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Article
Publication date: 12 November 2018

Muhammad Irfan Javaid and Attiya Yasmin Javid

The purpose of this paper is to determine whether the original and the revised versions of the existing prediction models are the best tools for assessing the going…

Abstract

Purpose

The purpose of this paper is to determine whether the original and the revised versions of the existing prediction models are the best tools for assessing the going concern assumption of a firm in the creditor-oriented regime.

Design/methodology/approach

The analysis begins from estimating the classification accuracy of the original versions of the bankruptcy, going concern and liquidation prediction models. At the second step, the revised versions of the aforesaid existing prediction models are developed. At the third step, the accounting-based going concern prediction model is proposed by using multiple discriminant analysis for the creditor-oriented regime. The sample contains the financial ratios of manufacturing firms for the period 1997–2014.

Findings

The finding indicates that the five discriminatory variables, which belong to “income statement” and “statement of financial position,” of the proposed model are not only useful for evaluating the going concern assumption of a firm, but also give aid for evaluating the financial fraud risk of a firm as compared to the original and revised versions of the prediction models that are developed for the debtor-oriented regime.

Research limitations/implications

The external validity of the proposed prediction model can be tested on the large data sets of the countries where the liquidation provisions are a part of their local corporate law.

Practical implications

The proposed accounting prediction model will be helpful for the internal and external auditors in order to determine the going concern assumption at planning, performing and evaluation stages.

Originality/value

The proposed accounting-based going concern prediction model is based on liquidated firms.

Details

Journal of Applied Accounting Research, vol. 19 no. 4
Type: Research Article
ISSN: 0967-5426

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Article
Publication date: 1 November 1997

Rune Höglund and Ralf Östermark

Previous evidence suggests that the relationship between different stock markets is unstable over time. In particular, the Finnish and Japanese financial economies are…

Abstract

Previous evidence suggests that the relationship between different stock markets is unstable over time. In particular, the Finnish and Japanese financial economies are interrelated and exhibit non‐linear behaviour. Presents an approximation of the influence of the Japanese stock market on the Finnish derivatives market by an adaptive recursive least squares (RLS) algorithm. The parameters are allowed to change over time through a discounting factor, thus providing a convenient means for recognizing past information to a specified degree. Following the reasoning of Bera et al. (1992), shows that the RLS algorithm is, theoretically, able to cope with conditional heteroscedasticity. Compares the results with different values on the discount factor and when choosing a suitable value the ARCH‐like effects in the residuals seem to vanish. On the other hand, some new peculiarities in the RLS residuals emerge when ARCH effects are eliminated. The results indicate that the standard RLS algorithm combined with a proper specification of the discount factor could be useful in studying relationships of this kind.

Details

Kybernetes, vol. 26 no. 8
Type: Research Article
ISSN: 0368-492X

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Article
Publication date: 1 June 1999

Ralf Östermark and Jaana Aaltonen

The paper is presented in two parts. The first is concerned with the methodology of the competing transformation models and the second details the results of the empirical…

Abstract

The paper is presented in two parts. The first is concerned with the methodology of the competing transformation models and the second details the results of the empirical tests. In particular, it concentrates on empirical testing of the stability and cross‐sectional invariance of the factor patterns underlying the arbitrage pricing models of two neighbouring security markets. In previous studies, the method of transformation analysis has been used to address these issues at the individual asset level. In the present study three alternative transformation analysis models are used to study the stability and invariance problems. The tests are carried out at an aggregated level, such that subsets of asset returns are combined in equally weighted portfolios in the spirit of Fama and MacBeth. Portfolio formation is motivated by the observed anomalies of individual asset return series. Even if some anomalies may be present on the aggregated level also, their impact will be weaker. The amount of different issues of the same company in the database is varied in order to study the impact of parallel issues on the empirical results.

Details

Kybernetes, vol. 28 no. 4
Type: Research Article
ISSN: 0368-492X

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Book part
Publication date: 11 July 2019

Zornitza Kambourova, Wolter Hassink and Adriaan Kalwij

An adverse health event can affect women’s work capacity as they need time to recover. The institutional framework in the Netherlands provides employment protection during…

Abstract

An adverse health event can affect women’s work capacity as they need time to recover. The institutional framework in the Netherlands provides employment protection during the first two years after the diagnosis. In this study, we have assessed the extent to which women’s employment is affected in the short- and long term by an adverse health event. We have used administrative Dutch data which follow women aged 25 to 55 years for four years after a medical diagnosis. We found that diagnosed women start leaving employment during the protection period and four years later they were about one percentage point less likely to be employed. Women in permanent employment did not reduce their employment during the protection period and reduced their employment with less than 0.5 percentage points thereafter. Furthermore, we found minor adjustments in the working hours in the short term and no adjustments in the long term. Lastly, we found that for wages, and not for employment and hours, adjustments could be related to the severity of the health condition: women diagnosed with temporary health conditions experienced a short-term wage penalty of about 0.5–1.7 percent and those diagnosed with chronic and incapacitating conditions experienced a long-term wage penalty of about 0.5 percent, while women diagnosed with some chronic and nonincapacitating conditions, such as respiratory conditions, experienced no wage changes in the short or long term.

