Template-Type: ReDIF-Article 1.0 Author-Name: Ying Chou Lin Title: THE MOTIVES OF CORPORATE SPINOFFS: EVIDENCE FROM EX-ANTE MISVALUATION Abstract: This study examines whether ex-ante misvaluation can explain motive differences between focus-increasing and non-focus-increasing spinoffs. In this study, a spinoff is defined as focus-increasing if the parent firm and the spun-off subsidiary operate in different industries. Otherwise, a spinoff is classified as a non-focusincreasing spinoff. The empirical results show that firms are more likely to conduct non-focus-increasing (focus-increasing) spinoffs if their valuation errors are larger (smaller). Also, short-term firm-specific overvaluation and overvalued long-run growth opportunities increase the probability of conducting a nonfocus-increasing spinoff. The probability of conducting a focus-increasing spinoff increases when long-run growth opportunities are undervalued. The results suggest that motives underlying non-focus-increasing spinoffs are likely related to the exploitation of investors, whereas the motives underlying focus-increasing spinoffs are more likely beneficial to investors. An examination of investor reactions to spinoff announcements suggests that investors can see through the motives underlying corporate spinoffs Classification-JEL: G14, G32, G34 Keywords: Corporate Spinoff, Divestiture, Focus, Misvaluation Journal: The International Journal of Business and Finance Research Pages: 1-20 Volume: 14 Issue: 2 Year: 2020 File-URL: http://www.theibfr2.com/RePEc/ibf/ijbfre/ijbfr-v14n2-2020/IJBFR-V14N2-2020-1.pdf File-Format: Application/pdf Handle: RePEc:ibf:ijbfre:v:14:y:2020:i:2:p:1-20 Template-Type: ReDIF-Article 1.0 Author-Name: William T. Chittenden Title: POLITICAL PARTIES IN POWER AND U.S. ECONOMIC PERFORMANCE Abstract: This study examines the simultaneous interaction between political control of the White House and both chambers of Congress and the impact of those combinations on various measures of economic activity in the U.S. Past economic growth is not significantly different under Republican and Democratic presidential administrations. Nor does the party that controls the House of Representatives appear to have a significant impact on economic growth. However, growth has been strongest when Republicans control the Senate. Non-farm payrolls and industrial production grow faster under Democratic Presidents, while higher inflation and unemployment are generally observed when Democrats control the Senate or House. Republican Presidents are in office for a significantly greater number of months when the economy is in a recession. The same is true when Democrats are in charge of the Senate or House. The U.S. economy appears to have the strongest performance under the combination of a Democratic President with a Republican controlled Senate and House, and the weakest economic performance is generally under a Republican President with a Senate controlled by Democrats and a Republican controlled House Classification-JEL: D72, E32, N12 Keywords: Political Business Cycle, Leading Indicators, Economic History Journal: The International Journal of Business and Finance Research Pages: 21-36 Volume: 14 Issue: 2 Year: 2020 File-URL: http://www.theibfr2.com/RePEc/ibf/ijbfre/ijbfr-v14n2-2020/IJBFR-V14N2-2020-2.pdf File-Format: Application/pdf Handle: RePEc:ibf:ijbfre:v:14:y:2020:i:2:p:21-36 Template-Type: ReDIF-Article 1.0 Author-Name: An-Sing Chen Author-Name: Che-Ming Yang Title: MOMENTUM MARKET STATES AND CAPITAL STRUCTURE ADJUSTMENT SPEED Abstract: It is well established in the momentum literature that market states affect momentum profit. Moreover, the market state variables employed in the momentum literature are distinctive in that they are constructed to be ex-ante observable by the investor. This study shows that these momentum market state variables also significantly affect a company’s capital structure adjustment speed. Our results provide a plausible explanation of how the momentum market state variables lead to momentum profit by affecting the capital structure. Additional findings show that low leveraged firms adjust their leverage toward target capital structure faster than high leveraged firms. We also show that producer linked variables such as total industry capacity utilization and producer price index significantly affect capital structure adjustment speeds, more so than standard macroeconomic variables Classification-JEL: G30, G32 Keywords:Momentum, Market State