Open Access Original Research Article

Impacts of Labor and Capital on Manufacturing Production Function

Rohitha Goonatilake, Susantha Herath

Journal of Economics, Management and Trade, Page 158-172
DOI: 10.9734/BJEMT/2014/5619

In essence, the power of compounding, together with the effect of discounting, has resulted in calculations of sinking funds and amortization possible. A greater aspect of this concept has allowed the business world to flourish and, at the same time, borrowing, financing, and mortgages have become extensively feasible. In this paper, we will attempt to provide a glimpse of these business concepts using concrete examples and calculations that use mathematical concepts. The Cobb-Douglas production function is given special consideration with a collection of related factors associated with this topic such as elasticity of demand and impacts of labor unions. Furthermore, in terms of the Cobb-Douglas Production Function, the behaviors of  for the different choices of  are significantly linear. An economic scenario in which unskilled and professionals are taken into account, the elasticity of the marginal utility function follows a linear, exponential, and logarithmic relationship for various choices of parameter.

Open Access Original Research Article

Assessing Lower and Higher Order Needs: A Cross-Cultural Comparative Study

Robert Klonoski

Journal of Economics, Management and Trade, Page 173-182
DOI: 10.9734/BJEMT/2014/6631

Clayton Alderfer proposed a framework of needs - existence, relatedness and growth – to simplify Maslow’s hierarchy and enable the concept to be empirically verified. Alderfer’s structure focuses on the individual and related individual needs to those things that a job or occupation could hope to satisfy. His framework was adapted and incorporated into the World Values Survey to measure respondents’ views on the meaning and purpose of work. Four value rankings in the survey assess the purpose of work in terms of the income, job safety and security, the value of associating with people the worker might like, and a sense of importance a job or occupation can provide. The question asked by this research is whether lower (income and security) or higher (association and job importance) order needs are the stronger motivators. It was determined that there was no significant difference in the level of work motivation between those people who are driven by lower order needs and those who are driven by higher order needs. The results were consistent across fifty-six national surveys. Self-assessed levels of work motivation, however, varied by country.

Open Access Original Research Article

Are there Simple Indicators as to Which IPOs Outperform the Market over the Long Term?

David E. Vance, Briance Mascarenhas

Journal of Economics, Management and Trade, Page 183-196
DOI: 10.9734/BJEMT/2014/6349

Aims: Most companies making an Initial Public Offering (IPO) underperform the market over the long term. Is this because investors are so enamored with IPOs that hope triumphs analysis? If investors are willing to invest in companies likely to underperform the market, someone will take them public. This raises the question as to whether there are simple indicators that can be used to identify IPOs likely to under or over perform the market over the long term.

Place and Duration of Study: This study is based on publically available information on Compustat, Hoovers On-line IPO Central, and the US Securities and Exchange Commission website www.sec.gov.

Methodology: This study analyzes the long term performance of 820 companies that went public in the United States from 1998 to 2007 and tracks their performance for an average of three and a half years. About 48.41% beat market returns defined as the Standard & Poor’s 500. Companies with the best and worst quintile of Underwriter Reputation, Assets, Revenue, EBITDA and EBITDA to Assets where compared, as were industries.

Results: The following factors were found to be statistically significant in identifying IPOs likely to outperform the market: (i) Underwriter Reputation (P <.01), (ii) Industry statistical significance varies among the 17 industries in the study, (iii) Assets (P <.01), (iv) Revenue (P<.01), (v) EBITDA (P <.01), and (vi) the ratio of EBITDA to Assets (P <.01). Simulation analysis using the Wilcoxon Sign Rank test confirms that by avoiding companies likely to underperform, a superior portfolio of IPO companies can be constructed (P = .05). Conclusion: This study found there are simple indicators for identifying IPO companies likely to outperform the market. No prediction is made as to specific companies, but results can be used to construct superior portfolios.  

Open Access Original Research Article

Factors Affecting Investment and Perceptions for the Bulgarian Market

S. Daly, Hayford Nsiah

Journal of Economics, Management and Trade, Page 197-212
DOI: 10.9734/BJEMT/2014/5162

This paper presents the research findings of a dual-survey process designed to understand the level of potential investor trust in the Eastern European market of Bulgaria both before and after being given information on the daily working environment for small businesses. The first survey inventories several key aspects of issues facing small businesses in Bulgaria and was distributed to potential investors. They are surveyed twice, both before and after exposure to the results of an inventory of owner issues. The second survey of Bulgarian business people was used to inventory these owner issues.

