Company liquidity management is connected to working capital, which is determined by decisions made at the level of cash, receivables, inventory, and payables. It can be assumed that the greater the liquidity, the higher the net working capital invested in a company; the higher the level of capital, the greater its cost, and thus the lower the ROE and EVA indicators. In such a case, investors monitoring company performance could interpret high liquidity as a negative signal, entailing a fall in the market prices. On the other hand, the greater the liquidity, the higher the flexibility of the company in terms of production and sales, which could provide additional income for the business. Consequently, investors could also interpret high liquidity as a positive sign, with a subsequent rise in the market prices. This paper sets out to examine the relations between the above-mentioned factors to find out how investors interpret corporate liquidity and profitability ratios on the Warsaw Stock Exchange.
Studies investigating the relation between risk and return occupy an important place in the discussion about the effectiveness of investing in real estate. A review of the available studies shows that real estate investments are less profitable than stocks, but in terms of risk and return, are usually the best option. This worldwide regularity may not necessarily be presented in Poland, as the Polish market is not fully fledged yet. The analysis presented in this article was performed with a view to reducing a research gap resulting from the lack of comprehensive Polish studies in this field.In the article, data spanning the years from 2006 to 2016 are examined by means of descriptive statistics, measures of risk, and the analysis of variance (ANOVA) to determine which of the following investment vehicles -bonds, real estate or stocks -offer the best risk-return ratio.The article has two parts. The analytical part is a review of studies on risk measurement methods and of earlier studies investigating risk and return by a class of assets (particularly real estate). In the empirical part, assets are compared with the use of statistical methods.The results of the risk-return analysis point to the money market as the best option for investors. Stocks and real estate ranked second and third, respectively.
The article discusses the ability of potential growth measures calculated basing on market share prices to predict the future growth of the companies listed on the primary and alternative exchange markets in Poland. Analysing the Polish exchange market and dividing the sample of companies due to the markets they are listed – the Warsaw Stock Exchange Main Market or the NewConnect Alternative Market – brought conclusive results. Company growth measured as the growth of total assets, equity, sales and, what is the most important, earnings per share, is related to the growth opportunity measures and other factors taken into account in the tested models. The differences between the results for the two separate markets are evident and the relationship between growth opportunity measures and the future growth seems to be stronger for larger companies listed on the main market, while the NewConnect smaller companies’ growth is less predictable. We add to the theory of the growth prediction a modified approach by sampling companies according to the exchange they are listed that helps to solve the companies’ “growth puzzle” and supplement the growth theory in the field of factors affecting this process in different growth stages. The originality of the paper is reflected in the modified approach to the problem and distinguishing the stages of development of the company taking into account the Polish stock market.
The integration of financial markets is an ongoing process throughout the world. Research shows that, from Australia through Europe to the United States, the capital and real estate markets are integrating, influencing each other. Although this process seems obvious, only research can show whether it actually occurs. Identifying these relationships is important for analyzing the entire market. Many methods, such as estimating the cost of equity, have been developed with the stock market in mind. Meanwhile, real estate valuation requires the cost of equity. Market integration is the rationale for using equity market methods on the real estate market.Aim of the work - the research is aimed at verifying whether there is cointegration between the secondary housing market and the stock market. A research hypothesis was put forward: the stock market and secondary housing market are integrated.Research methodology - the study used co-integration analysis using the Engle-Granger test. The study was conducted in the period from the third quarter of 2006 to the fourth quarter of 2018.Result - The tests carried out showed the existence of co-integration in one out of 36 cases for the explanatory variable - the delayed WIG index and the explained variable in the average price of residential real estate on the secondary market for the 7 largest Polish cities.Originality / Value - demonstrating the co-integration of markets justifies the use of analytical methods developed for stock markets on real estate markets. The research has no equivalent study on the Polish market. Similar analyses were carried out, but not for the stock and real estate market.
Some authors suggest that the use of standard deviation as a measure of total risk for returns on real estate leads to risk overestimation, as the classical Markowitz model does not account for the skewness of financial data, thus making the results unreliable. According to the available literature, risk calculated on the basis of standard semideviation may actually better reflect the nature of property investment. However, in this context, the question of whether or not this measure will lead to risk underestimation at a time of a downturn in the real estate market, resulting in inadequate investment decisions aggravating investor losses arises. Therefore, the present paper presents portfolios constructed using either classical risk measures or measures based on "downside deviations" of rates of return. The results of investment in these portfolios are analyzed.
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