International Journal of Revenue Management (9 papers in press)
Can Profit Targets Improve the Profitability of Candlestick Charting?
by Tsung-Hsun Lu
Abstract: This study proposes a different way to implement candlestick trading rules. Applying profit targets to the SOX component stocks from 1992 to 2016, I find two three-day candlestick patterns can earn over 1% profit significantly after considering transaction costs and the data-snooping problem. This profit target approach thus seems to provide an alternative way for investors to decide on which day to exit the market.
Keywords: Candlestick charting; Profit target; SOX component stocks; Financial crisis; Sub-sample test.
A Proposed PSC Fiscal Regime for South Sudans Oil Market: A New Model Harmonizing Contractors and Governments NPVs
by Mac Darlington Uche Onuoha, Menglan Duan, Henry Elochukwu
Abstract: Investment decision of any company is depended on the economic benefits accruable from such project and as to what rate, its return of investment would be. Economic evaluation of projects feasibility is largely done based on NPV estimations which involves the discounting of future earnings to present, and then, finding the net value to ascertain the present worth of the project, and how much it could increase the companys share value. In this paper, the impact of production sharing formula on the contractor and host governments net present values (NPV) was investigated by using the production sharing contract (PSC) of four different countries: Malaysia, Indonesia, Brunei and South Sudan. Analytical results showed the Malaysian's PSC term gives higher NPV to contractor than that of Indonesia and Brunei, whilst the contractor in South Sudan made higher NPV leaving the host government with a lesser share. Thus, a new PSC model is proposed for the government of South Sudan which was then used to re-evaluate the same field case in order to ascertain its effectiveness as an alternative contract term for the government. Result findings from the proposed PSC model showed the contractor gaining an additional 0.434 % NPV in comparison to Malaysian context, while in South Sudans context, an increase of 13.40 % NPV was seen to be gained by the government, thereby, reducing the excessive profit made by the contractor to 61.54 %. However, the proposed model also treaded very well with high level of acceptance to other economic evaluation indicators, making it attractive, and defends its suitability as an alternative instrument for petroleum fiscal policy reform for South Sudanese government.
Keywords: Production sharing contract; net present value; minimum rate of return; internal rate of return; payback period; sensitivity analysis.
New Asset Liability Management Model with Decision Support System for Life Insurance Companies: Interface Design Issues for Database and Mathematical Models
by Harish Rao, Goutam Dutta, Sankarshan Basu
Abstract: We introduce a new Asset Liability Management model based decision support system (DSS) for a life insurance firm. The DSS is based on multi-stage Stochastic Linear Programming (SLP) with recourse for strategic planning. The model can be used with minimal knowledge of management sciences. The model maximizes the expected value of total reserve (policy holders reserve and shareholders reserve) at the end of the time period of planning with constraints both on the asset and the liability side of the firms balance sheet. We discuss issues related to DSS interface design, one to one correspondences between the SLP model and the database and the difficulty in multi stage DSS compared to two stage DSS. We also compare and contrast the similarities and differences with our earlier work on SLP based DSS for process industries.
Keywords: Decision support system; stochastic optimization; financial institutions; strategic planning; asset liability management; insurance.
Special Issue on: Asian Consumer and Family Behaviour
Corporate Governance, Privatisation, and The Financial Performance of Indonesian State Owned Enterprises
by Nurharjanto Nurharjanto, Tulus Haryono, Djoko Suhardjanto, Niki Lukviarman, Erna Setiany
Abstract: AbstractrnThis study aimed to examine the effect of Corporate governance (CG) index to observe the effect of board governance implementation of SOEs on performance before and after privatization. Board governance measured by board characteristics proxied by several variables, namely; board size, proportion of Independent Commissioner on board, board meeting frequencies, board-member educational background, size of Audit Committees, proportion of Audit Committee independence, Audit Committee meeting frequencies, and educational background of Audit Committee members. While the financial performance of SOEs as dependent variable was measured by Return on Equity. Multiple linear regression technique was employed to test influence of CG index to financial performance of SOEs, and paired sample t test was employed to test the performance before and after privatization. The data used in this study to develop CG index consisted of primary data obtained through questionnaires, followed focus group discussions to clarify the result. Secondary data sourced from officially-published annual report of SOEs were gathered for board-governance characteristics. The study gathered 94 observations of firms-year of SOEs listed on the Indonesia Stock Exchange (IDX), three years before and after privatization until December 31, 2014. rnThe study found CG index have positive effect on SOEs financial performance. Further, the result indicates that financial performance of SOEs was better after privatization. It is suggested that the government of Indonesia need to selectively choose SOEs for privatization to achieve optimum results of privatization in accordance to priorities imposed by the government as the primary owner. rn
Keywords: Keywords: Corporate Governance; privatization; financial performance; state owned enterprises.
