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1 – 10 of 278Muhammad 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 concern…
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.
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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.
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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 tests…
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.
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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, automation…
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.
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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 or trade…
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.
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.
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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 assets…
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.
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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 time is…
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.
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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 recent…
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.
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The article is based on a research project using survey data (N=628) and qualitative interviews (N=60) with young people and their parents belonging to the five largest ethnic…
Abstract
The article is based on a research project using survey data (N=628) and qualitative interviews (N=60) with young people and their parents belonging to the five largest ethnic minority groups in Denmark, along with the experiences of psychosocial services for minority young people. The theoretical framework is social psychological, combining theories of modernisation, family relations and effects of discrimination. The article examines interaction with the parents in relation to their intimate partnership formation and the dynamics of religious endogamy. Main findings are that parents may be either supportive or against the young people, contrary to the dominant discourses about intergenerational conflicts. The continued practice of religious endogamy is another finding. The article criticises the reductionistic dichotomy ‐ either own or parental choice ‐ and appeals for broader concepts which focus both on own choice and parental acceptance. The article also throws light on some strategic services dealing with the problems of ethnic minority young people in forming intimate partnerships in other countries. A model for psychosocial intervention is presented which directs attention to ageism and sexism, as well as racism, at personal, interpersonal and structural levels.
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