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Quality of information disclosed by public companies in financial reports is a crucial problem both from practical and theoretical perspective. The paper checks if the company changes the stock-exchange market form alternative investment market (NewConnect) to regulated market. It results in increasing non-obligatory information range in yearly financial statements. Our sample consists of public companies which changed the market in 2009- -2013. We show that the expected improvement in the quality of reports appeared, although it is still an area for improvement. For the analysis, the quality index proposed by Eugster and Wagner was used, which was modified and adapted to Polish conditions.
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The aim of this paper is to evaluate the financial performance of pension funds in Croatia. Although there are other factors which are important in the pension funds overall performance, this paper focuses on investment accomplishments. The purpose of measuring portfolio performance is to determine whether portfolio managers add value compared to passive investment strategies. The traditional approach to pension funds’ performance evaluation underlines standard measures of financial performance (e.g. ratios such as Sharpe’s, Sortino’s, Treynor’s etc.) which quantify the ability of pension fund managers to deliver an active management risk premium, with respect to benchmarks.In this paper, the previously mentioned traditional measures of risk-adjusted performance are applied to Croatian pension funds. Due to recent changes in pension systems in other Eastern European countries once again emphasis is put on this issue in Croatia. The analysis furthermore includes evaluation of pension funds’ asset allocation. The period of analysis covers twelve years, from the establishment of pension funds in Croatia in 2002 until 2013. The main hypothesis of the paper states that Croatian pension funds under perform with respect to benchmark comparisons, set as return on the combined CROBEX/CROBIS portfolio. Results show that the main hypothesis does not hold. The financial performance of pension funds directly influences their competitiveness, derived from the possibility of measuring their success in active portfolio management. In addition, pension funds are expected to support the national economy. By investing their accumulating assets, they can protect jobs and enhance economic growth. However, they can achieve that only if they are competitive in means of financial performance.
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The Shariah law makes Amanah (trustworthiness) a fundamental obligation for all the contractual parties. From the agency theory perspective, we, thus, investigate managerial trustworthiness in capital structure decisions of Shariah firms and compare it with those of Non-Shariah firms, in the light of Islamic principle of Amanah (trustworthiness). Specifically, we examine whether capital structure of Shariah firms is partially influenced by managerial ownership under the motivation of self- interest. Using the data from Pakistan, our results show that, unlike Non- Shariah firms, leverage ratios in Shariah firms are insensitive to the varying degree of managerial ownership, indicating absence of managerial opportunism in financial decisions of these firms. For the Non- Shariah firms, on the other hand, our results confirm findings of previous research which reveal that managers manipulate leverage ratios in their own interest the cost of firm value, indicating the severity of agency conflicts among these firms. Invoking agency theory, we argue that certain firm characteristics (such as lower free cash- flows and lesser liquidity), achieved through Shariah compliance, help Shariah firms mitigate agency conflicts. These features persuade managers to behave less opportunistically than their counterparts in Non- Shariah firms as shown from their financing choices. The results are important for understanding nature of the two types of firms studied and the cross- sectional differences between the capital structure choices of these firms. Besides, our findings have also implications for growing number of Shariah compliant firms and a new clientele of Islamic investors who have entered capital markets due to the Islamic image of Shariah firms in Muslim majority country like Pakistan.
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What is the relationship between the two largest emerging financial markets of Eastern Europe, Russia and Poland, and how do they impact the region’s stock markets? The purpose of this paper is to examine the role of these two countries in regional volatility by examining their effect on two separate phenomena: financial volatility, defined here as long- term interrelations, and contagion, a more short- term phenomenon. Utilizing bivariate DCC- GARCH modeling, this paper estimates long- term volatility spillover effects and short- term contagion effects and their origins during several periods of financial crisis in the Central and Eastern European region. Our results show that the long- term impact of volatility in the Russian market is much more substantial than that of Poland in Central and Eastern Europe, with this disparate impact corresponding to each country’s level of market capitalization. Additionally, our results show that Russia served as a source of short- term contagion for neighboring countries during its banking crisis in 2004 and during the Russian stock market fall in 2008. Poland had comparatively less effect on the region during the Global Financial Crisis. Moreover, the entrance of Poland into the European Union in May 2004 had no impact on stock markets in the region in terms of enhancing contagion.
