The primary purpose for which the valuation of Redmond Pro Printing, Inc. was to value 100 per cent control interest of equity for charitable contribution. As the company is closely held and no interest to market the company or its assets, the capitalization of earning method based on a normalized cash flow income stream has been adopted as the most appropriate method of valuation of equity. The researcher for the purpose used databases of sales of controlling interests in closely held businesses. Databases reviewed are, Bizcomps, Done Deals, Pratt’s Stats, and the IBA Market Comparison Database. At the same time, the economic outlook in general of US and the outlook of the specific industry in particular and that of Florida region is considered. The capitalization rate arrived in the pertinent case is 15.25 per cent, after due adjustment of long term sustainable growth rate of 2.61 per cent, and industry risk premium; size premium; company specific risk, to the 20 year US treasury bond rate of 2.48 per cent. As arrived, the indication value under the capitalization method of earnings was $ 8,832,960 which included non-operating asset values for excess cash ($813,960), a home town ($600,000-including art work of $69,600) or a total of $ 1,482,960. A small discount for lack of marketability of 5 per cent was applied to this indicated control value to arrive at $ 8,300,000 (rounded) non-marketable value.
IntroductionIslamic banking is a paradigm that provides a structure for transactions involving exchange of capital in accordance with Sharia Law. Without the provision of charging interest1, i,t is a setting in which the lending institute makes money through the sharing of profits and losses with the borrowing party2*3. The assets of Islamic banks are expected to reach the $6.1 trillion level by 2020 (all limits in U.S. dollars), up from $1.6 trillion in 20 1 24; this growth approximates a fourfold ihcrease in assets in less than a decade; thereby demonstrating the potential of Islamic banking as an engine for economic growth throughout the world.Assets held by Islamic institutions, during the aftermath of the 2008 financial crisis (2009-2013), exhibited an annual compounded growth rate of 17 per cent5. This sector has witnessed avast expansion in the majority of their segments compared to its conventional counterpart6 7, but, Islamic banking is still a nascent paradigm, which only emerged in the 1970s, when some Islamic financial institutes started providing enhanced services within the arena of lending money8.The explosive growth of Islamic banking has been very successful to this point and still has significant upside potential. It has not yet been able to capture substantial market share, even in the Gulf market. Islamic banking has not captured more than half of any market that it services5. As it has proved to be such a profitable domain, some of the largest conventional banks (e.g., Citibank9, HSBC10) have begun to provide Islamic banking in certain selected markets, HSBC offers Islamic banking in Malaysia and Saudi Arabia10 while CitiBank provides Islamic banking services in the UAE9.The conventional banking system has been relatively unsuccessful in preserving the monetary interest of its various stakeholders, including those involved in national economies. The 2008 financial crisis accentuated that loopholes do indeed still exist and that regulatory failures were more prevalent in the conventional system. Islamic banking is not only poised to grow faster than conventional banking, but can also safeguard customers from various forms of financial exploitations in the future11. This study compares Islamic banking to conventional banking during the aftermath of the widespread 2008 financial crisis. Islamic banks were chosen from countries in the Organization of Islamic Cooperation (OIC) countries which consists of 57 predominantly Islamic countries, with India and Russia often invited to attend meetings as observers, (see Exhibit).This study analyses the performance of Islamic and conventional banks from six different OIC countries encompassing distinct and disparate economic, ideological, and political characteristics. The study finds evidence that Islamic banks in developed countries, as well as those in constitutionally Islamic countries (CICs), performed much better than conventional banks during the height of the financial crisis. This study provides robust results that the conservative nature of Islamic banking was instrumental in protecting them from the downturn that the conventional banks experienced.Principles of Islamic BankingIslam is the religious faith of Muslims as founded by the prophet Muhammad and taught through the Holy Quran. The basic principle is submission to a unique and personal god, Allah. It is the worldu0027s second largest religion that is also the worldu0027s fastest growing, which has 1.7 billion followers or 23 per cent of the worldu0027s population. There are two major denominations in Islam, Shia and Sunni. Their division traces back to a Sunni-Shia schism following the death of Muhammad in 632, which arose over the succession to Muhammad as caliph of the Islamic community. The present demographic breakdown between the two denominations is difficult to fully assess and varies according to the source employed, but an accepted approximation is that 85 to 90 per cent of the worldu0027s Muslims are Sunni and the rest being Shia. …
IntroductionInnovation activity has long been shown to have a long-term effect on firms' value. Porter1 has stated that, to compete effectively in international markets, a nation's businesses must continuously innovate and upgrade their competitive advantages. Innovation and upgrading come from sustained investment in physical as well as intangible assets. Given the importance of innovation, research into the direct effect of innovation on firms' market value should be a topic of interest, especially to managers and shareholders. This paper addresses the empirical stock market relationship between investment in innovation and a firm's stock price. Though it is beyond the purview of our analysis, mention may be made important work by Lerner2 and Swamy3 on the appropriate explanatory power of ((P-MC)/P)), referring to price; MC to marginal cost versus ((P-AC)/P)), AC referring to average cost in determining the degree of monopoly power.There has been considerable research on the impact of short-term institutional trading on corporate behavior,4 revealing that managers will attempt to boost short-term earnings to maximize short-term profits for their myopic owners. Such behavior of course mitigates against longer-term investments in intangibles such as innovation which were accelerated after the 2007-2009 financial crisis due to the collapse of traditional earnings across most U.S. companies. This paper examines this phenomenon to determine if investment in innovation has survived the U.S. financial crisis.PreludeFang and Tian5 raise the topic of 'does stock liquidity enhance or impede firm innovation?' Using a difference-in-difference approach that relies on the exogenous variation in liquidity, they found that an increase in liquidity causes a reduction in future innovation. Exposure to hostile takeovers is one mechanism through which this causality works. Stein6 shows that in the presence of information asymmetry between managers and investors, takeover pressure could induce managers to