Effects of regulator's announcements, information asymmetry and ownership changes on private equity placements : Evidence from China
- Authors: Fonseka, Mohan , Colombage, Sisira , Tian, Gao-Liang
- Date: 2014
- Type: Text , Journal article
- Relation: Journal of International Financial Markets, Institutions & Money Vol. 29, no. (2014), p. 126-149
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- Description: •Wealth effect of Chinese PE announcements can be seen on application, approval, and completion.•No significant price response on announcements of withdrawal or rejection of applications.•Market discount, proceeds from private placements, and private-institutional buying systematically influence market reaction.•Influence of announcement effect differs across changes in ownership of investor categories.•Results are consistent with the information and ownership structure hypotheses. In response to the China Securities Regulatory Commission's regulation of private equity placements (PEP) in 2006, this study investigates the impact of the announcements of PEP applications, withdrawals, rejections, approvals, and completions on the returns of the firms that issue private equity (PE) and the factors that influence market reactions to these announcements. The results show that issuing firms experience stock price responses only to the announcements of PE applications, approvals, and completions. The announcement effect is positively related to the market discount, proceeds from private placements, and private institutional buying and ownership changes; and negatively related to government or government institutional buying and changes in the ownership of management buyers.
To what extent do earnings affect the R&D decision of Chinese manufacturing firms?
- Authors: Wang, Yun , Zhai, Yu , Sun, Xiaohua , Colombage, Sisira
- Date: 2020
- Type: Text , Journal article
- Relation: Technology Analysis and Strategic Management Vol. 32, no. 3 (2020), p. 349-362
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- Description: As R&D activities are involved in inherent uncertainty of large investment, high risk and long return periods, earnings, as the main source of internal financing, have been a significant factor of R&D decision in the firms. In contrast to the previous research, this study investigates the impacts of firm’s earnings on R&D decision, in which earnings are measured by the indicators of earnings level, earnings quality and earnings persistence, while separating firm R&D activity into two stages of (i) the decision to undertake R&D activity and (ii) the amount to be invested on innovation activities. We document that earnings level can increase the probability of undertaking R&D activity, but has no effect on R&D investment intensity. Earnings quality and earnings persistence have a promotional effect on both stages of R&D decision. The empirical evidence of the subsamples shows that the impacts of earnings are heterogeneous across different ownership and technology-intensity firms. © 2019, © 2019 Informa UK Limited, trading as Taylor & Francis Group.
Key variables and characteristics of loan loss given default : empirical evidence from 28 provinces in China
- Authors: Zhao, Zhichong , Colombage, Sisira , Chi, Guotai
- Date: 2020
- Type: Text , Journal article
- Relation: Emerging Markets Finance and Trade Vol. 56, no. 11 (2020), p. 2443-2460
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- Description: This article empirically investigates the impact of key variables and characteristics on loan loss given default (LGD) of small farmers using data from 28 provinces in China. The default feature of loans is not only a financial issue and a risk management issue but also an exploration of the loan customers’ default rule. In this study, the key variables were selected using an F-test to identify which ones are critical in credit risk management. Then, we use a t-test to obtain the significant characteristics with an impact on LGD. We found that the 30-35-year-old age group, those living in houses with shared ownership, households with two to four workers, and those whose ratio of annual net income to GDP per capita is between 10 and 20 tend to have higher LGD. These results inform bank lenders and policymakers of the most significant factors that influence loan loss default. ©, Copyright © Taylor & Francis Group, LLC.
The financial system and revenue collection in Malaysia : an empirical analysis
- Authors: Taha, Roshaiza , Colombage, Sisira , Maslyuk, Svetlana
- Date: 2010
- Type: Text , Journal article
- Relation: The Empirical Economics Letters Vol. 9, no. 11 (2010), p.
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Stock market, tax revenue and economic growth : A case-study of Malaysia
- Authors: Taha, Roshaiza , Colombage, Sisira , Maslyuk, Svetlana
- Date: 2010
- Type: Text , Conference proceedings
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- Description: This paper empirically tests Levine's [1] endogenous growth model, which suggests that stock market and tax policy jointly affect economic growth. Following Levine [1], tax or impeding financial market activities have the potential to lower per capita growth rate. Using monthly data from 1980 to 2008, the relationship between tax revenue, stock market as proxies by direct tax revenue and KLCI respectively and economic growth in Malaysia is modeled using the Granger causality and VECM framework. Results support Levine's theory and reveal that over the sample period both tax revenue and stock market affect pattern of economic growth in Malaysia. These findings indicate that strong growth can be achieved through booming of stock market activities and the high revenue collection. Fiscal policy authorities in Malaysia will find these results useful.
