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Über dieses Buch

This volume of Eurasian Studies in Business and Economics focuses on latest results from research in Banking and Finance, Accounting and Corporate Governance, Growth and Development, along with a focus on the Energy sector. The first part on Accounting and Corporate Governance features articles on environmental accounting, audit quality, financial information, and adoption of governance principles. The Banking and Finance part looks at risk-behavior in banks, credit ratings during subprime crisis, stakeholder management, and stock market crises. The book focuses then on the energy sector and analyzes macroeconomic impacts of electricity generation, risk dimensions in wind energy, the latest EU energy reforms, and discusses prediction models.



Accounting and Corporate Governance


The Value Relevance of Audit Report Under IFRS in the Case of Romanian Listed Companies

On a financial market, investors need relevant and fair information on which to base their decisions. Investors seek instruments to assess the information quality which can indicate the stock that can reward them with high performance. To answer the investors’ problem, financial statements must be audited, receiving an opinion related to the quality of reported financial information. With the adoption of IFRS, can the audit report contain a professional, objective and independent opinion on the true and fair view of the financial statements, in the most significant aspects, related to the information that reflects financial position and performance, in accordance with an applicable accounting framework? The purpose of this study is to analyze, with the adoption of IFRS, if the auditors’ affiliation to the Big 4 and the audit opinion are value relevant for investors and have a significant impact on the stock price. To achieve the research objectives, a sample of 59 companies listed on Bucharest Stock Exchange (BSE) was selected. These companies use IFRS in financial reporting. To obtain the research results, multiple regression analysis, ANCOVA models and GLM were used. Data was collected from the financial statements of companies and from other reports provided by BSE. For data processing, SPSS 20.0 was used. The results achieved from the ANCOVA and GLM regression analysis indicate that information provided by the audit report, auditors’ affiliation to the Big 4 and the audit opinion, are value relevant for investors and have a significant impact on the stock price.

Alina Mihaela Robu, Ioan-Bogdan Robu

Performance Indicators Development in Function of Higher Education Quality Monitoring

The aim of this paper is to explore issues of higher education institution’s performance indicators development in Croatia. Accepted standards and regulations require defining of key performance indicators, but the process and the method of their choice and the definition is optional to institutions. Higher education institutions are obligated to measure and track performance. They need to define key performance indicators, in accordance with the Standards and Guidelines for Quality Assurance in the European Higher Education Area (ESG) and defined strategic goals. Tracking performance is important for program financing of higher education and performance monitoring of selected institution’s program goals and higher education in general. For higher education institutions, it is important to monitor and improve the quality. For that purposes they need to develop adequate and comparable performance indicators. In order to create comparable indicators it is necessary to conduct a detailed analysis of performance measurement of related higher education institutions in Croatia and the European Higher Education Area. The basis for performance measurement is information that institution owns, acquires and processes. In order to be relevant, indicators need quality information basis for their measurement. This paper analyzes the current performance indicators of selected institutions from Croatia, Great Britain, Canada and Australia. Based on the analysis, as the result of work, we propose indicators for one higher education institution. Authors propose a methodology for development of indicators, as well as a way of measuring and monitoring performance.

Verica Budimir, Ivana Dražić Lutilsky, Robert Idlbek

Environmental Accounting as Information Support for Ecological Controlling

The article reveals the essence of environmental accounting and environmental controlling, as well as to identify and consider their relationship. The field of study is environmental accounting as information provision processes controlling areas. The purpose of the study is to reveal the relationship of environmental accounting and controlling. The study was conducted with the use of general scientific methods: observation, comparison, abstraction, analysis and synthesis. Environmental accounting is an independent direction in comparison with accounting statements and its widespread adoption will allow users of natural recourses to enhance the ecological protection activities and implement informational support of environmental controlling. The development of environmental l accounting within information support of ecological controlling will provide an opportunity to correctly plan, control, analyze, forecast the environmental costs, more accurately determine the economic efficiency of environment protection and nature restoration activities, evaluation of economic damage caused by pollution of the natural environment, representation of reliable and accurate information to investors and auditors in respect to the natural environment components of the economic entity.

Farida Yerdavletova

Inspection Results on the Quality of Auditing

Financial statements auditing is conducted in order to protect public interest. In order to achieve that, it is necessary to establish the trust in auditor’s work. One of the quality control mechanisms are the inspections over the auditors and auditing firms performed by an independent authorized institution. Following that practice, the Croatian Audit Chamber is performing the inspection of auditors and auditing firms since 2010. The aim of this paper is to compare the results of inspections carried out in Croatia with the results in the selected European countries. The reports on audit inspection show that there is still room for improvements in terms of the audit quality. The conclusions of the research point towards the lack of auditor’s professional scepticism with regard to the statements of management. This refers to the importance of professional scepticism in audit fields which are exposed to increased risks in the context of the financial market and global economic crises. According to the experience of selected countries, the inspections that were carried out by an independent professional body have increased the quality of the performed audits. However, there are clear suggestions that there is still plenty of space for significant improvements.

Lajoš Žager, Sanja Sever Mališ, Mateja Brozović

Development of Cost Accounting in Higher Education Institutions in the Republic of Croatia

This paper aims to present the level of development of cost accounting in the Higher Education Institutions (further HEI’s) through conducted empirical researches. The main objective of this paper is to highlight that for quality decisions making at HEI’s it is necessary to have relevant information about costs. Using different methods for managing costs, information about costs are significantly different. Based on that, the process of decision making and decision made on costs could vary. To examine the level of cost accounting used in HEI’s, the research based on the questionnaire was conducted in the year 2006 and 2014. The questionnaire was sent to all HEI’s in Republic of Croatia, more precisely to the Deans of HEI’s and to the Head of Accounting of HEI’s. The authors have set the main hypothesis that cost accounting tools are still not enough used in Croatian HEI’s. The results of conducted research have shown that cost accounting in Croatian HEI’s is still undeveloped and still not sufficiently used in the process of decision making and funding of HEI’s. Moreover, authors have highlighted that some cost accounting instruments, e.g., cost allocation, are used less in 2014 than in 2006. The authors have also pointed out several potential obstacles for implementation of cost accounting in the accounting systems of HEI’s. Also, in the paper, the authors have provided possible recommendations for implementation and better usage of cost accounting in Croatian HEI’s.

