WSEAS Transactions on Business and Economics

Print ISSN: 1109-9526
E-ISSN: 2224-2899

Volume 10, 2013

Issue 1, Volume 10, January 2013

Title of the Paper: Models for Oil Extraction Process Management

Authors: Marius Bulearca, Catalin Popescu, Mihai-Sabin Muscalu, Constantin Ghiga

Abstract: This paper intends to present different models for optimal management of the extraction process in an oil drilling and extraction unit. In the beginning, the article deals with models related to under-balanced drilling to demonstrate that applying such methods is instrumental in increasing productivity by reducing the oil well formation damage, as well as helping to improve well performance. The article then analyses both hydrogeological wells productive capacity and estimation of oil deposit reserves through the production decline method. While characterizing the rate of decrease in production of an oil deposit, the declining oil production term is introduced, defined as both the actual decline and the nominal decline. To estimate the production of crude oil from deposits, analytical models have been developed corresponding to different geometric configurations. Some models consider oil as an incompressible fluid, while others (more complex) take account of its compressibility; this is corroborated with the modeling of stationary (independent of time) and nonstationary motions. In the end, the paper discusses that a model for optimal management of the extraction process implies determining an extraction policy that dynamically matches the extraction possibilities to beneficiaries' needs while maximizing/minimizing a performance objective function.

Keywords: oil industry, matrix model restrictions, Darcy equations, decline oil production, under-balanced drilling, formation damage, skin factor, homogeneous porous environment

Title of the Paper: Soft-Hard TQM Factors and Key Business Results

Authors: Arturo Calvo-Mora Schmidt, Araceli Picón Berjoyo, Carolina Ruiz Moreno, Lourdes Cauzo Bottala

Abstract: The purpose of this paper is to investigate, firstly, the existence of soft and hard TQM factors in the EFQM excellence model and, secondly, their impact on key business results .The EFQM model has been used as a framework model as it is the TQM implementation referent that is most widespread and accepted in the specialized literature. The methodology used is factorial analysis to determine the existence of the soft and hard TQM factors in the EFQM model and regression analysis to establish the impact of the factors identified on the business’ key results. A sample of 116 firms have been subjected to complete assessment processes (self-assessment and external assessment) according to the EFQM model. The article suggests that (1) the factorial analysis groups together the EFQM's five facilitating agents' criteria in three factors: soft factors, the strategic management of partnership and resources and processes management; (2) the regression techniques point out the influence of the hard factors (the strategic management of partnership and resources, and processes management) on the key business results and it is noted that the influence of the soft factors on the results is produced through the mediation of the hard factors of TQM.

Keywords: TQM, soft factors, hard factors, EFQM, key results, performance

Title of the Paper: Evaluating Firm Performance with Balanced Scorecard and Data Envelopment Analysis

Authors: Yungchih George Wang, Yi-Min Li, Chyan-Long Jan, Kuang-Wen Chang

Abstract: The evaluation of firm performance is very important for a firm since it is associated with the determination of corporate strategy, operating performance, and managerial compensation. This study aims to propose a complete framework for evaluating firm performance with the application of balanced scorecard (BSC) and data envelopment analysis (DEA). We first construct a measurable BSC indicator to examine the causal relationship between balanced scorecard and firm performance. The BSC indicator and its four components are shown to be critical corporate resources, thus leading to a significantly positive impact on firm performance. The DEA method, the Malmquist productivity index (MPI), and the Boston Consulting Group’s (BCG) matrix model are then included in the framework to investigate industrial operational efficiency. The main contributions of the study are that it shows empirical evidence for the positive association between BSC and firm performance and that it provides a complete framework for evaluating firm performance by integrating the BSC, the DEA, and the BCG matrix model. More importantly, this framework sheds light on managerial implications regarding how a firm could improve its operational efficiency via the application of the BCG matrix model.

