European Journal of Economics, Finance and Administrative Sciences

Issue 61
December, 2013

Analysis of Advanced Organizational Forms using A Transaction-Based Approach
Pavel Malyzhenkov,Tatiana Babkina and Aleksey Sergeev

Currently international economic environment is characterized by deep transformation of business operating conditions due to financial crisis, and the flexibility becomes the most important characteristic of European and international enterprises. In its turn it presumes the adoption of advanced organizational structures where business relationships developed in a particular social-economic environment are recognized as a specific type of resource that a company can use for the realization of competitive advantage. In this research different organizational issues and enterprise models are analyzed. For analysis authors apply the concept of transactions mechanism, and particular enterprise modeling methodology. Their competitive advantage especially in the field of relational strategies is described and an outsourcing definition formulated from ontological positions is delivered. The contribution offers to consider key properties of four major advanced organizational forms in tight connection with the formal modeling approach of Enterprise Ontology and DEMO rooted in the language-action perspective.
Keywords: Organizational forms, collaborative strategies, transaction cost theory, networks, spin-offs, clusters, outsourcing, DEMO methodology.

Implementation of Community Empowerment Policy Through Forestry Partnership Program to Forest Community in Mesuji-Lampung
Bambang Soepijanto,Soesilo Zauhar,Bambang Santoso Haryono and Saleh Soeaidy

Nowadays, forest conditions in Indonesia show a trend of increase in forest areas release. It provides negative impacts, especially for the people who have been living around the forest areas. Various phenomena of community resistance to the government and forest companies become indicators that community empowerment policy implementation around the forest areas is not effective. This research intends to test the implementation of local community empowerment policy in Mesuji Regency, as well as actors involved and how the roles of each actor are in the implementation process of local community empowerment in Mesuji Regency. This study uses a qualitative research design. The results show that the implementation of local community empowerment policy is through forestry partnership consisting of: komplangan and intercropping of cassava, pineapple intercropping, and rubber tapping, that have been carried out since 1995/1996. They have been going well in accordance with the provisions of the applicable legislations, among of which can be seen from the inclusion of activities at Annual Work Plan of the company, and the agreement with trained partner farmers. Actors involved in implementation of local community empowerment policy through forestry partnership have not worked synergistically yet in accordance with their respective functions to achieve goals of empowerment. The government and local government have performed regulatory functions in form of statutory provisions formulation, nevertheless, they have not been optimal in performing supervision and coaching functions. The company (PT.SIL) is not able to manage the whole Industrial Plantation Forests (HTI) which become its work area so that it creates the perception of forest areas which have been abandoned, and the company has not been maximum in running the partnership empowerment. The local community has reneged on the agreement with the company regarding the sale of cassava so that it causes detriment of the company, and has conducted Industrial Plantation Forest encroachment and destruction.
Keywords: Community Empowerment, Forestry Partnership, Mesuji

The Effect of Leadership on Ocb through Mediation of Organizational Culture, Rewards and Organizational Commitment
Benny Hutahayan,Endang Siti Astuti,Kusdi Raharjo and Djamhur Hamid

PT. Barata Indonesia (Persero) is a State-Owned Enterprises (SOEs) and has responsibilities to profit so that it cannot escape from competition with similar companies. One form of leaderships that is applied in PT. Barata Indonesia is transformational leadership. Transformational leadership constitutes ways of acting conducted by leader as direct supervisor of subordinates in influencing staffs to achieve organizational goals which are characterized from its effect of idealism, inspirational motivation, intellectual stimulation, and individual consideration. The results of this research showed that transformational leadership had no significant effect on OCB from the direct effect. But it indirectly affects on Organizational Culture and Organizational Commitment. The better the Transformational Leadership in PT. Barata Indonesia, the more strong the OCB will be if Organizational Culture and Organizational Commitment are also getting better. The highest the effect of idealism, inspirational motivation, intellectual stimulation, and individual consideration, the better the Transformational Leadership in the company and will make OCB better as well. The impact of improvement in the OCB will appear on the high altruism, conscientiousness, sportmanship, courtesy, and civic virtue of employees at PT. Barata Indonesia.
Keywords: Transformational leadership, organizational culture, rewards, organizational commitment, and OCB.