Martina Dragija, Ivana Dražić Lutilsky

Comparing the Value Relevance of Cash Flow Ratios and DU Pont Ratios under IFRS: A Case Study

In this research, the main aim is to point out the importance of financial reporting from the companies’ both internal and external points of view. For this reason it is good to emphasize that the accounting knowledge that will be gained by the companies’ financial reports leads the way in decision making process of the internal and the external environment of the companies. Within this context, the financial ratios have been classified and described. By the reason of the fact that cash flow ratios and Du Pont ratios are the key considerations of the research, these mentioned ratios have been examined in more detail. While taking the next step, the value relevance of the cash flow ratios and Du Pont ratios have been compared. Within this value relevance comparison process, the companies that take place in BIST 100 have been taken into consideration. While comparing the value relevance of the cash flow ratios and Du Pont ratios of the BIST 100 companies, the effects of the CFFO, ROA, and ROE on the companies’ stock prices and stock returns have been examined. Based on the findings that are obtained from the research, ROE and ROA are consistent with the stock price and/or return.

Gokce Sinem Erbuga

Assurance of a Credible Financial Information: A Product of Convergence Between Prudence and Continuity by Statutory Audit and a Good Corporation Governance

The current economic world is dominated by market globalization. The economic and social development presupposes an economic balance and cultural globalization. These manifestations also influence the business common language, that of accountancy and determine the company way of thinking and expressing, the entity management, the control and administration of their resources, as well as its principles, accountancy methods and specific practices of elaborating and presenting financial statements. The business globalization recommends and obliges the entity management to implement corporation governance and calls for statutory audit to offer, in general, the users a guarantee that the financial statement is correct and credible. Moreover, the entire accountancy process, by which a financial statement is obtained and which must be transparent for the users, is totally grounded starting from the idea of investment protection and of a credible management for the users. The accountancy logic starts and permanently has in view to apply correctly the prudence principle—a basis for accountancy conventions and a condition of provisional character of accountancy offered by going concern.

Bogdan Ionescu, Flavia Stoian, Tudose Geanina Gabrela, Grazia-Oana Petroianu

The Risk Analysis Process and Its Coverage: A Requirement for Management and Governance for Achieving the Objectives

Organizations issue on risk assessment in conjunction with the entity’s attitude and its organizational culture is a major concern for economic and social environment. The risk analysis process and its coverage, is today a requirement for management and governance to achieve the objectives. The objective of this article is to enrich the specialized information on financial risk analysis process due to customers and developing a scoring analysis model and risk assessment of clients from a company portfolio to avoid non-collection of receivables. In order to fulfill the objectives it will be used a mixed research methodology specific to economics, which will combine both qualitative and quantitative methods, to assessing financial risk for companies customers by analyzing methods and techniques for reducing the risk of not collecting the receivables through: contracts only with clients presenting an acceptable risk for collaboration (low, medium, high), the adoption of some measures to deal with credit limits in each client depending on the risk result, penetration on regions with a lower risk, provisioning for high-risk customers, additional safeguards and closer monitoring of their collaboration with the company’s sales department.

Ana Morariu, Bogdan Ionescu, Mihaela Dăucianu (Avram), Maria Constantin

Comply or Explain Approach and Firm Value on the Bucharest Stock Exchange

This paper aims at exploring the influence of compliance with the principles and recommendations stated within the Bucharest Stock Exchange (BSE) Corporate Governance Code on firm value, for a sample of companies listed in Romania, in 2011. Firm value was proxied both through accounting measures (such as return on assets, ROA and return on equity, ROE) and market measures (such as earnings per share, EPS), all being industry-adjusted. Based on the ‘Comply or Explain’ Statement issued by the BSE, there was conceived a questionnaire having the purpose to develop corporate governance ratings. Thus, we report the global corporate governance rating and a set of specific ratings as regards transparency and reporting, board and committees, shareholder rights, as well as corporate social and environmental responsibility. Therefore, by estimating several multivariate linear regression models, our results provide support for a positive and statistically significant relationship between the rating related to transparency and reporting and firm value, likewise between the rating related to corporate social and environmental responsibility and firm value, but only for industry-adjusted ROA. However, there was noticed the lack of any statistically significant relationship between corporate governance ratings and firm value, when industry-adjusted ROE and industry-adjusted EPS were employed.

Ştefan Cristian Gherghina, Georgeta Vintilă

Application of Governance Principles in IT Projects

An increased usage of projects can be observed in all fields, being a way of adapting current activities to the challenges of the economic reality. One of the most important characteristics of projects is the orientation towards objectives’ achievement, which contributes to the long term development of an organization and to obtaining competitive advantage on the market. But, in order to maximize the benefits of using projects as means of organizing the activity, a special attention should be given to aspects that can influence project success. We consider project governance as being essential to project success and having a positive influence on the development of the organization. The increased frequency and importance of projects nowadays determined a significant focus on projects’ governance and its relation with corporate governance. The steering group, the project owner and project manager are key roles influencing project governance. The objective of this paper is to analyse the opinions of project managers regarding the application of project governance principles when dealing with IT projects, based on structured interviews.

