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This issue of MUDRA: Journal of Finance and Accounting presents studies on diverse and contemporary topics in the domain of finance and accounting including impact of the Covid-19 pandemic on stock markets, factors affecting firm profitability, the adoption of IFRS and discussion on feasibility of rainfall derivatives instrument in India.

A topical paper by Dr. Lalitagauri Kulkarni and Ms. Ajita Pandit on ‘Is Covid-19 a Black Swan event? Evidence from the National Stock Exchange of India’ looks at how the pandemic shock affects the pricing and bid-ask spreads of options traded on the National Stock Exchange of India. The key finding of the study is that for the Indian options market, Covid-19 proved to be a short-term shock of limited impact on the sectoral level and hence cannot be considered a Black Swan event. Also dealing with the intersection between finance, accounting, and the pandemic is Dr. Ashoke Mondal’s study on the ‘Impact of first wave of pandemic on stock returns: Evidence from Indian Stock Market.’ The study deployed the event study approach to assess the impact of the Covid-19 pandemic on the selected sample stock returns in India. The study found that the stocks have shown negative reaction due to the pandemic.

Any conversation surrounding finance and accounting cannot be divorced from banks. In that spirit, Ms. Arushi Jain’s paper on ‘The riskiness of the banks: An empirical analysis of the depositor’s sensitivity’ focuses on checking for the existence and strength of the market discipline based on different ownership structures of banks. This article examines two questions: first, if depositors respond logically to risk levels based on the ownership type of the bank, and second, whether the strength of this responsiveness varies with ownership type.

Furthermore, Dr. Yesi Mutia Basri presents an interesting paper on ‘Determinants of fraud in the public sector: A study on village government in Indonesia’. The fraud pentagon perspective, which includes pressure represented by situational pressure, opportunity represented by law enforcement, rationalisation represented by organisational commitment, ability to be represented by individual morality, and arrogance represented by leadership style, is used in the paper to examine the factors that influence the presence of fraud in public sector organisations in Indonesia.

Mr. Bharath V., Mr. Dileep N. and Prof. Kotreshwar G. bring a unique perspective to this issue in their study ‘Evaluating the monsoon (rainfall) risk profile for the feasibility of rainfall derivatives instrument in India.’ Owing to the erratic nature of Indian rainfall, effective risk mitigation strategies are required to manage the monsoon risk. The study thus intends to investigate the statistical characteristics of the rainfall (monsoon) risk profile of the Indian Meteorological Department by analysing actual data from all 36 meteorological subdivisions for the previous 50 years on rainfall during the south-west monsoon.

Two papers in this issue focus on the pertinent aspect of firm profitability by examining its relation with select variables. The article ‘Impact of capital structure on the firm profitability: A study of select large-cap auto-ancillaries companies in India’ by Mrs. Pinky Mistri and Prof. Manas Chakrabarti studies the impact of capital structure decisions on the firm profitability of select large-cap auto-ancillary companies. Using ratio analysis and panel data analysis, the authors find that capital structure has a negative and significant impact on the firm profitability. Contributing to the discourse surrounding liquidity and profitability is Mr. Sudharsana Reddy Pujari and Dr. Muthu Gopalakrishnan Mariyappa’s though their study titled ‘Does liquidity affect a firm’s profitability? A case of automobile companies in India.’ In the 10 automobile manufacturing firms selected for the study, the current ratio, quick ratio, and absolute liquidity ratios are taken as liquidity, and return on equity shareholders’ funds, return on total assets, return on fixed assets and net profit ratios are selected as profitability ratios. The authors conclude through their empirical analysis, that there is no uniformity in the nature, strength, and direction of the relationship between liquidity and profitability ratios.

Dissecting the application and disclosure status of the International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) in 157 companies of 16 different sectors which are listed on the Dhaka Stock Exchange (DSE) is Mrs. Aziza Akhter’s paper on ‘Adoption of new IFRS in Bangladesh: Disclosure level and benefits.’ The major focus of the report is to analyse the implementation status of the accounting standards after recent amendments in the IAS and the introduction of the new IFRS. Annual reports of 157 companies are examined to check the disclosure status of the accounting standards.

We hope this issue of MUDRA is illuminating and insightful for our readers and motivates potential authors to make more unique, diverse, and topical contributions to the journal.

Dr. Prashant Sharma

Editor