The relevance of quantifiable audit qualifications in the valuation of IPOs

How useful are audit qualifications to financial statement users? We analyze a sample of 204 firms that went public at the Athens Stock Exchange over the period 1987–2002. For 149 of these firms, auditors report quantitative estimates of the amount by which assets are overstated and/or liabilities are understated in reported financial statements. We find that underwriters and their affiliated analysts do not incorporate the negative information provided by these qualifications into offer prices and earnings forecasts. Investors, however, appear to efficiently impound the negative implications of the audit qualifications into stock market prices within the first day of trading. The results suggest that underwriters tend to align their interests with the interests of their clients, the old stockholders, at the expense of the new stockholders. They also suggest that the practice of reporting quantifiable qualifications in audit reports is valuable to investors given that they are disclosed by an expert.     

A novel approach in risk evaluation for ship-to-ship (STS) transfer of cargo using process failure mode and effects analysis (PFMEA)

The ship-to-ship transfer (STS) of oil and oil products plays currently an important role on a worldwide scale. Usually, it refers to the transfer of cargo between seagoing ships positioned alongside each other. Although the procedure of STS transfer has become a day-to-day practice, it remains a difficult operation, which deserves special consideration. To reduce the adverse effect of a potential accident on humans as well as on the environment, a risk assessment is necessary to be done to evaluate the hazards that derive from such a difficult procedure. To this end, the process failure mode and effect analysis (PFMEA), which is under the umbrella of the traditional failure mode and effect analysis, is properly modified and applied to assess the hazards of a typical STS transfer procedure. PFMEA is based on the risk priority number with regard to each risk related to the procedure of interest by multiplying the numerical values of the severity, occurrence and detection indices. Although PFMEA is currently applied mainly to manufacturing processes, the aim of the paper was to implement this methodology to STS transfer of petroleum products. According to the study of PFMEA implementation, the petroleum cargo is the product similar to the product in a manufacturing procedure; hence, the different phases of the STS procedure are similar to the production line of the manufactured product. Moreover, proposals to eliminate the disadvantages of the implementation of PFMEA by a qualitative manner (using linguistic terms) are proposed. The objective target of this effort is to assess and evaluate the effectiveness of implementing the PFMEA in a maritime activity and therefore to address the advantages and disadvantages of such an approach.     

Foreign exchange intervention and equilibrium real exchange rates

Monetary authorities intervene in the currency markets in order to pursue a monetary rule and/or to smooth exchange rate volatility caused by speculative attacks. In the present paper we investigate for possible intervention effects on the volatility of nominal exchange rates and the estimated equilibrium behaviour of real exchange rates. The main argument of the paper is that omission of intervention effects – when they are significant – would bias the ability to detect any PPP-based behaviour of the real exchange rates in the long run. Positive evidence for this argument comes from the experience of six Central and Eastern European economies, whose exchange markets are characterised by frequent interventions.     

Leading indicators of non-performing loans in Greece: the information content of macro-, micro- and bank-specific variables

We examine the information content of a unique set of macroeconomic, bank-specific, market and credit registry variables as regards their ability to forecast non-performing loans using a panel data set of nine Greek banks. We distinguish between business, consumer and mortgage loans and investigate their differences with respect to their optimal predictors. The quasi-AIM approach (Carson et al. in Int J Forecast 27:923–941, 2010) is utilized in order to take into account heterogeneity across banks and minimize estimation uncertainty. In addition, we calculate a number of forecasting measures in order to take into account the policy makers’ preferences. We find that market variables, specifically the supermarket sales, confidence indices for the services and construction sector and the business sentiment index represent good forecasting variables for most categories of NPLs. In addition, industrial production is the optimal predictor for consumer NPLs and imports for business NPLs. Finally, bank-specific variables represent top-performing leading indicators for business NPLs. Our results have significant implications for stress-testing credit risk in a top-down manner and for supervisory and macro-prudential policy design.     

Information in balance sheets for future stock returns: Evidence from net operating assets

In this paper, we show that the negative relation of net operating assets (NOA) with future stock returns first documented by Hirshleifer et al. (2004) applies to both net working and investing pieces of NOA, while it is mostly driven by asset NOA components. Predictability of returns is significant only for their unexpected parts (unrelated to past sales growth) and not uniform across different industries. We also find that only high (low) NOA firms with asset expansion (contraction) and weak (strong) background of profitable investments exhibit negative (positive) abnormal returns. Our evidence suggests that the NOA anomaly may be present due to a combination of opportunistic earnings management and agency related overinvestment.     