sacrifice long-term performance (like investment in innovation) for current profits to keep the stock from becoming undervalued. Shleifer and Summers7 suggest that managers have less power over shareholders when hostile takeover threats are higher, which leads to fewer managerial incentives to invest in innovation. Following their logic, a cut in current innovation spending should cause an increase in current earnings but a decrease in the market valuation of the firm.On the other hand, there has been substantial research dedicated to studying the importance of innovation to firm value. For example, Chan8 uses the event study methodology to test the idea if announcement of changes to Research and Development (R&D) increase firm's market value. He found that, in general, 95 firms (out of the sample of 167 firms) react positively to announcement of Research and Development, which is consistent with the previous findings of McConnell and Muscarella9 that on average the stock markets react positively to announcements of increases in planned capital expenditures and negatively to decreases in planned capital expenditures (with the exception of oil and gas exploration). Woolridge10 also reports positive stock price responses to a variety of long-term strategic investments, including joint ventures, plant and equipment purchases, new product introductions, and R&D spending.Johnson and Pazderka11 in their paper 'Firm value and investment in R&D' use Canadian stock market and corporate finance data to test the hypothesis that the market places a positive value on reported R&D spending of firms as an indicator of expected profitability and growth. Their empirical results show a positive statistically significant relationship between R&D spending and firm value and suggest that investment in R&D is a rational allocation of resources. In this paper, we are trying to identify whether innovation continues to help to boost firms' market value even after a period financial crisis. …
IntroductionDifficulties in the Real Estate world depend largely on the articulated economic situation that has affected Italy, Europe and all over the western world. The international financial system, grown tremendously over the last 15-18 years, has shown that this growth without an appropriate system of infrastructure, rules and controls, could lead to profound weaknesses (Nomisma1). The turbulence that has hit the financial markets has come at the height of an excessive expansion of credit and finance, which for several years, had contributed to the development of the global economy (Cacciamani2; Ciaramella & Tronconi3).The crisis in the financial subprime products, linked to the U.S. Real Estate market, has brought to the attention of market operators the need to define a proper way of financing investments, so much that Real Estate is going through a significant transformation that is radically changing the characteristics, structure and relationships with other economic sectors. Nevertheless, Europe's Real Estate Industry is confident that 2015 and thereafter will be good years (PWC4). Since the late nineties, one of the main features of Real Estate has been the gradual intensification of the relationship with finance, because of the changes caused by the progressive development of Real Estate financial transactions. This growth has led, on the one hand, to more and more attention to the problems associated with the investment property and, to the orientation towards management addressed to the preservation of the asset value and to the profitability of the same. (Cafferata et. al.,5).The process of financialization of the Real Estate has therefore prompted the application, at Real Estate Management level, of an economical and financial logic, which is focusing on their ability of generating income. However, the most significant result of this process is probably that the assets are not considered as immutable; which implies the need to have adequate numbers of specialized structures which can give quality services on a large scale and at competitive costs. In this sense, the willingness to outsource more and more pronounced services to specialized companies is not a direct consequence of the desire to save on costs, but it is indicative of the commitment to protect the value of Real Estate assets, thus preserving over time, to increase the service quality and efficiency.PreludeIn addition, it is necessary to offer funding incentives by using Real Estate Funds and REITs for property possession and management available under European law. In particular, the role played by Real Estate Funds is crucial: many investors chose this channel of investment rather than direct investment and, furthermore, it is the only one valid for private investors of limited opportunity. For example, in the specific case of Italian Retail Real Estate, Real Estate Funds represent at least three quarters of the total investment, with a prevalence of international investors who are able to attract a flow of capital and resources essential to boost the economic cycle. In this sense, the high level of environmental complexity, along with the crisis that has imprinted and continues to mark the Real Estate Industry, require a general rethinking of management issues. Moreover a business model adjustment is needed to manage and to maintain the competitive advantage over time. Nowadays, the property (real estate) must be considered as a complex asset where everything is integrated and in which the financial management aspect becomes crucial for creating and sustaining new competitive advantages over time and not simply as a symbolic sign in a specific area.The research objective of this study is to: conceptualize a model directed to the value creation that highlights the role of financial services and the growing importance assumed by the integrated services in the process of evolution of the Real Estate's value chain and follows an exploratory and systematic research methodology. …
IntroductionA crude oil futures contract is an agreement to buy or sell a specified amount of crude oil at an agreed upon future date at an agreed upon price and location. Unless offset, the parties are obliged to complete the agreed transaction at the expiration date. Market expectation, therefore, is reflected in the futures market where buyers and sellers fix future prices corresponding to the delivery times. Apart from providing much needed liquidity, large international futures markets also serve as price centers to worldwide traders as a whole. While less than three per cent of futures contracts result in the delivery of crude oil, futures remain an indicative benchmark of market expectation. Participants in the futures market in general are hedgers (commercial) and speculators (noncommercial) who are distinguished by their exposures to the physical crude oil traded in the futures markets.For this study, the light sweet crude contract for West Texas Intermediate (WTI) FOB Cushing that trades on the New York Mercantile Exchange (NYMEX), now integrated into the CME Group (Chicago Mercantile Exchange), is examined. While there are many other petroleum-based products that are traded (such as BRENT, Rotterdam, sour gas, and heavier oils like bitumen), and refined products (such as gasoline (RBOB, Euro-BOB) and heating oil), as well as highly correlated ancillary products (such as natural gas and bio-fuels), this study focuses on