Political connections, ownership structure and private-equity placement decision : evidence from Chinese listed firms
- Authors: Fonseka, Mohan , Yang, Xing , Tian, Gao-Liang , Colombage, Sisira
- Date: 2015
- Type: Text , Journal article
- Relation: Applied Economics Vol. 47, no. 52 (2015), p. 5648-5666
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- Description: In contrast with many other countries, Chinese listed firms must obtain approval to make private-equity placements (PEPs) from the Chinese Security Regulatory Commission (CSRC), a state bureau that regulates capital market financing. We analyse the role of political connection (PC) and ownership structures when accessing private equity (PE) market, while investigating the mechanisms through which political ties operate within the regulatory process of PEPs. The findings suggest that PCs do not contribute to the firm's decision to apply for PEPs, but firms with state-ownership demonstrate a higher propensity to apply for PEPs. PC and state-ownership appear to help firms to obtain approval from the CSRC, and these firms are treated more favourably than their rivals without such connections. Politically connected firms spend less time in managing bureaucracy, but PC and state-ownership negatively affect proceeds from the PE market in China. Firms with politically connected directors with professional business backgrounds tend to spend less time managing the CSRC, and these professionals positively affect proceeds from the PE market in China. This study provides important insights for policy-makers, investors, PE issuing firms and security market regulators.
Do investors in Green Bond market pay a premium? Global evidence
- Authors: Nanayakkara, Madurika , Colombage, Sisira
- Date: 2019
- Type: Text , Journal article
- Relation: Applied Economics Vol. 51, no. 40 (2019), p. 4425-4437
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- Description: We examine the pricing difference of Green Bonds (GB) and conventional bonds (CBs) in capital markets worldwide. Credit spread is used to observe whether investors would like to pay a premium for GBs over CBs. This study uses panel data regression with hybrid model to analyse daily observations over the period 2016 to 2017. We employ Option-Adjusted spread (OAS) to measure the credit spreads of bonds while controlling for bond specific, macroeconomic and global factors that influence the spread. With the hybrid model used in the panel data analysis, we were able to capture the fixed-effects of variables in a random effect model. We find that GBs are traded at a premium of 63 basis points (BPS), compared with a comparable corporate bond issue. We find that the green label provides issuers an incentive to raise funds through issuing GBs while providing investors an opportunity to diversify their investments returns. Our findings provide several implications to the major stakeholders driving the GB market to scale up the market to finance the required level of global green investment needs. We stress an urgent need to support the growth of the GB market to achieve sustainable development through mitigating climate change challenges. Abbreviation GB: Green Bond; CB: Conventional Bond; YS: Yield Spread; BPS: Basis Points; OAS: Option-Adjusted Spread; PCSE: Panels Corrected Standard Errors; CPI: Consumer Price Index; GBPs: Green Bond Principles; CBS: Climate Bond Standard.
Does compliance with Green Bond Principles bring any benefit to make G20’s ‘Green economy plan’ a reality?
- Authors: Nanayakkara, Kariyawasam , Colombage, Sisira
- Date: 2021
- Type: Text , Journal article
- Relation: Accounting and Finance Vol. 61, no. 3 (2021), p. 4257-4285
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- Description: We examine the impact and degree of compliance with Green Bond Principles (GBPs) on investor demand for Green Bonds (GBs) in G20 countries by employing cross-sectional regression to analyse data over the period 2007–2016. After controlling for common bond-specific and macroeconomic variables, we find a significant positive impact of higher compliance with principles on investor demand, as measured by bid-ask spread and yield spread. We show that GBs issued by government institutions are able to minimise the adverse effects of low compliance with GBPs and the investor demand for fixed-coupon GBs is higher than float-coupon GBs. © 2020 Accounting and Finance Association of Australia and New Zealand