The current climate of transitional economies and European bailouts means uncertainty for all aspects of global business. By furthering understanding of perceptions of investors and actual Bulgarian business practices, this research attempted to ascertain if increased trust was possible and if increased trust would translate to willingness to create business partnerships. Both surveys utilized a Likert scale.  The potential investors surveyed were expatriates living in Sofia, Bulgaria and small business owners in the Mid-western United States. A second survey was given to Bulgarian small business owners.  This work served to identify currently held practices, issues and ideas encountered in the Bulgarian market. The initial survey of expatriates and small business owners showed a general lack of trust in, and understanding of, Bulgarian businesses, practices and their national context. After exposure to the inventoried results of the Bulgarian business environment, the surveyed individuals responded with increased levels of trust in multiple aspects of the Bulgarian business environment and a willingness to partner with, and invest in, these businesses.

Open Access Original Research Article

Factors Influencing the Choice of Wetland Valuation Methods in the Niger Delta, Nigeria

M. O. Ajibola

Journal of Economics, Management and Trade, Page 213-227
DOI: 10.9734/BJEMT/2014/4481

The focus of wetland valuation is on determining the compensation payable to the expropriated individuals or communities. In the conduct of wetland valuation, the Estate Surveyor and Valuer is faced with choosing the appropriate method(s) to adopt, hence this study examined the various factors considered by the Estate Surveyor and Valuer in choosing the method(s) he adopts. Seventy – two (72) questionnaires were retrieved, collated, analysed and presented using frequency distributions and percentages, relative importance index (RII) and principal component analysis (PCA). The study revealed that in valuing wetland resources, data availability and accessibility (RII = 4.16), availability of substitute sites (RII = 3.49), limitations of valuation methods (RII = 3.47) and people’s perception (RII = 3.00) are the major factors considered in the choice of wetland valuation method(s). The study further revealed that only 5.5% of the respondents took any course in environmental valuation while in school. Also, the course has not been included in the professional examinations conducted by the Nigerian Institution of Estate Surveyors and Valuers (NIESV). The paper recommends that both NIESV and higher institutions offering Estate Management courses should include environmental valuation in their curriculum, to ensure that Valuers are properly trained in the use and application of appropriate techniques of environmental valuation.

Open Access Original Research Article

Technoeconomic Projections with Artificial Neural Networks using an Ensemble of Sparsely-Sampled Bootstrapped Data

Mohammad Dabbas, Perambur S. Neelakanta, Dolores De Groff

Journal of Economics, Management and Trade, Page 228-263
DOI: 10.9734/BJEMT/2014/4185

Aims: The present study refers to developing an artificial neural network (ANN) that can be designed exclusively for ex ante forecasting in technoeconomic contexts using an ensemble set of sparse and insufficient sampled-data availed ex post.

Study Design: In general, the samples in a data set of technoeconomic structures would largely be limited in number due to sparse-sampling; also, availability of number of such sets is mostly inadequate for robust training of an ANN so as to obtain realistic inferences subsequently in the prediction phase. Hence, a sparsity-recovery strategy is advocated via a cardinality enhancement procedure (through Nyquist sampling) performed on the sparse data set in order to augment the number of samples in its sampled-data space. Further, the concept of statistical bootstrapping technique of resampling is invoked and applied on the cardinality-improved subset so as to obtain an enhanced number of data sets. This ensemble of data set is then adopted to facilitate robust training of the test ANN.

Place and Duration of Study: The studies were conducted (2012-2013) at: Department of Computer and Electrical Engineering and Computer Science, College of Engineering & Computer Science, Florida Atlantic University, Boca Raton, Florida 33431, USA.

Methodology: The study governs technoeconomic ex ante projections pertinent to a wind-power generation business complex elucidated via ANN-based forecasting. Relevant test ANN is designed to accommodate training with an ensemble of sampled set available ex post but, in limited numbers. The associated scarcity is recovered by artificially enhancing the data space to an adequate extent via Nyquist sampling and bootstrapping techniques. Further, the test ANN designed corresponds to a multilayer perceptron (MLP) supporting backpropagation of the perceived error at the output with respect to a supervisory value. It accommodates the bootstrapped data space at its input relevant to technoeconomic details on a practical wind-power system performance reported in the literature. The training and prediction exercises on the test ANN corresponds to optimally elucidating output predictions in the context of the technoeconomics framework of the power generation considered.

Results: Using the test ANN trained with bootstrap-enhanced, scarcity-recovered sparse data on wind-power generation statistics and associated plant economics, reliable inference (in the prediction phase) is achieved on the system performance. That is, the ANN output obtained depicts forecast projections on the productivity of electric power generation in the ex ante regime. Simulation studies thereof and results obtained demonstrate the efficacy of the method proposed, bootstrapping algorithm developed and the use of MLP in the technoeconomic contexts.

