Template-Type: ReDIF-Article 1.0
Author-Name: Neeraj J. Gupta
Author-Name: Joseph Golec
Title: DO INVESTORS USE CUSTOMER METRICS TO VALUE HIGH GROWTH SERVICE FIRMS?
Abstract: High growth service firms invest resources to acquire and retain customers, creating intangible assets. This paper tests whether investors use customer metrics to value these firms. Using a unique handcollected data set, we show that investors discount the values of high growth service firms if their service costs per customer are high, perhaps because high service costs are associated with inefficient business operations. Conversely, investors boost the values of high growth service firms with high acquisition costs per customer, perhaps because higher acquisition costs are associated with customers who generate larger future cash flows. We also show that relatively high growth firms tend to disclose customer metrics more frequently, monthly rather than quarterly, helping to moderate the inherent uncertainty in their quarterly earnings. We find that customer metrics are incrementally informative to traditional financial performance measures, particularly when valuing high-growth service firms.
Classification-JEL: G12, G14, M41
Keywords: Customers, Valuation, Intangibles
Journal: The International Journal of Business and Finance Research
Pages: 1-19 
Volume:6
Issue: 2
Year: 2012
File-URL: http://www.theibfr2.com/RePEc/ibf/ijbfre/ijbfr-v6n2-2012/IJBFR-V6N2-2012-1.pdf
File-Format: Application/pdf
Handle: RePEc:ibf:ijbfre:v:6:y:2012:i:2:p:1-19

Template-Type: ReDIF-Article 1.0
Author-Name: Praveen Kumar Das
Author-Name: S. P. Uma Rao
Title: IS THE VALUE EFFECT SEASONAL? EVIDENCE FROM GLOBAL EQUITY MARKETS
Abstract: This paper extends the research on value premium by examining patterns of seasonality exhibited in the book-to-market effect in major global equity markets. The results provide evidence supporting the January effect in the value premium phenomenon. Using stock market indices for Asia Pacific; Europe, Australasia, and Far East (EAFE); and Europe, with and without the U.K., Scandinavian countries, the U.K., U.S., and Japan form 1975 through 2007, the paper provides out-of-sample evidence from twentyone countries that comprise different index portfolios. As a robustness measures, we use regression analysis, paired means tests, and non-parametric tests to examine whether the persistence of the anomalous January value premium is real and significant. The annualized excess January value premium ranges from 42.96 percent for Scandinavian countries to 9.24 percent for EAFE markets with 20.28 percent for U.S. Even though such a predictable pattern exists, our analysis suggests that large standard deviations would not allow a viable investment strategy.
Classification-JEL: G12
Keywords: Value premium, International equity market, January effect
Journal: The International Journal of Business and Finance Research
Pages:  21-33
Volume:6
Issue: 2
Year: 2012
File-URL: http://www.theibfr2.com/RePEc/ibf/ijbfre/ijbfr-v6n2-2012/IJBFR-V6N2-2012-2.pdf
File-Format: Application/pdf
Handle: RePEc:ibf:ijbfre:v:6:y:2012:i:2:p:21-33

Template-Type: ReDIF-Article 1.0
Author-Name: Ching Yi Yeh
Author-Name: Tai Ma
Title: WHY DO INSIDERS SOMETIMES PAY MORE AND SOMETIMES PAY LESS IN PRIVATE PLACEMENTS?
Abstract: This paper explores private placement pricing sold to insiders by considering changes in the control power of the largest shareholders in private placement. We use the Banzhaf power index to reflect the largest shareholder’s relative power of influence. The results indicate that, if existing insiders maintain their leading control status, in cases where insiders are the main investors, private placements are issued at deep discounts that benefit themselves. However, in cases where outsiders/new insiders are the main investors, outsiders and new insiders will pay relatively more when existing insiders dominate. Contrarily, if existing insiders fail to retain their leading position and become less powerful after private placement, outsiders and new insiders buy at lower prices. In more than 65% of the sample, the largest shareholders lost their leading control status, and the issuer’s ownership structure becomes more concentrated following private placements. Finally, the findings suggest that motivations of private placement issues have a greater influence on pricing than investor types in private placements.
Classification-JEL: G1; G3
Keywords: Private placement discount, power index, control right, self-dealing, ownership structure
Journal: The International Journal of Business and Finance Research
Pages: 35-52 
Volume:6
Issue: 2
Year: 2012
File-URL: http://www.theibfr2.com/RePEc/ibf/ijbfre/ijbfr-v6n2-2012/IJBFR-V6N2-2012-3.pdf
File-Format: Application/pdf
Handle: RePEc:ibf:ijbfre:v:6:y:2012:i:2:p:35-52