Ioana Beleiu, Razvan Nistor

Proactive Cost Management in a Modern Company

Globalization, technological changes, intensive competition, fluctuating consumer demand, economic and political changes encourage company managers to act proactively, assume a bigger risk and choose suitable strategies. Unfortunately, insufficient cost management is a problem of most companies. A substantial part of cost in the companies is incurred “automatically”, i.e., due to inertia while conducting routine work which does not demand economic substantiation and create unnecessary cost for the company. A successful and proactive cost management could be a key to business success, and an effective cost management system in a company is directly and positively related with its competitive advantage. This research solves a research question of elimination of casual cost management decisions from the business model of the company and integrating it into proactive cost management which directly correlates with benefits created by changes of current principles and practices. The necessity of demand of proactive cost management was driven by two aspects: firstly, increasing competition and global financial crisis are increasingly signaling that effective cost management system is one of the most important management issues necessary to reach strategic organizational goals; secondly, the literature and practice more often identify cost management as a representation of incurred cost and less often with cost control and proactive management.

Lina Martirosianiene

The Impact of Adopting Corporate Governance Principles in Romania: Economic Performance or Just Good Practices?

The paper intends to capture the importance Romania gives to corporate governance domain. The study wants to outline the extent to which listed companies on the Bucharest Stock Exchange respect the principles of corporate governance, whether they offer explanations and whether this compliance leads to a better performance of the companies. Another objective is to capture the capacity of the entities to attract more investors through the compliance with corporate governance. The study is based on a sample of 16 listed non financial companies from Romania. When referring to the results, the computations show that the companies from the sample respect more than 70 % the code of corporate governance, as these entities declare. Using the regression analysis, it was concluded that less than a third of the compliance with corporate governance principles leads to a higher performance, but it seems there is no clear relationship between the level of compliance with corporate governance principles and the attractiveness of the companies.The analysis of the “Comply or Explain” statement for the selected companies from Romania highlighted some weaknesses related to the attitude towards the conformity with corporate governance principles.

Seria Crina

The Importance of Marketing and Its Influence on a Company’s Financial Performance

Recent years have seen an increased appreciation of the importance of marketing and of its significant contribution to financial performance. This paper uses mixed methods research in order to analyse the results collated from a survey and from secondary research in order to evaluate the contribution which is made by marketing to the financial performance of ice-hockey club Dinamo Riga. A random sample of ice-hockey Arena visitors was invited to the survey and there were 1200 respondents involved. The survey and research covers the time period of September 2014 to present time. It is argued that effective marketing strategies are likely to have a positive effect on the financial performance of an organization, by acting as a resource which can be utilised by the firm in order to create competitive advantage, thus increasing market share and profitability, and as a competency which can be used in order to improve financial performance by means of increasing customer satisfaction.

Jurijs Kuznecovs, Tatjana Tambovceva

Energy Studies and Growth and Development


Macroeconomic Impacts of Electricity Generation on Croatian Real GDP: Causality Analysis

This paper examines the causal relationship between electricity generation and economic growth in Croatia using data for the period 1966–2010. The analyzed time span includes the periods of both the socialist and market based economy. Based on a detailed review of previous empirical studies it is possible to conclude that this issue has not been systematically explored and analyzed using Croatia as an example. In our analysis, we use a multivariate model (a conventional multifactor neoclassical aggregate production function) of real GDP and electricity generation together with capital stock, employment and technological progress. In order to get robust results this paper applies the autoregressive distributed lag (ARDL) cointegration procedure with a time break as an appropriate quantitative method when analyzing small samples. The empirical results provide clear support of a unidirectional causality that runs from electricity generation to real GDP in both short- and long-term. Electricity generation has a positive and statistically significant impact on Croatian real GDP. This means that stable, adequate and uninterrupted electricity supply is one of the crucial determinants of Croatia’s economic growth. Croatia should adopt a more vigorous economic policy that should aim to increase investments in the electricity infrastructure.

Pavle Jakovac, Nela Vlahinic Lenz, Sasa Zikovic

In Search of the New EU Energy Reforms: Assessing the Financial Performance of the EU Energy Companies

To unveil the challenges the European energy industry faces, this paper looks at the financial performance of energy companies that are different in terms of the energy generation mix in the period 2011–2013. Furthermore, the paper aims to draw general conclusions on how the share of conventional power plants in the companies’ generation mix has affected their operation as a whole. Finally, the paper discusses the trends in the energy industry, in particular regarding gas-fired power plants, as well the opportunities and threats facing them in the context of achieving the EU strategic energy goals. The results show that companies with a higher share of conventional thermal power plants in their energy mix operate with a significant decrease in profit, and generally face a decrease in their asset value. This is opposite to companies with large diversified portfolios and shares of hydropower and new renewables. Since conventional power plants, especially high-performing and flexible gas-fired cogeneration ones, may play a key role in producing the peak load and even the base load power, as well as in maintaining high quality in the electricity grid, this situation might jeopardize the achievement of the EU strategic energy goals. Hence, it calls for new energy reforms.

Djula Borozan, Dubravka Pekanov Starcevic

Specific Risk Dimensions in the Wind Energy Field: Case Study—Romania

The wind energy industry has represented one of the main focus points in the case of business and political discussions in the last decade. The wind energy has often been described as the most favorable type of renewable energy source towards a sustainable future in the European Union due to its minimal impact on the environment. However, the associated risks and risk strategies have scarcely been mentioned in these discussions, remaining a subject worthy of attention for scientific literature. The present study aims to research the hampering factors of the wind energy business in Romania and the strategic methods of risk mitigation. The threats of the wind energy sector have been a major concern of the last 2 years in Romania, as the companies in the field have striven to overcome the green certificates subsidy crisis from 2013. By using the Delphi method based on questionnaires and interviews with 26 experts in the field, the current paper offers an overview of the most significant risks that have been associated with wind energy and of the risk mitigation strategies. The study revealed major threats in the case of political and regulatory risks and the risks associated with the authorization phase of wind energy projects. The relevance of the study lies in the correlation of the risks and risk mitigation strategies of the wind energy companies and the legal and economic environment in Romania that has brought adverse shift in the development of the wind energy field in the last year.

