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The French Companies and Their Stock Market Performance at the Launch of Corporate Acquisition Programs
Issue:
Volume 4, Issue 4, July 2016
Pages:
157-163
Received:
23 March 2016
Accepted:
11 May 2016
Published:
7 June 2016
Abstract: This paper presents an econometric analysis of the profitability generated at the initiation of the corporates acquisition programs by French investors. These programs generally launched by the firms directors, need to have a high frequency of acquisition attempts, in order to cover fixed costs of the program and generate profits, which they increase the value of the firm and enrich the shareholders. Our empirical study applied on a sample of French companies of various economics branches gives a controversial result. Indeed, the sample of study made up of 46 firms of any size over a period of 11 years from 1997 to 2007, shows that only the hypothesis of the announcement effect was been verified. In the sub-sample of the studied companies, the acquisition programs of two “SMEs” namely Guerbet and Sartorius had a positive value, what proves their financial performance. These results show that the corporate acquisition programs are projects of value-creating investment for French small and medium enterprises. However, generally, for the sample of study, the French companies considered as frequent bidders on French acquisition market indicate clearly that firm’s acquisition programs during the study period were destructive of value. It means they do not maximize the value of the firm nor the stockholder’s wealth.
Abstract: This paper presents an econometric analysis of the profitability generated at the initiation of the corporates acquisition programs by French investors. These programs generally launched by the firms directors, need to have a high frequency of acquisition attempts, in order to cover fixed costs of the program and generate profits, which they increa...
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Financial Crisis in the Euro-Zone and Moral Hazard
Hernán Ricardo Briceño Avalos
Issue:
Volume 4, Issue 4, July 2016
Pages:
164-178
Received:
7 June 2016
Published:
8 June 2016
Abstract: The aim of this document is provide empirical evidences and theoretical knowledge about how the compelling current Sovereign Debt Crisis in the periphery Euro-zone countries was triggered in accordance with Moral Hazard theory, because the implicit and explicit externalization of risk cost for commercial financial institutions. Different from traditional working papers that concentrated only on weak macroeconomic fundamentals and contagion effects as the main origins of the previous financial crises. This research is dealing with the question how moral hazard problem in the Euro-zone periphery after the introduction of the Euro currency as a global competitor of the U.S.A. Dollar caused and/or nurtured their Fiscal and External unbalances. This after a short period of euphoria and wellbeing, with reduction of the interest rate and easily access of fresh capital to finance unprofitable and risky biased businesses without appropriate banking regulation; ending up in a vicious circle between weak banking system and fiscal imbalances. After assessing different economic and financial statistics from the Euro-zone, as the ratio Short Term External Debt/Foreign Exchange Reserve as a Moral Hazard index and Fiscal and External unbalances Accounts, making a comparison with North-core Euro countries. The first evidence is that the Sovereign Debt Crisis was originated in the awkward circle between weak financial system and implicit guarantees provided by negligent governments without financial regulation and supervision; while politicians differed necessary reforms as Fiscal Union.
Abstract: The aim of this document is provide empirical evidences and theoretical knowledge about how the compelling current Sovereign Debt Crisis in the periphery Euro-zone countries was triggered in accordance with Moral Hazard theory, because the implicit and explicit externalization of risk cost for commercial financial institutions. Different from tradi...
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Debating the ‘Evolution of Accounting Equation’: A Cross-Case Analysis Approach
Issue:
Volume 4, Issue 4, July 2016
Pages:
179-187
Received:
20 May 2016
Accepted:
30 May 2016
Published:
13 June 2016
Abstract: This paper is an interrogation of the applicability of the recently introduced ‘new form of accounting equation’ and a ‘dynamic approach to accounting for capital structure’ (JFA 2013: 1(44) 55-63). It explicates the issues related to the methodological foundations at the base of the model specification and the estimated parameters. It goes on to conduct a cross-case analysis methodological approach to the same set of empirical data as a triangulation process. The outcomes confirm that the provided empirical evidence is not sufficient to demonstrate the pegging of the rate of change of equity and liabilities with respect to the change of assets to 36% and 64% values respectively. Rather this paper’s findings indicate that in the long term companies have used retained earnings and reserves to expel debt as a strategy to keep their debt levels low, except for firms with accumulated losses or excessive deficit. This paper also finds that firms have maintained certain debt levels but not maintained the logic suggested by the pay-off theory, and that the perking order was demonstrated through long-term adjustment process. This paper concludes that the new form of accounting equation is not pragmatically viable. The paper proceeds to make a contribution by developing a predictive dynamic model for capital structure based on lagged variables.
Abstract: This paper is an interrogation of the applicability of the recently introduced ‘new form of accounting equation’ and a ‘dynamic approach to accounting for capital structure’ (JFA 2013: 1(44) 55-63). It explicates the issues related to the methodological foundations at the base of the model specification and the estimated parameters. It goes on to c...
