Miroslav Todorović, Đorđe Kaličanin and Aleksandra Nojković
A large number of acronyms which indicate diff erent performance metrics, such as EBIT (Earnings Before Interest And Taxes), EBITDA (Earnings Before Interest, Taxes, Depreciation, And Amortization), ROIC (Return On Invested Capital), NPV (Net Present Value), EVA (Economic Value Added), IRR (Internal Rate Of Return), ROE (Return On Equity), ROA (Return On Assets) etc. are in use nowadays. In practice, managers cannot and do not want to apply all of these metrics and managers’ choice does not necessarily rely on what theory emphasizes as their advantages and disadvantages. We surveyed 64 CFOs in order to explore the corporate practice in the Republic of Serbia. The DCF-based capital budgeting metrics are dominant compared to the traditional metrics, and the one that is used the most is the profi tability index, only to be followed by the IRR and the NPV. The Payback Period is yet frequently used. The earnings-based corporate performance metrics are still the most important. However, the presence of EVA and balanced scorecard is not negligible. Large companies use them signifi cantly more than small companies. The orientation towards EVA and balanced scorecard increases with the internationalization of a fi rm as well. Finally, companies using sophisticated capital budgeting metrics are prone to using sophisticated corporate performance metrics.
Fang Ying1 and Zhao Wen-ping2
In recent years, the worsening of the quality of the air has urged more people to att ach great importance to circular economy. Shaanxi, abundant in natural resources, maintained the GDP growth rate of 14.9% during the period of the twelfth fi ve-year plan. However, the fast economic growth under the extensive traditional economic growth mode renders Shaanxi inadequate in resources supply and noticeably worse in ecological environment issues. With the method of the IPAT equation, this paper quantitatively analyzes the developmental stage and the developmental level of the circular economy of Shaanxi to cover the shortage of the previous studies having only been focused on the policy study and the practice mode. The result shows that Shaanxi is in the intermediate stage of circular economy and the advanced stage has an apparent advantage over the intermediate one by comparing their energy consumption and solid pollutant discharge. The development experience of Shaanxi, a typical province of China, has guidance and reference signifi cance to China and other developing countries.
Vladimir Mićić
This paper examines industrialization and structural change induced thereof, which are the main drivers and bearers of economic development. The author observes that the industry of the Republic of Serbia is devastated due to sudden and premature tertiarization as well as inadequate reforms. The current structures of both the economy and the industry do not have a sufficient capacity to ensure sustainable economic development; hence, the aim of the research presented in this paper is to emphasize the importance of reindustrialization and the implementation of structural changes in the Republic of Serbia. The paper starts from the premise that industry is the main driver and the bearer of economic growth and development. Therefore, it is necessary for the Republic of Serbia to turn to reindustrialization and implement structural changes in this sector given the fact that the levels of the development and competitiveness of the industry are correlated to the intensity of industrialization. The research findings indicate that developed industrial countries are characterized by more effective structural changes and more propulsive production that creates higher value-added products. This reflects not only at the level of the industrial development but also at the level of the competitiveness, volume and quality of exports.
Fan Xiufeng, Liu Bolong and Liu Qiong
This article is based on the years from 1991 to 2012 of the nine categories of the provincial pollutant discharge indexes of China, uses the „vertical and horizontal method“ to calculate the comprehensive indexes that can fully measure the provincial pollutant discharge situation of China, establishes a dynamic inter-provincial panel data regression model and makes an empirical test on the relationship among foreign direct investments, foreign trade and pollutant discharge these three factors. The results show that foreign direct investment and foreign trade in diff erent regions have a diff erent impact on pollutant discharge. Therefore, local governments should at all levels be based on local conditions to att ract foreign investment and develop foreign trade for the targeted optimization of the structure of introducing foreign investment and improving the quality of foreign trade growth, thus improving the overall situation of China’s pollutant discharge.
Fatih Burak Gümüş1 and Feyyaz Zeren2
The efficient market hypothesis is one of most important theories in finance and one of the most important research areas for both developed and developing stock markets. In this study, the random-walk hypothesis is tested for the main stock markets of the G-20 countries. The linearity of the series is determined in the first stage. In this context, 16 of 17 markets have a linear structure; therefore, the Fourier ADF unit root test that uses trigonometric functions in order to capture deviations greater than the average of the dependent variable and takes into account multiple structural breaks, is applied to these series. Furthermore, the Fourier KSS unit root test that has the same functions as the Fourier ADF unit root test is used for the Japanese stock market, being the only one market with a non-linear structure. As the result of these analyses, while the markets of the nine countries are observed as effective in the weak form, this hypothesis is not valid for the remaining eight countries. While the prediction of the future price of all of these nine markets will be impossible through a technical analysis, investors in the remaining eight markets can provide returns by carrying out the same analysis.