Maria Alexandra Nichifor

Is There a Necessity for an Alternative Energy Source Instead of Natural Gas in the Industrial Sector of Turkey?

This paper examines the causality relationship between natural gas consumption in industry sector and industrial growth within Granger causality technique and ARDL (autoregressive distributed lagged) model, testing for the period of 1976–2013 in Turkey. We have three main factors to choose this subject as a study. First of all, energy is a vital production factor related to economic growth. Secondly, because of industrial sector is one of the main sector in developing countries and Turkey is one of the developing countries in the world, industry takes the priority in our research. Lastly, natural gas is the most used primary energy source at industry. During analyzing these three factors, we tried to find the answer of necessity of an alternative energy sources at industry in Turkey. According to results, it is found that there is no causality relationship between natural gas consumption in industry sector and economic growth. As a conclusion, we offer an economic policy that, Turkey should find an alternative energy sources to continuing its growth.

Mehmet Samet Erdem, Mustafa Kemal Beser, Hakan Acaroglu

Non-Keynesian Effects of Fiscal Consolidations in Central Europe in the Years 2000–2013

Last two decades were a period of significant discussion concerning determinants of effectiveness of fiscal policy. After some cases of expansionary episodes of fiscal consolidations in eighties of XX century, an intensive international research on the possibility of non-Keynesian effects of fiscal contractions in highly developed countries has started. The aim of the article is to analyze the possibility of obtaining non-Keynesian effects of fiscal consolidations in post-transformation countries of Central Europe. An important aim of macroeconomic policy in the analyzed economies is to benefit the advantages of convergence process. Thus, the empirical analysis is made within conditional β-convergence framework. The verification of hypothesis of β-convergence enables to identify the long term tendency of output per capita, in the same time it enables to identify non-Keynesian effects of fiscal prudence and to assess their role in the process of reducing GDP gap between the analyzed economies. Then the potential transmission channels for non-Keynesian effects of fiscal policy were analyzed. In the research the data from Eurostat and European Commission for the years 2000–2013 was used. The paper provides arguments in favor of the existence of non-Keynesian effects of fiscal consolidations in Central Europe that support the process of conditional convergence.

Adam P. Balcerzak, Elżbieta Rogalska

Tax Burden and Economic Development: The Case of the European Union Countries

The paper presents the research results on the relationship between the tax burden and economic development. The research methods: systemic, logical and comparative analysis of scientific literature, and statistical methods: descriptive statistics analysis, hierarchical cluster analysis, correlation analysis. Empirical analysis of this study focuses on the data of the European Union countries. Implicit tax rates are used to measure the tax burden. The study covers the period from 2003 to 2012 using annual data. The results of this study show that there are large differences in the tax burden in the European Union countries. The tax burden on capital and consumption is higher in the very high economic development countries; but implicit tax rate on capital is higher in the case of countries with lower GDP growth, high government sector and high government debt. Joining the EU in 2004 or 2007 did not have a strong effect on the change in the joined countries tax burden. However, the tax burden on labor has declined, and the tax burden on consumption has increased or remained in the similar level in the majority of countries.

Lina Sinevičienė

Current Account Dynamics and Determinants in the European Union

European Union economies are facing important internal and external imbalances, as highlighted by the recent crises. Although progress has been made in order to reduce the gaps, the situation is still worrying. In this paper we aim at identifying the main determinants of current account balance in the European Union, as competitiveness is one of the major issues that need to be resolved regarding the European economies, aside with fiscal sustainability. We analyze the dynamics of current account balance in the European Union and test the effects of some economic imbalances, as highlighted by the current crises, considering data for the European Union member states covering years 2000–2013. Based on the results of panel data analysis we make considerations on future dynamics of the European Union economies.

Maria-Isadora Lazar, Ramona-Mihaela Paun

Prediction Models for High Versus Less Performant Economies in the European Union

In the current unstable economic environment the European Union countries seem to be facing real challenges that distinctly affect their economic performances. Although there are several attempts in the international literature in building efficient macroeconomic prediction models, the subject still remains of great relevance and it is mostly believed that automated correction in any decision process should be based on proper prediction models.Therefore, we draw on the main macroeconomic performance indicators, such as economic growth, current account balance and labour market indicators, such as labour productivity, employment and average net earnings for the year 2013 to propose several prediction models for the European Union countries. Thus, by applying both econometric analysis and classification trees methodology we will attempt to extend the empirical research in the field. A distinction between high performant and less performant European Union economies will be highlighted, and several CHAID classification trees will be elaborated, followed by a sensitivity analysis. The main findings of the study will consist of several efficient prediction models for which the prediction ability will be tested and compared.

Madalina Ecaterina Popescu, Ramona-Mihaela Paun

Correlating Local Recreation Specialization to Prosperity: Study on European Union Countries

The purpose of the present study is to assess, contrast and compare the degree of specialization of local recreation industries and to determine whether it exists a correlation between local recreation specialization and prosperity. To this end, the paper proposes an index for calculating the level of specialization of local recreation industries. This formula aggregates the influence of three major factors, namely the local recreation sector’s contribution in GDP, the share of employment in the local recreation sector, and the share of government spending allocated to recreation within total government expenditure. The index was calculated for 11 European Union member states for the year 2011. Results showed that, within the sample, the most specialized countries in terms of local recreation services provision are the Czech Republic and Netherlands, whereas the lowest degree of specialization is registered in Romania and France. The regression analysis performed on the given sample showed a moderate correlation between local recreation specialization and prosperity. Notwithstanding the limitations imposed by the rather small sample on which this study was conducted, the findings open up new research avenues concerning the macroeconomics of recreation industries.

