Environmental policies, national culture, and stock price crash risk: Evidence from renewable energy firms

This study investigates the impact of country-level environmental performance and national culture on the stock price crash risk of renewable energy firms. Employing a large sample of 626 renewable energy firms across 31 countries, we find a significant nonlinear relationship between country-level environmental performance and crash risk. National culture dimensions are found to strongly predict the crash risk of renewable energy firms, particularly after the global financial crisis. On the contrary, national culture dimensions and environmental policies are observed to not exert any significance in explaining the crash risk of fossil fuel firms. Our results are robust with respect to alternative measures of stock price crash risk and the endogeneity of national culture dimensions. Overall, the findings of this paper contribute to the environmental economics literature by providing new evidence regarding the role of societal and environmental factors in explaining the stock price crash risk of energy firms

Market reaction to grouping equities in stock markets: An empirical analysis on Borsa Istanbul

The main aim of this study is to investigate the market reaction to stock grouping announcements in Borsa Istanbul which requires stocks to be classified into groups “A”, “B” and “C” according to their market capitalization and floating rates. By utilizing event study analysis, our results suggest that grouping announcements have significant effect on stock prices and trading volume. The event day positive (negative) relationship between abnormal return and volume for the upgraded (downgraded) stocks supports the downward sloping demand curve hypothesis. Moreover, findings also suggest that stocks which are upgraded to Group A are exposed to more attention which is in line with the attention hypothesis. The reverse is valid for the downgraded firms. We find no evidence of price reversals and long-term symmetrical liquidity effect which lead us to reject price pressure and liquidity hypotheses. Finally, we reach controversial evidence for the information hypothesis

Momentum or market? Determinants of large stock price changes in an emerging market

The aim of this study is to investigate the determinants of large price changes in Turkey. We also provide additional evidence on determinants of large price changes in different macroeconomic environments, specifically on the pre-crisis and post-crisis periods. Using recurrent event analysis with stratified observations and frailty effects, our findings suggest that momentum has a significant impact on large price changes during both pre-crisis and post-crisis periods. However, the impact of market is more significant on the estimation of large price declines in the pre-crisis period and of large price increases in the post-crisis period. Additional findings suggest that liquidity and market-to-book ratio have positive, firm size has a negative impact on likelihood of large price changes regardless of the direction of the stock price change and macroeconomic environment. Findings of this study provide new insights into the understanding of large price changes in an emerging market

Corporate cash holdings in the oil and gas industry: The role of energy directives

With the implementation of energy directives and increasing competition among the market players, energy firms face more uncertainty than past. As being one of the most prominent factors for energy firms, industry-specific regulations and directives related to the energy security and climate change have a considerable impact not only on their performances but also on their corporate strategies. In this chapter, we investigate the impact of the energy directives on the corporate cash holding decisions of the energy firms in Europe. Using a large number of firms and a variety of econometric approaches, our findings suggest that there are significant differences among countries in terms of cash holding decisions and the impact of energy directives. We find that the energy firms in the Northern and Western Europe increase their cash holdings as a buffer against the unexpected cash shortages with the implementation of the Second and Third Energy Directives. However, directives do not have any impact on the cash accumulation of the energy companies in the UK and Eastern Europe. Our results also suggest that speed of adjustment toward the target cash position for the energy firms in Eastern Europe (Northern Europe) decreases (increases) with the implementation of the Second and the Third Energy Directives. Overall, the results suggest that energy directives have a strong influence on the energy firms in Northern, Western, and Eastern Europe, but firms in the UK are less sensitive to the changes in the industry dynamics in terms of cash accumulation and the speed of adjustment toward the target cash position. The findings of this study shed important lights on how industry-specific regulations affect the cash holding decision of energy firms, which is often a neglected issue in the energy economics

Market Reaction to Grouping Equities in Stock Markets: An Empirical Analysis on Borsa Istanbul

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The impact of the global financial crisis on corporate cash holdings: Evidence from Eastern European countries

This study investigates the impact of the global financial crisis on the determinants of corporate cash holdings and adjustments towards target cash levels using a sample of Eastern European firms. Employing panel fixed effects and GMM estimations, the results reveal that firm-level determinants of cash holdings significantly differ for pre- and post-crisis periods. Moreover, we find significantly lower adjustment speed to attain the optimal cash level in the post-crisis period. Our results are robust to correction for endogeneity. These results hold important implications for Eastern European firms, which are significantly afflicted by the global financial crisis in terms of liquidity shortage and limited financial flexibility

An Investigation on Early Voluntary Withdrawals from Individual Retirement Accounts: An Empirical Study on an Emerging Market

Early withdrawals from individual retirement accounts are one of the main problems of pension companies in both developed and emerging countries. The aim of this study is to identify the potential reasons behind decisions to withdraw early from the individual retirement system in Turkey. Using Cox proportional hazards model, we find that there is a significant negative relationship between financial literacy and withdrawal probability. Our results reveal that men and younger individuals are more likely to make an early withdrawal. We also find that individuals who experience liquidity constraints and income shocks tend to withdraw their contracts earlier. Further analysis suggests that the effect of variables remarkably changes among different subgroups. We believe that our findings will assist both pension managers and policymakers to design better retirement plans and to take steps to prevent voluntary withdrawals in the long term. © 2017 The International Association for the Study of Insurance Economics

Understanding the investment behavior of individual investors: An empirical study on forex markets

The FOREX market has become a popular ground amongst all kinds of market players. The leverage transactions of the market that may generate higher profit levels with low capital/investments make it very attractive for the individual risk takers. The research investigates the trading behavior of FOREX investors relying on the survey data collected from 167 Turkish investors in 2019. Within the scope of the research, the authors evaluate whether and to what extent behavioral factors, namely demographic characteristics; personal characteristics such as personality traits, love of money, and biases like disposition effect influence investment performance. The results reveal that among the personality traits, openness to experience and conscientiousness have a positive impact while disposition effect and love of money have a negative impact on the performance of investors. Additional analysis suggests that the effects of personality traits and biases on trading performance remarkably change among subgroups of investors regarding their income level. © 2020, IGI Global