Search results for: corporate financial crisis

Authors: Peter Oyelere, Fernando Zanella

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Corporate governance is one of the most discussed and researched issues in recent times in countries around the world, with different countries developing and adopting different governance structures, models and mechanisms. While the Codes of corporate governance have been weaved into the regulatory fabrics of most countries, it is equally critically important that their mechanisms, procedures and practices be transparent, and be transparently communicated to all stakeholders. The Internet can be a very useful and cost-effective tool for the timely and voluntary communication of corporate governance matters to stakeholders. The current paper details the results of an investigation on the extent of which companies listed in the UAE are using the Internet for communicating corporate governance issues, matters and procedures. We surveyed the websites of companies listed on the two UAE Stock Exchanges – the Abu Dhabi Stock Exchange (ADX) and the Dubai Financial Market (DFM) – to find out their level and nature of usage of the Internet for corporate governance disclosures. Regulatory and policy implications of the results of our investigation, as well as other areas for further studies, are also presented in the paper.

Keywords: corporate governance, internet financial reporting, regulation, transparency, United Arab Emirates

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Authors: Zouari Ezzeddine, Ghraieb Ikram

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From the results of the academic literature which evokes the limitations of previous studies, this article shows the reasons for multidimensionality Prediction of financial bubbles. A new framework for modeling study predicting financial bubbles by linking a set of variable presented on several dimensions dictating its multidimensional character. It takes into account the preferences of financial actors. A multicriteria anticipation of the appearance of bubbles in international financial markets helps to fight against a possible crisis.

Keywords: classical measures, predictions, financial bubbles, multidimensional, artificial neural networks

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Authors: Philemon Rakoto

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Most executive compensation packages consist of four major components: base fixed salary, annual and long-term non-equity incentive plans, share-based and option-based awards and pension value. According to agency theory, the relative composition of executive compensation packages is one of the mechanisms that firms use to align the interests of executives and shareholders in order to mitigate agency costs. This paper tests the effect of the relative composition of executive compensation packages on financial reporting quality. Financial reporting quality is measured by the value relevance of accounting earnings. Corporate governance is a moderating variable in the model. Using data from Canadian firms composing S&P/TSX index of the year 2013 and governance scores based on Board Games, the analysis shows that, only for firms with good governance, there is an optimal level of the proportion of executive equity-based compensation in relation to total compensation that enhances the quality of financial reporting.

Keywords: Canada, corporate governance, executive compensation packages, financial reporting quality

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Authors: Alexander Marx

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Measuring and mitigating market risk is essential for the stability of enterprises, especially for major banking corporations and investment bank firms. To employ these risk measurement and mitigation processes, the Value at Risk (VaR) is the most commonly used risk metric by practitioners. In the past years, we have seen significant weaknesses in the predictive performance of the VaR in times of financial market crisis. To address this issue, the purpose of this study is to investigate the value-at-risk (VaR) estimation models and their predictive performance by applying a series of backtesting methods on the stock market indices of the G7 countries (Canada, France, Germany, Italy, Japan, UK, US, Europe). The study employs parametric, non-parametric, and semi-parametric VaR estimation models and is conducted during three different periods which cover the most recent financial market crisis: the overall period (2006–2022), the global financial crisis period (2008–2009), and COVID-19 period (2020–2022). Since the regulatory authorities have introduced and mandated the Conditional Value at Risk (Expected Shortfall) as an additional regulatory risk management metric, the study will analyze and compare both risk metrics on their predictive performance.

Keywords: value at risk, financial market risk, banking, quantitative risk management

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Authors: Syafril Hendrik Hutabarat, Hartiwiningsih, Pujiyono Suwadi

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The Financial Service Authority (FSA) was formed as a response to the 1997 monetary crisis and the 2008 financial crisis so that it was more defensive in nature while developments in information and communication technology have required state policies to be more offensive to keep up with times. Reconstruction of Authorities of the FSA's Investigator is intended to keep the agency worthy to be part of an integrated criminal justice system in Indonesia which has implications for expanding its authority in line with efforts to protect and increase the welfare of the people. The results show that internal synergy between sub-sectors in the financial services sector is not optimised, some are even left behind so that the FSA is not truly an authority in the financial services sector. This research method is empirical. The goal of synergy must begin with internal synergy which has its moment when Indonesia gets a demographic bonus in the 2030s and becomes an international logistics hub supported by the national financial services sector.