Keywords: firm performance, balanced scorecard, data envelopment analysis, Malmquist productivity index, matrix model

Title of the Paper: Impact of Macroeconomic Forces on Nonperforming Loans: An Empirical Study of Commercial Banks in Pakistan

Authors: Munib Badar, Atiya Yasmin Javid

Abstract: This study assesses long and short run dynamics between nonperforming loans and macro economic variables covering the period from January 2002 till December 2011 of commercial banks in Pakistan. Macroeconomic variables include inflation, exchange rate, interest rate, gross domestic product and money supply. A long run relationship is found among variables by employing Johansen and Juselius multivariate cointegration. While pair wise bivariate cointegration reveals pair wise long run relationship between nonperforming loans with money supply and interest rate. Granger causality test is used to evaluate the cause and effect relationship within the sample. It reveals inflation and exchange rate granger caused Nonperforming loans. Short run dynamics is explored by vector error correction model. It provides that weak short run relationship exist between Nonperforming loans with inflation and exchange rate. Macroeconomic indicators are the sizeable determinants of nonperforming loans. This research also sensitizes policy makers to cater for impact of aggravating economy on non performing loans. If not attended to is likely that it may hurts profitability and overall health of financial system while formulating fiscal and monetary measures.

Keywords: inflation, exchange rate, interest rate, gross domestic product, money supply, nonperforming loans, Cointegration

Title of the Paper: Effects of Job Satisfaction on Service Quality, Customer Satisfaction, and Customer Loyalty: The Case of a Local State-Owned Enterprise

Authors: Pansoo Kim, Jang-Hyup Han

Abstract: This study examines how customers can be maintained, which is a particularly important issue for service industry area. Customer service is important not only to private firms but also to public organizations. To improve service quality and maintain customers, organizations must ensure their employees’ job satisfaction. This study measures job satisfaction and examines its effects on service quality, customer satisfaction, and customer loyalty. We measured job satisfaction by considering a sample of employees from Daegu Metropolitan Transit Corporation (DMTC) who provide customer service and by employing various measures of job satisfaction based on previous research, including workplace environments, job content, relationships with coworkers, relationships with supervisors, pay and benefits, and performance assessments. We measured service quality by using a SERVQUAL item developed by Parasuraman, Zeithamal, and Berry [42]. We conducted a survey of customers who used the city train at least once and adapted the items for customer satisfaction and loyalty from previous studies. Most studies have focused on railway facilities and management (e.g., safety systems and emergency management) after the DMTC subway tragedy in 2003. In this regard, this study is the first to explore the service quality of DMTC’s subway system. This study is particularly meaningful in that it relates job satisfaction to service quality. The results indicate the following: First, job satisfaction partially influenced service quality. Performance assessments, relationships with co-workers, and pay had significant effects on service quality, whereas supervisor relationships, job content, and workplace environments had no significant effects. Second, among the dimensions of service quality, tangibility and reliability had positive effects on customer satisfaction. Finally, customer satisfaction had a positive effect on customer satisfaction.

Keywords: Job Satisfaction, Service Quality, Customer Satisfaction, Customer Loyalty

Issue 2, Volume 10, April 2013

Title of the Paper: Supply Chain Alliance Factors Evaluation by the Delphi-AHP Method

Authors: Yi-Fei Chuang, Shui-Hui Chia, Jehn-Yih Wong

Abstract: Taiwanese firms are mainly small and medium-sized, and using alliances to restructure logistical activities, combined with external resources, are excellent methods for gaining competitive advantage. Deciding on the location of a distribution center for alliance is therefore a critical issue. We use the Delphi and the Analytic Hierarchy Process (AHP) to develop a decision hierarchy, and analyze factor and criteria priorities. The Delphi-AHP method provides a good connection between qualitative and quantitative elements that influence multiple criteria decision-making. The analytical results indicate that to improve operation performance, managers should integrate their firms’ specializations with those of their partners. Therefore, an alliance strategy that relies on the distribution center location should emphasize industrial clusters. Other factors influencing the decision-making of distribution center location include costs, demand, and logistical support.

Keywords: Supply chain management, Distribution center, Alliance, Delphi, Analytic hierarchy process (AHP)

Title of the Paper: Behaviour in a Two-Stage Public Goods Experiment

Authors: Massimo Finocchiaro Castro

Abstract: I investigate whether the adoption of a two-stage public goods framework causes a change in contributions to public goods compared to a standard public goods game. For this purpose, my first treatment (S) is a standard public goods game and represents the baseline treatment. The second treatment (D) is a twostage public goods game. In each stage, agents allocate their endowments between a private good and a public good. The results show that subjects contribute more to the public good in the S treatment than in the D treatment. In addition, agents under the D treatment evenly divide their limited endowments between both public goods, regardless of differences in the marginal per capita returns of the two goods.

