This study employs the autoregressive distributed lag (ARDL) bounds testing technique to examine whether Okun's law exists in Nigeria during 1970-2014. In addition, this study considers the role of oil prices in the Nigerian economy. The empirical results indicate that a cointegrating or long term relationship exists between the unemployment rate, economic growth and oil prices. In addition, the results demonstrate that in Nigeria, in the long term, unemployment has a negative and significant effect on economic growth, and oil prices have a significant and positive effect on economic growth. The coefficient of unemployment (0.18%) for this study is far less than the result reported by Okun and other studies that focused on developed countries. This suggests that the Okun coefficient is not only unstable but varies for different countries, and does not remain constant for Nigeria. However, policymakers should take steps to reduce unemployment to enhance economic growth in Nigeria.
We provide evidence regarding the relationship between director training programs and improved financial reporting. Director Training Programs (DTP) help directors better understand the specific context in which a firm operates, including its operations and environment; awareness of business norms and values; standards of probity and accountability; and their fiduciary duties as an agent of investors. This study explores a recent requirement for director training and its effect on the quality of financial reporting for publicly listed companies in three eastern countries. This study examines the relationship between DTP and the quality of financial reporting of Australian, Malaysian and Pakistani publicly listed companies by using a sample of data from 2011 to 2013. We determined that Australian companies that incur additional DTP expenditures and have a flexible training schedule (Online DTP)improve their financial reporting quality and that a well-established DTP positively affects financial reporting quality in Malaysia. In addition, the results indicate that firm size negatively affects financial reporting quality in the Asia Pacific and older companies (firm age) suffer from low-quality financial reporting.
In-work support through the tax-benefit system has proved to be an effective way of increasing the labor supply of lone mothers and first earners in couples in a number of OECD countries. At the same time, these instruments usually create negative employment incentives for secondary earners. This in turn reduces the potential of in-work support to address the joint objectives of higher employment and lower poverty levels. In this paper, we present a simulation exercise to examine labor supply implications of a diverse set of possible reforms to the main elements of tax and benefit support for families with children. We set the analysis in the context of the Polish tax and benefit system and show how an adequate combination of increased generosity of support with the introduction of a "double earner" premium may result in an increased labor supply of first and second earners in couples. The simulated reactions are concentrated in the lower half of the income distribution, thus increasing the potential of in-work support to alleviate poverty.
The European post-communist countries that have integrated into the European Union are emerging market economies. However, their short-run economic performance does not correspond to the observed business cycles of other global emerging markets. The business cycles of the studied countries are longer, and their recessions are more pronounced. Moreover, economic activity in the studied countries is relatively low and volatile, and the trade balance and government purchases have a relatively significant countercyclical character. These are the core conclusions from our business cycle study of the chosen European post-communist countries. In the study, we use both traditional and contemporary business cycle definitions. Using traditional definitions, we determine the peaks, troughs, expansions and contractions and quantify the durations and amplitudes of their expansions, recessions and business cycles. Using contemporary definitions, we measure cyclical properties by computing the first and second moments of the chosen macroeconomic cyclical components and growth rates. Differences in the business cycles and characteristics between European post-communist countries and other emerging countries are discussed with reference to the works of other authors.