The Role of Women in Gender Stereotype in Indonesia
Christiani Romaito Tarigan

Conflict in Poso, Central Sulawesi not only has claimed thousands of lives, but also has led to hundred thousands of people have been displaced. It cannot be denied that women often become victims and the group most affected by the conflict. In addition to being victims, women also have a very important power, namely: as agents of conflict and peace. Women run a variety of roles in addressing labile and conflict situation in Poso and surrounding areas. The experiences and roles of women in conflict situations in Poso are very important to understand the basis for the government in developing women's program for peace in the region. Results of Analytical Hierarchical Process (AHP) from the opinions of various groups, suggest that there should be focusing on the following six areas: women's economic empowerment, participation of women in formal peace processes, increase the capacity of women, increase gender awareness, women's rights and violence against women, as well as the provision and development of the data by gender.
Keywords: Gender Stereotypes, Poso, and AHP.

Governance/ Institutional Quality and Growth Nexus in Arab Countries
Hanan Nazier and Asmaa Ezaat

In this study, we investigated the role of governance and institutions in supporting economic growth with a special reference to Arab countries. To reach this objective the study took a close look at two critical issues. First, we examined where the Arab countries stand in the widely used measures of governance/institutional quality published by the World Bank relative to the rest of the world. Second, we tested the power of governance indicators in explaining cross-country variations in growth performance in the region. The results showed that the status of governance in these countries is relatively poor by international measures. The majority of the examined countries seem to suffer from various degrees of governance deficits, compared to the international averages, relative to their incomes. Furthermore, it was found that economies with governance in surplus in voice and accountability, government effectiveness, regulatory quality, rule of law, and control of corruption in 2000 grew faster on average during 2000–2010, than economies with governance in deficit in these dimensions. These results support the theoretically assumed causal link from good governance and institutions to better growth performance. However, such a causal link was not detected for political stability and absence of violence dimension.
Keywords: Economic Growth, Governance, Institutions, Arab Countries.
JEL Classification Codes: O10, O40, O53

Evaluation of the Effectiveness of Methods of the Imperfect Hedging of Financial Options on the Russian Forward Market
Varvara Nazarova

Under unstable economic conditions, interest in the financial derivatives market is easy to understand. On the Russian forward market, derivatives such as options and futures are gaining increasing popularity as a means of managing the risks of business units in order to protect against possible financial losses. The competition created among the organizers of forward trading has encouraged the emergence of a technically-effective trading method and an expanded range of available financial instruments. The need for an expanded range of risk-management instruments and the introduction onto the market of cutting-edge methods relying on a strict formalization of investor decisions has determined the current relevance of the article at hand. The aim of the article involves studying the latest methods of hedging financial options, comparing and contrasting the new methods with those traditionally used in the financial industry, and analyzing the opportunities for applying methods of imperfect hedging on the Russian forward market.
Keywords: Option market; Russian forward market; quantile hedging; imperfect hedging; risks and riskiness of investments; market portfolio
JEL Classification Codes: N2: Financial Markets and Institutions; E44: Financial Markets and the Macro-economy

Evidence of Volatility Risk Premiums in the Brazilian Options Market
Marcelo Bittencourt Coelho dos Santos,Marcelo Cabus Klotzle,Antonio Carlos Figueiredo Pinto and Luiz Felipe Jacques da Motta

This work’s objective is to seek evidence of volatility risk premiums in the Brazilian options market by using two measures. The first computes such premiums as an excess return on a hedged portfolio, and the second measures premiums based on expected hedging error (EHE). We are the first to apply these models for an emerging market currency. In both cases, we found evidence of volatility risk premiums that were negative, time-variant, and related to option’s moneyness. This implies an increase in currency option prices that, from an economics perspective, is equivalent to insurance. Furthermore, volatility risk premiums have a positive and significant relationship with the level of volatility, but not with changes in volatility (volatility of volatility). This implies that currency option prices increase in periods of high volatility not only due to the elevated volatility but also as a function of the increase in risk premium, at least for the Brazilian case.
Keywords: Risk premium, Exchange rate, Stochastic volatility in options
JEL Classification Codes: G13, G15

A Study on Impact of Shopping Malls on Small Retail Shops with Reference to FMCG in Bangalore City, India

Amaresha.M, Dinakar G.

