We study the effect of the Feed-in-System (FIS) policy on wind and solar photovoltaic energy investments in the European Union (EU), over the time period between 1992 and 2015, considering the heterogeneity of the policies and market conditions across the EU countries. We develop a FIS subsidy performance indicator that distinguishes feed-in-tariff (FIT) from feed-in-premium (FIP) and considers other important aspects of each of these contracts, such as the duration, tariff price, energy spot price and production costs, as well as the market conditions. We conclude that the mere existence of the FIS policy does not necessarily enhance renewable energy investments, it depends on the type of the FIS contract and its features, and may vary across the different sources of renewable energy. Some of our findings are new to the literature and can have important implications in the development of new public investment incentives to promote renewable energy.

Keywords: Feed-in-System; Feed-in-Tariff; European union; Renewable energy' Solar photovoltaic; Wind energy.

Motivated by the introduction of share repurchases regulations in 1998 and 2007 coupled with unique characteristics of the Indonesian market, we investigate the effect of firm’s sub-optimal financial position on its share repurchases decisions. Then, we study the effect of these determinants through an exogenous shock, the 2007 regulatory change. We show that sub-optimal financial positions play a role in the corporate share repurchases decisions. Further, we find that the enactment of the regulations has a significant effect on firms’ undertaking share repurchases programs. Unlike the common perception and findings in the literature, we observe that the underpricing of shares has a weak effect on the Indonesian firms’ decisions to repurchase their stocks. Our results hold using several estimation methods that account for potential endogeneity issues.

Key words: Share repurchases; regulations; dividends; sub-optimal decisions; underpricing; Indonesia.

We investigate how a firm’s decision to hold excessive cash or to over-invest could influence its dividend payout policy in Indonesia. Additionally, we examine the association between corporate ownership structure and cash dividends. Using a data set of Indonesian listed firms for the period from 1995 to 2014, we find that excessive cash holding (over-investment) positively (negatively) affects a firm’s likelihood of paying dividends. Also, we find that family, foreign, state and institutional ownership have significantly negative links with dividends, which suggests the signals of expropriation of firms’ wealth by major shareholders. These findings strongly support the expropriation hypothesis that commonly applies to firms with higher level of concentration or to firms in a weak legal environment by which the rights of minority interests are put at risk by large shareholders.

Key words: Dividend policy; overcash; overinvestment; corporate governance; ownership structure; Indonesia.

In this study, we examine the cross-market efficiency of the FTSE/MIB index options contracts traded on the Italian derivatives market (IDEM) between 1st October 2007 and 31st December 2012, a period including the financial crisis, using daily option prices. Two fundamental no-arbitrage conditions are tested: the lower boundary condition (LBC) and the put/call parity (PCP) condition while taking into account the role of transaction costs in mitigating the number of violations reported. Ex-post tests of LBC and PCP revealed a low incidence of mis-pricing in this market. Furthermore, to check the robustness of the results obtained by the ex-post tests, ex-ante tests were applied to PCP violations occurring within a one-day lag. The results showed a significant drop in the number of profitable arbitrage strategies. Overall, the number and monetary value of the violations reported declined during the post financial crisis period compared to those during the financial crisis period. The findings obtained from these tests generally support the cross-market efficiency of the Italian index options market during the sample period, though some violations were occasionally reported.

Key words: Cross-market efficiency, index options market, no-arbitrage condition, financial crisis.

We study the association between the stock liquidity of SMEs in the US and their likelihood of bankruptcy, using a dataset that comprises information on 5,075 firms over the time period from 1984 to 2013. We find that less liquid stocks are associated with higher probability of bankruptcy, although there is substantial heterogeneity across industries regarding the predictive power of the liquidity measure on the likelihood of bankruptcy. Furthermore, the exchange where the SMEs are listed also affects the likelihood of bankruptcy. Classification performance tests conclude that adding a liquidity measure variable to the Campbell et al. (2008) model improves its predictive power.

Key words: Market liquidity, liquidity measures, bankruptcy, hazard model.

In this paper, we provide the second part on the literature review on hedge funds (HFs) developed over the last two decades. More specifically, we concentrate on the literature  which relates to risk management characteristics (a companion piece investigates the managerial characteristics of HFs). We discuss the successes and the shortfalls to date in developing more sophisticated risk management frameworks and tools to measure and monitor HF risks, and the empirical evidence on the role of the HFs and their investment behaviour and risk management practices on the stability of the financial system. We also classify the HF literature considering the most recent contributions and, particularly, the regulatory developments after the 2007 financial crisis.

Key words:  Hedge funds, return characteristics, risk management characteristics.

In this paper, we attempt to summarize the literature on hedge funds (HFs) developed over the last two decades, particularly that which relates to managerial characteristics (a companion piece covers the return and risk management characteristics of HFs). We classify, the current HF literature, suggesting which critical problems have been “solved” and which problems have not been yet adequately addressed. We also discuss the effects of past financial regulation and the prospects for the effect of new financial regulation on the HF industry and its performance and risk management practices, and suggest new avenues for research. Furthermore, we highlight the importance of managerial characteristics for HF performance, and the successes and the shortfalls to date in developing more sophisticated HF-related risk management tools.

Key words:  Hedge funds, hedge funds characteristics, managerial characteristics.

In this paper,  we investigate the extent to which the size affects the SME probabilities of bankruptcy. Using a large dataset of (11,117) US non-financial firms, of which (465) filed for insolvency under chapters 7 and 11 between 1980 and 2013. We forecast the bankruptcy probabilities by developing four discrete-time duration-dependent hazard models for SMEs, Micro, Small, and Medium firms. A comparison of the default prediction models for medium firms and SMEs suggests that an almost identical set of explanatory variables affect the default probabilities leading us to believe that treating each of these groups separately has no material impact on the decision making process. However, comparisons between the micro and small firms with the SMEs firms strongly suggest that these categories need to be considered separately when modelling their credit risk.

Key words: SMEs, bankruptcy, size, discrete-time duration-dependent hazard model.