the WTI as it is the benchmark and most closely followed measure of the market for petroleum-based products in the world. Moreover, this future contract has the highest volume of any futures contracts and so this market segment exhibits continuous trading and would, therefore, not reflect any discontinuity that would distort either spot or futures prices. Lastly, most of the other futures contracts display a discernible discount or premium to the WTI, which makes their contracts easier to value correctly once the WTI relationship is measured. This study employs the most reliable data source for future estimation of prices available. Given the plethora of light, medium, and heavy contacts that are currently available, it would not be practical to attempt to measure them all individually. Rather, given the exhibited correlation among the contracts, it is imperative to measure the WTI with all other contracts then to be measured.PreludeBased on the literature review, variations of Auto Regressive Integrated Moving Average (ARIMA) and Vector Auto Regression (VAR) models are used to model the crude prices. The ARIMA model allows for the inclusion of information from the past observations of a series, but not for the inclusion of other exogenous variables that may be relevant. The price of crude oil is influenced by other economic factors. VAR models can be applied to model a vector of time series. VAR models including spot prices and stock (inventories) as exogenous variables are used for comparison of predictive accuracy.Crude oil price, like any commodity price, is influenced by fundamental variables, such as stocks (inventory), demand and supply. The crude oil prices are also impacted by factors such as geopolitical events, weather, and speculation in addition to micro and macro economics factors (EIA,1). Therefore, it is both complex and difficult to accurately model the price movement.Several studies have attempted to build mathematical models to help predict crude oil price movements. While the most popular forecasting approaches are based on traditional econometrics, computational approaches such as artificial neural networks and fuzzy logic expert systems have gained popularity in financial markets because of their flexibility and accuracy. However, there is still no general consensus on which method is more reliable (Behmiri and Manso,2).Pindyck3 used Kalman Filter to model long run behavior of crude prices using up to 127 years of price data. Fernandez4 used financial time series data to argue that the market either overreacts or under-reacts to new market information. …
Introductionin the future.In this paper, we examine the relation between Fed's monetary policy stance and analyst coverage, analyst recommendations, and revisions in the U.S. We know from previous studies that both analyst coverage and analyst recommendations have a significant impact on stock returns (Barber, et al1., Stickel2, Womack3, Barron, et al4., and Chan and Hameed5). Stocks that are covered by more analysts (i.e., high coverage stocks) and stocks that receive more favorable scores tend to have higher returns Since analyst coverage and recommendations are important to the investors, it would be crucial to know the factors that affect them. Several previous studies have examined the impact of firm characteristics on analyst coverage and recommendations, but to the best of our knowledge, there is no study on the relation between monetary policy and analyst coverage/ recommendations. Since macroeconomic policies including the monetary policy have an impact on firms' revenues, expenses and profits, stock analysts should control for them when forecasting firms' future cash flows, earnings and dividends. When the Fed is following a more accommodative (i.e., expansionary) policy, we would expect stock analysts to forecast a relatively brighter future for the firms that they are covering (hence better recommendation scores) during these periods. We would also expect more upward revisions and fewer downward revisions when the Fed is more accommodative.If that is the case, a recommendation score of 3 shouldn't be interpreted in the same way when the Fed is trying to grow the economy versus when it is trying to cool down the economy. Also, in that case, an upward revision for a firm in an expansionary policy period should not be regarded as highly as an upward revision in a contractionary policy period. In other words, if monetary policy significantly affects analyst coverage/revisions, we will need to interpret the recommendation scores, the upward/downward revisions, and the number of analysts following each firm differently in expansionary and contractionary policy periods. If there is a significant relation between monetary policy and analyst coverage and/or recommendations, it will have implications for future research. All future research that examines the relation between analyst recommendations/ coverage and stock prices will have to control for the monetary environment.PreludeSeveral studies have examined the relation between analyst forecasts (and coverage) and stock returns. These studies have shown a significant relationship between analyst forecasts (and coverage) and stock returns. Stickel and Womack show that favorable changes in individual analyst recommendations are accompanied by positive returns at the time of the announcement. They also show that unfavorable changes in recommendations are accompanied by negative returns. They also show a price drift that may continue up to six months after the announcement, meaning that prices slowly adjust.Later, Barber, et al. examine whether it is possible to profit from various investment strategies using publicly available analyst recommendations. They find that purchasing stocks with the most favorable consensus recommendations yield annual gross abnormal returns exceeding four percent, if the portfolios are rebalanced daily and if a timely response is given to recommendation changes. They show that similar gross abnormal returns can be made by short-selling stocks with the least favorable consensus recommendations. However, since their strategies require frequent trading, the transaction costs are high. After accounting for these costs, they find that none of their strategies generates a positive abnormal net return.Barron, et al. attempt to find out whether the relation between dispersion in analyst forecasts and stock returns is positive or negative, and which of the two variables, i.e. uncertainty and lack of consensus, causes the dispersion. …