Sava Ana-Maria



Supply–Demand Equilibrium for the Goods and Services Market: A Dynamic Model on Romania’s National Economy

The present paper proposes a cybernetic approach to the national economy system of Romania in order to give the basis for identifying, describing and modeling of the main feedback mechanisms of regulation that appear at macroeconomic level. We have built in STELLA—Modeling and Simulation Software a dynamic feedback model for the demand–supply equilibrium. The stock-flow dynamic model allows empirical analysis of the system’s states offering insight on its endogenous characteristics and behavior over time. The model also permits sensitivity analysis to exogenous stimuli. The data used for initialing the state variables of the model and parameters were taken from the official stats of Romania between 2007 and 2011, just before the economic crisis and the years of economic recovery. The results of the model simulations on extreme conditions, such as in which the scales of production do not change significantly in relation to profitability, have revealed that the model outlines a predictive reaction of the system, entering in decline—the national output having a descending trend. The structure of the model and its simulations sustain the rationality and validity of the purpose and we can conclude that it may become a useful instrument in macroeconomic governance.

Bianca Ioana Popescu, Emil Scarlat

The Determinants of Foreign Direct Investment Under Climate Change

Foreign direct investment is very important for the economy of both host countries and home countries, especially for host countries in terms of employment and technology transfer. Many previous researches focused on economic determinants, both micro and macro level, rather on climate-related determinants which become important currently. As a result, this research analyzes the determinants of foreign direct investment under climate change using secondary panel data and fixed effect model. The results show that, real GDP of home countries, real GDP of host countries, and the degree of trade openness of host countries are positively related to foreign direct investment. Conversely, CO2 emissions per capita of home countries and wage rate of host countries are negatively related to foreign direct investment

Piyaphan Changwatchai

The Evolution of School Textbook Supply Systems: Cost, Supply Procedures and State Policies

School textbooks have been significant components of educational systems since the nineteenth century. Traditionally, in most countries the supply of school textbooks has been funded by the state. However, in recent years the role of publishers has become dominant within this area and this has affected the level of prices, often leading to the formation of worldwide oligopoly dynamics. In turn, school textbook supply costs are born either by the state or citizens directly or indirectly. In this paper we explore the evolution of the production and distribution system of school textbooks in several European countries and briefly compare dynamics and outcomes generated by different educational systems. We particularly explore the case of the Greek system based on collected data and we estimate/compare cost results under the general assumption of adopting mainstream European school textbook supply models. To this purpose we outline and use an abstract model relying on simulation methods.

Christos Manolopoulos, Celia Roniotes, Rozina Eustathiadou, Dimitrios Sofotassios

Empirical Verification of the Scale Measuring Patient Service Quality in Integrated Health Care in Poland

The aim of the paper is to discuss the psychometric propertiesof a new instrument that assesses the patient service quality in Polish integrated healthcare. In the study the scale was composed of 32 statements. The examination of its validity was carried out on a sample of 320 patients. To measure the homogeneity of the scale α-Cronbach was applied. Next, the confirmation factor analysis was conducted based on PCA. In the study α-Cronbach coefficient for the entire scale amounted to 0.891, which is a very good result according to Nunnaly criterion. Moreover, individual items of the scale featured a high degree of validity. The confirmation factor analysis of 32 items demonstrated that the values of factor loading for nearly all test items are high. The study demonstrated that the developed instrument for measuring quality of care, comprised of nine areas and 29 test items, and it has a one-dimensional structure. The set of factor variables used allows to “aggregate” the seven initially distinguished dimensions and two new ones of the analysed quality of care.Validity and reliability tests of the scale demonstrated that the instrument allows an accurate diagnosis of the quality of care perceived by chronically ill patients.

Iga Rudawska

Project Orientation in Institutions of the Public Sector: Key Methodological Assumptions

Project Management Method (PM) is a holistic approach, defining contextual, procedural and behavioral aspects of project performance. Its genesis could be associated with the Manhattan Project (construction of the atomic bomb), and thus the time of World War II. In the 1960s PM was spreading in business ventures, especially in the developed countries of Western Europe and the USA. In today’s world, the following approaches are popular—linear: IPMA, PMI and PRINCE2 and light, based on the AGILE manifesto (e.g., Scrum). The aim of this paper is, to present chosen methodological assumptions of the implementation of project orientation in institutions of public administration. It focuses on the model of the project life cycle, confronting the assumptions of the method (mainly the requirements for the techniques of initiation, planning and controlling) with the conditions of the implementation, in terms of the Polish public administration. In the article a case study method of research was employed, referring to certain aspects of the implementation of the pilot project orientation, in one of the localities in southern Poland. Acceptance of the project orientation of public administration institutions should be treated as an innovation process, which is a response to the current challenges of the environment. It means often introducing a specific solution in many areas of the organization. In local government, this type of solution allows for the implementation of effective planning and controlling, at both the strategic and operational levels. Additionally, it promotes financial management through the judicious use of so-called task budgeting.

Jacek Strojny

Development of Municipal Solid Waste Generation and Expenditures: Case of Czech Municipalities

Municipal solid waste generation represents an important current environmental issue of modern societies. This paper presents trend in municipal solid waste generation, corresponding expenditures, and compares differences between various sizes of municipalities. Analyzed data covers almost 200 main municipalities from the Czech Republic during 2008–2012. Second part of the paper explores relationship between municipal waste volume, expenditures and selected social demographic parameters of municipalities using linear regression techniques and presents several models and discussion of the effects of considered variables. Results show that there is, without surprise, very strong relationship between the amount of municipal solid waste and related expenditures. Both these values are also strongly affected by the population level or alternatively amount of flats within the municipality. Either of them can thus serve as a proxy for municipal solid waste generation prediction. Additional estimated models explore effects of considered social demographic data on per capita development of expenditures and waste generation in order to estimate their marginal effects. Results presented in the models can have policy utilization regarding municipal solid waste collection fee differentiation, or serve as a supporting tool for municipal authorities when predicting development of waste volume and expenditures.

