Issue #3 (cont. 1) (Volume 13 2016)

The electricity market has experienced significant changes towards deregulation with the aim of improving economic efficiency. The electricity pricing is a major consideration for consumers and generation companies in deregulated electric markets, so that offering the right price for electricity has become more important. Various methods and ideas have been tried for electricity price forecasting. Artificial neural networks have received much attention with its nonlinear property and many papers have reported successful experiments with them. This paper introduces artificial neural network models for day-ahead electricity market in Turkey. Using gradient descent, gradient descent with momentum, Broydan, Fletcher, Goldfarb and Shanno (BFGS) and Levenberg-Marquardt algorithm with different number of neuron and transfer functions, 400 different models are created. Performances of different models are compared according to their Mean Absolute Percentage (MAPE) values; the most successful models MAPE value is observed as 9.76%.

Keywords: electricity price forecasting, neural networks, day-ahead electricity market, Turkey.
JEL Classification: C02, C13, C45, C53

This study examines the effect of control-ownership wedge (the difference between control rights and cash flow rights) on investment efficiency. Subsequently, the authors analyze how the level of foreign investor monitoring influences the association between control-ownership wedge and investment efficiency. The results of the analyses show that investment efficiency deteriorates as control-ownership wedge increases. This, in turn, suggests that when this wedge increases, agency problems and information asymmetry between controlling and minority shareholders become more severe. The authors also perform an analysis by dividing the samples into four groups based on foreign investor ratio from the least to the greatest. The result shows that control-ownership wedge deteriorates investment efficiency in the group with the least foreign investor ratio. The result reveals that foreign investor monitoring is effective corporate governance mechanism to monitor the controlling shareholders’ investment decisions. We also find that higher control-ownership wedge with over-investment tendency negatively affects firm performance, which implies an inefficient investment behavior. This result suggests that as controlling shareholders’ ownership increases, controlling shareholders becomes more and more reluctant to assume a loss of firm value as a result of reduced investment efficiency. This study provides additional evidence that the greater control-ownership wedge decreases investment efficiency, while recent studies on the relation between control-ownership wedge and investment efficiency suggest mixed evidence. In addition, the results show that foreign investors play an effective monitoring role when controlling shareholders are in position of exercising exclusive power. The results indicate the importance of external investors’ monitoring over investment decisions.

Keywords: control-ownership wedge, foreign ownership, investment efficiency, over-investment, under-investment.
JEL Classification: G32, M41

This study investigates whether corporate social responsibility (CSR) affects the financial performance of the United States (US) companies. In particular, the impact of CSR on financial performance is investigated in terms of involvement in socially responsible initiatives instead of outcome. The Environmental, Social and Governance disclosure score as calculated by Bloomberg is used as a proxy for corporate involvement in socially responsible initiatives. Fixed effects regression is employed to estimate the relationship between the extent of corporate social disclosure (CSD) and financial performance using the data of listed companies on the Standard & Poor’s 500 during the period 2009-2013. The results suggest that the involvement in socially responsible initiatives has a significantly positive effect on financial performance. In addition, the control variables, such as total compensation to directors, CEO duality and women presence on board are statistically significant to financial performance. It is important to incorporate a longer period in order to validate the positive relationship between CSR and financial performance, whilst the sample is focused on large in size US companies. This study chose to approach the topic from a different angle in order to provide an alternate perspective on this issue taking into account the involvement of socially responsible initiatives via CSD.

