BIJ Vol3No1

Business Intelligence Journal January, 2010 Vol.3 No.
Business Intelligence Journal

Volume 3 - Number 1 - January 2010 - Semiannual Publication Published by the IIU Press and Research Centre, A.C., Brussels EU Commission Building, Rond Point, Schuman 6, Box 5, 1040 Brussels, Belgium, for the Department of Business Management and Economics (BME) of the School of Doctoral Studies (European Union) at the Isles Internationale Universit (IIU-EU), Brussels, Belgium in collaboration with the Business Intelligence Service of London, UK (Sayco UK). Editorial Note Profile of authors included in this number Information for Contributors 1 2 4 9
Articles
The Association Between Components of Income Statement, Components of Cash Flow Statement and Stock Returns Mohsen Dastgir, Hossien S. Sajadi, Omid M. Akhgar Market Analysis of Students Attitudes about Credit Cards J.C. Arias, Robert Miller Customer Experience Management in Retailing Kamaladevi B. Income Smoothing, Real Earnings Management and Long-Run Stock Returns Abbas Aflatooni, Zahra Nikbakht Building a World Class University Ron Messer Oil Prices and Exchange Rates: The Case of OPEC Leili Nikbakht Cybercrime in Nigeria Okonigene Robert Ehimen, Adekanle Bola Supplier Development Strategies: A Data Envelopment Analysis Approach Rohita Kumar Mishra, Gokulananda Patel Switching Cost and Customers Loyalty in the Mobile Phone Market: The Nigerian Experience Oyeniyi, Omotayo Joseph - Abioudun, Abolaji Joachim Level of Job Satisfaction and Intent to Leave Among Malaysian Nurses Muhammad Masroor Alam, Jamilha Fakir Mohammad
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55 75 83 93 99 111 123
Business Intelligence Journal - January, 2010 Vol.3 No.1
Copyright 2010 IIU Press and Reserach Centre, A.C. All Rights reserverd. No part of this publication may be reproduced, stored in a retreival system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, whitout the written prior permission of the author. ISBN: 978-1-4251-8179-6 ISSN: 1918-2325
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EDITORIAL NOTE

In collaboration with the Business Intelligence Service of London, UK and with the European Business School of Cambridge, UK, the Business Intelligence Journal (BIJ), produced by the Department of Business Management and Economics (BME) at the School of Doctoral Studies of the European Union, hosted at the Isles Internationale Universit (IIU-EU) in Brussels, Belgium, publishes research, analysis and inquiries into issues of importance to the business community. Articles in BIJ examine emerging trends and concerns in the areas of general management, business law, public responsibility and ethics, marketing theory and applications, business finance and investment, general business research, business and economics education, production/operations management, organizational behavior and theory, strategic management policy, social issues and public policy, management organization, statistics and econometrics, personnel and industrial relations, technology and innovation, case studies, and management information systems. The goal of BIJ is to broaden the knowledge of business professionals and academicians by promoting free access and provide valuable insight to business-related information, research and ideas. All articles included in the BIJ are peer-reviewed. The Business Intelligence Journal is published semiannually (one volume per year) by the Business Intelligence Service of Secured Assets Yield Corporation Limited based in London, UK. Department of Business Management and Economics (BME) School of Doctoral Studies (European Union) Isles Internationale Universit (IIU-EU) Brussels EU Parliament Building: Square de Meeus 37 4th Floor 1000 Brussels, Belgium edit.bij@saycocorporativo.com Head of Department (BME): Dr. Jnger Albinger (PhD) Published by IIU Press and Research Centre, A.C. Brussels EU Commission Building: Rond Point, Schuman 6, Box 5 1040 Brussels, Belgium Research Centres Director: Professor Michael Rockwell (PhD) Periodical Publications Editorial Unit Director: Dr. Anne D. Surrey (PhD) Business Intelligence Journal Editor: Robert B. Stacey Associate Editors: Michael Summers Susan G. Boots Martin A. Miller Kenneth C. Michaels Reviewers Coordinators: Anita Peters Roger Puig Robert Miller Editorial Design: Pablo Gmez-Olivo
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January

Profile of authors included in this number
Article 1: Author: The Association Between Components Of Income Statement, Components Of Cash Flow Statement And Stock Returns
1 - Mohsen Dastgir Professor in Accounting. e-mail: mdastgir@scu.ac.ir 2 - Hossien S. Sajadi Associate Professor in Accounting. 2 - Omid M. Akhgar PhD student.
Article 2: Author: Article 3: Author:
Market Analysis of Students Attitudes about Credit Cards

1 J.C. Arias PhD, DBA 2 Robert Miller Candidate to DBA.
Customer Experience Management in Retailing

Kamaladevi B B. Com., DTE, DECT, MBA, PGDPMIR, PGDRM, M.Phil, Student, Dravidian University, Kuppam, Andhra Pradesh, India. e-mail: kamaladevimba@gmail.com
Article 4: Author:
Income Smoothing, Real Earnings Management and Long-Run Stock Returns

1 - Abbas Aflatooni Department of Accounting, College of Economics and Social Sciences, Shahid Chamran University of Ahwaz, Ahwaz, Iran. e-mail: Abbasaflatooni@gmail. com. 2 - Zahra Nikbakht Payam Noor University (PNU), Koohpaye, Isfahan, Iran. e-mail: Zahra.Nikbakht77@gmail.com
Article 5: Author:
Building aWorld Class University

Ron Messer Ron Messer holds graduate degrees in both public and business administration. He is also a Chartered Accountant and a Certified Management Accountant. Mr. Messer has experience in strategic planning, business analysis and information systems. His essays have appeared in journals in Canada, the United States and the United Kingdom. Mr. Messer is currently a faculty member in the School of Business at Kwantlen Polytechnic University, which is located in Vancouver, British Columbia, Canada. e-mail: ron.messer@kwantlen.net.
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Article 6: Author: Article 7: Author:
Oil Prices and Exchange Rates:The Case of OPEC

Leili Nikbakht Department of Economics, College of Management and Economics, Shahid Bahonar University of Kerman, Kerman, Iran. e-mail: leili.nikbakht@gmail.com.
Cybercrime in Nigeriat
1 Okonigene Robert Ehimen Ambrose Alli University, Ekpoma, Edo State, Nigeria. e-mail: robokonigene@yahoo.com. 2 Adekanle Bola Ambrose Alli University, Ekpoma, Edo State, Nigeria.
Article 8: Author:
Supplier Development Strategies: A Data Envelopment Analysis Approach 1 - Rohita Kumar Mishra Lecturer, IIPM-School of Management, Kansbahal, Orissa, (India) 770034. e-mail: rohitkmishra@rediffmail.com. 2 - Gokulananda Patel Professor, Birla Institute of Management Technology Greater Noida, UP (India) 201306. e-mail: gn.patel@bimtech.ac.in. Switching Cost and Customers Loyalty in the Mobile Phone Market:The Nigerian Experience
1 Oyeniyi, Omotayo Joseph Department of Business Studies, Covenant University, Ota. e-mail: omotayooyeniyi@yahoo.com. 2 Abiodun, Abolaji Joachim Department of Business Studies, Covenant University, Ota. e-mail: abijoac@yahoo.com.
Article 9: Author:
Article 10: Author:
Level Of Job Satisfaction And Intent To Leave Among Malaysian Nurses

1 - Muhammad Masroor Alam Institute of Business and Technology (BIZTEK) Karachi-Pakistan. e-mail: m_alam_muhammad@yahoo.com. 2 - Jamilha Fakir Mohammad Univrsiti Utara Malaysia Kaula Lumpur-Malaysia e-mail: illafm2000@yahoo.com
In order to make contact with any of the Authors referred to above, please forward your request to: edit.bij@saycocorporativo. com, including BIJs edition (BIJ Volume 2, Number 1, January 2008), articles and authors names with your requirement. BIJs Editor will be glad to submit your requests or inquiries before authors.
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2009
Mohsen Dastgir, Hossien S. Sajadi, Omid M. Akhgar
THE ASSOCIATION BETWEEN COMPONENTS OF INCOME STATEMENT, COMPONENTS OF CASH FLOW STATEMENT AND STOCK RETURNS
Abstract
This paper investigates the association between components of income statement, components of cash flow statement and stock returns. A sample of 65 companies listed in Tehran Stock Exchange for the time period of 2003-2005. Regression analysis is conducted to test the research hypotheses. Results show that among components of income statements, the net income (loss), and among components of cash flow statement, cash flows from investing activities have a strong relationship with stock returns. However, the paper results show that there is a stronger association between stock returns and components of income statements relative to components of cash flows statement.
Dastgir M., Sajadi H.S., Akhgar O.M. - The Association Between Components of Income Statement, Components of Cash Flow Statement and Stock Returns
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Introduction
The main purpose of financial reporting is to state the enterprises financial position and performance to the users of financial information to help them in their decision making. Main instruments for transferring such information to the user groups are financial statements and supplemented notes which are the final product of accounting process and financial reporting The income statement is a basic source of information for investment and other related decisions. Income measurement has always been a challenge for accounting standard setting bodies. In order to assess the future income and cash flows, investors rely on income reported. However, the components of income reported must be presented fairly and accurately. The cash flow statement, include important information about cash flows from various activities. Cash generated from operating activities and other sources is consumed for performing operation, paying dividends, repaying debts, etc. Cash inflows and outflows in any enterprise is the result of management decisions related to short-term and long-term operational plans, financing and investment plans. The income statement and cash flow statement are two means of providing important information about firms performance. Investors and other user groups extensively rely on the information that is disclosed in these two financial statements. In this research, we investigate the association strength of the components of income statement and cash flow statement with stock returns.
Previous studies
Bernard and Stober (1989) investigate the nature and amount of information in cash flows and accruals. They find no
evidence that stock prices respond in a systematic manner to release of information about the cash flow and accrual components of earnings and guess that the information content of these two components of earnings may not be systematically different. Watson and Wells (2005) study the association between various earnings and cash flows measures of firm performance and stock returns in Australian Stock Exchange. They report that for profit making firms, earning based performance measures are found to be more closely associated with stock returns than cash flow based measures. However, for loss making firms, they find that neither earning nor cash flow based measures capture firm performance well. Livnat and Santicchia (2006) test the association between cash flows, accruals and future returns. They find that, future quarterly earnings are more highly associated with current net operating cash flows than with accruals because accruals have less persistence and companies with extremely high (low) current quarterly accruals have significant and negative (positive) abnormal returns. Rayburn (1986) investigates the association of operating cash flow and accruals with security returns. The results of his research support the association of both operating cash flow and aggregate accruals with abnormal returns. Dechow (1994) studies the accounting earnings and cash flows as measures of firm performance. She finds that, both operating cash flows and accruals have incremental information content over each other and they are priced differently by the market. Bown et al. (1986) report low correlation between percentage changes in alternative measures of cash flow and both percentage changes in earnings and percentage changes in traditional cash flow.
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Sloan (1996) investigates whether stock prices reflect information about future earnings contained in the accrual and cash flow components of current earnings. He finds that, stock prices do not reflect fully information contained in the accrual and cash flow components of current earnings until that information impacts future earnings. Wilson (1986) examines the relative information content of accruals and cash flows. He defines funds and accruals as cash from operations and total accruals, respectively and repots that these parameters are both significantly different from zero and from each other. This result indicates that these components of earnings have incremental information content beyond earnings and beyond each other. In particular, the non-cash component of earnings has incremental information content beyond the cash component. Wilson (1987) in another research studies the incremental information content of the accrual and funds components of earnings after controlling for earnings and finds that, at least one of these components has information content and after controlling for earnings, incremental information about the cash and non-cash components of earning is precisely the same. Haw et al. (2001) examine the nature of information in accruals and cash flows in an emerging capital market. Their results demonstrate that earnings have relative information content over operating cash flows and also earnings have greater persistence and predictability than operating cash flows. Sharma and Iselin (2003) investigate the decision usefulness of reported cash flow and accrual information. They find that, judgments based on cash flow information are more accurate than judgments based on accrual information and the difference in judgment accuracy is more pronounced for insolvent (failed) companies than for solvent
(non-failed) companies. Sharma and Iselin (2003) in another research also investigate the relative relevance of cash flow and accrual information solvency assessments and find that, relative to accrual information, cash flow information enhances the accuracy of solvency assessments and cash flow information had greater relevance than accrual information for solvency judgments. Livnat and Zarowin (1990) survey the incremental information content of cash flow components. They find that there is no incremental information content of cash flows beyond net income. However, they show that the association of cash flows with stock returns increases when earnings are disaggregated into components of cash flows from financing, investing and operating activities and accruals. Dastgir and Saeedi (2006) study the superiority of comprehensive income to net income as a measure of firm performance. They find that, that comprehensive income is not superior to net income for evaluating firm performance on the basis of stock return and price. For the state companies, they find that, firm performance evaluation on the basis of cash flows prediction using comprehensive income is superior to net income. Further, research findings in Ball and Brown (1968) and Beaver and Dukes (1972) indicate that earnings have a higher association with security returns than cash flows with security returns.
Variables
Dependent Variable In this research, the depended variable is firms stock returns (SR). We collected the required data for this variable using Sahra Software (the Iranian software).
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Independent variables We use the components of income statements and components of cash flow statement as independent variables. We use the electronic archival data provided by Tehran Stock Exchange (TSE) to collect data. The components which we choose as components of income statements are Gross Income per share (GI), Operation Income per share (OI), Income before Tax per share (IBT) and Net Income per share (NI). The components of cash flow statement in this study are Cash Flows from Operating Activities per share (OC), Cash Flows from Investments Returns and Income Payable for Financing Activities per share (RC), Cash Flows from Income Tax per share (TC), Cash Flows from Investing Activities per share (IC), Total Cash Flows before Financing Activities per share (CBF) and Cash Flows from Financing Activities per share (FC).1
activities have a stronger relationship with stock returns. H3: Components of cash flow statement have stronger association with stock returns than components of income statement.
Sample
The sample of this study is selected based on the availability of the required data for the period of 2003 to 2005. From listed companies on Tehran Stock Exchange, first those companies having available data and their year end is 21st March (Iranian fiscal year end) is selected. Then investment and brokerage companies are omitted and 65 companies randomly selected for this study. The sample of 65 companies listed in Tehran Stock Exchange for the time period of 20032005 is shown in the table 1.
Hypothesis Testing
In this research we test each hypothesis in four situations. In first situation we use the pooling data approach for three years and 195 firm-year observations during 2003-2005. In other three situations we use the cross-sectional approach for each year during 2003-2005. In each situation we estimate various regression models. After estimating the regressions we compare the adjusted across the various regression models. We tried to use regression models in each situation that have the same dependentvariable.
Hypotheses
For studying the association between components of income statements and components of cash flow statement with stock returns, we test the following hypotheses: H1: Among the components of income statement, operating income has a stronger relationship with stock returns. H2: Among the components of cash flow statement, the cash flows from operating
These components are based on Irans Accounting Standards. According to Irans Accounting Standards all firms must disclose these items in statements of cash flows.
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Table 1. A Sample of Companies Listed in Tehran Stock Exchange

Industry Groups Year 2003 No. % Year 2004 No. % Year 2005 No. % Total Sample No. %
Metal Mines Other Mines Non-metal Mines Drugs & Chemical Plants & Equipments Food Rubber & Plastic Oil Products Textile Main Metals Metal Products Appliances & Electrics Auto Others Total
2 2 10 8 8 8 3 2 3 4 2 3 6 4 65
3.1 3.1 15.3 12.3 12.3 12.3 4.6 3.1 4.6 6.2 3.1 4.6 9.2 6.2 100
2 2 9 8 7 9 3 2 4 4 3 4 5 3 65
3.1 3.1 13.8 12.3 10.8 13.8 4.6 3.1 6.2 6.2 4.6 6.2 7.7 4.6 100
2 2 10 7 6 8 4 2 5 5 3 2 6 3 65
3.1 3.1 15.3 10.8 9.2 12.3 6.2 3.1 7.7 7.7 4.6 3.1 9.2 4.6 100
6 6 29 23 21 25 10 6 12 13 8 9 17 10 195
3.1 3.1 14.9 11.8 10.8 12.8 5.1 3.1 6.2 6.7 4.1 4.6 8.6 5.1 100
H1 Testing To test the first hypothesis by using the pooling data, we estimate the following regression models: SRi = a + bGIi + f SRi = a + bOIi + f SRi = a + bIBTi + f SRi = a + bNIi + f Where: SR is stock returns, GI is gross income (loss) per share, OI is operating income (loss) per share, IBT is income (loss) before tax per share and NI is net income (loss) per share. In order to test the first hypothesis by using the cross-sectional data, we estimate the following regressions for 2003 to 2005: 2003 SRi = a + bLOG (GIi) + f SRi = a + bLOG (OIi) + f SRi = a + bLOG (IBTi) + f SRi = a + bLOG (NIi) + f
2004 SRi = a + bLOG (GIi) + f SRi = a + bOIi + f SRi = a + bLOG (IBTi) + f SRi = a + bLOG (NIi) + f 2005 LOG (SRi) = a + bLOG (GIi) + f LOG (SRi) = a + bLOG (OIi) + f LOG (SRi) = a + bLOG (IBTi) + f LOG (SRi) = a + bLOG (NIi) + f H2 Testing For testing the second hypothesis by using the pooling data, we estimate the following regressions for 2003 to 2005: SRi = a + bOCi + f SRi = a + bRCi + f SRi = a + bTCi + f SRi = a + bICi + f SRi = a + bCBFi + f SRi = a + bFCi + f
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Where: OC is cash flows from operating activities per share, RC is cash flows from investments returns and income payable for financing activities per share , TC is cash flows from income tax per share , IC is cash flows from investing activities per share, CBF is total cash flows before financing activities per share and FC is cash flows from financing activities per share. In order to test the second hypothesis by using the cross-sectional data, we estimate the following regressions for 2003 to 2005: 2003 SRi = a + bLOG (OCi) + f SRi = a + bLOG (RCi) + f SRi = a + bTCi + f SRi = a + bLOG (ICi) + f SRi = a + bCBFi + f SRi = a + bFCi + f 2004 SRi = a + bOCi + f SRi = a + bRCi + f SRi = a + bTCi + f SRi = a + bICi + f SRi = a + bCBFi + f SRi = a + bFCi + f 2005 LOG (SRi) = a + bLOG (OCi) + f LOG (SRi) = a + bRCi + f LOG (SRi) = a + bTCi + f LOG (SRi) = a + bLOG (ICi) + f LOG (SRi) = a + bLOG (CBFi) + f LOG (SRi) = a + bFCi + f
H3 Testing In order to test the third hypothesis by using the pooling data, we estimate the following regressions:
SRi = a + b1 LOG (GIi) + b OI + b3 LOG (IBTi)
2 i
+ b4 LOG (NIi) + f SRi = a + b1 OCi + b2 RCi + b3 TCi + b4 ICi
+ b5 CBFi + b6 FCi + f In order to test the third hypothesis by using the cross-sectional data, we estimate the following regressions for 2003 to 2005: 2003 SRi = a + b1 GIi + b 2OIi + b3 IBTi + b4 NIi + f SRi = a + b1 OCi + b 2RCi + b3 TCi + b4 ICi + b5 CBFi + b6 FCi + f 2004 SRi = a + b1 GIi + b2 OIi + b3 IBTi + b4 NIi + f SRi = a + b1 OCi + b2 RCi + b3 TCi + b4 ICi + b5 CBFi + b6 FCi + f 2005 SRi = a + b1 LOG (GIi) + b2 OIi + b3 LOG (IBTi) + b4 LOG (NIi) + f SRi = a + b1 LOG (OCi) + b2 RCi + b3 TCi + b4 ICi + b5 CBFi + b6 FCi + f
The Results Testing
of
Hypotheses
In this section we present the findings of testing research hypotheses. The following
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subsections provide the results of hypotheses testing in four situations. A) First Hypothesis a) The results of testing by using the pooling data approach The results of the estimating the models related to this hypothesis are shown in table (2). As shown in the table, the P-values of all T-statistics of all variables are significant. The P-values of all F-statistics for all models are significant too and show that, all models are significant in general. The adjusted of models are 0.198, 0.290, 0.289 and 0.344 respectively. By comparison of adjusted of models, it is obvious that Net Income (Loss) variable has a stronger relationship with stock returns. However, the results of estimating these models do not show that, among components of income statements, operation income (loss) has a stronger relationship with stock returns.
Table 2. The results of H1 testing by using the poling data approach.
Coefficient F-statistic (Prob) T-statistic (Prob) Variable
T-statistics of all variables are significant. The P-values of F-statistics for all models, except the GI variable, are significant too and show that, these models are significant in general. The adjusted R2 of models are 0.036, 0.153, 0.093 and 0.100 respectively. By comparison of adjusted R2 of models, it is obvious that Operation Income (Loss) variable has a stronger relationship with stock returns. However, the results of estimating these models show that, among components of income statements, operation income (loss) has a stronger relationship with stock returns.
Table 3. The results of H1 testing by using the crosssectional approach-year 2003
C (Prob)
-125.749 (0.225) -251.960 (0.009) -146.039 (0.083) -147.347 (0.073)
LOG (GI) LOG (OI) LOG (IBT) LOG (NI)
0.036 0.153 0.093 0.100
3.307 (0.074) 10.965 (0.002) 6.663 (0.013) 7.125 (0.010)
1.819 (0.074) 3.311 (0.002) 2.581 (0.013) 2.669 (0.010)
25.874 44.105 39.460 31.405
1.928 2.083 1.873 1.854
C (Prob)
DW
GI OI IBT NI
0.198 0.290 0.289 0.344
48.951 (0.000) 80.173 (0.000) 79.794 (0.000) 102.551 (0.000)
5.280 (0.000) 8.198 (0.000) 6.911 (0.000) 8.027 (0.000)
0.011 0.015 0.014 0.017
18.097 (0.000) 20.054 (0.000) 22.090 (0.000) 22.437 (0.000)
1.980 2.004 1.981 1.977
b) The results of testing by using the cross-sectional approach The results of the estimating the models related to this hypothesis for year 2003 are shown in table (3). As shown in the table, except the GI variable, the P-value of all
The results of the estimating the models related to first hypothesis for year 2004 are shown in table (4). As shown in the table, the P-values of all T-statistics of all variables are significant. The P-values of all F-statistics for all models are significant too and show that, these models are significant in general. The adjusted R2 of models are 0.049, 0.079, 0.164 and 0.172 respectively. By comparison of adjusted R2 of models, it is obvious that Net Income (Loss) variable has a stronger relationship with stock returns. However, the results of estimating these models do not show that, among components of income statement, operation income
DW
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January
(loss) has a stronger relationship with stock returns.

