Investor sentiment is an important aspect of behavioural finance, which provides explanation of anomalies to the asset’s intrinsic values. Sentiments can easily affect individual investors. Historically, Australia is regarded as rich in resources but poor in capital, and this motivates the paper to further study and compare the effects of investor sentiment on performance returns. Aggregate and cross-sectional effects, as well as predictive regression analysis to forecast the relationships, while controlling for the macroeconomic variables, are used by employing Consumer Confidence Index (CCI) and trade volume as sentiment proxies. Contrary to some studies with aggregate stock markets, it is discovered that in the short term, investor sentiment poses a positive impact with strong predictive power on the forecast of portfolio returns but not so much in the long run, which supports the classical theories of rational investors. In both Australian and New Zealand markets, the sentiment proxies also cannot predict the returns portfolios with dividends in the long/short portfolio and book-to-market ratio long/short portfolio.
This study examine the predictive power of Credit Default Swaps (CDS) and the equity markets on currency exchange rate to determine whether the CDS is a better predictor as compared to the equity markets. Data sets used for the study include the Investment Grade (IG) and High Yield (HY) North American CDS indices, and iTraxx Europe index as a representative of the overall credit market conditions in Europe. The Vanguard Total Bond Market Index is included to see if CDS spread is more powerful information container than the bond market. The S&P500 index is used as controller for the effects of the US equity market and the Vanguard European Stock Index for Europe. ASX200 and NZ50 are chosen to represent the equity market conditions in Australia and New Zealand respectively. The Vector Autoregressive (VAR) model is used to analyze the simultaneous relationships between exchange rates and CDS index spreads. Granger causality test is conducted to determine the causal relationship between currency values and CDS spreads. Variance Decomposition or Forecast error variance decomposition is also used to complement the VAR analysis. The VAR analysis investigates that CDS can better capture the information in the market than other investment instruments such as bond. CDS thus may offer arbitrage opportunities for investors. In addition significant Grange-causality effects were found from IG and HY CDS spreads to currencies, which support the CDS spreads as a leading indicator of the several currencies versus US Dollar even in the financial crisis. The results of variance decomposition indicate that the contribution of the CDS market to the currency market is higher in Australian dollar, implying more carry-trades in the market.
Objective - The study analyzes the agency cost, dividend payments, and ownership concentration compared to Shariah and non-Shariah listed companies. Furthermore, this paper also seeks to examine the efficiency of managers in generating and utilising revenues to pay for operating expenses by comparing shariah and non-shariah compliant companies in determining any occurrences of agency conflicts.
Methodology/Technique – The sampling data were extracted from the Thomson Refinitiv Eikon Database for 5 years, from 2016 until 2020, for 567 Malaysian listed companies with a total of 2835 observations. The research implemented a One-way analysis of variance (ANOVA) to analyse the data.
Findings – ANOVA tests have shown that both Shariah and non-Shariah compliant companies pay dividends to their shareholders on average between 29 percent to 35 percent on returns. Interestingly, the decisions to pay the shareholders show that the shariah-compliant companies are more likely to pay out dividends than their non-shariah counterparts. Revenue generation is also found to be higher by 62 percent. Shariah-compliant companies demonstrate statistically significant higher dividends with better asset usage or lower agency conflicts in Malaysia.
Novelty - This paper is novel as it provides a thorough baseline analysis of the significant difference in agency conflicts, using both proxies, which are the dividend payments and the efficiency ratios, taking into consideration all the industries of the Shariah and non-Shariah listed companies in Malaysia.
Type of Paper: Empirical
J.E.L. Classification: C87, G10, G32, G35
Keywords: Agency conflicts; Shariah and non-shariah public listed companies; dividend and asset utilisation ratio; concentrated ownerships
Reference to this paper should be referred to as follows: Ahmad, D.E.N.A; Banchit, A; Johari, A. (2022). Agency Conflicts, Dividend Payments, and Ownership Concentration in Comparison of Shariah and Non-Shariah Compliant Listed Companies, Acc. Fin. Review, 7(2), 124 – 134. https://doi.org/10.35609/afr.2022.7.2(5)
This paper explores the co-integration and causality relationships amongst the Asian Triangle stock exchange indices. These Asian triangle regions consists of the eight key markets of Shanghai,
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