International Research Journal of Finance and Economics
 Issue 119
 February, 2014
Disclosure Quality and its Components in TSE
Abbas Aflatooni

Recent studies suggest that higher information risk proxied by lower disclosure quality results in higher stock returns. This paper investigates whether the risk factors of disclosure quality and its components (the risk factors of timeliness and reliability) explain the time-series variation in portfolio returns. I find that the disclosure quality risk factor and its components are significant in explaining the time-series variation of Tehran Stock Exchange portfolio returns. Furthermore, the results suggest that the risk factor of timeliness has an incremental explanatory power relative to the risk factor of reliability. Thus, the information risk arises from timeliness of financial reporting, results in higher stock returns than that of reliability of corporate reporting.
Keywords: Information risk; disclosure quality; timeliness; reliability, Tehran Stock Exchange.
JEL Classification Codes: M41, C30.
Absenteeism and its Impact on Productivity among Workers in Textile Industry
Venkatesh. J, Sethuram. S and Aarthy. C

The business sector turned out to be a employee oriented rather than management oriented. The management should take initiatives and be concerned toward the employees for each and every action in the organization. Absenteeism is considered to be a major hurdle from the past history. The study analyses the about the impact of absenteeism in the textile industry and its impact on productivity. The respondents who took more leave for the year 2012-2013 were selected as target sample and the questionnaires were distributed and the result of the study is computed using chi-square and percentage analysis. The respondents suggested reframing the shift schedule and the major reason for absenteeism is dissatisfaction with job and job related factors. So the management must take necessary steps to overcome the rate absenteeism thereby to improve the production rate.
Keywords: Net Income, Comprehensive Income, Performance Evaluation, Other Comprehensive Income Items.
Applying ANP Approach for Determining Main Problems in Developing Competitiveness of Indonesian Palm Oil-Based Fatty Acid and Fatty Alcohol Industry
Toni Yoyo, Arief Daryanto, Endang Gumbira-Sa’id and Mohamad Fadhil Hasan

Oleochemicals can be derived from natural oils or fats. Palm oil-based fatty acids and fatty alcohols are the most important basic oleochemicals. The aim of this study is to determine main problems in developing competitiveness of Indonesian palm oil-based fatty acid and fatty alcohol industry using analytic network process (ANP) approach. This study integrates Porter Diamond concept with ANP approach. This study used in-depth interview and questionnaire methods to gather opinions from experts of the industry. The experts were selected by purposive sampling method from the supply chain of the industry. The Kendall’s Coefficient of Concordance is used to test the agreement level of all experts. The results of this study show that ‘factor conditions’ is considered as the most prioritized and problematic factor, whereas ‘utility supplies’ is considered as the most prioritized and problematic sub-factor. The results of this study also show that there are different opinions among all experts. It can be seen that Kendall’s Coefficients of Concordance of some factors are low and p-values are higher than α.
Keywords: Analytic network process (ANP), competitiveness, fatty acids, fatty alcohols, experts.
Whether Financial Holding Companies Improve the Credit Quality of Banks in Taiwan? An Analysis of Distance-to- Default Approach
Li-Hom Tsung