Keywords: two-stage public goods game, experiments, voluntary provision

Title of the Paper: Enhancing the Employability of High School Graduates: Impact of Emotional Intelligence

Authors: L. N. A. Chandana Jayawardena, Ales Gregar

Abstract: Employability is referred to as the relative potential of an individual to obtain and retain suitable employment in the labour market. Success in higher education is an effective way of enhancing the employability of youth. Competitiveness of examinations has added in to the challenges and aspirations of youth. The objective of the study was to examine the impact of high school students’ emotional intelligence (EI) for their Training (study) approaches and employability potential. Eighty five high school (Advanced Level) students (40 girls, and 45 boys) were randomly selected from two high schools in Sri Lanka. They were preparing in three different subject streams for the university entrance examination. Emotional intelligence of the respondents was measured through Genos EI Inventory. Respondents’ training (study) approaches were assessed through the ‘revised two-factor Study Process Questionnaire’ of Biggs et.al. SPSS computer software was employed for descriptive and inferential analysis of data. The employability potential of the students was assessed based on their academic performances. Emotional intelligence, and the Training (study) approaches (motives, and strategies) used by the respondents were assessed. Relationships were sought with students’ employability potential (academic performances). High school girls revealed deeper training (study) approaches and their academic performances were superior to the boys. There was no significant impact of EI level to the training (study) process behavior of the respondents, and to their employability potential (academic performances). However, findings revealed a positive relationship between the Emotional Self Control and Employability potential (Academic performances) of high school students. This warrants further analysis, especially in a cultural context. It implies a competitive advantage (employability potential) for students with a better control of self emotions. This has the potential to generate a practical sense in academic and corporate environments alike. Further research is recommended on varying socio-cultural, and demographic segments.

Keywords: Emotional Intelligence, Employability Potential, High School Students, Study Process

Title of the Paper: Role of HR Practices in Turnover Intentions with the Mediating Effect of Employee Engagement

Authors: Tauseef Ahmad Chughtai

Abstract: The research paper seeks to identify the mediating role of employee engagement between HR practices and turnover intentions in the telecom sector of Pakistan. There has been a considerable gap in the existing literature indicative of the need to study HR practices and turnover intentions with reference to the employee engagement in Pakistan. Two leading Telecom Companies in Pakistan were included in the sample and the study was conducted on them. The results turned out to be extremely noteworthy as they highlighted a definite relationship between HR practices, employee engagement and turnover intentions. In addition to that, the research provides an effective model for the stake holders of concern telecom companies to keep hold of their capable work force in a highly dynamic and fluid business environment.

Keywords: HR practices, Mediating Role of Employee Engagement, Turnover Intentions

Issue 3, Volume 10, July 2013

Title of the Paper: Management Behaviour on Planning, Cooperation and Competition

Authors: Nelson Duarte, Francisco Diniz

Abstract: In the present paper we analyzed the behavior of firms in the construction and manufacturing sectors, located in the region of Vale do Sousa, in the north of Portugal. From the literature, even revising some disagreements, it is possible to conclude that planning is crucial for firms’ survival and growth. Co-operation is another aspect that the literature presents as an important factor for firms sustainability. It also plays a major role in competition, since firms are adopting coo-petition strategies. By studying a sample of 251 firms, it was possible to realize, that the majority started their business without a formal planning, and they keep going without using it. In cooperation aspects, there is a lack of cooperation. It was possible to verify, that existing cooperation has some evidence but at a vertical level. These vertical relations were also identified in stakeholder’s involvement.

