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September 2016 (International Review of Business Research Papers)

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September 2016 (International Review of Business Research Papers)

Total Articles - 14

Pages 1 – 22

Author: Tsai-Yin Lin, Min-Hsien Chiang and Jerry C. Yu

This paper aims to investigate the effect of financial analysts’ earnings forecasts on the institutional trading. In specific, we address three issues regarding the effect of financial analysts’ earnings forecast on the institutional investing behavior: (1) Do institutional investors prefer firms with higher accuracy on earnings forecast? (2) Do institutional investors prefer analysts with higher accuracy on earnings forecast? (3) Do institutional investors prefer analysts with bold attitude toward earnings forecast? Firstly, our result shows that firms with higher earnings forecast accuracy tend to attract more institutional investors’ attention and thus higher institutional holdings. Secondly, we also find that institutional investors prefer analysts with higher accuracy in their earnings forecast. That means institutional investors tend to follow more closely and pay more attention to those analysts whose earnings forecasts are more accurate. Finally, our result indicates that institutional investors in general are indifferent to analyst’s boldness toward earnings forecast. On the contrary, institutional investors seem to prefer analysts with accurate but close-to-consensus earnings forecast.

Pages 23 – 42

Author: Mosses Mwizarubi, Ramarcha Kumar, Bernard Mnzava and Sadananda Prusty

This paper examines the institutional factors that affect Community Banks’ savings mobilization efficiency. It is different from most studies that focus on the impact of macroeconomic, demographic or individuals’ social-economic factors on savings mobilization. This study uses panel data of 408 observations of Community Banks whose information was gathered by the Bank of Tanzania from 1996 to 2015 on quarterly basis. Using fixed effects approach; the findings indicate that interest rate on deposits, the age of an institution and usage of greater portion of capital for lending purposes lead to mobilization of more savings from the public, while usage of commercial debt for financing purposes reduces the efficiency in savings mobilization. Bank’s profitability and financial sustainability measures were found to have a mix of both positive and negative outcomes in relation to savings mobilization. Unexpectedly, investment in fixed assets, raising the proportion of salary in the expenses and increase in size of the institutions seem to have a negative impact on savings mobilization. Our results are robust to alternative regression estimated. Recommendations on institutional set-up required for more efficient mobilization of deposits from the public are given based on the findings of this study.

Pages 43 - 61

Author: Ramzi E. N. Tarazi and Mohammad Z. Hasan

This paper investigates the influence of volatility of foreign exchange rate of the U.S., the U.K., Eurozone, Japan, and Singapore against the volatility of six Australian sectors for the given investigation period by controlling the periods of global financial crisis 2007-2008. The volatility in this study is estimated using GARCH (1,1) models. The daily data is collected from the period of 2002 to 2014 while the dataset is divided into three sub-periods: before GFC (July 2002 to July 2007), during GFC (July 2007 to July 2009), and after GFC (July 2009 to July 2014). The estimated results show a weak relationship exists between exchange rates of the five countries and the volatility of six Australian sectors, except for the IT sector during GFC. The same relationship is evident before GFC, except for the financial sector. The statistically significant impact of these foreign exchanges on the six Australian sectors continues after GFC, except for the materials sector, which is significantly weak.

Pages 62 - 76

Author: Ramshah Rashid Lone, Fatima Hasan and Meher Afzal

This paper represents the initiative to highlight a developing country’s perspective on justification and thereby identifying the factors affecting CEO compensation. Pakistan’s Banking Sector represents a definite case of very high salaries and compensation packages, especially for the top level staff such as CEO and the directors. This paper tends to explore the reason for such high compensation for CEO’s in the Banking Industry. This paper attempts to use panel data of 22 listed banks in Pakistan for the period 2006-2013 and explores the relationship between CEO compensation and following variables: Firm Performance, Firm Size, CEO from the family, Independence of the board of directors, Shares held by the board, percentage ownership of financial and non-financial institution. The result reveals that Performance does not play any significant role in determining CEO compensation, whereas size of the firm has a significant and positive impact on CEO compensation in the banking sector of Pakistan. On the other hand within Ownership Structure board size does not matter, however, the composition of the board i.e. percentage of shares held by institutions and proportion of independent directors on the board, are the main factor affecting the CEO compensation

