Volume 24, Issue 2 pp. 1-71 (2016)
Mansor Isa1 & Siew-Peng Lee2
2Universiti Tunku Abdul Rahman
Abstract: This study examines the performance of selected government-linked companies (GLCs) versus non-GLC matching firms, during the period 2008-2013. Our sample of GLCs is drawn from the list contained in the GLC Transformation Program of the Government of Malaysia. Three performance measures are used – ROA, ROE and Tobin’s Q ratio. Two methods of analysis are performed: univariate analysis and multiple regressions. The results strongly indicate that GLCs perform worse than their non-GLC counterparts in all performance measures and in both univariate and multivariate tests. The performance of both GLCs and non-GLCs is found to be negatively related to leverage and board size. Further, non-GLCs performance is also found to be related to firm size and non-duality.
Do Changes in Index Composition Affect the Stock Prices and Trading Volume?
The Case of a Shariah-Compliant Index in Malaysia
Sin-Huei Ng1 & Xing Zhu2
1Faculty of Business, Communication & Law, INTI International University
2WUYIGE Certified Public Accountants LLP
Abstract: We investigate the effects of index revision on (i) stock performance as measured by stock prices movement and, (ii) stocks trading volume based on FTSE Bursa Malaysia EMAS Shariah Index. Based on the sample size of stock additions and deletions from 2007 to 2014, our findings indicate that the effects are significant on both the prices and trading volume. However, the effects on stock prices become insignificant in the long term in our sub-sample of stock additions with all newly added stocks without duplicated firms, firms that are added in or deleted from the same index more than once. This could be due to the reason that investors may not be familiar with these newly added stocks and as such would remain hesitant to purchase them despite the inclusions of the stocks to the index. Our findings also show that both the stock additions and deletions have a positive effect on trading volume in both the short and long runs. This is in contrary to the prediction of liquidity cost hypothesis that deletions could result in lower liquidity which leads to diminished trading volume in the long run. It is likely that investors in general have pessimistic expectations toward the deleted stocks; they were scrambling to sell those shares even a long time after the “change day”. Overall, our results imply that investors who are concerned with Shariah-compliant investments should monitor and be aware of the stock additions and deletions in the Shariah-compliant index to rebalance their investment portfolios from time to time to improve their investment returns, both in the short run and long run.
Wei Theng Lau1, Siong Hook Law1, Annuar Md Nassir2 & Tamat Sarmidi3
1Department of Economics, Faculty of Economics and Management, Universiti Putra Malaysia
2Department of Accounting and Finance, Faculty of Economics and Management, Universiti Putra Malaysia
3School of Economics, Department of Economics, Faculty of Economics and Management, Universiti Putra Malaysia
Abstract: This study examines the role of cash flow in the financial leverage-stock return nexus in Bursa Malaysia. The analysis, as conducted, is based on 12 sectors, and covers a sample of firms from the period 1986-2012. Panel regressions show that industry-specific analysis matters due to various marginal effects of leverage conditional on cash flow across sectors. Data relating to cash flow from operating activities, cash flow for capital expenditure, and free cash flow are employed. The results suggest that each adopted cash flow exhibits an important role in affecting the leverage impact on returns in most of the sectors. In most circumstances, leverage is deemed counter-productive under the existence of cash flow. The results are robust to market and book measures of leverage, net or inclusion of cash position, and to dynamic estimation. The conditional leverage impacts remain robust even though the firm effects and time effects are present in the model specification as controls.
Tze-Haw Chan1, Jeng-Hoong Woon2 & Ruhani Hj. Ali1
1Graduate School of Business, Universiti Sains Malaysia
2Intel Technology Sdn Bhd, Penang, Malaysia
Abstract: This study assesses the housing bubbles and cyclical linkages of housing prices across ten APE, the US and UK from1990Q1-to2013Q4. The sequential unit root tests (SADF and GSADF) have detected multiple and periodically collapsing bubbles for most economies (except Japan and Thailand), which occurred before the Asia Financial Crisis, during the 2000s boom and after the 2008 subprime crisis. Analysis also reveals that APE housing prices are characterized by comparable cyclical pattern and the cycles are closely linked. Domestic markets are vulnerable to regional and global shocks. The finding may contradict the efficient market hypothesis but the real time feature of the bubble tests makes it appealing to policy makers for early detection and correction of market failure. As for stakeholders, new investment strategies are essential in portfolio diversification. Overall, our study offers adequate instruments for future diagnosis of housing prices. The outcome provides fundamental elements of an early warning system against economic instability.
Updated on 30 December 2016