Coefficient F-statistic (Prob) T-statistic (Prob) Variable C (Prob)
2
B) Second Hypothesis a) The results of H2 testing by using the poling data approach The results of the estimating the models related to this hypothesis are shown in table (6). As shown in the table, the P-values of T-statistics of OC, RC and IC variables are significant. The P-values of all F-statistics for all models are significant too and show that, all models are significant in general. The adjusted R2 of models are 0.104, 0.107, 0.075, 0.149, 0.121 and 0.109 respectively. By comparison of adjusted R2 of models, it is obvious that cash flows from investing activities (IC) variable have a stronger relationship with stock returns. However, the results of estimating these models do not show that, among components of statements of cash flows, the cash flows from operating activities have a stronger relationship with stock returns.
Table 6. The results of H2 testing by using the pooling data approach
LOG (GI) OI LOG (IBT) LOG (NI)
0.049 0.079 0.164 0.172
3.945 (0.051) 6.501 (0.013) 10.188 (0.003) 10.954 (0.002)
2.663 (0.010) 2.550 (0.013) 3.463 (0.001) 3.511 (0.001)
15.646 0.013 26.058 26.393
-68.875 (0.078) 25.935 (0.003) -130.114 (0.008) -127.840 (0.007)
1.818 1.810 1.640 1.602
The results of the estimating the models related to first hypothesis for year 2005 are shown in table (5). As shown in the table, the P-values of all T-statistics of all variables are significant. The P-values of all F-statistics of all models are significant too and show that, these models are significant in general. The adjusted of R2 models are 0.123, 0.089, 0.085 and 0.073 respectively. By comparison of adjusted of R2 models, it is obvious that Gross Income (Loss) variable has a stronger relationship with stock returns. However, the results of estimating these models do not show that, among components of income statements, operation income (loss) has a stronger relationship with stock returns.
Coefficient F-statistic (Prob) T-statistic (Prob) Variable DW
2
DW
C (Prob)
31.049 (0.000) 27.454 (0.000) 33.649 (0.000) 31.114 (0.000) 35.718 (0.000) 35.898 (0.000)
OC RC TC IC
0.104 0.107 0.075 0.149 0.121 0.109
23.424 (0.000) 24.357 (0.000) 16.773 (0.000) 34.907 (0.000) 27.598 (0.000) 24.742 (0.000)
4.406 (0.000) -2.990 (0.003) -1.147 (0.253) -2.647 (0.009) -0.908 (0.365) 0.191 (0.849)
0.005 -0.014 -0.007 -0.012 -0.002 0.001
1.899 1.876 1.889 1.941 1.870 1.866
C (Prob)
CBF FC
LOG (GI) LOG (OI) LOG (IBT) LOG (NI)
0.123 0.089 0.085 0.073
6.872 (0.012) 5.021 (0.031) 4.819 (0.034) 4.211 (0.047)
-6.583 (0.000) -4.679 (0.000) -3.740 (0.000) -3.219 (0.003)
-0.287 -0.265 -0.245 -0.236
5.865 (0.000) 5.624 (0.000) 5.454 (0.000) 5.352 (0.000)
2.351 2.399 2.480 2.467
b) The results of H2 testing by using the cross-sectional approach The results of the estimating the models related to this hypothesis for year 2003 are shown in table (7). As shown in the
DW
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table, only the P-value of T-statistic of OC is significant and only the P-value of F-statistic for this model is significant and shows that, only this model is significant in general. The adjusted R2 of models are 0.189, 0.095, 0.006, 0.070, 0.008 and 0.029 respectively. By comparison of adjusted R2 of models, it is obvious that cash flows from operating activities variable have a stronger relationship with stock returns. However, the results of estimating these models show that, among components of cash flow statement, the cash flows from operating activities have a stronger relationship with stock returns.
operating activities variable have a stronger relationship with stock returns. However, the results of estimating these models show that, among components of cash flow statement, the cash flows from operating activities have a stronger relationship with stock returns.
F-statistic. (Prob) Coefficient T-statistic (Prob) Variable
C (Prob)
OC RC TC
0.107 0.009 0.006 0.009 0.011 0.005
8.709 (0.004) 0.948 (0.334) 0.637 (0.428) 0.227 (0.636) 1.705 (0.196) 1.351 (0.249)
2.721 (0.008) -0.980 (0.331) -1.045 (0.300) -0.478 (0.434) 1.774 (0.081) -1.705 (0.093)
0.016 -0.011 -0.019 -0.003 0.006 -0.005
23.868 (0.000) 30.990 (0.001) 33.466 (0.000) 36.395 (0.000) 41.404 (0.000) 40.915 (0.000)
1.848 1.696 1.675 1.671 1.755 1.738
C (Prob)
DW
IC CBF
Log (OC) Log (RC) TC Log (IC) CBF FC
0.189 0.095 0.006 0.070 0.008 0.029
11.951 (0.001) 1.824 (0.217) 0.346 (0.559) 2.423 (0.137) 1.490 (0.227) 2.886 (0.094)
3.457 (0.001) 1.357 (0.217) -0.588 (0.559) 1.557 (0.137) -1.221 (0.227) 1.699 (0.094)
50.539 15.857 -0.021 23.081 -0.015 0.022
-292.149 (0.006) -12.494 (0.848) 58.677 (0.002) -83.278 (0.356) 56.161 (0.001) 50.239 (0.006)
1.919 2.079 1.778 0.756 1.765 1.780
FC
The results of the estimating the models related to second hypothesis for year 2004 are shown in table (8). As shown in the table, only the P-value of T-statistic of OC is significant and only the P-value of F-statistic for this model is significant and shows that, only this model is significant in general. The adjusted R2 of models are 0.107, 0.009, 0.006, 0.009, 0.011 and 0.005 respectively. By comparison of adjusted R2 of models, it is obvious that cash flows from
The results of the estimating the models related to second hypothesis for year 2005 are shown in table (9). As shown in the table, only the P-value of T-statistic of CBF is significant and only the P-value of F-statistic for this model is significant and shows that, only this model is significant in general. The adjusted R2 of models are 0.064, 0.009, 0.009, 0.729, 0.498 and 0.010 respectively. By comparison of adjusted R2 of models, it is obvious that cash flows from investing activities variable have a stronger relationship with stock returns. However, the results of estimating these models do not show that, among components of cash flow statement, the cash flows from operating activities have a stronger relationship with stock returns.
DW
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F-statistic. (Prob) Coefficient T-statistic (Prob) Variable
Log (OC) RC TC Log (IC) Log (CBF) FC
0.064 0.009 0.009 0.729 0.498 0.010
3.672 (0.063) 1.384 (0.246) 1.373 (0.248) 9.058 (0.095) 14.878 (0.002) 0.561 (0.458)
-1.916 (0.063) 1.176 (0.246) 1.522 (0.135) -4.131 (0.054) -4.531 (0.001) 0.811 (0.422)
-0.194 0.001 0.001 -0.752 -0.419 0.001
5.081 (0.000) 3.999 (0.001) 3.938 (0.000) 7.790 (0.000) 6.307 (0.000) 3.701 (0.000)
2.398 2.366 2.326 0.435 1.205 2.266
C) Third Hypothesis In order to test this hypothesis we estimate two regression models. The first model is related to components of income statements and second is related to components of cash flow statement. a) The results of testing by using the poling data approach The results of estimating the models related to this hypothesis are shown in first pair-columns in table (10). As shown in table, in first model, the P-values of T-statistics of all coefficients are significant. In second model, except b6 , the P-values of T-statistics of all coefficients are significant too. The F-statistics related to both models show that the models are significant in general. The adjusted R2 of models are 0.759 and 0.192 respectively. However, this result shows that, relative to components of cash flow statement, there is a stronger association between stock returns and components of income statements. The results of estimating the models related to this hypothesis for year 2003 are shown in second pair-columns in table (10). As shown in table(10), in first model,
the P-values of T-statistics of b3 and b4 are significant. In second model, the P-values of T-statistics of all coefficients are not significant. The F-statistics related to both models show that the models are not significant in general. The adjusted R2 of models are 0.077 and 0.024 respectively. However, this result shows that, relative to components of cash flow statements, there is a stronger association between stock returns and components of income statements. The results of estimating the models related to third hypothesis for year 2004 are shown in third pair-columns in table (10). As shown in table, in first model, only the P-value of T-statistic of b1 is significant. In second model, the P-values of T-statistics of all coefficients are not significant. The F-statistics related to both models show that only the first model is significant in general. The adjusted R2 of models are 0.123 and 0.100 respectively. However, this result shows that, Relative to components of cash flow statement, there is a stronger association between stock returns and components of income statements. The results of estimating the models related to third hypothesis for year 2005 are shown in fourth pair-columns in table (10). As shown in table, in first model, the P-values of T-statistics of b1 and b2 are significant. In second model, only the P-value of T-statistic of b1 is significant. The F-statistics related to both models show that only the first model is significant in general. The adjusted R2 of models are 0.156 and 0.067 respectively. However, this result shows that, relative to components of statements of cash flows, there is a stronger association between stock returns and components of income statements.
C (Prob)
DW
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Table 10.The results of H3 testing

Pooling Data 1st model 2nd model Cross-sectional 2003 1st model 2nd model Cross-sectional 2004 1st model 2nd model Cross-sectional 2005 1st model 2nd model
0.759 125.448 (0.000) -48.713 -10.571 (0.000) 0.032 18.798 (0.000) -97.539 -4.741 (0.000) 111.510 5.312 (0.000) -
0.192 8.661 (0.000) -894.68 -2.497 (0.013) -894.69 -2.497 (0.013) -894.66 -2.497 (0.013) -894.69 -2.497 (0.013) 894.672 2.497 (0.013) -0.007 -0.962 (0.337) 26.354 (0.000) 1.890
0.077 2.340 (0.065) 0.035 1.214 (0.230) -0.080 -1.359 (0.179) 0.241 2.349 (0.022) -0.217 -0.162 (0.035) -
0.024 1.267 (0.287)
0.123 3.241 (0.018)
0.100 2.179 (0.058) -1036.6 -0.863 (0.392) -1036.6 -0.863 (0.392) -1036.6 -0.863 (0.392) -1036.7 -0.863 (0.392) 1036.7 0.863 (0.391) 0.033 1.416 (0.162) 29.681 (0.001) 1.984
0.156 3.497 (0.014) -42.302 -2.812 (0.007) 0.032 3.368 (0.001) -311.83 -1.875 (0.067) 316.603 1.918 (0.061) -
0.067 1.604 (0.103) -36.386 -2.562 (0.014) 0.028 0.765 (0.448) -0.069 -1.236 (0.223) -0.024 -0.918 (0.363) 0.004 0.235 (0.815) -0.002 -0.048 (0.962) 288.72 (0.001) 2.285
F-statistic (Prob)
b1
T-statistic (Prob)
-956.22 -0.020 -0.412 -0.237 (0.682) (0.029) -956.27 0.005 -0.412 0.204 (0.682) (0.839) -956.20 -0.013 -0.412 -0.195 (0.682) (0.846) -956.23 0.044 -0.412 0.684 (0.682) (0.497) 956.26 0.412 (0.682) 0.059 1.519 (0.134) 22.042 (0.352) 1.758 -
b2
T-statistic (Prob)
b3
T-statistic (Prob)
b4
T-statistic (Prob)
b5
T-statistic (Prob)
b6
T-statistic (Prob) C (Prob) DW
276.320 (0.000) 2.082
30.005 (0.155) 1.975
43.007 (0.000) 1.847
334.49 (0.000) 1.822
Conclusions
In this paper, the association between components of income statements and components of cash flow statement and stock returns has been investigated. Income statements provide information about gross income (loss), operation income (loss), income (loss) before tax and net income (loss). The results of testing first hypothesis show that, investors and other users of financial statements concentrate more on net income (loss).
Cash flow statement provide information about cash flows from various activities. The results of testing second hypothesis show that, investors and other users of financial statements have more interest to information related to cash flows from investing activities. In other hand, when they use information in cash flow statement, they concentrate more on investing activities. The results of testing third hypothesis show that, components of income statements have a stronger association with stock returns. This result is compatible with those of Watson and Wells (2005), Haw et al. (2001), Rayburn (1986), Bown et al.
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(1986), Wilson (1986), Ball and Brown (1968), Beaver and Dukes (1972), Livnat and Zarowin (1990) and incompatible with Livnat and Santicchia (2006) and Sharma and Iselin (2003).
behavioural field experiment. Accounting and Business Research, vol. 33, pp. 123135 Divesh S. Sharma and Errol R. Iselin, (2003). The Relative Relevance of Cash Flow and Accrual Information Solvency Assessments: A Multi-Method Approach. Journal of Business Finance and Accounting, 30(7) & (8), pp. 11151140. Haw, In-Mu ,Qi, Daqing, Wu ,woody (2001). The nature of information in accruals and cash flows in an emerging capital market: The case of China. The international journal of accounting ,36, 391-406. Livnat, J. and P. Zarowin, (1990). The Incremental Information Content of Cash Flow Components. Journal of Accounting and Economics, 13, pp. 2546. Livnat, J. and M. Santicchia, (2006). Cash Flows, Accruals, and Future Returns. Financial Analysts Journal, Vol, 62, pp. 48-61. Rayburn, J., (1986). The Association of Operating Cash Flow and Accruals with Security Returns. Journal of Accounting Research, 24, 112133. Sloan, R.G., (1996). Do Stock Prices Fully Reflect Information In Accruals and Cash Flows About Future Earnings? The Accounting Review, 71, 289315. Watson, J. and P.Wells, (2005). The association between various earnings and cash flow measures of firm performance and stock returns: Some Australian Evidence. Working Paper. University of Technology, Sydney.
References
Ball, R., and P. Brown, (1968). An Empirical Evaluation of Accounting Income Numbers. Journal of Accounting Research 6, 159178. Bernard, V.L., and T.L. Stober, (1989). The Nature and Amount of Information in Cash Flows and Accruals. The Accounting Review, 4, 624652. Beaver, W., and R.Dukes, (1972). Interperiod Tax Allocation Earning Expectations, and the Behavior of Security Prices. The Accounting Review(April), 320-332. Bowen, R.M., D. Burgstahler and L.A.Daley, (1986). Evidence on the Relationships between Earnings and Various Cash Flow Measures. The Accounting Review (October), 713725. Dastgir, M., A, Saeedi, V, (2006). Superiority of Comprehensive Income to Net Income as a Measure of Firm Performance: Some Evidence for Scale Effect. Selected Paper, English conference. Dechow, P., (1994). Accounting earnings and cash flows as measures of firm performance: The role of accounting accruals. Journal of Accounting and Economics, 18, 342. Divesh S. Sharma and Errol R. Iselin, (2003). The decision usefulness of reported cash flow and accrual information in a
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Wilson, P.G., (1986). The relative information content of accruals and cash flows: combined evidence at the earnings announcement and annual report release date. Journal of Accounting Research, 24, 165200.
Wilson, P.G., (1987). The incremental information content of the accrual and funds components of earnings after controlling for earnings. The Accounting Review, 62, 293322.
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2009
J.C. Arias, Robert Miller
23
MARKET ANALYSIS OF STUDENTS ATTITUDES ABOUT CREDIT CARDS
J.C. Arias (PhD, DBA), Robert Miller
Abstract
The attitudes of students to the use of credit cards is a complex subject, one that when measured needs to combine both demographic and attitudinal data to provide a complete picture of the topic. For this specific research project, fifty students, 25 of which were men and 25 women, were interviewed, and their responses entered into SPSS Version 14 and analyzed using frequency distributions and crosstabulations. The result is a report that provides a fascinating glimpse into the attitudes of students with regard to credit cards. Highlights from the report include the following: The marketing messages from credit card companies are being very effective in pushing emergency uses of credit cards as the rationalization for giving one to a student away at school. What follows however is spending on many other items apart from those that would be considered necessary for an emergency. Women, in general, understand credit and know the interest rates of their credit cards with much greater frequency than men. The need to feel in control and the need to have their egos gratified are two of the strongest reasons why students continue to accumulate credit cards. The higher the balance for graduate students the greater the feeling of control. Tracking expenses online is split between those students with 3 cards and those with 7 or more. 14% of students in the sample have a credit card due to their parents thinking they need one for emergencies, yet have their parents paying a monthly bill at the same time. The majority of students feel that credit cards are Ok to be used for meeting daily living expenses and making ends meet.
Arias J.C., Miller R. - Market Analysis of Students Attitudes about Credit Cards
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Research Issue
Ascertaining the attitudes of students relative to credit cards, including their attitudes about their perceived convenience, risk, and potential make transactions cost more than they would if paid in cash were several of the major attitudinal areas studied in this survey. Demographics including both the students income and their families income are included in the analysis, the frequency of how often their parents fought about money in general and credit cards specifically, and the number of credit cards they are carrying today were also included in the analysis. What emerged is a dichotomy in the views of students on credit cards and their relative usefulness and risk. Research Goals In completing this survey and resulting analysis, the following research goals were first defined: 1. Discover through the use of fifteen attitudinal questions and an additional twelve demographic variables if there is any correlation between students attitudes to credit card use and awareness of the mechanics of how credit works. Specifically this first goal looks to find if there is a correlation between students lack of knowing the interest rates on their credit cards relative to who pays their credit card bill. 2. The relationship between years in school and the perception of credit cards as a selective and not all-inclusive spending resource. 3. Measure students attitudes to using credit cards to feel better about themselves, specifically more in control
of their lives and feeling more important or privileged when they get a credit card. 4. Measure students attitudes about using their credit card balances to finance a vacation or down payment on a car versus saving credit cards balances for emergencies. 5. Define what percentage of students in the sample have at least one credit card maxed out to its limit and correlate this to their age and income level. 6. Define the overall attitudes of students when it comes to credit cards as a convenience or necessary evil in society.
Methodology
Fifty students were given the printed questionnaire and assured complete anonymity and privacy, and also were left alone in classrooms after sessions were over to complete the survey. A $3 Starbucks Card was offered to the first ten students to complete the survey, so that motivation to quickly finish the research instrument would be assured. Graduate-level students were asked to complete the survey during an evening course break. The sampling focused primarily on business students, with an even mix of women and men in the samples to rule out gender bias in the analysis of the results, a research design advocated by Hair, J.F., Anderson, R.E., Tatham, R.L., & Black, W.C. (1995) in their book. Simple Random Sampling was used in the administering of the questionnaires themselves, and anonymity was assured by having a box at the front of the room where the students could place their responses before leaving class.
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The questionnaire itself includes 24 questions, with 12 being focused on demographics and parents behavior around credit cards, and the remaining 12 being focused on attitudinal variables. An interval-scale questionnaire was created to capture their attitudes to the following questions. Each of these questions were responded to on a four-point scale comprised of Strongly Agree, Somewhat Agree, Somewhat Disagree, and Strongly Disagree. The following attitudinal statements were responded to in the interview process: I feel more in control of my life when I get a new credit card with a high balance I feel important when I apply and get any credit card Credit cards are necessary in todays society and provide a needed service Its easy to overspend when you have a credit card Credit cards end up costing me more than I think Credit cards make my spending more convenient One of the big benefits of spending using a credit card is tracking expenses online Right now one or more of my credit cards are at their maximum limit Credit cards are great for establishing credit Credit Cards are risk-free from identity theft
Credit Cards should only be used for emergencies. It is OK to charge a vacation entirely on a credit card
SPSS Version 14.0 for Windows was used for completing the statistical and graphical analysis of results, with the data being input into the Data View and the variables organized in the Variable View.
Analysis of Results
Starting with the research design, the role of sex of respondents were held constant to ensure that this variable would not have to be controlled for in the analysis. The analysis suggests that women students, in general, are more aware of how credit works and its ramifications on their lives going forward. Sex of Respondents
Sex of respondent
Valid Percent Cumulative Percent Frequency
Valid
Male Female Total
25 25 50
50.0 50.0 100.0
Percent
50.0 50.0 100.0
50.0 100.0
Whats fascinating about the intelligence of women in the sample relative to men is their higher level of awareness of how credit works. See the cross-tabulation below of sex of respondent by awareness of interest rates on credit cards:
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Sex of respondent * Know The Interest Rate on Cards Cross tabulation

