The relevance of earnings and cash flows in a heavily regulated industry: Evidence from the Greek banking sector

This study examines the informational quality of annual accounting earnings within Greek banking institutions taking into consideration the most significant risks facing by such firms and specifically interest rate risk, credit risk, liquidity risk and solvency risk, alongside with the persistence of earnings and bank size as significant determinants of ERCs. Data analysis over a period of ten years (1995-2004) revealed that earnings have higher incremental importance in explaining stock return movements compared to cash flows since earnings change has been found to affect stock returns positively. Additionally, interest rate risk has a positive but not significant impact on the return-earnings relation but on the contrary solvency risk, credit risk and liquidity risk proved to have a negative impact on the valuation process for both small and big-sized banks. Finally, tests on the incremental informativeness of cash flows when earnings are transitory provide significant results suggesting that investors seek for alternative measures of banks' performance when earnings are characterized by increased extremity but inversely cash flows and earnings seem to be equally value relevant when investors evaluate big-sized banking institutions. The results are generally robust to the specification of the empirical models and the research design employed in our study.     

Does Higher Education Affect Economic Growth? The Case of Greece

Abstract

The purpose of the study is twofold: first, it presents an extensive review of empirical studies that have examined the relationship between higher education and economic growth. Second, it estimates the effect of higher education on economic growth in Greece over the period 1960–2009. It applies the model introduced by Mankiw, Romer, and Weil (1992 Mankiw, G., Romer, D., & Weil, D. (1992). A contribution to the empirics of economic growth. Quarterly Journal of Economics, 107(2), 407–437. doi: 10.2307/2118477[Crossref], [Web of Science ®] , [Google Scholar]) by using the higher enrolment rates as a proxy of human capital. The paper employs cointegration and an error-correction model to test the causal relationship between higher education, physical capital investments and economic growth. The empirical analysis reveals that there is a long-run cointegrating relationship between higher education, physical capital investments and economic growth. The elasticity of economic growth with respect to higher education is 0.52%. The results also suggest that there is evidence of unidirectional long-run and short-run Granger causality running from higher education and physical capital investments to economic growth.     

CORPORATE DIVIDEND POLICY DETERMINANTS: INTELLIGENT VERSUS A TRADITIONAL APPROACH

Dividend is the return that an investor receives when purchasing a company's shares. The decision to pay these dividends to shareholders concerns several other groups of people, such as financial managers, consulting firms, individual and institutional investors, government and monitoring authorities, and creditors, just to name a few. The prediction and modelling of this decision has received a significant amount of attention in the corporate finance literature. However, the methods used to study the aforementioned question are limited to the logistic regression method without any implementation of the advanced and expert methods of data mining. These methods have proven their superiority in other business‐related fields, such as marketing, production, accounting and auditing. In finance, bankruptcy prediction has the vast majority among data‐mining implementations, but to the best of the authors’ knowledge such an implementation does not exist in dividend payment prediction. This paper satisfies this gap in the literature and provides answers that help to understand the so‐called ‘dividend puzzle’. Specifically, this paper provides evidence supporting the hypothesis that data‐mining methods perform better in accuracy measures against the traditional methods used. The prediction of dividend policy determinants provides valuable benefits to all related parties, as they can manage, invest, consult and monitor the dividend policy in a more effective way. Copyright © 2013 John Wiley & Sons, Ltd.     

New development: Public service enterprises and consumer-centric management

This article presents consumer satisfaction surveys for three very different public enterprises in the city of Edessa in Greece: the local water and sewerage company, the municipal conservatory of music and a café/restaurant. The majority of consumers were satisfied with the services provided to them by these three public enterprises. Relationships with consumers were managed very differently by the enterprises suggesting that service delivery should be based on the individual characteristics of the enterprise and the environment it operates in.     

Productivity Trends and the Sterling Real Exchange Rates*

This paper provides favorable econometric evidence for a productivity‐based model of the pound/euro real exchange rate. We find that a 1% increase in UK productivity is consistent with a 3.5% real depreciation of sterling. Likewise, a 1% increase in euro area productivity is compatible with a 5.16% real appreciation of sterling. The asymmetric response of UK and foreign productivity shocks corresponds well with our model if UK labor supply is more elastic than euro area labor supply. Estimates of equilibrium exchange rates suggest that sterling was not overvalued at its 2004Q3 level vis‐à‐vis the euro.     

A short proof of Deb’s Theorem on Schwartz’s rule

Schwartz in (Nous,7, 1972, Definition, 3) introduces a generalization of the Condorcet criterion, which is the classical approach to rational choice in the context of cycles, and he defines the Schwartz set. Deb (J Econ Theory 16:103–110, 1977) shows that the Schwartz set consists of the maximal elements according to the transitive closure of the asymmetric part of a binary relation corresponding to a choice process or representing the decision maker’s preferences. This note provides a short and simple proof of Deb’s theorem on the characterization of the Schwartz set.     

Toward rigor and parsimony: a primary validation of Kolvereid’s (1996) entrepreneurial attitudes scales

Questioning the validity of scholarly work is not a typical path to publication in the management field. However, although considerable scholarship assesses entrepreneurial attitudes and intentions models of behaviour, methodological weaknesses in scale development have hampered scholars’ ability to rigorously interpret and build upon their research findings. We review 20 years of research and discover that the pioneer measure of entrepreneurial attitudes as a predictor of self-employment intentions, has yet to be empirically validated. We show that construct and measurement differences, one-off modifications to existing scales and a lack of adequate justification may partially explain why studies in the entrepreneurship education domain have produced inconsistent results. We address this limitation by performing factor analytic techniques on data from two sets of English-speaking university students from two North American countries. The result is a more parsimonious and streamlined ‘mini-Kolvereid’ scale. We further demonstrate that this scale is an effective predictor of entrepreneurial intentions.     

Seasoned equity offerings,operating performance and overconfidence: Evidence from the UK

Prior research on seasoned equity offerings in UK shows that equity issuers report a significant long-term underperformance in the period following the event. However, the factors contributing to such underperformance are not yet fully explored. Using a sample of rights issues for the period 1988–1998, this study suggest that the long-term underperformance is significantly related to a deterioration of companies’ operating fundamentals in the post-offering period. Further comparison between “Best” and “Worst” post-issue performers reveals that long-term underperformance is predominantly robust in the case of fastgrowing firms with over-optimistic management. This evidence is consistent with the managerial overconfidence and “empire-building” hypotheses.     

On the determination of maximum accuracy for regression processes with endogenous variable constraints

Optimal regression design is studied for a sequential problem in which the experimenter wishes to constrain the probable value of a dependent variable to the vicinity of a given target. In the context suggesting the problem, the dependent variable is an effluent, and the target arises from anti-pollution regulation.     

Short-run forecasts of consumer expenditures based on the linear expenditure systems

Summary The main purpose of this paper was to estimate various alternative expenditure systems for the Canadian economy using quarterly data and then to evaluate the performance of the models on the basis of short-run predictions. The results indicate that although the predictive performance of all the estimated models is similar, there is significant evidence in support of the LES. While a better evaluation of the models would consider the error structure in greater detail, that is a task for further research. For quarterly Canadian data, the LES provides somewhat better predictions than its competitors and satisfies all the theoretical criteria and restrictions imposed by its specification.