Keywords: Planning; Co-operation; Competition; Innovation, Strategy

Title of the Paper: The Measurement of Operating Efficiency: A Case Study of Fong Shan Tourism Plaza

Authors: Jui-Min Hsiao, Chund-Wei Sung

Abstract: This paper presents an empirical study in which Data Envelopment Analysis is used to evaluate the operating efficiency of 12 business units and 182 stores of Fong Shan Tourism Plaza. Land size, equipment investment, sales costs, operating expenses, and number of personnel are selected as input variables, while turnover, number of customers and customer satisfaction are output variables. We found that five variables are reserved after factor reduction by correlation analysis. These 12 business units are categorized into 3 groups based on efficiency scores. In each group, cultural booth, mini-train, self-store, and ice cream store are the relatively efficient business units and flower market and heritage area are the most inefficient business units. Moreover, dual analysis shows that business expenses, sales costs, and equipment investment have high priority for improvement. Finally, according to sensitivity analysis results, sales costs and business expenses are key factors to the efficiency scores of each business unit.

Keywords: Leisure, DEA, operating efficiency, dual analysis, measurement, tourism

Title of the Paper: Islamic Insurance in the European Countries: Insights from French Muslims’ Perspective

Authors: Abdelghani Echchabi, Fatiha Echchabi

Abstract: The main purpose of the study is to investigate the willingness of the French Muslims to adopt Islamic insurance (takaful), as well as the factors that may influence their decision. Accordingly, 100 questionnaires were distributed to French Muslims in several cities. The data was analysed using Structural Equation Modelling (SEM) as well as one sample t-test. The findings indicate that subjective norm has a positive influence on the attitude towards Islamic insurance services. Furthermore, attitude and perceived behavioural control were found to have a positive influence on the intention to adopt these services. Finally, the French Muslims have shown willingness to adopt takaful services as an alternative to the existing conventional insurance services depending on the above dimensions.

Keywords: France, Europe, Islamic insurance, Takaful, SEM, TPB

Title of the Paper: Risk Management in Companies and the Importance of Selected Measures for Overcoming the Crisis

Authors: Josef Krause

Abstract: The present article deals with the management of business risk. Business risk is fundamental to the long term success of a company and the achievement of its goals. Risks can be classified in various ways. There are basic categories of risk such as systemic risk, market risk, production risk, etc. Enterprises can substantially eliminate a certain part of the risk, although some risks cannot be controlled by the company. The financial crisis has had a major impact on the success of firms. This crisis was due to the mortgage crisis in the U.S. In order to verify the relevance of the chosen measures for crisis management, a survey has been carried out in the Czech Republic. Selected results of this research are presented in the article.

Keywords: Cash flow, crisis, equity, financial measures, ratio, equity, cash flow, turnaround strategy

Title of the Paper: Prediction of Functional Requirements Classes In Business Information Systems

Authors: Arbi Ghazarian

Abstract: Low predictability is a major concern in most software development endeavors as it implies high risk in terms of schedule, quality, and cost. Ontologies have received considerable attention in software engineering, as they afford predictive capabilities for various aspects of software domains, and as such, they can be employed as a basis for the development of more effective approaches to the engineering and management of software systems and projects. Ontologies, however, vary in terms of the comprehensiveness and accuracy of the predictions they make and, therefore, one must rigorously evaluate their predictive power before adopting them. This paper investigates the predictive power of an ontology that serves as a requirements domain model for Business Information Systems (BIS). Results from this study indicate that an accurate prediction of functional requirements categories in BIS is well within reach. This finding bears important implications for the advancement of domain-specific engineering of Business Information Systems.

Keywords: Business Information Systems, Domain Model, Functional Requirements, Ontology, Empirical Study

Title of the Paper: Constant vs. Time-varying Hedging Effectiveness Comparison for CO2 Emissions Allowances: The Empirical Evidence from the EU ETS

Authors: Kai Chang, Su-Sheng Wang

Abstract: In recent years emissions allowances markets have become the most promising and quickly growing markets in the global commodities markets. In this paper, we estimate constant and time-varying optimal hedge ratios (OHR) and hedging effectiveness between spot and futures for CO2 emissions allowances by choosing the two-step EG, ECM, ECM-GARCH, and modified ECM-GARCH techniques. The empirical results show that price series between spot and futures contracts with different maturities exhibit significant cointegration relation, the error corrections and previous price movement significantly affect the optimal hedge ratios, and the hedging effectiveness (HE) by using constant hedge ratios from the ECM method has slightly better than HE from the two-step EG method. The optimal hedge ratios from the ECM-GARCH and modified ECM-GARCH method exhibit strongly time-varying trend, and then the hedging effectiveness by using time-varying hedge ratios from the ECM-GARCH and modified ECM-GARCH method are significantly better than HE by constant hedge ratios. The hedging effectiveness from the modified ECM-GARCH methods is highest among the hedging portfolio returns by using the above four methods.