Michal Struk

Determinants of Success and Failure in the Internationalization of the Cork Business: A Tale of Two Iberian Family Firms

The main purpose of this paper is to identify the facilitating and restricting factors during the internationalisation path of family firms, considering their competitive advantages, ownership structure, management attitudes and other intangible assets, as well as external factors to the firms, like location. The research involved a long run analysis (of more than one century) of two cork producing firms operating in Spain and Portugal: Mundet & C.ª, Lda and Corticeira Amorim. One of these companies—Mundet—was closed down in the 1980s and the other—Corticeira Amorim—became, and still is, the leading firm worldwide in the cork industry. A detailed comparison of these two histories—one of failure, the other of success—allows an accurate identification of the determinants of successful internationalisation. This comparison is useful for understanding several characteristics of both firms and testing several hypotheses within the context of the theoretical approach to the internationalisation of family firms, as well as the location choices they made, which were an important cause of the opposing destinies of these two emblematic Iberian cork family firms.

João Carlos Lopes, Amélia Branco, Francisco Parejo, José Francisco Rangel

Portugal and Poland: Two Different Tales on Export Performance to the European Union in the 2000s

European Union’s enlargement to eastern and central Europe’s countries imposed a challenge to southern Europe’s countries. With similar labor intensive specialization patterns, but much lower production costs and better qualified human capital than eastern and central Europe’s countries, southern Europe faced serious threats to their competitiveness. This chapter compares the export performance of these two groups of countries in the period 2000s through the analysis of two specific representative countries: Portugal and Poland. The study is based on a Constant Market Share analysis, which allows to decompose the export growth into several components; and a combination of revealed comparative indexes with a geographical orientation measure. We conclude that while Poland registered a great and impressive export performance across the analyzed period, increasing around 100 % the country’s market share to the EU15, Portugal has evolved in the opposite direction, with an average market share decrease of 7 %. Although it was not the only factor, we conclude that Poland’s competitiveness effect was essential to explain Poland’s increasing industries export share. Several reasons are proposed for the different course taken by the two countries.

Christopher Marques, Inês Paulino, Maria Paula Fontoura, Pedro Serôdio, Sofia Rodrigues

EU Customs Logistics and Global Supply Chain

Customs administrations play a vital role in the growth of international trade and the development of the global marketplace. The role of customs has now expanded to include national security, in particular the security and facilitation of legitimate trade from the threats posed by terrorism, trans-national organized crime, commercial fraud, counterfeiting and piracy. Being a part of the governmental organizations that monitor and manage a cross-border movement of goods, customs administrations appear in a unique position, as they ensure an increased security of the global supply network as well as contribute to the social and economic development through the revenue collection and the trade facilitation. In the article the customs logistics importance to the defense of the society and markets has been revealed integrating security aspects to the customs control. After conducting the analysis of the EU customs audit’s model, used for the assessment of business enterprises activities, the evaluation of this model has been introduced, its fundamental drawbacks lying in the identification of the appropriate indicators of the activities’ assessment have been revealed. The aim of research is to identify the most risky and the most significant areas of the business activities’ assessment.

Danutė Adomavičiūtė

Does the Impact of Trade Openness on Income and Income Inequality Differ in Developed and Developing Countries?

It is mostly believed that the trade openness creates a competitive environment resulting in economic growth. But, trade often produces losers as well as winners. According to the theoretical framework, trade liberalization is associated with narrowing or widening income disparities within countries. Empirical studies both support and oppose trade openness. Studies can be divided into two categories. In this study, we underline the link between foreign trade and income inequality in developed and developing countries by such these explanatory variables. For this purpose we use panel data to investigate the trade’s impact on levels and distribution of income.

Asli Yenipazarli, Hatice Kucukkaya

Application Methods AHP and Benchmarking in the Strategic Management of Local Development: The Key Procedural Aspects Through the Example of Polish Districts

Public administration institutions, as well as other organisations, must currently face many challenges (opportunities and threats). The following can be mentioned among them: high public debt, increasing competition in the area of mobile resources or—in the case of new EU countries—the need to absorb substantial funds from EU structural funds. Growing external demands require improvement of management processes. In this context, one of the most current issues is the effectiveness of strategic management. Not only is it important to properly define long-term goals, but also to properly implement them into actions—strategies, programs and operational tasks. The problem of strategic management optimisation is in line with the demands of current theoretical concepts, such as the New Public Management (NPM) and Good Governance. However, it primarily has a practical significance. Therefore, specific conditions of the country should be concerned. This chapter is part of a series of empirical studies and theoretical deliberations that aim to identify solutions useful for the management of socioeconomic development and public administration institutions as well. Its aim is to present the specifics of the AHP and benchmarking methods in the process of strategic management. The focus is not only on the description of the methods. The results of research carried out in one of the Polish local governments were also cited. The case study consisted of the experimental implementation of the mentioned methods in real conditions of strategic management.

Jacek Strojny

The Impact of the Concepts of Human Nature on the Methodology of Humanistic Economics and Religious Motivated Streams of Economics (Buddhist, Islam and Christian)

The shape of the economics depends on the concept of human nature, which builds main assumptions of any economical school. This set of assumptions is made about the individual (his/behavior, motives, meaning), interactions with the natural and supernatural powers (worldview) and other people (social world) and provides foundations to the economics. The chapter focuses on the influence of this concept on its methodology and methods of the economics. This impact is presented here on the example of humanistic economics, which is here understood widely, including approaches developed within particular world religions as: Buddhism, Islam and Christian. The method applied to this research is a content analysis of the most important texts created within the humanistic economics and directions of economics motivated by world religions. To reach this goal, the following steps will be conducted: firstly, the concepts of human nature will be defined and categorized; secondly, the main levels and dimensions of the concept of human nature in the humanistic tradition will be presented, and thirdly the influence of such understanding of the human being on the methodology, methods and main theories within those denominations of economics will be discussed. The analysis proved that main orientations of these schools of economic could be explained by the changed assumptions about the human nature.

