European Journal of Economics, Finance and Administrative Sciences

Issue 58
May, 2013

Fraud Triangle for the Management of Fraudulent Practices in Nigerian Business Organizations
Akenbor Cletus O and Onuoha Teresa Ezenwa

This study was conducted to investigate the fraud triangle in order to determine the extent to which it minimizes the risk of fraud in Nigerian business organizations. To achieve this objective, we hypothesized that the fraud triangle makes no significant difference in minimizing the risks of fraud in Nigerian business organizations; and a review of relevant literature was equally made. To gather the necessary data for this study, the researchers administered questionnaire on chief executives of selected quoted companies in the South-East region of Nigeria through a pilot survey. The hypothesis was statistically tested with the Z-test. Our findings indicated that the fraud triangle is a veritable tool to be employed by Nigerian business organizations in minimizing the risk of fraud. It was therefore recommended that Nigerian business executives should use the fraud triangle in fighting fraudulent practices in their domains
Keywords: Fraud Triangle, Management, Risks, Fraudulent Practices, Pressure, Opportunity, Rationalization

The Impact of Tick Size on Order Submission Strategies
Chiraphol N. Chiyachantana

This study examines the impact of tick size changes on order submission strategies of decimal stocks relative to matched sample stocks. We find that the number of trades for limit orders as well as market orders significantly increases. When measuring the order submissions by average trading volume and dollar volume, only limit order submissions significantly decrease after decimalization. Furthermore, the size of both limit order and market orders significantly decline after the tick size changes. Overall, traders increase their use of market orders and decrease their trade size as a result of tick size changes.
Keywords: Tick Size Changes; Order Submission; Order Submission Strategy; Limit Order; Market Order

Financial Issues of Powerloom Sector: An Emprical Study
K. Veerakumar and S. Annamalai

One of the necessities of life is cloth, which is produced by the textile industry, occupies an important position in the Indian economy. It contributes to industrial output, employment generation and the export earnings of the country. Textile industry provides employment to about 93 million people directly and indirectly, which includes a substantial number of SC/ST and women. Indian textile industry consists of Textile Mill Sector, Decentralised Powerloom Sector and Handloom Sector. The Decentralised Powerloom Sector plays a most significant role in textile industry, in the development of economy as well as in meeting the clothing needs of the entire nation, but also of catering to the fabric requirement for the manufacture of garments and made-ups for exports. But the Indian Powerloom Sector faces cut-throat competition from China, Pakistan, Bangladesh, Korea, and Thailand. Products supplied by the above countries are for superior and cheaper than that of Indian powerloom products. Due to obsolete machinery, the Powerloom Sector produces poor quality products; ultimately it is unable to compete with world competitors like China and Thailand, which uses the latest technology. To meet the challenges of globalised competition, India has to invest largely in Powerloom sector at a much faster rate. If the powerloom sector has adequate finance, it can make adequate and timely investment and replace the very old and out-dated machines into very modern automatic looms and allied machines and thereby they can compete in the international market with quality products. The present study tries to find out reason for the present situation and trace out the causes of financial problems faced by the powerloom units in obtaining adequate finance from institutional and non-institutional finance
Keywords: Powerloom Sector, Sources of Capital, Composition of capital, Garrett’s Ranking Technique and Factor Analysis
JEL Class: L67

The Causality Relationship between Economic Globalization and Government Size: Evidence from Egypt
Mahmoud Ahmed EL- Motayem

There are double hypotheses relate to the globalization and the size of government: the first is the efficiency hypothesis predicts that globalization reduces the size of government. The second is the compensation hypothesis, in contrast, predicts that globalization increases the size of government. This paper investigates the direction of causality between trade-openness and size of the government according to the compensation hypothesis which, expects a positive relationship between trade openness and the size of the government, as Governments play a role mitigating risks in the face of risks from international economic crises. I use time series data for Egyptian economy over the 1975-2010 period to test this hypothesis, by using the ECM for Granger causality test. The results indicate that I have been unable to find any indication of significant interaction between trade-openness and government size. So, my results suggest that the compensation hypothesis may not be the main factor behind the growth of government size
Keywords: Globalization; trade-openness; government size; causality; co-integration.

Is Education a Good Investment for the Generation-Y? Comparison Study of US, Canada and EU27
Sahar Sadeddin

Generation-Y, that is the fastest growing segment of today’s workforce, is facing so many challenges. Generations-Yers are considered to be the most recent entrants to the work force with high expectation of work. They are very focused on becoming rich, are computer savvy’s and have entrepreneurial ship spirits. However, this group is struggling to find full-time jobs and it seems that they are very vulnerable to the global economic recession. With the rise of unemployment and the world of uncertainty, the probability of current and future employment of this group is decreasing. Subsequently, this might result in lack motivation for Generation-Yers to invest in education. Human capital is costly to acquire and with a grim chance of future employment, the cost of education might overweight the benefit for the Generation-Y. This paper examines the motivation of this population group in investment in human capital in the United States, Canada and European Union. By comparing the unemployment rate, employment growth and the future income in the US, Canada & EU., and this paper estimates the probability of employment and motivation of investment in human capital for the Generation-Y in these three regions. The result of this study can be used by government agencies and policy makers to decide on investing more social sources in the educational sector.