Keywords: Emissions allowances, hedge ratio, hedging effectiveness, ECM-GARCH, modified ECM-GARCH

Title of the Paper: Assessment of Customer Credit with Efficient Multivariate Classifier

Authors: Hung-Yi Lin, Kuang-Yu Huang

Abstract: The assessment of customer credit is important for financial institutions. Many techniques are developed for customer credit classification. Traditional methods suffer from the problems of inaccurate prediction and/or inefficient data analysis. In this paper, we adopt the entropy-based evaluation method and PCA-based classifier to improve these two problems. A new feature evaluation criterion collaborated with a novel feature selection are proposed to identify the critical factors of classification. By means of multivariate analysis, not only a reduced subset of relevant features is achieved but also the efficient classifier is generated. This paper aims at assessing customer credit with effectiveness and efficiency. From the experimental results of German credit case, it shows that our propsed method can simultanously improve accuracies in the classes of high-credit and bad-cedit when competing with the traditional C4.5 scheme.

Keywords: Customer credit assessment, feature selection, multi-class classification, PCA, multivariate, analysis, C4.5

Title of the Paper: Fair Value Approach: Recent Developments and Professionals’ Perceptions

Authors: Carmen Giorgiana Bonaci, Jiří Strouhal, Razvan V. Mustata

Abstract: Paper contributes to the debate on fair value measurements by clarifying the current state of accounting regulations in the international area comparing main differences between IFRS (IFRS 13) and US GAAP (SFAS 157 – Topic 820). Paper develops an analysis focusing on professional valuers and their activity in the area of financial instruments’ measurement in order to dimension their opinion, knowledge and perceptions in relation to a series of transformation processes taking place at national and international level. The employed research methodology relies on implementing a questionnaire survey. The questionnaire represents the main research instrument used and was directly administered through an electronic communication channel. The developed descriptive analysis presents a series of details related to respondents’ perceptions on the issue of financial instruments’ measurement in general, their involvement in the recent financial crisis and the concept of fair value. The results offer significant insights on the manner in which professionals in the area of accounting handled the dynamic of their national accounting system, therefore suggesting ways to optimize the profession’s future development. Capturing the perception of professionals in the area of accounting is integrated within a larger objective that looks at the respondents as a significant element in the dynamic of a national accounting system that went through complex accounting reforms of more than two decades.

Keywords: Fair value, IFRS, US GAAP, financial instruments, professional valuers, measurement, accounting professionals

Title of the Paper: Czech Insolvency Law after Four Years

Authors: Luboš Smrčka, Jaroslav Schönfeld, Petr Ševčík

Abstract: Insolvency systems are essential characteristics of every national economy. Their performance can significantly affect the quality of the business environment and are especially important for the predictability of risk. The present study concerns the possibilities of reforming Czech insolvency law on the basis of the experience gained during the four years in which the new legislation has been in effect. After evaluating changes in the costs incurred by creditors during insolvency proceedings, the duration of insolvency proceedings and recovery rates for lenders, the following hypothesis is suggested: Further improvement of creditors’ positions and in the functioning of the insolvency system as a whole are possible only if more comprehensive legislative changes are made. An analysis of the functioning of the new law and other relevant regulations from 2008 to 2012 (the first quarter) shows that the fundamental problem in the processes of solving bankruptcies of Czech companies is the fact that insolvency proceedings are commenced late, at a time when debtors possess very few assets which are quite insufficient for satisfying the creditors, especially nonsecured creditors. Therefore, new legislative and systematic measures to remedy this unacceptable situation are proposed. Moreover, on the basis of international comparisons and their own research, the authors advise against new objectives being incorporated into the insolvency law such as preserving employment or maintaining the firm as a going concern. They conclude that such legal attempts lead to worse results, and jobs and production are maintained in a smaller number of cases than in an impartial insolvency system.