Know The Interest Rate on Cards Yes No
Total
Sex of respondent
Male
Count % within Sex of respondent % within Know The Interest Rate on Cards % of Total
13 52.0% 38.2% 26.0% 21 84.0% 61.8% 42.0% 34 68.0% 100.0% 68.0%
12 48.0% 75.0% 24.0% 4 16.0% 25.0% 8.0% 16 32.0% 100.0% 32.0%
25 100.0% 50.0% 50.0% 25 100.0% 50.0% 50.0% 50 100.0% 100.0% 100.0%
Female
Total
Comparing Men's and Women's Awareness of Interest Rates on their credit cards
25
Know The Interest Rate on Cards Yes No
20
Count
15
10
0 Male Female
Sex of respondent
Clearly women understand the implications of credit card debt before and at a much more fundamental level than men in this sample as the chart, Comparing Mens & Womens Awareness of Interest Rates on their credit cards which is shown in the graphic to the left
Attitudes towards Credit Cards The main research objective of this paper is to define students attitudes about credit cards. From the research completed by Hayhoe, Leach, Allen, and Edwards (2005) the researchers found that students acquire and spend more to feel more in control over their lives. 36% respondents agree with the hypothesis of the researchers mentioned,
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in that they strong agree with the statement that credit cards give them a strong sense of control.
Credit Cards Make Me Feel In Control
Cumulative Percent
Strongly Agree Somewhat Agree Somewhat disagree Total Valid
18 28 4 50
36.0 56.0 8.0 100.0
36.0 56.0 8.0 100.0
36.0 92.0 100.0
When this attitudinal variable of feeling in control is cross-tabulated by the class rank of the respondent, another fascinating dynamic emerges, showing that the higher the class rank the more in control respondents feel about their use of credit cards. This is attributed to the fact that in general, the higher the class rank the higher the credit limits, and the greater the opportunities to make good and bad decisions in the use of credit cards. The following table shows a cross-tabulation of class rank by the attitudinal variable of credit cards making the respondent feel in control. Notice that not a single respondent completely disagreed with this attitudinal statement a sure sign being in control is correlated with a high credit limit.
Cross-tabulation of Class in School with attitudinal variable Credit Cards Make Me Feel In Control
CC Makes Me Feel In Control Strongly Agree
Valid Percent
Frecuency
Percent
Somewhat Agree
Somewhat disagree
Total
Class in Freshman School
Count % within Class in School % within CC Makes Me Feel In Control % of Total
1 25.0% 5.6% 2.0% 0 .0% .0% .0% 2 28.6% 11.1% 4.0% 2 28.6% 11.1% 4.0% 4
3 75.0% 10.7% 6.0% 3 100.0% 10.7% 6.0% 1 57.1% 14.3% 8.0% 4 57.1% 14.3% 8.0%
0 .0% .0% .0% 0 .0% .0% .0% 7 14.3% 25.0% 2.0% 1 14.3% 25.0% 2.0%
4 100.0% 8.0% 8.0% 3 100.0% 6.0% 6.0% 100.0% 14.0% 14.0% 7 100.0% 14.0% 14.0%
Sophomore
Junior
Senior
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CC Makes Me Feel In Control Strongly Agree
Somewhat Agree
Somewhat disagree
Total
Graduate Student Count % within Class in School % within CC Makes Me Feel In Control % of Total Total Count % within Class in School % within CC Makes Me Feel In Control % of Total
13 44.8% 72.2% 26.0% 18 36.0% 100.0% 36.0%
14 48.3% 50.0% 28.0% 28 56.0% 100.0% 56.0%
2 6.9% 50.0% 4.0% 4 8.0% 100.0% 8.0%
29 100.0% 58.0% 58.0% 50 100.0% 100.0% 100.0%
Attitudes to Credit Marketing of Ego
Cards:
The
For many respondents, applying for and getting a credit card is a big boost to their ego. In the fifty respondents in this survey, not a single one said they completely disagreed with this statement. In fact, many of them feel that this is the biggest pay-off of going for even more cards; there is the validation that they are worthy of someones trust with a credit card, and the freedom it conveys is a powerful force in acquiring more and more cards. 58% of respondents strongly agree with this statement, and an additional 40% somewhat agree. This is the most powerful allure of credit cards to students, the feeling that they are somebody when they get a credit card. One student also wrote in that getting an American Express card felt better than getting straight As.
Feel more important when I get a Credit Card
Valid Percent Cumulative Percent Frecuency Percent
When a histogram is produced in SPSS V.14, the results continue to make the point that the ego gratification of getting a credit card far outweighs the risks, and for men students especially, they are more often than not aware of the interest rate payments are based on.
Histogram
40
30
Frequency
20
10
0 0.50 1.00 1.50 2.00 2.50 3.00 3.50
Mean =1.44
Std. Dev. =0.5406
N =50
Feel more important when I get one
Necessary for Society? When student respondents were asked if a credit card was essential in westernized society, 64% strongly agreed, followed by 28% somewhat agreeing. There were no overt negative responses to this question, as credit cards have become a fact of life for many of these students.
Strongly Agree Somewhat Agree Somewhat disagree Total
Valid
29 20 1 50
58.0 40.0 2.0 100.0
58.0 40.0 2.0 100.0
58.0 98.0 100.0
2009
29
Credit Cards are necessary in society

Valid Percent Cumulative Percent Frecuency
captures the attitudes of respondents in terms of their attitudes to over-spending. When this attitudinal variable is cross-tabulated to respondents class rank, graduate students have the greatest fear of overspending.
Easy to overspend on a Credit Card
Cumulative Percent
Valid
32 14 4 50
64.0 28.0 8.0 100.0
Percent
64.0 28.0 8.0 100.0
64.0 92.0
Frecuency
The histogram analysis from this specific attitudinal question also shows the prevalence of how critical students see credit cards in society. As is the case with other attitudinal variables that are focused on the pervasiveness of credit cards, the majority of students commented that they did not feel prepared for a semester without at least one credit card with a low enough balance to be used during the year.
Histogram
40
Valid
25 17 8 50
50.0 34.0 16.0 100.0
Percent
100.0
50.0 34.0 16.0 100.0
Valid Percent
50.0 84.0 100.0
When this attitudinal variable was crosstabulated to the total number of credit cards a student has, the median number of 7 total credit cards held was the delineating point where students started reporting heavily that it was easier to overspend with their credit cards.
Easy to overspend on a CC
30
Frequency
20
30
25
10
20
0 0.50 1.00 1.50 2.00 2.50 3.00 3.50
Mean =1.44
Std. Dev. =0.64397
N =50
Frequency
15
CC are necessary in society
10
Attitudes and Beliefs Regarding Overspending The higher the credit limit the more the attitude prevails that its easier to overspend on a credit card. The table below that
0 0.50 1.00 1.50 2.00 2.50 3.00 3.50
Mean =1.66
Std. Dev. =0.74533
N =50
Easy to overspend on a CC
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Credit Cards Cost More Than I Think A common attitude among the broader consumer population is that credit cards are more expensive than their initial claims suggest, including escalating interest rates and for some cards, an annual renewal fee that can be in the hundreds of dollars. As many of the students in the sample undoubtedly have excellent credit scores due to little or no debt to this point in their lives and the fact that credit card companies are anxious to gain them as new customers, its not surprising to see students attitudes be contrarian. The following table shows the results of this attitudinal variables result, with 22% strongly disagreeing with the statement that credit cards have higher costs than they initially thought.
Credit Cards cost more than I think typically
Valid Percent
agreed with that statement, and respondents completely disagreed.

Credit Cards Makes Spending Convenient
Valid Percent
no
Valid
31 16 3 50
62.0 32.0 6.0 100.0
62.0 32.0 6.0 100.0
100.0
Valid
Strongly Agree Somewhat Agree Somewhat disagree Strongly Disagree Total
4 17 18 11 50
8.0 34.0 36.0 22.0 100.0
8.0 34.0 36.0 22.0 100.0
8.0 42.0 78.0 100.0
The histogram for this specific variable shows that overall student respondents sees the positive aspects of using credit cards, and given the fact they are in the primary target market for many of the credit card companies, its again clear to see the messaging is working. One student also mentioned that gift credit cards from parents and relatives were all he asked for during the last holiday season, and he promptly used the gift cards to travel to Mexico for Spring Break.
CC Makes Spending Convenient
40
Cumulative Percent
Frecuency
Percent
30
This is the customer segment credit card companies want most, and their marketing appears to be working based on this survey. Credit Cards Convenient Making Spending
Frequency
20
10
0 0.50 1.00 1.50 2.00 2.50 3.00 3.50
Mean =1.44
Std. Dev. =0.61146
N =50
CC Makes Spending Convenient
The next attitudinal question, that of how convenient or not credit cards make spending, 62% of respondents strongly
Cumulative Percent
Frecuency
Percent
62.0 94.0
2009
31
Tracking Expenses Online: Attitude of Accountability
The
The focus on accountability from and validation of spending being the respondents own doesnt seem to nearly as important attitudinally as feeling in control and also getting the ego gratification of getting a new credit card, which is a point validated by Davies, E., & Lea, S. E. G. (1995). Only 40% of the respondents strongly agreed with the point that tracking expenses online was a task that made holding credit cards convenient.
Tracking Expenses Online
Valid Percent
The histogram of the attitudinal variable for tracking expenses online shows the polarity of how students see this specific area attitudinally. When this specific attitudinal variable is cross-tabulated with the total number of cards a student owns, which is shown in the table below, shows the polarity of those student respondents clustered at the 3 and 7 card areas. The 7-card area specifically is the breakout area for respondents who also know their interest rates on cards and have the strongest attitudes towards being in control with higher available balances.
TrackingExpensesOnline
20
Cumulative Percent
Frecuency
Percent
15
Frequency
10
Valid
20 9 14 7 50
40.0 18.0 28.0 14.0 100.0
40.0 18.0 28.0 14.0 100.0
40.0 58.0 86.0 100.0
0 0.00 2.00 4.00
Mean =2.16
Std. Dev. =1.11319
N =50
TrackingExpensesOnline
% of Total
Total Number of Cards by Tracking Expenses Online Cross-tabulation

Tracking Expenses Online Strongly Agree Somewhat Agree
Somewhat disagree
Strongly Disagree
Total
Total Number of Cards
1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 10.00 2.0% 10.0% 2.0% 4.0% 6.0% 10.0% 6.0%
2.0% 2.0% 4.0% 6.0% 2.0% 2.0% 40.0% 18.0%
6.0% 6.0% 4.0% 6.0% 2.0% 4.0%
2.0% 6.0% 6.0%
10.0% 16.0% 20.0% 12.0% 12.0% 6.0% 16.0% 6.0% 2.0%
Total
28.0%
14.0%
100.0%
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Establishing Credit: Rationalization or Planning for the Future? Respondents felt mixed about credit cards establishing their credit. 36% agreed with this and had a positive attitude towards this statement, while 30% disagreed and in conversations on this general topic, felt getting a home was by far more important to their credit standing than getting a credit card.
Credits Are Critical for Establishing Credit
Valid Percent
Credit Cards Maxed Out The attitudes of respondents specifically on credit cards are also very much influenced by how maxed out their credit cards are. 60% of the respondents have maxed out one credit card today.
One or more credit cards are maxed out
Valid Percent
Cumulative Percent
Frecuency
Percent
Valid
19 11 12 8 50
38.0 22.0 24.0 16.0 100.0
38.0 22.0 24.0 16.0 100.0
Valid
18 17 11 4 50
36.0 34.0 22.0 8.0 100.0
36.0 34.0 22.0 8.0 100.0
36.0 70.0 92.0 100.0
100.0
The histogram graphically shows the fact that many respondents feel that this is a positive aspect of getting a credit card, yet just as many are in the most negative attitudinal category, which were not listed on other variables.
Establishing Credit
25
The histogram of responses for this specific attitudinal variable shows the split nature of respondents. On the one hand they have maxed out at least one credit card, yet on the other it is seen as not that important, as the split of the histogram shows.
20
15
Frequency
10
20
Frequency
15
10
0 0.00 2.00 4.00
Mean =2.18
Std. Dev. =1.11922
N =50

5
0 0.00 2.00 4.00
Mean =2.02
Std. Dev. =0.9581
N =50
Establishing Credit
Cumulative Percent
Frecuency
Percent
38.0 60.0 84.0
2009
33
Using Credit Cards for Vacations Respondents feel that in general credit cards are not a good idea as a means to financing a vacation. 60% of them say that they disagree with the specific idea of using credit cards to pay for a vacation. The assumption behind this is that a vacation costing thousands of dollars is not acceptable as an expense subsidized completely on credit cards.
OK to Charge a Vacation
Used for Emergencies One of the greatest marketing messages credit card companies use is to sell the concept of getting your children credit cards for emergencies. Too often the emergencies are pizza at midnight, a new stereo when one is broken, or even a new laptop. The marketing messages to students and their families however are working when one looks at this attitudinal variable, with 58% agreeing with this assessment.
Only Used for Emergencies
Valid Percent
Cumulative Percent
Frecuency
Percent
Valid Percent
Valid
5 15 18 12 50
10.0 30.0 36.0 24.0 100.0
10.0 30.0 36.0 24.0 100.0
10.0 40.0 76.0 100.0 Valid Strongly Agree Somewhat Agree Somewhat disagree Strongly Disagree Total 14 15 13 8 50 28.0 30.0 26.0 16.0 100.0 28.0 30.0 26.0 16.0 100.0 28.0 58.0 84.0 100.0
The histogram for this specific attitudinal variable also shows that the majority of respondents disagree with the point of paying for a vacation using credit cards.
25
20
15
10
0 0.00 2.00 4.00
Mean =2.74
Std. Dev. =0.94351
N =50
From the histogram however its easy to see how effective the marketing programs of credit card companies are in persuading both students and their families that while emergency uses of cards is a noble goal, many of these same students have high balances and many different cards. Clearly they are more sophisticated at juggling multiple cards and debts than their parents realize, a finding also validated by Churaman, C. V. (1988). The following table shows how students perceive the emergency nature of their credit cards by how they pay their bill, including the dynamic of their parents paying their credit card bill for them. 14% of respondents have the best of both
Frequency
Cumulative Percent
Frecuency
Percent
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worlds, their parents pay the bill and it is substantiated with the attitude that it is for emergencies only.
Frequency

20
15
10
0 0.00 2.00 4.00
Mean =2.30
Std. Dev. =1.05463
N =50
% of Total
How Credit Cards Are Paid By Only Used for Emergencies Cross tabulation
Only Used for Emergencies Strongly Agree Somewhat Agree Total
Somewhat disagree
Strongly Disagree
How Credit Cards Are Paid
Online By Mail Parents Pay Bill
12.0% 2.0% 14.0% 28.0%
10.0% 16.0% 4.0% 30.0%
18.0% 8.0% 26.0%
10.0% 6.0% 16.0%
50.0% 32.0% 18.0% 100.0%
Total
Making Ends Meet with a Credit Card: Attitudes towards Everyday Spending For many students their first experiences with budgeting are when they go away to school. This next attitudinal variable defines how students feel about credit cards being used to make ends meet. 56% agree that this is OK to do with a credit card, while 44% dont.
OK to Make Ends Meet
The histogram for this specific variable shows that many students actually do use their credit cards to help make ends meet, and some feel guilty about it, while others find this perfectly fine. 14% of these respondents have parents paying the bill, so dressing up circumstances can keep the parent paying connection moving.
25
20
Frequency
15
Valid
9 19 17 5 50
18.0 38.0 34.0 10.0 100.0
18.0 38.0 34.0 10.0 100.0
18.0 56.0 90.0 100.0
10
0 0.00 2.00 4.00
Mean =2.36
Std. Dev. =0.89807
N =50
2009
35
Attitudes and Perceptions of Risk Whats refreshing in this attitude survey is that 56% of all respondents are concerned about identity theft from using their credit cards, and 44% arent. Despite this lack of trust in identity protection credit cards continue being used heavily in the respondent population.
Free of identity theft
Conclusions/Recommendations
The conclusion from this research is that the marketing of credit cards for college students, both to their parents and to the students themselves, is extremely effective. While not measured to statistical relevance, it is clear that to a high level of confidence the messages of control, ego gratification and the rationalization of emergencies is working very well. Recommendations based on this research are as follows: 1. Greater education into the FICO score definition based on the use of credit cards. The fact that so many students dont really see credit cards impacting their credit score in the short-term. 2. Focusing on the number of credit cards and their interest rates through greater education is also critical, especially for men students. There is a big gap in how many men know the interest rates they are paying on their credit cards for example. 3. Defining the costs of carrying multiple credit cards is also critical. Many students in the sample believe that there is a lower cost to managing their credit cards than the general public believes. 4. The level of accountability for matching receipts to actual spending is troubling, as only upper division and graduate-level students use online services to check the validity of charges on their account.
Valid
10 12 22 6 50
20.0 24.0 44.0 12.0 100.0
20.0 24.0 44.0 12.0 100.0
20.0 44.0 88.0 100.0
The histogram for this specific variable shows that the majority of respondents have a decidedly pessimistic view of security online for their credit cards
25
20
Frequency
15
10
0 0.00 2.00 4.00
Mean =2.48
Std. Dev. =0.95276
N =50
Limitations
There are several limitations to this analysis, and these include the following:
36
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1. There needs to be a casual model developed that speaks to the marketing influences on students and their lack of accountability of how they use credit cards. 2. Further research into the impact on FICO and credit scores based on having multiple credit cards in college. 3. The impact of having seven or more credit cards for any student and their future credit score.
Students. 2005, Association for Financial Counseling and Planning Education Journal. Churaman, C. V. (1988). College student use of consumer credit. Proceedings of the American Council on Consumer Interests (Ed. by V. Hampton), pp 107-113. ACCI. Columbia, Mo. Davies, E., & Lea, S. E. G. (1995). Student attitudes to student debt. Journal of Economic Psychology 16, 663-679. Hair, J.F., Anderson, R.E., Tatham, R.L., & Black, W.C. (1995). Multivariate data analysis (4th ed.). Englewood Cliffs, NJ: Prentice Hall.
References
Hayhoe, Leach, Allen, and Edwards (2005),Credit Cards Held By College
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CUSTOMER EXPERIENCE MANAGEMENT IN RETAILING
Kamaladevi B.
Abstract
Survival of fittest & fastest is the mantra of todays business game. To compete successfully in this business era, the retailer must focus on the customers buying experience. To manage a customers experience, retailers should understand what customer experience actually means. Customer Experience Management is a strategy that focuses the operations and processes of a business around the needs of the individual customer. It represents a strategy that results in a winwin value exchange between the retailer and its customers. The goal of customer experience management is to move customers from satisfied to loyal and then from loyal to advocate. This paper focuses on the role of macro factors in the retail environment and how they can shape customer experiences and behaviors. Several ways (e.g., Brand, Price, Promotion, Supply Chain Management, Location, Advertising, Packaging & labeling, Service Mix, and Atmosphere) to deliver a superior customer experience are identified which should result in higher customer satisfaction, more frequent shopping visits, larger wallet shares, and higher profits.
Kamaladevi B. - Customer Experience Management in Retailing
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Introduction
Just when companies are becoming comfortable with the idea of Customer Relationship Management (CRM), a new term has emerged: Customer Experience Management (CEM). The two are similar in many ways, not least in that they are both difficult to define. Neither can be identified with a unique product or a specific technology; rather, they both comprise a group of applications, technologies and analytics that orbit around a central premise. The premises of CRM and CEM are quite different, however, and are best understood when compared side by side. The idea at the center of CRM can be stated in the following way: Every time a company and a customer interact, the company learns something about the customer. By capturing, sharing, analyzing and acting upon this information, companies can better manage individual customer profitability. Customer Experience Managements premise is almost the mirror image. It says that every time a company and a customer interact, the customer learns something about the company. Depending upon what is learned from each experience, customers may alter their behavior in ways that affect their individual profitability. Thus, by managing these experiences, companies can orchestrate more profitable relationships with their customers. In a sense, this is a classic nature vs. nurture argument. CRM uses profiling, micro-segmentation and predictive analyses to identify each customers figurative genetic structure. CRM thus uncovers the preferences and propensities of customers so that they can be nudged towards optimal profitability. Customer Experience Management, on the other hand, looks at the environment. It gathers and analyzes information about the dynamics of interactions between companies
and customers. This information is feed back to the company in a self-calibrating system that (in theory) makes optimal use of every opportunity to influence customer behavior. Obviously these are overlapping approaches, and both have merit if designed and applied intelligently. Up until now the spotlight has predominantly been on CRM, in part because it is technologically impressive (as well as astonishingly expensive). Unfortunately, CRM has not been nearly as effective as promised; according to some estimates, from 50% to 70% of CRM initiatives fail to achieve their goals. As CRM is more widely used, its weaknesses become more apparent. Analysts have become fond of noting that there is no R in CRM (some go so far as to say there is no C, either). The idea of a relationship with customers seems hollow: CRM is very good at receiving, but not very good at giving. It asks customers to provide access and information without telling them what they will get in return. It pigeonholes customers based on past actions without informing them how to build a more advantageous profile. It prompts customers to become more valuable to the company without promising greater value from the company. Furthermore, while CRM is fairly effective at measuring its own successes, it does not provide much information about its failures. It can record when customers respond positively to its automated prompting and prodding, but it doesnt give much insight when customers do not respond in the predicted way. CRM is thus unable to determine whether failures are the result of faulty assumptions, incorrect information or poor execution. It is also unable to tell how these failed interactions affect the customer relationship; it treats all failures as neutral, when in fact the fabric
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of the relationship may have been weakened or undermined by a poorly executed service encounter. CEMs strengths lie in precisely the areas where CRM is weak. By focusing on the experiences of customers and how those experiences affect behavior, CEM examines both the quality of the companys execution and the efficiency of the result. It aligns customer needs with the companys ability to fulfill those needs, leading to business relationships that are mutually beneficial and that both parties company and customer are motivated to improve.
moving to a new, state-of-the- art warehouse facility in Delhi. * Pizza hut It recognises frequent callers and the context of their call enabling the customer to be routed to the agent who can best fulfill their requirements, whether its a new order, changes to an existing order or a status inquiry on an existing order. Pizza Hut operators can access up-to-date information on its outlets in the catchment area, enabling them to select the Pizza Hut store that can fulfill the customer order quickest, thereby meeting its commitment to deliver hot pizza quickly.
Examples of CEM
* Best New Airline of the Year Award 2005 Kingfisher airlines Given by Centre for Asia Pacific Aviation for its significant innovation and outstanding customer experience. For the first time in the Indian skies, Kingfisher Airlines offers world-class inflight entertainment with personal video screens for every seat. Theres a wide selection of 5 video channels and 10 audio channels available on- board. Also on offer are extra-wide seats and spacious legroom, delicious gourmet meals, international-class cabin crew and a whole host of comforts and delights. Kingfisher Airlines also facilitates doorstep delivery of tickets on guest request. * Blue Dart Express Limited, South Asias largest integrated air express, courier and logistics company Their focus was on providing customers with quality service and an enhanced customer experience, they continued to upgrade and expand their infrastructure, by adding new facilities in Lucknow, Mumbai, Pune, Ahmedabad, Meerut and Jaipur, and
Conceptual Background
Overview of literature on aspects of customer experience
Theme Study
Customer Experience
Berry, Carbone, and Haeckel (2002); Sousa and Voss (2006); Gentile, Spiller, and Noci (2007), Meyer and Schwager (2007); Naylor et al. (2008); Chartrand, and Fitzsimons (2008); Ofir and Simonson (2007); Keller and Lehmann (2003); Lee and Rhee (2008); Gauri, Trivedi, and Grewal (2008). Ofir et al. (2008); Kopalle et al. (2009); Bronnenberg and Wathieu (1996); Wedel and Zhang (2004); Dorotic, Verhoef, and Bijmolt (2008); Gauri, Sudhir and Talukdar (2008); Noble and Phillips (2004).
Customer Experience Driver Brand
Price
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Theme
Study
Promotion
Ailawadi et al. (2009); Van Heerde and Neslin (2008); Gijsbrechts, Campo, and Goossens (2003); Chiou-Wei and Inman (2008); Lwin, Stanaland, and Miyazaki (2008). Garg et al. (2005); Dant et al. (2009); Burkle and Posselt (2009), Xu and Kim (2008), Neslin et al. (2006); Patricio, Fisk, and Falcao e Cunha (2008); Sousa and Voss (2006); Verhoef, Neslin and Vroomen (2007). Durvasula, Sharma, and Andrews (2002); Ghosh and Craig (2001); Gauri, Trivedi, and Grewal (2008); Xu and Kim (2008). Chaudhuri & Buck Petty & Cacioppo Janoschka (2004); Gainer, and Bristor Goff et al. (1997). (2005); (2003); Fisher, (1997);
Major Factors Influencing Consumer Buying Decision Process On the consumer front, many peoples savings have evaporated in the year 2008, primarily because of the precipitous decline in stock prices, suffering real estate markets, and increasing unemployment. Consumers thus take greater care in what they buy, where they buy, and how much they will pay. Although hardly a sufficient silver lining, researchers now have the opportunity to examine more thoroughly many of the issues discussed in the remainder of this introduction in a new light. How do consumers react differently to brand, price, promotions, supply chain management, location, advertising, packaging, labeling, service mix & atmosphere in an economic crisis? Can retailers take certain actions to increase patronage, both before and during a shopping experience? Does consumer cherry picking change when consumers face more difficult economic trade-offs? Will consumers continue to embrace more expensive and higher quality private-label merchandise? How should retailers alter their assortments? Should they continue to experiment with new categories that previously appeared only in stores with different retail formats? Will price elasticities for substitute and complementary purchases differ during economic downturns? What innovative strategies might multichannel and online retailers use to gain greater shares of wallet? And how might retailers adjust their global sourcing strategies and the way they work with and develop relationships with their global vendors? These questions and many more depend on the major economic issues that confront consumers and the retailers they serve.
Supply Chain Management
Location
Advertising
Packaging & labeling
Koirala (2005); Kotler and Armstrong (2005); Young (2003); Jugger (1999); Luo (2005); Wakefield and Baker (1998); White and Dahl (2006). Oliver (2001); Parasuraman, Zeithaml, and Berry (2004); Baker et al. (2002); Beatty et al. (1996); Folkes and Patrick (2003); Meuter et al. (2005); Van Dolen, Dabholkar, and de Ruyter (2007); Weijters et al. (2007). Baron, Harris and Harris (2001); Kozinets et al (2002); Schmitt (1999); Baker et al. (2002); Kaltcheva and Weitz (2006); Wakefield and Baker (1998).
Service Mix
Atmosphere
Figure 1. Overview of literature on aspects of customer experience
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Kamaladevi B.
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Brand Price Promotion Supply Chain Management Location Advertising Packaging labeling Service Mix Atmosphere &
x x
x x
x x x
x x
x x x x
x x x x
x x x
x x x x
Figure 2. Macro Factors Influencing Consumer Buying Decision Process
The Brand Experience