Pages 77 – 87

Author: Amina Abdul and Marcellina Chijoriga

The purpose of this research paper is to examine the influence of external social ties on repayment performance of microfinance group borrowers by using personal network analysis technique. The data for this study were collected from PRIDE Microfinance in Tanzania. In order to map external social ties, borrowers’ personal network data were collected from 351 borrowers through self-administered questionnaire using social capital measurement questions known as name generator. Using logit regression analysis, the findings of the study show that among external ties variable; role relationship, duration of relationship, frequency of contact and information sharing between borrower and his external ties to be significant and influence repayment performance. However, duration of relationship shows negative influence. Conversely, there was positive influence of financial and social support that borrowers received from their external social ties on repayment performance but the results were not significant. Our results confirm the supportive function of borrower’s external social ties as informal insurance as well as information channel that help borrower when screening, monitoring and enforce loan repayment.

Pages 88 – 107

Author: Tharindu Chamara Ediriwickrama and Abdul Azeez

Sri Lanka suffered from a civil war for three decades and this conflict ended in 2009. This study examines the impact of 20 war related incidents on Sri Lankan Initial Public Offering (IPO) stocks from 2000 to 2009. The broad methodologies used were event study analysis, Ordinary least square regression analysis (OLS) and the generalized autoregressive conditional heteroscedasticity (GARCH (1,1)) model. Under regression, the main techniques used were the Chow breakpoint test (CBT) and dummy variable analysis. OLS dummy variable analysis and the ordinary GARCH model appeared to be the best estimators in measuring the impact of war, while 50% of events selected had a negative impact on IPO stock returns. The ordinary GARCH model is recommended for use in assessing the impact of war on specific security classes or industries.

Pages 108 – 117

Author: Thuy-Huong Truong

This study investigates how the cultural values of American visitors will impact on their perceptions of Vietnamese service providers’ attributes and performance. The Principal Component Analysis on the distinct cultural values exhibited by American visitors and Vietnamese service providers provides an enhanced understanding of cross-cultural tourist-host perceptions about service quality. By investigating tourism service quality and holiday perceptions from a cross-cultural perspective, the researchers were able to identify which different theoretical vantage points provide greatest insight. The implications for tourism industry management destination and marketers are also presented.

Pages 118 – 140

Author: Hebatallah Abd El Salam Mahmoud Badawy

The objective of this paper is to address the impact of the external assurance on RTA information systems, on user's trust in and reliance on the system in making decisions. An experimental study on a sample of first level managers in the commercial banks in Egypt, who depend mainly on RTA information systems to take their decisions, was conducted. The results of the experimental study indicate that first level managers appreciate the assurance provided by external auditors and their trust in the RTA information system and their reliance on it have increased. This paper contributes to existing literature by providing additional evidence on the effect of external assurance on RTA system; its availability, security, and integrity, on the system user’s reliance on the system. Additionally, it provides guidance to solving a critical problem in Egyptian companies – specifically in commercial banks – that depend mainly on electronic systems to perform their daily operations.

Pages 141 – 151

Author: Ashish Kumar and Dilip Kumar

The present study has attempted to contribute to the existing literature on oil and agricultural commodity prices by examining the dynamic linkages between crude oil prices and agricultural commodities’ like wheat, rice, oats, soybean corn and cotton over a period of 25 years ranging from 1990 to 2015. The core purpose of this study is to examine the return and volatility transmission mechanism between crude oil and agricultural commodities. Presence of contagion from crude oil market to major agricultural commodities and vice-versa is analysed by applying the vector autoregressive (VAR) asymmetric dynamic conditional correlation bivariate generalised autoregressive conditional heteroskedasticity (VAR-DCC-BVGARCH). The findings of the present study have highlighted the wider scope of portfolio diversification using crude oil and agricultural commodities.

Pages 152 – 165

Author: A.K.M. Atiqur Rahman and Sakiba Zeba

The paper examines the role of food price increase in overall inflation in Bangladesh using econometric analysis of time series data. While the direct impact of food price is quite obvious because of its high share in overall price indices, the paper focuses on the second round impacts of food inflation on non-food and overall inflation. As opposed to usual perception that food price shock is transient in nature, the paper finds that shocks in food inflation has been at least as persistent as that of non-food inflation. More importantly, food inflation might transmit to non-food inflation. Granger causality test suggests that food inflation causes non-food inflation. Food inflation may create a pressure on wage inflation as well. These indirect effects of food inflation may propagate the overall inflation further. Monetary authority should be cautious in formulating monetary policy based on core inflation as it understates the underlying inflationary pressure in the economy; rather current practice of considering moving average of headline inflation may perform better in formulation of monetary policy in Bangladesh.

