Dr Frank Obenpong Kwabi

Job: Associate Professor in Accounting and Finance

Faculty: Business and Law

School/department: Leicester Castle Business School

Address: Hugh Aston Building

T: 0116 201 3862

E: frank.kwabi@dmu.ac.uk

W: http://dmu.ac.uk

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Personal profile

Frank is Associate Professor in Accounting and Finance. He joined De Montfort University as a Lecturer in Accounting and Finance (VC2020) in September 2016. Prior to joining the Leicester Business School, he was a tutor in finance at the University of Strathclyde. Frank completed his PhD in Finance at the University of Strathclyde entitled ‘The impact of sub-optimal international portfolio allocation on cost of capital, stock market development and investor protection standards’. Frank research interest is in International Finance. Particularly, how laws and institutions affect International Finance. He has successfully supervised two PhD students to completion and currently supervising five PhD students. Frank is research active and having a growing publications in internationally recognised journals such as International Review of Finance and Accounting, Economic Letters, Review of Quantitative Finance and Accounting, Journal of Multinational Financial Management. He is the Doctoral Research Coordinator for the Department of Accounting and Finance.

Publications and outputs

High frequency trading, price discovery and market efficiency in the FTSE100
High frequency trading, price discovery and market efficiency in the FTSE100 Leone, Vitor; Kwabi, Frank This study examines the role of high frequency trading in price discovery and efficiency in the FTSE100 index tick changes. Using a unique data set, we find that there is no random walk when investors extract information at a millisecond to a second. Further analysis provides evidence that the information cannot be extracted by investors at frequencies starting from 10 minutes. This is consistent with the view that the market already experiences a random walk, which contributes to the weak form of market efficiency. The file attached to this record is the author's final peer reviewed version.
Sub-optimal international equity portfolio diversification and stock market development
Sub-optimal international equity portfolio diversification and stock market development Kwabi, Frank; Thapa, Chandra; Paudyal, Krishna; Neupane, S. This paper examines whether the widely reported phenomena of home and foreign biases (i.e. suboptimal international equity portfolio diversification) hold any ramifications for the development of stock markets. The results, analysed using macro- and micro-level data, support the view that stock markets that are characterised by a higher degree of home bias are associated with lower levels of development. On the other hand, markets where foreign investors show a higher degree of allocation preference, relative to the prescribed benchmark (foreign bias), are found to be more developed. The results, which are robust to the use of shock based identification strategy, indicate that policy measures that promote optimal international equity portfolio diversification could be crucial in developing the depth and breadth of domestic stock markets.
International equity portfolio investment and enforcement of insider trading laws: a cross-country analysis
International equity portfolio investment and enforcement of insider trading laws: a cross-country analysis Kwabi, Frank; Boateng, Agyenim; Adegbite, Emmanuel In this study, we examine the effects of stringent insider trading laws’ enforcement, institutions and stock market development on international equity portfolio allocation using data from 44 countries over the period 2001-2015. Our results suggest that stringent insider trading laws and their enforcement exert a positive and significant impact on international portfolio investment allocation. Further analysis indicates that the interaction between a country’s institutional quality, stock market development and enforcement of insider trading laws have a positive and significant effect on international equity portfolio allocation. The findings of this study have implications for the design of portfolio investment trading strategies and contribute to the literature on foreign equity investment decisions. The file attached to this record is the author's final peer reviewed version. The Publisher's final version can be found by following the DOI link.
The impact of stringent insider trading laws and institutional quality on the cost of capital
The impact of stringent insider trading laws and institutional quality on the cost of capital Kwabi, Frank; Boateng, Agyenim; Adegbite, Emmanuel This paper examines the effects of interaction between stringent insider trading laws, institutional quality and equity portfolio allocation on the cost of capital. Using a dataset drawn from 44 countries over the period from 2001-2015, we find that stringent insider trading laws interact with institutional quality and foreign equity portfolio allocation to reduce the country-level cost of capital. Further analysis from a quasi-natural experiment based on the 2008-2009 global financial crisis suggests that the findings are robust to endogeneity. Our results imply that the enactment of stringent insider trading laws and their interplay with the quality of institutions are not only important to portfolio investment allocation decisions but reduce the country-level cost of capital. The file attached to this record is the author's final peer reviewed version. The Publisher's final version can be found by following the DOI link.
