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Empirical Corporate Finance: Opportunities and Challenges
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Empirical Corporate Finance: Opportunities and Challenges

A special issue of Journal of Risk and Financial Management (ISSN 1911-8074). This special issue belongs to the section "Sustainability and Finance".

Deadline for manuscript submissions: closed (31 July 2022) | Viewed by 13897

Special Issue Editors

Dr. Xiaofei Pan

E-Mail Website
Guest Editor
Faculty of Business, School of Accounting, Economics and Finance, University of Wollongong, Northfields Ave., Wollongong, NSW 2522, Australia
Interests: empirical corporate finance; political economy; financial institutions/bank lending; emerging markets
Dr. Philip Sinnadurai

E-Mail Website
Guest Editor
Department of Accounting and Corporate Governance, Macquarie Business School, Macquarie University, Balaclava Rd, Macquarie Park, NSW 2109, Australia
Interests: agency theory; corporate governance; capital markets research; earnings quality and disclosure policy; Southeast Asia

Special Issue Information

Dear Colleagues,

This Special Issue focuses on the broad topic of “Empirical Corporate Finance” and welcomes studies using novel methods.

The recent public health crisis and climate risk bring both opportunities and challenges to the corporate sector, and it is critical to understand how firms reshape their policies post-crisis or in response to mitigating the climate risk. This will also advance our knowledge about corporate sustainability in the long-term.

This Special Issue invites studies in all areas of finance, such as green finance, financial market investment and hedging, risk management, enhancing corporate governance, and changing policy designs, which can help us to gain a better understanding of this issue.

Dr. Xiaofei Pan
Dr. Philip Sinnadurai
Guest Editor

Manuscript Submission Information

Manuscripts should be submitted online at www.mdpi.com by registering and logging in to this website. Once you are registered, click here to go to the submission form. Manuscripts can be submitted until the deadline. All submissions that pass pre-check are peer-reviewed. Accepted papers will be published continuously in the journal (as soon as accepted) and will be listed together on the special issue website. Research articles, review articles as well as short communications are invited. For planned papers, a title and short abstract (about 100 words) can be sent to the Editorial Office for announcement on this website.

Submitted manuscripts should not have been published previously, nor be under consideration for publication elsewhere (except conference proceedings papers). All manuscripts are thoroughly refereed through a single-blind peer-review process. A guide for authors and other relevant information for submission of manuscripts is available on the Instructions for Authors page. Journal of Risk and Financial Management is an international peer-reviewed open access monthly journal published by MDPI.

Please visit the Instructions for Authors page before submitting a manuscript. The Article Processing Charge (APC) for publication in this open access journal is 1400 CHF (Swiss Francs). Submitted papers should be well formatted and use good English. Authors may use MDPI's English editing service prior to publication or during author revisions.

Keywords

  • corporate governance
  • financial markets
  • financial and investment policies
  • green finance
  • risk management
  • sustainability

Published Papers (5 papers)

