Issue #1 (cont.) (Volume 14 2017)

This paper documents the empirical relationship between ownership concentration and monetary policy to fill out the picture for when ownership concentration is likely to change within U.S. publicly traded firms. Our sample is drawn from the Dlugosz et al. (2006) data set for firms between 1996 and 2001. The authors explore the patterns between the Federal Reserve’s policy position and ownership concentration rather than asserting causal direction between the two. This empirical paper tests alternative theories on blockholder activism by examining whether “voice” or “exit” is more dominant under contractionary monetary policy. Using the series of same direction changes in the Federal Funds Rate to establish time periods as a proxy for monetary policy in the U.S., nonparametric tests show that there are more blockholders per firm, the sum of their blockholdings in percentage terms is higher, and the total percentage held by the blockholder in U.S. firms is greater under contractionary policy periods. This supports an active theory of blockholder behavior in corporate governance.

This paper is the first research attempt that investigates the impact of a large number of corporate governance mechanisms on the performance of Greek banks,employing widely accepted in the literature of corporate governance econometric models. Results indicate that system GMM models are more suitable methodological tools than pooledOLS and fixed effects models to address well-known econometric problems, such as endogeneity, simultaneity and unobserved heterogeneity of individual banks. The findings, as derived from the application of GMM models, imply that increasing the board size and the number of independent directors can both have positive impact on the performance of Greek banks, but only up to a certain point. Thus, bank efficiency will increase as board size and the proportion of independent directors grow up to a point where these relationships hit a maximum from which bank performance decreases. Our multi-model estimations failed to trace any significant contribution of the number of female and foreign directors on the performance of Greek banks. Finally, the dual appointment of a CEO as Chairman appears to affect negatively two out of four proxies of bank performance. Overall, the results provide support for the positive impact of corporate governance mechanisms on the performance of Greek banks. The significance of these findings increases, considering that the period under study (2008-2014) is marked by high market volatility and uncertainty due to the well-known debt crisis that plagues Greece since the beginning of 2008.

In this study the author examines the effect of the speed of population aging on the financial markets in 11 OECD (The Organisation for Economic Co-operation and Development) countries after controlling the proportion of labor population, the growth rate of real GDP (Gross Domestic Product), the rate of increasing productivity, inflation rate, and the rate of increasing scale of pension market. The author finds that the performance of stock market is affected by complex factors including increasing of average life expectancy, the growth rate of real GDP, the rate of increasing productivity, the inflation rate, the earning rate of stock market and the rate of increasing scale of pension market. Especially, the proportion of economically active people is the most significant factor to explain the stock market performance. Considering the decreasing proportion of economically active people in aging societies, the decrease of productivity and eventually the decrease of earnings from financial markets would be expected.

Agricultural enterprises in Ukraine require a considerable investment income. The paper studies the main problems and conditions for investment into agricultural enterprises, the scope and dynamics of their investment provision.

The results of agricultural enterprises activity depend directly on the state of their fixed assets. This is one of the biggest vulnerabilities of agricultural enterprises, which makes it impossible for the economy of Ukraine to demonstrate decent results. Investments should be used primarily for the development of material and technical basis of agricultural enterprises, because the fixed assets always depreciate, the term of their use in many enterprises exceeds 15 years and their number is constantly decreasing.

Investment in technical provision of plant growing is necessary and attractive. Firstly, as a basis of plant growing, grain and oilseeds are always in demand at the domestic and foreign markets. Secondly, the volumes of investments are moderate compared to other investments in agriculture. In the beginning, it is sufficient to invest into the branch on average from 1 to 2 thousand US dollars per 1 hectare. The average payback period of investments is 2-4 years.

Thus, in order to stimulate investments, it is vital to form a qualitatively new policy aimed at increasing investment attractiveness of agricultural enterprises.

The paper determines that the need in financial monitoring of Ukrainian companies of the port sector is caused by financial consequences related to the need to protect the environment, the existence of a dominant part of payments in foreign currency (foreign exchange risk associated with currency fluctuations), the possibility of cash outflows into the shadow sector of the economy and the possibility to use transport for smuggling. In addition, in the recent years there is a tendency of diminished financial stability of the seaports of Ukraine, which is a signal to determine the factors that have an impact on this situation, the consequences of risky operations and the optimal structure of sources for the formation of assets. An important aspect of financial monitoring is the necessity to identify the data about the objecton the basis of insignificant and relevant information, which makes it possible to avoid non-essential features and parameters and to speed up the decision making process at the lowest cost of expenditures and time. The study offers a methodical approach to financial monitoring of the port industry companies on the basis of the risk-based approach that takes into account the conditions for the functioning of port companies and their business characteristics, making it possible to implement the appropriate measures to prevent and avoid risky financial transactions and, consequently, to increase/preserve the competitiveness of the port sector companies. Regarding the need in further studies of the practical realization of financial monitoring of the port sector companies, there is a choice and substantiation of aggregate indicators of the financial monitoring system, their listing with a view to specific features, types and scale of activities.

Project finance is the process of financing a specific economic unit that the sponsors create, in which creditors share much of the venture’s business risk and funding is obtained strictly for the project itself. Project finance creates value by reducing the costs of funding, maintaining the sponsors financial flexibility, increasing the leverage ratios, avoiding contamination risk, reducing corporate taxes, improving risk management, and reducing the costs associated with market imperfections. However, project finance transactions are complex undertakings, they have higher costs of borrowing when compared to conventional financing and the negotiation of the financing and operating agreements is time-consuming. In addition to describing the economic motivation for the use of project finance, this paper provides details on project finance characteristics and players, presents the recent trends of the project finance market and provides some statistics in relation to project finance lending activity between 2000 and 2014. Statistical analysis shows that project finance loans arranged for U.S. borrowers have higher credit spreads and upfront fees, and have higher loan size to deal size ratios when compared with loans arranged for borrowers located in W.E. On the contrary, loans closed in the U.S. have a much shorter average maturity and are much less likely to be subject to currency risk and to be closed as term loans.

