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Research Article
Debt and the Excess Value of Diversified Firms: Evidence from Nigeria
Ibeawuchi Ibekwe*
,
Pedkuna Queenta Siliya
Issue:
Volume 12, Issue 5, October 2024
Pages:
235-249
Received:
26 July 2024
Accepted:
26 August 2024
Published:
6 September 2024
Abstract: The purpose of this study was to examine the relationship between debt and the value and excess value of diversified firms in Nigeria. This is against the background that there is no consensus on the factors that distinguish value-creating from value-destroying diversified firms. Data were collected from the annual reports of 62 diversified firms listed on the Nigerian Stock Exchange between 2008 and 2018. The multilevel generalized method of moments technique in the REndo package in the R Statistical Package was used to test the hypotheses. There is a significant positive relationship between debt and diversified firms’ value and excess value. The study and its findings are significant in several ways. First, no study has examined the relationship between debt and the value and excess value of diversified firms in the Nigerian context, and the few relevant studies have been in the context of developed countries. Second, it contributes to the literature on the valuation implications of firm diversification by providing some insight into the diversification discount often documented in the literature. These findings suggest that diversified firms’ failure to use the debt capacity that diversification creates is one reason some experience valuation discount. Third, the study employs the multilevel GMM analytical technique to control for endogeneity in the absence of valid instrumental variables. This technique has not been used in the diversification literature. The implication of the findings is that diversified firms should use the debt capacity that diversification provides to invest in positive net present value projects. The use of debt also adds a layer of corporate governance required in an environment of increased complexity and opacity associated with diversification. Increased investment in positive NPV projects and improved corporate governance through increased use of debt will enhance firm performance and value. The increased valuation of diversified firms due to debt increases the ability of diversified firms to play their developmental role in society. Investors would also benefit more from investing in diversified firms with higher debt ratios than those with lower debt ratios, all things being equal.
Abstract: The purpose of this study was to examine the relationship between debt and the value and excess value of diversified firms in Nigeria. This is against the background that there is no consensus on the factors that distinguish value-creating from value-destroying diversified firms. Data were collected from the annual reports of 62 diversified firms l...
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Research Article
Socio-Economic Perspectives of Household Water Treatment for Safe Drinking in Nigeria
Issue:
Volume 12, Issue 5, October 2024
Pages:
250-257
Received:
29 July 2024
Accepted:
22 August 2024
Published:
6 September 2024
Abstract: Access to safe drinking water remains a huge challenge to households in developing countries of which Nigeria is one. This is evident from the numerous cases of water related diseases ravaging the country. The United Nations Children Emergency Fund reports that over 150,000 Nigerians and about 117, 000 under five children, die of water borne diseases annually. Since safe water is gotten from water treatment, the challenges associated with ensuring that water is adequately treated for the households are enormous. Considering that the household is generally the primary source of drinking water for the populace, the socio-economic characteristics of a household plays a key role in determining their access to quality water for drinking. It is based on this that this study seeks to evaluate how household socio-economic characteristics influences a household’s decision to treat its drinking water. The study uses the Binary Logistic regression model to test for the correlates of household water treatment decisions. The data employed in this study is sourced from the Multiple Indicator Cluster survey conducted by UNICEF. A total of 26359 households were selected for the study. The study shows that about 23,495 of the selected households do not treat their water for safe drinking in Nigeria. The result also shows that source of drinking water is a key determining factor in the water treatment decisions of households, as different sources of water were found to have varying degrees of effects on water treatment decisions by households. Some ethnic groups were also observed to have a poor water treatment culture. Also, education of household head and high wealth status increases water treatment.
Abstract: Access to safe drinking water remains a huge challenge to households in developing countries of which Nigeria is one. This is evident from the numerous cases of water related diseases ravaging the country. The United Nations Children Emergency Fund reports that over 150,000 Nigerians and about 117, 000 under five children, die of water borne diseas...
