International Research Journal of Finance and Economics
 Issue 154
 October, 2016
On Analysts Earnings Forecasts Mistakes
Gil Cohen and Julia Pavlodsky

In this paper we construct a theoretical model that tries to explain why analysts make mistakes in forecasting a firm's quarterly earnings per-share. We test our model empirically and use it to try to predict future mistakes. We find that it is possible to predict earnings mistakes in all four quarters, with a focus on the first and the fourth quarters. We find that analysts are overly pessimistic with their earnings estimations for the first quarter and overly optimistic for the fourth quarter. Last quarter and last year same quarter earnings surprises were found to be an important influential factor in current quarter earnings mistakes. However, their influential direction varies across sectors. Other external factors such as firm growth rate, financial leverage and market capitalization were found to have a limited impact on quarterly earnings forecast mistakes and their impact varies across quarters and sectors.
Keywords: Earnings Per-Share, Earnings surprises, Analysts prediction
JEL Classification: G14, G11, G15.
Empirical Analysis of the Potency of Fiscal Policy on Economic Growth in Ghana
Promise Orlando Quashigah, Grace Ofori-Abebrese and Robert Becker Pickson

This study examined the effect of fiscal policy on economic growth in Ghana. The fiscal variables considered in the study included, government consumption expenditure, government investment expenditure, government transfer payments and taxes revenue. Annual data covering the period of 1983 to 2012 were collected and interpolated into quarterly series for the analysis of the study. The analysis was done by the use of vector error correction model (VECM) and vector autoregression (VAR) approaches. The empirical results revealed that government investments, government transfer payments and tax revenue affect economic growth positively whereas government consumption expenditure affects economic growth negatively. Since the short run and long run results were the same, the study recommended that the government needs to invest in productive sectors and also introduce policies that would protect and enhance private investments. It was also suggested to the government of Ghana to put in more efforts in revenue mobilisation since tax revenue serve as a source of funding for government expenditure in undertaking infrastructure development.
Keywords: Government Consumption Expenditure, Government Investment Expenditure, Government Transfer Payments, Tax Revenues, Fiscal Policy, and Economic Growth.
The Influence of Financial Ratios on Stock Returns
Pompong Budi Setiadi and Fanny Dwi Puspitasari

The purpose of this study are: to determine the effect of financial ratios reflected on liquidity ratios, profitability ratios, activity ratios, solvency ratio, and the ratio of market value respectively in proksikan sequentially with the current ratio, return on equity, total asset turnover, debt to equity ratio, and price to book value partially and simultaneously on stock returns of companies listed on the Indonesia stock Exchange.
The results of this study indicate that: (1) current ratio positive and significant effect on stock returns, (2) return on equity positive and significant effect on stock returns, (3) total assets turnover positive and significant effect on stock returns, (4) debt to equity ratio has no effect on stock returns, (5) price to book value positive and significant effect on stock returns, (6) simultaneously current ratio, return on equity, total asset turnover, debt to equity ratio, and price to book value and significance of the positive effect on stock returns.
Keywords: stock return, current ratio, return on equity, total asset turnover, debt to equity ratio, and price to book value.
Subsidies on Brazilian Agribusiness: Panel Data Model
Silvia Ferreira Marques Salustiano, Tito Belchior Silva Moreira, George H. de Moura Cunha and Carlos Vinicius Santos Reis

Global subsidy policies affect international trade and allocation of resources intended for agribusiness. In this context, the effects of credit policies and subsidies on the performance of agribusinesses are relevant. This article addresses these issues by evaluating the impacts of credit programs, including subsidized credit, on 28 Brazilian agribusiness corporations using the panel data model. A survey of data from the balance sheets disclosed by the Securities and Exchange Commission of Brazil (Comissão de Valores Mobiliários - CVM) for the period from 2007 to 2012 was performed. The financing accounts were analyzed by dividing them into three types: subsidized financing, market-rate financing and foreign financing. The total revenue, fixed assets and personnel spending accounts were also analyzed. Based on both fixed-effects and random-effects methods, a positive impact of foreign financing was observed when it interacts with the variable labor. No significant effects on the companies' outcome were observed in relation to subsidized financing and market-rate financing. However, production was highly responsive to increases in the variables labor and capital.
Keywords: Subsidies, credit, agribusiness, Brazil, panel data.
Jel Classification: C1, H2, Q1.
The Survey of the Relationship between the Taxable Profits Management with Tax Avoidance and Its Information Content By Industry Separation
Marziyeh Dormishi, Mohsen Hassani and Abdolkarim moghadam

This study aims to survey “the impact of taxable profits management with tax avoidance and information content” in companies listed in Tehran Stock Exchange. In this regard, the companies listed in Tehran Stock Exchange eligible to join the activities during the years 2010-2014 have been surveyed and availability of all required data was defined as statistical population. Among these companies based on appropriate statistical formula 115 companies were as random sample that have been selected through systematic elimination method and in 5-years period were analyzed that totally were 575 years-firm. In this study, to assess the hypotheses, the correlation regression is used. To analyze data and test hypotheses, the EVIEWS software is used. According to regression analysis results, the taxable profit management has negative and significant impact on avoidance of future tax and taxable profit management has significant positive impact on the information content. In addition, taxable profit management in all three industries has not same impact on avoidance of future tax and information content and Automotive and parts industry has the greatest influential factor compared with two other industries.
Keywords: management profit, tax, information
Funding Structure and Corporate Governance: The Brazilian Case
Angela Cristiane Santos Póvoa, Claudineia Kudlawicz-Franco, Tatiana Marceda Bach and Claudimar Pereira da Veiga

