Template-Type: ReDIF-Article 1.0 Author-Name: Rahim M. Quazi Title: INVESTMENT CLIMATE AND FOREIGN DIRECT INVESTMENT: A STUDY OF SELECTED COUNTRIES IN LATIN AMERICA Abstract: Since the early 1980s, developing countries around the world have lifted restrictions on foreign capital inflow. Among the Latin American countries, Mexico has now become a prime destination of FDI. There are however eight other countries in the region --Argentina, Bolivia, Brazil, Costa Rica, Ecuador, Nicaragua, Panama, and Peru, that have emerged as Mexico’s main regional rivals as FDI destinations. For this sample of nine countries, this study econometrically estimates the determinants of FDI, examines the relationship between FDI and economic freedom, and analyzes the investment climate from foreign firms’ perspective. Using panel regression models, this study finds that FDI inflow is significantly boosted by foreign investors’ increased familiarity with the host economy, better infrastructure, higher return on investment, and greater trade openness, but the inflow is significantly depressed by lack of economic freedom. Furthermore, this study finds that FDI inflow is negatively correlated with policy changes that result in higher trade barriers, more repressive taxation, more restrictive foreign investment code, more repressive financial system, and further price and wage controls. Finally, this study identifies two factors --excessive bureaucracy and inefficient financial markets, which have possibly created locational disadvantages for Mexico vis-à-vis its regional rival countries. Classification-JEL: Keywords: Journal: Global Journal of Business Research Pages: 1-13 Volume: 1 Issue: 2 Year: 2007 File-URL: http://www.theibfr2.com/RePEc/ibf/gjbres/gjbr-v1n2-2007/GJBR-V1N2-2007-1.pdf File-Format: Application/pdf Handle: RePEc:ibf:gjbres:v:1:y:2007:i:2:p:1-13 Template-Type: ReDIF-Article 1.0 Author-Name: Lucia Gibilaro Author-Name: Gianluca Mattarocci Title: THE SELECTION OF THE DISCOUNT RATE IN ESTIMATING LOSS GIVEN DEFAULT Abstract: Loss Given Default (henceforth the LGD) is the ratio of losses to exposure at default. It includes the loss of principal, the carrying costs of non-performing loans and workout expenses. In light of the management and regulatory advances regarding LGD, this paper addresses the topic of choosing the proper rate to estimate the current value of recoveries. By means of a review of the available literature on LGD, the impacts of different solutions for the discount rate (contractual rate, risk-free rate and single-factor approaches) on the variability of LGD are analyzed and compared. In order to understand the influence of market constraints from both the static and dynamic standpoints, the paper studies the methodologies for the selection of the discount rate. Considering the limitations of the approaches found in both academic and operational literature, the paper proposes a multi-factor model to measure the discount rate based on systemic and specific factors. These factors, in light of the aggregate empirical evidence, can serve as explanations for the variability of LGD. Classification-JEL: Keywords: Journal: Global Journal of Business Research Pages: 15-33 Volume: 1 Issue: 2 Year: 2007 File-URL: http://www.theibfr2.com/RePEc/ibf/gjbres/gjbr-v1n2-2007/GJBR-V1N2-2007-2.pdf File-Format: Application/pdf Handle: RePEc:ibf:gjbres:v:1:y:2007:i:2:p:15-33 Template-Type: ReDIF-Article 1.0 Author-Name: Tao Zeng Title: AN INVESTIGATION OF THE VALUE RELEVANCE OF THE CORPORATE TAX REDUCTIONS FROM 1987 CANADIAN TAX REFORM Abstract: This paper examines the impact of tax savings from the 1987 Canadian Tax Reform on firm equity value in the context of a tax-based market valuation model. The 1987 Canadian Tax Reform, which dramatically changes the tax regime in Canada, provides a unique opportunity to test the effects of the changes in corporate taxes on the implementation of the market valuation model. This study assesses the incidence of the Canadian Tax Reform and the firms’ potential tax savings under the reform, and links this to market value. The empirical results document a significant and positive association between levels of tax savings from the tax reform and levels/changes of stock prices. This paper provides evidence consistent with the perceived importance of corporate tax payment in the marketplace. Classification-JEL: Keywords: Journal: Global Journal of Business