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Research Article
A Soft Voting Ensemble Model for Hotel Revenue Prediction
Issue:
Volume 12, Issue 5, October 2024
Pages:
258-266
Received:
9 August 2024
Accepted:
9 September 2024
Published:
11 September 2024
Abstract: In recent years, the hotel industry has faced unprecedented opportunities and challenges due to the increasing demand for travel and business trips. This growth not only presents significant opportunities but also brings challenges to resource management and price setting. Accurate hotel revenue prediction is crucial for the hotel industry as it influences pricing strategies and resource allocation. However, traditional hotel revenue prediction models fail to capture the diversity and complexity of hotel revenue data, resulting in inefficient and inaccurate predictions. Then, with the development of the ensemble learning, its application to hotel revenue prediction has emerged as an influential research direction. This study proposes a soft voting ensemble model for hotel revenue prediction, which includes six base models: Convolutional Neural Network, K-nearest Neighbors, Linear Regression, Long Short-term Memory, Multi-layer Perceptron, and Recurrent Neural Network. Firstly, the hyper-parameters of the base models are optimized with Bayesian optimization. Subsequently, a soft voting ensemble method is used to aggregate the predictions of each base model. Finally, experimental results on the hotel revenue dataset demonstrate that the soft voting ensemble model outperforms base models across six key performance metrics, providing hotel managers with more accurate revenue prediction tools to aid in scientific management decisions and resource allocation strategies. This study confirms the effectiveness of the soft voting ensemble model in enhancing the accuracy of hotel revenue forecasts, demonstrating its significant potential for application in strategic planning within the modern hotel industry.
Abstract: In recent years, the hotel industry has faced unprecedented opportunities and challenges due to the increasing demand for travel and business trips. This growth not only presents significant opportunities but also brings challenges to resource management and price setting. Accurate hotel revenue prediction is crucial for the hotel industry as it in...
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Research Article
Diversification Effect of Gold as an Asset Class in Foreign Exchange Reserve Portfolio, Evidence from Sri Lanka
Roshan Harshapriya*
Issue:
Volume 12, Issue 5, October 2024
Pages:
267-275
Received:
14 August 2024
Accepted:
5 September 2024
Published:
20 September 2024
Abstract: Foreign Exchange Reserves of the countries play a major role in managing exchange rate and monetary policy, particularly in emerging countries as Sri Lanka. Therefore, it is important to manage foreign exchange reserves in an open and transparent manner with clear objectives of what is going to be achieved. For a country like Sri Lanka the main objective would be the safety of the assets since it is difficult to absorb substantial risks in managing foreign exchange reserves due to relative lower size compared to its exposure to external sector of the economy. When it comes to gold as an assets class is considered to safe-haven assets due to its nature of higher return in times of crisis and inflationary periods. The objective of this study is to explore the diversification impact of gold on foreign exchange reserves in Sri Lanka for the period from 2007 to 2023. To explore the impact of diversification, correlation between gold and existing foreign exchange reserves and additional excess return per unit of risk provide with the inclusion of gold into the portfolio were used to analyze the possible diversification impact. The results showed that there is an increase in excess return with the addition of 1% to 5% of gold as a percentage of total foreign exchange reserves, while correlation of gold with existing portfolio was less than 0.5 indicating diversification impact. Further, the Sharpe ratio was also seen increasing when the gold composition in foreign exchange reserve portfolio was increased. It was found that gold can be considered as an asset class which help diversification for foreign exchange reserves of Sri Lanka, even though the same are managed in very conservatively.
Abstract: Foreign Exchange Reserves of the countries play a major role in managing exchange rate and monetary policy, particularly in emerging countries as Sri Lanka. Therefore, it is important to manage foreign exchange reserves in an open and transparent manner with clear objectives of what is going to be achieved. For a country like Sri Lanka the main obj...
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Research Article
Causes of Failure Among Family Owned Businesses
Marcellinus Chukwuka Ihionu,
Iyke Ofoedu Maureen*,
Alexander Chinaza Aneke
Issue:
Volume 12, Issue 5, October 2024
Pages:
276-283
Received:
13 June 2024
Accepted:
28 June 2024
Published:
26 September 2024
Abstract: The study investigated the causes of failure among family owned businesses in South-East, Nigeria. Specific objectives were to; evaluate major family business enterprises that have failed in South-eastern states, Nigeria; investigate the causes of failure of these family owned business enterprisesidentified in South-eastern states in Nigeria; explore strategies that will help prevent such failures in other family owned business enterprises in Nigeria. The study adopted a qualitative approach in analyzing the causes. Historical analysis of ten indigenous family owned business situated in South-eastern, Nigeria that have gone into extinction, were thoroughly carried out to identify factors that contributed to their extinction. It was found out that; death of founder(s), financial constraint, poor management, market complexity and competitions are the main contributors to family business failures and extinctions in Southeastern, Nigeria. Thus, it was recommended family business owners should be liberal, open-minded, flexible and inclusive in making business decisions that will propel their enterprises to greater height. More so, competent hands, professional business consultants and advisors should be incorporated in managing the business. This will ensure the success and fecundity of the business. Though, the study encountered a slight challenge as regards to the availability of resources, because relevant information that would have enriched the result, were not documented or uploaded on the internet. However, the findings of the study contributed immensely to the body knowledge of family successes, growths and failures in Nigeria.