Keywords: reconstruction, authorities, FSA investigators, synergy, demography

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Authors: Andrea Paltrinieri, Alberto Dreassi, Stefano Miani, Alex Sclip

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The financial crises caused a collapse in prices of most asset classes, raising the attention on alternative investments such as Sukuk, a smaller, fast growing but often misunderstood market. We study diversification benefits of Sukuk, their correlation with other asset classes and the effects of their inclusion in investment portfolios of institutional and retail investors, through a comprehensive comparison of their risk/return profiles during and after the financial crisis. We find a beneficial performance adjusted for the specific volatility together with a lower correlation especially during the financial crisis. The distribution of Sukuk returns is positively skewed and leptokurtic, with a risk/return profile similarly to high yield bonds. Overall, our results suggest that Sukuk present diversification opportunities, a significant volatility-adjusted performance and lower correlations especially during the financial crisis. Our findings are relevant for a number of institutional investors. Long term investors, such as life insurers would benefit from Sukuk’s protective features during financial crisis yet keeping return and growth opportunities, whereas banks would gain due to their role of placers, advisors, market makers or underwriters.

Keywords: sukuk, zero beta asset, asset allocation, sukuk market

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Authors: Levan Sabauri

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In this paper, we discuss the deteriorated standing of engineering companies, some of the reasons behind it and the problems facing engineering enterprises during the financial crisis. We show the part that financial analysis plays in the detection of the main factors affecting the standing of a company, classify internal problems and the reasons influencing efficiency thereof. The publication contains the analysis of municipal engineering companies in post-Soviet transitional economies. In the wake of the 2008 world financial crisis the issue became even more poignant. It should be said though that even before the problem had been no less acute for some post-Soviet states caught up in a lengthy transitional period. The paper highlights shortcomings in the management of transportation companies, with new, more appropriate methods suggested. In analyzing the financial stability of a company, three elements need to be considered: current assets, investment policy and structural management of the funding sources leveraging the stability, should be focused on. Inappropriate management of the three may create certain financial problems, with timely and accurate detection thereof being an issue in terms of improved standing of an enterprise. In this connection, the publication contains a diagram reflecting the reasons behind the deteriorated financial standing of a company, as well as a flow chart thereof. The main reasons behind low profitability are also discussed.

Keywords: efficiency, financial management, financial analysis funding structure, financial sustainability, investment policy, profitability, solvency, working capital

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Authors: Imen Latrous

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Family firm is the most common form of business organization in the world. Many family businesses rely heavily on their own capital to finance their expansion. This dependence on internal funds for their investment may be deliberate to maintain the family dominant position or involuntary as family firms have limited access to external funds. Our understanding of family firm’s choice to fund their own growth using existing capital is somewhat limited. The aim of this paper is to study whether the presence of a controlling family in the company either mitigates or exacerbates external financing constraints. The impact of family ownership on investment–cash flow sensitivity is ultimately an empirical question. We use a sample of 406 Canadian firms listed in Toronto Stock exchange (TSX) over the period 2005–2014 in order to explore this relationship. We distinguish between three elements in the definition of family firms, specifically ownership, control and management, to explore the issue whether family firms are more efficient organisational form. Our research contributes to the extant literature on family ownership in several ways. First, as our understanding of family firm’s investment cash flow sensitivity is somewhat limited in recession times, we explore the effect of family firms on the relation between investment and cash flow during the recent 2007-2009 financial crisis. We also analyse this relationship difference between family firms and non family firms before and during financial crisis. Finally, our paper addresses the endogeneity problem of family ownership and investment-cash flow sensitivity.

Keywords: family firms, investment–cash flow sensitivity, financial crisis, corporate governance

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Authors: Azhar Abdul Rahman

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This paper examines the readability of the chairman’s narratives, as determined by the Flesch score, of a Malaysian public listed company’s corporate reports from 1962 to 2009. It partially supports earlier studies which demonstrated that corporate reports were difficult to read, and had shown very negligible decrease in difficulty over time. Net profit to sales and readability was significantly positively correlated but number of financial statements was significantly negatively correlated with readability.