The present study mainly focuses on Impact of shopping malls on small retail shops with reference to fast moving consumer goods. It describes the reasons and factors influence on small retail shops, particularly in Bangalore City. This study identifies the opinion of retailers of shopping malls and small retail shops. A survey of 88 respondents carried out in Bangalore city. The data were analyzed by using percentages, means, and chi-square test. It was found that there is a significance relationship between sales decline, inventory, space, small retail shops with shopping malls.
Keywords: Shopping Malls, Small Retail Shops, Fast Moving Consumer Goods.

Gap in Investment Management Education and its Application in Saudi Arabia?
Mohd I M Alnajjar

Numerous efforts have been made to inspect the theory practice gap in multiple disciplines. T his research investigates the gap in theory and practice of investment management subject in Saudi Arabia. This study used the data from 26 participants of each group comprised of university professors of investment management subject and market professional of investment management. Data is analyzed by using the Independent sample T-test values and mean values through SPSS software. There are 15 areas which are significantly different. Results confirm the widening gap in investment management education. Results support this belief that professors are fundamentalist and market professional are technicians. Professional should participate in teaching and Ministry of Higher Education Saudi Arabia should take remedial measure to resolve this problem.
Keywords: Technical analysis, Fundamental analysis, Gap analysis, Investment management education

Measuring the Returns to Scale Effect on Profitability of Manufacturing Industries, Evidence from Iran
Somayeh Azami, Ebrahim Hosseini Nasab and Isa Najafi

It is common theoretical knowledge that under the assumptions of perfect competition, homogeneous products and constant returns to scale, product prices converge to marginal costs and profits amount to what in economics is called normal profits. Now, an important question and one that is the most neglected in the economic literature concerns the ramifications, from both the theoretical and empirical credibility standpoint, of moving away from these assumptions. With this question acting as the basic motivating force, the paper proceeds to estimate returns to scale via a regression model that follows Basu and Fernald and data taken from 22 manufacturing industries of Iran carrying two digit codes and observed over the period of 1994-2007 and measure that net effect of returns to scale on profitability in these industries. The paper finds that 21 industries that constitute about 95% of all manufacturing industries exhibit decrease returns to scale and only one industry carrying the code of 22 exhibits increasing returns to scale. Furthermore, the effect of increases returns to scale on profitability, depends on production and price policies (degree collusion) adopted within industries. Increases in returns to scale, under policies that embrace higher degree of collusion lead to increases in the profit share of revenue in 9 industries out of the 22 and decreases in the profit share in the remaining 13 industries, but the reduction in profit share in ten out of these 13 is less than what when the degree of collusion is unaffected by increases in returns to scale.
Keywords: Returns to scale, manufacturing industries, profit share, imperfect competition, firm strategy, Iran.
JEL Classification Codes: D24, L25, L60

Investigation the Effects of Restatement of Tehran Stock Exchange’s Firms on Information Risk
Akhgar M. Omid, Alikhani Arazoo and Jelvezan Soraya

Restatement of financial statements has new information to the market that shows not only the previous problems, but also is a forecast of company’s future problems. We examine the association between accounting restatements and the pricing of information risk. For this purpose we use the Fama and French three-factor model augmented with discretionary risk factors. In period of 2002 to 2010, we use 115 companies that are listed in Tehran Stock Exchange. We find a significant increase in the factor loadings on the discretionary information risk factor for restatement firms after a restatement announcement. Also, we find that there is a significant relationship between restatements initiated by a firm’s auditor, number of times a firm restates and information risk.
Keywords: Restatements, Information risk, Cost of capital

Impact on the Rankings of Mutual Funds Due to Choice of Performance Measure: An Asian Perspective
Vinu Nagar, Rakesh Gupta and Chandrasekhar Krishnamurti