The customer comes to a retailing environment with perceptions about two types of brands: the retail brand (e.g., Victorias Secret, Starbucks, Wal-Mart, Macys, Best Buy) and the manufacturer or service brand that is sold in the retail stores (e.g., Verizon, Ralph Lauren, Tide, Dell, private label brand). Here, the discussion is about the retail brand customer experience, although the ideas put forth below could be investigated in relation to the manufacturer or service brand as well. Background Customers brand perceptions may influence their customer experience. Recent research has begun to investigate new aspects of this relationship. Specifically, Fitzsimons, Chartrand, and Fitzsimons (2008) found that the type of brand and consumers perceptions of the brand can influence their behavior. For example, consumers primed to think of Apple behave more creatively than consumers primed to think of IBM. In
addition, Ofir and Simonson (2007) found that customer expectations (when stated prior to a service encounter) have a significant effect on post purchase evaluations of the shopping experience and the firm. This suggests that customer brand perceptions (of the retailer), when primed prior to shopping experience, might significantly influence the customers experience. It is also important to consider the reinforcing effects of the customers experience and the brand over time. Prior research suggests that customer experience has a significant influence on the customers overall perception of the brand. In addition, Keller and Lehmann (2003) propose that the customer mindset (e.g., awareness, associations, attitude, attachment and activity) is the key driver of brand performance (e.g., price premiums, price elasticities, market share, expansion success). Research Discussion There is much yet to learn about the influence of brand perceptions on the customers retail experience. There may be asymmetric effects of brand perceptions on customer experience. Consumers whose first impression of a brand is negative can be influenced by providing them with non-comparative information, whereas consumers with positive first impressions of a brand are influenced more by comparative information. This suggests an area that is ripe for future researchnamely, understanding how a customers initial perceptions of a retail brand may influence distinct elements of the customers subsequent experiences with the brand, and how those experiences in turn may influence brand perceptions in the future. In addition, positive customer brand perceptions may influence customer experiences differently than negative customer brand perceptions. As such, future
Need Recognition
Information Search
Evaluation
Purchase
Post Purchase
Macro Factors
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research could also investigate the extent to which strong (positive or negative) brand perceptions may have a significant effect on the customers experience. In addition to the direct effects of customer brand perceptions on customer experience, future research could examine the extent to which customer brand perceptions may act as a moderator in influencing the effects of other determinants of customer experience. For example, might brand perceptions (either retail or manufacturer) moderate the effects of social environment, self-service technology, or price on customer experience?
The Price Experience

A lot rides on how a retailer sets its prices. The three other Ps create value for the seller; the fourth P of price captures value. In addition, this is the only P that earns revenue for the retailer. When retailers price a product or service too high, consumers view it as a poor value and will not buy. A price set too low may signal low quality, poor performance, or other negative attributes about the product or service. Although setting the right price is clearly an important retailing task, it is often treated as an afterthought, partly because it remains the least understood and therefore most difficult to manage task. Background Recent research demonstrates that a consumers store price image likely results from a numerosity heuristic, such that the greater the number of low priced products at a store, the lower is the price image among knowledgeable consumers (Ofir et al. 2008). Kopalle et al. (2009) concentrate on the interaction between pricing and competitive effects in retailing, noting the difficulty of research into category and store level prices,
because retailers stock thousands of items, most of which are irrelevant to any given consumer. Furthermore, because different consumers buy different market baskets, a category or store that one customer perceives as high priced may seem low priced to another. Research suggests that retailers therefore should carry some high-priced merchandise to extract rents from loyal customers and some low-priced merchandise to attract new ones, but more work is needed in this area. Moreover, the emergence of discount stores carrying fashion products and luxury brands can affect pricing in traditional retail chains (Kopalle et al. 2009). Previous pricing research regarding private labels versus national brands suggests asymmetric sales effects, such that higher price/higher quality brands steal sales from lower price/lower quality brands when the higher tier reduces its price (Blattberg and Wisniewski 1989). In various examinations of the different features of the private label/national brand and price/sales interactions, asymmetric effects predominate (Allenby and Rossi 1991; Bronnenberg and Wathieu 1996; Pauwels and Srinivasan 2004; Sethuraman and Srinivasan 2002; Wedel and Zhang 2004). These studies again focus on grocery and drugstore formats, in which private-label prices generally are significantly lower than those of national brands. Further research should investigate the pricing aspects of private labels versus national brands using premium private labels (Kumar and Steenkamp 2007) and durable and fashion goods. Research Discussion A popular pricing strategy adopts loss leaders, items priced at or below the retailers cost. The preponderance of loss leader activity in retail stores believes the
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gaps in our knowledge about its impact on traffic, sales, and profits. Although store traffic increases and sales generally increase for items used as loss leaders, these loss leaders may not influence the sales of other, non-promoted items, and their impact on profitability is questionable. A more definitive understanding of how loss leaders affect the sales of non-promoted items and profitability would be very useful. Research on online and multi channel pricing takes a prominent place in modern academic journals, yet limited study addresses online pricing strategies. Much of this limited research focuses on customer reactions to different pricing strategies and shipping fees, the role of infomediaries, advertising revenues, channel interactions, and personalized pricing schedules. Yet some of the issues described herein and examined in brick-and-mortar store settings would be useful pursuits in the virtual and multichannel world. For example, how might online strategies differ from in-store strategies for similar merchandise and services? Should they differ across channels? Do consumers behave differently online? What competitive behavior effects exist?
minor impact on retailer profits; they also conclude that not all promotions have a positive revenue impact for retailers though. Rather, the profit impact is decidedly mixed. Background Literature on integrated marketing communications is vast, but research pertaining to retailing is very specific. Ailawadi et al. (2009) logically organize this body of research into manufacturer promotion decisions, as it relates to retailers, and retailer promotion, the manufacturer primarily is interested in using promotions to enhance the performance of its brands, whereas the retailer is interested in enhancing their own performance (Van Heerde and Neslin 2008). Significant research on trade promotions centers on the extent of the monetary savings passed on to consumers. Some controversy surrounds the impact of pass-through trade promotions; specifically, does a trade promotion from one manufacturer in a given period influence the promotion of another manufacturers brand in the same period (e.g., Moorthy 2005)? The accounting records pertaining to trade promotions remain inadequate for deriving a definite answer (Parvatiyar et al. 2005). Ailawadi et al. (2009) therefore suggest further research should examine how different types of trade promotions get funded, passed through, and perform. A plethora of research investigates the impact of different types of promotions on sales and profits, including the composition of flyers (Gijsbrechts, Campo, and Goossens 2003). Research Discussion Although most retail promotions emphasize price, studies often consider them in isolation. Yet price promotion coordination is a key driver of retailer
The Promotion Experience

Consumer promotions also take several forms, including price promotions, loss leaders, and in-store displays. Meta analyses show that the immediate increase in sales of a promoted item is substantial. However, brand switching as a result of consumer promotions is closer to 3045 percent, far less than previous estimates of approximately 80 percent. A consumer promotion, such as a loss leader, on one item should increase sales of other items and overall profits, yet empirical research in this area is mixed. Consumer cherry picking for special prices has a relatively
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profitability. Retailers and researchers alike need more information about the impact of coordinating price promotions within and across categories and across retail formats within a chain, such as Wal-Mart and Neighborhood Markets. The National brands should be promoted more than private-label brands, because the national brands attract customers attention and attract them to the store. Yet retailers promote private-label merchandise, because they generally earn higher margins on private labels. Although the customer knows much about the sales bump caused by consumer promotions, they have a poorer understanding of the profit impact. Retailers increased emphasis on private-label merchandise demands more work investigating the effectiveness of private-label promotions. It also seems important to identify win win promotions for manufacturers and retailers. Because many purchase decisions take place in brick and mortar stores and as new methods for reaching consumers in stores emerge, more research should assess the effectiveness of in-store promotions to customers.
Background Ganesan et al. (2009) examine several important supply chain issues, including global sourcing practices, multichannel routes to market, and relationship-based innovation. These authors note that with private-label merchandise, as opposed to national brands, the burden of ensuring that merchandise production adopts corporate socially responsible (CSR) policies, as well as quality and safety control issues, rest with the retailer. And most of this sourcing is done globally today. Academic research at the nexus of global sourcing and CSR is somewhat sparse (e.g., Wagner, Lutz and Weitz 2008); more research might examine the circumstances in which customers will pay more for merchandise produced in a socially responsible manner, particularly during economic downturns. Ganesan et al. (2009) also examine several issues for hierarchical multichannel relationships, in which both manufacturers and retailers sell through multiple channels to consumers. As hierarchical multichannel relationships develop, conflict can occur between the channel members, which must compete with one another. Retailers can respond to this competitive situation by taking direct action, such as refusing to sell products that the supplier sells directly (Schoenbachler and Gordan 2002), or looking for alternative ways to service customers (Vinhas and Anderson 2005). A more positive approach would pursue a channel structure with mutual benefits, such as profit sharing (Neslin et al. 2006; Yan 2008). Ganesan et al. (2009) therefore suggest that further research should attempt to increase our understanding of how hierarchical multichannel structures affect the participants relationships, their relative power, and their performance.
The Supply Chain Management Experience

Most of the researchers centers on what happens at the front-end of the retail store, supply chain management occurs at the back end. For decades, retail supply chain and logistics issues seemed somehow less important than other activities such as promotion, pricing, or customer service. But this erroneous perception no longer exists. Supply chain issues, from both the more managerial partnering side and the more technical operations side, have proven important sources of competitive advantage for many retailers, particularly low-cost providers such as Wal-Mart and Zara.
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Research Discussion Most recent retailing innovation initiatives seem to come from sustainability initiatives designed to improve the environment, healthcare, diversity, and sourcing. It investigates how relationships between retailers and their suppliers may facilitate product or process innovations. Specifically, when supply chain partners exchange information, the relationship grows stronger, and the likelihood that valuable and important information gets exchanged increases. However, the strength of relational ties may play a more important role for process than for product innovations. When retailers have supply chain partners with diverse, rather than complementary, capabilities and resources, they are more likely to innovate, because the information acquired from these varied sources differs. Finally, asymmetrical dependence between the retailer and its supply chain partners should negatively affect innovations, because the weaker party guards against exploitation, while the stronger party tends to exploit opportunities without worrying about negative partner perceptions.
has major ramifications for price, promotion, and merchandising decisions. Background Durvasula, Sharma, and Andrews (2002) recommend STORELOC, a store location model that incorporates managerial judgment data in addition to consumer data. Because key managers participate in the process, their buy into the outputs of the location model increase, namely, the identification of the best retail sites for expansion. The key store attributes and their relationships with relative competitive strength can be estimated using varied methods in this model, including conjoint or logit analysis. Another interesting location problem involves understanding how to expand a franchisor distribution system optimally, because in some cases, that which is best for the franchisor may be at odds with the preferences of the individual franchisees. Ghosh and Craig (2001) develop FRANSYS, a franchise distribution system location model, to address this kind of problem. Another important issue related to locating franchises concerns the choice between multi unit franchisees (MUF) versus single unit franchisees (SUF) since the modal franchisee in the US is no longer the stereotypic mom and pop single unit operator, but a mini chain operator (Garg et al. 2005; Kaufmann and Dant 1996). Some recent evidence suggests that even though MUF may be preferred by franchisors for reasons of rapid system growth, system-wide adaptation to competition, minimization of horizontal free-riding, and the strategic delegation of price or quantity choices to franchisees, it is the SUF that characterize their dyadic relationships with their franchisors as more relational and cooperative as compared to their MUF counterparts (Dant et al. 2009).
The Location Experience

Retailing academics and practitioners seem always to emphasize location, location, location as the key to success. An important research advance could consider the role of travel time on consumers choices of retail formats and the related retailing implications because consumers value their time, researchers should investigate what it might take, in terms of price savings and deals, to attract consumers to a factory outlet store (normally located some distance away) rather than a similar store in a conveniently located mall. The location decision likely
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Research Discussion The age of these models clearly shows, however, the need for more research into location issues. With the greater availability of excellent geographical information systems (GIS), rich data are easily accessible. For example, GIS data supplemented with appropriate panel consumption data could enable empirical tests of a host of location models. More recent research highlights the role of two key location factors: proximity to customers (measured in travel time) and proximity to other stores or agglomeration. For example, grocery stores appear to benefit from agglomeration with discount stores, but Wal-Mart discount stores suffer reductions in revenues when they agglomerate with grocery stores. Prior research recognizes several different retail formats, according to pricing (e.g., everyday low price vs. high/ low promotions), merchandise (wide vs. narrow) and Internet presence (bricks, clicks, or bricks and clicks). Insights from this area of inquiry suggest that bricks still hold an advantage over clicks and are likely to dominate in certain categories, such as high end apparel and jewelry. Research also shows that consumers may use the different retail formats for different stages of the consumer decision process, such that the online store might be a great way to compare alternatives, but brick-and-mortar stores seem more suitable for purchases. A systematic understanding of the role of these different formats in the consumer decision process and how retailers can best optimize their multiple channels would be a fruitful area of inquiry.
the growth process, marketers recognized that the Internet was a medium for reaching millions of potential customers. Since then, marketers have adapted value based advertising strategies to the Internet. Background Traditional consumer behavior literature would suggest that intense product information is vital for high involvement product web sites, while entertainment content may be fit for low involvement product sites (Chaudhuri & Buck, 2005; Petty & Cacioppo, 2003). Additionally, the primary reason for distinguishing between high and low product involvement is that habit, intuition and convenience sometimes guide the actions of consumers rather than rational considerations (Lamb, 1996). There are various types of online advertising, including emails, newsletters, screensavers, e-sponsoring, asynchronous and synchronous chat groups, infomercials, online games, and web sites (Janoschka, 2004). Similar to other types of advertisements, web ads are paid or unpaid form of communication aim at informing the existence of a product or service and/or persuading consumers to take actions. And Janoschka (2004) found one major difference is that web ads are hyperlinks in nature, which enable activation by their users. They not only contain promotional messages on themselves which tries to attract consumers attention, but also embedded with hyperlinks and then point to a much greater information pool, such as the corporations website. Research Discussion The global online advertising industry has witnessed the rapid emergence of social networking sites and is growing rapidly despite the economic slowdown. The
The Advertising Experience

Exponential growth in Internet hosts and personal computer adoption has led to dramatic increases in online activity. During
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growth of this industry is being driven by increasing internet users, rising awareness and growing broadband subscription rate and ecommerce, which is playing a key role in this industry. In coming years online Ad spending is expected to overtake the TV advertising market. The industry is divided into various segments but mainly three segments (search, display and classifieds) represent the whole industry. Rich media is a new segment recently entered in the online Ad industry, caters to a small portion of the market whereas search, display and classifieds serves almost 80% of the online Ad industry. There are various revenue models, out of which pay-per-impression and pay-per click are the most common among others. In terms of online Ad spending by geography, UK, Netherlands and the panEuropean sector lead the market but in terms of internet Ad budget allocation France, Germany, Spain and Italy have a strong presence. United States is the most developed market for the advertising industry. In Canada, internet advertising accounted for almost one third of total advertising market. The areas for future research are discussed here. The thirty-three items suggested by the fourteen academicians may be grouped into types of ads, types of appeals, larger effects on society, advertiser concerns, and legal concerns. Types of ads include ads for legal vices (e.g., ads for tobacco or alcoholic beverages), ads for sex-related products (e.g., condom ads or ads for abortion services), and ads for health care and professional services (e.g., ads for personal care and hygiene products or ads for professional legal services). Types of appeals include the use of questionable appeals (e.g., fear or negative appeals) and stereotypical appeals (e.g., sexual or racial stereotyping). Larger effects on society include value formation
(e.g., molding societys material wants) and media content (e.g., the information content of ads). Advertiser concerns include ad agency concerns (e.g., self-regulation or the ethical codes of ad agencies) and the voice/ tone of the ad (e.g., corporate advocacy or comparative ads). Finally, legal concerns include the use of deception, advertising to children, and public service announcements (e.g., anti-drug or anti-cigarette ads).
The Packaging Experience
&
Labeling
Packaging plays a major role when products are purchased. After all, it is the first thing seen before making purchase choices and it is widely regarded that over 50 per cent of purchasing decisions are made at the shelf, or point of purchase. Therefore, packaging which creates differentiation and identity in the relatively homogenous consumer packaged goods industry is therefore highly important. Background As a fifth p of marketing, packaging refers to the activities of designing and producing the container or wrapper for a product. It may be primary, secondary, and shipping to perform the objectives as containment, protection, identification, communication, promotion and product differentiation. Good packaging also provide information based on truth, it must be economical, attractive, convenient, protective and transparent (Koirala, 2005). A label is a simple tag attached to a product or an elaborated designed graphic that is the part of the package. It identifies, grade, scribe and promote the product by providing the information to the buyer. It may be brand labels, grade labels and descriptive labels (Kotler and Armstrong 2005). It is vitally
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important that when researching package design that it is measured in the context within which it is usually found (Young, 2003). The right packaging solution is different for each brand. What is important is that it works when placed next to the competition on the shelf (Jugger, 1999). Research Discussion Packaging has a better reach than advertising does, and can set a brand apart from its competitors. It promotes and reinforces the purchase decision not only at the point of purchase, but also every time the product is used. Packaging in different serving sizes can extend a product into new target markets or help to overcome cost barriers. Packaging can even drive the brand choice (especially in the context of childrens products). As the market becomes more competitive and shelf space is at a premium, products need to be able to stand out from the crowd and packaging needs to provide more than just functional benefits and information. Under time pressure and in low involvement purchases, less time is spent looking at the detail and information provided on packaging this is especially true in the FMCG category. Research into packaging has found that different packaging cues impact how a product is perceived. Often the packaging is perceived to be part of the product and it can be difficult for consumers to separate the two (the concept of gestalt). Aspects such as packaging colour, typography, illustrations and graphics can influence how a product is perceived. Labeling should not be unnecessarily confusing or misleading in order to hide the poor nutritional/ingredient profile of certain products. The decrease in consumer confidence in food safety is not a result of the number of recalls, but instead the high-profile, long-lasting nature of the safety
incidents. Packaging is integral to boosting perceptions of safety and will therefore be an important part of more concerted efforts to regain consumer trust going forward.
The Service Mix Experience

Customer service is the ability of an organization to constantly and consistently give the customer what they want and need. Background Customer satisfaction is a key consequence of service quality and can determine the long-term success of a service organization (Parasuraman, Zeithaml, and Berry 2004). In general, customer satisfaction is affected by customer expectation or anticipation prior to receiving a service and can be approximated by the following equation: Customer Satisfaction = Perception of Performance Expectations (Oliver 2000). When translated to services, a distinction between service quality and customer satisfaction needs to be made (Parasuraman, Zeithaml, and Berry 2004). Furthermore, one must differentiate between service expectations and service perceptions. While service expectations are a combination of a customers predictions about what is likely to happen during a service transaction as well as the wants and desires of that customer, service perceptions can be defined as a customers global judgments or attitudes, which relate to the superiority of a service (Oliver 2001; Parasuraman, Zeithaml, and Berry 2004). Research discussion A lot of companies are so preoccupied with day-to-day operations, but if they dont have customers for life were going to go out of business. Many service
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organizations, such as hotels, retail stores, and airlines, invest substantially in their physical plant to provide a superior service experience. However, little is known about how to design a servicescape to enhance the consumption experience. For example, it may be unsurprising to learn that research has shown that pleasant music, compared with less pleasant music, is associated with longer consumption times, shorter time perceptions, less negative emotional reactions to waiting, more favorable attitudes toward the physical environment, more positive attitudes toward service providers, and more favorable customer assessments, purchase intentions, and behavior.
Schmitt 1999). Sharma and Stafford (2000) suggest that customers have a higher need to affiliate with salespeople working in nicer retail environments or prestige ambience environments which should lead to an increase in the perceived level of credibility for the salesperson, and subsequently a higher likelihood to purchase. However, the prestige and discount ambience stores have been hard to define in the literature, with most researchers testing atmospherics in isolation, and not at a holistic perspective (Turley and Milliman, 2000).
Research Discussion
The future research should examine retail store environments where customersalesperson relationships may exist to increase understanding in this area. Furthermore, customer service quality measures typically given when examining low sales interaction stores should be compiled in conjunction with relationship selling and other measures that influence the customer experience to understand if relationship selling is necessary in these retail settings. Store atmospherics did have a significant impact on customer expectations of the retail salesperson, but in behaviour only. A higher perceived store ambience resulted in higher expectations of a retail salespersons behaviour, but a higher store atmosphere did not result in higher expectations of a retail salespersons credibility. Store atmospherics manipulate customers expectations of the retail salesperson behaviour, subsequently affecting customer satisfaction if the retail salesperson does not match expectations. Future research will be directed into the exploration of characteristics of the salesperson and store atmospherics to determine the optimal blend for certain store environments.
The Atmosphere Experience

