Agency Cost and Dividend Pay-out: A Study of Selected Listed Manufacturing Firms in Nigeria

Agency cost is an internal cost which arises between management (agent) and shareholder (principal), because of the diverging interest of the two parties. Dividend payments are often employed to mitigate this cost. Studies have examined the effect of dividend pay-outs on agency costs documenting mixed findings. However, the literature on the reverse effect of agency costs on dividend pay-outs is still nascent. The main objective of the study is to examine the effect of agency cost on dividend pay-out of listed manufacturing firms in Nigeria. The study used a panel research design. The population of the study comprised listed manufacturing firms, but delimited to firms in conglomerate and consumer goods sectors of the Nigerian Stock Exchange. Data for the study were collected from yearly financial statements of the selected firms. The hypotheses were tested using pooled OLS Regression. The dependent variable of the study was dividend pay-out, while assets to sales ratio, leverage, and free cash flow were proxies of agency cost. Firm size and profitability measures (ROA and ROE) were used as control variables in the study. The study found a significant and positive effect of assets to sales ratio and free cash flow, and a significant and negative effect of leverage on dividend pay-out. The study recommended amongst others that, managers should consider the implication of agency costs in the design of in the design and implementation of a dividend policy.

Ease of Doing Business and Its Impact on Inward FDI

This study investigates the impact of Ease of Doing Business on Inward FDI over the period from 2011 to 2015 across the globe. This study measures ease of doing business using starting a business, getting credit, registering property, paying taxes and enforcing contracts. The research used a sample of 177 countries from 190 countries listed in World Bank. Least square regression model via E-views software used to examine causal relationship. The study found that ease of doing business indicators ‘Enforcing Contracts’ was found to have a positive significant impact on Inward FDI. Nevertheless, ‘Getting Credit’ and ‘Registering Property’ were found to have a negative significant impact on Inward FDI. However, ‘Starting a Business’ and ‘Paying Taxes’ have no significant impact on Inward FDI in the studied timeframe of this research. The findings of the study suggested the ease of doing business enables inward FDI through better contract enforcements, getting credit and registering property. The findings of the research will assist international managers and companies to know the importance of ease of doing business when investing in foreign countries through FDI.

Store Attributes: A Sustainable Strategy to Influence Customer Satisfaction and Purchase Intention

This research examines the influence of store attributes namely store assortment, aesthetics, store convenience, and store service and customer relation on customer satisfaction and purchase intention. A sample of 373 customers were used to collect data using convenient sampling methods at the time of shopping from various hypermarkets located in Selangor. A Likert-scale questionnaire from 1 to 5 was used to measure the items. To analyses the data, SPSS and AMOS software were used. The path analysis showed that store assortment, aesthetics and store convenience had a positive and significant impact on customer satisfaction and purchase intention except store service and customer relation. Therefore, it is very vital for retail managers and marketers to promote these attributes and make it visible for customers to increase satisfaction and purchase volumes. This research potentially contributes to develop and implement more successful relationship marketing strategies for retailers and managers. Also future researchers could emphasis on extending this research by comparing local and foreign hypermarkets attribute and whether there exit any difference in the eyes of customer.

Dynamic Interaction Between Macroeconomic Fundamentals and Stock Prices in Bangladesh

This study attempts to investigate whether dynamics in fundamental macroeconomic factors significantly influence the stock prices of Bangladesh by applying cointegration test, Granger causality test based on the Vector Error Correction Model (VECM), Variance Decomposition and Impulse Response Analysis. Johansen and Juselius cointegration test detect six cointegrating vectors and a short-run and long-run relationship is investigated by normalizing the first cointegrating vector corresponding to the largest Eigen-value. We find a long-run positive relationship between stock price and IP, CPI, EX, and RT but a negative relationship between stock price and M2 and interest rate (both TB & GB). Empirical findings of this study reveal that no macroeconomic variables except TB Granger cause stock price in short run. Variance Decomposition analysis shows that most of the stock price variance can be explained by its own shocks in the shorter horizon but its magnitude diminishes over the long horizon which is about 26.77% after 24 months. Therefore, empirical results suggest that stock prices are weakly exogenous relative to the macroeconomic variables. Findings of the study have important implications to market participants and financial analysts when they have chosen to invest in Bangladesh stock market.

Downside Risk Analysis of Returns Financial Institutions of Pakistan

This study empirically tested the standard CAPM and DR-CAPM to examine the cross-sectional variation in stock returns of financial institutions listed at PSE over the period 2002-2016. The analysis is also performed for three sub-periods: pre-financial crisis period (2002-2005), during- financial crisis period (2006-2009), and post-financial crisis period (2010-2016). The empirical analysis is carried out following the two-pass regression analysis of Fama & Macbeth (1973). The results of the study suggest that the standard CAPM is not suitable for calculating the risk and required rate of returns for Pakistani financial institutions. To examine the validity of DR- CAPM, we estimate the downside beta developed by Bawa and Linderberg (1977), Fishburn (1977), Harlow and Row (1989), and Estrada (2002). Out of these models, the DR-CAPM of Fishburn (1977) appeared to be more appropriate for calculating required rate of returns. The DR-CAPM of Harlow and Row (1989) also provides evidence of a positive and statistically significant risk-return relationship in most of the examined sub-periods. However, the results for Estrada (2002) are inconclusive at best, suggesting that the downside beta of Estrada (2002) is an inefficient measure of risk. The results help investors in identifying an appropriate and suitable measure of risk for financial institutions of Pakistan, which, in turn, enables the investors to design an efficient and well-diversified portfolio. The results are also of great significance to managers of financial institutions as they help them in making capital budgeting decisions and calculating the cost of equities.