Keywords: chairman’s narratives, corporate communications, readability, longitudinal

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Authors: Shibly Abdullah

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This paper provides an overview of fundamental philosophical and functional differences in conventional and Islamic accounting. The aim of this research is to undertake a detailed analysis focus on specific illustrations drawn from both these systems and highlight how these differences implicate in recording financial transactions and preparation of financial reports for a range of stakeholders. Accounting as being universally considered as a platform for providing a ‘true and fair’ view of corporate entities can be challenged in the current world view, as the business environment has evolved and transformed significantly. Growth of the non-traditional corporate entity such as Islamic financial institutions, fundamentally questions the applicability of conventional accounting standards in preparation of Shariah-compliant financial reporting. Coupled with this, there are significant concerns about the wider applicability of Islamic accounting standards and framework in order to achieve reporting practices satisfying the information needs generally. Against the backdrop of such a context, this paper raises fundamental question as to how potential convergence could be achieved between these two systems in order to provide users’ a transparent and comparable state of financial information resulting in an alternative framework of financial reporting.

Keywords: accounting, conventional accounting, corporate reporting, Islamic accounting

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Authors: Wanlapha Phraibueng, Patrick Sentis, Geraldine Riviere-Giordano

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Corporate Social Responsibility (CSR) initiatives have been widely discussed especially in investor-oriented firms. In contrast, cooperatives pay less attention to CSR because their activities have integrated the responsibility and the solidity of social, economic and environment. On the other hand, by adopting ownership theory and agency theory – cooperatives ignore CSR investment due to unclarified decision control in the governance and the limitation to acquire the capital financed. The unique governance and financial structures in cooperatives lead to the conflict among the stakeholders and long-term investment which have an impact on firm financial performance. As an illustration of cooperatives dilemmas, we address the question of Whether or not cooperatives in term of governance and financial structures are the constraints on implementing CSR policies. We find that the governance and financial structures in large cooperatives are the influence factors which predispose cooperatives to invest on CSR. In contrast, in the startup or small cooperatives, its governance and financial structures are the constraints on implementing CSR policies. We propose the alternative financial structure based on the trade-off between debt and equity which aims to relax the restrictions in cooperatives’ governance and allow cooperatives to acquire the capital financed either from its members or non-members. We suggest that engaging equity as a financial structure induces cooperatives to invest on CSR policies. Alternative financial structure eliminates not only cooperative ownership control problem but also the constraints in capital acquisition. By implementing CSR activities consistent with the alternative financial choice, cooperatives can increase firm’s value and reduce the conflict among their stakeholders.

Keywords: cooperatives, corporate social responsibility, financial, governance

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Authors: Anne Kariuki, Kellen Kiambati

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The broad objective of this study was to establish the mediating effect of media visibility on the relationship between corporate Social Responsibility (CSR) and the corporate performance of firms listed on the Nairobi Securities Exchange. The review of the literature provided conceptual and empirical gaps that formed the basis of the conceptual hypotheses. A survey questionnaire was distributed to the 50 heads of human resource departments in the different firms. A survey was conducted on fifty (50) companies listed on the Nairobi Securities Exchange. The study findings reported a significant relationship between CSR and non-financial performance and the mediating role of media visibility on the relationship between CSR and performance. The findings of the study support the signaling theory and stakeholder’s theory. Conclusively, CSR activities have an effect on media visibility, which in turn affects performance.

Keywords: corporate social responsibility, media visibility, corporate performance, non-financial performance

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Authors: Saad Bin Nasir

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The research will examine the role of corporate governance (CG) practices on firm’s financial performance. Population of this research will be manufacture sector of Pakistan. For the purposes of measurement of impact of corporate governance practices such as board size, board independence, ceo/chairman duality, will take as independent variables and for the measurement of firm’s performance return on assets and return on equity will take as dependent variables. Panel data regression model will be used to estimate the impact of CG on firm performance.