Consumer spending behavior can be significantly influenced by the store atmosphere and the customer mood. Customers require a store layout that maximizes the number of products seen within the context of a customers need for the product. Customers who experience a form of personal control, whether in orienting themselves to the store section they need to go to or in finding the products they want, generally feel good about the store. Good feelings lead to more purchases, especially if products are presented within a display that shows the potential usefulness of the product for them. Background Store atmospherics have been at the centre of numerous discussions recently as a means of creating a pleasurable consumption experience; engaging and luring customers, with hopes that they will increase their likelihood to purchase, revisit and recommend to others (Baron, Harris and Harris 2001; Kozinets et al 2002;
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10 Best Practices to make the Successful CEM

1. Successful deployment requires the active and continuing involvement of leadership Execution is the hardest part of creating a customer experience because in order to deploy successfully they have to mobilize employees at all levels and align competing agendas, functions and executives. This is not an easy task. Perhaps that is why that so many of the exemplars of Customer Experience tend to be organizations led by passionate founders or CEOs that see it as a primary source of differentiation. Think of Starbucks, Amazon, Southwest Airlines or Virgin and inevitably you quickly think of Howard Schultz, Jeff Bezos, Herb Kelleher and Richard Branson. CEM can work just as successfully and achieve startling results in large mature corporates too, but the need for leadership is even greater. 2. Ensuring ownership is vital cross-functional
3. Focusing on the most strategically important customers The starting point for the work is collecting customer data to inform the definition of a promise and design the new experience. The most frequent client response to this suggestion is We already have lots of customer data and research so you dont need to bother. In reality whilst organizations undertake customer research and collect mountains of data, relatively few know who their most profitable (not largest) customers are. The fact is that a few customers will typically represent the significant proportion of the profit and these are the ones to focus improvement efforts on. 4. Finding out what these customers truly value Knowing who are the most profitable customers is all very well, but if they do not know what these customers value and the three or four most important attributes which drive their intention to repurchase, cannot influence their behaviour. Without the answers to these questions they may have data, but they do not have insight. A key component of a branded customer experience is being differentiated in a way that is valuable to target customers. A key component of a branded customer experience is being differentiated in a way that is valuable to target customers. 5. Being clear about what we stand for In 2001, UK-based bank Barclays aired a television advertisement called Big Idea. It was a beautifully crafted ad featuring Anthony Hopkins as a big shot businessman with a big house, a big car and a big meeting
If the CEO or President recognizes that it will take more than rhetoric to make a difference, the next common mistake is asking the Marketing VP, HR Director or Customer Service Executive to fix the problem. The brand and the customer experience must be owned collectively by the senior management team. Each function has its particular part to play, but to be successful these three functions must operate as what we refer to as a Triad to optimise resources, efforts and budgets to create an organization-wide strategy for delivering the brand.
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to attend. The tagline was, A big world needs a big bank. The ad received a bronze award at that years British Television Advertising Awards, but customers replied with a less than enthusiastic, big deal! The ad simply reinforced common customer preconceptions about large banks that they dont care about the average person and are interested only in making as much money as they can. In the Polish market, 55 percent of executives feel that they have defined a brand promise that differentiates us in the eyes of their target customers but only 35 percent have mapped their customer touchline to determine the key points of contact their customers have with us and how their promise should be delivered at each. This omission is quite common in their experience and takes us on to our next point. Making a promise to the customers is one thing, delivering it quite another. 6. Delivering the promise at every touch point This is particularly true in todays economy. With the pressure on sales and costs they have to make sure that every effort is made delivering those things that customers value rather than things that they dont. This means having an intimate understanding of the customer experience and being intentional about designing it to deliver value at the key touch-points. 7. Providing branded training to ensure that employees understand the brand story Many organizations provide customer service training yet few are differentiated in the service they provide. The reason is that vanilla training creates vanilla service. This is not to say that all generic service
training is bad. In fact there are some very good off-the-shelf programmes that really help to improve customer-facing skills and make service more consistent. A key ingredient of successful branded training is to build executives into the process so that they have an active role in cascading the message. Leaders have been trained as champions of customer experience and are leading its implementation. 8. Designing CEM before installing CRM systems At the peak of CRM hype, expenditure on CRM systems was estimated to have increased from $20 billion in 2001 to $46 billion in 2004. Yet one survey by Gartner research estimated that 55 percent of CRM systems drove customers away and diluted earnings. This is because most CRM systems are installed without any thought about how they will be used to add value for the customer. These powerful systems allow companies to collect knowledge about the customer that can be used to offer them products and services tuned to their particular needs and preferences. However, for many customers the acronym CRM stands for Constantly Receiving Mailshots since many organizations (and banks are the worst) use them as a blunt instrument to stalk, rather than woo, the customer through junk mail. Some software providers are now designing their products to support the customer experience and build CEM functionality into their call-centre products so that the agent is provided with all the information, tools and measures necessary to deliver the desired experience.
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9. Measuring experience
the
customer
appropriate measurement and rewards then it is unlikely to happen.
Peter Druckers maxim that what gets measured gets managed is still true today. Yet most organisations focus exclusively on end-results measures. Market share, profitability and EPS growth are all vital measures of business performance but they are all lagging indicatorsthe result of differentiation, customer loyalty and brand preference. The answer is to move up-stream and measure and manage those activities that deliver the required customer experience and drive customer advocacy. Market share, profitability and EPS growth are all vital measures of business performance but they are all lagging indicators. Yet over 51 percent of the executives the organization surveyed reported that their organization did not have a scorecard to measure the customer experience. The mean score for the statement We have a scorecard of indicators that provide leaders with objective and timely feedback on how well we are delivering against our promise was the lowest achieved in the survey scoring at just 4.6 on their ten-point scale. 10. Aligning the organization with the customer experience One of the lowest scoring items in the organization survey was Leaders measure and monitor the quality of the customer experience. As many respondents disagreed with this statement as agreed with it. This poor result was reinforced by the fact that only 47 percent of respondents agreed with the statement Our leaders reward employees who put customers first. The fact is that unless there is a link between the desired business results, the customer experience necessary to achieve it and
Conclusion
Customer Experience Management is not, however, simply an old idea in a new wrapper. In recent years a number of fundamental changes have occurred in the business environment that have led to the emergence of Customer Experience Management as both a strategic discipline and a fast-growing industry, complete with a wide array of tools and solution sets. The changes have been fueled by technological advancements, which have expanded the range of services available to customers, and simultaneously led to escalating customer expectations. The result is that there are now more services and products available than at any time in the past, yet customer satisfaction are on a downward slide. Customer Experience Management can help reverse that slide by providing efficient business tools that make the interactions between companies and customers more rewarding for both parties. Hope this article provide a broad-based overview of the various domains (e.g., Brand, Price, Promotion, Supply Chain Management, Location, Advertising, Packaging & labeling, Service Mix and Atmosphere) of the retail customer experience and in turn provide a research catalyst for a plethora of important retailing issues. Keeping customers in the next few years will be even more important than making a sale. Shoppers are getting used to those 5075 percent off sale signs, and that is bad news for merchants who worry they will also have to quickly slash prices on merchandise to attract customers. Retailers will have to engage their customers every day to create the long-term loyal advocates necessary to compete in these challenging
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times. The most important thing is to be able to identify ways to hold on to profitable customers. 10 Best Practices to make the Successful CEM have shown in this article to provide a great customer experience for retail shoppers.
A Risk-Based Explanation, Journal of Retailing, 84 (1), 3947. Fay, Scott (2008), Selling an Opaque Product Through an Intermediary: The Case of Disguising Ones Product, Journal of Retailing, 84 (1), 5975. Gremler, Dwayne D. and Kevin P. Gwinner (2008), Rapport-Building Behaviors Used by Retail Employees, Journal of Retailing, 84 (3), 30824. Grewal, Dhruv, Anne L. Roggeveen and Michael Tsiros (2008), The Effect of Compensation on Repurchase Intentions in Service Recovery, Journal of Retailing, 84 (4), 4243. Koschat, Martin A. (2008), Store Inventory Can Affect Demand: Empirical Evidence from Magazine Retailing, Journal of Retailing, 84 (2), 16580. Kumar, V., Morris George and Joseph Pancras (2008), Cross-Buying in Retailing: Drivers and Consequences, Journal of Retailing, 84 (1), 1527. Lee, Chang Hwan and Byong-Duk Rhee (2008), Optimal Guaranteed Profit Margins for both Vendors and Retailers in the Fashion Apparel Industry, Journal of Retailing, 84 (3), 32533. Ofir, Chezy, Pryia Raghubir, Gili Brosh, Kent B. Monroe and Amir Heiman (2008), Memory Based Store Price Judgments: The Role of Knowledge and Shopping Experience, Journal of Retailing, 84 (4), 41423.
References
Gauri, Dinesh K., Debabrata Talukdar and Brian Ratchford (2008), Empirical Investigation of the Impact of Loss Leader Promotion on Store and Category Performance in Grocery Industry, Working Paper, Syracuse University. Minakshi Trivedi and Dhruv Grewal (2008b), Understanding the Determinants of Retail Strategy: An Empirical Analysis, Journal of Retailing, 84 (3), 25667. Brooks, Charles M., Patrick J. Kaufmann and Donald R. Lichtenstein (2008), Trip Chaining Behavior in Multi-Destination Shopping Trips: A Field Experiment and Laboratory Replication, Journal of Retailing, 84 (1), 2938. Brown, Stephen (1989), Retail Location Theory: The Legacy of Harold Hotelling, Journal of Retailing, 65 (4), 4507. Brown, James R. and Rajiv Dant (2008a), On What Makes a Significant Contribution to the Retailing Literature, Journal of Retailing, 84 (2), 1316. Brown, James R. and Rajiv P. Dant (2008b), Scientific Method and Retailing Research: A Retrospective, Journal of Retailing, 84 (1), 113. Brkle, Thomas and Thorsten Posselt (2008), Franchising as a Plural System:
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Wu (2008), Global Media, Local Metaphor: Television Shopping and Marketingas-Relationship in America, Japan, and Taiwan, Journal of Retailing, 84 (1), 1192.
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Abbas Aflatooni, Zahra Nikbakht
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INCOME SMOOTHING, REAL EARNINGS MANAGEMENT AND LONG-RUN STOCK RETURNS
Abstract
Using the Tucker-Zarowin (TZ) statistic of income smoothing, we find firms with higher income smoothing rankings exhibit lower long-run return and abnormal return. Also, we find similar results on firms that manage its earnings to meet zero earnings threshold.To test for the combined explanatory power of our independent variables ( b , size, book to market ratio and smoothing (earnings managing to avoid losses) proxy), we estimate a multivariate regression. Multivariate analysis confirms our previous findings.
Aflatooni A., Nikbakht Z. - Income Smoothing, Real Earnings Management and Long-Run Stock Returns
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Introduction
According to Healy and Wahlen (1999), Earnings management occurs when managers use judgment in financial reporting and in structuring transactions to alter financial reports to either mislead some stakeholders about the underlying economic performance of the company or to influence contractual outcomes that depend on reported accounting practices. At the risk of repeating a clich, accounting numbers have no meaning without being compared to some benchmark. Firms therefore have incentives to manage earnings to beat such benchmarks as zero earnings, expected changes in earnings between parallel periods, and analysts consensus forecasts (Ronen and Yaari, 2008, p. 135). Anecdotal evidence suggests that there are strong incentives to avoid reporting losses. Burgstahler and Dichev (1997a), and DeGeorge, Patel, and Zeckhauser (1999), offer psychological explanations, such as the notion that investors would like to observe positive earnings. Hayn (1995), Burgstahler and Dichev (1997b), Durtschi and Easton (2005), and Lee, Li, and Yue (2006), base the answer on the fact that the valuation models for losses and profits firms are different. Since Hayn (1995) and Burgstahler and Dichev (1997) found evidence of the discontinuity in frequency of firm-years around zero earnings, academics have had limited success in documenting further evidence of earnings management to avoid losses. Dechow, Richardson and Tuna (2003) fail to find evidence that firms reporting small profits manage accruals to cross the zero thresholds. An earnings management strategy that has survived the test of time is smoothing (Buckmaster, 2001). Income smoothing has existed for decades, and there are generally two schools of thought as to what motivates
managers to smooth. First, smoothing presents an arguably efficient vehicle for managers to reveal private information. Second, smoothing represents garbling, that is, smoothing is an exercise undertaken by managers in an attempt to fool analysts and others and to enhance managerial compensation (Li and Richie, 2009). The first school of thought is reflected in the works of Ronen and Sadan (1981), Demski (1998), Sankar and Subramanyam (2001), Srinidhi, Ronen and Maindiratta (2001), Kirschenheiter and Melumad (2002), and Goel and Anjan (2003), among others. For example, Ronen and Sadan (1981) employ a signaling model and contend that only firms with good prospects elect to smooth. Essentially, the first school holds that income smoothing may aid in the revelation of private information in much the same way that dividend smoothing can occasion information revelation (Miller and Rock, 1985). The second school of thought is reflected in the works of Beidleman (1973), Lambert (1984), Healy (1985), Fudenberg and Tirole (1995), Arya, Glover and Sunders (1998), and Demski and Frimor (1999), among others. In addition, garbling has been evidenced by some recent and high profile cases of smoothing abuse. For example, the Federal Home Loan Mortgage Corporation was found by the government to have illicitly altered the volatility mark on its put swaptions in order to achieve a smoother earnings growth profile. Noravesh and Sepasi (2005) examine the possible impact of culture on income smoothing in Iran. Explanatory variable capturing Hofsted (1991) cultural values are used as proxy for Individualism, Masculinity, Power Distance and Uncertainty Avoidance. It is shown that the relationship between Hofsted cultural values and income
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smoothing is significant for firms listed in Tehran Stock Exchange (TSE). Pourheydari and Aflatooni (2006) investigate the Iranian managers incentive to smooth income using discretionary accruals. They find that Iranian managers, smooth income by using discretionary accruals and income taxes and deviation in operating activities are managers derives to smooth income. They also find that firms size, debt ratio and earnings variability are not important derives to income smoothing in TSE. Mashayekhi, Mehrani, Mehrani and Karami (2006) find that listed firms in TSE do earnings management when their operating performance is poor and they tend to choose income increasing accounting strategies. Mehrani and Arefmanesh (2008) provide some evidence that income have had a weaker performance leading to a higher motivation compared with non-income smoother in TSE. Haghighat and Raigan (2009) show that the Iranian investors prefer smoothed income and on this regard, managers try to smooth income and on the base one classification of management incentives for income smoothing, managers smooth incomes either for purpose of garbling of information and either benefits or in order to transforming and reporting the insider information about future earnings. For many years, studies of income smoothing and earnings management have suggested that one of its purposes is to increase the level of market return. For instance, Hepworth (1953) states that the owners will feel more confident toward a company that reports stable earnings. Gordon (1964) suggests that management should smooth (within the accounting rules) reported income, for stockholder satisfaction increase with the rate of growth and stability of its income. Ronen and Sadan (1981) report
that most of the rationales offered for income smoothing focus on managements desire to enhance the value of the firms stock. Moses (1987) states that the argument for smoothing implies a direct cause-and-effect relationship between earnings fluctuations and market risk. Booth, Kallunki and Martinkainen (1996) indicate that firms that do not smooth income have higher abnormal return from earnings surprise than firms that smooth income. Toeh, Welch, and Wong (1998a, b) and Rangan (1998) investigate the relationship between earnings management and seasoned equity offerings. Using methodology similar to Dechow, Sloan and Sweeney (1995 and 1996), discretionary accruals are used as a measure of earnings management. Toeh, Welch and Wong find a negative relation between pre-issue discretionary accruals and post-issue earnings and stock returns. Rangan finds that discretionary accruals are higher during the pre offering period and are reversed in the year following the offering. He also finds that an increase in discretionary accruals is associated with a predictable earnings decline. Gibbons, Richardson and Waterhouse (1990) provide an intriguing discussion of corporate disclose behavior that helps explain an investors preference for firms with smoother incomes. They state that a corporation builds a financial reputation and that consistency and credibility in disclosures are central to that reputation. Moreover, a firms choice of accounting methods may enhance that reputation. Therefore, it follows that investors place greater value on companies with consistent (smooth) financial disclosure (earnings) than on companies with fluctuating financial statements. Chaney and Lowis (1995) develop a model that shows companies smooth income in order to signal firm value to investors. This concept of signaling was
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also discussed by Dye in the development of his earnings management model. Dye (1988) states that, the demand for earnings management derives from current shareholders desire to influence prospective investors perceptions of the firms value. Badrinath, Gay and Kale (1989) argue that institutional investors normally avoid companies that experience large variations in earnings or firms that are perceived as risky. Therefore, intuitional investors tend to prefer companies with smoother earnings streams. Bricker, Previts, Robinson and Young (1995) present evidence that analysts associate earnings quality with the capability of a companys managers to manage earnings so as to avoid negative earnings surprise. Chaney and Lewis (1994) develop a model that shows companies smooth income in order to signal firm value to investors. Bowman and Navissi (2003) examine the association between abnormal returns and earnings management in the context of price control regulations to test the construct validity of the earnings management model. Abnormal returns are used as a market-based measure, and discretionary accruals are employed to measure earnings management. Their results support the hypotheses that (1) price control regulations affect firms security prices negatively, (2) firms make income-decreasing discretionary accruals to increase the likelihood of price increase approval, and (3) firms that are affected most negatively by the regulations manage earnings more aggressively. They conclude that the earnings management model they use in their study is capable of predicting opportunistic discretionary accruals. Michelson, Wagner and Wootton (2000) use risk-adjusted returns to test whether the stock market response to accounting performance measure is related to the smoothness of companies reported earnings. The results indicate that companies that
report smoothed income have significantly higher cumulative average abnormal returns than firms that do not. Also, they find that when size is considered, market returns are stronger for small companies than for large companies and there is a significant relationship between the types of industry and income smoothing. Singer (2007) shows that earnings management is negatively associated with long-run stock returns. Based upon the literature, companies with smoothed earnings are more attractive to investors than companies with widely fluctuation earnings. But we think that there is also a second story on firms that smooth their reported incomes. By smooth their incomes, firms send signals to market and overstate their economic performance and influence contractual outcomes that depend on reported accounting practices. In short period (around reporting time), it is possible that income smoother and/or earnings manager firms achieve their purpose (increases in their short-run returns and abnormal returns, and avoid from losses) but in long period, stockholders obtain additional information (from competitive information sources) about the true financial and economical position of those firms and then correct their decisions. In this situation we expect that the level of long-run stock return and abnormal stock return decline. Thus it is expected that there is a negative relationship between income smoothing (and earnings management) and long-run stock return. In other words, it is expected that the income smoother and earnings manager firms earn lower long-run return and abnormal return than other firms. The methodology employed in this paper to determine if there is a statistical difference in mean (median) returns and abnormal returns between smoothing and non-smoothing (earnings manager and other) firms involves a comparison of the cross-sectional mean
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(median) returns and abnormal returns using the t-statistic (Wilcoxon Z-statistic) for the difference of means (medians) test. To test for the combined explanatory power of our independent variables , size, book to market ratio and smoothing (earnings managing to avoid losses) proxy, we estimate a multivariate regression. This result confirms the previous findings of a significant negative relationship between long-run returns and abnormal returns and income smoothing (earnings management to avoid losses). The remainder of the paper is organized as follows: the next section contains the research design of the study including hypotheses development and research models. Section 3 presents the empirical results and conclusions are presented in section 4.
For our tests, suspect firm-years (SUSPECT) are firm-years reporting small annual profits and income smoother firms (IS) are firms with high negative correlation between the changes in their discretionary accruals and changes in their pre-discretionary income. Thus, the research hypotheses are presented as follows: Hypothesis 1: Income smoother firms exhibit unusually low stock returns. Hypothesis 2: Suspect firm-years exhibit unusually low stock returns. Hypothesis 3: Income smoother firms exhibit unusually low abnormal stock returns. Hypothesis 4: Suspect firm-years exhibit unusually low abnormal stock returns. In the next section, we provide research models to test each of hypotheses. Research design In this study it is assumed that the information obtained on income smoothing and earnings management is transmitted regularly to the market and that stock prices are continually adjusting to such information. To obtain a clear indication of how the market evaluates the practice of smoothing, we carried out a long-tem association analysis, similar to those developed for the American market by Michelson et al. (1995, 2000) and Iniguez and Poveda (2004) .In this type of long-run study, the method chosen for calculating and testing returns and abnormal returns is of great importance, since the results on long time-horizons are very sensitive to methodology (e.g. see Michelson et al. 1995, 2000). For the analysis of returns, the monthly return on each stock was taken and duly adjusted for dividends. For market returns, we used an equally weighted index for the returns on all the stocks that were trading
Research design
Hypotheses development As stated in section 1, In short period (around reporting time), income smoother and/or earnings manager firms may achieve their purpose (increases in its short-run returns and abnormal returns, and avoid from losses) but in long period, stockholders obtain additional information (from competitive information sources) about the true financial and economical position of those firms and then correct their decisions. In this situation we expect that the level of long-run stock return and abnormal stock return decline. Thus it is expected that there is a negative relationship between income smoothing (and earnings management) and long-run stock return. In other words, it is expected that the income smoother and earnings manager firms earn lower long-run return and abnormal return than other firms.
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on the Tehran stock market during the 20012006. To obtain the cumulative returns and abnormal returns of each stock over one year, we have compounded the monthly returns on each stock and the monthly reference returns, and then calculated the compounded returns and compounded abnormal returns for, as follows: (2) CoRi = P12 1 (1 + Rit) t= (3) ACoRi = P12 1 (1 + ARit) t= where CoRi (ACoRi) is compounded return (abnormal return) on stock i over 12 months (from five months after fiscal yearend) of each year, Ri,t is the return obtained from stock i in month t and ARit is monthly abnormal stock return derived from FamaFrench (1993) three factor model . Thus we start my tests by following regression:
(4)
Also, to test the hypotheses (2) for income smoother and earnings manger firms, we estimate the following models, respectively:
(7)
ACoRit = a1 + b1 b 1 + b2 DSIZEit- 1 + b3 DBTMit - 1 + b4 15i ACoRit = a1 + b1 b 1 + b2 DSIZEit- 1 + b3 DBTMit - 1 + b4 SUSPECTit
(8)
CoRit = a1 + b1 b 1 + b2 SIZEit- 1 + b3 BTMit - 1 Based on previous research (e.g. Fama and French, 1992) we expect that b1 > 0, b2 < 0 and b3 > 0 . Now, to test the hypotheses (1) for income smoother firms, we present the following model:
(5)
CoRit = a1 + b1 b 1 + b2 SIZEit- 1 + b3 BTMit - 1 + b4 15i and to test the hypotheses (1) for earnings manager firms, we estimate the following model:
(6)
CoRit = a1 + b1 b 1 + b2 SIZEit- 1 + b3 BTMit - 1 + b4 SUSPECTit

