The floating stock policy in fast moving consumer goods supply chains

The floating stock distribution concept exploits intermodal transport to deploy inventories in a supply chain in advance of retailer demand. In this way response times are reduced and storage costs can be reduced as well by having products in the pipeline. In this paper we present two mathematical models to analyse this policy with backlogging allowed. The first one tries to optimize the advanced shipping time of containers to intermodal terminal, and the second optimizes the total number of containers in pipeline and terminal. A comparison is made with the simulation outcomes of applying previously developed strategies, which shows that this concept has advantages in inventories over other strategies.     

Corporate Reporting in Central and Eastern Europe: Issues,Challenges and Research Opportunities

The purpose of this paper, building upon the papers included in this special section of Accounting in Europe on Corporate reporting in CEE countries and on our knowledge of the region, is to broaden out and open up dialogue and debate about how local institutions are evolving and impact the corporate reporting practices in this under-researched region. We begin by discussing the institutional context for conducting research on corporate reporting by entities in Central and Eastern Europe (CEE), within the broader context of emerging, transitional economies. We also reflect on how research conducted on CEE countries can make a relevant contribution to the international literature, and exemplify by summarizing the research questions and findings of the papers included in the special section. A future research agenda emerges, given the gaps in the international literature and the future research implications suggested in the papers constituting the special section.     

Global industry portfolios and short-term predictability of returns: Is it there?

This paper explores the degree of success of a large set of active trading rules that have been popularized in the literature on the short-term predictability of returns in equity and foreign exchange markets by extending the scope of research in three dimensions: global portfolios, industry portfolios, and exclusive versus inclusive portfolios. Our results show that after adjusting for (1) the impact of nonsynchronous prices in the reported closing index levels which causes spurious autocorrelations in returns, (2) data snooping bias caused by searching through a large number of possible trading strategies in order to find a few that yield superior in-sample performance, and (3) transaction costs that reduce any profits from active trading, the risk-adjusted profits generated by short-term trend chasing trading rules are generally not statistically significant and the hypothesis of no outperformance of trading rules over either buy-and-hold or risk-free benchmark return cannot be rejected in most industries. Such findings favor short-term market efficiency and are hardly comforting for active traders.     

Substituting Distribution for Growth: The Political Logic of Intergovernmental Transfers in the Russian Federation

Given limited resources and economic realities, how do politicians distribute monetary transfers in order to retain office? Previous work has largely focused on two models – a core model of rewarding loyal supporters and a swing model of purchasing the support of easily swayed voters. Empirical results have proven mixed, however. In this article, we argue that these mixed results are due to economic factors, which condition politicians' distributive strategies. In our model, we consider that politician and voters are involved in a repeated game, where past expectations condition future strategy. Current (core) supporters who receive few benefits and perceive themselves worse off than other, less loyal, groups are likely to be less loyal themselves tomorrow. In our model, politicians avoid this by providing their supporters consumption benefits directly, in the form of transfers, or indirectly, via strong economic growth. Where economic growth is good, politicians can distribute less to core supporters, who benefit from the rising economy. Where economic growth is weak, however, politicians make transfers to their core supporters to ensure future loyalty. We test our theory using data on federal transfers from the Russian Federal government to 78 Russian Regions from 2000–2008.     

Predictability of equity returns during a financial crisis

An occurrence of a market crash or a financial crisis has long been considered a cause of market inefficiency. An inefficient market commonly implies return predictability and the existence of profitable opportunities for traders and speculators. Technical analysis has been a popular tool to identify predictable patterns in asset prices. The usefulness of a large universe of technical trading rules popularized in the existing literature on technical analysis is tested when they are applied to a set of equity markets that are generally considered developed and efficient during the two most recent periods of major financial turmoil: the 1997 Asian financial crisis and the 2008 global financial crisis. Three major statistical deficiencies that existing studies on return predictability are commonly criticized for – data snooping bias, nonsynchronicity bias and transaction costs – have been incorporated in the analysis. Technical trading rules are largely unable to yield abnormal excess returns over the passive benchmark after data snooping bias, nonsynchronous pricing and transaction costs are accounted for. Chaotic price movements typical for a volatile market during a financial crisis are likely to have an adverse effect on the performance of active trend chasing trading strategies.     

