The time-varying nature of the overreaction effect: evidence from the UK

Previous studies on the overreaction effect in the UK show that prior losers consistently outperform prior winners in the period 1975 to 1990. This paper extends current knowledge by assessing the above phenomenon in the UK market for the period 1987 to 2007. In contrast to earlier research, we produce evidence of a weak presence of the overreaction effect for the latest test period. Further, we show that, after adjusting for size, the overreaction effect almost disappears and any additional excess post-formation return to prior-losers is attributable to market cycles. This study implies that the presence of the overreaction effect in the UK stock market is time-varying and difficult to exploit in practice

Paraconsistent games and the limits of rational self-interest

It is shown that logical contradictions are derivable from natural translations into first order logic of the description and background assumptions of the Soros Game, and of other games and social contexts that exhibit conflict and reflexivity. The logical structure of these contexts is analysed using proof-theoretic and model-theoretic techniques of first order paraconsistent logic. It is shown that all the contradictions that arise contain the knowledge operator K. Thus, the contradictions do not refer purely to material objects, and do not imply the existence of inconsistent, concrete, physical objects, or the inconsistency of direct sensory experience. However, the decision-making of rational self-interested agents is stymied by the appearance of such intensional contradictions. Replacing the rational self-interest axioms with axioms for an appropriate moral framework removes the inconsistencies. Rational moral choice in conflict-reflexive social contexts then becomes possible

The Time-Varying Nature of the Overreaction Effect: Evidence from the UK

Previous studies on the overreaction effect in the UK show that prior losers consistently outperform prior winners in the period 1975 to 1990. This paper extends current knowledge by assessing the above phenomenon in the UK market for the period 1987 to 2007. In contrast to earlier research, we produce evidence of a weak presence of the overreaction effect for the latest test period. Further, we show that, after adjusting for size, the overreaction effect almost disappears and any additional excess post-formation return to prior-losers is attributable to market cycles. This study implies that the presence of the overreaction effect in the UK stock market is time-varying and difficult to exploit in practice

Solvency determinants: evidence from the Takaful insurance industry

This paper contributes to the nascent literature on Takaful by investigating the solvency determinants for Takaful firms in both the Gulf Cooperation Council (GCC) and Malaysian economies. Our main objective is to develop a deeper understanding of the solvency determinants of these firms. Using hand- collected microdata for the period 2011 to 2016 for 52 Takaful firms, we document that firm size and wakalah fees significantly decrease solvency. From a regulatory point of view, this finding underscores that the percentage of wakalah fees should be closely monitored. Moreover, we find that other explanatory variables, including return on assets and the risk retention and investment income ratios, are not significantly associated with solvency. Overall, our results remain robust to many different model specifications. Further analysis indicates significant differences between the GCC and Malaysian Takaful firms. This may be explained by the different stages of financial development in the two markets

Paraconsistent games and the limits of rational self-interest

It is shown that logical contradictions are derivable from natural translations into first order logic of the description and background assumptions of the Soros Game, and of other games and social contexts that exhibit conflict and reflexivity. The logical structure of these contexts is analysed using proof-theoretic and model-theoretic techniques of first order paraconsistent logic. It is shown that all the contradictions that arise contain the knowledge operator K. Thus, the contradictions do not refer purely to material objects, and do not imply the existence of inconsistent, concrete, physical objects, or the inconsistency of direct sensory experience. However, the decision-making of rational self-interested agents is stymied by the appearance of such intensional contradictions. Replacing the rational self-interest axioms with axioms for an appropriate moral framework removes the inconsistencies. Rational moral choice in conflict-reflexive social contexts then becomes possible