IntroductionGlobalization of economies has opened up competitiveness in most field of business activities, be it satisfying their customers with quality product at competitive prices or adding value to the shareholders wealth. Competitiveness among businesses is in terms of investments, technology adoption, new product development, financial inclusion, internationalization, mergers and acquisitions, and so on. Corporate managers are actively engaged to take business and financial decisions which results in long term value to their shareholders. Managers pursue this goal through their investment, financing and dividend decisions. Investment decision involve commitment of funds for long-term projects, while financing decision is concerned with selection of an appropriate capital structure that aims to minimize the cost of capital of firm (Chowdhury,1). A financial decision which also includes dividend policy decision has assumed great importance in Corporate Finance that many studies have led to new theories and models to create value. Dividend policy refers to the payout the management decides to compensate their shareholders for having assumed the risk of investment. But what determines the amount to be paid to the shareholders as dividend is a key policy decision that management has to make by keeping various investment, market, expectations etc., in mind. Brealy and Myers2 found that, the dividend policy comes among the top ten puzzles in finance.Dividend policy by firms depends on various factors such as the age of the firm, stability of earnings,trade cycles, liquidity position, management philosophy etc. For example, a new company may not prefer to pay all its earnings as dividend as it would enable for investments, though, technically, firms pay dividend out of the profit it earn. Profits do not guarantee the dividend, if liquidity position is not sound. As the dividend policy decision shapes its long term financing, short-term investments, and also helps in creation of wealth to shareholders, management should therefore act prudently to arrive at a decision to appropriate the profit between dividend and earnings. In Pandey3 view, Dividend policy is a decision by the financial manager whether the firm should distribute all profit or retain them or to distribute a portion and retain the balance. Thus, the dividend decisions in the form of dividend policy forms an important aspect of corporate financial management.That is, the pattern and payment of dividend reflects on the company's financial position and it is a valuable source of information for investors, managers and lenders. Through and by means of highpayout a firm can attract investors and increase the demand for its share, but shareholders consider the dividend payout as a crucial factor in determining the financial health of a company, in terms of its ability to increase earnings and stock price-in future. For managers, they will be left with fewer funds for further business development, and for lenders, high dividends are an indication of fewer amounts available to settle their claims.So, the first objective of the study is to map the pattern of dividend by the sample companies.PreludeAs -the dividend announcement and payment stimulate the market price of equity shares, it also influences market capitalization of firm. The studies conducted have found current year's earnings as the major determinant of dividend payment. Lintner4 in his study on the determinants of dividend payout amongst American companies found that, the dividend decisions are based on current year's profit and previous year's dividend payment. Companies pay a fixed portion of their earnings after tax as dividend and the amount of dividend varies according to the earnings. Baker and Powell5 concluded that the determinants of dividend are industry specific and the major determinant is anticipated future earnings.Bose and Husain6 showed that, most of the firms increased their dividend payment due to increase in profits and decrease their dividend payment due to decrease in profits. …
IntroductionA Hospital Administrator is primarily a manager of scarce resources which are many and varied. This is especially so in a country like India. The success of a hospital administrator depends on how well he or she organizes and utilizes the available resources. A hospital administrator may be compared to a conductor of an orchestra; making optimum use of each resource.' Equally imperative is the development of new innovative ideas on the part of hospital administrators to generate wealth and revenue as money is invariably a scarce entity in most cases.It is ironic that the health care facilities, which restore the health of the diseased, pose a huge health risk and environmental degradation due to improper hospital waste management. Safe and sustainable health care waste management is not possible without a favourable attitude among health care providers.2 One of the most important matters in planning a hospital is to consider the disposal routes of all waste and infected material. In every part of the hospital where patients are treated, there will be infected material to be disposed of. Dirty materials should, in general, go into a bin, bag or other disposal container at its point of origin and remain in that container until it reaches a point at which it is sterilized or incinerated1. It is noteworthy that Government of India enacted an Act in July 1996, followed by laying down Biomedical Waste (Handling and Management) Rules in 1998 to ensure proper handling and disposal of hospital wastes4.Though wealth might not be considered as significant as health, it is a universal truth that wealth and funds are salient inputs for any system. Thus it is a refreshingly confounding fact that wealth can actually be generated by utilizing the solid / medical wastes in hospitals after adequate treatment5.PreludeIn India, the average production of hospital waste is 1.5 kg./bed/day (range: 1-2.50 kg/bed/day)5, out of which 20 per cent is biomedical (hazardous) in nature. However, waste produced has been quoted up to 5.24 kg/bed/day in developed countries.6 These higher figures in developed countries are due to greater use of disposables in those countries. On an average, 1.8 million wastes are generated per day from about 1.2 million beds of about 11000 hospitals in India. Cost benefit measures of hospital wastes, especially the biomedical wastes, are not practiced; therefore emphasis is given in this study on cost containment/ cost effectiveness. Thus the domestic waste such as cardboard, paper, container, glass bottles and a part of biomedical waste such as plastic materials (IV bottle, tube syringes, gloves, canula, bags etc.) and other rubber materials can be utilized by recycling after disinfection/ sterilization to recover some revenue out of it or to bring down the cost of treatment like in the case of recycling of high cost disposables such as catheterization tube, dialyzers, etc. The benefit can be shared with low socio-economic patients by providing them quality state of the art health care at an affordable (low) cost. Law does not mention whether re use the waste or not, but All India Audit Report on Management of Waste emphasizes on 3 Rs. i.e., Reduce, Recycle and Reuse7. Developed countries have also adopted the practice of reuse after recycle.Methodology UsedThe Sanjay Gandhi Post Graduate Institute of Medical Sciences (S.G.P.G.I.M.S.), Lucknow, Uttar Pradesh, State of India which is a tertiary care super specialty (868-bedded) is a pioneer in using modern management (innovative) techniques vis-a-vis cost-containment, cost-effectiveness and savings methods in waste utilization and recycling*. The present study was done with an intention to analyze the outcome of measures adopted for hospital solid waste utilization/ recycling, in terms of wealth/ revenue generation and medical 'treatment cost' reduction.A retrospective study was carried out in the month of April 2014 at S. …