Anna Horodecka

Banking and Finance


Culture, Geographies or Accounting Regimes: Which Are Drivers for Risk-Taking in European and Asian Banks?

Our goal is achieved using the Hofstede’s model of cultural dimensions that has become internationally recognized. A sample covering 41 countries from Europe and Asia and about 3150 bank-years observations was selected to represent low and high averse to risk characteristics. The research is conducted to investigate the influence of culture attributes of risk-taking on the reporting of some variables related to risk, identifying whether or not geographies or accounting regimes are also determinants. We use two proxies for risk-taking, namely, Provisions for Loan Losses and Risk-Weighted Assets. Our research is designed using a twofold perspective. First, we examine if the distribution of our proxies for risk taking are different between independent groups. We compare the outcomes based on groups clustered by national culture dimensions, geographies and accounting regimes. Secondly, we examine if culture is a determinant of banks that present higher or lower amounts of incurred and unexpected losses. Our findings suggest that national culture is (is not) a determinant for the probability of reporting higher or lower level of loans loss provisions (risk weighed assets). These findings are consistent for banks in different geographies (Europe vs. Asia) and subject to different accounting regimes (IFRS vs. local standards).

Ana Isabel Lopes

Effects of Macroeconomic Factors on Bank Loans Quality: Evidence from Central and Eastern European Countries

The objective of our study is to identify the key macroeconomic factors with impact on the dynamics of non-performing bank loans and to empirically assess their contribution in 11 Central and Eastern European countries (namely Bulgaria, Czech Republic, Estonia, Croatia, Hungary, Lithuania, Latvia, Poland, Romania, Slovenia and Slovakia), over the period 2000–2013. Our research is conducted on data from the International Monetary Fund, the World Bank and the Eurostat databases, using panel data estimation techniques. The results of our study show that, among the considered macroeconomic variables, the GDP growth rate, the unemployment rate and the public debt have a significant impact on the ratio of non-performing bank loans in all countries included in our analysis. Our chapter thus underlines that the health of a country’s macroeconomic environment is of great importance for bank loans quality and, in general, for ensuring the soundness and stability of the banking sector in the selected Central and Eastern European countries. The added value of our study arises from the inclusion in the analysis of public finance variables, especially of public debt which has proved to have crucial relevance for the financial stability in the context of the recent economic and financial crisis.

Bilan Irina, Roman Angela

Stock Market Reactions to Credit Ratings Across the Subprime Crisis

At the time of the subprime crisis, investors strongly blamed credit rating agencies (CRAs). Six years later, we want to verify if CRAs are still suffering a reputational damage by measuring stock prices reactions to rating announcements. To test our hypothesis we conduct an event analysis on the American, EU area and Asian/Pacific stock markets over a 10-year period from November 2003 to November 2013. We find that the post-crisis abnormal returns are in general lower if compared with the pre-crisis level, in particular if rating changes are far away from the speculative-junk border.

Eleonora Isaia, Marina Damilano, Cristina Rovera

Does the Market Trust Credit Rating Agencies After the Subprime Crisis? A Comparison Between Major and Minor Agencies

As a consequence of the subprime crisis the credit rating agencies suffered a reputation damage. In this chapter we gauge the extension of this reputation damage by looking at the market’s reaction to rating actions. Through a standard event-study methodology, we measure the abnormal return of stock prices in the 3-day window centered on the announcement day during the decade 2003–2013. Our thesis is that the market reaction to rating actions should be lower—after the crisis—than it used to be, due to a lack of trust in the reliability of the rating agencies. The evidence strongly supports the thesis. In line with previous literature, we find that—as a consequence of the “certification” role that many regulations recognize to rating agencies—the abnormal return is stronger when the valuation is near to the border between investment and speculative grade. On the contrary the cumulative abnormal return is significantly lower after the crisis when there is no “regulation-induced” trading. The reputation damage is stronger for the major rating agencies who were directly involved in the subprime scandal. However a lower reaction to rating actions emerges also for minor rating agencies due to a general decrease in the trust over private creditworthiness assessment.

Paola De Vincentiis, Patrizia Pia

Towards Valuation Multidimensional Business Failure Risk for the Companies Listed on the Bucharest Stock Exchange

Current research aims at developing a comprehensive financial instrument towards valuation business failure risk for a sample of 69 companies listed on the Bucharest Stock Exchange in 2013. There were considered several financial ratios such as liquidity ratios (e.g., current ratio, quick ratio, cash ratio), indebtedness ratios (e.g., general indebtedness ratio, financial stability ratio, global financial autonomy ratio, financial independence ratio, borrowing capacity ratio, long-term financial autonomy, leverage ratio, debt service coverage ratio), as well as solvency ratios (e.g., global solvency ratio and patrimonial solvency ratio). By taking into consideration the large number of selected ratios, we employed the principal component analysis as multidimensional analysis technique which ensures the non-redundant decomposition of the total variability out of the initial causal space through a lower number of components. Thereby, there were retained five principal components (being underlined liquidity, financial autonomy, financial independence, debt service coverage ratio, and solvency) which cumulate 90.5895 % of the initial information. Subsequently, based on the selected principal components we reported the aggregate business failure risk indicator.

Ştefan Cristian Gherghina, Georgeta Vintilă

Using Past Prices and Earnings to Derive Abnormal Returns over a Stock Index

Our objective is to determine whether one can derive returns in excess of a chosen benchmark by using readily available information such as past prices and earnings. A key aspect of our method is that we test the estimation results in conjunction with the portfolio optimization process that incorporates those same estimates, as they are generated, into a rationally-diversified portfolio. We rely on a sampling process that randomly pairs companies from a pool of available estimates for any given date, coupled with the Black–Litterman optimization algorithm, in order to derive a distribution of average returns for the 2006–2014 period, using data available for companies listed at Bucharest stock Exchange. We find that even when using information such as earnings and past prices, one can still improve the performance of a given benchmark, both on an absolute and risk-adjusted metrics. We show how the variability of the results coming from the calibration of the Black–Litterman model itself can easily be mitigated by carefully selecting the model’s parameters.