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The financial crisis has highlighted the role and the position of central banks in terms of responsibility and actions. The aim of this paper is to determine the level of democracy of four central banks (the Federal Reserve (the FED), the European Central Bank (the ECB), the National Bank of Romania (the NBR) and the Bank of Japan (the BOJ)). Structured in three parts, the paper focuses on the existing literature in order to define central bank democracy; establishes the link between central bank independence and democracy and finally, the analysis includes the construction and interpretation of a democracy index for each central bank. To conclude, we appreciate that the European Central Bank is the most democratic, but pure democracy is an ideal concept.
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Informational banking asymmetry and banks’ tempting to manipulate or hide information affect the banking transparency and do not permit that banking disclosure process to be adequate for the users of public banking information. Based on these assumptions, this study explores the issue of public disclosure of audit reports at the level of Romanian banking system. Empirical study case focuses on analyzing of the way in which the banking societies Romanian legal persons that activate in Romania disclose information regarding the audit opinion on the financial statements. We studied the Internet as a medium used by banks to disclose public information and found evidence of unequal, irregular and unforeseeable behavior of banks that publish auditor’s report, taking into account that 31% from the analyzed banks did not disclose their auditors’ reports on financial statements during 2000-2011.
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Independent Component Analysis (ICA) and Singular Spectrum Analysis (SSA) are two nonparametric methods, based upon a matrix spectral decomposition. In this paper, a hybrid ICA-SSA approach is used for predicting foreign exchange rates. The primarily role of ICA is to reveal certain fundamental factors behind several parallel series of foreign exchange rates. More accurate predictions can be performed via these independent components, after their separation. MSSA is employed to compute forecasts of independent factors. Afterwards, these forecasts of underlying factors are remixed into the forecasts of observable foreign exchange rates.
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I apply two models from the existing academic literature to assess liquidity risk in groups of mutual funds as well as in individual high yield mutual funds. These models are a serial correlation model with an AR(1) process and a lagged effects model. These models were most recently applied in the field of hedge fund research to measure liquidity risk and to evaluate the performance of aggregated groups of hedge funds, organized by investment strategy. I apply these models in the recently developing area of liquid alternative mutual funds and at the level of the individual mutual fund. A perceived benefit to investors in the liquid alternative funds is the structural, daily-redemption liquidity of the fund shares. Yet, the liquidity of the underlying securities portfolios held by these funds is not apparent to the investors and may expose the investor to heightened liquidity risk. The models perform well and will be applied to identify liquidity risk in a further ongoing study of the performance and liquidity of individual mutual funds. Liquidity risk assessment should play a vital role in performance evaluation and fund selection.
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Leading enterprises of the shipbuilding and ship repair industry in Latvia, for example, Riga and Liepaja shipyards tend to occupy a leading position in their niches in the European and world markets. This means first and foremost commissioning and practical application of innovations and scientific achievements, i.e., innovation. The objective of the research is to determine the characteristics of innovative processes of enterprises in the shipbuilding and ship repair industry in Latvia. The novelty of the research lies in the fact that for the first time the overall system analysis of innovation processes has been performed, taking into account the existing risks in the Latvian shipbuilding industry. The object of research is innovation processes in the shipbuilding and ship repair industry in Latvia. The goal of the research is to investigate the influence and relationships of the main factors of innovative processes in the shipbuilding and ship repair industry at the system level. Methods of research comprise the mathematical modelling of the system and the analysis of the interaction of factors on the basis of graph theory; balance sheet analysis as well as pulse analysis in the system. For the shipbuilding and ship repair industry in Latvia, the research proposes an interactive model of innovations taking into account risks. The model of the innovation process has mathematically been considered as a signed weighted digraph. The main groups of risks are distinguished as separate vertices of the digraph since they play an important role in the system of operative factors: risks and negative relations violate the balance of the system. In general, the weighted digraph analysed in the research is unbalanced. Therefore, any innovation process is not sufficiently stable mainly due to the effect of risks. This reflects the need for continuous risk identification and management at all stages of innovation. The results have demonstrated that the system of factors in the model of innovation process is absolutely and pulse unstable. This reflects the need for continuous strict control of the innovation process, in particular of existing and potential risks.