IntroductionThe budget based on the distinct accounting model and relying on two financial statements - - an income statement and balance sheet - - is a pure theoretical exercise in practical futility1. Commenting on the accuracy or inaccuracy and reliability or unreliability of financial data provided by accountants, the Swedish 'Match-King' has this to say:You know, it's curious thing how every pefiod in history has it$ own gods, its own high priests and holy days. It's been true of politics and religion and war, and now it's true of economics. We've created something new. Instead of being fighting men as in days of old, we're all in business, and we've chosen some new high priests and called them accountants. They too have a holy day, the 31st of December, on which we're supposed to confess. In olden times, the princes and everyone would go to confession because it was the thing to do, whether they believed or not.Today the world demands balance sheets, profitand-loss statements once a year. But if you're really working on great ideas, you can't supply these on schedule and expose yourself to view. Yet you've got to tell the public something, and so long as it's satisfied and continues to have faith in you, it's really not important what you confess. The December ceremony isn't really a law of the gods - - it's just something we've invented. Alright, let's conform, but don't let's do it in a way that will spoil our plans. And some day people will realize that every balance sheet is wrong because it doesn't contain anything but figures. The real strengths and weaknesses of an enterprise lie in the plans'...But the key issue is not accounting : It is accountability. The use of cash accounting, which vastly understates the true cost of government, is not accidental. It has enabled politicians to increase benefits to special interest groups continually without reporting the true cost of those obligations. Thus the most important benefit of accrual accounting would be to reduce politicians' incentive to curry favor with today's voters at the expense of tomorrow's taxpayers2.No wonder, the budget(s) which are fictional and have got to be presented by policy makers year after year, more as a duty to the country, have to undergo several step by step pathological tests which may take anywhere upto three years for completing several laboratory tests before the actual diagnosis of the problem and which assume the form of presentation of the budget estimate for the current year; re-revised estimate (based on changed macroeconomic scenario like hike in crude (petroleum) oil prices exerting inflationary pressures, etc., revised estimate (final estimate); all revealing very wide divergences/differences from the actual figure. During the process of undergoing several laboratory tests, the country has got to cope up with problems emerging from statistical manipulations, wrong budgets estimates and wrong guess work, etc. - - all leading to structural imbalances in the economy. In this context, the view point of the renowned corporate finance expert Alan Shapiro is highly persinent to recall;The gap between the cash deficit and the deficit on an actual basis is enormous2.Budget Classification3* Unified BudgetThe unified unified budget is a comprehensive statement of the government's financial plan, replacing the administrative budget as the Government's basic planning document. The unified budget includes receipts and expenditures of funds owned by the government, as well as receipts and expenditures of funds owned by the government, as well as receipts and expenditures of the trust funds and certain government-sponsored agencies. Sales of participation certificates are treated as borrowing in the unified budget. Receipts and expenditures in the unified budget are generally presented on a cash basis, but are presented on an accrual basis after accounting procedures are revised.* National Income Accounts BudgetThe national income accounts budget summarises the receipts and expenditures of the Federal Government sector as an integrated part of the recorded activities (i. …
It appears from recent experiences that to-day’s governance (Man-Mangement) has been degraded to such an extent that moral bankruptcy has become an integral part of day to day business activities -- as evidenced by experiences -- where righteousness is at a discount (account tampering, manipulation/falsification of accounts and frauds are rampant); truth has become rare, trickery at all levels of governance through rampant red tapism in decision-making (and corporate-related financial institutions’ resorting to heinous business practices of money laundering, etc.) is spreading and integrity is vanishing; and selfishnesse is growing alarmingly in all spheres of human business life. The research paper is based on case studies of major corporate related financial institutions with recommendations to come out with practical solutions.
IntroductionConsidering the technical efficiences, Farm C (small scale) has been the most technically efficient out of the three farms since it has been working/ operating at a level closer to the maximum capacity attainable, unlike the two large farms that have a lot of equipment, cages, feed mill through integration but are yet under-utilized. Household income is directly related to the consumption of poultry meat and eggs in Nigeria, since poultry products are normal food, the income elasticity of demand for poultry products in Nigeria is relatively elastic, thus with increasing income, demand will certainly rise and vice versa (Oni1).Household income in Nigeria has increased substantially in the last few years, evidently from the minimum wage given rise to the increasingly demand for more nourishable protein diet like poultry products by many household, thus promoting chicken and table eggs from their occasional diet category to normal food. Eggs nowadays is a major breakfast food for many household (Cole2). He stressed further that, the increased demand has triggered the increase in prices of poultry products and partly due to the ban in importation of processed chicken. Though, this ban have encouraged increased Local poultry production, but the consequent increased cost of production that emanated from the ban in maize importation led to the increasing price of these products, making them out of the reach of many household. Adeyokunnu and Ingersent1, asserted that high cost of table eggs in Nigeria was partly attributed to high cost of feeding the birds, irregular . supply of the feeds, irregular replacement of stock, and small scale of production.Akinwumi and Ikpi found out that feed accounts for about 65 per cent of the total cost of production, day old chicks, takes 18 per cent transportation 2%, miscellaneous expenses (mostly utilities) constitutes 1.5 per cent. They also found out that about 60 per cent of all the day old chicks used in the country were imported. On the feed situation in Nigeria, they found out that there was about 60 percent capacity utilization of feed mills in Nigeria due to delays in grain importation and problems of feed utilization.Bamidele5, revealed that the cost of production vary across the regions due to variations in factor prices, and that major component of costs was feed which had the highest percentage of about 73 per cent of the total cost of production. He also revealed that in the index of cost variability computed, egg production using battery caged had the highest variance while that of broiler was low. Nwoko6, observed that over 90 per cent of all exotic poultry produced in the country on commercial basis is kept by private producers. He observed further that, poultry keepers in Nigeria are mainly interested in egg production, because