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Article
Publication date: 1 June 1992

A. Gunasekaran, S.K. Goyal, T. Martikainen and P. Yli‐Olli

In any organization, the information relevant to the problem areais essential in making decisions. The top management makes decisionslike expansion of the plant…

Abstract

In any organization, the information relevant to the problem area is essential in making decisions. The top management makes decisions like expansion of the plant, automation, recruitment of senior personnel and diversification of products, etc. There are many kinds of tools or methods available to analyse these problem areas. Among these, turnover rate is useful for many purposes, especially in evaluating the performance of an organization. Here, the turnover rate is considered in order to identify the effect of the number of types of products or product mix on the performance of a manufacturing system. It can be defined as the ratio of average demand to average inventory level. The model presented discusses the effect of the number of products/product mix on the turnover rate of a production system when the appropriate market value of the products is considered. The turnover rate discussed is based on the economic production quantity (EPQ) and the manufacturing cycle time of each product. An example is presented to explain the application of the model.

Details

International Journal of Operations & Production Management, vol. 12 no. 6
Type: Research Article
ISSN: 0144-3577

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Article
Publication date: 1 February 2004

Pervaiz Alam and Anibal Báez‐Díaz

This study uses a simultaneous equations approach to examine the price‐earnings relationship of non‐U.S. firms that directly list their securities in U.S. capital markets…

Abstract

This study uses a simultaneous equations approach to examine the price‐earnings relationship of non‐U.S. firms that directly list their securities in U.S. capital markets or trade as American Depository Receipts (ADRs). The Hausman test shows that price changes and earnings changes are endogenously determined, thus the simultaneous equations approach is used to estimate the earnings response coefficient (ERC) and the returns response coefficient (RRC). Under the ordinary least squares (OLS) estimation, the parameter estimates are biased downward because the OLS fails to correct for endogeneity. In general, our results show that the joint estimation procedure mitigates some of the single‐equation bias. The estimated ERC and the RRC are higher under the three stage least regression (3SLS) than under the OLS regression. In addition, the product of the ERC and the RRC coefficients approaches its theoretical value of one when using the 3SLS estimation. The evidence also shows that institutional factors affect the way the market value information for these firms. We find that the ERC and RRC are insignificant for the common law non‐ADR firms and significantly positive for common law ADR firms.

Details

Review of Accounting and Finance, vol. 3 no. 2
Type: Research Article
ISSN: 1475-7702

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Article
Publication date: 15 March 2011

Dimosthenis Hevas and Georgia Siougle

This study aims to test empirically the validity of the accounting valuation model that is based on earnings and book values for loss‐reporting firms under a conservative…

Abstract

Purpose

This study aims to test empirically the validity of the accounting valuation model that is based on earnings and book values for loss‐reporting firms under a conservative accounting regime.

Design/methodology/approach

The empirical tests are performed by employing returns models on data derived from non‐financial firms listed on the Athens Stock Exchange for the period 1992‐2000.

Findings

The empirical results suggest that there is no unique concept of income, which is applicable, for valuation purposes, in all circumstances. Total income may be the appropriate income concept to use for the valuation of profit reporting firms but not for loss‐reporting ones; for loss‐reporting firms, ordinary income appears to be a more useful concept for valuation purposes. Extraordinary income was also found to be value relevant. Further, different versions of the accounting valuation model appear to be more relevant for different groups of firms (groups defined in terms of various firm characteristics, such as: size, growth opportunities and riskiness.

Practical implications

The study examines the informational content of the various earnings and loss items in the income statement and provides conclusions that are useful for standard setters, accounting policy makers and market participants.

Originality/value

It provides further evidence on the value relevance of losses, as opposed to that of earnings. It coincides with the development of a new project initiated by the International Accounting Standards Board, i.e. “Reporting Comprehensive Income”, concerning the content of the income statement. The analysis is carried in an accounting environment that adopts only historic cost accounting for the recording and measurement of assets and liabilities, revenues and expenses.