Real earnings management in family firms: Evidence from Chinese listed firms
by Xi Tian, Tao Yang, T. Robert Yu
Abstract: Using a large sample of Chinese family firms and nonfamily firms, we examine whether family ownership is associated with higher or lower levels of real earnings management. Based on the agency and stewardship theories, we develop two competing hypotheses. Our findings are consistent with the prediction of the stewardship theory that family firms engage in lower levels of real activities manipulation relative to nonfamily firms. Specifically, family businesses are less likely to accelerate sales, over-produce, cut discretionary expenditures, or engage in more than one real activities manipulation. In our analyses, we control for a number of firm properties and fixed effects. Further analysis suggests that the negative association between family ownership and real activities manipulation is more prominent for young family firms than for mature family firms. Our results are robust to different measures of family firms, alternative measures of real earnings management, and potential endogeneity.
Keywords: real earnings management; agency theory; stewardship theory; family firm; family business; Chinese listed firms.
The Profitability of Just-Cut Barbershops: A Case Study of QB HOUSEs in Hong Kong
by Che-Cheong Poon, Tak Man Anna Lisa Lee
Abstract: The process innovation of QB HOUSEs has made them outweigh the traditional barbershops. It significantly reduces both money cost and time cost at the customer side, and enables a smart increase in total revenue together with a decrease in average total cost at the firm side. The marketing slogan of HK$60 for a just-cut of 10 minutes captured the heart of the fast-paced Hong Kong people, and the just-cut barbershop industry has grown rapidly in the past decade. By using data and information collected by field observations and interviews, this study identified the keys leading to QB HOUSEs success in Hong Kong. It also points out that although the market of just-cut barbershops has not yet saturated, further enhancement in service quality and marketing strategies are needed for sustainable growth.
Keywords: Process innovation; qualitative research; blue ocean strategy; monopolistic competition; market saturation.
Typology of Life Insurance Consumers: A Q-Methodological Study
by Shiou-Yu Chen
Abstract: People have come to gradually recognize that life insurance has an essential role of safeguarding the interest of people from loss and uncertainty whilst compensating the insufficiency of the national insurance coverage. Understanding the range of changing motivations and preferences of life insurance purchasing behaviors is a key challenge for both the insurance companies and the government. Extant research has identified many factors that affect the life insurance purchasing behaviors, yet relative little is known about how the consumers look at these factors and how they dispute them as they contribute to their life insurance purchasing behavior. This study has adopted the Q-methodology to explore the typology of life insurance consumers together with their own statements of their purchasing behavior. We employed an in-depth methodology that incorporates both the quantitative and qualitative methods for an investigation of life insurance purchasing behavior among consumers particularly in Taiwan. The analysis revealed five main types: Financial Planning, Family Care, Social Value, Life Planning, and Future Prospects. The results provided some implications and guidance for formulating national policies, as well as effective strategies for improving the competitiveness of the insurance companies and the government.
Keywords: Life Insurance consumers; Q-methodology; Typology; Life insurance purchasing behavior.
ECONOMICS IS LEARNT IN THE FAMILY: REVALUING FAMILY INFLUENCE ON FINANCIAL BEHAVIOUR IN INDIA
by JEHANGIR BHARUCHA
Abstract: Family Economics primarily studies the influence of the family on consumption and investmentbehavior through the generations.Research has clearly shown that the family should be the source for most of a youths financial knowledge. This study attempts to fill a gap as scant literature is available on the influence of the family on financial behavior of the youth in India. Theinterviews were largely administered in person and in a few cases through an email or on the phone. This piece of research tries to assess the family perception and practice on improving the level of financial literacy of the Indian youth.The results show thatonly34% of parents were having discussions with their offspringson financial planning and42% of the respondents felt they were aware and educ ated enough to impart financial training to their offsprings. Slightly more than 25% of the parents admitted to their lack of financial knowledge. It is thus concluded that family involvement in financial education programs is not at all well developed in India. The study gives several recommendations in this regard.
Keywords: financial education; family; young consumers; savings; role models.
Empirical Study on Conservative and Representative Heuristics of Hong Kong Small Investors Adopting Momentum and Contrarian Trading Strategies
by Wing Keung Wong, Sheung Chi Chow, Tai Yuen Hon, Kai Yin Woo
Abstract: Recently, a new Bayesian approach has been developed to explain some market anomalies. In this paper, we conduct a questionnaire survey to examine whether the theory holds empirically by studying the conservative and representative heuristics by Hong Kong small investors who adopt momentum and/or contrarian trading strategies. In addition, our study provides evidence for the small investors on their time horizon and risk tolerance when facing uncertainty in their investments. Our findings are useful to small investors in their investment decision making and useful to financial advisors in providing service to small investors.
Keywords: conservative and representative heuristics; momentum and contrarian trading strategies.