Keywords: Bankruptcy, debtor, insolvency, insolvency law, reorganisation, creditor

Title of the Paper: An Application of Decentralized Control Theory to an Economic Policy Model

Authors: Reinhard Neck

Abstract: We show an application of decentralized control theory to a macroeconomic model of unemployment and inflation. Fiscal and monetary policies are assumed to be designed by different institutions, namely the government and central bank respectively, and both policy-makers are assigned particular targets and may have different information. It is shown that the economic system can be stabilized by decentralized feedback. An interpretation in economic terms of the stabilizing controls and the conditions for stabilizability is given.

Keywords: Decentralized control; large-scale systems; stability properties; stabilizability; stabilizing feedback; fixed modes; economic systems.

Title of the Paper: The Influence of Fama-French Factors in Equity and Bond Markets on Corporate Bond Spread

Authors: Su-Sheng Wang, Jie-Min Huang, Xi Yang, Jie-Yong Huang

Abstract: We choose corporate weekly transaction data from the end of 2011 to the end of 2012 in Shenzhen Exchange and Shanghai Exchange, and analyze the determinant factors of corporate bond spread, mainly including company size factors in equity market and bond market, book to market ratio factors in equity market and bond market, default risk, term factor and credit rating factors. We find that small companies tend to issue bonds with high yield spreads, but big companies will issue low yield spread bonds. The companies with high book to market ratios will have high yield spread bond, while low book to market ratio corporates will have low yield spread bond. Default risk and term factor are important part in corporate bond spread. Also, the credit ratings are significant in the model. We suggest the China Securities Regulatory Commission encourage small companies to issue bonds and increase the low credit rating bonds.

Keywords: Bond spread company size equity market book to market ratio default risk credit rating

Title of the Paper: Fair Value Measurement Disclosures in Practice of Companies Listed at London Stock Exchange and Deutsche Börse

Authors: Maria Damian, Carmen Bonaci, Jiří Strouhal

Abstract: The financial reporting process generating information which is useful in relation to user needs helps companies in becoming more competitive within both the local and global environment. Paper contributes to the body of literature dealing with financial reporting disclosure practices: there is studied the issue of disclosures on fair value measurements in the financial statements. The employed research design imposes the construction of a guide of best practices that is further used in computing a disclosure index. Based on a sample of companies belonging to the financial sector we analyze to which extent they disclose information on fair value measurements used in financial reporting. In order to achieve the objective of this study there was calculated a firm-based disclosure score called a disclosure index. Descriptive analysis and potential correlation between this index and the use of fair value for financial reporting valuations are further investigated. When aiming to clarify professional ethics, we closely analyze integrity based on the latest developments undertaken by European professional bodies. Findings are used in identifying ways to contribute to the endeavor of aligning the profession’s performance with society’s reasonable expectations.

Keywords: Financial Reporting, measurement, fair value, disclosure index, IFRS 7, professional ethics

Title of the Paper: Requirements Engineering for Business Information Systems: A Dimension-Oriented Approach

Authors: Arbi Ghazarian

Abstract: In previous work, we developed a software engineering theory, called dimension-orientation, which is capable of explaining and predicting the characteristics of the requirements space in the domain of business information systems. The dimension-oriented theory serves as a solid foundation for the design of more effective software engineering processes in the domain of business information systems. Accordingly, In this paper, we develop a theory-backed approach for the engineering of requirements in business information systems, which is based on the dimension-oriented theory. We further provide a mathematical formalism for the theory and evaluate its theoretical and methodological aspects within the two standard frameworks of design science research and software engineering theory goodness criteria.

Keywords: Requirements Engineering, Software Engineering Theory, Design Science, Dimension Orientation, Business Information System, Domain Engineering, Theory Goodness Criteria, Requirements Taxonomy

Title of the Paper: Business Process Optimization in Madrid City Council

Authors: Juan M. Garitagoitia, Nuria Gomez, Carlos Cuvillo, Luis F. Mingo

Abstract: While designing systems and products requires a deep understanding of influences that achieve desirable performance, the need for an efficient and systematic decision-making approach drives the need for optimization strategies. This paper provides the motivation for this topic as well as a description of applications in Computing Center of Madrid city Council. Optimization applications can be found in almost all areas of engineering. Typical problems in process, working with a database, arise in query design, entity model design and concurrent processes. This paper proposes a solution to optimize a night process dealing with millions of records with an overall performance of about eight times in computation time.

