Year 2014 , Volume 3, Issue 3, Part 2
Year 2014 , Volume 3, Issue 3, Part 2
1
Drivers of Hidden Reserves ? Consequences for the Comparability of Financial Statements Under IFRS GERNOT BR?HLER and SEBASTIAN SCHMIDT Pages: 1416-1427
The comparability of IFRS financial statements is frequently discussed in literature and numerous researches show that entities from different countries or with particular characteristics tend to use IFRS differently. However, hidden reserves, i.e. the discrepancy between the historical book values and their fair value counterparts, are usually not part of these investigations. Since we assume that hidden reserves can be a reliable measure of comparability, the purpose of this paper is to examine if specific factors of a company like size, country of origin or industry membership also indicate different odds to observe hidden reserves. Analysing 456 purchase price allocations, we do indeed find evidence for our aforementioned assumption. Our results show that the probability to observe hidden reserves under IFRS seems to be dependent on certain factors. For instance, our results clearly indicate that large companies show hidden reserves more frequently than small companies. We also find that entities from particular countries exhibit significantly higher odds to hold hidden reserves than others. In consequence, we assume that the comparability of financial statements under IFRS is still not achieved. Key Words: Hidden Reserves, Comparability, Faithfulness, Financial Statements, IFRS, IFRS 3.
2
Use of Macro Stress Testing for the Creation of Business Strategy in the Case of the Czech Republic LUCIE STAŇKOV? and PAVLA BEDN?ŘOV? Pages: 1428-1442
Macro stress tests has become a part of the tools for testing the ability of the financial system to withstand unexpected shocks and now it is increasingly used in developing the corporate strategy. Theoretical and methodological parts were focused on explaining the process of macro stress testing and on particular decision-making steps in the implementation of macro stress tests to the individual portfolio. The results of the financial stability testing are the significant source of information for companies. Mainly, in this project there was evaluated the importance of macro stress tests in the preliminary phase of the business (after-tax return of equity), in the case of the creation of the operating plan (non-performing loans ratios in selected branches), in the planning of customer-supplier relationships (nominal and real income growth, the unemployment rate and employment growth, household debts and over indebtedness) and in financial and operational corporate planning (capital adequacy ratios, credits drawn from bank and non-bank institutions). Key Words: Corporate Strategy, Financial Stability, Households, Macro Stress Tests, Non-financial Corporations.
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Innovation Responses from the Leather Value Chain Strata Survey in Kenya MWINYIKIONE MWINYIHIJA and WILLIAM QUISENBERRY Pages: 1443-1453
Innovation in the leather sector at global level determines its productivity and competitiveness. Thusly, its importance in enhancing leather value chain initiatives in Africa cannot be disregarded without adverse socio-economic consequences. This is especially so when the continent is endowed with great resources with a global share of 21% of the world livestock population. However, to attain on some of the goals related to processing and product development in the leather sector innovation becomes pinnacle in the re-strategization phases of Africas agro-based development plans. It is with this background that the study analyzed the responses from the leather strata in Kenya and related the strata to innovativeness. Moreover, the research evaluated the significance of the interrelationship between various stratums that interphase in the value creation process of the leather sector under the auspicious of innovation. The study used a quantitative approach (n=244), descriptive analysis including an aggregate score to ascertain the top activities impacting on innovation in Kenya. The results indicated that the lower tier of the leather strata which encompassed the producers, butchers and traders were inept in using ICT to facilitate in their business development and transactions. In retrospect the higher tier (includes tanners, leather goods and footwear) the tanners were mostly found to engage with ICT to enhance on their operations. The shortcoming of not using ICT was observed to impact negatively on Leathergoods and footwear stratums. This was conspicuous and related to declined productivity culminating to poor competitiveness which resulted to dumping of lower quality products. Therefore, this performance deterred all efforts in developing the leather goods and footwear stratums competitiveness. In general, responses of the study were significant portending that innovation is central to the overall development of the leather sector in Kenya. Key Words: Leather Sector, Economic Indicators, Innovation, Agro-Based Commodity Performance, Productivity & Value Addition.
