European Journal of Economics, Finance and Administrative Sciences

Issue 69
November, 2014

An Evaluation of the Nigerian Capital Market Impact on Micro, Small and Medium Scale Enterprises (MSMEs) in Nigeria
Imoisi, Anthony Ilegbinosa and Amos, Akinola Olusola

This research examines the Nigerian Capital market influence on the Micro, Small and Medium Scale Enterprises (MSMEs) in Nigeria. One of the main vehicles for growth in any economy is the micro, small and medium scale enterprises. Over the years in Nigeria, there has always been a financial gap existing between large-scale enterprises and micro, small and medium scale enterprises in terms of availability of financial resources referred to as the missing middle and this has affected the activities of these MSMEs. The purpose of the study is to identify and consequently analyze the financial incentives available to MSMEs in the Nigerian capital market. We adopted the survey design for our method of study and the disproportionate stratified random sampling technique was use to select a representative sample of one hundred MSMEs in Lagos state being the centre of commerce in Nigeria. Our data for this study were sourced from Primary sources and the Questionnaire was used as the instrument for data collection. The questionnaire was developed on a five-likert scale ranging from one to five (i.e. from strongly disagree to strongly agree) while, the hypothesis developed was tested using Chi-square(X2). Based on our findings, we recommended that, the government through the Nigerian Capital Market should create an alternative Stock Exchange dedicated to MSMEs as done in the developed countries like USA, Japan, China, Malaysia, and many other countries that has changed their economic fortunes. In addition, the management of MSMEs should prepare timely, transparent and acceptable financial reports of their companies, which would be acceptable to regulators, investors and stakeholders especially financial institutions.
Keywords: Capital Market, Stock Exchange, Missing Middle, Entrepreneurship Financing, Capital Accumulation, Financial Gap, Financial Incentives

Risk Classification in Global Stock Markets
Samet Günay

In this study, we analysed the basic determinants that effect the classification of global stock markets such as BRIC, PIIGS and MINT. In the scope of the paper, we examined the stock returns of 27 stock markets during the period between January 02, 2004 and June 15, 2014 via Binomial Logistic Regression and Factor Analysis. In the logistic regression analysis we used four independent variables: downside beta, downside variance, long memory and Lyapunov Exponent. We have seen that the only significant variable in the discrimination of the markets as emerging and developed via Logistic Regression Model is downside variance. In the second section of the empirical analysis, focus turned on whether sub-groups may be consisted or not via Factor Analysis on the basis of the semi-annual variance series of the stock returns. According to the results, four factor groups were obtained: the first one can be defined as emerging markets, the second one as developed markets, the third group includes PIG countries and the last group includes China. Another interesting result noted was that unlike MSCI classification, Singapore, Hong Kong, Norway and Japan are not within the developed markets in terms of risk situation.
Keywords: Risk Classification, Emerging Markets, BRIC, PIIGS, MINT
JEL Classification codes: C14, C22, F30

The Legal Renegotiate Aspects of Mining Contracts in Indonesia
Zainal Asikin, SH., SU

This study aims to examine the legal position COW Mining in Indonesia after the enactment of Law No. 4 Year 2009 on Mineral and Coal. The main issues are being debated, whether the contract of work that has not expired may be renegotiated to conform to the Law No. 4 of 2009? Is it not to renegotiate the contract violates the principle of legal certainty?
From the results of the study of law and legal principles developed in Indonesia that the cancellation of the contract can be done in case of Misbruik Van Omstadigheden (abuse of state). The state of Abuse Occurs when people know or should know that the other party for any special circumstances such as emergencies, dependence, cannot think long, the abnormal mental or inexperienced moved to do a legal act even though he knows or should know he actually had to stop.
In international law set forth in the UNIDROIT (UNIDROIT Principles of International Commercial Contracts) that the contract renegotiation can be justified if it contains a huge difference when (gross disparity)., And there has been a fundamental change on the strength of Fundamental Economics of Finance as required by the Vienna Convention of 1969.
Keywords: Renegotiation of Contracts, Contract of Work

Empirical Study on Maturity Level Efficiency in International Capital Market
Sambasivam Srinivasan and Aiyaswami Natesa Prasad

This paper discusses an empirical study on maturity level efficiency in international capital market setting. Dr. Sambasivam Srinivasan (4) has defined a new concept of efficiency amplifying semi strong efficiency. This paper discusses the features of this new efficiency measure and reports the results of an empirical study. This is the first empirical study of this new measure of efficiency namely “maturity level”. Section 1 gives an introduction on Maturity level efficiency. Section 2 presents an empirical testing on maturity levels of two capital markets namely USA and South Africa. Section 3 summarizes the conclusions and outlines the scope for further empirical studies in the context of maturity level efficiency.