Details

Managerial Finance, vol. 37 no. 4
Type: Research Article
ISSN: 0307-4358

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Article
Publication date: 1 December 1993

S.K. Goyal, A. Gunasekaran, T. Martikainen and P. Yli‐Olli

Presents a mathematical model for determining Economic ProductionQuantity (EPQ) in a multistage flow‐shop production system for the casewhere the demand for items per unit…

Abstract

Presents a mathematical model for determining Economic Production Quantity (EPQ) in a multistage flow‐shop production system for the case where the demand for items per unit time is deterministic and the planning horizon is finite. Solves an example problem to illustrate the model.

Details

International Journal of Operations & Production Management, vol. 13 no. 12
Type: Research Article
ISSN: 0144-3577

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Article
Publication date: 1 October 2018

Kirithiga S., Naresh G. and Thiyagarajan S.

The commodity and equity derivatives have a close resemblance between them in trade practices and mechanisms, which makes it easy for the investors to combine these two…

Abstract

Purpose

The commodity and equity derivatives have a close resemblance between them in trade practices and mechanisms, which makes it easy for the investors to combine these two assets classes for building up their portfolio. The diversification of investment among asset classes builds some relation between them. The integration of market within a country is necessary to bring in a smooth and balanced economic growth. Thus, the purpose of this paper is to examine the spillover between the equity and commodity futures markets which will be helpful not only for the investors but also for the policy makers, producers and the regulators.

Design/methodology/approach

To examine the spillover between the equity and commodity market, the major benchmarking indices of these markets, namely COMDEX of MCX, Dhaanya of NCDEX and NIFTY 50 of NSE, were chosen. NIFTY 50 index was chosen as representative of equity market due to its composition of most active constituent stocks than any other broad market index of Indian stock market. As the commodity market indices are not been traded, their constituent commodities were taken for the study. Thus, 11 MCX-COMDEX constituents such as Gold, Silver, Copper, Zinc, Aluminum, Nickel, Lead, Crude oil, Natural gas, Kapaskhali and Mentha oil and eight NCDEX-Dhaanya constituents such as Castor seed, Chana, Cotton seed oilcake, Jeera, Mustard seed, Refined soy oil, Turmeric and Wheat futures prices were taken against the NIFTY 50 futures prices with daily trading data for ten years starting from January 1, 2006 till December 31, 2015 to analyze their spillover effect. The return series data were used to test the spillover between equity and commodity futures market as it gives the crux of investors’ diversification through the Vector Autoregression (VAR) model and verified with Impulse Response Function by testing the null hypothesis, H0, that there is no return spillover between the equity and commodity futures market.

Findings

The investors move from equity to commodity when there is a threat in equity market and vice versa, thereby diversify their risk for those commodities which are vulnerable to global and domestic pressures in the economy. Investigating the spillover between equity and commodity market gives an insight of market integration effect. A nation can achieve its economic growth easily when its markets are integrated.

Research limitations/implications

The commodity indices are still notional indices in the market; therefore, individual constituent commodities of commodities indices were considered with the benchmarking equity futures index, which is one of the limitations of the study.

Practical implications

The integration of market within a country is necessary to bring in a smooth and balanced economic growth.

Originality/value

Most of the past studies dealt only with few commodities and equities and not with the broad-based benchmarking indices. This paves way for enquiry into the commodity and equity markets integration with the major constituent commodities traded in the economy. Hence, this paper looks into the presence of spillover between the equity and commodity markets. The VAR model is verified with the impulse response function which explains the reaction of any dynamic system in response to a pulse change in another. The impulse response function is presented graphically for easy and better understanding.

Details

Benchmarking: An International Journal, vol. 25 no. 7
Type: Research Article
ISSN: 1463-5771

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Article
Publication date: 1 December 1998

A. Gunasekaram, S.K. Goyal, T. MArtikainen and P. Yli‐Olli

This paper deals with total quality management (TQM) with an emphasis on developing suitable strategies for improving quality and productivity in manufacturing systems. In…

Abstract

This paper deals with total quality management (TQM) with an emphasis on developing suitable strategies for improving quality and productivity in manufacturing systems. In recent years, TQM has been seen as an important strategy for achieving success in business both in terms of quality and productivity. However, there seem to be no clear strategic framework and guide‐lines for implementing TQM in manufacturing in the light of available advanced production concepts and technologies. A review of previous implementation approaches of TQM in practice has been presented in order to gain further insights into the implementation aspects of TQM. The main objective of this paper is to present a general framework for the development of TQM in manufacturing organizations considering the recent developments in production concepts and technologies and competitiveness among firms to utilize quality as a competitive weapon.

Details

International Journal of Quality & Reliability Management, vol. 15 no. 8/9
Type: Research Article
ISSN: 0265-671X

Keywords

1 – 10 of 220