Keywords: corporate governance, board size, board independence, leadership

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Authors: Norashikin Ismail, Nadia Anridho

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Sustainable investing is a responsible investment that focuses on Environmental, Social, and Governance (ESG) elements. ESG integration is essential in the investment process as it provides a positive contribution to the corporate performance for stakeholders, specifically investors. Sustainable investing is in line with the objectives of Shariah (Maqasid of Shariah), such as social inclusion as well as environmental preservation. This study attempts to evaluate the impact of ESG elements to the corporate financial performance among Shariah compliant stocks listed in two countries, namely Malaysia and Indonesia. The motivation of this study is to provide a further understanding in corporate sustainability for two different Islamic capital markets. The existence of the FTSE4Good Asean Index has played a vital role for ESG practices and eventually encouraged specific index for ESG and Shariah Compliant stocks. Our sample consists of 60 companies over the period 2010-2020 from two Southeast countries. We employ System Generalized Method of Moments (GMM) to reduce bias and more specific parameter estimation. Shariah Compliant companies tend to have higher ESG scores and are positively correlated to corporate financial performance. ESG integration with Shariah based investing would provide higher returns and lower risks for Muslim investors. Essentially, integrating ESG and Shariah, compliant companies lead to better financial performance.

Keywords: shariah compliant, southeast asia, corporate performance, sustainable investing

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Authors: Sana Masmoudi, Yosra Makni

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Regulators highlight the importance of the Audit Committee (AC) as a key internal corporate governance mechanism. One of the most important roles of this committee is to oversee the financial reporting process. The purpose of this paper is to examine the link between the characteristics of an audit committee and the financial reporting quality by investigating whether the formation of audit committees and their characteristics are associated with improved financial reporting quality. This study provides empirical evidence of the association between audit committee independence, financial expertise, gender diversity, and meetings and Real Earnings Management (REM) as a proxy of financial reporting quality. Using data from, with a sample of 80 companies listed on the Amsterdam Stock Exchange during 2010-2017, the study finds that independence and AC Gender diversity are strongly related to financial reporting quality. In fact, these two characteristics constrain REM. The results also suggest that AC-financial expertise reduces to some extent, the likelihood of engaging in REM. These conclusions provide support then to the audit committee requirement under the Dutch Corporate Governance Code rules regarding gender diversity and AC meetings.

Keywords: audit committee, financial expertise, independence, real earnings management

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Authors: Miriam Sosa, Edgar Ortiz, Alejandra Cabello

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This paper examines the volatility changes and leverage effects of the MILA stock markets and their changes since the 2007 global financial crisis. This group integrates the stock markets from Chile, Colombia, Mexico and Peru. Volatility changes and leverage effects are tested with a symmetric GARCH (1,1) and asymmetric TARCH (1,1) models with a dummy variable in the variance equation. Daily closing prices of the stock indexes of Chile (IPSA), Colombia (COLCAP), Mexico (IPC) and Peru (IGBVL) are examined for the period 2003:01 to 2015:02. The evidence confirms the presence of an overall increase in asymmetric market volatility in the Peruvian share market since the 2007 crisis.

Keywords: financial crisis, Latin American Integrated Market, TARCH, GARCH

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Authors: Santi Gopal Maji, R. A. J. Syngkon

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The changing attitude of the corporate enterprises from maximizing economic benefit to corporate sustainability after the publication of Brundtland Report has attracted the interest of researchers to investigate the sustainability practices of firms and its impact on financial performance. To enrich the empirical literature in Asian context, this study examines the disclosure pattern of corporate sustainability and the influence of sustainability reporting on financial performance of firms from four Asian countries (Japan, South Korea, India and Indonesia) that are publishing sustainability report continuously from 2009 to 2016. The study has used content analysis technique based on Global Reporting Framework (3 and 3.1) reporting framework to compute the disclosure score of corporate sustainability and its components. While dichotomous coding system has been employed to compute overall quantitative disclosure score, a four-point scale has been used to access the quality of the disclosure. For analysing the disclosure pattern of corporate sustainability, box plot has been used. Further, Pearson chi-square test has been used to examine whether there is any difference in the proportion of disclosure between the countries. Finally, quantile regression model has been employed to examine the influence of corporate sustainability reporting on the difference locations of the conditional distribution of firm performance. The findings of the study indicate that Japan has occupied first position in terms of disclosure of sustainability information followed by South Korea and India. In case of Indonesia, the quality of disclosure score is considerably less as compared to other three countries. Further, the gap between the quality and quantity of disclosure score is comparatively less in Japan and South Korea as compared to India and Indonesia. The same is evident in respect of the components of sustainability. The results of quantile regression indicate that a positive impact of corporate sustainability becomes stronger at upper quantiles in case of Japan and South Korea. But the study fails to extricate any definite pattern on the impact of corporate sustainability disclosure on the financial performance of firms from Indonesia and India.

