nep-cfn New Economics Papers
on Corporate Finance
Issue of 2015‒04‒19
four papers chosen by
Zelia Serrasqueiro
Universidade da Beira Interior

  1. Balanced Scorecard Concept in Romanian Small and Medium enterprises By Anna Siemionek; Ma³gorzata Siemionek
  2. Economic consequences of the adoption of the International Financial Reporting Standards: evidences in the research literature By Irina-Doina Pãºcan; Ramona Neag
  3. How Bank Managers Anticipate Non-Performing Loans. Evidence from Europe, US, Asia and Africa By Ozili, PK
  4. Convex Incentives in Financial Markets: an Agent-Based Analysis By Annalisa Fabretti; Tommy Gärling; Stefano Herzel; Martin Holmen

  1. By: Anna Siemionek (University of Gdansk); Ma³gorzata Siemionek (University of Warmia and Mazury in Olsztyn)
    Abstract: The purpose of this paper is to explore the implementation of a performance management system using the balanced scorecard (BSC) within Romanian small and medium sized enterprises (SME). This is a casebased methodological approach. This ensured that the issues were appraised in both an operational and a strategic context. The findings of this research are that balanced scorecards can be implemented within a SME context. However, the motivations for the adoption of the scorecard were both internal and external due to the heavily regulated nature of the organization. The paper analyses the application of the Balanced Scorecard (BSC) in Romanian Small and Medium enterprises (SMEs). Actions necessary for its implementation, obstacles and BSC development trends have been presented.
    Keywords: Balanced scorecard, strategy, performance management, SMEs, Romanian enterprises
    JEL: G30 M21
    Date: 2015–04
  2. By: Irina-Doina Pãºcan (Petru Maior University of Tîrgu Mureº); Ramona Neag (Petru Maior University of Tîrgu Mureº)
    Abstract: Along with the economic globalization, the international accounting regulation bodies faced the need to issue internationally accepted global accounting standards. The effect was the issuance and the widespread of the International Financial Reporting Standards (IFRS). At European level, the IFRS gained legitimacy in 2002, when the European Parliament and Council have decided that all European publicly traded entities must prepare their consolidated financial statements in accordance with IFRS starting with January 1st, 2005. The regulation from 2002 on the application of the international standards in EU summarizes the benefits emerging from the adoption and use of IFRS, related to: a high degree of transparency and comparability of financial statements and, as consequence, an efficient functioning capital market. However, the achievement of these expected benefits is based on the assumption that the application of these standards contributes to the increase in the quality of accounting data reported in the financial statements. In this context, our main objective is to summarize, based on the research literature, the economic consequences that emerge from the publication of higher quality accounting data in accordance with IFRS.
    Keywords: Economic consequences; International Financial Reporting Standards; listed entities; quality of financial information; stakeholders
    JEL: G14 M41
    Date: 2015–04
  3. By: Ozili, PK
    Abstract: This study extends the literature on the determinants of NPL. I investigate whether banks anticipate non-performing loans by making balance sheet adjustments. This study draws insights into the actions taken by credit risk management teams and bank managers to minimize the size of non-performing loans. After examining 82 banks from US, Europe, Asia and Africa, the result indicate that banks adjust the level of loan loss reserves and loan growth to minimize the size of NPLs. Our results do not show evidence that loan diversification minimizes NPLs. Further, I find that banks in developing countries reduce loan growth when they expect high NPL while banks in developed countries do not anticipate the level of NPL by adjusting loan growth. Further, I find that post-crisis Basel regulation did not lead to a decrease in the size of NPLs among banks in developed countries but appear to minimize NPLs in some developing countries. Overall, the significance and predictive power of each bank-specific factor (excluding loan diversification), regulatory variable and macroeconomic indicator in explaining NPLs depends on regional factors (less significantly) and country-specific factors (more significantly).
    Keywords: Non-performing Loans, Credit risk, Macroeconomic determinants, bank specific determinants, banking
    JEL: G20 G21 G32 G38
    Date: 2015
  4. By: Annalisa Fabretti (DEF, University of Rome Tor Vergata); Tommy Gärling (University of Gothenburg); Stefano Herzel (DEF and CEIS, University of Rome Tor Vergata); Martin Holmen (University of Gothenburg)
    Abstract: This paper uses agent-based simulation to analyze how financial markets are affected by market participants with convex incentives, e.g. option-like compensation. We document that convex incentives are associated with (i) higher prices, (ii) larger variations of prices, and (iii) larger bid-ask spreads. We conclude that convex incentives may lead to decreased stability of financial markets. Our analysis suggests that the decreased stability is driven by the fact that convex incentives pushes agents towards more extreme decisions. Furthermore, while risk preferences affect agent behavior if they have linear incentives, the effect of risk preferences vanishes with convex incentives.
    Keywords: incentives, market instability, agent-based simulations.
    JEL: G10 D40 D53
    Date: 2015–04–08

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