Open Access Original Research Article

Is Entrepreneurship a Significant Determinant of Financial Development?

Michael Adusei

Journal of Economics, Management and Trade, Page 264-274
DOI: 10.9734/BJEMT/2014/6382

Aims: The paper explores whether entrepreneurship is a significant determinant of financial development in 12 African countries.

Study Design:  Cross-sectional Study

Place and Duration of Study: The study is in 12 African countries between 2004-2011

Methodology: Total domestic credit provided to the private sector by the banking sector as a share of GDP and the number of new business start-ups registered in each fiscal year are used to measure financial development and entrepreneurship respectively.  We use data (2004-2011) from 12 African countries(Ghana; Algeria; Botswana; Egypt; Gabon; Lesotho; Mauritius; Senegal;  South Africa; Togo;  Zambia; and Nigeria). Two estimation techniques are used: Fully Modified Ordinary Least Squares (FMOLS) and Generalized Method of Moments (GMM) techniques. The latter is used as a control measure to ascertain the robustness or otherwise of the results obtained from the former.

Results: We find evidence in support of a positive statistically significant relationship between entrepreneurship and financial development.

Conclusion: The paper concludes that entrepreneurship significantly predicts variations in the financial development of the study countries.

 

Open Access Original Research Article

The Agency Theory: The Main Foundational Base to Explain the Auditing in Portuguese Investor-Oriented Firms

Bruno José Machado de Almeida

Journal of Economics, Management and Trade, Page 275-304
DOI: 10.9734/BJEMT/2014/4758

In today's society, theories justifying auditing have to be framed in the social and cultural context in which this branch of knowledge exercises a fundamental and credible role in the dissemination of financial information. Today, the audit is an important control mechanism of any economic system. Therefore, finding a suitable theory to explain its existence, in a context of constant change and within a contradictory debate underlying the various approaches - until now put forward by English-speaking authors - is an academic requirement, an intellectual challenge and an important contribution to a more appropriate and universally accepted conceptual framework. We also carried out an empirical study with Portuguese auditing professionals in order to investigate how they interpret and explain the existence of the audit in society.

Aims: The study aims a framework of agency theory in the justify theory of audit, by testing the following hypothesis: H1 – audit professionals in Portugal interpret the audit based on agency theory; H2 – audit professional in Portugal explain its existence based on information theory. 

Study Design: Overview of the different theories that justify audit and their successive integrations.

Place and Duration of Study: Portugal, between 2009 to 2010.

Methodology: Interpretative and a field survey of 1275 enquiries to professionals and higher education auditing teachers.

Results: Response rate was 447 (35%) consisting of 51 (4%) for internal auditors, 25 (2%) for court auditors, 159 (12%) for higher education teachers and 212 (17%) for statutory auditors. Three hypotheses were tested using X2 at 0.95 level of confidence and 0.05 level of significance. X2 indicates that the factors indicated do not influence the answers given. All areas of professional activity have values p<0.05, indicating that these professionals demonstrate a preference for information theory with the exception of auditor’s with connections to international network, who indicate a greater extent agency theory.

Conclusion: The study shows that the credibility theory and agency theory, as an attempt to explain reality, are too reductionist, their approach being too focused on particular or atomized aspects, and therefore do not achieve a reasonable level of general acceptance. In turn, a more in-depth analysis of the content of each explanatory theory, points to the existence of firm connecting links between them, and suggests that agency theory is a deeper, more concrete, rational and suitable explanation in relation to the present economic environment, characterised by a permanent conflict of interests, although in Portugal, the empirical evidence points to information theory.

Open Access Original Research Article

Are Exchange Rates in Nigeria Useful in Predicting Global Commodity Prices?

Dauda Olalekan Yinusa, Adebayo Adedokun

Journal of Economics, Management and Trade, Page 305-318
DOI: 10.9734/BJEMT/2014/6931

In this paper, we explore granger causality between the global commodity prices and exchange rate of Nigerian ‘Naira’. The analysis through the use of Vector Error Correction (VEC) Granger Causality/Block Exogeneity Wald Test shows that the long run pattern of crude oil prices at the international market could be largely predicted given the basic information on real exchange rate of Naira. The same applies to the long-run predictability of the real exchange rate given basic information on the price of crude oil. Meanwhile, the information on the nominal exchange rate of Naira could only assist in the short-run prediction of the global prices of crude oil and other commodity prices. Consequently, given that Nigeria, like many other countries do not have control over world commodity prices, since they are determined competitively, the outcome of this analysis will enable policy makers to adapt domestic policies to curtail adverse consequences of unexpected movement in world commodity prices. It is especially useful in predicting the volatile crude oil price which is the economic nerve of Nigeria economy, based on the prior information from domestic real exchange rates.