The objective of this paper is to investigate whether financial institutions in Taiwan benefit from financial integrations. I employ the distance-to-default methodology to approximate and measure financial institutions’ credit risk. If financial institutions do benefit from establishing financial holding companies, it is expected to observe the credit risk of those financial institutions to be improved than before. My empirical results from Taiwanese case shows that there are 7 percent to 14 percent of financial institutions do benefit so, but the percentage rises to 29 percent to 36 percent if depression periods are excluded. This implies that the impact of depression on the credit issue might be nontrivial.
Keywords: Financial Holding Company, Distance-to-Default, KMV Model, Credit Risk.
Role of Education on Economic Growth in Saudi Arabia: An Empirical Analysis
Waleed Alkhuzaim
This paper empirically examines the relationship between education and economic growth in Saudi Arabia. Using annual data from 1985 to 2011, the study employs several econometrics techniques, such as the Unit Root test, the Cointegration test and the Error Correction Model (ECM). The long run relationship between variables is estimated by the Johansen and Juselius Cointegration test. Granger causality within error correction mechanism has been employed to investigate the direction of causality between variables. The empirical results showed that a positive relationship between education, as measured by government expenditure on education and economic growth. The results also suggest a unidirectional causality running from education to economic growth in both the short run and the long run.
Effect of Dividend Policy Measures on Stock Price Volatility in Tehran Stock Exchange
Nooshin Salari, Ezatollah Abbasian and Kamran Pakizeh
This paper aims to determine the impact of dividend policy on stock price volatility by taking firms listed on Tehran stock exchange. A sample of 68 listed companies from Tehran stock exchange is examined for a period from 2001 to 2012. The estimation is based on cross-sectional ordinary least square regression analysis to find the relationship between share price volatility and dividend policy measures (dividend payout ratio and dividend yield). Control variables taken by the study are: size, earnings volatility, debt and growth. Results show, there is a significant negative relationship between share price volatility and two main dividend policy measures: payout ratio and dividend yield. It has also identified that there is a positive relationship between share price volatility and size and also debt of firms. The other finding of this study is that there is no relationship between stock price volatility and earnings volatility and also growth of the firms.
Keywords: Dividend policy, Dividend yield, Dividend payout, Share price volatility.
The Effect of Capital Structure on Economic Value Added: Evidence from Turkey
Famil Samiloglu, Hasim Bagci and Yusuf Polat

This paper examines the capital structure and its effects on the profitability of Turkish manufacturing firms listed on the Istanbul Stock Exchange. A sample of 120 Turkish firms listed on Istanbul Stock Exchange for a period of 10 years from 2003-2012 was selected. Profitability is measured by economic value added. Determinants of capital structure include current liabilities to total resources, long-term liabilities to total resources and total liabilities to total resources. The control variable is invested capital. Panel data and multiple linear regression models have been used to find out the relationship between capital structure characteristics and company firm profitability in the context of Turkey. The findings of this paper show a significant and negative relationship between current liabilities to total resources and economic value added, while there is a positive and significant relationship between long-term liabilities to total resources, total liabilities to total resources and economic value added. On the other hand, the study shows that there is a positive relationship between control variable, invested capital and profitability of manufacturing industry. Based on the findings of this study, it can be concluded that the capital structure of the firm impacts economic value added.
Keywords: Capital Structure, Economic Value Added, Invested Capital, Istanbul Stock Exchange.
Okun’s Law and Long Term Co-Integration Analysis for OECD Countries (1987-2012)
Bilal Kargi

Even though, there are so many so long discussions on the relation between population increase and economic growth, today, general opinion tends to believe that there is a direct relation between population increase and economic growth. This opinion is supported by some empirical studies. Despite an economical growth caused by directly with population growth, it is known that there is a reverse relation between unemployment and growth known as Okun’s Law. This relation, suggesting that every 1 point decrease in unemployment induces a 3 point increase in growth, is tested for many countries. In this study, this hypothesis of Okun is examined and it is found to be true for selected 23 countries, even with the difference in coefficients. At the same time, long term relation between growth and unemployment is tested with the use of time series analysis and long term relation is found for 14 countries. Additionally, tests done for all 34 OECD countries showed that reversed relation between unemployment and growth is valid and they are co-integrated in long run. In this study, countries are categorized according to growth rate as “low”, “normal” and “high” and a consistent unemployment rate for countries with high growth rate could not be seen. In the case of countries with lowest growth rate, generalization that they have quite high unemployment rate can be made.
Keywords: Economic Growth, OECD Countries, Unemployment.
JEL Classification Codes: O40, O57, J64.
An Employee Satisfaction on Human Resource Management of Educational Institutions: A Case Study of Public Universities in Thailand
Ornpapha Chutikorntaweesin, Thuchapon Yodthong, CDR. Panupong Jitdon, Pol.Col. Athiwit Kamolrat and Tanarwad Wisamitanan

