Browsing by Author "Nnadi, Matthias"

Now showing 1 - 9 of 9
  • Thumbnail Image
    ItemOpen Access
    The effect of government involvement and payment method on merger and acquisition performance: the case of China
    (Inderscience, 2019) Nnadi, Matthias; Volokitina, Evgeniia; Aghanya, Daniel
    This paper applies a sample of 842 to investigate the effect of government involvement and payment methods on merger and acquisition of Chinese listed firms for the period 1993 - 2015. The study employs market model as benchmark to estimate expected returns for several event windows. We find that Chinese acquirer shareholders experience higher returns from the acquisitions in firms with no government involvements than those where government is involved. Our study demonstrates that stock-financed acquisitions maximise the wealth gains of shareholders than cash-backed acquisitions. Our finding further shows that using cash to finance government backed acquisitions yields extra wealth for investors on the announcement date whilst the market experience higher abnormal returns when stocks are used to finance the acquisition of privately held targets. The result of this paper has significant policy implications for both M&A financing decisions and government involvements in merger deals.
  • Thumbnail Image
    ItemOpen Access
    Empirical analysis of debt maturity, cash holdings and firm investment in developing economies
    (Wiley, 2021-01-05) Nnadi, Matthias; Surichamorn, Vachiraporn; Jayasekera, Ranadeva; Belghitar, Yacine
    This study investigates the potential simultaneous relationships among leverage, debt maturity and cash holdings and how these jointly affect financial policy and firms' investment activities in developing countries of Thailand, Indonesia and Singapore during the period 2006–2015. Using the two‐step system GMM estimator, our results show that high‐growth firms not only shorten debt maturity to reduce the underinvestment incentive, but also decrease leverage to reduce liquidity risk. We find evidence that the level of cash holdings is a key determinant of leverage in all countries and that debt policy and growth opportunities affect the investment decision of firms in Thailand and Singapore whereas cash policy is more important in Indonesia. These findings have significant implications for investment decisions in these economies.
  • Thumbnail Image
    ItemOpen Access
    Evaluation of merger premium and firm performance in Europe
    (World Academy of Science, Engineering and Technology, 2015-06-30) Nnadi, Matthias; Aghanya, Daniel
    This paper investigates whether the deal premium affects the performance of the acquiring firms in European mergers and acquisitions (M&As) deals for the period 2000-2013. We find a significant reduction in short-term performance of the acquiring firms after the M&As, reflecting the overpayment hypothesis. Our result also indicates that the negative effect on the performance of the acquiring firms is less pronounced in the long-term. The result confirms the synergy hypothesis and the existence of quadratic relationship between high premium and performance. Our findings are robust as we control for firm and time trends. The findings of our study have implications for companies engaging in acquisitions in Europe.
  • Thumbnail Image
    ItemOpen Access
    Evaluation of strategic and financial variables of corporate sustainability and ESG policies on corporate finance performance
    (Taylor and Francis, 2021-02-16) Weston, Piers; Nnadi, Matthias
    Over the past few decades, there has been a sharp increase in interest by investment professionals to become more socially responsible with regards to their decision making relating to their choice of investments and overall make-up of their portfolios. This paper conducts various tests to establish a link between Corporate Social Responsibility (CSR) and Corporate Financial Performance (CFP). This paper adds a strategic management element by establishing various frameworks that corporations can include in the decision-making process and includes CSR and Environmental, Social and Governance (ESG) principles when making investment decisions. The sample chosen for this paper includes the iShares MSCI KLD 400 Social exchange traded fund (ETF), iShares Core S&P 500 ETF as well as firms that follow the Principles for Responsible Investing (PRI). Overall, there is no evidence to suggest that ethical ETFs outperform conventional ETF's however PRI following firms outperform those who do not follow the guidelines.
  • Thumbnail Image
    ItemOpen Access
    IFRS 9 and earnings management: the case of European commercial banks
    (Emerald, 2023-04-18) Nnadi, Matthias; Keskudee, Atis; Amaewhule, Wey
    Purpose This paper examines the impact of International Financial Reporting Standards (IFRS) 9 on earnings management (EM) using data from 2011 to 2019 of 100 commercial banks in Europe. Design/methodology/approach Using data from 2011 to 2019 of 100 commercial banks in Europe, the authors conducted several empirical investigations to test the mediating role of IFRS 9 on earnings manipulation through loan loss provision (LLP) by banks. Findings The result shows that the new accounting standards (IFRS 9) significantly affect the way banks report LLP. This paper provides evidence that non-listed banks in the EU engage in EM through LLP following IFRS 9 but experience less volatility of net income following the adoption. The findings indicate that such behaviour by banks cannot be suppressed by level of audit quality; suggesting that an improvement in accounting standards might not always guarantee accounting quality. Originality/value This finding has some policy implications; and regulators will need to identify additional tools to regulate or supervise EM behaviour.