Keywords: Process Optimization, DataBase Optimization, Information Retrieval, Business Process

Title of the Paper: Cluster Analysis of Professional Focus of Future HR Managers

Authors: Jena Švarcová, Iva Stavjaníčková

Abstract: Europe is facing an unprecedented increase in unemployment in the segment of young workers to 34 years. Partly it can be attributed to the phase of business cycle, but we can also observe changes in orientation of young people in specific groups of professions who are increasingly different from the structure of the economy and the requirements of companies in the Czech Republic - in the occupational group No 4 - Technology we can see an excess of demand of companies over supply of employees; and in the occupational group No 8 - Arts and Entertainment there is a large oversupply of students. This paper presents the results of research of students’ professional preferences with a special focus on students' interest about work in HR department. Roe’s classification was used for this research - profession of HR Manager belongs to the group of professions No 3 – Organization according to Roe. Research showed that students are very indefinite when choosing their profession and many of them choose 5 or more different professions to their portfolio. It could be problem because companies need HR Manager, who is straight focused on working with people. The research team used cluster analysis and the results showed that students with lower number of job preferences (1-4) choose suitable professions more often than students with a higher number of profession preferences. The result of this research is that HRM for HR department has to search students with low number of profession preferences who are focused for HR Manager Position.

Keywords: HR Manager, Professional Focus, Cluster Analysis, the Czech Republic

Title of the Paper: Measuring a Company´s Performance: The Identification of Correlation between EVA and Selected Financial Indicators with Use of Genetic Algorithm

Authors: Drahomíra Pavelková, Petr Dostál

Abstract: This paper deals with topic of measuring company´s performance using different concepts, tools and indicators. It defines the requirements on a concept or an indicator to reflect the real performance of a company, comparing value-based concepts and the traditional financial analysis indicators. The authors demonstrate their results of a survey on an extensive sample of companies in the Czech Republic, and conclude that the use of traditional financial indicators hugely prevails, despite the value based indicators demonstrate much stronger connection to the market value of companies. The authors inquire into a question whether some relationship between the value of selected value-based concept of Economic Value Added (EVA) and the selected indicators of traditional financial analysis may be found using genetic algorithms for clustering into different groups of performance. They show that, to a certain degree of probability, this relationship may be proved with selected parameters.

Keywords: Company performance, value-based management, indicators, financial analysis, EVA, pyramidal breakdown, genetic algorithm

Title of the Paper: Assessment of Conditions for Enterprising in Selected Regions using the Regional Economic Development Risk Indicator

Authors: Renata Myskova

Abstract: Diversity of regions is monitored not only within the respective country, but also by business managers in evaluating their business opportunities in the respective region. In such cases, the managers' decisions are based on the information if the conditions are suitable for economic operations of the respective company. This includes not only evaluation of the company's resources; also the analyses of the company's environment are of a great importance. There are many indicators whose values are measured by statistical offices at the regional and national levels; however, when assessing a region, it is necessary to consider the indicators in mutual relations. For the said reason, use of indicators designed as synthetic is available. The Regional Economic Development Risk indicator is such indicator, which includes not only the selected economic aspects, but also the social aspect and partially the environmental aspect. The said indicator can be used for evaluation of the region within a higher-level unit, including from the corporate viewpoint (if the region has any advantages for business development). The indicator is created by application of fuzzy logic, and in this article, two selected regions of the Czech Republic are evaluated with this indicator, namely Hradec Kralove and Pardubice regions.

Keywords: Regional economic development risk, region's level, macro-economic indicators, fuzzy logic

Title of the Paper: Professional Accountants’ Perception on Measurement Issues in Financial Reporting

Authors: Jiří Strouhal, Marie Paseková, Martin Kovářík, Kaidi Kallaste, Monika Nikitina-Kalamäe, Beata Blechová, Carmen G. Bonaci, Victor O. Müller, Alin I. Ienciu, Nicoleta M. Cioara

Abstract: This paper provides an analysis focusing on knowledge of professional accountants in the area of accounting measurement and perceptions in relation to a series of transformation processes taking place at national and international level. The employed research methodology relies on implementing a questionnaire survey. Results document relatively good knowledge of local accounting legislature, however the knowledge gap in international legislature is visible. The paper also develops an analysis focusing on professional valuers and their activity in the area of financial instruments’ measurement in order to dimension their opinion, knowledge and perceptions in relation to a series of transformation processes taking place at national and international level. There was documented the association between the developed activity and the valuers’ level of professional training when considering the national market of valuation services in the field of financial instruments. The results offer significant insights into the manner in which professionals in the area of accounting handled the dynamic of their national accounting system, therefore suggesting ways to optimize the profession’s future development.