The purposes of this dissertation were (a) to find an employee satisfaction on human resource management of public universities; (b) to find the factors influencing employee satisfaction on human resource management of public universities; (c) to find a difference of satisfaction on human resource management of employees in public universities when they are grouped according to demographic profile; (d) to find a relationship between factors enfluencing employee satisfaction and employee satisfaction on human resource management of public universities; and (e) to find the most important factors influencing employee satisfaction of public universities. This research used quantitative method to analyse the results. The results of the study showed that the overall satisfaction of employees on human resource management can be interpreted to be highly satisfied. Employees perceived income as the important factors influencing employee satisfaction on human resource management. Employees are very strongly satisfied with benefits and compensation. The results of hypotheses testing showed that participants differing in gender and income had significant difference in satisfaction on human resource management. Participants differing in age, marital status, educational level, and work experience had no significant difference in satisfaction on human resource management. Factors influencing employee satisfaction i.e. income, job stability, carreer advancement and happiness at workplace are positively related to employee satisfaction. Income is the most important factor influencing employee satisfaction of public universities.
Keywords: Employee Satisfaction, Human Resource Management, Educational Institution, Public University
The Extent of Perception of the Importance of Non-Financial Performance Metrics and Their Role in Performance Assessment A Field Study on Jordanian Public Shareholding Electronic Manufacturing Companies
Ziad Odeh Ebniah Al Amaideh

Performance evaluation is considered of the important and basic ways in the field of performance improvement and scalability, because of its role in achieving the goal of reducing costs, improving quality of products, and maintaining morale of the personnel. However, the traditional methods of performance evaluation, do not serve its purpose any more, as a result of the emerging vulnerability in these traditional ways. This weakness made it the center of much criticism in today's business environment that is characterized by changes, rapid developments, deepening competition and the application of continuous improvement programs such as just-in-time production, target cost, and advanced manufacturing technology, the matter that leaves a question mark on the validity of the performance appraisal system being used in the light of these changes and developments , since these tools must be developed a way that in line with the changes in the surrounding environment, as the information generated by the performance measurement and evaluation is the basis of decision making process aiming to promote economic integration.
An Inv`estigation of the Critical Factors in Determining Customer Intentions - Choices in the Taiwanese Catering Industry
Chi-Jung Hsieh and Yi-Meng Huang
Catering is quite an important part of the culture in Taiwan. Catering not only represents local culture, but also increases business opportunities in southern Taiwan. However, while there has been a great deal of research into the other restaurant industry, very little attention has been paid to catering. The purpose of this study was, first, to examine the linkage between service quality, guanxi networks, customer satisfaction, and purchase intention; and secondly to investigate the mediating effects of service quality and customer satisfaction. The questionnaire adopted items from the relevant literature with regard to the four factors of service quality, guanxi network, customer satisfaction, and purchase intention. This study discovered that guanxi networks and customer satisfaction have direct influence on purchase intention in catering industry. Moreover, the better guanxi networks customers have the better service quality they obtain. In addition, service quality has an indirect positive effect on purchase intention via customer satisfaction. If the catering manager can improve service quality, this is thus conducive to increasing the sales performance. This paper is one of the first to uses a systematic method to analyze service quality and customer satisfaction in Taiwanese catering industry. The findings suggest that catering managers should understand the demands of customers and provide suitable services and dishes to maintain good customer perceptions.
Keywords: Service quality, Guanxi networks, Customer satisfaction, Purchase intention, Taiwanese catering industry.
The Causal Relationship between the Factors of Genius Triangle and Shape of Genius Triangle Affecting the Success of Small and Medium Enterprises in Thailand
Chalieo Vitoorapakorn