Abstract: The study investigated the causes of failure among family owned businesses in South-East, Nigeria. Specific objectives were to; evaluate major family business enterprises that have failed in South-eastern states, Nigeria; investigate the causes of failure of these family owned business enterprisesidentified in South-eastern states in Nigeria; explo...
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Report
Visibility in the Italian Art World: How Far Along We Are
Irene Sanesi*
Issue:
Volume 12, Issue 5, October 2024
Pages:
284-292
Received:
23 July 2024
Accepted:
13 September 2024
Published:
29 September 2024
Abstract: Even though the concept of “nationality” when we talk about an internationally acclaimed artists is more and more blurred and has little to do with the importance of the artworks, it is evident how small the Italian art presence in great international art manifestations is, sometimes almost negligible. It is then necessary to understand the causes of this situation, to draw a map of the current state of the contemporary Italian scene and state some resolutions from it. The first 2022 Report “How (well) known is Italian art abroad?” by BBS-Lombard Benefit Corporation, together with Arte Generali has investigated how much Italian contemporary artists are (in)visible in the international art market, laying the groundwork for a much more in-depth research of the art system, with the ultimate purpose of giving new solutions to overcome this situation, wandering whether Italian art has a business model with (still) some gray areas - unlike almost all other product sectors – and how building an economy to bridge the gap, having a market strategy and being attractive in the international positioning can be a strategic move. The study was conducted carrying out both qualitative and quantitative analysis throughout more than 20 interviews to Italian curators internationally known that have helped us understand causes, strengths and weaknesses of the Italian art system and a big data collection about the presence of Italian artist in international museums, art manifestations, biennials, such as Biennale di Venezia and documenta, international art galleries and auctions. The global media coverage of Italian artists was analyzed with the help of Artiker and through the artificial intelligence of Wondeur AI, partner of Arte Generali, it was possible to analyze the relationship between art development and cities, considering the city’s overall success rate (percentages of artists showing growth in the city) and the city’s risk propensity (ability to attract artists). The instrument of the Italian Council was also studied, the main MIC project (Italian Ministry for Culture) in support of Italian art and the initiatives of Italian cultural institutes abroad. From the overall analysis some relevant names have emerged: Francesco Vezzoli, Monica Bonvicini, Enrico David, Paola Pivi, Tatiana Trouvè, Roberto Cuoghi, Rosa Barba, Massimiliano Cattelan (above all) and a few others, all united by a time of study or work abroad which allowed them to create valuable relationships with curators, galleries and museums abroad.
Abstract: Even though the concept of “nationality” when we talk about an internationally acclaimed artists is more and more blurred and has little to do with the importance of the artworks, it is evident how small the Italian art presence in great international art manifestations is, sometimes almost negligible. It is then necessary to understand the causes ...
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Research Article
Navigating Inflationary Tides: An In-Depth Exploration of Inflation’s Impact on the Indian Economy and Strategic Approaches for Mitigation
Tanwangini Sahani*
Issue:
Volume 12, Issue 5, October 2024
Pages:
293-301
Received:
27 August 2024
Accepted:
18 September 2024
Published:
18 October 2024
Abstract: Inflation occurs when the value of a currency diminishes over time, making it more expensive to buy the same goods and services than it was in the past. Imagine you're shopping for your daily essentials like groceries, fuel, or even clothing. Over time, you might notice that the prices of these items have gone up, meaning your money doesn't stretch as far as it used to. This rise in prices across a broad range of products is what we call inflation. At its core, inflation is driven by an imbalance where the money supply grows faster than the goods and services available. When there's more money floating around but the same amount of goods, people are willing to pay more for these goods, leading to higher prices. It's like an auction where more bidders show up, driving up the price of the item being sold. For India, the International Monetary Fund (IMF) has pointed out that even though the economy is bouncing back after the impact of COVID-19, there's a risk of rising inflation. The IMF suggests that as the recovery strengthens, India should slowly reduce the monetary policies that were supporting the economy during the downturn. One of the most effective tools central banks have to control inflation is adjusting interest rates. By raising interest rates, it becomes more expensive to borrow money, which slows down spending and investment, helping to cool off inflation.