Keywords: corporate sustainability, quality and quantity of disclosure, content analysis, quantile regression, Asian countries

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Authors: Maruf Ariyo Raheem, Patrick Oseloka Ezepue

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This research aimed at determining most appropriate heteroskedastic model to predicting volatility of 10 major Nigerian banks: Access, United Bank for Africa (UBA), Guaranty Trust, Skye, Diamond, Fidelity, Sterling, Union, ETI and Zenith banks using daily closing stock prices of each of the banks from 2004 to 2014. The models employed include ARCH (1), GARCH (1, 1), EGARCH (1, 1) and TARCH (1, 1). The results show that all the banks returns are highly leptokurtic, significantly skewed and thus non-normal across the four periods except for Fidelity bank during financial crises; findings similar to those of other global markets. There is also strong evidence for the presence of heteroscedasticity, and that volatility persistence during crisis is higher than before the crisis across the 10 banks, with that of UBA taking the lead, about 11 times higher during the crisis. Findings further revealed that Asymmetric GARCH models became dominant especially during financial crises and post crises when the second reforms were introduced into the banking industry by the Central Bank of Nigeria (CBN). Generally, one could say that Nigerian banks returns are volatility persistent during and after the crises, and characterised by leverage effects of negative and positive shocks during these periods

Keywords: global financial crisis, leverage effect, persistence, volatility clustering

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Authors: Proud Arunrangsiwed

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Crisis management strategies could be found in various curriculums, not only in schools of business, but also schools of communication. Young students, such as freshmen and sophomores of undergraduate schools, may not care about learning crisis management strategies. Moreover, crisis management strategies are not a topic art students are familiar with. The current paper discusses a way to adapt entertainment media into a crisis management lesson, and the importance of learning crisis management strategies in the school of animation. Students could learn crisis management strategies by watching movies with content about a crisis and responding to crisis responding. The students should then participate in follow up discussions related to the strategies that were used to address the crisis, as well as their success in solving the crisis.

Keywords: situational crisis communication theory, crisis response strategies, media effect, unintentional effect

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Authors: Joanna Błach, Anna Doś, Maria Gorczyńska, Monika Wieczorek-Kosmala

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Financial innovations can be regarded as the cause and the effect of the evolution of the financial system. Most of financial innovations are created by various financial institutions for their own purposes and needs. However, due to their diversity, financial innovations can be also applied by various business entities (other than financial institutions). This paper focuses on the potential application of financial innovations by non-financial companies. It is assumed that financial innovations may be effectively applied in all fields of corporate financial decisions integrating financial management with the risk management process. Appropriate application of financial innovations may enhance the development of the company and increase its value by improving its financial situation and reducing the level of risk. On the other hand, misused financial innovations may become the source of extra risk for the company threatening its further operation. The main objective of the paper is to identify the major types of financial innovations offered to non-financial companies by the banking system in Poland. It also aims at identifying the main factors determining the creation of financial innovations in the banking system in Poland and indicating future directions of their development. This paper consists of conceptual and empirical part. Conceptual part based on theoretical study is focused on the determinants of the process of financial innovations and their application by the non-financial companies. Theoretical study is followed by the empirical research based on the analysis of the actual offer of the 20 biggest banks operating in Poland with regard to financial innovations offered to SMEs and large corporations. These innovations are classified according to the main functions of the integrated financial management, such as: Financing, investment, working capital management and risk management. Empirical study has proved that the biggest banks operating in the Polish market offer to their business customers many types and classes of financial innovations. This offer appears vast and adequate to the needs and purposes of the Polish non-financial companies. It was observed that financial innovations pertained to financing decisions dominate in the banks’ offer. However, due to high diversification of the offered financial innovations, business customers may effectively apply them in all fields and areas of integrated financial management. It should be underlined, that the banks’ offer is highly dispersed, which may limit the implementation of financial innovations in the corporate finance. It would be also recommended for the banks operating in the Polish market to intensify the education campaign aiming at increasing knowledge about financial innovations among business customers.