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Alternative Welfare in Rural Thailand: A Case Study of Khon Kaen Province PRADIT NUTTAYAI and BUAPUN PROMPHAKPING Pages: 1454-1467
There has been generally agreed that state welfare of developing countries is limited, due to the partial growth of employment and industrialization. This paper is seeking to understand the plausible alternative welfare that is appropriate to local context. The empirical data is derived from Ph.D. Thesis titled future scenario of alternative welfare: a case study of Khon Kaen Province. This research was undertaken in Khon Kaen, the Northeast of Thailand, employed both qualitative and quantitative methods to obtain the required data. In regard to the identifying and analysis of alternative welfare, the research adopted a scenario workshop. This study found that although the Thai economy has been constantly grown, most people in Khon Kaen Province continued to be dependent on agriculture, albeit their source of income have been increasingly diversified. In this context the stakeholders attended the workshop of this research identifies the most likelihood future scenario welfare regime of Khon Kaen Province as ?wealthy in degraded environment?. As natural environment is a primary source of welfare of most people earning their living in agriculture, this future scenario also foresees the weakening of the current mixed welfare regime supporting living of Khon Kaen People. This study recommended that development approach of Khon Kaen Province must put both natural environmental concerns and expanding employment through promoting economic growth into priority. Key Words: Alternative welfare, Rural, Khon Kaen, the Northeast of Thailand (Isan).
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Unequal Lot Sizes for Repetitive Cycle Scheduling DOUGLAS R. MOODIE and LLOYD A. SWANSON Pages: 1468-1483
This paper examines the joint lot sizing problem for minimizing inventory costs for several products of constant demand made on one machine with zero cost setups but with setup times. If total demand requirements do not exceed available capacity then there is always a feasible schedule for any cycle sequence using different lot sizes. The paper describes a four-stage solution procedure, which builds upon the concept of not having any idle time or carryover inventory. The paper demonstrates that, quite often, unequal lot sizes can reduce inventory costs over equal lot sizes in the zero inventory case. Key Words: Lot-Sizing, Scheduling, Setup Time.
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Empirical Study of the Effect of Reverse Logistics Objectives on Economic Performance of Food and Beverages Companies in Nigeria SOMUYIWA, ADEBAMBO O. and ADEBAYO, IYABO T Pages: 1484-1493
The paper presents result of the empirical survey targeting an aspect of reverse logistics management in the food and beverages companies carrying on business in Lagos, Nigeria particularly the capability of the objectives of reverse logistics to impact on economic performance. With data collected from both primary and secondary sources of data on food and beverages companies, analysis was done using inferential statistical analysis. The results showed that the companies have been effective in using reverse logistics to reduce total logistic cost, improve customer satisfaction, enhance competitive advantage and in minimizing the environmental impact of returns as well as recovery of materials for re-use. Based on the findings of the study it was recommended that for reverse logistics systems to be successful, top management must guide and support the implementation and also recognize the fact that, reverse logistics cannot be managed in isolation. Key Words: Returns, Economic Performance, Effectiveness, Food and Beverages.
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Analysis of Vehicle Routine and Scheduling (VRS) Cost in Total Logistics Cost of Manufacturing Companies in Southwestern Nigeria SOMUYIWA, ADEBAMBO OLAYINKA Pages: 1494-1507
The importance of VRS in logistics activities of manufacturing companies are well appreciated but need not be over flogged, but rather how this salient issue in Transportation can be more practicable among manufacturing companies. It is in this light that the paper examines and modeled VRS within the context of Total Logistics cost with a view to minimizing cost and enhance effective distribution activities in manufacturing companies. The paper adopted case study approach. Forty-five (45) manufacturing companies formed the sample of the study, based on multi stage sampling techniques that incorporated cluster, stratified and purposive sampling methods. Various VRS components-Labour cost; Transport cost; Maintenance cost, Information cost and others were identified and analysed using adapted distribution function of Cobb-Douglas that incorporates Ordinary Least Square and Weighted Least Square methods. All these components were regressed on the Volume/Quantity of goods distributed. Similarly, translog cost function equally revealed that the parameters in the constrained model are significant, consequently explained a large part of the variation in the data set. The paper recommends that companies should adopt scientific information management system that is information technology in orientation, which will in turn propel VRS as well as lay emphasis on IT investment in attempt to cut cost, simultaneously maintaining customers? service. Key Words: Analysis, Vehicle, Routine, Scheduling, Cost, Logistics.