1) We assume that security returns follow a Fama-French (1993) three factor model:
Rit - Rf = a + b2i (R- it - RF) + b2i SMBt + b2i HMLt + fit

Where Rit is the actual return on stock i for month t; Rm is the market return for month t; Rf is risk-free interest rate for month t; SMBt is the small-big risk factor for year t and HMLt is the high-low book-to-market risk factor
Where CoRit (ACoRit) is the compounded return (abnormal returns) of firm i during period t, bi is systematic risk of firm i during research period. SIZEit - 1 is the size of firm i at the beginning of the year that is equal to the logarithm of the market value of equity at the beginning of the year and BTMit - 1 or book-tomarket ratio is the ratio of book value equity to market value equity at the beginning of the year. Since the dependent variables of regressions (7) and (8) are essentially deviations from normal levels within an industry-year, all the control variables in the regressions are also expressed as deviations from the respective industry-year means. Thus, Db is the b , expressed as deviation from the corresponding industry-year mean, DSIZEt - 1 is the size of firm at the beginning of period t, expressed as deviation from the corresponding industry-year mean and DBTMt - 1 is the logarithm of book to market ratio at the beginning of period t, expressed as deviation from the corresponding industryyear mean. As Said earlier, SUSPECTit denotes firm-years reporting small annual profits and ISi denotes firms with high negative correlation between the changes in their discretionary accruals and changes in their pre-discretionary income. In the next sections, to determination of income smoother and earnings manager firms, two measures are presented. In models (4-7), we expect that b4 is significantly negative.
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Selection of income smoother firms Income smoothing is commonly understood to mean managements use of discretionary accounting and management principles to reduce earnings variability. Following Myers and Skinner (2002) and Leuz, Nanda and Wysocki (2003), Tucker and Zarowin (2006) estimate income smoothing as the negative correlation between the change in a firms discretionary accruals proxy (DAP) and the change in its pre-discretionary income (PDI). This measure assumes that there is an innate, unmanaged income series and that management employs discretionary accruals to smooth this raw series. More income smoothing is evidenced by a greater degree of negative correlation between DAP and PDI. To estimate discretionary accruals, TZ use the cross-sectional version of the Jones (1991) model as modified by Kothari, Leone and Wasley (2005), namely: Accrualsit = a (1/Assetit) + b9Salesit + cPPEit + dROAit + fit Where Assets is total assets, Accruals stands for total accruals estimated as net income minus operating cash flow, Sales is change in sales, PPE is property, plant and equipment, and ROA is return on assets using net income over lagged total assets. Accruals, Sales and PPE are each deflated by the beginning-of-year total assets (Assets). Return on assets (ROA) is added as an additional control variable, because previous research finds that the Jones model is misspecified for well-performing or poorly performing firms (Dechow et al. 1995; Kothari et al. 2005). To employ a large number of observations, we estimate the regression on all firms in the same industry (two-digit SIC) each year. The non-discretionary accruals (NDAP)
are the fitted values of Regression (1) and the discretionary accruals (DAP) are the deviations of actual accruals from NDAP. The pre-discretionary income (PDI) is calculated as net income minus discretionary accruals (PDI=NI-DAP). The TZ income-smoothing measure is the correlation between the change in discretionary accruals and the change in prediscretionary income: Corr(DAP, PDI), using the current years and past five years observations. We use annual data because there is much evidence that firms smooth period earnings and that fourth-quarter reporting is distinctively different from that of other quarters (Jacob and Jorgensen, 2003; Das and Shroff, 2002). Firms with more negative correlations are higher smoothing firms while firms with less negative (or positive) correlations are lower smoothing firms. In this study, income smoother (IS) firms have TZ correlation that is lower than the respective industry-year mean. Selection of suspect firm-years Fig. 1 groups firm-years into intervals based on net income scaled by total stock market prices at the beginning of the year. The histogram of scaled earnings is constructed with widths of 0.05 for the range -1 to +12.The histogram in Fig. 1 is similar to that documented by prior literature, with the prominent upward shift in the frequency of firm-years going from the left of zero to the right. Researchers have argued that it is likely that firm-years in the interval just right of zero manage their earnings to report income marginally above zero. Since earnings are scaled by stock market prices,
2) The histogram is truncated at the extremes, meaning that I exclude firm-years with scaled earnings above 1 or below -1. In the case of firm-years grouped by scaled earnings, the intervals presented in the figures include 2092 firm-years, or just over 85% of my total sample.
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the discontinuity at zero can be explained by Durtschi and Easton (2005), who argue that
scaling by market capitalization generates the discontinuity.
Figure 1: The distribution of earnings scaled by the stock price at the beginning of period
Number of firm years by earnings interval: 2458 firm-years over the period 20012006 are classified into earnings intervals over the range -1 to +1, where earnings is defined as net income scaled by the stock price at the beginning of period. Each interval is of width 0.05, with category 21 including firm-years with earnings greater than or equal to zero and less than 0.05. The figure is truncated at the two ends and includes 2092 firm-years
To increase the power of our tests, we concentrate on firm-years in the interval to the immediate right of zero, the suspect firm-years (SUSPECT). Suspect firm-years have net income scaled by stock market prices that is greater than or equal to zero but less than 0.05 (interval 21 in the figure). There are 278 suspect firm-years, including 213 unique firms. Focusing on only firmyears in the small interval (interval 21) to the right of zero restricts the power of our tests. Firms whose un-manipulated earnings are substantially above zero possibly have an incentive to manage earnings downward to report profits that are only slightly above zero, in order to create reserves for the future. In that case, the interval just right of zero possibly includes firm-years with downward earnings management. This lowers the proportion of firms in the suspect interval that manage earnings upward to
meet the zero target and hence, lowers the power of our tests. However, we do not include other intervals in the suspect category, as these intervals are likely to contain a higher proportion of firm-years that did not manipulate earnings at all.
Empirical results
We use the 2009 version of Tadbirpardaz (the Iranian database of Tehran stock exchange) annual data files and choose 2001-2006 as the sample period for the primary test. The period begins with 2001 because 2001 is the first year in which firms are required to report cash flow statements, and we use six observations of DAP and PDI to calculate the income-smoothing measure. Firms in the financial and regulated industries are excluded due to their unique nature of accounting.
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Estimation of Discretionary Accruals For this estimation, we use the data from 20012006 and estimate Regression (1) on each of the 81 industry-year cross-sections, I require at least 10 observations for each industry-year grouping. Table 1 presents the mean, standard deviation, median, minimum, and maximum of the coefficient estimates and R2. The coefficients on PPEt and the coefficient on Salest are lower than that in Subramanyam (1996) and Tuker and Zarowin (2006) due to our additional control for earnings performance. The coefficient on ROAt has a mean of 0.44, confirming that accruals are associated with firm performance. We calculate a firms assetdeflated nondiscretionary and discretionary accruals as the fitted values and residuals, respectively.
Table 1: Cross-sectional estimation of discretionary accruals
a b c d R2
Variable Definitions: Accrualst = the total accruals in period t obtained by subtracting operating cash flows from net income, deflated by the beginningof-year total assets; Assetst-1 = the total assets at the beginning of period t; Salest = the change in sales from periods t-1 to t; PPEt = the gross property, plant and equipment at the end of period t; and ROAt = the ratio of net income over the beginning-of-year total assets for period t. Income-Smoothing Data Cleaning Measure and
Mean Median Minimum Maximum Std. Dev
662.75 249.71 -457.39 2133.14 1015.55
0.03 0.04 -0.02 0.07 0.04
-0.18 -0.17 -0.21 -0.15 0.03
0.44 0.40 0.32 0.57 0.12
0.26 0.23 0.17 0.37 0.09
The table presents the summary statistics of the estimated coefficients and R2 of 81 industry-year regressions from 2001-2006, where industries are classified by the first two digits of the SIC code. The Jones Model, modified by Kothari et al. (2005): Accrualsit = a (1/Assetit) + b9Salesit + cPPEit + dROAit + fit
PDI is calculated as net income minus DAP, both deflated by the beginning-ofyear total assets. A firm-year observation is deleted if its DAP or PDI is missing in the current year or any of the past five years. The income-smoothing measure is calculated for the remaining firmyear observations. At first, we have 2458 observations. For the primary test, we delete the firm-year observations that have missing data for past, current, and future three years earnings, operating cash flows, and accruals as well as those for current and future three years returns (123 observations are deleted). To minimize the effect of outliers, we delete the observations that are in the top or bottom 2 percent of the distributions of the above variables (93 observations are deleted). Even with this effort, extreme outliers are still observed. We further delete the observations whose earnings, operating cash flows, or total accruals in the past, current, or any of the future three years are
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greater than 20 times or less than -20 times the market equity value, or whose future three years compound returns are greater than 20 or less than -20 (49 observations are deleted). These procedures result in 2193 observations for the primary test. Descriptive statistics Descriptive statistics of 2193 firmyears observations are presented in table 2. The mean and median of are 0.13 and 0.03, respectively. The mean (median) of , D, SIZE and book-to-market ratio are 0.32 (0.25), 5.24 (5.18) and -0.45 (-0.41), respectively. You see other statistics in table 2. Table 2 provides total descriptive statistics, however it is beneficial to present them in another ways. Based on IS and SUSPECT, Table 3 provides the means (medians) of variables for income smoother firms and rest of the sample and table 4 provides the means (medians) of variables for suspect firm-years and rest of the sample. Also, using of ordinary t-test and Wilcoxon z-test, the means and medians of income smoother firms (suspect firm-years) and rest of the sample are compared. In table 3, the mean (median) of CoR for income smoother firms and rest of the sample are 0.09 (0.00) and 0.16 (0.04), respectively. The differences between means (medians) of CoR are -0.07 (-0.04) and significant at the 5% level (t-stat=-2.34, z-stat=-2.75). Thus, the mean (median) of CoR for income smoother firms is significantly lower than that of rest of the sample. These results provide the first primary evidences that confirming hypotheses (1). The mean (median) of ACoR for income smoother firms and rest of the sample are -0.01 (-0.08) and 0.06 (-0.05), respectively. The differences
between means (medians) of ACoR are -0.07 (-0.02) and significant at the 5% level (t-stat=-2.34, z-stat=-2.52). Thus, the mean (median) of ACoR for income smoother firms is significantly lower than that of rest of the sample. The results in table 3 also indicate that the means (medians) of SIZE, BTM ratio, DSIZE and corr(DACt,PDIt) for income smoother firms are significantly lower than those of rest of the sample.
Table 2: Descriptive statistics (2193 firm-year observations during 20012006)
Maximum Minimum Std. Dev Median Mean
Variables
CoRt ACoRt
0.13 0.03 0.32 5.24 -0.45 0.03 0.01 0.01 0.00 -0.79 0.13
0.03 -0.06 0.25 5.18 -0.41 -0.05 -0.02 0.03 0.00 -0.98 0.13
-1.32 -1.40 -1.52 3.78 -1.94 -1.64 -1.59 -1.38 -0.79 -1.00 -1.37
1.48 1.41 1.98 7.40 0.97 1.85 1.89 1.40 1.09 1.00 1.47
0.45 0.45 0.51 0.67 0.38 0.49 0.59 0.34 0.15 0.58 0.21
b
SIZEt-1 BTMt-1
Db
DSIZEt-1 DBTMt-1 DACt Corr(DAC t, PDIt) NIt/MVt-1
Variable Definitions: CoRt = is compounded return on stock i over 12 months (from five months after fiscal year-end) of period t. ACoRt = is compounded abnormal return on stock i over 12 months (from five months after fiscal year-end) of period t. b = the systematic risk of stock during 2001-2006 and is equal to covariance between monthly stock return and monthly market return divided to variance of monthly market return during period t;
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SIZEt-1 = the size of firm at the beginning of Period t that is equal to logarithm of total market value of stock at the beginning of period t; BTMt-1 = the logarithm of book to market ratio at the beginning of period t that is equal to logarithm of book value divided to market value of stock at the beginning of period t; Db = the , expressed as deviation from the corresponding industry-year mean; DSIZEt-1 = the size of firm at the beginning of period t, expressed as deviation from the corresponding industry-year mean; DBTMt-1 = the logarithm of book to market ratio at the beginning of period t, expressed as deviation from the corresponding industry-year mean; DACt = the discretionary accruals for period t, deflated by the beginning-of-year total assets;
Corr(DACt, PDIt) = the Pearson correlation between the change in discretionary accruals and the change in premanaged income; and NIt/MVt-1 = the net income for period t, deflated by the stock price at the beginning of period t In table 4, the mean (median) of CoR for suspect firm-years and rest of the sample are -0.10 (-0.08) and 0.11 (0.00), respectively. The differences between means (medians) of CoR are -0.21 (-0.08) and significant at the 1% level (t-stat=-6.26, z-stat=-6.94). The mean (median) of CoR for suspect firmyears is significantly lower than that of rest of the sample. These results provide the second primary evidences that confirming hypotheses (2). The mean (median) of ACoR for suspect firm-years and rest of the sample are -0.21 (-0.19) and 0.01 (-0.08),respectively.
Table 3: Comparison of income smoother firms with the rest of the sample
Variables Income smoother firms Mean Median Rest of the sample Mean Median Difference in Means (t-stat) Medians (z-stat)
CoRt ACoRt
0.09 -0.01 0.28 5.16 -0.45 -0.03 -0.30
0.00 -0.08 0.18 5.12 -0.40 -0.11 -0.12
0.16 0.06 0.26 5.32 -0.50 -0.07 -0.17
0.04 -0.05 0.19 5.26 -0.47 -0.10 0.06
-0.07** (-2.34) -0.07** (-2.34) 0.02 (0.66) -0.16*** (-3.40) 0.06** (2.14) 0.04 (1.32) -0.13* (-1.71)
-0.04** (-2.75) -0.02** (-2.52) -0.01 (-0.10) -0.14*** (-3.78) 0.07** (2.38) -0.01 (-1.05) -0.19*** (-4.10)
b
SIZEt-1 BTMt-1
Db
DSIZEt-1
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Variables
Income smoother firms Mean Median
Rest of the sample Mean Median
Difference in Means (t-stat) Medians (z-stat)
DBTMt-1 DACt Corr(DACt, PDIt) NIt/MVt-1
0.12 0.00 -0.95 0.10
0.16 0.00 -1.00 0.12
0.08 0.00 0.30 0.13
0.10 0.00 0.36 0.15
0.04* (1.71) 0.01 (0.84) -1.25*** (-61.41) -0.04* (-1.74)
0.06 (1.60) 0.00 (0.78) -1.36*** (-28.54) -0.03*** (-2.90)
*Significant at the 10% level. ** Significant at the 5% level. *** Significant at the 1% level. The sample period spans 20012006. Income smoother (IS) firms have TZ correlation that is lower than the respective industry-year mean. The numbers in parentheses are t-statistics from t-tests for the differences in means, and z-statistics from Wilcoxon tests for the differences in medians. All descriptive statistics are reported for the full sample of 2193 firm-years.
The differences between means (medians) of ACoR are -0.22 (-0.12) and significant at the 1% level (t-stat=-6.52, z-stat=-7.51). Thus, the mean (median) of ACoR for suspect firm-years is significantly lower than that of rest of the sample. These results provide the second primary evidences that confirm the hypothesis (2).
There are some conflicts between the sign of differences in mean (median) of other variables in table 3 and 4. This is because of different definition of income smoother firms and suspect firm-years that manage earnings to avoid losses.
Table 4: Comparison of suspect firm-years with the rest of the sample

Variables Suspect firm-years Mean Median Rest of the sample Mean Median Difference in Means (t-stat) Medians (z-stat)
CoRt ACoRt
-0.10 -0.21 0.21 5.42 -0.62 -0.09 0.12 0.00 0.02
-0.08 -0.19 0.14 5.36 -0.51 -0.11 0.01 0.04 0.02
0.11 0.01 0.30 5.17 -0.45 0.00 -0.03 0.09 0.00
0.00 -0.08 0.23 5.12 -0.41 -0.07 -0.04 0.11 -0.01
-0.21*** (-6.26) -0.22*** (-6.52) -0.09** (-2.47) 0.25*** (4.63) -0.17*** (-5.40) -0.09** (-2.47) 0.15*** (3.20) -0.09*** (-3.27) 0.02* (1.77)
-0.08*** (-6.94) -0.12*** (-7.51) -0.09** (-2.00) 0.24*** (4.33) -0.11*** (-4.06) -0.04** (-2.00) 0.06*** (2.72) -0.06** (-2.20) 0.02 (1.33)
b
SIZEt-1 BTMt-1
Db
DSIZEt-1 DBTMt-1 DACt
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Variables
Suspect firm-years Mean Median
Rest of the sample Mean Median
Difference in Means (t-stat) Medians (z-stat)
Corr(DACt, PDIt) NIt/MVt-1
-0.74 0.05
-1.00 0.03
-0.70 0.08
-0.99 0.13
-0.04 (-0.77) -0.03 (-0.77)
-0.01 (-1.80) -0.10* (-1.80)
*Significant at the 10% level. ** Significant at the 5% level. *** Significant at the 1% level. The sample period spans 20012006. Suspect firm-years are firm-years with reported income before extraordinary items between 0% and 5% of total assets. The numbers in parentheses are t-statistics from t-tests for the differences in means, and z-statistics from Wilcoxon tests for the differences in medians. All descriptive statistics are reported for the full sample of 2193 firm-years.
Table 5 presents correlations between various variables. The correlations that are significant at the 10% level or better are marked in bold. The CoR is positively (and significantly) correlated to and BTM ratio. Also, ARat and ARbt are positively correlated to DBTM. There are no significant correlation between CoR and discretionary accruals. Not that, the correlation between CoR and Corr(DACt, PDIt) and between ACoR and Corr(DACt, PDIt) is significantly positive.
Regression results Table 6 reports the results of regressions over a period of six years from 2001 to 2006. The regressions are estimated for every industry every year. Two-digit SIC codes are used to define industries. Industry-years with fewer than 10 firms are eliminated from the sample.
Table 5: Pearson correlation coefficients

CoR ACoR
SIZE
BTM
Db
DSIZE
DBTM
DAC
Corr(DAC, PDI)
ACoR
0.85 0.06 -0.04 0.12 0.03 -0.05 0.11 0.00 0.08 0.36 0.07 -0.03 0.12 0.04 -0.05 0.11 0.00 0.08 0.36 0.34 -0.01 0.83 0.28 -0.05 -0.03 0.02 0.07 -0.41 0.26 0.81 -0.37 -0.02 0.10 0.10 -0.01 -0.35 0.81 0.03 -0.03 0.11 0.32 -0.06 -0.03 -0.01 0.01 -0.42 -0.02 0.09 0.01 0.04 -0.03 0.14 -0.05 0.12 0.06
b
SIZE BTM
Db
DSIZE DBTM DAC Corr(DAC, PDI) NI/MV
This table reports pooled Pearson correlations for the entire sample of 2193 firm-years over the period 2001-2006. Correlations significant at the 10% level or better are marked in bold.
There are 81 separate industry-years over 20012006. The table reports the mean coefficient across all industry-years and t-statistics calculated using the standard error of the mean across industry-years. In regression (4), b1 is positive and
significant at the 1% level (b1=0.10, t=3.91), b2 is negative and significant at the 10% level (b2=-0.03, t=-1.71) and b3 is positive and significant at the 1% level (b3=0.13, t=3.69). Thus, the and BTM ratio are significantly
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related to return but SIZE is not significantly related to CoR. In regression (5), b1 is positive and significant at the 1% level (b1=0.07, t=2.69), b2 is negative but is not significant (b2=-0.02, t=-0.90) and b3 is positive and significant at the 1% level (b3=0.14, t=3.69). Thus, the and BTM ratio are significantly related to return but SIZE is not significantly related to return. As we expect, b4 is negative and significant (b4=-0.09, t=-2.84). Results indicate that the income smoother firms have CoR that is lower on average by 9% of stock market value to the rest of the sample and the hypothesis (1) is not rejected at the 1% level.
Table 6: The results of regressions (4-6)accruals
Regressions (4) Regressions (5) Regressions (6)
In regression (6), b1 is positive and significant at the 1% level (b1=0.08, t=2.83), b2 is negative but not significant (b2=-0.01, t=-0.65) and b3 is positive and significant at the 1% level (b3=0.14, t=3.70). Thus, the and BTM ratio are positively (and significantly) related to return but SIZE is negatively (but not significantly) related to return. The coefficient of SUSPECT is negative and significant (b4=-0.10, t=3.62). Results show that the suspect firmyears have CoR that is lower on average by 10% of stock market value to the rest of the sample and the hypothesis (2) is not rejected at the 1% level.
Table 7: The results of regression (7) and (8)
Regressions (7) Regressions (8)
Intercept
0.33*** (3.29) 0.10*** (3.91) -0.03* (-1.71) 0.13*** (3.69)
0.35*** (3.03) 0.07*** (2.69) -0.02 (-0.90) 0.14*** (3.69) -0.09*** (-2.84)
0.30*** (2.64) 0.08*** (2.83) -0.01 (-0.65) 0.14*** (3.70)
Intercept
0.06** (2.48) 0.07*** (2.72) -0.03* (-1.71) 0.06* (1.85) -0.08*** (-2.70)
0.04** (2.39) 0.06*** (2.70) -0.03 (-1.34) 0.07* (1.95)
b
DSIZE DBTM IS SUSPECT
b
SIZE BTM IS SUSPECT
-0.10*** (-3.62)
-0.06*** (-3.25)
*Significant at the 10% level. ** Significant at the 5% level. *** Significant at the 1% level. This table reports the results of regressions, over a period of six years from 2001 to 2006. The total sample includes 2193 observations. The regressions being estimated are of the form: Regression (4)
*Significant at the 10% level. ** Significant at the 5% level. *** Significant at the 1% level. This table reports the results of regressions, over a period of six years from 2001 to 2006. The total sample includes 2193 observations. The table reports the mean coefficient across all industry-years and t-statistics calculated using the standard error of the mean across industry-years. The regression being estimated is of the form: Regression (7)
CoRit = a1 + b1 b1 + b2 SIZE it - 1 + b3 BTM it - 1

Regression (5)
ACoRit = a1 + b1 Db1 + b2 DSIZEit - 1 + b3 DBTMit - 1 + b4 15 i

Regression (8)
CoRit = a1 + b1 b1 + b2 SIZEit - 1 + b3 BTMit - 1 + b 4 15 i

Regression (6)
CoRit = a1 + b1 b1 + b2 SIZEit - 1 + b3 BTMit - 1 + b4 SUSPECTit

T-statistics are calculated using standard errors corrected for autocorrelation using the NeweyWest procedure. They are reported in parentheses.
ACoRit = a1 + b1 Db1 + b2 DSIZEit - 1 + b3 DBTMit - 1 + b4 SUSPECTit