Present Scenario of Financial Services Rendered by Private and Public Sector Banks with Reference to Tamil Nadu
Mahalakshmi. V and M. G. Saravanaraj

The Purpose of this research article is to find out the customer satisfaction towards the financial services rendered by both private and public sector banks in Tamil nadu. The authors conducted a literature search on Financial Services and interviewed with 1040 respondents. Present research has been carried out in four zones like Chennai, Coimbatore, Salem and Trichy. Convenient Sampling Technique is used to collect the data. The study also focused on the various financial services such as Loan Oriented services, Deposit Oriented services, Front Office Services and Infra- Structure Facilities provided by Banks. A Descriptive Analysis was made by using various statistical tools like Percentage Analysis, Garrett’s Rank, Friedmans Test, Chi square analysis, t-test and Multiple Regression. The result revealed that there exists a significant relationship between financial services rendered by banks towards customer satisfaction. Thus the banks must give due care to these dimensions in order to retain the existing customers and to attract the new customers
Keywords: Financial Services, Loan Oriented services, Deposit Oriented services, Front Office Services, Infra- Structure Facilities and Customer Satisfaction

Forecasting Potash Exports Value in Jordan: An Application of Box-Jenkins Method
Hanan A.D Al-Abbadi

The current study conducted an empirical modeling and forecasting of potash exports value in order to access its future effects up to the year 2022. The data used was collected from Jordanian Department of Statistics. The Box-Jenkins methodology was applied on the collected data. Various diagnostic checks were carried out for analysis of data by using Eviews program, which showed that ARIMA (0,1,1) is an appropriate model for the time series data of potash exports from the year 1983 to 2011. The forecasting results revealed a decreasing pattern of potash exports over forecasting period; this empirical result indicates that The Arab Potash Company should thoroughly review future marketing plans. It should also try to open new markets by taking advantage of the expertise of the strategic partner The Canadian Corporation of Saskatchewan Inc., also known as PotashCorp, as it is the first globally in the potash sector
Keywords: Potash Exports, Jordan, Forecasting Exports, Time Series Analysis, Box-Jenkins Method, ARIMA Model.

Dividend Policy and Stock Returns: Evidence from Jordan

Wasfi AlTroudi

The purpose of this study is to examine the empirical relationship between the two dividend policy measures (dividend yield and dividend payout ratio) and the stock return, after controlling for the excess return on the market, the size of the firm, financial leverage, and the ratio of the book value per share to the market value per share in the context of the Jordanian stock market. All firms listed on the Amman Stock Exchange are selected for analysis over the period from 2002 to 2008. The unbalanced panel data (cross-sectional and time series) is used to examine the relationship between dividend policy and stock returns. The results of this study show a positive and significant relationship between dividend yield and stock return while stock return is inversely associated with dividend payout ratio. The contribution of this thesis is to reduce the dearth of previous research on dividend policy in emerging markets regarding the empirical relationship between dividend policy and stock return.
Keywords: Dividend Yield, Payout Ratio, Stock Return, Market Return, Amman Stock Exchange

Financial Reform in Developing Countries
Giseok Nam

In this study I explain how financial reform should be accomplished in developing countries. It is unlikely that developing countries may have technical and institutional capacities to implement the reform program at the very early stage of development. Therefore, it should not be pushed rapidly before requisite institutional arrangements are firmly in place. Also, financial liberalisation should be preceded or accompanied by the development of an effective machinery for prudential regulation and supervision of the financial markets
Keywords: Financial Reform, Financial Liberalization, Developing Country
JEL Classification Codes: G21, G28

Economic Transformation and Industrialization: The Nigerian Experience
Enang B. Udah, Peter Ubi and Iyelli Iyelli

Today, a lot of transformation policies are pursued with a view to industrializing the country. Though a lot of changes are taking place, the country is yet to attain the heights reached by the Asian Tigers, specifically, Thailand. This study seeks to investigate and re-emphasize the critical role the state could play in transforming the economy of Nigeria from traditional agrarian economy to a modern industrialized economy akin to that of Thailand. In order to achieve this objective, the study adopted the comparative analytical approach in analysing the economies of Thailand and Nigeria and eventually employs the quantitative approach of co-integration/error correction methodology to determine the impact of transformation variables on industrialization in Nigeria between 1970-2011.The results showed that government expenditure on education, transport and communication infrastructure has long lasting effects on industrial development. Thus, the Nigerian government should invest in education and other selected social infrastructures to fast track transformation and by extension, industrialization in Nigeria
Keywords: Transformation, Infrastructure, Industrialization, Agriculture, Thailand, Nigeria

Information Systems Pre- Evaluation Practices in Context
Fayiz Shrafat, Abdelghafour Al-Zawahreh, Faisal Al-Madi and Dia Zeglat