consumers know little or difference between broiler and culled birds, since they prefer old strong chicken meat to those obtained from broilers for sale while they concentrate on layers which are culled as demanded.Cole, reported that, the quantity of eggs and poultry meat consumed by each household is determined by a number of socio - economic characteristics, which includes; size of households, level of household income, prices of eggs and poultry meat, level of education or awareness, availability of close substitutes and festivities.Specific Objectives of the Study are to:* determine the cost of production amongst different sizes of poultry entrepreneur in Oyo State;* determine the lucrativeness of poultry production faced with the present situation in the country;* compare the present level of operation of the farms selected and determine the factors responsible for the existing performance;* determine the efficiency of each farm under consideration.Methodology UsedThe three farms selected were located within Oyo State. The two large-scale farms are Vabo agricultural industry in Ibadan, and Amo Sandas in A weOyo, while the small scale farm is Ajagbe poultry farm in Ogbomoso. …
IntroductionIn this paper, we analyze the effects of monetary policy and firm characteristics on different measures of working capital management. More specifically, we use micro level U.S. manufacturing firm data, namely firm size, profitability, tangibility, marketto-book ratios, and leverage in conjunction with aggregate monetary policy to analyze the impacts on firms' short-term financial management measures.We attempt to answer these three questions:* What is the impact of monetary policy on firms' short-term financial management measures including net working capital, inventory turnover and receivables turnover?* Do firm characteristics like size, profitability, tangibility, market-to-book ratio, and leverage help firms from the impact of monetary policy?* Since monetary policy affects financing conditions for firms, does it have a different impact on highly levered firms versus other firms?Our results will have implications for policymakers as well as managers of firms and investors. How does monetary policy affect firms' operations? What kinds of firms are affected less (insulated more)? Does having more debt make the firm more prone to the impacts of monetary policy? Knowing the answers to these questions will help the Fed when planning its future actions. It will also help firm managers because they will know what kind of precautions they will need to take in advance of monetary policy actions. Investors would also benefit from this knowledge. Depending on their expectations for Fed's actions, they will be able to switch to another investment if they think that their current investment will be negatively affected.PreludeA number of papers have looked at the hypothesis whereby monetary policy is seen to affect firms' investments and their term structure of debt, but several factors them from the transmission effects of monetary policy. Gander1 finds some evidence that U.S. industrial firms themselves from the effects of monetary policy in their borrowing behavior, and the firms' retained earnings have a significant role in the insulation effect. In our paper, we look at possible insulation effects of monetary policy on short-term financial management ratios of firms due to factors such as firm size and leverage.Bernanke and Blinder ( 1 992)2 and Gertler and Gilchrist (1993, 1994)1-4 have analyzed the existence and the degree of effectiveness of different lending channels (banks and nonbanks) and the transmission of monetary policy through the alternate sources of lending for aggregated corporate data. Bernanke ( 1993)5 reviewed the understanding of the macroeconomic role of credit or. more accurately, of the credit creation process. The paper noted that an alternative to this conventional view holds that the credit creation process, far from being a perfectly functioning machine, may sometimes be ineffective and even break down. According to Bernanke, the development of alternative credit sources will both reduce the Fed's influence on the volume of lending and increase the ability of borrowers to substitute away from bank loans. In our paper, we try t& identify firm characteristics that may insulate the firm from the transmission mechanism of the aggregate credit creation process.Jeffrey Nilsen (1999)6 has looked at the behavior of trade credit, particularly at the possibility that wholesale and retail firms increase their use of trade credit when monetary policy tightens and bank loans become more difficult to obtain. We are interested in the behavior of firms' net working capital, inventory turnover and receivables turnovers when monetary policy is contractionary, and check whether certain firm characteristics help to the firms from the effects of tighter monetary policy. Bernanke finds that monetary policy has a disproportionate effect on small firms with the implication that the burdens of disinflation are not evenly shared. …
IntroductionConsidering the technical efficiences, Farm C (small scale) has been the most technically efficient out of the three farms since it has been working/ operating at a level closer to the maximum capacity attainable, unlike the two large farms that have a lot of equipment, cages, feed mill through integration but are yet under-utilized. Household income is directly related to the consumption of poultry meat and eggs in Nigeria, since poultry products are normal food, the income elasticity of demand for poultry products in Nigeria is relatively elastic, thus with increasing income, demand will certainly rise and vice versa (Oni1).Household income in Nigeria has increased substantially in the last few years, evidently from the minimum wage given rise to the increasingly demand for more nourishable protein diet like poultry products by many household, thus promoting chicken and table eggs from their occasional diet category to normal food. Eggs nowadays is a major breakfast food for many household (Cole2). He stressed further that, the increased demand has triggered the increase in prices of poultry products and partly due to the ban in importation of processed chicken. Though, this ban have encouraged increased Local poultry production, but the consequent increased cost of production that emanated from the ban in maize importation led to the increasing price of these products, making them out of the reach of many household. Adeyokunnu and Ingersent1, asserted that high cost of table eggs in Nigeria was partly attributed to high cost of feeding the birds, irregular . supply of the feeds, irregular replacement of stock, and small scale of production.Akinwumi and Ikpi found out that feed accounts for about 65 per cent of the total cost of production, day old chicks, takes 18 per cent transportation 2%, miscellaneous expenses (mostly utilities) constitutes 1.5 per cent. They also found out that about 60 per cent of all the day old chicks used in the country were imported. On the feed situation in Nigeria, they found out that there was about 60 percent capacity utilization of feed mills in Nigeria due to delays in grain importation and problems of feed utilization.Bamidele5, revealed that the cost of production vary across the regions due to variations in factor prices, and that major component of costs was feed which had the highest