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We investigate the effectiveness of hedge fund activism in addressing inefficient R&D investment and creating long-term value at target firms. Using an endogenous growth model to estimate efficient R&D investment levels, we find target firms exhibit a tendency to overinvest in R&D. The likelihood of being targeted and activism announcement returns increase with R&D overinvestment. Despite observable cuts in R&D expenditure following activism, our analysis shows no significant improvement in R&D efficiency over the subsequent three years. Additional tests, controlling for the activist's objectives, reputation, and stock selection ability, reveal a negative impact of activism on value creation. Our study offers important insights into how hedge fund activism shapes corporate R&D strategies and highlights challenges in achieving sustainable innovation and value enhancement through activist interventions. • This study examines if hedge fund activists address inefficient R&D investments and create long-term value at target firms. • Using an endogenous growth model, we find target firms overinvest in R&D, making them likely targets for activists. • Despite reduced R&D expenditure post-activism, we find no significant improvement in R&D efficiency over the next three years. • Our findings have implications for corporate governance and policy formulation, amid regulatory scrutiny of hedge fund activism and the need for innovation. [ABSTRACT FROM AUTHOR]

Abstract We test whether the channel by which the government plays the role of political patron to selected firms influences analysts' forecast precision in Malaysia. Correcting for analysts' self-selection bias, we find a negative relation between analysts' forecast errors and the social dimension of political patronage, as proxied by government-controlled institutional ownership. The reverse is found for the economic dimension of political patronage, as proxied by the percentage shareholding of government-linked corporations. We find no evidence that the personal dimension of political patronage influences analysts' forecast precision. [ABSTRACT FROM AUTHOR]

The rapid growth of Islamic banking around the globe has led to questions about its role in the economy. In this paper, we examine whether Islamic banking acts as a substitute or complement to conventional banking in promoting macroeconomic efficiency in countries with a dual-banking system. Using a one-stage Stochastic Frontier (SF) approach, we find evidence that similar to conventional banking, Islamic banking positively contributes to a country's macroeconomic efficiency. However, Islamic banking acts as a substitute not as a complement to conventional banking in contributing to macroeconomic efficiency. The results are robust to using both credit and deposit ratios as proxies of financial development. The findings are consistent with growing evidence that despite the apparent philosophical differences between the two banking systems, Islamic banking is increasingly converging in its operations to conventional banking. [Display omitted] • A sound financial system mobilizes and allocates funds in a more efficient way. • Both conventional and Islamic banks play a key role in promoting macroeconomic efficiency. • Islamic banking substitutes rather than compliments conventional banking in promoting macroeconomic efficiency. • For economic analysis, Islamic banks may be treated like conventional banks. [ABSTRACT FROM AUTHOR]

• We analyse the impact of gender on firm financing during the COVID–19 pandemic. • We find evidence of female favouritism in the formal debt market during the pandemic • Prototypical forms of femininity become advantageous during the pandemic. Using gender as a theoretical framework, we analyse the dynamics of debt and equity financing during the COVID-19 pandemic for a cross-country sample of 8,921 private firms. We provide evidence of a slight gender bias in debt financing, with creditors favouring female entrepreneurs when dealing with cash flow problems during the COVID-19 pandemic. We find no evidence of gender bias in equity financing. The results are robust after controlling for a larger number of firm-specific characteristics and selection bias. We challenge the assumption of "gender-based discrimination" in the debt market, speculating that in the context of high uncertainty, prototypical forms of femininity may be advantageous as financial institutions seek to hedge their risk by favouring more conservative borrowers. [ABSTRACT FROM AUTHOR]

Abstract: This paper provides the first evidence showing that ownership concentration and the identity of the largest shareholder matter to the timeliness of corporate earnings, measured by a stock price-based timeliness metric and the reporting lag. Using panel data of 1276 Malaysian firms from 1996 to 2009, we find a non-linear relationship between concentrated ownership, measured by the largest shareholding in a firm, and the reporting lag but not the timeliness of price discovery. Although firms with government as the largest shareholder and political connections have a significantly shorter reporting lag, only the former are timelier in price discovery. Firms with family and foreigners as the largest shareholder however are less timely in price discovery. While the reporting lag is shorter in the period after the integration of the Malaysian Code of Corporate Governance (MCCG) into Bursa listing rules, its impact on the timeliness of price discovery is mostly immaterial. [Copyright &y& Elsevier]