Keywords: banking products and services, banking sector in Poland, corporate financial management, financial innovations, theory of innovation

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Authors: Min-Ming Wen

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Applying the U.S. lodging and tourism industry as a research sample, we examine the relation between the corporate governance structure and managerial risk-taking behavior. In light of the global financial crisis, the importance of effective governance structures is essential in protecting claimholder interests. We propose a governance structure consisting of shareholder governance measured by anti-takeover provisions to examine whether the governance structure has a significant impact on managerial risk-taking behaviors in terms of the investment policy. We will use capital expenditure and R&D investment to measure managerial risk-taking and the firm’s investment policy. In addition, we will examine whether the effects of governance on investment policy differ significantly between speculative and investment-grade firms.

Keywords: corporate governance, risk-taking, firm value, lodging industry

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Authors: Suffian Hadi Ayub, Mohammad Rezal Hamzah, Nor Hafizah Abdullah, Sharipah Nur Mursalina Syed Azmy, Hishamuddin Salim

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The liberalisation of the education industry has exposed the institute of higher learning (IHL) in Malaysia to the financial challenges. Without good financial standing, public institution will rely on the government funding. Ostensibly, this contradicts with the government’s aspiration to make universities self-sufficient. With stiff competition from private institutes of higher learning, IHL need to be prepared at the forefront level. The corporate identity itself is the entrance to the world of higher learning and it is in this uniqueness, it will be able to distinguish itself from competitors. This paper examined the perception of the stakeholders at one of the public universities in the east coast region in Malaysia on the perceived reputation and how the university communicate its preparedness for self-sustainability through corporate identity. The findings indicated while the stakeholders embraced the challenges in facing the stiff competition and struggling market conditions, most of them felt the university should put more efforts in mobilising the corporate identity to its constituencies.

Keywords: communication, corporate identity, market conditions, universities

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Authors: Mimi Hafizah Abdullah, Hanani Farhah Harun, Nik Ruzni Nik Idris

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With the implied volatility as an important factor in financial decision-making, in particular in option pricing valuation, and also the given fact that the pricing biases of Leland option pricing models and the implied volatility structure for the options are related, this study considers examining the implied adjusted volatility smile patterns and term structures in the S&P/ASX 200 index options using the different Leland option pricing models. The examination of the implied adjusted volatility smiles and term structures in the Australian index options market covers the global financial crisis in the mid-2007. The implied adjusted volatility was found to escalate approximately triple the rate prior the crisis.

Keywords: implied adjusted volatility, financial crisis, Leland option pricing models, Australian index options

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Authors: Uwalomwa Uwuigbe, Olubukola Ranti Uwuigbe, Jinadu Olugbenga, Otekunrin Adegbola

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Corporate reporting has evolved over the years resulting from criticisms of the precedent by shareholders, stakeholders and other relevant financial institutions. Integrated reporting has become a globalized corporate reporting style, with its adoption around the world occurring rapidly to bring about an improvement in the quality of corporate reporting. While some countries have swiftly clinched into reporting in an integrated manner, others have not. In addition, there are ample research that has been conducted on the benefits of adopting integrated reporting, however, the same is not true in developing economies like Nigeria. Hence, this study basically examined the factors determining the adoption of integrated reporting in Nigeria. One hundred (100) copies of questionnaire was administered to financial managers of 20 selected listed companies in the Nigeria stock exchange market. The data obtained was analysed using the Spearman Rank Order Correlation via the Statistical Package for Social Science. This study observed that there is a significant relationship between the social pressures of isomorphic changes and integrated reporting adoption in Nigeria. The study recommends the need for an enforcement mechanism to be put in place while considering the adoption of integrated reporting in Nigeria, enforcement mechanisms should put into consideration the investors demand, the level of economic development, and the degree of corporate social responsibility.

Keywords: corporate social responsibility, isomorphic, integrated reporting, Nigeria, sustainability

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Authors: Domagoj Hruska, Drazen Milkovic, Maja Darabos

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This paper empirically investigates the performance of Croatian initial public offerings (IPOs) throughout 20 years period, from 1996 until 2016. By proving the comprehensive evaluation of reasons and consequences of IPO initiatives in Croatia we give analytic evidence on the influence of this corporate action on the development of corporate governance. Furthermore, the paper discusses the relationship between internal and external corporate governance mechanisms in companies that initialize entering the financial markets. The paper will provide a synthesis of evidence of IPO-s in Croatia based on in-depth case studies of 13 cases of IPO-s. The major findings of the paper include identification of reasons for conducting IPO-s and calculation of underpricing effect and change of market capitalization. To the best of the author's knowledge, the results of the paper provide the analytical framework for understanding the impact of IPOs on the corporate governance system in transition countries.