Keywords: corporate social responsibility, disclosure, financial performance.
JEL Classification: M140, M410, Q00

The purpose of this paper is to analyze the value chain, the main activities, and supporting activities as well as cost driver activity of one essential oil export company in Central Java. This research is a case study using the survey method (ex post facto). Primary data were collected by in-depth interviews and FGD (Focus Group Discussion). Secondary data were taken from natural materials purchasing department and finance department and controlling. Based on the research, the authors found that the main activity of the company consists of Supply, Purchasing/Procurement, Production Planning, Manufacturing, Materials, Quality Control (QC), Research and Development (R & D), Sales and Marketing and Customer activities. While supporting activities (support) consist of Personal and General Affair (P & GA), Information Technology (IT), Administration, Quality Assurance (QA) and Maintenance activities. Based on the value chain analysis (VCA), the company has Purchasing and R & D activities as the main activity of which is a characteristic that distinguishes the generic value chain of Porter. Purchasing a company with a cost driver activity expenditure composition of 85.6%. Clove oil is the dominant raw material of 78.26%.
Based on this research, the authors, then, put forward some suggestions as follows: firstly, doing further research with the identification and analysis of internal and external factors, in order to know the internal strengths and weaknesses, opportunities and threats faced by the company. Second, analyzing company’s competitive position and the selection of alternative strategies to formulate strategies that can enhance the competitive advantage of companies.

Keywords: value chain analysis, main activity, supporting activity, cost driver.
JEL Classification: M21, M41

The main aim of paper is seen at two levels: the first level to assess the situation on the venture capital market in the Czech Republic based on the results of a comparative study of selected countries of European Union is the area of venture capital financing. The second level is, then, to propose measures, whose implications could increase the effectiveness of venture capital to the business sector in the Czech Republic. The main purpose of the paper is to identify internally homogeneous groups of the EU states regarding the situation on the venture capital market in the European Union Member States. The aim of this article is supported by relevant statistical data for the period 2008-2013 to assess the legislative framework of venture capital market in the Czech Republic and other selected European countries. Based on the results of cluster analysis, EU countries were identified, Hungary and the Netherlands, in which legislative conditions with venture capital market were subsequently analyzed and the results were compared with the situation in the Czech Republic. The Netherlands as a representative of the countries with developed market risk capital, Hungary as a representative of CEE countries. The problem of undeveloped VC market in the Czech Republic is not in demand for venture capital, but in its supply. Pension funds and insurance companies cannot invest more than 5% in risky assets. In the Czech Republic, there are no tax incentives to attract investors and even government programs that could complement the missing investors and support the creation of venture capital funds. This low level of venture capital usage for the development of enterprises could also be seen in misunderstanding and ignorance of this form of financing, the inability of management to prepare a business plan and to attract a potential investor, fears of administrative burdens arising from an investor and finally questionable return on investment when, for example, public offering of shares, which achieves a high appreciation, is in the Czech Republic underused.

Keywords: venture capital, benchmarking, cluster analysis, Ward’s method, CEE countries, EU countries, Czech Republic, Hungary, Netherlands.
JEL Classification: G32, M21

In this paper, the authors provide an explanation of the abnormal behavior of gold returns between the 1^st of January 2008 and the 31^st of December 2013. The authors suggest a behavioral finance foundation to the fact that gold returns exceed those of a wide range of other assets over this period. The approach rests on the safe haven (SH) motif for flights to gold during heavy financial stress periods. The prevailing Baur-Lucey-McDermott paradigm on gold as a SH is shown to be insufficient, as it ignores the roles of volatility and risk preferences. The auhors suggest a formal SH definition, recovering those elements from behavioral finance. Contrary to the previous paradigm, the approach is data-consistent, in the sample period. The authors find that gold is a SH for all stock markets considered, some exchange rates, and even Euro Area sovereign bonds (including German bunds). They estimate the SH risk premium in all cases. The authors find that investors perceive the distinction between good and bad volatility, and that they do not ask for excess returns when gold volatility is high for SH reasons. This is consistent with the literature on the low frequency of idiosyncratic shocks in the gold market. Furthermore, the authors find evidence that, in a period of high financial uncertainty, fund managers building portfolios consisting only of gold might be acting rationally, contrary to the finance common sense for normal periods. In fact, in the sample period, gold is even strictly dominant in mean-variance terms, when compared to equity.