Research Pages: 35-44 Volume: 1 Issue: 2 Year: 2007 File-URL: http://www.theibfr2.com/RePEc/ibf/gjbres/gjbr-v1n2-2007/GJBR-V1N2-2007-3.pdf File-Format: Application/pdf Handle: RePEc:ibf:gjbres:v:1:y:2007:i:2:p:35-44 Template-Type: ReDIF-Article 1.0 Author-Name: Peter Oyelere Author-Name: Ehab K. A. Mohamed Title: INTERNET FINANCIAL REPORTING IN OMAN Abstract: This paper investigates the extent and variety of practices of internet financial reporting (IFR) by companies listed on the Muscat Securities Market (MSM) in Oman. While IFR is fast becoming the norm in most western countries, there is little empirical evidence of the phenomenon in the Middle East region. This paper attempts to fill some of the gap in the literature by providing evidence of IFR practices in Oman. The 142 companies listed on the MSM were investigated to ascertain whether they maintain websites and/or if these sites are being used for communicating financial information. Only 84 of the listed companies were found to operate websites, with even less (only thirty-one) engaging in IFR. However, IFR is not restricted to the publication of annual financial statements only as the companies also disclose financial highlights through their websites. The results of this study indicate that IFR is still at an embryonic stage in Oman and there are lots of opportunities and challenges for all stakeholder parties in corporate reporting. The study highlights the challenges and opportunities for IFR in the Middle East Region, as well as a number of areas for further study. Classification-JEL: Keywords: Journal: Global Journal of Business Research Pages: 45-54 Volume: 1 Issue: 2 Year: 2007 File-URL: http://www.theibfr2.com/RePEc/ibf/gjbres/gjbr-v1n2-2007/GJBR-V1N2-2007-4.pdf File-Format: Application/pdf Handle: RePEc:ibf:gjbres:v:1:y:2007:i:2:p:45-54 Template-Type: ReDIF-Article 1.0 Author-Name: Ellen M. Kraft Author-Name: Anne B. Fosbre Author-Name: Nelcy M. Davila-Aponte Title: THE BROKEN PROMISE OF PENSION FUNDS Abstract: It’s 2007, do you know where our pension is? It was part of the American Dream, a pledge made by corporations to their workers for their decades of hard work, that they would be assured of retirement benefits such as pension and health care. Now more and more companies are rescinding their promise, leaving millions of Americans at risk. Unfortunately, many companies have already been struggling with underfunding their employees’ pension funds and as a result many employees are losing their pensions. The Pension Protection Act of 2006 was passed by Congress and signed by President Bush with a broad overhaul of rules. The Law gives private companies seven years to shore up funding of their traditional pensions. Special rules for seriously underfunded companies require them to pay higher premiums to eliminate their shortfall. A gradual disappearance of pensions is occurring in favor of saving accounts such as 401(k)s that require workers create their own retirement plans. Classification-JEL: Keywords: Journal: Global Journal of Business Research Pages: 55-63 Volume: 1 Issue: 2 Year: 2007 File-URL: http://www.theibfr2.com/RePEc/ibf/gjbres/gjbr-v1n2-2007/GJBR-V1N2-2007-5.pdf File-Format: Application/pdf Handle: RePEc:ibf:gjbres:v:1:y:2007:i:2:p:55-63 Template-Type: ReDIF-Article 1.0 Author-Name: Ann Galligan Kelley Author-Name: Margaret P. Ruggieri Title: ACCOUNTING TRANSPARENCY FOR POST RETIREMENT BENEFITS: COULD THE NEW FASB STANDARD RESULT IN NEGATIVE EQUITY? Abstract: The Financial Accounting Standards Board (FASB) issued a new standard, Statement of Financial Accounting Standards (SFAS) No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, on September 29, 2006, which is an amendment of FASB Statements No. 87, 88, 106, and 132R. This new standard may drastically impact stockholders’ equity for many companies and possibly even cause it to be negative. Classification-JEL: Keywords: Journal: Global Journal of Business Research Pages: 65-71 Volume: 1 Issue: 2 Year: 2007 File-URL: http://www.theibfr2.com/RePEc/ibf/gjbres/gjbr-v1n2-2007/GJBR-V1N2-2007-6.pdf File-Format: Application/pdf Handle: RePEc:ibf:gjbres:v:1:y:2007:i:2:p:65-71 Template-Type: ReDIF-Article 1.0 Author-Name: Laura Kozloski Hart Author-Name: Jose Lopez Author-Name: Mercedes Jalbert Author-Name: Terrance Jalbert Author-Name: Alison Rampersad Title: ARE RETAIL BANKS SATISFYING THEIR CUSTOMERS IN COSTA RICA? Abstract: Retail