Ruhani Ali

Culture, corporate governance and analysts forecast in Malaysia

Purpose - – The purpose of this paper is to examine the relationship between Bumiputra (in reference to Malay indigenous race) directors, a proxy for culture and analysts forecast. In addition, the study investigates whether corporate governance affects that relationship. Design/methodology/approach - – The sample of this study is based on 664 firm-year observations from 193 firms during the 1999-2009 periods. The authors employ a panel least square regression with both period and industry fixed effects. The authors retrieved of analyst data from the Institutional Broker Estimate System (I/B/E/S) database while the authors hand collected the corporate governance variables. The remaining data were collected from Compustat Global. Findings - – The authors find a positive relationship between the proxy of culture, Bumiputra directors and analysts forecast error suggesting that cultural values influences the level of information in the Malaysian capital market. Research limitations/implications - – The research is dependent on the data availability from I/B/E/S database. Originality/value - – The authors extend the work of Haniffa and Cooke (2002) in investigating how cultural values influence the capital market. In addition, this is the first study that investigates culture values and the analysts forecast.

Emerging Markets and Financial Resilience

Research in financial markets which have special focus on emerging markets has gained momentum since the early 1990s. Today, the role of emerging countries in the world economy is significant. In the year 2010, more than 50 per cent of world output expansion at purchasing power parity (PPP) was contributed by emerging markets, the largest being China, 25 per cent, followed by India, 10 per cent, and Brazil, 4 per cent; and, given the uptrend of economic growth in these emerging markets, the figures are still rising.

Momentum and Contrarian Strategies on ASEAN Markets

Momentum strategy entails buying stocks with a recent history of good performance and selling stocks with bad performance (Jegadeesh & Titman, 1993). On the contrary, contrarian strategy proposes a trading strategy of buying poorly performing stocks and selling better-performing stocks (De Bondt & Thaler, 1985). Underlying the contrarian strategy is the belief that prices will reverse, whereas proponents of momentum strategy contend that return continuation will occur. Both strategies are successful at different time horizons: intermediate term for momentum and long term for contrarian.

EFFECTS OF THE LARGEST SHAREHOLDER STAKES ON THE PERFORMANCE OF THE MALAYSIAN ACQUIRING FIRMS

This paper examines the relationship between the ownership stakes of the largest shareholders and the post-take-over operating performance and firm values of the acquiring firms. It was found that the operating performance as measured by the control-adjusted cash flow returns rose as the largest ownership stakes increased. However, when the dominant owners obtained a very high level of ownership stakes, the operating performance deteriorated. This shows that at lower level of ownership stakes, ownership concentration aligns the interests between controlling owners and shareholders. In contrast, when the dominant owner had absolute control over the firm, there was a potential of expropriation of minority shareholders by the controlling owners. Nevertheless, we did not find significant relation in the market-based assessment.