Issue #1 (Volume 13 2016)

This study investigates whether company’s chairman of the board and management’s education background is business or accounting, their decision making will cause the result of company’s dividend policy or not. This study uses logistic and OLS regression method to exam Taiwanese public company from 2007 to 2011. The empirical result shows that when company’s chairman of the board graduates from business school, the company will pay less cash dividend. On the other hand, when more management education background is business or accounting, the company tends not to pay cash dividend. Furthermore, under the situation that chairman of the board is also the CEO of the company, when chairman of the board graduated from business school, the company tends not to pay cash dividend and pay less cash dividend

This study investigates the relation between tax avoidance and discretionary expenses. The object of this study is to present the empirical evidence on whether additional cash from tax avoidance is used on discretionary expenses. Tax avoidance is estimated using the model suggested by Desai and Dharmapala (2006). Discretionary expenses are estimated using the index suggested by Roychowdhury (2006), which are selling and administrative expenses except taxes and dues, depreciation expenses, amortization expenses, rent expenses and insurance expenses because the management cannot manage these expenses discretionarily. Research expense and ordinary development expense are included in discretionary expenses. The empirical results of this study are as follows. First, tax avoidance is positively associated with discretionary expenses. This result means that the management spends additional cash from tax avoidance on discretionary expenses. Second, the ownership percentage of foreign investors weakens the positive relation between tax avoidance and discretionary expenses. This result suggests that foreign investors monitor the management’s discretionary decision effectively. Third, the positive relation between tax avoidance and discretionary expenses is weakened as the ownership percentage of a major stockholder increases

The aim of this paper is to provide new empirical evidence on the capital structure of companies. The author is going to analyze models used in previous literature, and these models will be applied to the sample selected. This sample is different from previous ones in time and characteristics. So it can be analyzed whether the type of company and the moment of time affect the financial structure of models. At the same time the author offers a new model that is representative of the variables that affect the corporate debt in this type of firms.
Methodologically a multivariate analysis has been used with panel data on a sample of Spanish listed companies for the period 2003-2013. The sample had not been used in previous studies and the time horizon is characterized by periods of both boom and difficulties and even crises in corporate finance. First the author analyzes a series of models developed from previous studies in which different variables are analyzed, on the other hand has been discussed a proposed based on the results observed model. It is also reported about the evolution of the debt and the level of intangibles by the industry.
The results are consistent with the existence of influence of variables related to economic structure (non current assets and current assets), the size of the company, the industry, the level of intangible assets and the return on the debt level

The paper is focused on selected aspects of the hedging using of Nova 3 option strategy created by barrier options, which are appropriate tools widely used for risk management of high risk underlying assets. Financial risk management using option strategies is an effective solution for limiting the loss from underlying asset’s price development. The Nova 3 option strategy is suitable for hedging against increase in price of the underlying asset in case of its purchase in future. In our approach, European up and knock-in call options together with standard put and barrier put options are used for investigation of hedging strategies in increasing markets. Theoretical models of suitable hedged profit functions in analytical expressions are analyzed also from their benefits and risks point of view. Created combinations of these hedging variants have to meet the requirements of zero-cost option strategy. Based on the own theoretical results, the hedged profit portfolio is applied to SPDR Gold Shares, where due to the lack of data on real barrier option premiums, these were calculated according to Haug model. Designed secured variants through Nova 3 option strategy were analyzed and compared to each other with the recommendations of the best possibilities for investors

This study empirically investigates the effect of a CEO turnover on audit report lag (ARL), discretionary report lag (DRL) and total report lag (TRL). The object of this study is to provide empirical evidence for the responses of both the CEO and the external auditor on audit risk increases and information asymmetry that occur as a result of a CEO turnover. According to the previous study on CEO turnovers, the CEO turnover would increase audit risk and information asymmetry (Sohn et al., 2014). In this situation, the CEO has an incentive to provide timely information to decrease the monitoring costs and cost of debt (Lee et al., 2008). It is expected that an external auditor spends a large amount of time on audit procedures to lower the audit risk when the CEO changes. Therefore, the CEO turnover would have a conflicting effect on the ARL and DRL.
The results of the analysis are as follows. First, the ARL increases and DRL decreases when the CEO changes, which suggests that an external auditor spends a great amount of time on audit procedures to lower the audit risk because the audit risk increases when the CEO changes. A new CEO provides information faster to reduce monitoring costs and cost of debt that occur due to information asymmetry. Second, the ARL increases and DRL decreases as the frequency of CEO turnover increases. An external auditor would estimate the audit risk as being high if the CEO changes more frequently. To lower the audit risk to an acceptable level, many audit hours are spent on audit procedures by an external auditor, which increases the ARL. A new CEO has an incentive to provide timely information when the CEO changes more frequently. Thus, the DRL decreases as the frequency of CEO turnover increases