Keywords: corporate governance, Croatia, initial public offering, transition economy

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Authors: Henriette Scholtz

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Excessive executive directors’ remuneration remains a major concern for many stakeholders and are some of the factors to blame for the recent global financial crisis. The objective of this study was to examine whether certain firm characteristics are an effective way of protecting shareholders’ interests with respect to executive directors’ remuneration. To achieve this, an ordinary least squares model was used to test the relationship between the remuneration of executive directors and a number of firm and corporate governance characteristics to determine whether these characteristics have an influence on executive directors’ remuneration of large listed companies in South Africa. It was found that corporate governance reforms relating to institutional ownership, shareholder voting on the remuneration policy and the number of remuneration committee meetings acts as an effective governance tool to protect shareholder’s interests with regard to executive remuneration. There is no evidence that the number of non-executive directors on the remuneration committee has an influence on the executive directors’ remuneration.

Keywords: executive directors’ remuneration, agency theory, corporate governance, remuneration committee, directors’ shareholding, institutional ownership

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Authors: M. Mikušová

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The main aim of this paper is to present a clear and comprehensive picture of the process of a crisis in the organization which will help to better understand its possible developments. For a description of the sequence of individual steps and an indication of their causation and possible variants of the developments, a detailed flow diagram with verbal comment is applied. For simplicity, the process of the crisis is observed in four basic phases called: symptoms of the crisis, diagnosis, action and prevention. The model highlights the complexity of the phenomenon of the crisis and that the various phases of the crisis are interweaving.

Keywords: crisis, management, model, organization

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Authors: Josip Visković, Josip Arnerić, Ante Rozga

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Based on the fact that volatility is time varying in high frequency data and that periods of high volatility tend to cluster, the most successful and popular models in modelling time varying volatility are GARCH type models. When financial returns exhibit sudden jumps that are due to structural breaks, standard GARCH models show high volatility persistence, i.e. integrated behaviour of the conditional variance. In such situations models in which the parameters are allowed to change over time are more appropriate. This paper compares different GARCH models in terms of their ability to describe structural changes in returns caused by financial crisis at stock markets of six selected central and east European countries. The empirical analysis demonstrates that Markov regime switching GARCH model resolves the problem of excessive persistence and outperforms uni-regime GARCH models in forecasting volatility when sudden switching occurs in response to financial crisis.

Keywords: central and east European countries, financial crisis, Markov switching GARCH model, transition probabilities

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Authors: Aristeidis Samitas, Evangelos Vasileiou

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The aim of this study is to examine the month and the trading month effect under changing financial trends. We choose the Greek stock market to implement our assumption because there are clear and long term periods of financial growth and recession. Daily financial data from Athens Exchange General Index for the period 2002-2012 are considered. The paper employs several linear and non-linear models, although the TGARCH asymmetry model best fits in this sample and for this reason we mainly present the TGARCH results. Empirical results show that changing economic and financial conditions influences the calendar effects. Especially, the trading month effect totally changes in each fortnight according to the financial trend. On the other hand, in Greece the January effect exists during the growth periods, although it does not exist when the financial trend changes. The findings are helpful to anybody who invest and deals with the Greek stock market. Moreover, they may pave the way for an alternative calendar anomalies research approach, so it may be useful to investors who take into account these anomalies when they draw their investment strategy.

Keywords: month effect, trading month effect, economic cycles, crisis

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Authors: Ayodele Ajayi, John Ajayi

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This paper investigates the effect of corporate governance with a view to determining the relationship between board size and bank performance. Data for the study were obtained from the audited financial statements of five sampled banks listed on the Nigerian Stock Exchange. Panel data technique was adopted and analysis was carried out with the use of multiple regression and pooled ordinary least square. Results from the study show that the larger the board size, the greater the profit implying that corporate governance is positively correlated with bank performance.

Keywords: corporate governance, banks performance, board size, pooled data

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