Mikica Drenovak and Vladimir Ranković
Active portfolio management implies periodic rebalancing, i.e. a change in the structure of the existing portfolio. Rebalancing is aimed at improving the performance of the managed portfolio by adjusting it with respect to the given objective. The main objective of this research is to test two portfolio rebalancing strategies, one based on market risk and another on optimal risk-return tradeoff. We use optimal volatility or Sharpe of portfolio as a criterion for the initial portfolio allocation and rebalancing over the observed period. In order to obtain solutions that can be applied in practice, we impose rebalance triggers designed to control the portfolio turnover and corresponding transaction costs. the results suggest that the minimum volatility strategy can be accepted as an eligible investment alternative for risk adverse investors since it provides superior risk performance compared to the reference S&P 100 index and 1/n portfolio, with a relatively low level of turnover and a low rebalance frequency.
Jarosław Kaczmarek
The paper focuses on the phenomenon of a business failure and the assessment of the degree of the financial security of Polish companies, mainly industrial entities, during the period of the economic transformation (1990-2013), with special attention paid to the last economic crisis (2007-2013). With regard to the theoretical and cognitive aspects of the presented issues, attention is paid to corporate crises, the types of crises and their causes as well as the identification and quantification of the symptoms of deteriorating financial conditions. In its empirical dimension, the paper aims to measure the degree of the financial security of Polish industrial companies as well as the trends and dynamics of changes and the corresponding interdependencies. Additionally, the author presents the characteristics of industrial mezzo-structures from the perspective of their stability and the frequency of the movement of objects (changes to ranging positions). Finally, the paper confirms that the degree of financial security can be seen as a symptom of changes to macroeconomic business cycles.
Srđan M. Đinđić
of the repatriation of international income, the effects of the reallocation of international income and the effects of the current and perspective reform tendencies in the EU member countries on the achievements of international tax planning in the Republic of Serbia are valorized. By a meaningful restructuring of its global business transactions, a transnational corporation can gain an „extra” reduction in the effective tax burden, compared to the level of the tax burden standard, overlooked within the officially established procedure of international tax planning (OECD). As long as there are differences in the corporate income tax rates among the countries, there is a realistic incentive for TNCs to locate their income in low-tax countries and their expenses in high-tax countries. The actual reform tendencies in the EU have a two-sided influence on the achievements of tax planning in the Republic of Serbia, in the form of activating non-tax instruments for an improvement of the competitiveness of the Serbian industry as well as in the form of prolonging international pressure on the budget of the Republic of Serbia.
Tran Quang Tuyen
This paper has reviewed recent empirical evidence on the link between nonfarm employment, land and rural livelihoods in the context of increasing a land loss to urbanization and industrialization in some developing countries and Vietnam. It was found that while land is of great importance to a number of countries, it seems to be less important to others. Land shortage can be a positive factor encouraging rural households’ participation in nonfarm activities and improving their welfare in countries in which non-farm job opportunities are available to a large part of the population. Nevertheless, this can negatively affect rural household livelihoods in countries lacking such nonfarm jobs. In Vietnam, nonfarm employment has gained increasing importance to rural livelihoods. In addition, in peri-urban areas where more and more farmland has been lost to rapid urbanization and industrialization, nonfarm employment was found to help households reduce their dependence on farmland and improve their welfare.
Jatinder P. Singh
This article provides an evaluation of translation accounting through a logical and deductive analysis of the concepts. The relationship between the inflation of constituent countries and the methods of translation is explored. It is established that only the Current Value (Purchasing Power Parity) (PPP) Method correctly reports the effects of the inflation of both countries. The Current Rate Method fails to correctly report the effect of the subsidiary country’s inflation and the temporal method does not correctly report the parent country’s inflation. The efficacy of FAS 52 (USA) and the functional currency concept is examined. Under FAS 52, the functional currency determines the method to be adopted for translation and hence the accounts of the subsidiary that are subject to an exchange rate risk. It is, however, argued that the exchange rate risk is related to violations of Purchasing Power Parity. The degree of such violations should, therefore, form the premise on which the functional currency and translation method should be selected.