Open Access Original Research Article

Crude Oil the Forerunner of Internationalisation and ‘Grandparent’ of Diversity Management: The Nigerian Experience

Olusoji George, Oluwakemi Owoyemi, Mofope Adegboye

Journal of Economics, Management and Trade, Page 319-332
DOI: 10.9734/BJEMT/2014/6629

Aim: The study examines how the discovery of crude oil in Nigeria gave birth to the recent phenomena of multinationalisation/internationalisation of business and globalisation which brought together people from different socio-cultural backgrounds to work together in the various workplaces thereby making managing diversity problematic. With the resulting challenges, the paper presents the need for greater attention to be placed on examining the complexities of workplace diversity in the Nigerian workplace and the implication for the future of multinational businesses and their employees in this location.   

Study Design: This paper relies on descriptive qualitative research methodology and will examine the impact of the influx of foreign workers on the already diverse workforce

Place and Duration of Study: Nigeria from 1950’s (before the discovery of crude oil) to 1956 (after the discovery of oil)

Methods and Methodology: The study relied on secondary sources of data on non-oil exports (cocoa beans, in the South-West, Groundnut in the North and Oil palm in the South East) in the 1950’s and the discovery of crude oil in 1956 at Oloibiri.

This paper employs a descriptive and historical research methodology through secondary data sources. Secondary data are information collected and recorded by someone else prior to and for purposes other than the current needs of the researcher [1]. They are therefore usually historical and does not necessitate access to respondents or subjects  [2]. This source of data collection is becoming very popular in business researches, market survey, facts-findings, model building, and among social scientists generally [1]. The major advantage of this form of data collection is in the fact that it is less expensive especially when compared with the primary source of data collection; as it has been previously collected [3]. Secondary sources are good sources of proceeding with researches even if the researcher still has to go back to the primary source; there is at least something relevant to be used as a starting point [4]. One can also build on the researches already conducted by other people using the secondary source as the basis of judgement. There are some instances where only the secondary sources can be used; and there was no way of considering primary source at all; for example a researcher conducting researches into events that happened a long time ago has no other choice than to depend on secondary source [1]. For the purpose of this study, secondary data sources were adapted and at no point in this research was there the use of primary data especially as several historical facts were applied in developing the paper.

The major shortcoming in this form of data collection is in the fact that a lot of care must be taken in using secondary sources because the information was not collected with the present study in mind, so it might not specifically meet the researcher’s needs and there will be an issue of relevance; care must therefore be taken before making inferences and conclusions or else a lot of errors might be committed [5]. In selecting secondary data, the present researcher relied on historical data from several sources including books, journals, archives of economic and public government databases and business news. In building a timeline of economic and business data this addressed the question of relevance in several aspects including; if the subject matter is consistent with the present research, if the time period what was really needed and if the information presented addresses the present research interest area(s).

Another major disadvantage of applying secondary sources is that researchers cannot confirm the accuracy of information and this affects its reliability; if there were errors in the secondary data, the researcher will automatically inherit the errors [3]. Secondly, researches about the past are always problematic because the actors might have died or as people have short memories some important events might be forgotten. Moreover, it might be difficult if not impossible to address some issues because of the need to respect individual privacy as well as commercial implications [5]. For example, in some cases the present management or administrators might not want to admit their roles in the past when things turned negative or provoked negative reactions and its only historical data that can effectively expose this [6,7]. 

This type of research methodology is regarded as one that does not fit into either quantitative or qualitative research method; this is because it utilises elements of both within the same study [6]. This type of research methodology can also employ multiple variables for analysis; on the other hand it is unlike other methodology in that it requires only one variable [8]. The four main purposes of secondary sources methodology are: to describe, to explain, to validate findings and to infer from all the findings having been validated to be true [9].

Description emerges following the creative exploration, and helps to arrange the findings in an order that will help to be fit for explanations and these explanations can then be tested to validate the variables being studied. With the aid of description, knowledge is illuminated and facts that were ignored can now be brought to light and be better understood [10]. This method also helps in describing natural and man-made phenomena that will be very useful to other researchers and policymakers while prediction is also made easier at least to some extent [11].  The study is primarily descriptive and weaves qualitative issues with quantitative facts to present its discussions.

Conclusion: The paper concludes that the favourable economic indexes and realities ushered in by the discovery of crude oil were fertile grounds for Multinationalisation, Globalisation and Internationalisation and increased the complexity of diversity management in a very diverse multi-cultural Nigeria. Furthermore, increased culture studies will aid in the understanding of diversity and how to manage it. This will be beneficial to the field of international management and the operations of multinationals in foreign locations in the long-run.