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Remittances are for Serbia most important source of foreign capital, but the remittances and diaspora received little public attention. In this paper we analyze different characteristics of the Serbian diaspora, it’s possible motives for sending remittances and ways to channel remittances into productive use. Given the great disunity of the Serbian diaspora, as well as bad experiences with investing in the development of the it’s home country, we should not expect large effects of a call for help and patriotism. Efficient approach to Serbian diaspora involves the development of new relationships and new offers for investment in the home country.
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The easy access to financing of enterprises in general and of small and medium enterprises (SMEs) in particular is of crucial importance, for it conditions their creation, survival and development, and, eventually, economic growth and the creation of workplaces. In comparison with large enterprises, SMEs are faced with numerous obstacles when obtaining financing resources, due to the reticence of the financial markets to take risks, as well as to the insufficient guarantees offered to the creditors. The aim of this paper is to analyze the particularities of the financing received by small and medium enterprises in Romania in comparison with other EU countries, the implications of the current crisis on the access to financing of small and medium enterprises, as well as the measures adopted by public authorities in order to support these enterprises.
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In this article author wrote about Byzantine history and heritage, analyzing influence of Roman civilization, Greek culture and Christianity on its development. The author analyzed the causes for the birth and development of Byzantine civilization achievements, continuity, its significance and influence on other states, cultures and civilizations, as well as the causes for its disintegration. The objective of such analysis was to present formal, doctrinarian and conceptual differences between the civilizations, as well as the causalities and laws within their different historical processes and their developmental dynamics. In the final part of the article the author presented how the Byzantine cultural heritage reflected itself in current historical developmental processes.
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We use daily stock returns from the NASDAQ composite index and its eight composite indexes to investigate the reaction of investors to the arrival of unexpected information in framework of Efficient Market Hypothesis (EMH), the Overreaction Hypothesis (OH), and the Uncertain Information Hypothesis (UIH). Consistent with the prediction of the UIH regarding investor behavior, we find strong statistical evidence of a corrective process of significantly positive cumulative abnormal returns following the arrival of both unexpected favorable and unfavorable information for the NASDAQ Composite and four of the sub-indexes. For the Computer and Insurance sub-indices, we observe downward trends in the CARs following the arrival of favorable market surprises and upward trends in response to the arrival of unfavorable surprises, a result consistent with the predictions of the OH. For the Industrials and Transportation sectors, the pattern of investors reaction is not strongly consistent with any of the theories of investor reaction presented here, although the trendless pattern of returns following market surprises for the Transportation index could be explained by the EMH. One main implication of these mixed empirical results is that investor ‘s reaction varies significantly by sector, highlighting the value of analyzing investor reaction in different segments of the security markets in addition to investigating composite indexes.
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The aim of this paper was to identify the main determinants of pathological customers’ behaviour as well to describe different types of customers’ pathologies in financial markets. Based on the direct research, we may conclude that pathologies are relatively rare in consumer behaviour in financial markets. Mostly they are fraud, misrepresenting, and moral hazard, as well as reliance on the use of various financial services and moderate consumer terrorism. The main determinants of pathological customers’ behaviour are unfulfilled aspirations, neutralisation, thrillseeking, and influence of different reference groups. The research findings presented in the paper could be used by financial institutions and authorities to create spatial programmes preventing development of pathological customer’s behaviour and social and economic consequences of such behaviours.
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Investors unable to find the country on a map are keen to buy bonds with the promise of attractive yields.
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Destination and touristic products devoted to that destination make different senses to different tourist groups. In order to be able to realize effective marketing activities, to use the sources efficiently, to satisfy the needs of tourist and ensure a competitive advantage over its rivals, tourist profile of the destination is required to be identified. Thanks to the correctly identified tourist profile, it could be possible to segment the market by splitting tourists into homogeneous groups and offer ideal touristic products that will meet the needs and expectations of each segment. There is no tourist profile research about Eastern Black Sea Region where rapid changes has been observed for the last fifteen years. This research has been made to identify the profile of tourists who participated in a tour package of Eastern Balck Sea Region and to propose a market segmentation based on that profile. As a result of analysis of the datum obtained by survey method, it has been ascertained that, Eastern Black Sea Region is mostly visited by undergraduates, government employees and 31-60 age segment. Among the participants’ reasons of going on Eastern Black Sea Region excursion; cost, natural beauties and amusement factors come to the forefront, while most wondered cities were Trabzon and Rize.
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