Shareholder protection, stock markets and cross-border mergers
Shareholder protection, stock markets and cross-border mergers Ahiabor, Frederick; James, G. A.; Kwabi, Frank; Siems, Mathias This paper is the first one that uses a panel data of different types of shareholder protection in order to examine (i) the effect of such laws on stock market development and (ii) the convergence of shareholder protection laws through cross-border mergers and acquisitions. We find significant results for enabling laws but less so for paternalistic ones. The file attached to this record is the author's final peer reviewed version. The Publisher's final version can be found by following the DOI link.
Financial and corporate social performance in UK listed firms: The relevance of non-linearity and lag effects
Financial and corporate social performance in UK listed firms: The relevance of non-linearity and lag effects Adegbite, E.; Guney, Y.; Kwabi, Frank; Tahir, S. Using environmental, social and governance (ESG) scores compiled by Reuters Datastream for each company’s corporate social performance (CSP), we examine the relationship between CSP and corporate financial performance (CFP) of 314 UK listed companies over the period 2002 to 2015. We further evaluate the relationship between prior and subsequent CFP and prior and subsequent CSP. Based on the system-GMM estimation method, we provide direct evidence that suggests that while CFP and CSP can be linked linearly; however, when we examine the impact of CSP on CFP, the association is more non-linear (cubic) than linear. Our results suggest that firms periodically adjust their level of commitment to society, in order to meet their target CSP. The primary contributions of this paper are testing i) the non-monotonous relationship between CSP and CFP, ii) the lagged relationship between the two and the optimality of CSP levels, and iii) the presence of a virtuous circle. Our results further suggest that CSP contributes to CFP better during post-crisis years. Our findings are robust to year-on-year changes in CFP and CSP, financial versus non-financial firms, and the intensity of corporate social responsibility (CSR) engagement across industries. The file attached to this record is the author's final peer reviewed version.
Biases in International Portfolio Allocation and Investor Protection Standards
Biases in International Portfolio Allocation and Investor Protection Standards Kwabi, Frank; Thapa, Chandra; Paudyal, Krishna; Adegbite, E. Economic reasoning suggests that financial globalization that encourages optimal international portfolio investments should improve investor protection standards (IPS) of a country. In practice, however, investors manifest varying degrees of suboptimal international portfolio allocations. Using a panel dataset covering 44 countries spanning over 15 years we examine whether suboptimal equity portfolio allocation in part is associated with the cross-country variations in IPS. Consistent with economic reasoning we find robust indications that international portfolio allocation may play an important role in the development of IPS. More specifically, the quality of IPS improves with higher degrees of optimal international equity portfolio allocation of domestic and foreign investors. The file attached to this record is the author's final peer reviewed version. The Publisher's final version can be found by following the DOI link.
Sub-optimal international portfolio allocations and cost of capital
Sub-optimal international portfolio allocations and cost of capital Kwabi, Frank; Faff, Robert; Marshall, Andrew; Thapa, Chandra Finance theory suggests that the optimal international equity portfolio investment by home and foreign investors reduces cost of capital through international risk sharing and capital market integration. However, the empirical evidence is inconsistent with theory as a number of studies show investors exhibit cross-country biases in their international portfolio investments, known as home and foreign biases. In this study we investigate the implications of home and foreign biases on cost of capital. Using data from 44 countries over a period of 2001-2014, we provide strong evidence that countries which experience higher home bias are associated with a higher cost of capital. Similarly, we also find that countries which are more favoured by foreign investors, relative to the theoretical predictions, are associated with a lower cost of capital. The file attached to this record is the author's final peer reviewed version. The Publisher's final version can be found by following the DOI link.