Indicators, Dynamic Capital Structure, Speed of Adjustment, Macroeconomic Conditions, Industry Capacity Utilization, Producer Price Index Journal: The International Journal of Business and Finance Research Pages:37-49 Volume: 14 Issue: 2 Year: 2020 File-URL: http://www.theibfr2.com/RePEc/ibf/ijbfre/ijbfr-v14n2-2020/IJBFR-V14N2-2020-3.pdf File-Format: Application/pdf Handle: RePEc:ibf:ijbfre:v:14:y:2020:i:2:p:37-49 Template-Type: ReDIF-Article 1.0 Author-Name: Hong Rim Author-Name: Robert Setaputra Title: EQUITY MARKET INTEGRATION AND DIVERSIFICATION: EVIDENCE FROM EMERGING AND DEVELOPED COUNTRIES Abstract: This study examined the role of the US market on the portfolio of emerging stock markets in Asia, Europe, and S. America from the foreign investors’ perspectives. The Lambda is used to separate impacts of exchange rates from stock returns in local currencies. Notable findings are as follows. First, there is no additional diversification gain for the portfolio of six emerging regional markets when the US market is added as a representative of developed markets. Second, there are some potential diversification benefits (lower risk) to be exploited in the portfolio of regional emerging markets if the US market is added: the US market seems to play an important role in reducing risk in the portfolio of regional emerging markets. The results could be of value to advance risk management for portfolio managers and individuals alike in emerging markets. Classification-JEL: G110, G140, G150 Keywords: Lambda, Integration, Diversification, Contagion, Emerging Markets, and Crisis Journal: The International Journal of Business and Finance Research Pages: 51-59 Volume: 14 Issue: 2 Year: 2020 File-URL: http://www.theibfr2.com/RePEc/ibf/ijbfre/ijbfr-v14n2-2020/IJBFR-V14N2-2020-4.pdf File-Format: Application/pdf Handle: RePEc:ibf:ijbfre:v:14:y:2020:i:2:p:51-59 Template-Type: ReDIF-Article 1.0 Author-Name: Shih-Ping Feng Author-Name: Bi-Juan Chang Title: LIMITS OF ARBITRAGE, RISK-NEUTRAL SKEWNESS, AND INVESTOR SENTIMENT Abstract: This paper uses individual stock options to examine the effect of limits of arbitrage on the relations between risk-neutral skewness and investor sentiment for the underlying stocks. Empirical results show that the riskneutral skewness tends to be more (less) negative under bearish (bullish) investor sentiment, and the significant relations become stronger especially when there are more impediments to arbitrage in stock options. In addition, the empirical results show that increased bearishness among market investors who dominate the use of index options increases the extent to which risk-neutral skewness is affected by fluctuations in investor sentiment for the underlying stocks. Empirical results show that the limits of arbitrage have important implications for the role of investor sentiment in explaining risk-neutral skewness Classification-JEL: G12, G14 Keywords: Risk-Neutral Skewness; Investor Sentiment; Limits of Arbitrage Journal: The International Journal of Business and Finance Research Pages: 61-71 Volume: 14 Issue: 2 Year: 2020 File-URL: http://www.theibfr2.com/RePEc/ibf/ijbfre/ijbfr-v14n2-2020/IJBFR-V14N2-2020-5.pdf File-Format: Application/pdf Handle: RePEc:ibf:ijbfre:v:14:y:2020:i:2:p:61-71 Template-Type: ReDIF-Article 1.0 Author-Name: H. W. Wayne Yang Author-Name: Po-Wei Shen Author-Name: An-Sing Chen Title: TRIMMING EFFECTS AND MOMENTUM INVESTING Abstract: This study tests the effects of outlier trimming (or truncation) on the performance of momentum portfolios. We test the hypothesis that outliers are essential and possess carry-over effects applicable to momentum investing. Our results support the hypothesis. We find momentum portfolios formed using untrimmed data produce higher returns than those formed using outlier trimmed data. Risk-adjusted results show the same results. Moreover, we find that the less the data are trimmed, the larger the resulting spread between the winner and loser portfolios formed from momentum. Finally, our results show that the trimming effect continues to exist even after distinguishing between UP and DOWN market states Classification-JEL:G11, G12, G14, G17 Keywords:Trimming Level,Trading Strategies, Investment Strategies Journal: The International Journal of Business and Finance Research Pages: 73-87 Volume: 14 Issue: 2 Year: 2020 File-URL: http://www.theibfr2.com/RePEc/ibf/ijbfre/ijbfr-v14n2-2020/IJBFR-V14N2-2020-6.pdf File-Format: Application/pdf Handle: RePEc:ibf:ijbfre:v:14:y:2020:i:2:p:73-87