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Accounting Record Keeping Practices in Small and Medium Sized Enterprise’s (SME’s) in Sri Lanka
M. W. Madurapperuma,
P. M. C. Thilakerathne,
I. N. Manawadu
Issue:
Volume 4, Issue 4, July 2016
Pages:
188-193
Received:
12 April 2016
Accepted:
6 May 2016
Published:
14 June 2016
Abstract: Small and Medium Enterprises (SMEs) play vital role in many countries including Sri Lanka, because of its role for the country's economic growth. This study discovers the level of awareness towards the importance of Accounting Record Keeping Practices and its information usage in the business. The research design is based on a survey methodology using a sample of systematically selected SMEs in Gampaha District in Sri Lanka. The target population comprised of 100 SMEs operating retail shops, manufacturing firms and supplier’s of various services in Gampaha district in Sri Lanka. It was concluded that the most of the SMEs do not keep complete accounting records because lack of accounting knowledge and the cost of hiring professional accountants. As a result, there is an inefficient use of accounting information to support financial performance measurement by SMEs. This made it difficult for the entrepreneurs to calculate their business profit efficiently. Lack of keeping of accurate records was highly blamed on the lack of skills in this field by the owners or managers. The study further revealed that the owners and managers of SMEs were highly willing to learn more about how to keep accurate records of their business transactions. The results of the study also revealed that majority of the SMEs encounter problems of lack of accounting knowledge. This study recommended that that the responsible authorities should come up with an effective programme for training for SMEs entrepreneurs.
Abstract: Small and Medium Enterprises (SMEs) play vital role in many countries including Sri Lanka, because of its role for the country's economic growth. This study discovers the level of awareness towards the importance of Accounting Record Keeping Practices and its information usage in the business. The research design is based on a survey methodology us...
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The Quality of Mandatory Disclosure by Listed Companies in Bangladesh
Issue:
Volume 4, Issue 4, July 2016
Pages:
194-201
Received:
23 May 2016
Accepted:
5 June 2016
Published:
23 June 2016
Abstract: The main thrust of this paper is to assess the level of mandatory disclosures attributable to the quality of mandatory disclosure practices by the listed companies in Bangladesh. It is also designed to examine the trend of disclosure over the year and to investigate the variation of disclosure across the samples and industries for measuring the quality of disclosure practices. Thirty annual reports for the year 2006-2010 of non-financial companies with listed Dhaka Stock Exchange in Bangladesh have been considered as sample to find the empirical result of this study. The outcome of the analysis reveals that the mean score of mandatory disclosure is 59.28 percent with a range of 45.34% to 71.85% and 87 percent of sample companies have shown a significant difference in the disclosure scores in their annual reports. The T-test result shows that there is a significant variation of disclosure among the sample firms and a little variation is observed over the years. But the result of F-test reports no variation of disclosure across the industrial sectors. The overall findings of this study is that the quality of mandatory disclosure practiced by listed companies in Bangladesh is being improved over the years at a little variation.
Abstract: The main thrust of this paper is to assess the level of mandatory disclosures attributable to the quality of mandatory disclosure practices by the listed companies in Bangladesh. It is also designed to examine the trend of disclosure over the year and to investigate the variation of disclosure across the samples and industries for measuring the qua...
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Determinants of Dividend Policy for Companies Listed at Dar Es Salaam Security Exchange (DSE), a Case of Selected Listed Companies
Issue:
Volume 4, Issue 4, July 2016
Pages:
202-211
Received:
10 May 2016
Accepted:
23 June 2016
Published:
6 July 2016
Abstract: The main objective of the study was to establish the determinants of dividend policies of companies listed at DSE. Specifically, the study aimed to identify factors that influence dividend policy among listed companies and explore the statistical relationship between determinants of dividend policy. Correlation and regression analysis were used to establish the relationship between the dependent and independent variables. The study concludes that the dividend policies of companies listed at the DSE is determined by the amount of profit after tax, liquidity and shareholders’ fund. Among these four determinants, Profitability is the most significant determinant of dividend policy. The study recommends that listed company should adopt dividend policy based on their current financial circumstances, especially, based on their current Profitability position. Also DSE should conduct frequent training to shareholders of various companies listed at DSE so as to help them make sound financial decisions with regard to which companies to buy shares from.
Abstract: The main objective of the study was to establish the determinants of dividend policies of companies listed at DSE. Specifically, the study aimed to identify factors that influence dividend policy among listed companies and explore the statistical relationship between determinants of dividend policy. Correlation and regression analysis were used to ...
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Dividend Policy and the Profitability of Selected Quoted Manufacturing Firms in Nigeria: An Empirical Analysis
Henry Waleru Akani,
Yellowe Sweneme
Issue:
Volume 4, Issue 4, July 2016
Pages:
212-224
Received:
23 May 2016
Accepted:
12 June 2016
Published:
6 July 2016
Abstract: This paper examined the impact of dividend policy on the profitability of selected quoted manufacturing firms in Nigeria from 1981 – 2014. The objective was to investigate the existing relationship between dividend policy and profitability of the selected quoted manufacturing firms in Nigeria. Time series data were computed from financial statement of the selected quoted manufacturing firms and stock exchange factbook. Return on Investment (ROI) and Net Profit Margin (NPM) were modeled as our dependent variables while Dividend Payout Ratio (DPR), Retention Ratio (RR), Dividend Yield (DY) and Earnings per Share (EPS) were proxied as our independent variables. Multiple regressions with the aid of Statistical Package for Social Sciences Research (SPSS) were used as data analyses techniques. Multi co-linearity, co-linearity, Durbin Watson, F-statistics and regression coefficient were used to determine the dynamic relationship between the variables. Findings revealed that all the independent variables have positive relationship with the dependent variables except dividend yield. The study recommends that operational efficiency of Nigerian financial market should be deepened and management should strengthen its effort for effective dividend policy that will increase the profitability of the quoted manufacturing firms Nigeria.