Abstract: Inflation occurs when the value of a currency diminishes over time, making it more expensive to buy the same goods and services than it was in the past. Imagine you're shopping for your daily essentials like groceries, fuel, or even clothing. Over time, you might notice that the prices of these items have gone up, meaning your money doesn't stretch...
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Research Article
Measuring Multi-Dimensional Mobile Behavior Effect on Inclusive Finance: Evidence from China
Issue:
Volume 12, Issue 5, October 2024
Pages:
302-317
Received:
8 September 2024
Accepted:
16 October 2024
Published:
29 October 2024
Abstract: Credit Invisible is one key area that many countries put much effort to solve in decades. According to the 2020 World Bank statistics, for example, there are over 500 million Chinese and 45 million American, classified as credit invisible who don’t have banking and finance history in bank or credit bureau, making them difficult to borrow money from financial institution. Previous studies adopted different non-financial information to evaluate one’s credit worthiness and status to address this issue. However, they provide little information about how real mobile user interactions can be used to solve this issue in inclusive finance. This paper proposes a novel data generative framework to fusion APP data, call detail record data and SMS data with a total of 4,689 attributes derived from a large-scale mobile dataset. We then construct a unique set of mobile behavior-driven credit risk factors based on statistical diversity, intensity, consistency, and regularity of mobile user behavior characterizing user preferences, attitudes, geolocation, and temporal patterns. Empirical analysis demonstrates that the newly discovered mobile behavior factors are useful as new inputs for credit scoring and proves the factors representing new source of positive and negative credit information. Decision tree analysis and Quantile regression are conducted to validate effect of these factors to credit default. It facilitates credit assessment based on non-financial data for the credit invisible people, which promoting inclusive finance to larger community in society. We also analyze implications of mobile user characterization findings in relation to credit default which helps decision makers to optimize credit policy and product design.
Abstract: Credit Invisible is one key area that many countries put much effort to solve in decades. According to the 2020 World Bank statistics, for example, there are over 500 million Chinese and 45 million American, classified as credit invisible who don’t have banking and finance history in bank or credit bureau, making them difficult to borrow money from...
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Research Article
Exploring the Causal Effect of Cash Conversion Cycle Signals on Profitability of Tanzanian Manufacturing Firms
Gwatako Tago,
Sadiki Sumawe
Issue:
Volume 12, Issue 5, October 2024
Pages:
318-328
Received:
12 September 2024
Accepted:
4 October 2024
Published:
31 October 2024
DOI:
10.11648/j.ijefm.20241205.19
Downloads:
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Abstract: Management of Cash Conversion Cycle (CCC) components is piercing for firms’ profitability. Financial Managers world-wide, adopts cash conversion cycle in measuring and estimating the level of risks and return of their firms for profit and wealth maximization. As a result, managers keep an eye on the drivers and derailers of profitability. The study focused on establishing the causal effect of cash conversion cycle on profitability while exploring whether single or double digit indicators matter for profitability determination of manufacturing firms. Theoretical and extant empirical literature reviewed guided the scholar foundations for gap identification. The findings were elicited from annual audited financial statements of companies enrolled on DSE from 2008 to 2022 with a sample of 8 manufacturing firms for 15 years, aggregating to a total of 120 observations. Profit was estimated using Profit-After Tax (PAT) and the Cash Conversion Cycle was measured through Inventory Turnover Days (ITD), Debt Collection Days (DCD) and Credit Payment Days (CPD). In model selection, Hausman test was adopted to pick between fixed effect and random effect model while Panel Regression was favored in estimating the causal effect of CCC and profitability. Based on regression analysis, Inventory Turnover Days (ITD) has a negative impact on firms’ profitability and Debt Collection Days (DCD) revealed an insignificant positive relationship between DCD and profitability. Furthermore, the study found a negative relationship between Credit Payment Days (CPD) and profitability. On the other hand, the research found that profitability of most firms with double digit cash conversion cycle proved to be higher than those firms with single or triple cash conversion cycle. The research findings unveiled that CCC correlates positively with profitability and significantly impacts manufacturing firms’ profitability. So, for DSE firms to increase their profitability and firm value under modern competitive era, concentration on double digit cash conversion cycle is paramount ought to the nature of business and assets invested in. Therefore, we conclude that there is a significant causal-relationship of cash conversion cycle on profitability for firms in Tanzania, indicating the necessity of managing appropriately the CCC components.