Keywords: Measurement; financial reporting; professional accountants; professional valuers; SMEs; IFRS; national accounting practices

Issue 4, Volume 10, October 2013

Special Issue: Computational Techniques for Trading Systems, Time Series Forecasting, Stock Market Modeling, and Financial Assets Modeling

Title: An Introduction to the Special Issue on Computational Techniques for Trading Systems, Time Series Forecasting, Stock Market Modeling, Financial Assets Modeling

Authors: Petr Hájek, Filippo Neri

Title of the Paper: Forecasting Stock Prices using Sentiment Information in Annual Reports – A Neural Network and Support Vector Regression Approach

Authors: Petr Hájek, Vladimír Olej, Renáta Myšková

Abstract: Stock price forecasting has been mostly realized using quantitative information. However, recent studies have demonstrated that sentiment information hidden in corporate annual reports can be successfully used to predict short-run stock price returns. Soft computing methods, like neural networks and support vector regression, have shown promising results in the forecasting of stock price due to their ability to model complex non-linear systems. In this paper, we apply several neural networks and ε-support vector regression models to predict the yearly change in the stock price of U.S. firms. We demonstrate that neural networks and ε-support vector regression perform better than linear regression models especially when using the sentiment information. The change in the sentiment of annual reports seems to be an important determinant of long-run stock price change. Concretely, the negative and uncertainty categories of terms were the key factors of the stock price return. Profitability and technical analysis ratios have significant effect on the long-run return, too.

Keywords: Stock price, forecasting, prediction, sentiment analysis, annual report, neural networks, ε-support vector regression

Title of the Paper: Empirical Studies of the Effect of Leverage Industry Characteristics

Authors: Wei Li, Su-Sheng Wang

Abstract: The policy implication of itself is the noise of the stock market trading behavior. Good policy to price fluctuations than bad policy is called leverage effect, while the industry characteristics interval by the leverage effect. Based on the CSI 300 Sector Index, ARMA-GARCH model analysis of the CSI representative industries index volatility, the empirical results indicate that the GARCH (1,1) model can explain the fluctuations in the industry there are persistent, gathering; through TARCH (1,1) and EGARCH (1,1) models examined the impact of fluctuations in the various sectors of the leverage effect and information asymmetry, results show that the reverse impact than the same amount of positive impact to be various industries generate greater volatility.

Keywords: CSI 300 Sector Index; volatility; leverage effect

Title of the Paper: Empirical Analysis of Liquidity Risk Premium Based on Bond Age

Authors: Jie-Min Huang, Su-Sheng Wang, Jie-Yong Huang

Abstract: By using panel data of corporate bond in Shenzhen Exchange and Shanghai Exchange we research on liquidity risk premium in corporate bond spread. We choose squared price return, issued amount, volume, trading turnover and bond age as corporate bond liquidity proxies to analyze liquidity risk. Squared price return is significant in the regression, and the squared price return could indicate to what extent the bond is underpriced. Meanwhile, corporate bond trading volumes increase, but liquidity risk premium decreases, so the corporate bond spread decreases. Also, the large issued amount means high liquidity. We find that the threshold of 12 months is the best in corporate bond market in Exchange in China, and the liquidity risk premium which presented by age is a very important part in corporate bond spread. The results above are consistent with our hypotheses. But in the regression, the variable of corporate bond trades is positively correlated with corporate bond spread, and it’s different from the null hypothesis. We infer that there’re several reasons, maybe too much missing data in the sample or the samples are in an economic crisis period. Overall, squared price return, issued amount, volume and trading turnover are proxies of liquidity risk, however they are less important than bond age.

Keywords: Yield volatility, turnover, maturity, liquidity risk, issued amount, age

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