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Research

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15 pages, 335 KiB  
Article
Understanding Post-Privatisation Performance of Statutory Bodies Subject to Government Shareholding—A Suggested Theoretical Framework, for Malaysian Researchers
by Philip Sinnadurai and Susela Devi
J. Risk Financial Manag. 2022, 15(5), 228; https://doi.org/10.3390/jrfm15050228 - 23 May 2022
Cited by 1 | Viewed by 1893
Abstract
The purpose of this concept paper is to suggest a theoretical framework for understanding the post-privatisation performance of statutory bodies, subject to government shareholding. We identify a suitable model, from the analytical economics literature. We argue that this model is a manifestation of [...] Read more.
The purpose of this concept paper is to suggest a theoretical framework for understanding the post-privatisation performance of statutory bodies, subject to government shareholding. We identify a suitable model, from the analytical economics literature. We argue that this model is a manifestation of agency theory. Our proposed framework for using this theory is replete with examples from Malaysia. We conclude that in Malaysia, the principal determinant of whether government subsidisation enhances or erodes shareholder wealth is the level of government shareholding. We also predict that in Malaysia, the relation between shareholder wealth and government shareholding follows an “inverted U” shape. However, the turning is likely to vary, cross-sectionally and temporally. We believe that the framework presented within this paper can be used to understand empirical results reported by other Malaysian studies into the shareholder wealth effects arising from economic policies featuring close co-operation between the public and private sectors. Full article
(This article belongs to the Special Issue Empirical Corporate Finance: Opportunities and Challenges)
17 pages, 5508 KiB  
Article
Simulation-Based Business Valuation: Methodical Implementation in the Valuation Practice
by Dietmar Ernst
J. Risk Financial Manag. 2022, 15(5), 200; https://doi.org/10.3390/jrfm15050200 - 26 Apr 2022
Cited by 8 | Viewed by 3870
Abstract
The simulation-based company valuation values a company on the basis of the risks actually present in the company without having to derive them from the capital market data. The simulation-based company valuation takes into account the market imperfections, such as the probability of [...] Read more.
The simulation-based company valuation values a company on the basis of the risks actually present in the company without having to derive them from the capital market data. The simulation-based company valuation takes into account the market imperfections, such as the probability of insolvency or the lack of diversification, and fulfils the legal requirements and auditing standards for a company valuation. The simulation-based company valuation is an alternative to the CAPM-based company valuation, which, under the assumption of perfect capital markets, derives the risks through capital market comparisons. A simulation-based business valuation has many advantages and is particularly suitable for valuing medium-sized companies, start-ups, companies in a crisis, and for integrating country-specific risks into business valuations. Due to the internationally widespread use of the CAPM, a simulation-based company valuation is still rarely used in practice. This article shows which valuation formulas are necessary for the application of a simulation-based company valuation. These are used for both the certainty equivalent method and for the risk premium method. In a concrete and valuation example, the simulation-based business planning and company valuation is carried out, and the derived valuation formulas are applied in a way that allows a transfer to concrete valuation cases in practice. It is shown that the certainty equivalent method and the risk premium method lead to identical company values. Full article
(This article belongs to the Special Issue Empirical Corporate Finance: Opportunities and Challenges)
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14 pages, 517 KiB  
Article
Intended Use of IPO Proceeds and Survival of Listed Companies in Malaysia
by Siti Sarah Alyasa-Gan and Norliza Che-Yahya
J. Risk Financial Manag. 2022, 15(3), 145; https://doi.org/10.3390/jrfm15030145 - 18 Mar 2022
Cited by 2 | Viewed by 3113
Abstract
In the context of Malaysian companies’ survival, the potential role of intended use of proceeds as an influential factor remains unfamiliar. This study examines the link between the intended use of IPO proceeds and the survival of 423 Malaysian listed companies over the [...] Read more.
In the context of Malaysian companies’ survival, the potential role of intended use of proceeds as an influential factor remains unfamiliar. This study examines the link between the intended use of IPO proceeds and the survival of 423 Malaysian listed companies over the period of 2000–2014. This study distinguishes the use of IPO proceeds into three segregations: growth opportunities, debt repayment, and working capital. Employing the Accelerated Failure Time (AFT) survival model, the overall evidence shows a statistically significant effect of the intended use of IPO proceeds for growth opportunities and debt repayment on companies’ post-IPO survival. Furthermore, company survival was found to be consistently improved when they allocated less than 50% of their IPO proceeds, regardless of the purposes (growth, repay debt or general). These results highlight the importance of the intended use of IPO proceeds on the survival of newly listed companies, and provide insights for policymakers on the management of IPO proceeds for long-term survival. Full article
(This article belongs to the Special Issue Empirical Corporate Finance: Opportunities and Challenges)
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24 pages, 417 KiB  
Article
Government Subsidisation and Shareholder Wealth Impact: Evidence from Malaysia
by Philip Sinnadurai, Ravichandran Subramaniam, Susela Devi and Kyungyoung Ko
J. Risk Financial Manag. 2021, 14(9), 396; https://doi.org/10.3390/jrfm14090396 - 25 Aug 2021
Cited by 4 | Viewed by 2105
Abstract
This paper investigates the shareholder wealth impact of government investment in listed companies (and by extension, government subsidisation of those companies), using data from Malaysia. We distinguish two overlapping categories of government-related investors: those whose principal mission relates to economic policy and those [...] Read more.
This paper investigates the shareholder wealth impact of government investment in listed companies (and by extension, government subsidisation of those companies), using data from Malaysia. We distinguish two overlapping categories of government-related investors: those whose principal mission relates to economic policy and those whose principal mission relates to social policy. The methodology entails Ordinary Least Squares regressions. There are two dependent variables measuring management success at generating shareholder wealth: an intrinsic value surrogate and return on equity. The final sample comprises 1732 company–year observations from the investigation period 2011–2014. The evidence indicates that companies subject to shareholder by a government-related investor with a social (economic) policy mission are more (less) successful at generating wealth than companies without any government shareholding at all. The findings indicate that for companies subject to ownership by government investors with a mission related to economic policy, government subsidies are wealth-enhancing, subject to diminishing marginal returns beyond a threshold level of government shareholding. The research design reflects adaptations to the Malaysian institutional setting via choice of control variables and usage of data from a leading Malaysian equity analyst. Full article
(This article belongs to the Special Issue Empirical Corporate Finance: Opportunities and Challenges)

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8 pages, 279 KiB  
Concept Paper
“Empirical Corporate Finance: Opportunities and Challenges”—Editorial Synthesis of the Special Issue
by Philip Sinnadurai
J. Risk Financial Manag. 2022, 15(9), 377; https://doi.org/10.3390/jrfm15090377 - 25 Aug 2022
Cited by 2 | Viewed by 1481
Abstract
This concept paper synthesises the special issue with an integrated discussion of all four papers published therein, from the viewpoint of the theme of this special issue: opportunities and challenges for future empirical research in corporate finance. The four papers highlight that future [...] Read more.
This concept paper synthesises the special issue with an integrated discussion of all four papers published therein, from the viewpoint of the theme of this special issue: opportunities and challenges for future empirical research in corporate finance. The four papers highlight that future empirical research faces the challenge of acknowledging fundamental paradigms in the literature. These include analytical models of capital structure, agency theory, the literature on Initial Public Offering anomalies and earnings valuation. An opportunity for future empirical research is to use these foundations to contribute to emerging paradigms. The latter include the empirical evidence of the shareholder wealth effects of government investment, managerial overinvestment and the acknowledgement of unlisted entities within capital markets research. Full article
(This article belongs to the Special Issue Empirical Corporate Finance: Opportunities and Challenges)
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