Keywords: safe haven, gold, euro debt crisis, risk preferences, fund management.
JEL Classification: C22, C58, G01, G11, G15

In contemporary international payment transactions, there takes place frequent use of bank guarantees as collateral payment in commercial transactions. The bank guarantee is usually required when it comes to specific business agreements that require stronger commitment and assurance that all contractual obligations will be implemented exactly as indicated. Knowledge of the use of bank guarantees allows better negotiating position in making business, quicker response to the demands of public calls for tenders and the provision of their own claims. Because of its rapid and efficient implementation, the bank guarantee is one of the most commonly used collateral in international business.

Keywords: bank guarantee, business environment in Serbia, legal framework of bank guarantees.
JEL Classification: G21, M16, M21

When examining retail patronage, customer satisfaction must also be considered. Secondary resources (American Marketing Association, 2007; Berman, 2011; Berry, 2008; Chang, 2006, p. 209; Helgesen & Nesset, 2007, p. 129, Kong and Jogaratnam, 2007, p. 279) observed that customer satisfaction is the degree to which customer’s expectations agree with the actual performance of the product and/or service
South African consumers situated in Gauteng consider a sales person’s product knowledge as the most important attribute when making purchasing decisions. American consumers, in contrast, consider sales person respect as the most important attribute when making purchasing decisions. The implications for marketers and sales managers are that marketers and sales managers must provide adequate training for their sales personnel in order for them to treat customers in such a way to obtain their loyalty.
The quality of the products sold at the retailer does not form part of the trade off options that customers are presented with.

Keywords: retail store customer, prices compared to competitors, salesperson product knowledge, salesperson responsiveness, South African retail consumers.
JEL Classification: L81, M31

This paper investigates the influence of firm-level corporate governance on financial performance of the listed firms in Bangladesh. Agency theory suggests that better corporate governance reduces expropriation costs, which, in turn, enhances investors’ confidence in the firm’s future cash flow and growth prospects, leading to higher firm valuation. Likewise, a decrease in private benefits is likely to cause an improved operating performance. This paper uses a questionnaire survey-based corporate governance index (CGI), comprising of the three dimensions – shareholder rights, independence and responsibilities of the board and management, and financial reporting and disclosures. The study results partly confirm the prediction of the agency theory, with a statistically significant positive relationship between a firm’s corporate governance quality and its valuation, even though the relationship between firm level corporate governance and operating performance seems inconclusive.

Keywords: corporate governance index, agency theory, financial performance, Bangladesh.
JEL Classification: G32, G34, G38, O16

The intense competition in the current marketplace has forced local companies to re-examine their methods of doing business to improve product quality and reduce cost of production at a faster ratethan its competitors (Singh & Ahuja, 2012). The South African manufacturers have struggled with growing trade deficits and outsourced operations. Although proponents cite the many benefits of JIT adoption, its implementation rate in South Africa has been relatively conservative and is highly criticized, especially in comparison with India (Jacobs, 1997; Singh Ahuja, 2014). The purpose of the study is to verify the financial impacts on a company’s performance on reduction of waste by implementing the JIT principle. The focus of the study will be looking at the profit derived of a company’s production line by comparing the amount of waste reduction of a JIT line, as opposed to a non-JIT line. This is of significant importance, since the profits of a company effects the GDP of South Africa, and increases employment (Jacobs, 1997). This study is a replication from Cua (2000) and is a quantitative study. The case study company, Sabertek, has two different manufacturing plants where one plant uses JIT, whilst the other plant does not use JIT. Structured questionnaires were considered and administered to the senior staff and various technical staff of each plant for the collection of primary data. This was approximately 120 personnel (60 questionnaires in each plant) with a total expected response rate of 30%. This was used to compare the profit of a JIT line, as opposed to a non-JIT line, especially in relation to reduction of waste. Secondary data from the company’s financial records of each plant relating to the return rate from rework, sales, profit from the different production lines were equally looked at.