The Effects of Auditors' Reputation and Default Risks on Unethical usage of Expenses in Korea
Kim, Sunghwan, Pae, Sangshin and Kim, Mina

In this study, weinvestigate the effects of a peculiar type of expenses in Korea, entertainment expense, which is sometimes used as a barometer of unethical usage of expenses, to make best of illegal loopholes in manipulating taxable income and other discretionary usage in various business activities. We use firm level data for firms listed on and delisted from Korea Composite Stock Price Index(KOSPI) during the period 1991 to 2007.
From the study, we find that (1) the entertainment expense, measured as a ratio to sales, does not have any statistically significant relationship with the reputation of auditors, proxied by big 4 auditing firms, which are the biggest in size and primarily associated with global auditing and consulting firms, (2) it increases with bad audit opinions, implying firms try hard to receive “clean”audit report using entertainment expense, (3) the predicted default risk increases the entertainment expenditure while the actual default decreases such spendingand (4) entertainment expense increases with new auditors, implying that firms shop their auditors for better audit opinions.
Keywords: Entertainment expense, auditor reputation, default risk, financial distress, auditor independence, audit quality
JEL Classification codes: M41, G30

Conducting a SWOT Analysis with a Prioritising Model Based on Fuzzy Inference System, Decision Support Tool in the Strategic Human Resources Management
Rachid Belhaj and Mohamed Tkiouat

SWOT analysis (Strength, Weakness, Opportunity, and Threat) has been in use since the 1960s as a tool to assist in strategic management in various types of enterprises including those in the government service. Whilst still widely used, the approach has called for improvements to make it more helpful in strategic management. The paper provides an augmented SWOT analysis approach to evaluate strategies in the field of the Strategic Human Resources Management (SHRM). The ratings and attractive scores used in this paper, however, require judgmental decisions and should be based on expert’s opinion to ensure the applicability of the chosen strategies. That’s why we proposed a fuzzy decision making method based on building a fuzzy inference system to treat a second time the inputs data (coming from SWOT analysis) by the fuzzy method with the goal of finding a better strategies prioritisation. The proposed model can be applied for strategies prioritisation and decision making problems in all fields.
Keywords: SWOT, Strategic Management, Fuzzy method, Prioritisation

The Influence of Financial Wealth on Private Consumption: An Analysis on the Recent Spanish Experience with Special Reference to the Great Recession
Manuel A. Blanco Losada, Rafael Frutos Vivar, Elena Lopez Diaz-Delgado and Silvio Martinez Vicente

In line with the dominant core of the theory of aggregate consumption, various studies carried out in Spain have confirmed the decisive role real disposable income and real wealth play in explaining the evolution of this key component of aggregate demand. However, an in-depth analysis of the fluctuations registered by private consumption in Spain during the so-called Great Recession indicates that total real wealth might not be the most adequate variable with which to explain the short term fluctuations of private consumption. Our analysis confirms that, along with real disposable income, the evolution of real financial wealth is crucial to explaining the evolution of Spanish private consumption during the recent economic turmoil. These results lend credit to the theories that grant financial wealth a decisive influence in generating economic fluctuations in general and in aggregate consumption in particular. This conclusion is highly relevant for economic policy, since the recent substantial improvement in Spanish financial wealth, largely as a result of the reduction of the risk premium induced by the more expansionary monetary policy adopted by the European Central Bank, is presently encouraging a growth in private consumption which has become the main support of the incipient Spanish economic recovery.
Keywords: Private Consumption, Disposable Income, Finance Wealth, Interest Rate, Error Correction Model.
JEL Classification: E21: Consumption, saving, wealth

The Geographic Peer Effects of Corporate Community Responsibility (CCR): Evidence from the U.S.
Pradit Withisuphakorn and PornsitJiraporn

We argue that firms located in the same geographic location exhibit similar corporate community responsibility (CCR) because they are influenced by the same local factors, such as investor clientele, local competition, and social interactions. Our results strongly support this hypothesis. The degree of CCR of a given firm is influenced by the degrees of CCR of the surrounding firms in the same 3-digit zip code. Thus, firms take into account the policies of the neighboring firms when formulating their own CCR policies. Our study contributes to the literature by showing that geography is a relevant factor in determining CCR.
Keywords: corporate social responsibility, CSR, corporate community responsibility, community, geography
JEL Classification: M14, G30

Tax Reforms and Its Influence on Tax Evasion in Nigeria between 2002 and 2011
Samson Yimka Alalade and Okezie Fine-Country Okezie

Tax evasion has been a practice that cuts across all strata of tax payers in Nigeria and many other developing countries. In response to this predicament, tax authorities have implemented various reforms as strategies to curb the menace of tax evasion and reduce the associated loss of revenue due to the government. This study examined the influence of tax reforms on tax evasion in Nigeria. The survey research method was adopted through which questionnaire were used to elicit responses from tax professionals and practitioners. Multiple regression analysis was employed to analyze the responses and determine the relationship between tax reforms and tax evasion. The results showed that tax reforms had significant positive effect on tax evasion in Nigeria. Consequently, the study concluded that adoption of tax reforms had been effective in reducing tax evasion in Nigeria and, thus, enhanced government tax revenue. The study recommended that those reforms should be sustained and that more tax administration reforms be put in place to ensure sound tax system and sustainable government tax revenue in Nigeria.
Keywords: Tax Reforms, Tax Administration, Tax Evasion, Sound Tax System, Tax Policy

Functions of Major Agents before and after the Port Reforms in Nigeria

The government of Nigeria in the past decade has vigorously pursued economic reforms policies that aimed at liberalizing and promoting competition and investment in the Nigerian economy. These means therefore that, in order for the economy to perform well its expected functions within the Nigerian Port Authority (NPA) there must be commitment to the market – led economy, in which the government has to continue to enact and update relevant legal instruments that would contain provisions inhibiting competition and investment in Nigeria. It means that appropriate incentives has to be continuously be put in place to encourage and promote private investments in the Nigerian economy.