No abstract

Stock price synchronicity since the adoption of International Financial Reporting Standards (IFRS) has been significant due to its strong relationship with the economic development and capital market stability of a country. Using data from 2006-2011, the study examines whether the mandatory adoption of IFRS reduces stock price synchronicity in the Asian context. The study utilizes a sample of 1,800 firm-year observations for firms in four Asian markets-China, Hong Kong, Israel, and the Philippines-where IFRS have been mandatory since 2009. The empirical model, relating to stock price synchronicity with the adoption of IFRS, and other firm-specific control variables were analysed using both univariate and multivariate techniques. Different types of panel data estimates were used and compared so as to interpret the results with the best-suited parameters for different data sets for different markets. The empirical results support the argument that, for all four markets considered, IFRS adoption improves the information environment through the capitalization of firmspecific information into stock prices, thereby reducing the stock price synchronicity. Along with IFRS adoption, other firm-specific control variables are found to have significant influence on stock price synchronicity, such as cross-listings in foreign stock exchanges in China and Philippines, the Herfindahl index in Hong Kong, and the percentage of foreign sales in Israel.

The present study analyzes the trading activity of Indian mutual funds and investigates whether Indian mutual fund managers are engaged in herding behaviour. Results are compared with previous studies in mature as well as developing markets to determine the level of maturity of the Indian capital market. Measure of herding developed by Lakonishok et al. (1992) has been used. The study found strong evidence of herding in the overall sample. Managers herd primarily when they trade in large capitalization stocks or stocks that belong to the most famous indices. The herding effect seems to affect both purchases and sales of stocks. The level of herding is more in Indian stock market as compared to developed markets. Furthermore, the Indian mutual funds tend to herd more often when purchasing than when selling a stock, and when trading large stocks. The study will contribute to the discussion regarding market efficiency and traditional asset pricing models validity. Evidence on herding by institutional investors, could explain whether there are different types of

The present study examines whether adoption of IFRS reduces Cost of equity Capital for firms in Asia. The sample consists of firms from four Asian Countries, namely China, Hong Kong, Israel and Philippines, where IFRS has been made mandatory. Data for six years covering the period from 2006-2011 has been taken for analysis. Different types of panel data estimates were used and compared so as to interpret the results with the best suited parameters for different data sets for different countries. The results vary for different countries. The firms in Hong Kong and Philippines get benefit from the reduction in their cost of equity capital after adopting IFRS, but for firms in China and Israel cost of equity capital increased. It is also evident from the study that other firm specific control variables have no impact on cost of equity capital. The study contributes to the understanding of economic consequences of adopting IFRS across Asian countries. The findings would be important not only to countries that have already adopted IFRS, but also to countries that are in the process of adopting the standard. The outcomes will have important implications for the regulators, practitioners, academicians and auditors, as well as end-users of financial statements.

Policymakers in developing and emerging countries are facing higher risk that is related to natural disasters in comparison to developed ones because of persistent problem of supply-side bottleneck for disaster insurance. Additionally, lower insurance consumption, higher disaster risk, and high income elasticity of insurance demand have worsened the loss consequences of natural disaster in these markets. In this context, current study for the first time argues that the supply side bottleneck problem has its origin in peculiar pattern of disaster consumption owing to memory cues. The study finds that relatively higher frequency of natural disasters acts as a negative memory cue and positively impacts insurance consumption. On the other hand, a relatively lower frequency of natural disasters adversely impacts insurance consumption in the background of variation in risk aversion behavior. For this purpose, current study has based its work on Mullainathan (2002), which builds its argument around memory cues.