banks serving ethnically diverse customer bases are challenged to measure up to differing perceptions of service quality. While there is existing research about customer satisfaction and service quality in the banking industry around the world, there are no clear conclusions as to the most important service quality dimensions for satisfying bank customers. Moreover, there is little published work about the similarities or differences with which ethnically diverse customers view the service aspect of retail banking. This study examines the perceptions of four specific ethnic groups about how service quality dimensions contribute to their satisfaction with retail banking in Costa Rica. Costa Rica was a logical research location given the large number of expatriates living and working there as well as its own ethnically diverse citizenry. We find that as a group ten service quality dimensions have a moderate positive correlation with customer satisfaction. Each of the four ethnic groups showed significant differences in their perceptions of the importance of each dimension to their satisfaction. In fact, among the four groups, no commonalities existed in how they ranked their three most important dimensions. The findings in this study provide targeted information for bank managers and others working to improve satisfaction levels of specific groups of the ethnically diverse customer population in Costa Rica and elsewhere. Classification-JEL: Keywords: Journal: Global Journal of Business Research Pages: 73-86 Volume: 1 Issue: 2 Year: 2007 File-URL: http://www.theibfr2.com/RePEc/ibf/gjbres/gjbr-v1n2-2007/GJBR-V1N2-2007-7.pdf File-Format: Application/pdf Handle: RePEc:ibf:gjbres:v:1:y:2007:i:2:p:73-86 Template-Type: ReDIF-Article 1.0 Author-Name: Susan Baxter Title: IS IT WORTH THE COST? MARKETING TO NEGATIVELY PERCEIVED CONSUMER GROUPS Abstract: Examining consumer concerns is of importance to marketers. Some concerns include the desire for businesses to be more socially responsible through products and being more inclusive in advertisements. . To stress the need for social responsibility, consumers have reverted to using civil disobedience. A civil disobedience tool, the boycott, is now being used to protest not only unethical behaviors, but to also discourage businesses from marketing to certain populations and from giving employees of that group recognition. Consumer groups that are prejudiced against other consumers are attempting to impact corporate decision making in regards to human resource policies and marketing decisions. This paper looks at the history of inclusiveness, boycotts, and the current state of affairs with consumer groups. Classification-JEL: Keywords: Journal: Global Journal of Business Research Pages: 87-96 Volume: 1 Issue: 2 Year: 2007 File-URL: http://www.theibfr2.com/RePEc/ibf/gjbres/gjbr-v1n2-2007/GJBR-V1N2-2007-8.pdf File-Format: Application/pdf Handle: RePEc:ibf:gjbres:v:1:y:2007:i:2:p:87-96 Template-Type: ReDIF-Article 1.0 Author-Name: Lynda S. Livingston Title: A PUZZLE FOR TEACHING THE CONSTANT GROWTH STOCK PRICING MODEL Abstract: The constant growth stock pricing model is an important component of introductory corporate finance courses, and an important step on the way to understanding the general two-stage model. In this paper, I present a relatively fun puzzle based on the relationships implied by the constant growth model. When solving this puzzle, students are forced to look beyond the apparent simplicity of the model, ensuring that they are ready to incorporate its concepts into more general situations. However, the most satisfying part of the exercise is the enthusiasm with which students approach the exercise, since, after all, it is a puzzle! Classification-JEL: Keywords: Journal: Global Journal of Business Research Pages: 97-107 Volume: 1 Issue: 2 Year: 2007 File-URL: http://www.theibfr2.com/RePEc/ibf/gjbres/gjbr-v1n2-2007/GJBR-V1N2-2007-9.pdf File-Format: Application/pdf Handle: RePEc:ibf:gjbres:v:1:y:2007:i:2:p:97-107 Template-Type: ReDIF-Article 1.0 Author-Name: Rafiu Oyesola Salawu Title: CAPITAL INDUSTRY PRACTICE AND AGGRESSIVE CONSERVATIVE WORKING CAPITAL POLICIES IN NIGERIA Abstract: This study investigates fifteen diverse industrial groups over an extended period to establish the relationship between aggressive and conservative working capital practices. Data were sourced from the annual reports of the companies and the