARDL)

The objective of this study is to identify the impact of trade liberalization on economic growth in Japan. Annual data are utilized from 1985 to 2016 via on Autoregressive Distributed Lag Model (ARDL) Cointegration test and Vector Error Correction Model (VECM) based Granger causality. The findings from unit root tests revealed that all the variables of mixed results whereby they are integrated at I(0) and I(1) and could proceed to the ARDL Cointegration test. Furthermore, all the variables have long-run relationships between trade openness, investment, education, inflation and economic growth in Japan. However, this study found a significant positive of trade openness and investment on economic growth in the long run. Lastly, VECM based Granger causality showed some of the causality relationships between variables in the short run for Japan

Portfolio Diversification Benefits of Cryptocurrencies and ASEAN-5 Stock Markets

This paper examines the portfolio diversification benefits in the cryptocurrencies (Bitcoin, Ethereum, Ripple, Litecoin, Stellar and Dash) and ASEAN-5 stock markets (Malaysia, Indonesia, Singapore, Thailand and Philippines). Cointegration and Granger causality tests are used in this study for the period from August 2015 to October 2019. We found evidence of no cointegration among the cryptocurrencies. Thus, the cryptocurrencies market provides an opportunity for the potential benefits from portfolio diversification and hedging strategies. However, cointegration is found between cryptocurrencies and ASEAN-5 stock markets thus indicating limited portfolio diversification benefits in the long-run among these markets. In addition, the results also show that ASEAN-5 stock markets are going towards a greater integration among them which is in congruence with the previous studies. However, in the short-run, Granger causality tests show that Dash, Ethereum, Lite, Ripple and Stellar have no causality relationship with all ASEAN-5 stock markets and no causality is also found between Bitcoin and three of ASEAN-5 stock markets (Malaysia, Singapore and Philippines). Therefore, there still exists an opportunity for portfolio diversification between cryptocurrencies and ASEAN-5 stock markets in the short-run. The findings of this study suggest that crypto-investors, international investors and fund managers can diversify their investments in both cryptocurrencies and the ASEAN-5 stock markets

Environmental, Social, and Governance Performance and Value Creation in Product Market: Evidence from Emerging Economies

Using a unique sample of 13,412 firm-year observations from 19 countries of the emerging economies for the period of 2011 to 2019, we investigate the association between the firms’ environmental, social, and governance (ESG) performance and their value creation in the product market. Specifically, we first used the pooled OLS regression model for panel data as our baseline model and found that ESG performance (as well as its pillars) has a strong positive effect on the future value creation of the firms in the product market. We also conducted some additional analyses using various regression models, as well as adopting multiple tests for endogeneity, and the additional analyses revealed that the results are robust under different scenarios. Overall, the findings of this study highlight the importance of firm-level ESG performance for the value creation of firms in the product market in emerging economies and have theoretical and practical implications for academic researchers, market participants, and government entities in studying, evaluating, and governing firms’ ESG performance and reporting