May 2018

Zagreb International Review of Economics and Business
Volume XXI, Number 1 (May 2018)

 

ABSTRACTS 

Government Tax Policy and Private Sector Development in Nigeria: Evidence from Dynamic Panel Data Model
Hammed Adetola Adefeso

Abstract: This study examined the influence of government corporate tax policy on the performance of 54 randomly selected listed companies that cut across 17 categories of non-fi nancial firms in Nigeria over a period of 1990-2002. Using Generalised Method of Moment (GMM) and contrary to the expectation, the study found positive* and significant relationship between corporate tax policy and the output performance of quoted manufacturing firms in Nigeria. This may be an indication that government revenue from corporate tax was judiciously expended on productive government expenditure such as road, security and power as nearly all firms selected are located in Lagos State. The study therefore, suggested that corporate tax if judiciously used in the provision of physical infrastructures and other public goods would reduce the cost of production of the private sector in Nigeria.

Keywords: government; corporate tax; tax policy; manufacturing firms; generalized method of moment

JEL Classification: H, H2, H25


Economic Growth and Inequality with Tourism in an Integrated Walrasian-General Equilibrium and Neoclassical-Growth Theory
Wei-Bin Zhang

Abstract: This paper studies dynamic interdependence between economic growth, tourism, and inequalities in income and wealth in a small open economy. We build the dynamic model in an integrated Walrasian-general equilibrium and neoclassical-growth theory for a small open economy with multiple sectors and heterogeneous households in a perfectly competitive economy. The economy consists of one service sector which supplies non-traded services and one industrial sector which produces traded goods. We treat wealth accumulation and land distribution between housing and supply of services as endogenous variables. We show that the motion of the economy with J types of households is given by J nonlinear differential equations. We simulate the motion of the system with three groups of households. We also conduct comparative dynamic analysis with regards to the rate of interest, the price elasticity of tourism, the global economic condition, and the rich class’ human capital, and the rich class’ propensity to consume housing.

Keywords: tourism; price elasticity of tourism; heterogeneous households; capital accumulation; land rent; integrated Walrasian and neoclassical-growth theory

JEL Classification: O, O4, O41


Organisational Decision-Making and Academic Institutions: Increasing Complexity of Processes, Settings and Actors​
Ivana Ilijašić Veršić 

Abstract: Changes in understanding and interpretation of decision-making processes have shed more light on complex interplay given the different settings, and different actors. The limitations in human decision-making and their significance and long-term implications on organizational management or policy making inspired a large body of evidence and research. Exploration of decision-making processes spans over decades, and is closely connected to the role of power; the amount of power in organizations is usually joined by the knowledge and prior experience, which together play a significant role in decision-making process, as well in selection of candidates for the job. However, there is an evident void concerning publications on decision-making processes in academic institutions, and it rapidly becomes the focus of interest due to a specific opposition contained in its core; positions of high level administrators are held by the university professors with no mandatory previous experience and/or knowledge in organisational management.

Keywords: decision-making; academic institutions; organisations

JEL Classification: D87, D89, D91
 

The Impact of Working Capital Management on Profitability of Croatian Software Companies
Dina Korent
Silvije Orsag

Abstract: The idea that working capital management impacts profitability and risk of a company is generally accepted and in last 10-15 years has acquired a substantial interest. Accordingly, from the aspect of the measure of efficiency of working capital management, the objective of this paper is to evaluate working capital management impact on profitability of Croatian software companies. This impact was examined using descriptive and correlation as well as panel regression analysis for six-year period (2008-2013). The results show that after controlling for characteristics of the company and macroeconomic conditions working capital management significantly affects the profitability of Croatian software firms. Moreover, the results imply the existence of a nonlinear, concave quadratic relationship between the net working capital and return on assets. This suggest the existence of an optimal level of net working capital that balances costs and benefits and maximizes profitability of analysed companies.

Keywords: working capital management; net working capital; company’s profitability; return on assets; Croatian software companies

JEL Classification: G30, G39


The Concept of Sustainable Development: From its Beginning to the Contemporary Issues
Klarin Tomislav

Abstract: The concept of sustainable development has undergone various developmental phases since its introduction. The historical development of the concept saw participation of various organizations, which nowadays work intensely on its implementation. The concept has experienced different critiques and interpretations over the time while being accepted in different areas of human activity, and the definition of sustainable development has become one of the most cited definitions in the literature. In its development, the concept has been adapting to the contemporary requirements of a complex global environment, but the underlying principles and goals, as well as the problems of their implementation, remained almost unchanged. Still, some goals have been updated, and the new goals were set. These goals are united in the framework of the Millennium Development Goals 2015 which outline the challenges that humanity has to fight not only to achieve sustainable development but to survive on Earth as well.

Keywords: concept of sustainable development

JEL Classification: Q01


Are Multi-Armed Bandits Susceptible to Peeking?
Markus Loecher

Abstract: A standard method to evaluate new features and changes to e.g. Web sites is A/B testing. A common pitfall in performing A/B testing is the habit of looking at a test while it's running, then stopping early. Due to the implicit multiple testing, the p-value is no longer trustworthy and usually too small. We investigate the claim that Bayesian methods, unlike frequentist tests, are immune to this "peeking" problem. We demonstrate that two regularly used measures, namely posterior probability and value remaining are severely affected by repeated testing. We further show a strong dependence on the prior probability of the parameters of interest.

Keywords: multiple comparisons; A/B testing; Bayesian decision theory

JEL Classification: C4, C6


Crowdfunding in a Context of Financing Firms Through Their Life Cycle
Tin Horvatinović
Silvije Orsag

Abstract: In this paper we first present some developed theories of financing that firms might accord with in their development stages. The framework, assumptions and predictions of the capital structure of firms in each theory is shown. Afterwards, crowdfunding, as a fairly new source of financing that is increasing significance, is described and is differentiated on the basis of the type of return on investment for the outside investors. In recent literature there have been models that introduce crowdfunding in the framework of financing firms through their life cycle stages. We point the difficulty of encompassing crowdfunding in the mentioned models because of characteristics that are unique to it from the perspective of the investor and the firm. While it is not surprising that crowdfunding is used in development stages, these characteristics make it difficult to construct a model of financing firms that has traditional means of financing and crowdfunding.

Keywords: crowdfunding; small business financing; life cycle of firms

JEL Classification: G32, L26

BOOK REVIEWS

Sanda Renko and Blaženka Knežević (Editors): Trade Perspectives in the Context of Safety, Security, Privacy and Loyalty
Publisher: Cambridge Scholar Publishing, 2018, Cambridge, UK.
ISBN 978-1-52750-841-5

Mirko Palić


Bruce A. Blonigen and Wesley W. Wilson (Editors): Handbook of International Trade and Transportation
Publisher: Edward Elgar Publishing, 2018, Cheltenham, UK;
Northampton, Massachusetts, USA.
ISBN 978-1-78536-614-7

Vladimir Čavrak