Research interests/expertise

Corporate Finance
International portfolio diversification
Cost of capital
Stock market development
Investor protection standards
Insider trading
Equity home and foreign bias

Areas of teaching

Corporate Finance
Portfolio Management
Introduction to Finance and Accounting
Derivatives

Qualifications

PhD University of Strathclyde

MSc Heriot Watt University

PG Cert University of Strathclyde

BA (Hons) First Class Edinburgh Napier University

Courses taught

Current teaching:

Performance Measurement in Organisations (Year 2)
Professional Communication (Year 1)
International Financial Markets and Institutions (Postgraduate)

Previous taught:

ACFI 3203 Business Finance (Year 3)
ACFI 1203 Financial Decision Making (Year 1)
CORP 2165 Contemporary Management (Year 2)
LCBS5000 Entrepreneurial Finance and Financial Management (Postgraduate – Module Leader)

Current admin roles:

Doctoral Research Coordinator - Department of Accounting and Finance
Module Leader: Performance Measurement in Organisations
Module Leader: International Financial Markets and Institutions

Membership of external committees

Royal Economic Society

American Finance Association

Fellow of Higher Education Academy (FHEA)

Conference attendance

Kwabi, F.O., Neupane, S., Paudyal, K., and Thapa, C., (2014) International portfolio investment and stock market development: British Accounting and Finance Association, London School of Economics, London.

Kwabi, F.O., Neupane, S., Paudyal, K., and Thapa, C., (2014) Foreign portfolio investor’s influence and investor protection standards: Scottish DTC Business and Management Pathway PhD Colloquium at Stirling Management Centre. University of Stirling.

Kwabi, F.O., Faff, R., Marshall., and Thapa, C., (2013) Sub-optimal portfolio allocation and cost of capital: 7th International Accounting and Finance Doctoral Symposium. Bologna, Italy.

Key research outputs

Leone, V., Kwabi, F.O., (2019). High frequency trading, price discovery and market efficiency in FTSE100. Economics Letters, Vol 181, pp.174-177. ABS 3*

Kwabi, F.O., Thapa, C., Paudyal, K., Neupane, S., (2019). Sub-optimal international equity portfolio diversification and stock market development. Review of Quantitative Finance and Accounting (forthcoming), pp.1-36. (ABS 3*)

Adegbite, E., Guney, Y., Kwabi, F.O., Tahir, S., (2019). Finance and corporate social performance in the UK listed firms: The relevance of non-linearity and lag effects. Review of Quantitative Finance and Accounting, pp. 52(1), pp. 105-158. (ABS 3*).

Kwabi, F.O., Boateng, A., Adegbite, E., (2018). International portfolio investment and enforcement of insider trading laws: A cross-country analysis. Review of Quantitative Finance and Accounting (forthcoming), pp.1-23. (ABS 3*)

Ahiabor, F. S., James, G., Kwabi, F.O., Siems, M.M., (2018). Shareholder protection, stock markets and cross-border mergers. Economic Letters, Vol 171, 54-57. (ABS 3*)

Kwabi, F.O., Boateng, A., Adegbite, E., (2018). The impact of stringent insider trading laws on cost of capital. International Review of Financial Analysis Vol 60, pp.127-137. (ABS 3*)

Kwabi, F.O., Thapa, C., Paudyal, K., Adegbite, E., (2017). Biases in international portfolio allocation and investor protection standards. International Review of Financial Analysis Vol 53, pp. 66-79. (ABS 3*)

Kwabi, F.O., Faff, R., Marshall., and Thapa, C., (2016). Sub-optimal portfolio allocation and cost of capital. Journal of Multinational Financial Management Vol 35, (6), pp. 41-58.

Current research students

Mrs Nuha Alofi: “The Effect of Corporate Social Responsibility Disclosure on Firms’ Stock Performance of the top 100 Tadawul Listed Companies”.
Rawinder Kaur: “Relationship between Corporate Social Responsibility and Bankruptcy: Evidence from U.K”.
Mathew Undenge
Chizzy Wonu
Shi Tang
Abdullah Mamoon
Samuel Fulgence

Completed PhDs

Dr Wardah Abdulrahman Bindabel: “The Impact of Shariah (Islamic Principles) Corporate Governance on Cross-Border Merger and Acquisitions Involving Islamic Companies in the Gulf Countries”.