publications of Nigerian Stock Exchange. Descriptive statistics were used for analyzing the data collected. Results strongly show that firms in differing industries have significantly different current asset management policies. Additionally, the relative industry ranking of the aggressive/conservative asset policies exhibit remarkable stability over time. It is evident that there is a significant negative correlation between industry asset and liability policies. Relatively aggressive working capital asset management seems balanced by relatively conservative working capital financial management. The study recommends that, a firm in deciding its working capital policies should consider the policies adopted in that industry in which it operates. A firm pursing aggressive working capital investment policy should match it with a conservative working capital financing policy. Classification-JEL: Keywords: Journal: Global Journal of Business Research Pages: 109-117 Volume: 1 Issue: 2 Year: 2007 File-URL: http://www.theibfr2.com/RePEc/ibf/gjbres/gjbr-v1n2-2007/GJBR-V1N2-2007-10.pdf File-Format: Application/pdf Handle: RePEc:ibf:gjbres:v:1:y:2007:i:2:p:109-117 Template-Type: ReDIF-Article 1.0 Author-Name: Jorge Torres-Zorrilla Title: OIL AND ETHANOL IN LATIN AMERICA AND ASIA-PACIFIC Abstract: Oil prices have escalated dramatically in recent years. As a result, observers have renewed interest in the possibility of producing ethanol. For some time, oil experts have been predicting the exhaustion of oil supplies. To date, reality has contradicted that position. However, there is consensus of the urgency to search for oil-substitutes including ethanol. Additionally, ethanol is an environmentally acceptable alternative. This study concludes that the growth of oil prices has the same critical importance for Latin America as for Asia-Pacific. The study examines the potential of substituting ethanol for petroleum in selected countries of Latin America and Asia-Pacific. The conclusion is that only Colombia, Peru, Malaysia, and Thailand have the potential because they cultivate sugarcane; Chile and South Korea do not have sugarcane production. The country with the greatest potential is Colombia, with a potential ethanol output greater than the equivalent fuel imports. The countries with medium potential are Thailand and Peru and the country with the smallest potential is Malaysia. Korea and Chile do not have the potential to replace oil imports, because they are located in a temperate region of the world; they must look for alternatives in other agricultural raw materials or in foreign trade. Classification-JEL: Keywords: Journal: Global Journal of Business Research Pages: 119-131 Volume: 1 Issue: 2 Year: 2007 File-URL: http://www.theibfr2.com/RePEc/ibf/gjbres/gjbr-v1n2-2007/GJBR-V1N2-2007-11.pdf File-Format: Application/pdf Handle: RePEc:ibf:gjbres:v:1:y:2007:i:2:p:119-135 Template-Type: ReDIF-Article 1.0 Author-Name: Petr Marek Author-Name: Jarmila Radova Title: FINANCIAL DECISIONS AND TAX SHIELDS Abstract: This paper addresses two questions related to tax shields. Firstly, what is the real moment of tax shield realization? Secondly, what influence shall the real tax shield realization moment have on tax shield present value? The real moment of tax shield realization is defined at the moment when the tax shield is reflected in the taxpayer’s cash flow, in the form of income tax reconciliation and paid tax deposits. Subsequently, authors have investigated the dependence of tax shield present value on the discount rate, and on the size of a time span between the moment of tax-shield claim origination and tax-period’s end. The largest difference between basic value of the tax shield and its present value was found at the maximum discount rate considered in the model, and at the maximum size of the time span between the moment of tax-shield claim origination and tax-period’s end. The dependence was not always linear. In conclusion modifications of financial models that employ tax shields are suggested. These modifications are based on including coefficients reflecting the real moment of tax shield realization. Classification-JEL: Keywords: Journal: Global Journal of Business Research Pages: 133-143 Volume: 1 Issue: 2 Year: 2007 File-URL: http://www.theibfr2.com/RePEc/ibf/gjbres/gjbr-v1n2-2007/GJBR-V1N2-2007-12.pdf File-Format: Application/pdf Handle: RePEc:ibf:gjbres:v:1:y:2007:i:2:p:133-143