Pages 166 – 182

Author: Salma Begum and Tahreen Zahra

Several qualitative research studies exist relating to the operations of Readymade Garments industry that explore the working conditions and reasons behind the accidents that took place in the past. This study contributes to the existing volume of literature by conducting an econometric analysis of safety and compliance standard of RMG factories in Bangladesh. The paper treats Rana Plaza incident in the year 2013 as a natural experiment to identify any change in compliance. This study uses 561 factory observations obtained from the Alliance for Workers’ Safety Bangladesh and 39 similar observations from Fair Labor Association (FLA). A compliance index is formed using weighted average of factors which are related to the preparedness and prevention of fire in factories, and structural safety in buildings. Two levels of econometric estimation include an ordered probit analysis of factory characteristics and probit analysis to identify change in compliance nature after Rana Plaza. Findings reveal that premises owned by factories increases the chances of compliance. Moreover a greater number of operating units used by factories lower the chances of compliance. It is also evident that factory locations tend to affect the compliance standard. Lastly, the paper finds that an improvement in the performance of compliance standards of factories has occurred after the Rana Plaza incident in 2013.

Pages 183 – 203

Author: Sakib B. Amin, A M Muhib Morshed and Aroni K. Porna

Amin et al. (2011) examine the causal relationship among energy use, CO2 emissions and economic growth in Bangladesh and reveal that energy consumption leads to economic growth and no causal relationship exists between economic growth and CO2 emissions in Bangladesh, which implies that economic growth can be achieved without deteriorating the environmental quality. Since there is a debate regarding the fact that whether environmental degradation is measured only by considering CO2 emissions, the objective of the present study is to expand the aforementioned study for robustness check, by considering two more environmental indicators and an extended time period of 1972-2011 and hence, address the question: Can a sustainable economic growth persist without degrading the environment? We consider a multivariate model and perform the Augmented Dickey Fuller (ADF) and Phillips Perron (PP) tests to check if the variables are stationary. Next, we apply the Johansen cointegration method followed by the Granger causality test to check for robustness of the relationship among the variables. Our results confirm that Bangladesh cannot achieve economic growth without hindering the environmental quality as there is a unidirectional causality running from CO2 emissions to economic growth. The results also point out that considering only one environmental indicator might lead to a misleading conclusion regarding the economic growth and environmental quality nexus.

Pages 204 – 217

Author: Simona Alfiero, Massimo Cane, Paola De Bernardi and Francesco Venuti

This study investigated the relationship between female presence in boardrooms and corporate social responsibility. The under-representation of women in boardrooms is a heavily discussed topic, not only in Italy, but also abroad. As a case study, this research selected a sample of 628 scenarios from Italian listed companies, from the period between 2011 to 2013 results showed that a higher percentage of female members in boardrooms tends to have a positive impact on corporate giving (considered as a form of corporate philanthropy).

Pages 218 – 236

Author: Majeed Ali Hussain and Afaf Abdull J. Saaed

This paper examines the links between financial development, trade openness and economic growth by using a VECM model in United Arab Emirates (UAE) for the period 1977-2012. The econometric methodology employed was the Cointegration and Granger Causality test. The stationarity properties of the data and the order of integration of the data were tested using both the Augmented Dickey-Fuller (ADF) test and the Phillip-Perron (PP) test. The variables tested stationary at first differences. The Johansen multivariate approach to cointegration was applied to test for the long-run relationship among the variables. The results of cointegration analysis suggest that there are two cointegrated vectors among GDP, financial development and the degree of openness of the economy. Granger causality tests based on error correction models show that there is a causal relationship between economic growth and financial development and between the degree of openness of the economy and economic growth. Implying support for growth-led financial development and support for trade of openness -led growth. Moreover, Money supply was the only instrument of financial development that was seen to cause degree of Trade openness. The findings of the study show that financial development does have positive effect on economic growth due to economic growth having impact on the financial development. Thus, suggesting a need of reforming the UAE financial system, whereby UAE should promote its trade linearization policy, in order to enhance both growths of GDP and financial development.

Total Articles- 14

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