Keywords: JIT, market place, profit, JIT line, non-JIT line, primary data, secondary data.
JEL Classification: L10, D21, C8

While businesses worldwide are aiming increasingly on the sustainability in various business areas, customer service is by nature not consistent and stable, because it is delivered by human beings and, therefore, subject to their imperfections and influences on them. This can result in unstable, unsustainable and unpredictable service delivery. This article describes the corporate culture/service quality conceptualization as a basis for overcoming this by embedding and implementing the stability and sustainability of corporate culture to enhance the stability and sustainability of quality of service. This conceptual study demonstrates that a well-planned and maintained corporate culture, based on quality service delivery goals, is able to do exactly that under the initiative of the leadership. Although there are many articles referring to service quality, very few of them succeed in bringing sufficient aspects into account to be able to form a holistic image of enhancing stability, sustainability and consistency in service quality. Existing models and approaches were combined in a holistic conceptual approach.

Keywords: service quality, corporate culture, stability, sustainability, customer perception, perceived quality, expectations, ACSI, internal marketing, relationship marketing, CSP, profit service chain.
JEL Classification: L8, M14, M31, M30

This study investigated the challenges independent retailers in Soweto, Johannesburg in South Africa face. The empirical research using a survey method was conducted among independent retailers selling different types of goods. Due to inaccessibility of a database on independent retailers in SA, a convenience sampling method was adopted for the study. Existing literature was used to design a questionnaire targeted at independent retailers to investigate the challenges that impact on their business performance. The findings of the study revealed that competition is the major challenge that independent retailers face which is supported by existing research findings. Other challenges included costs of buying the products, high inventory costs and high rental costs. Furthermore, this study found that marketing related challenges are major challenges compared to finance related challenges. Independent retailers need to market the businesses appropriately in order to survive and do better than their competitors.

Keywords: independent retailess, costs, buying, selling, goods.
JEL Classification: L81, F1

This study investigated the relationship between perceived organizational support (POS), job satisfaction (JS) and organizational commitment (OC) in an institution of higher learning. The mediating effect of job satisfaction on the relationship between perceived organizational support and organizational commitment was tested. Self-completion questionnaires were administered to a sample of (n=302) participants. Structural equation modelling techniques were used to test the hypothesized relationships. Results indicate strong significant positive correlations among the variables. Furthermore, findings of the study demonstrate that job satisfaction mediates the relationship between perceived organizational support and organizational commitment. The results also showed that there is a significant relationship between perceived organizational support and job satisfaction. A significant relationship between perceived organizational support and affective commitment, as well as continuance commitment was also noted, but no significant relationship between perceived organizational support and normative commitment was found. Results showed a significant positive relationship between job satisfaction and affective commitment, as well as continuance commitment, but no significant relationship between job satisfaction and normative commitment was found.

Keywords: academic staff, perceived organizational support, organizational commitment, job satisfaction, relationships, SEM.
JEL Classification: J28

A survey was conducted (2012 to 2014) in the City of Tshwane in order to assess and evaluate determinants of adequate municipal services that are routinely provided to operators of start-up business enterprises. Data used in the report come from 1.058 small businesses. The aim of research is to assess and evaluate the relationship between the quality of services and sustained viability in small business enterprises. The study was conducted against the background of a high failure rate among newly established small businesses in the City of Tshwane. The study showed that there was a significant association between positive perception of business operators on the quality of municipal services provided to them and viability of businesses. The percentage of viable business enterprises that were satisfied with the quality of services provided to them was 87%. The percentage of non-viable business enterprises that were satisfied with the quality of services provided to them was only 13%. Profitability in business enterprises was significantly affected by lack of capacity for fulfilling the business and entrepreneurial needs of newly established businesses [hazard ratio = 3.58; P = 0.000; 95% C. I. = (1.45, 5.46)], inappropriate policy [hazard ratio = 3.19; P = 0.000; 95% C. I. = (1.39, 5.28)], and lack of tailor made training programs directed at newly established small businesses [hazard ratio = 2.89; P = 0.000; 95% C. I. = (1.24, 4.77)]. In-depth interviews conducted with business operators led to similar findings.

Keywords: city of Tshwane, small businesses, municipal services, perception, hazard ratio.
JEL Classification: L26, H7, L8