T-statistics are calculated using standard errors corrected for autocorrelation using the NeweyWest procedure. They are reported in parentheses
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Table 7 reports the results of regressions over a period of six years from 2001 to 2006. In first column, b1 is positive and significant at the 1% level (b1=0.07, t=2.72), b2 is negative and significant at the 10% level (b2=-0.03, t=-1.71) and b3 is positive and significant at the 10% level (b3=0.06, t=1.85). Thus, the D, DSIZE and DBTM ratio are significantly related to ACoR. The coefficient of IS is negative and significant (b4=-0.08, t=-2.70). Results show that the income smoother firms have ACoR that is lower on average by 8% of stock market value to the rest of the sample and the hypothesis (3) is not rejected at the 1% level. In second column, b1 is positive and significant at the 1% level (b1=0.06, t=2.70), b2 is negative but not significant (b2=-0.03, t=-1.34) and b3 is positive and significant at the 10% level (b3=0.07, t=1.95). Thus, the D and DBTMis positively related to ARat but SIZE is not significantly related to ACoR. The coefficient of SUSPECT is negative and significant (b4=-0.06, t=-3.25). Results indicate that the suspect firm-years have ACoR that is lower on average by 6% of stock market value to the rest of the sample and the hypothesis (4) is not rejected at the 1% level.
that other firms (firm-years). Additionally, as corroborating evidence, there results are confirmed by multivariate regressions. Overall, our results indicate that there is a significant negative relationship between long-run returns and abnormal returns and income smoothing behavior. Also, there is a significant relationship between long-run returns and abnormal returns and managing earnings to avoid losses.
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Conclusions
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Singer, Z. (2007). Discretionary financial reporting: Items manipulated by IPO firms, and investors increased awareness. SSRN.com/abstract=898644. Srinidhi, B., Ronen, J., & Maindiratta, A. J. (2001). Market imperfections as the cause of accounting income smoothingthe case of differential capital access. Review of Quantitative Finance and Accounting, 17(3), 283300. Stattman, D. (1980). Book value and stock return. The Chicago MBA: Journal of selected papers, 4, 25-45. Subramanyam, K. R. (1996). The pricing of discretionary accruals. Journal of Accounting and Economics, 22, 249 281.
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Ron Messer
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BUILDING A WORLD CLASS UNIVERSITY
Ron Messer
Abstract
As university MBA programs proliferate, the quality of the once coveted business degree has come into question. While some of the first movers in the field of business education have maintained a strong position among the published rankings for such programs, other newer schools struggle to promote themselves in a very competitive field. This paper addresses the situation of one such school that has recently launched an MBA program. The strategy proposed is based on an analysis of environmental changes that are occurring, including shifts in technology, demographics and culture. By identifying and understanding the impacts of these forces, newer university programs can more effectively compete with their more well-established competitors. The well-known story of David and Goliath provides guidance and perspective in this situation.
Messer R. - Building a World Class University
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Introduction
There are perhaps a hand-full of truly great universities around the world. These institutions have achieved their vaunted status through longevity (such as Oxford); technical innovation (consider MIT and Caltech) and expertise (think of the University of Chicago and its long list of Nobel laureates in Economics). But given the many thousands of universities in existence, how can a relatively newer institution distinguish itself in such a competitive field? Can a newbie university achieve academic excellence, or is mediocrity the best that it can expect in the world rankings? I think that it is possible for newer institutions to attain scholarly prominence. But this requires some out of the box thinking. A me-too mindset will not work -- so, forget about setting up flavour-of-themonth research institutes, internet based learning models and so-called executive education programs.
metropolitan area of approximately one half million inhabitants. The local job market is primarily white collar and the economy is based on government, tourism and a significant number of retirees. The moderate temperature and abundant sun shine has made this an attractive location for those in their golden years. Crime rates are low, health care facilitates excellent and transportation links (air, water and road) are available to locations throughout North America and the world. The greater metropolitan area is also gaining a reputation as a high tech incubator. The metaphor underlying the strategic plan for this university is that of the tale of David and Goliath, which is probably appropriate, given this institutions current situation (note, too, that Elah was the valley where David and Goliath fought their famous battle). Of course, everyone knows the outcome of the story but few realise the real reasons why David was successful. I contend that he was able to kick ass because, 1. He shifted the competitive paradigm (turning weakness into strength) 2. He effectively leveraged the power of technology (converting potential to kinetic energy) 3. He used youth to his advantage, against tradition (making youth a state of mind) 4. Each of these themes is examined in my assessment. Also, reminiscent of the style of many MBA programs, the arguments are presented in the form a business case write-up: identifying the issue, presenting a situational analysis -- along with alternatives -- and making appropriate recommendations.
Background:
In this article I consider the real-life situation of a mid-sized publicly funded university (student enrolment of about 15,000) located on the west coast of North America, which I refer to as Elah University (not its real name). It has a relatively new business school and is attempting to market its MBA program. In order to do this it needs to attract top calibre scholars, the best and the brightest students and some much needed outside funding. While Elah University is a real institution, the strategy suggested in this paper has not yet been implemented; but it is available to any of the West Coast universities that can identify with the situation presented. Elah University is located near the Pacific Ocean, on the outskirts of a
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Issue
How can a business school that lacks (1) reputation and (2) money become a worldclass institution?
Technology and its impacts While technology, globalisation, and commoditization have often been interpreted as distinct phenomenon, in reality they all follow logically from developments in technology. Technology has, and will continue to shape the business landscape. As well, it has led to both economic globalisation (by ameliorating time/space constraints) and the commoditization of goods and services (by overcoming information asymmetries about the price/quality of goods -- i.e. via standardized communications protocols, such as the Internet). 1 These forces have manifest themselves in business school education through the development of, International business programs, resulting from the globalisation impact, Entrepreneurship studies, resulting from the impact of product commoditization, which has led to branding and niche markets and Specialised MBA programs, which are typically technology driven; for example, e-commerce or bio-tech specializations).
Analysis:
University business schools typically establish their reputations over long periods of time. Usually this is done in conjunction with the development of the university as a whole. Key to this development is three main elements: Attracting outstanding faculty Selecting the best and brightest students Obtaining appropriate levels of funding
The table below shows a ranking -- in no particular order -- of (arguably) the top five business schools (showing the date their MBA program was founded) in the United States and Canada, along with each schools claim to fame.
United States Canada Claim to Fame
Harvard (1908) Wharton (1920) Chicago (1898) Stanford (1925) Northwestern (1908)
Western (1948) Toronto (1937) UBC (N/A) Queens (1960) McGill (1962)
CEOs Finance Research High-tech Marketing
Source: Businessweek and Canadian Business magazine web site on the Internet.
But, reputations can be easily undone if schools do not respond to forces in their internal and external environment; these forces include (i) technology changes and (ii) population shifts.
While technology impacts are well known and have been part of the evolving curriculum of most business programs, population shifts have not been fully considered in developing a strategy that is responsive to environmental change. Demographics and its impacts: Distinct from the technology shaping the economy is the ageing of the North American population. Much has been written about this phenomenon from both a descriptive and prescriptive viewpoint. Particularly
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salient to the institution in question is the fact that it is estimated that 55% of North American academics will be retiring within the next 5 - 10 years. Following from this observation, it is important to note that, Traditional notions of retirement are expected to change, with part-time and gradual work reduction becoming more prevalent. (Part of this occurrence is of necessity, as more workers will be needed to pay for the burgeoning number of retirees. Another part is due to the individual knowledge workers desire to continue to remain productive and useful to society.) Knowledge workers (such as business school professors) are defacto entrepreneurs (e.g., faculty members who have private consulting practices). Well known university names are frequently more important than their affiliations (consider Michael Porter of Harvard and the late Milton Friedman of Chicago).
schools. Simply pick up an MBA promotional brochure for almost any program, or browse through the on-line content of the schools web-site. These approaches include, Developing an Executive, or E-MBA program (to increase funding). Raising tuition to cost recovery levels (like many private business schools). Garnering donations for facilities (e.g., corporate naming of lecture halls). Further subject area specialisation (e.g., an e-commerce MBA). Supplementing faculty salaries (through teaching continuing studies diploma or certificate programs). Videoconferencing and Internet-based MBA programs (i.e., technology enabling outreach). Creating research institutes or centres of excellence in specific areas (e.g. performance measurement)
This means that a large talent pool exists which not only wants to provide its services (however, in a different way) but which has no real reason for remaining attached to a particular institution.
Alternatives:
Several alternatives are available to help our new business school develop a reputation for scholarship and obtain funding. These options can be conveniently summarised as (1) old strategy and (2) new strategy. Old Strategy: All of the essential elements of the old strategy have been used by many business
(Some efforts at cross branding have also taken place between schools, most notably Canadian and American universities -- such as York Universitys Schulich business school and Northwestern University.) Unfortunately, for those schools that are not already well-known, these approaches have done little to enhance their reputations. The problem with the old strategy is that everyone is doing it. Not only is novelty absent in this approach, but it is also unlikely to be fruitful when trying to enhance an institutions academic reputation.
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New Strategy: A new way of doing things utilises this West Coast Universitys natural competitive and comparative advantages. This strategy borrows from the lessons learned in Davids meeting with the Philistine Goliath. Paradigm Shift Retirement becomes Work Just as David altered the competitive paradigm by showing that weakness can become strength, Elah University can also redefine traditional paradigms about the notion of scholarly work. Money as a reward for providing services will be redefined by other incentives: Elah Universitys reputation depends upon having a well-known and highly regarded faculty. As noted, many business professors from prominent universities will be retiring within the next decade. Money will not be their greatest concern. Rather, life-style and flexible work arrangements will be paramount. The West Coast offers an unparalleled climate and lifestyle (i.e., comparative advantages) specifically geared to seniors, including excellent public transportation, short travelling distances, high personal safety and security, and topquality medical facilities. In addition, Elah University can offer flexible work arrangements to these not quite ready to retire academics (i.e., competitive advantages). Institutional reputation will be redfined by the notion of a community of scholars: World-class business scholars will be attracted to a location by an appropriate sense of community (consider the University of Chicago and the significant influence of its financial economists). This community can be centred in a number of ways -- for example (i) in the university, (ii) in the nearby
city (iii) in the greater metropolitan area. Much like the notion of an artist colony, Elah University should strive to create a sense of place -- i.e. an appropriate atmosphere where scholarship can thrive. (Remember that the word university is derived from the Latin universitas magistrorum et scholarium, which is approximately translated as community of teachers and scholars.2) Technology Facilitating & Enabling David converted the potential energy of a stone into highly effective kinetic energy by using technology (sling) in his battle with a much larger adversary. Today, too, technology can be both a facilitator and enabler. It is not an end but rather a means to an end. A community of scholars based at Elah University can communicate with the entire world via the Internet, or other communications media (such as videoconferencing, webcams, fax machines, mobile telephony, texting, instant messaging, etc.). Place becomes almost irrelevant for knowledge workers when technology becomes an enabler. If the appropriate scholarly atmosphere exists, technology can facilitate exchange that is two-way: (a) from a scholars current location to Elah University and/or (b) Elah University to the scholars hometown, and beyond. The potential of the Internet creates real-life energy when it seamlessly facilitates the communication of ideas. Remote access to numerous data sources used in scholarly work is also possible with todays technologies, making place almost irrelevant when conducting research.
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Youth Old Age with Attitude Youth is not just a physical state; it is an attitude as well. Think of young David -soon to be King of Israel -- stepping forward to meet the challenge of the Philistine army when none of his older, more battle tested comrades would act. Just as Davids youth contrasts with the maturity of his fellow warriors, older academics will increasingly be stepping forward to challenge traditional notions of retirement. A community of scholars of similar ages, reputations and interests will inspire each other. Interdisciplinary research, publications and seminars will emerge if the appropriate atmosphere exists. In brief, Elah University can provide the place, technology will enable the (two-way) exchange of ideas and youth will become a state of mind (rather than body) among individuals with similar interests. It is also important to note that this is not a zero-sum game. By following the recommendations which I outline below, Elah University enhances its reputation at very little cost -- other than opportunity cost. In addition, scarce productive resources -- i.e., human capital -- are more effectively utilised and not lost due to our societys antiquated notions of retirement.
driven by the scholars schedule/needs. It is expected that the appropriate name will draw the necessary registrations. 2. The program should be marketed to preselected and highly regarded scholars who are approaching traditional retirement -- i.e. 65 - 70 years of age. (For example, Nobel prize winner Robert Mundell -- 70+ years young -who is originally from the West Coast). 3. The scholar-in residence should be offered free accommodation, meals and local travel for him/herself and their significant others (possibly in conjunction with support from local businesses) in exchange for teaching a course of their interest. (This will also allow up-sell potential, in terms of retirement/second homes and could provide a source of additional funding from local businesses -- e.g. as a percentage of real estate commissions for appropriate referrals.) 4. This initiative should commence immediately, before the unfolding of demographic trends (and opportunities) becomes of greater interest to scholars, forecasters and the news media. First movers will reap the greatest benefits from this initiative. It is expected that as a critical mass of scholars buys in to the Elah University initiative, the business schools reputation will be enhanced. In turn, applications for admission to its program will most likely increase, not just quantitatively, but also in terms of the quality of the students seeking admission there. Funding to attract notable business scholars will not be a significant issue because of the nature of the new work model being proposed, which is based on
Recommendations
Based on the analysis presented, I recommend the following. 1. Elah University should develop a schedule of scholar-in-residence intensive courses/programs that can be counted towards the MBA degree. The timing of the courses is not critical -- i.e. fall, winter, summer -- and should be
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changing demographics and altered notions of retirement. The threat of similar wannabe programs can be subverted by acting quickly and effectively marketing the program. This can be done using Internet based technologies (e.g., web-sites, on-line registration, marketing materials and gathering data about other business schools faculty and their research interests). In summary, the Internet allows ideas to be communicated independent of time and space by using technology as an enabler. It is also equally important to recognize the demographic reality of an ageing scholarly work force. Elah University can leverage technology (as did David) to win the battle for recognition against some much larger (Goliath-like) and better endowed (armed) universities. It can do this by using its comparative advantage to attract a highly mobile workforce which will be redefining the notion of retirement over the next few decades.
End Notes
Technology has led to globalization through the elimination of time and space constraints. Marshall McClewen is credited with coining the phrase the global village. He hypothesized that as the world becomes increasingly interconnected (through -- at the time -- television/radio communications and jet aircraft travel), perceived distances between people would become smaller. The Internet, as a standardized communications protocol has made the global village even smaller, creating more connections that facilitate exchanges of goods, services, and ideas. Commoditization has resulted from globalization (which, in turn, arose from advances in technology) as information has becomes readily available about product/ service prices and specifications. A large assortment of output is available from suppliers around the world, making price the main differentiator. That is, unless branding can provide additional value for a companys offerings. 2 Encyclopaedia Britannica
1
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Leili Nikbakht
83
OIL PRICES AND EXCHANGE RATES: THE CASE OF OPEC
Leili Nikbakht
Abstract
This paper has studied the relationship between oil price and exchange rate in OPEC members. In this paper, we investigate the long-run relationship between real oil prices and real exchange rates by using monthly panel of seven countries of OPEC members from 2000:01 to 2007:12. We first test whether or not exchange rates are cointegrated with real oil prices. Stationary and cointegration tests for pooled series obviously have shown the high power of pooled tests for unit root and cointegration. It is shown that real oil prices may have been the dominant source of real exchange rate movements. Finally, the results shown that, there is a long-run linkage between real oil prices and real exchange rates.
Nikbakht L. - Oil Prices and Exchange Rates: The Case of OPEC
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Introduction
The exchange rate is arguably the most difficult macroeconomic variable to model empirically. Many papers have previously suggested that oil prices may have an important influence on exchange rates. The suggestion, however, that oil prices might be sufficient to explain all long-run movements in real exchange rates appears to be new. Structural time-series work on the determinants of real exchange rate fluctuations indicates that real shocks or permanent components play a major and significant role in explaining real exchange rate fluctuations. The potential importance of oil prices for exchange rate movements have been noted by, McGuirk (1983), Krugman (1983a, 1983b), Golub (1983) and Rogoff (1991). Univariate and multivariate BeveridgeNelson decompositions by Huizinga (1987) and Baxter (1994) find that, even though real exchange rates may not follow a random walk, most of their movements are due to changes in the permanent components. Lastrapes (1992) by using the Blanchard and Quah (1989) decomposition, find that much of the variance of both real and nominal exchange rates from a number of countries over both short and long horizons is due to real shocks. The conclusions from the structural time-series literature therefore seem to be robust to both decomposition methods and currencies. This has led some to suggest that an unidentified real factor may be causing persistent shifts in real equilibrium exchange rates. Clarida and Gali (1994) use the BlanchardQuah identification strategy to estimate the share of exchange rate variability that is due to different shocks by using quarterly USCanada, USGermany, USJapan, and USUK real exchange rate data from 1974:Q3 to 1992:Q4. They find
that real shocks can account for more than 50% of the variance of real exchange rate changes over all time horizons. Different sources of real shocks have been investigated in Zhou (1995). Among many sources of real disturbances, such as oil prices, fiscal policy, and productivity shocks, it has been shown that oil price fluctuations play a major role in explaining real exchange rate movements. Moreover, Chaudhuri and Daniel (1998) investigate 16 OECD countries and find that the non-stationary behavior of US dollar real exchange rates is due to the non-stationary behavior of real oil prices. Similar results are obtained by Amano and Norden (1998a, b). By using data on real effective exchange rates for Germany, Japan, and the US, they find that the real oil price is the most important factor determining real exchange rates in the long run. Camarero and Tamarit (2002) use panel cointegration techniques to investigate the relationship between real oil prices and the Spanish pesetas real exchange rate. Yousefi and Wirjanto (2004) adopts a novel empirical approach to the crudeoil price formation for the purpose of understanding the price reactions of OPEC member countries to changes in the exchange rate of the US dollar against other major currencies and prices of other members. The results are broadly consistent with the view of the absence of a unified OPEC determined price in the international crude market literature. In addition, the results also highlight a cross-regional dimension of the crude oil market. Chen and Chen (2007) investigate the long-run relationship between real oil prices and real exchange rates by using a monthly panel of G7 countries from. They found that real oil prices may have been the dominant source of real exchange rate movements and that there is a link between real oil prices
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and real exchange rates. They then examine the ability of real oil prices to forecast future real exchange returns. Finally, they found that Panel predictive regression estimates suggest that real oil prices have significant forecasting power. The rest of the paper is organized as follows: In Section 2, we present a simple theoretical model. In Section 3, the sources of data and notations are described. In Section 4, we report the country-by-country results. In section 5, the panel results are reported. Concluding remarks are provided in Section 6.
Where exr and exn are real and nominal exchange rates, respectively. Thus, by notice to (1), (2) and (3), the real exchange rate can be rewritten as (4)
lexr = (lexn + plt * + plt) + (1 - a) (plt - pln) - (1 - a *) (plt * - pln *)
A Theoretical Model
Based on Chen and Chen (2007), Supposed that the home and foreign country consumer price indices be as follows: (1)
cpih = (pt) a (pn) 1 - a & pl = log (cpih) = a log (pt) + (1 - a) log (p n) & pl = aplt + (1 - a) pln
cpi f = (p t *) a * (p n *) 1 - a & pl* = log (cpi f ) = a * log (p t *) + (1 - a *) log (p n *) & pl* = a + plt * + (1 - a +) pln *
(2)
where plt ( plt * ) and pln ( pln * ) are prices of traded and non-traded goods in the home (foreign) country, respectively. Also cpih and cpi f are home and foreign consumer price indices, respectively. a and a * weights correspond to the expenditure shares on traded goods near the point of approximation for the home and foreign countries, respectively. The log of the real exchange rate, is defined as (3)
p* exn p & log (exr) = log (exn) + log (p *) - log (p) & lexr = lexn + Pl* - Pl exr =
According to (4), if a , a * a rise in the relative price of domestic tradables, depreciates the real exchange rate, while the magnitude of the rise exceeds that of the rise in the relative price of foreign tradables. That is, if the home country is more dependent on imported oil, a real oil price rise may increase the prices of tradable goods in the home country by a greater proportion than in the foreign country, and thereby cause a real depreciation of the home currency. Moreover, in order to improve competitiveness when an oil price shock worsens the term of trade, the home country would have to raise the nominal exchange rate, which would lead to a further real depreciation. In this paper, we empirically investigate the link between real exchange rates and real oil prices. We study whether the real exchange rate is positively related to the real oil price as predicted by the above model. We also investigate whether real oil prices can predict movements in real exchange rates. It is well known that real exchange rate fluctuations can be attributed primarily to nonmonetary shocks. Numerous of researchers have reviewed the relationship between oil prices and exchange rates.
Data and Notations

We use data on the seven countries of OPEC members, Algeria, Indonesia, Iran, Kuwait, Nigeria, Saudi Arabia, and Venezuela. Monthly data, from 2000:01 to
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2007:12, are used. Data on nominal exchange rates (domestic currency per unit of foreign currency), consumer price indices, and the British price of oil (Brent), the United Arab Emirates price of oil (Dubai), the West Texas Intermediate (WTI) and the world price of oil (World) were obtained from International Financial Statistics (IFS), published by the International Monetary Fund (IMF). The Spot OPEC Reference Basket oil prices were obtained from OPEC annual reports. Real exchange rates are constructed by following formula: (5)
exr = pw exn cpi
Country-by-Country Results
Stationary Test: Given no evidence of the presence of structural breaks, we test for unit roots. We examine each individual series by using the Augmented DickeyFuller (ADF) test. Results are based on the inclusion of an intercept and trend. The results of augmented Dickey-Fuller unit root test are presented in Table 2. Clearly, according to the ADF tests, all real oil prices are integrated of order one, I(1), but real exchange rates of Algeria and Indonesia are stationary at level, and real exchange rates of Iran and Venezuela are integrated of order one, I(1). Finally, real exchange rates of Kuwait, Nigeria and Saudi Arabia are integrated of order two (calculated but not reported). It is evident that real oil prices are nonstationary. This confirms the findings of Amano and Norden (1998a), who have shown that German and Japanese real WTI prices are I(1) series. These results are also consistent with those of Chaudhuri and Daniel (1998), who find that real Dubai oil prices for Canada, Germany, Italy, Japan, and the UK are I(1). Finally, the results are also consistent with those of Chen and Chen (2007), who show that real Dubai, Brent, WTI and World oil prices for G7 countries are I(1), too.
where p w is the world export index and cpi is the consumer price index of each country. Real oil prices are defined as the US dollar prices of oil converted to the domestic currency and then deflated by the domestic consumer price index (CPI).
Table 1: Variable names, notations and data source
Variables Notation Source
Nominal Exchange Rates Real Exchange Rates Consumer Price Index World Export Index United Kingdom (Brent) United (Dubai) Arab Emirates
Exn exr cpi pw Brent Dubai WTI World OPEC
IFS IFS IFS IFS IFS IFS IFS IFS OPEC Annual Reports
West Texas Intermediate (WTI) World average crude price Spot OPEC Basket price Reference
All variables are measured in logarithms. Variable names, their notations and sources of data are provided in Table 1.
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Table 2: The results of augmented Dickey-Fuller unit root test