percentage of about 73 per cent of the total cost of production. He also revealed that in the index of cost variability computed, egg production using battery caged had the highest variance while that of broiler was low. Nwoko6, observed that over 90 per cent of all exotic poultry produced in the country on commercial basis is kept by private producers. He observed further that, poultry keepers in Nigeria are mainly interested in egg production, because consumers know little or difference between broiler and culled birds, since they prefer old strong chicken meat to those obtained from broilers for sale while they concentrate on layers which are culled as demanded.Cole, reported that, the quantity of eggs and poultry meat consumed by each household is determined by a number of socio - economic characteristics, which includes; size of households, level of household income, prices of eggs and poultry meat, level of education or awareness, availability of close substitutes and festivities.Specific Objectives of the Study are to:* determine the cost of production amongst different sizes of poultry entrepreneur in Oyo State;* determine the lucrativeness of poultry production faced with the present situation in the country;* compare the present level of operation of the farms selected and determine the factors responsible for the existing performance;* determine the efficiency of each farm under consideration.Methodology UsedThe three farms selected were located within Oyo State. The two large-scale farms are Vabo agricultural industry in Ibadan, and Amo Sandas in A weOyo, while the small scale farm is Ajagbe poultry farm in Ogbomoso. …
IntroductionMergers and acquisitions have long been a popular element of corporate strategy; equally important is they represent an important alternative for strategic expansion through inorganic growth. This research study investigates the abnormal returns (short-term in nature) to the shareholders of acquiring firms on the announcement of acquisitions of 100 per cent stake (complete acquisition) of the target firm. The returns of the sample related to 398 complete acquisitions have also been analyzed for sub-samples disaggregated on the basis of the status of target firm whether it is acquired as a wholly owned subsidiary (WOS) or to be absorbed with the operations of acquiring firm. Furthermore, the possible impact of different means of payment (cash, stock) on the acquirers' return has also been examined in the paper. Whether the type of target firm (listed, unlisted) acquired has an important impact on acquirers' return has also been studied. The impact of method of payment and type of the target firm has also been analyzed for all the sub-samples. The present study makes a unique contribution by investigating the impact of acquisitions of independent firms only.PreludeThere is a significant body of literature analyzing the success of mergers and acquisitions activity. The purpose of this paper is predominantly assessed from the shareholders of the acquiring companies. Accordingly, the review of extant research work is primarily focused on studies measuring the implications of mergers and acquisitions on acquirer shareholders' wealth from the point of view of method of financing employed in mergers and acquisitions and type of target firm (listed/unlisted) merged. Performance of acquiring firms has been extensively studied empirically in finance as well as in strategy literature. Ravenscraft and Scherer1 analyze 6000 US mergers between 1950 and 1977. The study reveals the absence of announcement return as well as post-merger profit. The study documents divesture of nearly one-third of all acquisitions during the 1960s and 1970s .They conclude that diversifying acquisitions promote managerial empire building rather than efficiency. Subeniotis, Tampakoudis, Kroustalis, and Poulios 2 use event study is to assess the wealth effects arising to acquiring and acquired companies' shareholders during 2005 in the U.S. stock market. They document the acquirer shareholders earn very low-abnormal return on the announcement.Most empirical studies agree that the method of payment plays an important role in explaining acquiring firms' stock return. The stock market accords differing reaction to the announcement of acquisitions on the basis of mode of financing being used. Carleton, Guilkey, Harris and Stewart3; Amihud, Lev, and Travlos4; Martin5; Ghosh and Ruland6; and Zhang7 study different factors that influence an acquirer's decision regarding mode of payment to be used in financing acquisitions. They contend that the possibility of stock financing increases with the acquiring company's shares being overvalued in the market. The overvalued stock means shares of the acquiring company are trading at a premium to the book value of its assets. In contrast, an acquisition financed with cash conveys the confidence of an acquirer in accurately assessing the value of a target firm. Stock markets, in general, consider cash offers as good news which leads to positive valuation of share prices of both the target and the acquiring firms (Loughran and Vijh8; Emery and Switzer9; Martynova and Renneboogl0).It has been well documented in the literature that acquiring companies' shareholders earn normal returns on the announcement of cash offers while the returns in stock offers are negative (Brown and Ryngaert; Smith and Kim12; Loughran and Vijh8; Blackburn, Dark and Hanson13; Faccio and Masulis14; Kummer and Hoffmeister15; Travlos16; Wansley, Lane and Yang17; Asquith, Bruner and Mullins18; Trifts; Sullivan, Jensen and Hudson20; Lyroudi, Lazaridis and Subeniotis21; and Yook22). …
This study takes a critical look at the impact of micro finance banks on poverty reduction in Nigeria. The objective being to determine if the credits or other ancillary services provided by them have had any significant effect upon the livelihoods, homes and standard of living of the teaming economically active poor in Nigeria. To specifically understand the relationship between micro finance activity and poverty assessment indicators, we adopt some selected explanatory variables like Microfinance banks aggregate asset, Deposit liabilities and loan advances; while the dependent variable was decomposed into life expectancy index, education index, gross domestic product per capital and human development index. In other to evaluate the hypotheses of the study we employed the Ordinary Least Squares (OLS) regression technique. This is especially important for a better understanding of the impact of microfinance banks activities on the selected poverty assessment index in Nigeria. Our findings reveal that loans and advances of microfinance banks had a significant impact on education and life expectancy index. Also, microfinance banks asset base had a negative impact on human development index and its components; while deposit liabilities of microfinance banks also had a negative impact on human development index and its components. Some of the recommendations to increase impact of microfinance banks on poverty reduction in Nigeria are more efforts at increasing loans and advances given to the economically active low income groups to enable them engage in economically viable entrepreneurial activities which helps reduce their level of poverty. Others include the provision of adequate infrastructures such as functional roads and electricity in the rural areas and city slums.