Template-Type: ReDIF-Article 1.0
Author-Name: Zheng-Feng Guo
Author-Name: Lingyan Cao
Title: AN ANALYSIS OF THE DEGREE OF DIVERSIFICATION AND FIRM PERFORMANCE
Abstract: A firm's diversification decision is likely to be a response of two interacting effects, one is the agent problem and the other is the economies of scale. Whether diversification causes a discount or a premium depends on the interaction of the two effects. This paper re-evaluates the effect of diversification on firm performance by examining firms with different degrees of diversification. We found the evidence that the diversification premium gets smaller if a firm engages in more than three industries.
Classification-JEL: G30, G34, L22, L25
Keywords: Tobin’s Q, Firm performance, Diversification
Journal: The International Journal of Business and Finance Research
Pages: 53-58 
Volume:6
Issue: 2
Year: 2012
File-URL: http://www.theibfr2.com/RePEc/ibf/ijbfre/ijbfr-v6n2-2012/IJBFR-V6N2-2012-4.pdf
File-Format: Application/pdf
Handle: RePEc:ibf:ijbfre:v:6:y:2012:i:2:p:53-58 

Template-Type: ReDIF-Article 1.0
Author-Name: Meijui Sun 
Title: IMPACT OF DIVESTITURE ACTIVITIES ON CORPORATE PERFORMANCE: EVIDENCE FROM
LISTED FIRMS IN TAIWAN
Abstract: This study examines how divesture affects the performance of listed companies in Taiwan. Divestiture describes firms selling their assets, production lines, subsidiaries or other segments for either cash or securities. This study focuses on two types of divestiture activities: sell-offs and equity carve-outs. Specifically, this work employs a control group design to examine 266 sell-off and equity carve-out announcements between 1995 and 2004, and measures the short-term abnormal stock returns and long-term (5 years) operating performance using financial ratios. The analytical results show significant positive stock abnormal returns associated with divestiture announcements for listed companies in Taiwan. Furthermore, firms generally experienced enhanced performance after undertaking divestiture activities.
Classification-JEL: G34, G14
Keywords: Divestiture, Sell-offs, Equity carve-outs, Event study, Taiwan
Journal: The International Journal of Business and Finance Research
Pages: 59-67
Volume:6
Issue: 2
Year: 2012
File-URL: http://www.theibfr2.com/RePEc/ibf/ijbfre/ijbfr-v6n2-2012/IJBFR-V6N2-2012-5.pdf
File-Format: Application/pdf
Handle: RePEc:ibf:ijbfre:v:6:y:2012:i:2:p:59-67

Template-Type: ReDIF-Article 1.0
Author-Name: Ranjini L. Thaver
Author-Name: E. M. Ekanayake
Author-Name: Daniel R. Plante
Title: AN ESTIMATION OF THE IMPACT OF GEAR AND NEPAD ON SOUTH AFRICA'S DISAGGREGATED IMPORT DEMAND FUNCTION WITH NIGERIA
Abstract: This paper estimates South Africa’s disaggregated import demand function with Nigeria from 1992 to 2010 utilizing the bounds testing approach to cointegration and the unrestricted error-correction model. We further estimate South Africa’s short-run and long-run import elasticities. Our results indicate a long run cointegrated relationship among the variables. However, not all the long-run elasticities display theoretically expected signs; neither are they all significant. While consumption and exports affect imports positively, investment affects it negatively. Real foreign reserves and volatility yield expected signs, but contrary to theoretical expectations, relative price is positive and highly elastic. In the short run almost all the expected elasticity coefficient signs are met and they are all statistically significant. Our study further discloses that South Africa’s commitment to increasing intra-African trade through its GEAR and NEPAD policies applies negatively to Nigeria, contrary to our hypothesis. We argue that appropriate public policy at the regional level is necessary to effectively increase trade with Nigeria, given South Africa’s reliance on oil imports for which Nigeria is its largest supplier.
Classification-JEL: F14, F31 
Keywords: South Africa, Nigeria, disaggregated import demand, cointegration, GEAR, NEPAD.
Journal: The International Journal of Business and Finance Research
Pages: 69-79
Volume:6
Issue: 2
Year: 2012
File-URL: http://www.theibfr2.com/RePEc/ibf/ijbfre/ijbfr-v6n2-2012/IJBFR-V6N2-2012-6.pdf
File-Format: Application/pdf
Handle: RePEc:ibf:ijbfre:v:6:y:2012:i:2:p:69-79