  • Thumbnail Image
    ItemOpen Access
    The impact of international financial reporting standards on fund performance
    (Emerald, 2018-01-31) Rubanov, Dmitrij; Nnadi, Matthias
    Purpose The purpose of this paper is to examine the effect of international financial reporting standards (IFRS) on the performance of UK investment closed-end trust funds with domestic equity focus using Carhart’s Four-Factor model. Design/methodology/approach The paper is based on the Efficient Market Hypothesis, which argues that all available information is already included in the price of assets, and therefore, investors cannot beat the market or generate abnormal returns. Findings The results show that on average, UK investment trusts neither do generate abnormal returns, nor is their performance persistent. This paper provides empirical evidence to support the efficient market hypotheses and provides proof that the adoption of IFRS has, on average, a decreasing impact on the excess returns generated by UK investment trusts. Originality/value The findings of this paper have business policy implications for investment trust in the UK.
  • Thumbnail Image
    ItemOpen Access
    Loss sensitive investors and positively biased analysts in Hong Kong stock market
    (Springer, 2021-04-10) Choudhry, Taufiq; Dissanaike, Gishan; Jayasekera, Ranadeva; Kang, Woo-Young; Nnadi, Matthias
    The Hong Kong stock market is known to be highly volatile. Professional investors have a strong demand for timely information because of the infrequent nature of Hong Kong analysts’ interim reports (Cheng et al., 2003). Our paper provides a comprehensive study of investor reactions to analysts’ recommendations in the Hong Kong stock market from 2009 to 2014 under different sentiment scenarios. We find that analysts’ recommendation upgrades and downgrades deliver significant information to the Hong Kong stock market. However, analysts’ initiation coverages convey little information and bring about limited impact to the stock market. In addition, analysts’ upgrades and downgrades result in significant differential price impacts in bullish and the bearish phases
  • Thumbnail Image
    ItemOpen Access
    Narratives in corporate annual reports: the drivers and impacts of narrative's readability and tone.
    (Cranfield University, 2019-09) Alrefaei, Hessa; Belghitar, Yacine; Nnadi, Matthias
    Corporate annual reports have increased in size over time, not only to contain financial data but a plethora of narrative explanations concerning the firm’s current performance and their prospects. This thesis attempts to fill the gaps presented in the field of research of narrative disclosure in corporate reports by conducting three interconnected studies presented in a journal article manuscript form. The first paper provides an understanding of the drivers and consequences of narrative disclosure in corporate reports by conducting a systematic literature review of existing studies. The aim is to get a full understanding behind the intentions and consequences of narrative disclosures, to identify the gaps in research, and to provide recommendations for future research. The second paper focuses on the consequences of the readability of narratives, as an impression management technique in corporate annual reports. This study expands existing literature by not only analysing the reading difficulty of narratives but also touching on the use of ambiguous. It is found that readability (using both readability and ambiguity measures) are negatively associated with firm performance, indicating management’s use of impression management to obfuscate adverse performance, resulting in the reduction of performance persistence and firm value. The third paper focuses on earnings management as the driver of the tone of narratives. The study aims to find that relationship between earnings management (using accruals-based and real activities-based earnings management) and the tone of narratives, during two different strategic incentives that drive managers to manipulate earnings (meeting or beating prior year’s earnings and leverage increase). It is found that when managers practice income-increasing (decreasing) earnings management the tone is positive (negative). The findings signify that whether the intention is beneficial or harmful to investors, the tone of narratives is biased towards management’s intentions of earnings management practices.
  • Thumbnail Image
    ItemOpen Access
    Probability of mergers and acquisitions deal failure
    (Emerald, 2020-05-09) Tanna, Sailesh; Yousef, Ibrahim; Nnadi, Matthias
    Purpose The purpose of this paper is to investigate whether the probability of deal success/failure in mergers and acquisitions (M&As) transactions is influenced by a range of deal, firm and country-specific characteristics which tend to affect acquirers’ shareholder returns. The specific hypotheses under investigation relate to the method of payment (cash versus stock), target status (listed versus non-listed), diversification (domestic versus cross-border and industry-wide) and acquirers’ prior bidding experience. Additionally, the authors also investigate whether announced deals reflect an expectation about likelihood of deal completion. Design/methodology/approach The authors analyse the probability of deal success/failure in M&As by combining event study and probit regression-based methods. The authors use the standard event study methodology to calculate acquirers’ abnormal returns for up to 10 days before and after the announcement date. In the probit model, the dependent variable is the probability of deal i being failure depending on four sets of explanatory variables: method of payment, target status, diversification and acquirer bidding experience, along with a set of control variables. Findings The findings from event study confirm that market reaction is indifferent to whether announced deals are likely to be successfully completed or not, consistent with the efficient markets hypothesis. However, the results from cross-sectional, cross-country regressions confirm that the aforementioned deal characteristics, as well as certain firm and country level attributes do influence the likelihood of whether an announced deal is subsequently completed or terminated. Originality/value In examining whether the specific characteristics affecting the likelihood that M&A transactions, once announced, will ultimately succeed or fail, it seems natural to ask whether the market reaction at the time of deal announcement reflects an expectation regarding deal completion. This could be associated with specific deal or firm-level characteristics influencing shareholder returns or risk, and represents a unique contribution of this study, over and above the use of a global sample of M&A data. The empirical analysis investigates these issues by using an extensive, global sample of 46,758 M&A transactions from 180 countries and 80 industries, which took place between the years 1977 and 2012