The main goal of this paper is the empirical examination of the Polish stock market reactions to dividend announcements and dividend payouts made by the companies listed on the Warsaw Stock Exchange (WSE). The research sample comprises 56 companies (WIG index constituents) that announced dividend payments and completed the payout during 2013. In the analysis, event study methodology is employed including either calculating abnormal returns and cumulative abnormal returns around the event day or testing their statistical significance using parametric and nonparametric tests. The average cross-sectional abnormal return calculated for the entire sample is found to be significant on the dividend announcement day (t=0, 0.86%) and on one day after (t=+1, 0.59%) at the 1% and 10% significance levels, respectively. The outcomes of the analysis conducted within the three distinguished subsamples are rather more diverse. In the subgroup of the first announced dividends (or dividends announced after a minimum one-year break), the significant average abnormal return is found on day t=+1 (0.90%, 5% significance level), whereas in the case of the dividend decreases subsample, the significant average abnormal returns (at the 10% significance level) occur on days t=-4 (-1.44%) and t=+2 (-1.15%). The average abnormal return calculated within the subsample of dividend increases turns out to be positive and significant on day t=+1 (1.03%, 10% significance level). The results obtained for the average cumulative abnormal returns corroborate the findings reached for the average cross-sectional abnormal returns in the case of the first dividend and dividend increase subsamples. However, the average cross-sectional abnormal returns calculated within the eleven-day-long event window around the dividend payment day turn out to be statistically insignificant. The obtained results provide evidence that the Polish stock market reaction to dividend announcements is positive and immediate. However, the market does not significantly react to dividend payouts, which may lead to the conclusion that the WSE directly incorporates news on dividends into stock prices. Moreover, the reaction of the market for dividend announcements is consistent with the sign of the dividend change: dividend-increase (-decrease) announcements are interpreted as a positive (negative) signal by the investors. Such results support both the informational content of the dividend hypothesis and the dividend signaling hypothesis. Considering that the observed abnormal market behavior disappears within two days at most after the announcement date, the results of the study can be useful for financial practitioners only with regard to short-term investment decisions.
Given the high and rising household debt in Malaysia, the objective of this paper is to ascertain the characteristics of a financially vulnerable individual. Financial vulnerability is measured based on two indicators: the debt-to-income ratio and the level of emergency savings for income shock. The findings of this paper show that, in addition to socio-economic factors, other factors such as risk tolerance, savings portfolio, and individuals' objectives and subjective financial knowledge can significantly explain differences in the levels of individual financial vulnerability. Using ordered probit on primary data consisting of 854 working adults aged 18–60, it is found that gender, ethnicity, income, number of dependents, age and education can significantly explain differences in the levels of financial vulnerability. Furthermore, the findings highlight the importance of continuous efforts to provide financial education to improve personal financial management. The findings also confirm that risk takers are more likely to be financially vulnerable. However, individuals who diversify their savings channels to include stock and bond holdings instead of solely saving through bank deposits are less likely to be financially vulnerable.
Forecasts, models and stress tests are important tools for policymakers and business planners. Recent developments in these related spheres have seen greater emphasis placed on stress tests from a regulatory perspective, while at the same time forecasting performance has been criticized. Given the interlinkages between the two, similar limitations apply to stress tests as to forecasts and should be borne in mind by practitioners. In addition, the recent evolution of stress tests, and in particular the increasing popularity of scenario-based approaches, raises concerns about how well the shortcomings of the associated models are understood. This includes estimated stress cases relative to base cases – the degree of pain – that simple scenario modelling approaches engender. This paper illustrates this phenomenon using simulation techniques and demonstrates that more extreme stress scenarios need to be employed in order to match the inference from simple value-at-risk approaches. Alternatively, complex modelling approaches can address this concern, but are not widely used to date. Some policymakers seem to be aware of these issues, judging by the severity of some recent stress scenarios.
One of the most serious effects of offshoring is tax avoidance, which harms the economies of the affected regions. In an attempt to eradicate tax avoidance, the EU seeks to establish tax harmonization across its Member States. Based on data for 2006–2014, this study analyzes the historical evolution and current trends of a convergence or divergence of the tax burden for 15 EU Member States. The effective tax rate was used to assess the tax burden. This study used a novel approach to analyze the tax burden and conducted a cluster analysis to examine changes in the effective tax rates between 2006 and 2014. The results imply that when the economy prospers, effective tax rates tend to converge. In contrast, during periods of economic downturns, effective tax rates diverge. This divergence occurs because of differences in Member States' tax policies that reflect the various strategies that are adopted by different Member States to combat economic crises. Therefore, the tax harmonization criteria that were established by the EU are relegated to the background and offshoring is encouraged.