Abstract: This paper examined the impact of dividend policy on the profitability of selected quoted manufacturing firms in Nigeria from 1981 – 2014. The objective was to investigate the existing relationship between dividend policy and profitability of the selected quoted manufacturing firms in Nigeria. Time series data were computed from financial statement...
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The Effect of Market Risk on Financial Performance of Commercial Banks in Kenya
Jane Gathigia Muriithi,
Willy Mwangi Muturi,
Kennedy Munyua Waweru
Issue:
Volume 4, Issue 4, July 2016
Pages:
225-233
Received:
17 June 2016
Accepted:
7 July 2016
Published:
23 July 2016
Abstract: Despite the growth in the Kenyan banking sector, market risk still remains a major challenge. The objective of study was to assess the effect of market risk on financial performance of commercial banks in Kenya. The study covered the period between year 2005 and 2014. Market risk was measured by degree of financial leverage, interest rate risk and foreign exchange exposure while financial performance was measured by return on equity. The study used the balance sheets components and financial ratios for 43 registered commercial banks in Kenya. Panel data techniques of random effects, fixed effects estimation and generalized method of moments (GMM) were used to purge time–invariant unobserved firm specific effects and to mitigate potential endogeneity problems. The pairwise correlations between the variables were carried out. F- test was used to determine the significance of the regression while the coefficient of determination, within and between R2, were used to determine how much variation in dependent variable is explained by independent variables. From the results financial leverage, interest rate and foreign exchange exposure have negative and significant relationship with bank profitability. Based on the study findings, it is recommended that commercial banks especially locally owned are required to consider finding ways of mitigating the market risks by use of financial instruments such as financial derivatives and be active in derivatives markets. These may reduce their interest rate risk and foreign currency risk exposure. The commercial banks are also required to monitor the financial leverage so as to reduce the financial risk.
Abstract: Despite the growth in the Kenyan banking sector, market risk still remains a major challenge. The objective of study was to assess the effect of market risk on financial performance of commercial banks in Kenya. The study covered the period between year 2005 and 2014. Market risk was measured by degree of financial leverage, interest rate risk and ...
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Influence of Hedging Cost upon Weather Derivatives Pricing
Issue:
Volume 4, Issue 4, July 2016
Pages:
234-238
Received:
24 January 2016
Accepted:
29 February 2016
Published:
2 August 2016
Abstract: Weather derivatives play a major role in risk management of non-catastrophic weather market. The healthy development of the derivatives market is inseparable from the reasonable pricing of the product itself. As non-traditional financial derivatives, weather derivatives can provide a good risk hedging. Meanwhile, in the weather derivatives market, brokers play an even more important part than in the traditional financial derivatives market. Therefore, when pricing weather derivatives, we must take two factors into consideration, namely, brokers as market makers as well as the impact of their hedging cost on weather derivatives pricing. Based on the expected claims and risk payment of basic derivatives contracts, this paper is going to discuss weather derivatives pricing on the basis of hedging costs, while taking into account the impact of market makers’ hedging costs, risk aversion and existing positions.
Abstract: Weather derivatives play a major role in risk management of non-catastrophic weather market. The healthy development of the derivatives market is inseparable from the reasonable pricing of the product itself. As non-traditional financial derivatives, weather derivatives can provide a good risk hedging. Meanwhile, in the weather derivatives market, ...
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Factors Analysis on the Level of Cash Dividend in Chinese Gem Listed Companies
Lin Huijuan,
Huang Qianhong
Issue:
Volume 4, Issue 4, July 2016
Pages:
239-244
Received:
2 August 2016
Published:
3 August 2016
Abstract: The growth enterprise market (gem), which has the characteristic of strong cash dividend, is a supplement to the main board market and take an indispensable part in the financing platform and the multi-level capital market in China, but the current achievements in the research reveals that researchers who studied the cash dividend mostly based on the main board market rather than gem, however, the characteristics of the gem companies and their cash dividends are different from the main board market due to the particularities of their own. Therefore, basing on the current achievements in the research, the characteristics of cash dividend in gem companies and the main factors that influence the paying level of the cash dividend are analyzed in this paper.
Abstract: The growth enterprise market (gem), which has the characteristic of strong cash dividend, is a supplement to the main board market and take an indispensable part in the financing platform and the multi-level capital market in China, but the current achievements in the research reveals that researchers who studied the cash dividend mostly based on t...
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