A Bayesian approach to detecting nonlinear risk exposures in hedge fund strategies

This paper proposes a model that allows for nonlinear risk exposures of hedge funds to various risk factors. We introduce a flexible threshold regression model and develop a Bayesian approach for model selection and estimation of the thresholds and their unknown number. In particular, we present a computationally flexible Markov chain Monte Carlo stochastic search algorithm which identifies relevant risk factors and/or threshold values. Our analysis of several hedge fund returns reveals that different strategies exhibit nonlinear relations to different risk factors, and that the proposed threshold regression model improves our ability to evaluate hedge fund performance.     

Business Cycle Synchronization in the Enlarged EU: The Role of Bilateral Trade and FDI

The aim of this paper is to investigate the determinants of business cycle (BC) synchronization across 21 (old and new) countries of the enlarged European Union (EU). It utilizes international data to evaluate the linkages among bilateral trade in goods, bilateral foreign direct investment (FDI) flows and BC co‐movements. The paper contributes to the current literature by examining the relationship using the latest available data (sample range: 1998–2011), and thus taking into account the European sovereign debt crisis period. It also examines the role of FDI, which though increasingly important in the flows of international production factors, is currently neglected by the literature. Preliminary results show that FDI has no direct effect on BC synchronization while international trade helps to synchronize BCs but only before the recent financial crisis (pre‐2008) and only for the traditional EU countries.     

Exploring geographic variation in corporate broadband adoption; evidence from Irish small- and medium-sized enterprises (SMEs)

Despite its growth experience, Ireland still lags behind in international league tables on broadband adoption and within Ireland great disparities exist between central and peripheral regions. This paper explores the context-specific determinants of broadband adoption among Irish small- and medium-sized enterprises (SMEs), attempting to shed some light on the sources of the considerable geographic variation in particular. Drawing from determinants of broadband adoption identified in literature the authors develop a number of plausible hypotheses. Using cross-section data from a ComReg survey of Irish-based SMEs, a logit model of broadband adoption is estimated. Among other factors, a company's industrial sector and other demand proxies are good predictors of broadband adoption. Controlling for other factors, regional ISP market concentration appears to be negatively associated with the probability of broadband adoption. It is argued that, in the absence of more detailed information, statistics on regional-level market structure could be a promising indicator of the supply-side.     

Usability of Chinese Destination Management Organization Websites

Information Communication Technology (ICT) has had a large impact on tourism industry. In Mainland China (hereafter known as China), the increasing popularity of Internet applications to its tourism industry is evident by the rapid growth of Chinese tourism websites. In 2005, e‐tourism in China has reached an income of RMB12.5 billion or US$1.63 billion, showing that although a small percentage of Chinese use the Internet, their online consumption is still considerable. While the e‐tourism market seems promising, there exist a limited number of prior studies on website evaluations in the context of China. This research explores usability, a contemporary issue of website design, and focuses on the provincial Destination Management Organization (DMO) websites in China. Research findings include a checklist of criteria for assessing DMO website usability. Findings showed that China's DMO websites had medium problems, and the best and worst performing destinations were Beijing and Ningxia. In addition, the usability indices had no significant relationship with website performance and level of tourism regional development which was represented by total tourism income in the destination. Findings of this study would be of interest to readers for better understanding the current development of DMO websites in China. Industrial practitioners may consider adopting a similar approach to evaluate their websites.     

Tourists as Mobile Gamers: Gamification for Tourism Marketing

Gaming as a cutting-edge concept has recently been used by some innovative tourism sectors as a marketing tool and as a method of deeper engagement with visitors. This research aims to explore the gamification trend and its potential for experience development and tourism marketing. Using a focus group, this paper discusses gaming and tourism, and explores what drives tourists to play games. The results suggest tourists’ game playing motivation is multidimensional. Players tend to start with purposive information seeking, then move on to an intrinsic stimulation. Socialization is also an important dimension. The research demonstrates several implications for tourism marketing.