Bankers, Markets & Investors

EDITORIAL

Jean-FRANÇOIS BOULIER — 2023-12-28

We are pleased to introduce a new type of article. «Debate On» is the transcript of a debate among experts who has actually taken place in a forum, conference or seminar. It offers academic and practitioners views on a specific topic and provides thus up to date research and applications on a theme that is relevant to the contributors and readers of Bankers Markets and Investors. As any topic keeps some unresolved issues or even sometimes antagonistic approaches, we feel it is of great interest to listen to the opinions of experts to guide future research or to consider their application in real life. The first «Debate On» that this issue publishes is related to “How Do Investor’s Expectations and Emotions Drive Financial Asset Prices in Times of Crises and Uncertainty ?”. It was part of a seminar organized in IAE Lille on February 1st 2023 on “Investor’s Emotions and Asset Price”, a seminar where other traditional selected papers were presented. Thus the debate that occurred was a reflection and complement to what was also shown and discussed during that day. The debate was prepared and moderated by Fredj Jawadi. Fredj made the transcript of the panel and offered the various contributors to rewrite their text so that it can be read easily. The article was peer reviewed so that any useful modification or complement could enhance the content of the article. We hope you will enjoy reading this new form of contribution making the most of knowledge and market practice. Other scientific journals have also tried this new way of disseminating research and discussions. The Editors and the Associate Editors thank very much Fredj Jawadi for this proposal and welcome other proposals designed on similar settings. After a few of them, we will check readers interest and may modify the concept accordingly.

HOW DO INVESTOR’S EXPECTATIONS AND EMOTIONS DRIVE FINANCIAL ASSET PRICES IN TIMES OF CRISES AND UNCERTAINTY: THE ANALYSIS OF EXPERTS’ OPINIONS

Jean-FRANÇOIS BOULIER — 2023-12-28

This paper analyses the main views of several experts (academics and professionals) who met at the 2nd IEAP (Investor’s Emotions and Asset Price) meeting that was organized at the IAE Lille University School of Management on the 1st Februrary 2023. In particular, we analyze, first, the dynamics of financial asset prices as well as commodities prices during the last decade and we provide some projections about the future. Second, we discuss the role played by investors’ emotions as well as sentiment in driving financial asset prices and the contribution of fundamental factors while distinguishing financial markets from commodities and cryptocurrencies. Third, we document the dynamics of financial asset prices in the context of uncertainty, geopolitical tensions, post-COVID-19 period and high inflation. Finally, we provide some suggestions about the further extension of usual financial asset price models to include behavioral factors (emotions, sentiment) as well as uncertainty.
JEL Classification: G10, G12, G41.

AN INVESTIGATION OF A MULTIVARIATE SIMILARITY APPROACH FOR PEER SELECTION IN RELATIVE VALUATION

Mohamad HASSAN ABOU DAYA — 2023-12-28

This study presents a multivariate similarity-based peers approach (MSBP) for the selection of peer firms in relative valuation. We select peer firms based on the collective similarity of ten variables which reflect firms’ expected profitability, risk and growth. We test this approach by comparing its valuation accuracy relative to the industry membership selection method. We measure accuracy based on the absolute percentage pricing error and the squared percentage pricing error. We conclude that selecting comparable firms based on our approach offers very sharp improvements in the accuracy of relative valuation using the price-to-book, enterprise-value-to sales and price-to-earnings ratios in comparison to the industry membership selection method. Also, we introduce the use of a multivariate similarity visualization tool which we believe will be very useful in finance research, in general, and firm valuation research in particular.
JEL Classification: G320.

SHAREHOLDER ENGAGEMENT, THE NEW FRONTIER OF SUSTAINABLE FINANCE?

Nicolas MOTTIS — 2023-12-28

Shareholders are increasingly pressuring public companies to strengthen their climate agenda. This paper proposes a literature review of the many research papers that have covered shareholder engagement practices on ESG topics. It shows that there are still many angles to explore to better understand the real effects of these practices on firms’ strategies and their key success factors.
JEL Classification: O16, G15, G32, G34, M2.