Template-Type: ReDIF-Article 1.0
Author-Name: Tomola Marshal Obamuyi
Author-Name: J. Adeniyi Demehin
Title: INTEREST RATE REFORMS AND FINANCIAL DEEPENING IN NIGERIA
Abstract: This main objective of the paper is to examine the effect of interest rate reforms on financial deepening in Nigeria. The methodology adopted for the study includes cointegration and vector error correction models (VECM) to determine the long and short run dynamics of the model. The paper examines time series data from 1973 to 2009. The results indicate that there exists a long run relationship between financial deepening and interest rates. We also find that interest rate reform has a positive and significant effect on financial deepening in Nigeria. The results here suggest that policy makers enact measures that positively influence financial development, economic growth, liquidity reserve ratio, domestic savings/GDP ratio as well as reforms to ensure the efficiency and development of the financial system.
Classification-JEL: E4, G2
Keywords: Reforms, Vector error correction model, economic growth, financial deepening
Journal: The International Journal of Business and Finance Research
Pages: 81-90
Volume:6
Issue: 2
Year: 2012
File-URL: http://www.theibfr2.com/RePEc/ibf/ijbfre/ijbfr-v6n2-2012/IJBFR-V6N2-2012-7.pdf
File-Format: Application/pdf
Handle: RePEc:ibf:ijbfre:v:6:y:2012:i:2:p:81-90

Template-Type: ReDIF-Article 1.0
Author-Name: Po-Cheng Wu
Author-Name: Chih-Wei Lee
Author-Name: Cheng-Kun Kuo
Title: PRICING OF PAYMENT DEFERRED VULNERABLE OPTIONS AND ITS APPLICATION TO VULNERABLE RANGE ACCRUAL NOTES 
Abstract: This paper derives a pricing model for payment deferred vulnerable options and applies the results to the pricing of vulnerable range accrual notes. The valuation model for vulnerable options takes into account the possibility of the option writer defaulting. However, when the payment date is set later than the option
maturity date, the valuation model will be incomplete if the default risk between the option maturity and payment dates is not explicitly incorporated. We extend the current available models and our results show that the default risk of the option writer will further reduce the option value if the payment date is after the maturity date. The analysis of vulnerable range accrual note, which contains multiple payment deferred vulnerable options, is also performed. Due to the product design, the pricing model for vulnerable range accrual notes shows that the relationship between volatility and note value is not monotonic but depends on whether the underlying price is within, outside, or on the range boundary.
Classification-JEL: G12; G13
Keywords: Reduced form model, vulnerable options, vulnerable range accrual notes
Journal: The International Journal of Business and Finance Research
Pages: 91-100
Volume:6
Issue: 2
Year: 2012
File-URL: http://www.theibfr2.com/RePEc/ibf/ijbfre/ijbfr-v6n2-2012/IJBFR-V6N2-2012-8.pdf
File-Format: Application/pdf
Handle: RePEc:ibf:ijbfre:v:6:y:2012:i:2:p:91-100

Template-Type: ReDIF-Article 1.0
Author-Name: Yi-Chein Chiang
Author-Name: Hsin-Chiu Huang
Title: EQUITY AGENCY COSTS AND INTERNATIONALIZATION: THE EFFECT OF REVISED ACCOUNTING STANDARDS IN TAIWAN
Abstract: This study investigates whether the equity agency problems of firms with foreign operations mitigate after 2005, when the revised accounting standards on consolidated financial statements were implemented in Taiwan. A sample of listed Taiwanese firms announcing security offerings from 2000 to 2008 were examined. The results weakly support the hypothesis that equity agency cost problems of Taiwanese multinational corporations improved after 2005. Thus, we suggest that the Taiwanese government further increase information transparency of multinational corporations in order to be consistent with International Accounting Standards and achieve lower equity agency costs.
Classification-JEL: F23, G32
Keywords: agency costs, consolidated financial statements, internationalization, information transparency
Journal: The International Journal of Business and Finance Research
Pages: 101-111
Volume:6
Issue: 2
Year: 2012
File-URL: http://www.theibfr2.com/RePEc/ibf/ijbfre/ijbfr-v6n2-2012/IJBFR-V6N2-2012-9.pdf
File-Format: Application/pdf
Handle: RePEc:ibf:ijbfre:v:6:y:2012:i:2:p:101-111

Template-Type: ReDIF-Article 1.0
Author-Name: Anastasia Maggina
Author-Name: Angelos Tsaklanganos
Title: ASSET GROWTH AND FIRM PERFORMANCE EVIDENCE FROM GREECE
Abstract: This study provides evidence drawn from publicly traded companies in Greece on the predictability of assets growth with respect to firm performance. We employ discriminant analysis and a logit specification to test our models. Results indicate that assets growth is predictable at an 85.7% rate in large companies. This rate is high compared those in other prediction studies such as bankruptcy, qualified audit reports and going-concern opinions.
Classification-JEL: M,M41
Keywords: asset growth, firm performance, discriminant analysis, logit
Journal: The International Journal of Business and Finance Research
Pages: 113-124
Volume:6
Issue: 2
Year: 2012
File-URL: http://www.theibfr2.com/RePEc/ibf/ijbfre/ijbfr-v6n2-2012/IJBFR-V6N2-2012-10.pdf
File-Format: Application/pdf
Handle: RePEc:ibf:ijbfre:v:6:y:2012:i:2:p:113-124