This study examines the determinants of cost inefficiency of banks operating in 8 member countries of the Association of Southeast Asian Nations (ASEAN): Indonesia, Malaysia, Singapore, Thailand, the Philippines, Cambodia, Brunei and Vietnam. The author defines the cost inefficiency using accounting based efficiency known as business efficiency (CIR). Second, the researcher regresses the cost inefficiency ration on a set of bank specific variables (size, equity to total asset, personnel expenses to total expenses) and economic variables (economic growth and inflation rate) using ordinary least squared (OLS) regression analysis. The dataset of 504 banks in the ASEAN countries is used for the period from 2008 to 2012. The results show that the average cost inefficiency ratio during the period is about 59%. Banks from Vietnam exhibit the lowest cost inefficiency relative to banks in the other ASEAN countries. It is found that cost inefficiency is positively determined by inflation, loan loss provision, personnel expenses, capital adequacy and negatively by asset size and liquidity position

The purpose of this article is to investigate the accounts payable management practices of small, medium and micro enterprises (SMMEs) in the Cape Metropolis. The study is motivated by a lack of research on payable management practices of SMMEs in South Africa. Data are collected from a sample of 200 SMMEs by means of a closed-ended questionnaire and analyzed using descriptive statistics and inferential statistics.
The findings of the study indicate that 70% of the sampled SMMEs purchase only on cash basis. Of the sampled SMMEs, 22% purchase on both cash and credit, while 8% purchase only on credit basis. Of those that purchase on credit, 72% pay their creditors promptly to take advantage of discount facilities. To manage their accounts payable, 52% of the SMMEs use computers. Only 43% settled accounts payable on the last day that the payment is due. The results further indicate that a lack of personnel and time are the main factors that inhibit the SMMEs from managing their accounts payable effectively. The above results suggest that SMMEs are inclined towards purchasing on cash or paying promptly when they purchase on credit, which could indicate that they had a lower bargaining power relative to that of suppliers who may have viewed these entities as risky ventures to which they were reluctant to extend credit terms.
Based on the above findings, this study recommends that the SMMEs decision-makers be educated on the competitive advantages gained by buying on credit, most important of which are improving cash flow and building supplier relationship. In addition, the decision-makers may be trained, perhaps through Government intervention, on how to overcome the factors that inhibit them from managing their accounts payable effectively, by using computers. The Government may also provide guarantees to SMMEs’ suppliers to relax the credit terms extended to these entities.
This study makes several original contributions to literature. It is the first study to investigate the accounts payable management practices of SMMEs in the Cape Metropolis. Entities whose management of accounts payable had up till now been neglected appeared in the prior research to their peril. Secondly, this study provides a unique insight into SMMEs management of their liquidity by focusing on their management of most immediate obligations (accounts payable), which are critical for these entities’ survival given their limited access to finance. The proposed study thus fills the gap in research on the accounts payable management practices employed by SMMEs in South Africa. Although various studies have been published on the accounts payable management practices on SMMEs in other countries, no study was found within the South African context. This study therefore contributes to the debate on the accounts payable management practices of SMMEs in a unique context of South Africa and inspires other researchers to investigate the same in other Metropolis in the country

This paper seeks at investigating the critical determinants that affected the profitability of the commercial banks in Jordan by applying a balanced panel data set of these banks. So that it seeks to identify the significant bank-specific variables, by comprising 130 observations of thirteen banks over the years (2005-2014). A measurement of banks’ profitability is the return on assets (ROA) and the return on equity (ROE). The results indicate that the variables of capital adequacy, capital and leverage positively effect on the banks’ profitability, and the variable of assets quality negatively effects on the banks’ profitability.
Results also indicate that rising bank’s profitability in Jordan is associated with well-capitalized banks, accompanied by high capital adequacy

This paper demonstrates that both Taiwan’s exchange-traded funds (ETFs) and equities exhibit an asymmetric volume-return relationship in which the ETF display a mixed, negative or positive, asymmetry and the equity exhibits primarily a positive asymmetry. The positive asymmetry in equities and its decline with the progressive elimination of the short-sale restriction on equities support the costly short-sale hypothesis, which considers a costly short-sale restriction or asymmetric transaction costs on long and short trading to be the source of the asymmetry. The part of a less positive asymmetry in ETFs also consists with what the costly short-sale hypothesis predicts. The later information models that consider asymmetrically-informed traders or the heterogeneity of traders to be the source of the asymmetry explain the negative asymmetry in ETFs and the upward trend in the magnitude of volume-return correlation with the grow of volume quintiles. An important conclusion is that not a single hypothesis can be a universal explanation for the asymmetric volume-return relationship. Which hypothesis may explain the volume-return asymmetry depends largely on whether the short-sale restriction is present

This paper surveys the literature examining securitization. Besides describing the economic motivation for the use of securitization, the paper provides details on securitization characteristics and players, presents the recent trends of securitization markets, describes the role played by securitization in the 2007-2008 financial crisis, and compares the financial characteristics of securitization transactions for a large cross-section of ABS, MBS and CDO tranches issued during the 2000-2011 period. Securitization creates value by increasing liquidity, reducing the cost of funding, allowing originators to diversify funding sources, improving originators’ risk management, and allowing originators to benefit from regulatory arbitrage and to improve key financial ratios. However, securitization transactions are complex undertakings, they are expensive to set up, and increase the deadweight transaction costs associated with principal-agent and asymmetric information problems when used inappropriately