May 2009

Zagreb International Review of Economics and Business
Volume XII, Number 1 (May 2009)

ABSTRACTS

Target Liquid Balances and Value of the Firm
Grzegorz Michalski

Abstract: The basic financial purpose of corporation is creation of its value. Liquidity management should also contribute to realization of this fundamental aim. Many of the current asset management models that are found in financial management literature assume book profit maximization as the basic financial purpose. These book profit-based models could be lacking in what relates to another aim (i.e., maximization of enterprise value). The corporate value creation strategy is executed with a focus on risk and uncertainty. Firms hold cash for a variety of different reasons. Generally, cash balances held in a firm can be called considered, precautionary, speculative, transactional and intentional. The first are the result of management anxieties. Managers fear the negative part of the risk and hold cash to hedge against it. Second, cash balances are held to use chances that are created by the positive part of the risk equation. Next, cash balances are the result of the operating needs of the firm. In this article, we analyse the relation between these types of cash balances and risk. This article presents the discussion about relations between firm’s net working investment policy and as result operating cash balances and firm’s value. This article also contains propositions for marking levels of precautionary cash balances and speculative cash balances. Application of these propositions should help managers to make better decisions to maximize the value of a firm.

Keywords: corporate value, investments, current assets, working capital, value based management, cash management

JEL Classification: G32, G11, P34


Urban Dipoles in Greece: Economic Development Opportunities for Larissa-Volos Dipole in Thessaly Region
Theodore Metaxas

Abstract: The article attempts to illustrate the significance of the existence of co-operation and in tandem development of an urban dipole, as well as the impact of such a dipole development on each of the two cities and on the greater region they belong. For this reason, the article focuses on a specific case of two medium size cities in Greece, Larissa and Volos, which activate in the same region by taking development actions complementary to one another. The aim of the article is to define the prospects for economic development of this dipole and examine its dynamic in relation to other cities in Greece, by using original data derived by a recent empirical research conducted among foreign firms of the region which have established in the dipole area the last 15 years.

Keywords: urban dipoles, economic development, Greece

JEL Classification: R11, R12, R13



The Competitiveness of Croatian Export to EU Markets
Goran Buturac
Jasmina Gržinić

Abstract: This paper explores the competitiveness of Croatian export to EU market. At the very beginning of the paper, by analyzing the results of regression model the basic differences among the value of Croatian exports in EU countries are to be explained. The differences in the size of Croatian export among EU countries could be well explained by the geographical distance between Croatia and individual EU countries, as well as, by the GDP of the EU countries. Croatia has positive trade balance with EU at low value added products. Although, the total export competitiveness to EU market remains unchanged during the observed period, the competitiveness of the economic sectors was really changeable. Compared to other economic sectors agricultural sector showed the most favorable position on the EU markets. Relatively good position in the competitiveness of the transport equipment could be explained by the significant value in the export of the shipbuilding industry. While the competitiveness of the chemicals was stagnating, the competitiveness of the textiles and clothing were falling.

Keywords: export, competitiveness, EU markets, Croatia

JEL Classification: F14, F15


Examining the Danish Flexicurity Labour Market Concept
Alka Obadić

Abstract: Objective of this paper is to analyse the most recent changes of the interplay between the flexibility of the employment relationship on the one hand, and labour market and social policy, on the other. This article examines the new policy concept of ‘flexicurity’ in view of the emerging flexibility-security approach that the European Union, national governments, sector of industry, individual companies and workers are currently facing. The flexicurity approach provides important answers to the question of how to meet modern labour market challenges and at the same time improve security. The special interest is concentrated on the so-called ‘golden triangle’ of the Danish labour market successful flexicurity model.

Keywords: labour market, flexibility, security, flexicurity, ‘Danish’ model

JEL Classification: J0, J8



Tobin’s Q Model and Cash Flows from Operating and Investing Activities in Listed Companies in Iran
Mahdi Salehi

Abstract: Tobin’s Q model is one of the economic models for evaluation of companies, proposed by Tobin in 1968 and represents the ratio of the market value of the companies’ shares plus the book value of its debts to the book value of its assets. It seems that one reason for the difference in abilities of the above said companies to produce cash from operating and investing activities. Therefore this research intends to find out a relationship between Tobin’s Q and cash flows from operating and investing activities so that market participants can gain necessary knowledge about market efficiency and choosing investment basket with the aid of it. The results obtained from the research shows that there is no relationship between Tobin’s Q ratios and cash flows from operating activities in the companies listed in TSE.

Keywords: Tobin’s Q, cash flows from operating activities, cash flows from investing activities

JEL Classification: G100



Destination Competitiviness: A Framework for Future Research
Ramona Gruescu
Roxana Nanu
Gheorghe Pirvu

Abstract: The paper envisages aspects concerning identification of the competitive advantage of a tourist destination from a double perspective: the critical contribution of the employees and the ICT impact on promoting and selling the destination. Research methodology includes ‘bottom to top’ analysis of the mentioned indicators. Thus, results include the eficientisation of tourist businesses and destinations due to both human element development and ICT technologies. Two essential basis of the competitive advantage are isolated: differentiation and cost advantage. ICT creates a series of new working types through new applications and its use in management and distribution of key functions such as yield.

Keywords: tourist destination, competitiveness, training and education, information technology

JEL Classification: L 83, O15, O14



Privatization in Slovenia: A Macroeconomic Perspective of its Effects
Primož Dolenc

Abstract: State-owned enterprises and privatization has long been a major economic topic. After large privatizations in Great Britain, France etc., the privatization became an interesting topic again when now transition economies changed its economic system. The purpose of this article is to present preliminary results of the analysis that took into consideration of privatization proceeds potentially influencing some macroeconomic variables. However, we found that in Slovenia privatization so far influenced only on lowering public debt, while other influences could not be proven.

Keywords: state-owned enterprises, macroeconomic effects of privatization, Slovenia

JEL Classification: L33, E62, H82



Solving the Nonlinear Economic Equations by Modified Newton Method
Josip Matejaš
Martina Nakić

Abstract: In this paper two ways how to modify the Newton method for solving general equation are presented. The modifications accelerate convergence of the existing method. The modified methods are useful for application to many economic functions and problems.

Keywords: nonlinear equation, iterative method, Newton method, modified Newton method

JEL classification: C02, C63