Existing literature on performance evaluation has used wide variety of performance measures to estimate the risk-return benefits of a portfolio. This has raised questions about the reliability and accuracy of the performance measures. Investors are also concerned whether the choice of a performance measure has an impact on their investment decisions. This paper attempts to resolve this issue by comparing eight risk-adjusted and downside risk-adjusted performance measures using a sample of open-ended equity mutual funds of India, Singapore and Taiwan. We estimate the performance measures by creating a moving window of time and perform Spearman’s rank correlation on them. Results show that performance measures that fall in the same category, for example Value-at-Risk (VaR) based measures, are highly correlated to each other, but as we go further and use performance measures that are different from each other, rank correlations decrease. In our study, rank correlations for Sortino ratio are significantly lower for Singapore and Taiwan markets. Therefore, we conclude that the choice of performance measure is significant as it affects the rankings of mutual funds.
Keywords: Mutual Funds, Performance Evaluation, Rank Correlation, Risk-Adjusted Performance Measures, Downside Risk-Adjusted Performance Measures
JEL Classification Codes: D81; G10; G11

Indicator for Measuring the Degree of Market Concentration
Manuel Meireles, Cida Sanches and José Osvaldo De Sordi

The aim of the present study is to test an indicator based on the KS (Kolmogorov-Smirnov) test and with the interpretation of significance given by Goodman, designated KSG. The theme is pertinent to the fields of Administration and Economics because there are many studies that use the degree of concentration of a market or industry. The proposed indicator has been compared especially with one of the currently most widely used concentration indicators, the Herfindahl-Hirschman index (HHI). This is a quantitative study using parametric statistics (polynomial regression) on data generated through simulation. The data obtained, especially the KSG and HHI variables, were subjected to a normality test and polynomial regression analysis. Forty-three simulations were performed using four different n values from market companies. The study concluded that the proposed indicator can be used as a differentiated alternative and can substitute with an advantage either of the two indicators that are currently most in use for this purpose: the HHI and the concentration ratio (Ck). To test the proposed indicator, simulations were made comparing the results supplied by the KSG indicator with those provided by the HHI. The results showed the consistency of the proposed indicator.
Keywords: Antitrust Law, Anticompetitive Practice, Monopolies, Market Concentration, Concentration index, Herfindahl-Hirschman index, KSG.
JEL Classification Codes: C82, L13

The Changing Structure of Banking Firms and Industry: An Analysis through the European Banks’ Balance Sheets
Sebastiano Mazzù and Enzo Scannella

This paper analyzes the changing structure of the Italian and European banking firms and industry. The main aim is to identify the fundamental changes of the underlying economics of banking through the analysis of banks’ balance sheets. In this paper, we provide evidence that commercial banks have progressively moved from traditional banking to new forms of financial intermediation. The paper discusses the implications of this changes in terms of business models of banking firms, business operations of banks, structure of the financial system and banking industry. The research points out that the role of traditional bank is in decline. It is changing the fundamentals of banking business. Banks are losing their predominant role as deposit takers and lenders to firms. Substantial structural changes are facing the banking business, but not uniformly in the European banking industry. These changes have deep effects on the operation of banking firms, the structure and organization of banking firms, the structure of banking industry, the financial stability of banking firms and banking industry, and sustainability of emerging new banking business models.
Keywords: Banking Firm, Banking Industry, Business Model, Financial Intermediation, Financial Crisis.
JEL Classification Codes: G01, G20, G21, G23, G28.

The Effects of OPEC Conference Announcements on Oil Prices
Gurcharan Singh, Anandadeep Mandal and Dauren Kozhamkulov

In this study we seek to establish whether OPEC can be viewed as a cartel. This is establish by evaluating the impact of OPEC quota announcements over the period 2007 to 2011; and analysing its members’ predisposition to ignore the quotas assigned to them. The event study methodology is applied to appraise the possible impact of OPEC decisions concerning the levels of production on the oil spot and futures prices. We use GARCH (1, 1) model to project the normal daily oil price returns that would occur in the vicinity of OPEC conference meetings. The results of the analysis confirm that OPEC as a cohesive body cannot be characterised as a cartel, as the existing cooperation level between its members is weak and the OPEC influence on spot oil prices is not statistically significant in the unchanged group. The findings of this study imply that testing the non-cartel OPEC behaviour is an interesting direction for future studies.
Keywords: Price Volatility, Announcements