IntroductionIncreased risk in financial markets has raised interest for measures of financial markets' stress (systemic financial stress). Financial stress indices (FSIs) are applied by individual banks to assess and predict aggregate financial risk, while financial supervisors may base macroprudential policy on the level of stress indicated from FSIs. In all cases, the quality of systemic risk management depends on the quality of the systemic risk measure.Since the inception of the most recent crisis, a number of FSIs have been developed (see the overview in Table 1). While it is questionable if systemic stress can be captured in a single measure', almost all FSIs involve the choice of different indicators for financial stress and their aggregation into one overall measure for systemic financial stress. While constructing FSIs, special emphasis is placed on the question of what indicators and/or markets to choose as a representation of overall risk and how to synthesize them. While the relevance of weighting methods is recognized principally2, there are few approaches to assess them systematically. A major contribution is the empirical comparison of four different weighting methods by llling and Liu3. In many cases, a specific weighting method - often equal weighting4 or principal components - is simply selected without being explicitly discussed and indicators are aggregated without explaining the sensitivity to the weighting mechanism.However, this simple selection has to be considered critically, as the weighting of indicators affects the level of the FSI and is assumed to further impact the FSI's behavior over time. This impact may be particularly relevant for financial markets with dynamic and individually behaving submarkets. Therefore, the objective of this study is to explore in more detail the relevance of weighting methods for the construction and application of FSIs. Particularly, it is asked :* from a conceptual perspective, if and how weighting matters for FSIs,* from an empirical perspective, what are the differences and similarities across time between FSIs constructed on the basis of various weighting schemes, and what is their sensitivity with respect to different sets of indicators used for FSI construction,* from an application perspective, what are the implications for the selection of optimal weighting concepts in the context of FSIs.Where the conceptual discussion grounds on evidence from literature and own considerations, empirical aspects are investigated on the basis of stress (sub-) indices that - while referring to the same time series indicators - are aggregated using different weighting methods. Applying data from 1991 to 201 1 and six different weighting concepts, two sets of indicators are implemented to capture the sensitivity of weighting methods to the data series. In the remainder of this study, the relevance and scope of weighting regimes is assessed. Empirical aspects are analyzed while examining the statistical properties of single FSIs and comparing them to one another. While much evidence is found for the relevance of weighting techniques, the final selection of appropriate weightings depends on the overall architecture of FSIs.FSI Construction Excitation Monitoring in Financial SystemsFSIs are statistical instruments for monitoring the excitation in financial systems. Beyond conveying information about the state of the financial system (e.g., the level of instability or stability), they are capable of shedding light on the origins of financial stress. Knowing the level of stress and its origins is then conducive for actions in risk management, both from the perspectives of the individual agents (e.g., investors) and the institutional agents (e.g. firms and supervisors). However, the quality of these actions depends on the quality of the underlying FSI including its weighting technique as a specific construction principle. …
IntroductionThe sweeping political changes ofthe eighties and nineties have been as welcome as they were unexpected. This is true not only for the man on the street, but also for scholars. In the past two decades, the tiieoretical foundations of the understanding of centrally planned economies has developed to a sophisticated level in the West as well as in Eastern Europe.The former management has left a legacy of structural damage which will require at least a generation to repair. A stable market economy can only be the result of organic development. Because of the lack of capital in this region the problem of the disproportionately high amount of state-owned property can only be resolved slowly. In spite of this fact, there is no apparent shortage of interest in new ventures. This can be explained by the fact that for the last two decades, hidden behind the State economy, a number of second and tiiird economies have developed and become indispensable. This is true especially in agriculture and the service industries. In tins process, the black market economies have turned grey. Prohibition has turned into toleration, and in some cases even legalization. Because of die newly available political freedom, a wide range of new ventures is now possible.Tax Reforms in HungaryThe reforms which radially changed die Hungarian tax system began in 1 987. They constituted a part of die overall economic reforms, in that mey were created in accordance with the abolition ofthe monolithic banking system (the founding of commercial banks). Partly because these reforms were based on antecedents, and partly because tiiey themselves were only relatively minor events which preceded later reforms, me changes of 1 987, although important, were not really decisive. Widi regard to the past, the Amendment of the Act on State-owned Enterprises, passed in 1 984, should not go unmentioned. This act embodies the idea that by means of separating state enterprises from the central administrative bodies, it would be possible to manage economic organizations that are profit-oriented, and at the same time remain within die framework of State property. To reach this stage, a new category of so-called self-administered enterprises has been initiated. State enterprises were expected to be able to create a new capital market instated of simply a bureaucratic alalocation of resources. As for the monetary and fiscal background of the developing market, the banking and tax reforms of 1987 themselves are not responsible for the failure of the self-administered enterprises (to become participants in a real market). It has been proved that under self-administration, State enterprises cannot function as real owners. Their managers have a stake in adapting to the formal and informal requirements of the public administration, rather than to the requirements of the ventures.In the eighties, the reserves of the last reform attempts were depleted. By 1 990 it was time to surrender any remaining illusions about a socialist planned economy including the greatest taboo, that is, the intangibility of State property. This development is characterized best by the Company Act (Act VTH of 1988 on Business Associations). New companies here have enjoyed advanced banking services, and a tax system which has gradually grown more modernized since 1 987. With regard to the above mentioned reform measures that preceded the changes in the political system which took place between 1 989 and 1 990, it is worth emphasizing that the changes in official policy have been preceded by the legal declaration of the freedom of ownership and entrepreneurship, and the establishment of its institutional prerequisites. This does not mean that all institutions of major importance were established before 1 990. It does mean, however, that the main deficiencies, that is the lack of a new Land Act, a Bill on the Bank of Issue and an Act on the Bank of Issue and an Act on the Performance Budget are, in 1993, three years after the changes in the political system, just as effective as before. …
We examine the effects of strategic risk perception on behaviour through the meta-analysis of five studies. The extant literature suggests that if risk perception is high it can decrease risk-taking behaviour. The direction of the impact is generally accepted in the business and research community, however, the strength of that direction is not very clear. Using meta-analysis, five strategic risk studies are synthesized to gain clarity on this issue. The results reveal that high-risk perceptions exhibit a negative relationship with risk-taking behaviour. This effect should be understood and closely monitored when formally evaluating strategic risk in business decisions, projects and management.