The insurance market of Ukraine is a part of the global economic environment, which brings together national insurance markets around the world. The paper studies the functioning of the insurance market of Ukraine taking into account the latest trends in the world economy. It notes an extremely small volume of premiums, insufficient coverage of the population and business entities. It is emphasized that the main attention of the experts of the insurance market of Ukraine is focused on its reaction to the annexation of the Crimea and the military conflict in Donbas. It identifies trends, conditions and development factors of the Ukrainian insurance market, as well as its prospects and the role of Ukraine on the global insurance market.

Research and development (R&D) investment affects firms’ growth and reflects their investment energy. However, it is recorded as an expense in financial statements, according to generally accepted accounting principles (e.g., International Financial Statements Standards). This study examines whether firms’ R&D investment has a positive effect on their performance, when they engage in corporate social responsibility. The author focuses on firms that have earned corporate social responsibility awards from Global Views Magazine, Common Wealth Magazine, and the Taiwan Institute for Sustainable Energy in order to measure firms’ levels of corporate social responsibility engagement. Tobin’s Q is used as a proxy for firm performance. Because corporate social responsibility engagement is not mandatory in Taiwan, the Heckman two-stage process is used to control for an endogeneity bias. In the first stage, logit regression is employed, using a dummy variable as a proxy for a firm’s social responsibility engagement. In the second stage, the impact of corporate social responsibility on firm value is estimated by regressing Tobin’s Q on various governance and firm characteristics and on a dummy variable for social responsibility engagement. Based on all public traded companies in Taiwan for the period 2005 – 2014, and after controlling for an endogeneity bias, it is found that R&D investment is positively associated with Tobin’s Q, but only when firms engage in corporate social responsibility. Therefore, an investment strategy that meets corporate social responsibility objectives benefits firm performance. The empirical results provide policy implications for firm R&D investment and corporate social responsibility implementation.

Financial imbalance is the reason of a macroeconomic instability. This study aims at identifying the institutional causes of financial markets imbalance. The authors consider that financial intermediaries in Ukraine work in a speculative market segment carrying out high-risk transactions with the purpose of earning a huge profit. In fact, in Ukraine the role of these institutions in the investment process financing is insignificant. The authors show that soundness of banks along with the ease of access to loans and a low level of confidence in national banking system are the main reasons of instability in financial market in Ukraine. Due to scarcity of financial capacity and refusal to carry out transactions in a high-risk market segments, insurance companies are unable to entirely perform functions of risk redistribution. Competitiveness of Ukrainian financial market remains low with a limited financial services nomenclature and it may be considered to be attractive for potential foreign investors.

The purpose of the current paper is to elaborate the model for assessing cumulative synergetic effect in M&A (Mergers and Acquisitions) deals on the basis of a real options approach. The majority of papers on the synergetic effects of M&A deals typically focus on a particular type of synergy, while the current paper proposes a model that accounts for the cumulative simultaneous effect of different types of operating and financial synergies. The methodology of our research is loosely based on Datar-Mathews real option valuation model, which is flexible and intuitive for practitioners. Formulae for assessing eight types of synergy typically arising from M&A deals are developed. They are integrated into a single model to assess their cumulative effect on the M&A deal using a simulation modelling approach. The method was used ex post to find synergy values in two recent M&A deals in the pharmaceutical industry, and produced sound results. The proposed approach to value target companies could be used by firms before an M&A deal in the due diligence process. Using this tool a company can build a bidding strategy and define the maximum premium it can pay for the target.

Usually, financial crisis affects the firm’s operations with different resistance level, such as financial difficulties and even negative profits or equity. The crisis may affect heavily certain industry, but not in the other industry. This study examines the financial performance of property and real estate firms listed on the Indonesian Stock Exchange which was argued to have been affected by 2008 global financial crisis. Five ratios were examined, namely liquidity ratio, debt to equity ratio, total assets turnover, net profit margin, and return on equity. The sample consists of 27 firms. Results showed that two ratios, debt to equity ratio and return on equity ratio, were significantly lower after the crisis. The other three ratios were not significantly different between before and after the crisis.

This study examines the relationship between corporate governance and capital structure employing data from the Athens Stock Exchange for the period 2005-2014. This period encompasses the sovereign debt crisis erupted in Greece at the end of 2009 and still continues to hit households and businesses alike. The results from the panel regression analysis signify the role of corporate governance structures in determining the capital structure of the Greek listed firms. In particular, the empirical results reveal a negative impact of board size on debt levels, which is weakened during the debt crisis period. In contrast, the presence of outside directors provides the appropriate certification to use more debt. Finally, growth opportunities and profitability are the two firm-specific factors which effect was weakened during the financially-constraint period.

The purpose of this study is to determine the relationship between domestic financial resource gaps and current account balance in Indonesia by using data from 2010 to 2014. Gaps in the domestic economy are classified into three types: 1) the domestic absorptive capacity of the national income gap (GNP), 2) gross national savings and investment gap, 3) private sector gap (private saving minus private investment), and public sector gap (tax minus government spending). By using a concept of open economy that is described in a theoretical framework, the study results show that: 1) the gap absorption of domestic and GNP, 2) the gap between gross national saving and gross national investments, 3) the gap in private sector and government sector resulting in deficit in the current account during Indonesia on 2010-2014 periods.