The purposes of this research were to study and to analyze the causal relationship between factors of Genius Triangle and the shape of Genius Triangle influencing the success of Small and Medium Enterprises (SMEs) in Thailand. Quantitative research was used in conducting this study. The research findings showed that in total, factors of Genius Triangle influencing the success of SMEs was at the highest level. In particular, Triangle of Life Time was at the highest level, followed by Triangle of Role in Organization, and Triangle of Working Value. About the form of Genius Triangle influencing the success of SMEs, the research finding showed that in total, the shape of Genius Triangle influencing the success of SMEs was at the moderate level. In particular, the equilateral triangle influenced the success of SMEs in the high level, followed by the obtuse triangle, the right triangle, and the acute triangle. The result of hypothesis testing showed that the variables influencing the success of SMEs in Thailand were factors of Genius Triangle, consisting of triangle of life time, triangle of role in organization and triangle of working value; all these also influenced the success of SMEs. The shape of the equilateral triangle has the positive relationship with the success of SMEs. The acute triangle, the right triangle, and the obtuse triangle did not have the relationship with the success of SMEs in every aspect.
Keywords: Genius Triangle, Success, Small and Medium Enterprises (SMEs), Time Management, Role in Organization, Working Value.
Risk of Expropriation and Rybczynski Theorem
Amjad Toukan

In the Heckscher-Ohlin world, Rybczynski theorem predicts that holding product prices constant, an increase in the relative supply of a factor increases the relative output of the good that uses that factor intensively so much that the output of the other goods decline. Using a sample of 16 developing countries, 28 manufacturing industries and eight years, we find evidence contradicting the predictions of Rybczynski theorem. This contradiction is examined using a modification of the Heckscher-Ohlin model to allow for international variability in corruption and risk of expropriation. Our results show that the weak enforcement of property rights indicated by the increase in the incidence of corruption and the increase in the risk of expropriation counteracts the increase in the relative output of capital-intensive goods to the output of labor-intensive goods caused by an increase in the capital stock per worker and predicted by Rybczynski theorem.
Keywords: Corruption; Risk of expropriation; Production patterns; Capital abundance; Factor price equalization; Multiple diversification cones; Developing countries.
JEL Classification Codes: F1, D73, O1.
Inflation, Risk, and Equilibrium Asset Returns
Claude Bergeron

In this note, we examine the theoretical effect of inflation and risk on asset returns. From the fundamental prediction of the capital asset pricing model, we first relate the expected nominal rate of return of the asset to its inflation beta (estimated by the covariance between the asset’s nominal rate of return and the rate of inflation, divided by the variance of the inflation rate). Then, we show that the equilibrium expected rate of return on risky asset can be expressed by a linear combination of its standard beta and inflation beta. This result indicates that inflation rate, in addition to market return, influences asset returns. This result also suggests that inflation risk, in addition to market risk, should be priced in the cross-section of asset returns.
Keywords: Inflation, Risk, Inflation Beta, Capital Asset Pricing Model, Inflation-CAPM, Multifactor Model.
Impact of Liqudity Ratios on Economic Value Added: A Case Study of Turkish Manufacturing Firms
Famil Samiloglu and Ali Ihsan Akgün

This paper examines the impacts of liquidity ratios on economic value addedof Turkish manufacturing firms listed on the Istanbul Stock Exchange. A sample of 100 Turkish firms listed on Istanbul Stock Exchange for a period of 10 years from 2003- 2012 was selected. Performance is measured economic value added. Liquidity ratios include current ratio, quick ratio and cash ratio. The control variables consist of firm size and firm leverage. Panel data and multiple linear regressionswere used to find out the relationship between liquidity ratios and economic value added in the context of Turkey. The findings of the study show that there are significant and positive relationships between current ratio, quick ratio, cash ratio and economic value added. The implication of the study is that liquidity has low degree of influence on the economic value added of manufacturing firms in Turkey.
Keywords: Economic Value Added Current Ratio, Quick Ratio, Cash Ratio, and Istanbul Stock Exchange.