The explanatory factors of companies regarding their funding sources are still quite obscure in Brazil, although considered as relevant from the practical and theoretical standpoints. This study investigated corporate governance (GC) as a potential determining factor for the choice of corporate funding sources. To this end, a panel data model was used with data from 2010 to 2014. The sample consisted of 177 non-financial public companies. The empirical results indicated that corporate bond issuance (public debt) is associated with companies with higher levels of corporate governance regarding their board structure and ownership, and information disclosure. This relationship was negative for funds subsidized by the government and banks. A weak relation was found between the simultaneous use of different funding sources and corporate governance practices. Evidence suggests that there is a relationship between debt structure and CG practices, especially when related to board structure and ownership.
Keywords: Corporate governance, Debt structure, Asymmetric information; Board structure and Ownership.
Zakah for Poverty Alleviation: Evidence from Sudan
Khalifa Hassanain and Abd elrahman Elzahi Saaid

In the Republic of the Zakah programme not only aims at short-term escape from poverty due to the programme investments but rather the provision of tools, livelihoods, and peace of mind necessary for participants to sustain themselves as they actively work their way out of poverty. The main objective of this paper is to determine the milestones of alleviating poverty through Zakah Systems in the Republic of the Sudan. More specifically the study seeks to examine the operational efficiency of the Sudanese Zakah Chamber (SZC); to assess the impact of the SZC on its targeted beneficiaries and to determine the extent to which the SZC is linked to the Sudanese Micro finance services (MFS) sector. A structured questionnaire is used.. The results suggest that despite some operational inefficiencies and the challenges facing the SZC there exists a positive and significant relationship between the programme and poverty alleviation in Sudan.
Keywords: Zakah, Islamic Microfinance, Poverty alleviation.
JEL Classification: G21, I30
Causal Relation of FDI, Inflation, Exchange Rate and Gross domestic product: Evidence from Pakistan

The study explores the correlation between FDI, inflation, Gross domestic product annual percentage growth and Exchange rate in Pakistan. Study used the annual time series data from 1980 to 2013.Study used unit root test to check the weather the variables are stationary or not on level. The findings of the study reflect that there is positive and significant relation between FDI and Gross domestic product. There appear negative and significant relations between FDI inflow and inflation rate. For the above variables the econometrics technique as Unit root test, Granger causality test, VECM, Cointegration analysis are applied to check the significance of the variables.
Keywords: FDI, Unemployment, exchange rate, VECM, Cointegration, inflation.
Competitive Positioning and Quality of Management: Is There A Relationship with the Organizational Performance of Micro and Small Enterprises?
Carlos Otavio Senff, Tatiana Marceda Bach, Claudineia Kudlawicz-Franco, Fernando Antonio Prado Gimenez, Claudimar Pereira da Veiga, Luiz Carlos Duclós

The purpose of this article is to investigate the relationship between the competitive positioning and quality of management of micro and small enterprises (MSE) and their organizational performance. To identify the competitive positioning, the typology of Porter (1986) was used. For quality of management, the scale developed by Gimenez et al. (2011) was used. This is an additional contribution of the work to the study of MSE. To measure organizational performance, the subjective scale developed by Maciel and Camargo (2010) was used. The study was conducted through a quantitative analysis of data collected from questionnaires applied to 149 enterprises located in the south of Brazil. The data were analyzed using a robust statistic, based on Factor Analysis (FA) to verify the constructs of the scale, its reliability, validity and multiple regression. This article presents three main results: (i) evidence that competitive positioning with differentiation is positively associated with organizational performance, (ii) competitive positioning through cost leadership with a lower price is not associated with organizational performance and (iii) the quality of management is positively linked to the organizational performance of SME. The findings indicate that improved quality of management indices can lead to better organizational performance of SME.
Keywords: Competitive positioning, Quality of management, Organizational performance.
The Dynamic Impact of Macroeconomic Variables on BSE Sensex Returns Using VAR Analysis
S.Baranidharan, Dr.S.vanitha, U.Kavipriya and Vaibhav. S Arwade

The present study proposes to examine the impact of macroeconomic variables on BSE sensex returns, over the study period from 1st January 2006 to 31st December 2015. The study employed statistical tools namely, Correlation, OLS Regression, Vector Auto Regressive (VAR) method and Granger Causality Test. The study found that the selected ten macroeconomic variables accounted 93 percent of variance on BSE sensex returns and were weakly correlated during the study period. The results of cointegration evidenced that the existence of long run cointegration between selected macroeconomic variables and BSE sensex returns, due to drastic growth in inflow and outflow of FDI and FPI whereas supporting the sustainable rate of interest and inflation. In VAR results revealed that ten macroeconomic variables did not delivery any dynamic shock to BSE sensex returns, in the short run. The inclusion of other variables and tools might be providing a better implication to short run relationship. The some variables were caused negative effect and which may be irrespective to the price fluctuation. The investors and policy makers should study the movement of these variables while investing and framing the policy and this leads to glossiness of stock market and economy growth of a country.
Keywords: Macroeconomic, Exchange Rate, Inflation Rate, Money Supply, Economic Growth.
JEL Classification: E2, E6, E51, F43, O24