Andrei Anghel, Dallina Dumitrescu, Cristiana Tudor

Corporate Social Responsibility (CSR) and Stakeholders Management

This chapter describes the ways in which CSR practices can develop and strengthen company’s relation with their key stakeholders in order to create both social and financial value to the companies. Using companies CSR reports, current study identifies theoretically for the case of Romania the mechanisms and the important contingencies in whether the CSR practices are considered by stakeholders authentically and effective and if these practices persist in time. The importance of relation between company and stakeholders through CSR practices is due because of the long term success of the company as there are outside immediate profit maximization goals. We conclude from companies CSR reports and websites that in order to achieve long term financial performance, they (the companies) engage in specific CSR activities as social activities. Thus, companies select ‘the right’ social activities turning them into companies’ strategies addressed to specific types of stakeholders, namely to those are trying to strengthen their relation with.

Liliana Simionescu, Dalina Dumitrescu

EU’s Political Actions for the Enhancement of Macroeconomic Stability in Confrontation with Great Economic Recession

After the great economic recession, started in the end of 2007, provokes the complicated question for researches and experts: do the EU’s legal authorities [e. g., European Commission (EC), European Central Bank] have taken appropriate political actions in order to make more efficient fight with banks collapses, growing the governmental debt of some EU member states, rising unemployment rate and other undesirable downturns in the systems of economies. The article tries to answer to mentioned question. For the first time, it were systemised and explained various EC’s initiatives towards supervision of EU’s economic stability. Comprehensive analysis of first adequate actions of Lithuania’s Government and other World countries as the reaction to the great economic recession in the period of 2007–2009 was systemised. The chapter highlights several important results: what actions were undertaken by EU authorities in order to reduce the painful consequences of later economic recession? Were they adequate and timely? How to maintain stability of state’s economy by implementing political actions of EC? The latter economic recession showed that fiscal policies—both micro level (related with interest payments) and macro level (related with amount of resources available to deal with financial crises)—have an influence on the vulnerability of economy. However, still it is unclear what exact adaptations in the economy are needed.

Rasa Daugėlienė

Determinants of Stock Price in Singapore’s Manufacturing Sector

Determination of factors influencing the share prices has been one of the favorite themes of researchers, academicians as well as the practitioners. Empirical research indicates, though not conclusively, that firms’ internal financial performance indicators and external macroeconomic variables affect the share prices. The notable among those factors that have been found to affect the stock prices are Earning per Share (EPS), Net Cash Flow (NCF), Leverage, Gross Domestic Product (GDP) and Inflation. The present study has been conducted to revalidate this relationship in the context of manufacturing sector in Singapore. Panel regression technique has been used to carry out the analysis for of data pertaining to 263 manufacturing companies in Singapore on for a time period of 10 years. The results indicate the GDP, Inflation and earnings per share impact the prices of common stock but the relationship does not seem to be very strong.

Parvinder Arora, Muslim Bhimani

Corporate Social Responsibility (CSR) and Company Financial Performance: Empirical Evidence from Listed Companies in Romania

The increased attention of companies’ managers towards the benefits of corporate social responsibility (CSR) has led many corporations to integrate CSR practices into their business strategy. Consequently, the literature has examined the relation between CSR and firm performance. Although CSR is adopted by companies on a voluntary basis, more heated discussions regarding the effects of CSR on company financial performance has lead various authors to different results. This chapter empirically analyzes the CSR effects on company financial performance in developing countries, especially Romania. As empirical method we employed univariate analysis to investigate whether the company financial performance of companies which implement CSR (considered experiment group) is higher than non-CSR companies (considered control group). T-test is used to find out if there is any statistically difference in mean company financial performance between ROA, ROE, ROS, PBV, PER, and EPS of experiment group and control group. The sample used included 68 companies listed on the Bucharest Stock Exchange (BSE) for the 2011 fiscal year. The empirical research reveals that there is not a significant difference in mean company financial performance between CSR companies and non-CSR companies.

Dalina Dumitrescu, Liliana Simionescu

IMF and Recent Crisis Prevention: Evidence from Romania

Romania, a member of the EU, was among the first countries to turn to the IMF for assistance. Since then, the Romanian economy has experienced positive changes and ranks among front runners of economic growth in the EU. In light of the development, it has become an issue of interest to investigate to what extent and how the IMF firstling collaboration with the EU affected the Romanian economy and to appraise the compliance of the government to the underlined measures. At the same time, in context to the case of Romania, the chapter aims to highlight the main actions of the IMF, which could be helpful for prevention or mitigation of a new crisis. The propensity score matching method was used to identify a country most similar to Romania and one that has not claimed IMF assistance—Bulgaria. Comparative analysis of major economic indicators over a 5-year span in Romania and Bulgaria suggests the effectiveness of IMF measures. The novelty of the article is in the results, which underline the success of conditional lending on specific macroeconomic indicators in Romania. Both EU states and other governments cooperating with the IMF might want to take the positive findings into consideration.

Gurgen Ohanyan

When Stock Market Investors Breathe Polluted Air

The finance literature documents a strong relationship between mood effects and stock market returns. Air pollution is one of the factors affecting people both physiologically and mentally. This study examines the impact of air pollution sourced mood change on stock returns in Turkey. We find that lag of air pollution in the three most populated cities of Turkey where the majority of investors live is negatively related to stock returns, even when other variables are controlled. On the contrary, the relationship doesn’t exist for the air pollution in other cities of Turkey.

Ender Demir, Oguz Ersan
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