Abstract: Management of Cash Conversion Cycle (CCC) components is piercing for firms’ profitability. Financial Managers world-wide, adopts cash conversion cycle in measuring and estimating the level of risks and return of their firms for profit and wealth maximization. As a result, managers keep an eye on the drivers and derailers of profitability. The study...
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Research Article
A Study on the International Management Strategy of Small and Medium Enterprises in Thailand
Chuanling Zhang*,
Vichit U-on
Issue:
Volume 12, Issue 5, October 2024
Pages:
329-335
Received:
21 September 2024
Accepted:
14 October 2024
Published:
31 October 2024
DOI:
10.11648/j.ijefm.20241205.20
Downloads:
Views:
Abstract: In the context of global economic integration, information technology accelerates economic transformation, international division of labor, and enterprise competitiveness in the global development chain. As a result, international management has become a critical strategy for businesses seeking to enhance competitiveness and ensure sustainable development. For Thailand’s small and medium-sized enterprises (SMEs), economic globalization presents both new opportunities and challenges. However, much of the current research on international management in Thailand focuses on large corporations, leaving SMEs underexplored, particularly in their internationalization strategies. This study employs a qualitative research methodology, involving a comprehensive literature review, case studies, and interviews with key stakeholders in Thai SMEs. The data were analyzed using thematic analysis to identify core challenges and strategies for SME internationalization. The research takes a problem-solving approach, examining the inevitability of SME internationalization in Thailand. It explores key issues such as the feasibility of international operations, critical success factors, and the role of government policy in supporting international management efforts. The findings reveal that Thai SMEs face substantial pressure to internationalize due to the increasing globalization of domestic markets. However, their success in international ventures is contingent on addressing internal challenges such as limited resources, strategic planning deficiencies, and external issues like regulatory barriers and competitive pressures in the international arena. This research contributes to the theoretical understanding of SME internationalization by expanding the focus to smaller enterprises, which have been largely overlooked in the Thai context. Practically, the study offers strategic recommendations for Thai SMEs to enhance their international management capabilities. It also highlights the critical role of government policies in facilitating successful SME internationalization, providing actionable insights for both business leaders and policymakers.
Abstract: In the context of global economic integration, information technology accelerates economic transformation, international division of labor, and enterprise competitiveness in the global development chain. As a result, international management has become a critical strategy for businesses seeking to enhance competitiveness and ensure sustainable deve...
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Research Article
Central Bank Losses and the Shareholder Values of Commercial Credit Institutions
Bernd Lucke*
Issue:
Volume 12, Issue 5, October 2024
Pages:
336-351
Received:
11 September 2024
Accepted:
29 October 2024
Published:
31 October 2024
DOI:
10.11648/j.ijefm.20241205.21
Downloads:
Views:
Abstract: Quantitative Easing (QE) created huge excess reserves of Eurozone credit institutions. When Quantitative Tightening (QT) set in, these reserves had to be remunerated by the European Central Bank (ECB) at the deposit facility rate. Hence, credit institutions presently benefit from large interest incomes on their reserve holdings, reflected by increasing share prices. I study the case of Deutsche Bank Aktiengesellschaft (AG) using a structural vector autoregression (SVAR) framework to identify the root causes of the recent rise in Deutsche Bank share prices. In order to identify the effects of QT on stock prices, each empirical model is estimated on two different samples: One sample which ends in June 2022 when QE was discontinued and a second sample spanning the same time period plus the rather short QT-period July 2022 to September 2023. The stark difference in results suggests that autonomous monetary policy decisions which raised the deposit facility rate since June 2022 have significantly increased the price of Deutsche Bank stocks. Since the interest payments to commercial credit institutions are not offset by revenues from ECB assets purchased during QE, this implies that private wealth of shareholders increased at the expense of central bank profits that would normally contribute to public budgets.
Abstract: Quantitative Easing (QE) created huge excess reserves of Eurozone credit institutions. When Quantitative Tightening (QT) set in, these reserves had to be remunerated by the European Central Bank (ECB) at the deposit facility rate. Hence, credit institutions presently benefit from large interest incomes on their reserve holdings, reflected by increa...
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