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Do Private Equity-Backed Companies Perform Similarly Throughout Europe? GIUSY CHESINI and ELISA GIARETTA Pages: 1508-1527
This study analyzes the performance of private equity-backed European companies. The purpose of this research is to explore the impact of private equity investments on the variables of profitability and dimensional growth for the target companies. We studied the performance of private equity-backed companies located in the top eight European countries in terms of number of investments ? the Czech Republic, France, Germany, Italy, Spain, Sweden, Netherlands and the UK. We created a database of 2,429 unlisted companies that received private equity investments in the period from 2003 to 2009, and we compared them with a sample of 2,506 non-private equity-backed companies with similar characteristics in terms of their size and industry. Secondly, we compared the performance of private equity-backed companies within countries, taking the performance of private equity-backed companies in Italy as a benchmark. The analyses were conducted through the use of a statistical probit model, Ordinary Least Squares (OLS) regression models and Students T-test. The results of the analyses suggest that on average, private equity investments have a positive effect on target companies in terms of dimensional growth compared to non-invested companies. In the first post investment years, private equity operators act to improve the growth of private equity-backed companies, even decreasing profitability, therefore preferring long-term results. We prove that private equity-backed companies show similar performance throughout Europe, while non-private, equity-backed companies do not. In most cases, we found similar performance in the different countries. There are homogeneous results in all countries because internationalization has induced common practices over time. Key Words: Private equity, Performance, International comparison, Profitability, Venture capital.
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Does Business Advisory Help? ? The SMEs Dilemma in Malaysia Livestock Industry FAKHRUL ANWAR ZAINOL, WAN NORHAYATE WAN DAUD, NALINI ARUMUGAM and NOR ASMAHANI IBRAHIM Pages: 1528-1532
NMF Company (NMF) is a manufacturing and trading company which operated since 2008 in Kuala Terengganu, Terengganu, Malaysia. NMF offers ruminant feed products such as pallets, pallet feeder cattle and dairy cattle feed pallets. From the beginning of its establishment, the company faced various challenges and obstacles; from operation up to human resources related issues. Though, having good products and have been recognized by the Ministry of Agriculture (MOA) and HALAL certification from JAKIM (Malaysian Halal Certification Authority), it did not favour the company in capturing the market share in the industry. Despite various action being taken by the management, it seem not enough for the company to moving forward. Thus, the company is looking other alternatives to resolve all the issues. This case study examines NMFs operational challenges within SMEs context and how the company can benefits from the business advisory services offered by various parties. Key Words: Business challenges, Livestock Industry, SMEs, Business Advisory Services.
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How to Find a New Geographical Route for Economic Exchange: A Visionary Project ROSA CAIAZZA and GRAZIELLA FERRARA Pages: 1533-1537
The article aims to evidence how the construction of an intermodal hub with a free trade zone in Europe can open a new geographical route for economic exchange. This European corridor could represent an hub able to intercept important goods traffic flows with possibility to create added value through both handling services and appropriate processes on some goods chains. Key Words: Economic, Project, Geographical Route, Exchange.
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Determinants of Foreign Direct Investment in Nigeria IKPA A OFFIONG and IGNATIUS AMED ATSU Pages: 1538-1550
One of the arguments for pursuing Foreign Direct Investment (FDI) by countries is the belief that FDI bridges the gap between rich and poor nations by promoting economic growth and development in addition to generation of technological transfers. However, empirical studies have found divergent views on the effect of FDI on growth and development. This paper examines the determinants of Foreign Direct Investment (FDI) in Nigeria during 1980 ? 2011. It aimed at determining functional relationships that exist between GDP, wage rate, interest rate and relative openness index, and the extent to which each variable has influenced FDI inflow to Nigeria. The paper contributes to existing studies by using the multiple regression analysis in testing whether the set of independent variables explained the dependent variable. The study found that a significant relationship existed between GDP and inflow of FDI as well as real wage rates and inflow of FDI. It also found no significant relationship between FDI in flow and the relative openness index as well as lending rate and FDI inflow in the years under review. Based on the findings, it was concluded that Nigeria being a latecomer to the quest for FDI, campaigns for inward flow of FDI have not yielded the desired result. Specifically, it was found that improvement in GDP would lead to an improvement in inflow of FDI. Per capita income is too low to effectively draw FDI into sectors that will generate positive externalities. When the wage rates increase in Nigeria, it will have a positive impact on the FDI inflow. To address the problem, it was recommended that; government must follow through with the reform programmes and pursue policies that will increase the GDP and income per capita, address the issue of poor wage rates, review trade and investment policies as well as customs and banking regulations. Key Words: FDI, Interest Rate, Wages, Relative Openness, Lending Rate.