The value relevance of earnings in a transition economy: The case of Romania

We investigate the value relevance of earnings on the Bucharest Stock Exchange. We find that the association between accounting earnings and stock returns is comparable to the levels reported by studies conducted on more mature markets, and that it is higher for securities issued by small companies. Excluding losses from the analysis increases the value relevance of earnings, which confirms the transitory nature of negative earnings, already documented by prior studies. We also find that the regression coefficient of earnings changes is negative and we provide evidence consistent with the hypothesis that it is a consequence of the relative inefficiency of the market. Finally, the “prices lead earnings” hypothesis formulated for more mature markets is not supported by our results.     

Using Real Activities to Avoid Goodwill Impairment Losses: Evidence and Effect on Future Performance

We examine whether managers postpone the recognition of goodwill impairment by manipulating cash flows and the consequences of such a strategy on future performance. According to SFAS 142, an impairment loss must be recognized if the reporting unit's total fair value to which goodwill has been allocated is less than its book value. A growing body of empirical evidence shows that managers delay the recognition of goodwill impairment in accounting books. However, past literature is silent on how managers convince various gatekeepers (e.g., auditors, financial analysts) that recognizing an impairment loss is unnecessary although it seems economically justified. SFAS 142 requires managers to forecast future cash flows to justify the decision to recognize, or not, an impairment loss. Therefore, we predict that managers manipulate upward current cash flows to support their choice to avoid reporting an impairment loss. We also test whether or not this real earnings management is detrimental to future performance. Based on a sample of US firms over the period 2003–2011, we document that firms suspected of postponing goodwill impairment losses exhibit significantly positive discretionary cash flows compared to various control groups. We also find that this real activities manipulation is detrimental to future performance.     

Analysis of a threshold dividend strategy for a MAP risk model

We consider a class of Markovian risk models in which the insurer collects premiums at rate c₁(c₂) whenever the surplus level is below (above) a constant threshold level b. We derive the Laplace-Stieltjes transform (LST) of the distribution of the time to ruin as well as the LST (with respect to time) of the joint distribution of the time to ruin, the surplus prior to ruin, and the deficit at ruin. By interpreting that the insurer pays dividends continuously at rate c₁?c₂ whenever the surplus level is above b, we also derive the expected discounted value of total dividend payments made prior to ruin. Our results are obtained by making use of an existing connection which links an insurer's surplus process to an embedded fluid flow process.     

Investigation of causality based on complex use of statistical methods (case study of social research)

The article deals with the problem of revealing cause–effect relations in the social research by a complex of statistical methods. The ways for solving the problem for experimental and non-experimental data are regarded. In the research the role of the statistical methods in formation of causal relation hypotheses is revealed and the methods of hypotheses verification in conditions of experiment or upon latent structure modelling are discussed. The possibilities of the use of the factor analysis and the analysis of variance in revealing cause–effect relations are also considered. Special attention is paid to the interpretation of the analysis results depending on the character of the empirical data and the conditions they were obtained in. The approaches to causal relations revealing based on the development of the schemes of the complex analysis of the empirical data by the statistical methods aimed at investigation of the cause and effect relation in a long-term research are suggested. We take into account the hierarchical structure of the schemes reflecting the structure of the subject of cognition, the specificity of which requires the use of “rigid” and “flexible” models in combination. Its variant could be the method of structural equation modelling. The article gives an example of the research of causal relations in the assessment of the quality of education services in higher institution. Each stage of the assessment is provided with building of certain “rigid” or “flexible” mathematical models. Their combination allows using the obtained quality parameters as an instrument of regulation of interaction between education service providers and clients.     

Sorting equilibrium in a multi-jurisdiction model

This paper analyzes a general model of an economy with heterogeneous individuals choosing among two jurisdictions, such as towns or political parties. Each jurisdiction is described by its constitution, where a constitution is defined as a mapping from all possible population partitions into the (possibly multidimensional) policy space. This study is the first to establish sufficient conditions for existence of sorting equilibria in a two-jurisdiction model for a policy space of an arbitrary dimension.