This paper documents an investigation of the extent to which information system (IS) pre-evaluation processes affecting the selection of such systems are influenced by the pre-existing organizational context in the Jordanian banking sector and the relationship of these processes to IS investment pre-evaluation practices. The study extends the existing knowledge in IS evaluation research by drawing on the interpretive case study to understand how pre-evaluation practices are being influenced by the developing country context of Jordan. The findings demonstrate that there are important contextual factors in all development and implementation activities that affect or frame the evaluation process. The paper also finds that more flexibility in pre-evaluation methodology would be preferable, as it would allow the innovative capacity of the actors to play a significant role in articulating the future of these practices in banking
Keywords: IS pre-evaluation process, organizational context, contextual factors

Liquidity Management, Operating Performance, and Corporate Value: Evidence from an Emerging Market
Mohammad Fawzi Shubita and Dua'a Fawzi Shubita

This study examines the relationship between liquidity management and operating performance, and the relationship between liquidity management and corporate value for industrial firms listed in Amman Stock Exchange. The study sample consists of 39 companies for the 8 years period from 2004-2011. The study findings indicate that there is a positive relationship between cash conversion cycle (CCC) and returns on assets (ROA). The findings indicate also that there is a relationship between liquidity management and corporate value. Yet recommendations based on findings are offered to improve certain factors like decreasing current assets level through maintaining its optimum level, quick recovery of debts through the preparation of reports of the overdue, reaching to a definite proportion among the various components of working capital and strengthening the liquidity position through reducing the inventory and collecting accounts receivable
Keywords: Liquidity Management, Operating Performance, Corporate Value, Amman Stock Exchange

A Comparative Analysis of Operating Performance: Evidence from the Top Five Pharmaceutical Companies of Bangladesh Listed with Dhaka Stock Exchange
Shabnaz Amin and Samina Haque

This paper attempts to evaluate the financial performance of pharmaceutical industry of Bangladesh through analyzing the top 5 listed companies in this sector. The study is based on secondary data from 2005 to 2010 and collected data have been analyzed through different financial ratios and statistical tools like mean, standard deviation (SD), coefficient of variance (CV) and T- test, etc. It was observed from the study of the audited financial statements of the pharmaceutical companies that the efficiency dimension has not been satisfactory for all the companies mainly due to inefficient asset management. However, most of the companies managed to maintain financial stability over the years under consideration. As far as the profitability and solvency dimensions are concerned, both Renata and Square companies outperformed the industry and had been able to generate reasonable return to the shareholders. In terms of liquidity, although the ratio of these companies has shown a downward trend over the past six years but was above the industry average. This study will help the general investors to understand the nature of operating performance of the pharmaceutical companies of Bangladesh, to identify the key factors responsible for such performance and help them to take informed investment decision.
Keywords: Operating Performance, Ratio Analysis, Pharmaceutical Industry, Covariance, T-test.

Volatility Transmissions across GCC Markets An Empirical Analysis
S.N. Sarma

GCC markets made considerable progress in their expansion, reforms and openness and known for advocating and advancing vociferously economic reforms. The expected consequence of economic reforms in terms of liberalisation of markets is a solid progress in regional and global integration of these markets. This is an attempt to enquire into the degree of integration of GCC markets (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and UAE) among themselves and with the region and global markets. The study is focussed on the degree of integration of these markets, in the post global economic meltdown and ‘Arab Spring’ period. Using correlation and integration scores this study reveals that the GCC markets are totally segmented from global markets; are integrated with regional benchmark; Saudi market is extremely segmented from among the GCC markets; UAE, Qatar and Oman on one hand, Bahrain and Kuwait markets on the other appear to be sub-blocs within GCC markets in terms of correlation coefficients and integration scores. The findings suggest that there is ample scope for portfolio risk management for cross boarder investors. At the policy level considered positive initiatives in the realms of investment, institutional and regulatory environments in these markets are very much wanting
Keywords: Volatility, Market integration, GCC Markets, ‘Arab Spring’
Keywords: G15/N25

Comparison of the Labour Market Development of EU-27 and Labour Markets of Visegrad Group Countries in the Context of Economic Crisis
Gabriela Cieslarova

The labour market of the EU has been significantly influenced by the economic crisis since 2008. This economic crisis caused an increase in unemployment in all countries and regions EU, as well as decrease in the number of vacancies. However, it is quite a heterogeneous process, spreading from region to region with different levels of intensity, impact and varying evolution in time. The global economic crisis has affected the Visegrad Four (V4) countries as well as other regions of Europe. This paper examines data about labour market of the whole European Union (EU-27) and compares them with single labour markets of V4 countries in period of 2008 – 2012. The region of Visegrad group countries was considered mostly as a compact area with a lots of similar attributs. Nevertheless the crisis has strogly contributed to its differentiation. The aim of the article is the comparison of the development of labour market of EU-27 and labour markets of V4 on the background of economic crisis using a method of comparative analysis of key labour market indicators. Such as unemployment rate, long-term unemployment rate, unemployment rate of population up to 25 years, unemployment rate by sex and other related macroeconomic inicators.
Motclés: European Union, Visegrad group countries, Unemployment, Economic crisis
JEL Classification: J 64, E24