Real Exchange rates Algeria Indonesia Iran Kuwait Nigeria Saudi Arabia Venezuela
Series in level: Series in first differences:

Real Oil Prices
-4.07 (0.00)** --Brent
-3.47 (0.04)* --Dubai
-2.42 (0.36) -10.95 (0.00)**

WTI
-2.20 (0.48) -2.88 (0.17)

World
-2.60 (0.28) -2.73 (0.22)

OPEC
-3.33 (0.06) -2.73 (0.22)
-3.01 (0.13) -9.63 (0.00)***
Series in level: Series in first differences:
-0.80 (0.96) -9.85 (0.00)***
-0.37 (0.98) -9.41 (0.00)***
-0.79 (0.96) -9.32 (0.00)***
-0.64 (0.97) -9.55 (0.00)***
-0.58 (0.97) -9.52 (0.00)***
Note: The null hypothesis is that the series is a unit root process. An intercept and trend are included in the test equation. p-values are provided in parentheses. The lag length was selected by using the Schwarz Information Criterion. * Significant at 0.05 level ** Significant at 0.01 level
Cointegration Test: We apply the Johansen (1988) test for cointegration and investigate the results from the trace and max-eigenvalue statistics. Results are based on the inclusion of linear deterministic trend in data. The results of Johansen cointegration test are provided in Table 3. In all cases, real exchange rates and real oil prices are not cointegrated. These results on cointegration are consistent with the findings of Amano and Norden (1998a), Chaudhuri and Daniel (1998)and Chen and Chen (2007). As shown in this section, our country-by-country results are consistent with other empirical studies. Given the notoriously low power of individual country-by-country tests for unit roots and cointegration, it may be preferable to pool the currencies and conduct panel analysis.
Panel Results
Panel Unit Root Test We implement five different types of panel unit root tests: the Lin et al. (2002)
test (LLC), the Breitung (2000) test, the Im et al. (2003) test (IPS), and the Fisher-type ADF and PhillipsPerron (PP) tests. Results are based on the inclusion of an intercept and trend. The results of panel unit root tests in level and one order of differentiation are reported in Table 4. It is clear that the real exchange rates are I(0) and the oil prices are I(1). The evidence for exchange rates is relatively weak because the Breitung (2000) test suggests stationary in one case. However, significant evidence of nonstationary is suggested by the Fishertype statistics (FisherPP), which have been shown to be superior to IPS tests by Maddala and Wu (1999). Also, significant evidence of nonstationary is suggested by the LLC test statistic. These results are consistent with Chen and Chen (2007). For panel cointegration test, we apply the Pedroni (2004) tests. Panel Cointegration Test We then implemented the panel cointegration tests proposed by Pedroni
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(2004). This is a residual-based test for the null of no cointegration in heterogeneous
panels. Two classes of statistics are considered in the context of the Pedroni test.
Table 3: The results of Johansen cointegration test

Hypothesized Rank (r) Brent Trace MaxEigen Dubai Trace MaxEigen Trace WTI MaxEigen World Trace MaxEigen OPEC Trace MaxEigen
Country
Algeria Indonesia Iran Kuwait Nigeria Saudi Arabia Venezuela
r=0 r 1 r=0 r 1 r=0 r 1 r=0 r 1 r=0 r 1 r=0 r 1 r=0 r 1
18.69 7.31 15.15 5.75 19.43 8.47 17.42 6.67 19.00 7.64 17.29 7.49 21.07 8.99
11.37 7.31 9.40 5.75 10.95 8.47 10.74 6.67 11.35 7.64 9.80 7.49 12.07 8.99
18.53 7.40 14.42 5.39 19.01 8.34 16.38 6.28 18.43 7.27 16.77 7.03 20.82 9.14
11.31 7.40 9.03 5.39 10.67 8.34 10.10 6.28 11.15 7.27 9.74 7.03 11.68 9.14
16.24 6.58 14.53 4.99 18.72 7.41 17.84 6.80 18.49 6.99 17.08 7.21 19.80 7.78
9.65 6.58 9.54 4.99 11.30 7.41 11.04 6.80 11.49 6.99 9.87 7.21 12.01 7.78
18.17 7.34 14.85 5.51 19.27 8.32 17.18 6.62 18.77 7.41 17.13 7.33 20.94 8.86
10.83 7.34 9.39 5.51 10.95 8.32 10.55 6.62 11.35 7.41 9.79 7.33 12.08 8.86
18.48 7.25 14.66 5.93 19.20 8.41 16.80 6.18 18.59 7.26 16.83 7.05 21.63 9.31
11.23 7.25 8.73 5.93 10.78 8.41 10.62 6.18 11.33 7.26 9.78 7.05 12.32 9.31
Note: Trace statistic critical value at 0.05 level for r= 0 is 25.87 Trace statistic critical value at 0.05 level for r1 is 12.51 Max-Eigen statistic critical value at 0.05 level for r= 0 is 19.38 Max-Eigen statistic critical value at 0.05 level for r1 is 12.51
Table 4: Panel unit root tests

Real Exchange Rates Series in level: Levin, Lin, and Chu Breitung Im, Pesaran, and Shin FisherADF FisherPP Series in first differences: Levin, Lin, and Chu Breitung Im, Pesaran, and Shin FisherADF FisherPP ---8.75 (0.00)** -------29.47 (0.00)** -9.82 (0.00)** -26.23 (0.00)** 370.13 (0.00)** 375.88 (0.00)** -29.60 (0.00)** -9.26 (0.00)** -24.74 (0.00)** 349.28 (0.00)** 347.49 (0.00)** -29.94 (0.00)** -10.24 (0.00)** -24.42 (0.00)** 344.48 (0.00)** 341.91 (0.00)** -28.59 (0.00)** -9.82 (0.00)** -25 20 (0.00)** 355.90 (0.00)** 355.06 (0.00)** -29.74 (0.00)** -9.55 (0.00)** -25.09 (0.00)** 354.23 (0.00)** 353.68 (0.00)** -3.41 (0.00)** 2.27 (0.60) -2.91 (0.00)** 30.85 (0.00)** 36.93 (0.00)** 2.49 (0.99) 4.91 (1.00) 4.70 (1.00) 0.54 (1.00) 0.20 (1.00) 4.41 (1.00) 6.01 (1.00) 6.17 (1.00) 0.17 (1.00) 0.08 (1.00) 3.87 (0.99) 4.97 (1.00) 4.74 (1.00) 0.53 (1.000 0.34 (1.00) 3.76 (0.99) 3.31 (1.00) 5.25 (1.00) 0.36 (1.00) 0.19 (1.00) 3.95 (1.00) 5.41 (1.00) 5.45 (1.00) 0.31 (1.00) 0.14 (1.00) Real Oil Prices Brent Dubai WTI World OPEC
Note: The null hypothesis is that the series is a unit root process. An intercept and trend are included in the test equation. p-values are provided in parentheses .Probabilities for Fisher-type tests were computed by using an asymptotic 2 distribution. All other tests assume asymptotic normality. The lag length was selected by using the Schwarz Information Criterion. * Significant at 0.05 level, ** Significant at 0.01 level
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The first type is based on pooling the residuals of the regression along the withindimension of the panel, where as the second type is based on pooling the residuals of the regression along the between-dimension of the panel. For the first type, the test statistics are the panel -statistic, the panel -statistic, the panel PP-statistic, and the panel ADFstatistic. These statistics are constructed by taking the ratio of the sum of the numerators and the sum of the denominators of the analogous conventional time-series statistics across the individual members of the panel. The tests for the second type include the group -statistic, the group PP-statistic, and the group ADF-statistic. They are simply the group mean statistics of the conventional individual time-series statistics. All statistics have been standardized by the means and variances so that they are asymptotically distributed N(0,1) under the null of no cointegration. As one-sided tests, large positive values of the panel -statistic reject the null hypothesis of no cointegration. For the remaining statistics (the panel , the panel PP, the panel ADF, the group , the
group PP, and the group ADF tests), large negative values reject this null. See Pedroni (2004) for a detailed discussion. The results are based on the inclusion of an intercept and trend and inclusion an intercept only. The results of panel cointegration tests (between exchange rates and each of oil price indices) are provided in Table 5 The group and the group PP (based on the inclusion of an intercept only) and all panel statistics, except for panel , (based on the inclusion of an intercept and trend) indicate fairly strong support for the hypothesis that oil prices are cointegrated with real exchange rates in the context of world, Dubai, Brent, WTI and Spot OPEC Reference Basket prices. Given the evidence that real exchange rates and real oil prices may be cointegrated, we conclude that there is a long-run relationship between them. Thus we estimate the cointegrating coefficients between real exchange rates and real oil prices. Consider the following regression.
exit = ai + b opit + fit
WTI No trend Trend World No trend Trend OPEC No trend Trend
(6)
Table 5: The results of Pedroni (2004) Panel cointegration tests

Brent No trend Trend 1.42 (0.14) -5.03 (0.00)** -4.10 (0.00)** -3.11 (0.00)** -6.52 (0.00)** -6.10 (0.00)** -4.07 (0.00)** Dubai No trend Trend
Panel Panel Panel-PP Panel-ADF Group Group-PP Group-ADF
-0.22 (0.38) 0.26 (0.38) 0.10 (0.39) 0.37 (0.37) -4.07 (0.00)** -3.00 (0.00)** -1.82 (0.07)
-0.20 (0.39) 0.40 (0.36) 0.21 (0.38) 0.50 (0.35) -3.37 (0.00)** -2.45 (0.01)* -1.24 (0.18)
1.69 (0.09) -4.88 (0.00)** -4 01 (0.00)** -3 08 (0.00)** -6.09 (0.00)** -5.78 (0.00)** 3.75 (0.00)**
-0.06 (0.39) 0.25 (0.38) 0.11 (0.39) 0.41 (0.36) -4.27 (0.00)** -3.02 (0.00)** -1.69 (0.09)
1.45 (0.13) -4.54 (0.00)** -3.77 (0.00)** -2.81 (0.00)** -6.35 (0.00)** -5.96 (0.00)** -3.90 (0.00)**
-1.18 (0.35) 0.32 (0.37) 0.16 (0.39) 0.45 (0.36) -3.87 (0.00)** -2.78 (0.00)** -1.53 (0.12)
1.46 (0.13) -4.88 (0.00)** -4.00 (0.00)** -3.01 (0.00)** -6.37 (0.00)** -5.98 (0.00)** 3.89 (0.00)**
-0.20 (0.39) 0.35 (0.37) 0.20 (0.39) 0.48 (0.35) -3.65 (0.00)** -2.60 (0.01)* -1.38 (0.15)
-1.46 (0.13) -4.88 (0.00)** -4.00 (0.00)** -3.01 (0.00)** -6.37 (0.00)** -5.98 (0.00)** -3.89 (0.00)**
Note: The null hypothesis is that there is no cointegration. * Significant at 0.05 level, ** Significant at 0.1 level
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Where is the log of the real exchange rate and is the log of the real oil price. The Restricted F test statistic, Hausmans specification test statistic and estimation results for Eq. (6) are provided in Table 6.
The coefficients are estimated by using a panel OLS estimator. Clearly, the results comfortably reject the null hypothesis of no long run relationship between the real exchange rate and the real oil price for all measures of oil prices.
Table 6: The Results of Panel Estimation

Brent Oil Prices Dubai Oil Prices WTI Oil Prices World Oil Prices OPEC Oil Prices
P-Value Adj. R
2
0.34 (0.00)** 0.51 175.75 (0.00)** 0.00 (1.00)
0.34 (0.00)** 0.51 174.57 (0.00)** 0.00 (1.00)
0.35 (0.00)** 0.52 177.92 (0.00)** 0.00 (1.00)
0.34 (0.00)** 0.52 176.41 (0.00)** 0.00 (1.00)
0.35 (0.00)** 0.52 176.93 (0.00)** 0.00 (1.00)
Restricted F Test: F- statistic (P-Value) Hausmans Specification Test: Chi2-statistic (P-Value)

** Significant at 0.01 level
Note: The regression is where is the log of the real exchange rate and is the log of the real oil price.
Conclusion
In this paper we studied the long-linkage between real oil price and real exchange rate in OPEC members and investigated the long-run relationship between them by using a monthly panel of seven countries of OPEC members from 2000:01 to 2007:12. We first test whether or not exchange rates are cointegrated with real oil prices. The countryby-country results reject the cointegration between oil prices and exchange rates, but stationary and cointegration tests for pooled series obviously had shown the high power of panel analysis for unit root and cointegration between exchange rates and oil prices. It is shown that real oil prices may have been the dominant source of real exchange rate movements. Finally, results show that, there is a longrun and positive linkage between real oil prices and real exchange rates. Since the real
exchange rate of OPEC members depends on oil price movements severely, thus we suggest to the economists and governments of these countries that consider this powerful relationship and oil shocks in their economic planning and decision making.
References
Amano, R.A. and Norden, S. (1998a), Exchange rates and oil prices, Review of International Economics, Vol. 6 No. 4, pp. 683694. Amano, R. and Norden, S. (1998b), Oil prices and the rise and fall of the US real exchange rate, Journal of International Money and Finance, Vol. 17 No. 2, pp. 299316. Baxter, M. (1994), Real Exchange Rates, Real Interest Differentials,
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and Government Policy. Theory and Evidence, Journal of Monetary Economics, Vol. 33, pp. 5-37. Breitung, J. (2000), The local power of some unit root tests for panel data. In: Baltagi, B. (Ed.), Advances in econometrics, nonstationary Panels, Panel Cointegration, and Dynamic Panels, JAI Press, Amsterdam, pp. 161 178. Camarero, M. and Tamarit, C. (2002), Oil prices and Spanish competitiveness: a cointegrated panel analysis, Journal of Policy Modeling, Vol. 24 No. 6, pp. 591 605. Chaudhuri, K. and Daniel, B.C. (1998), Long-run equilibrium real exchange rates and oil prices, Economic Letters, Vol. 58 No. 2, pp. 231238. Chen, Sh. and Chen, Hu. (2007), Oil prices and real exchange rates, Energy Economics, Vol. 29, pp. 390-404. Clarida, R. and Gali, J. (1994), Sources of real exchange-rate fluctuations: how important are nominal shocks?, CarnegieRochester Conference Series on Public Policy, Vol. 41, pp. 156. Golub, S.S. (1983), Oil Prices and Exchange Rates, Economic Journal, No. 93, pp. 576-93. Huizinga, J. (1987), An empirical investigation of the long-run behavior of real exchange rates, Carnegie-Rochester Series on Public Policy, Vol. 27, pp. 149215. Im, K.S., Pesaran, M.H. and Shin, Y.C. (2003), Testing for unit roots in
heterogeneous panels, Journal of Econometrics, Vol. 115 No. 1, pp. 5374. Johansen S. (1988), Statistical Analysis of Cointegrating Vectors, Journal of Economic Dynamics and Control, Vol. 12, pp. 231-54 Krugman, P. (1983a), Oil and the dollar In Economic Interdependence and Flexible Exchange Rates, Cambridge: MIT Press. Krugman, P. (1983b), Oil shocks and exchange rate dynamics In Exchange Rates and International Macroeconomics, University of Chicago Press. Lastrapes, William D. (1992), Sources of fluctuations in real and nominal exchange rates, Review of Economics and Statistics, Vol. 74 No. 3, pp. 530539. Levin, A., Lin, C. and Chu, C. (2002), Unit root tests in panel data: asymptotic and finite-sample properties, Journal of Econometrics, Vol. 108 No. 1, pp. 124. Maddala, G.S. and Wu, S. (1999), A comparative study of unit root tests with panel data and a new simple test, Oxford Bulletin of Economics and Statistics, Vol. 61 No. 0, pp. 631652. McGuirk, A.K. (1983), Oil price changes and real exchange rate movements among industrial countries, International Monetary Fund Staff Papers, Vol. 30, pp. 843-83. Pedroni, P. (2004), Panel cointegration: asymptotic and finite sample properties of pooled time series tests with an application to the PPP hypothesis, Econometric Theory, Vol. 20 No. 3, pp. 597625.
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Rogoff, K. (1991), Oil, productivity, government spending and the real yendollar exchange rate, Working Paper, Federal Reserve Bank of San Francisco, San Francisco, CA. www.imf.org/external/np/ds/matrix.htm. Yousefi, A. and Wirjanto, T. (2004), The empirical role of the exchange rate on
the crude-oil price formation, Energy Economics, Vol. 26, pp. 783799. Zhou, Su. (1995), The response of real exchange rates to various economic shocks, Southern Economic Journal, Vol. 61 No. 4, pp. 936954.
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Okonigene Robert Ehimen, Adekanle Bola
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CYBERCRIME IN NIGERIA
Abstract
In this paper we investigated cybercrime and examined the relevant laws available to combat this crime in Nigeria. Therefore, we had a critical review of criminal laws in Nigeria and also computer network and internet security. The internet as an instrument to aid crime ranges from business espionage, to banking fraud, obtaining un-authorized and sabotaging data in computer networks of some key organizations.We investigated these crimes and noted some useful observations. From our observations, we profound solution to the inadequacies of existing enabling laws. Prevention of cybercrime requires the co-operation of all the citizens and not necessarily the police alone who presently lack specialists in its investigating units to deal with cybercrime. The eradication of this crime is crucial in view of the devastating effect on the image of Nigeria and the attendant consequence on the economy. Out of over 140 million Nigerians less than 5x10-4% are involved in cybercrime across Nigeria.
Ehimen O.R., Bola A. - Cybercrime in Nigeria
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Introduction
Computer crime can broadly be defined as criminal activity involving an information technology infrastructure: including illegal access or unauthorized access; illegal interception that involves technical means of non-public transmissions of computer data to, from or within a computer system; data interference that include unauthorized damaging, deletion, deterioration, alteration or suppression of computer data; systems interference that is interfering with the functioning of a computer system by inputting, transmitting, damaging, deleting, deteriorating, altering or suppressing computer data; misuse of devices, forgery (ID theft), and electronic fraud [1]. The advent of digital technology gave birth to modern communication hard-wares, internet service and powerful computer systems to process data [2]. Hence, cyberspace has provided a save haven for internet platform, which has created geometric growth and accelerated windows of opportunities for businesses and the removal of economic barriers hitherto faced by nations of the world. People from diverse areas of human endeavour can now freely access and utilize the advantages offered by internet platform. However, information technology revolution associated with the internet in Nigeria has brought about a new wave of crime. A very few criminally minded youth in the country, who are mostly not educated or graduates, are stealing and committing atrocity through the aid of the internet online business transactions. The internet online business services, which ordinarily suppose to be a blessing as it exposes one to a lot of opportunities in various field of life is fast becoming a source of discomfort and worry due to the atrocity being perpetrated through it. Cybercrime has come as a surprise and a strange phenomenon that for now live with
us in Nigeria. Computer crimes encompass a broad range of potentially illegal activities. Generally it may be categorize into two major groups: (1) crimes that target computer networks or devices directly; (2) crimes facilitated by computer networks or devices, the primary target of which is independent of the computer network or device [3-9]. Nigeria was recently identified as the innocent and ignorant passive player in cyberspace knowledge Olympiad [10]. The capture of Al Qaedas operative, Muhammad Naeem Noor Khan, provided the Pakistani and American Intelligence Authority with some of Al Qaedas Internet Communication Strategy. It also identified that Nigerian Websites and Email System were used by Al Qaeda to disseminate internet information. This has once again brought up the pertinent questions of the safety and security of Nigerias national cyberspace. This paper therefore addresses, from our investigation the aspect that deals with cybercrime based on false pretence or impersonation. An area that is likely to be fertile to the cyber criminals also called yahoo boys is the stock exchange market. Proper mechanism needs to be put in place to control the activities of these criminals in this area otherwise Nigeria economy may be brought down, particularly with trading on the countrys stock exchange market going online. Without proper security methods in place, it is just like building a house without locks. Any person can gain access. The category and nature of cybercrime in Nigeria is endless. Cybercrime is a global phenomenal that is threatening the economy of nations. It is a major threat in India as it is in Nigeria. Punjab National Bank suffered a loss of close to Rs. 1. 39 chore when the computer recorders were manipulated to create false debits and credits. In bank of Baroda, Rs 2.5 lakh was misappropriated
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95
through the computerized creation of false bank accounts [11]. In Mahanager Telephone Nigam Limited (MTNL) in Delhi, a junior telecom official was charged for reversing electronic telephone meter system thereby allowing some commercials export houses to make overseas calls without the charges being directed to their telephone numbers. Materials and Methods We investigated and carried out a critical review of criminal laws in Nigeria. Also an investigation was carried out on cybercrimes, the social economical consequences, the damage or negative impact it had on the image of Nigeria as a nation. We examined the inadequacies of the existing laws in combating cybercrime and profound solution.
Cybercrime
Technology has integrated nations and the world has become a global village. The economy of most nations in the world is accessible through the aid of electronic via the internet. Since the Electronic market is opened to everybody it also includes eavesdroppers and criminals. False pretence, finds a fertile ground in this situation. Some perpetrators of this crime usually referred to in Nigeria as yahoo boys are taking advantage of e-commerce system available on the internet to defraud unsuspected victims who are mostly foreigners thousands and sometimes millions of dollars. They fraudulently represent themselves as having particular goods to sell or that they are involved in a loan scheme project. They may even pose to have financial institution where money can be loaned out to prospective investors. In this regard, so many persons have become a duped. Merchants who take orders from merchandise on credit are also
facing mounting losses from rip offs. Our investigation revealed that yahoo boys also take undue advantage of some people that are looking for spouse through the aid of Internet. These criminally minded individuals usually have discussion with their victims via the internet. These criminals pretend to be interested and loving. And before the victim realizes what is happening, the criminals would have succeeded in cajoling them to send some dollars to enable them facilitate traveling documents. These criminals falsify document and tell all sort of lies to get money from their victims, when their victims begin to suspect fowl play, they will immediately stop interacting with them and shift their target elsewhere. Cybercrime in Nigeria is difficult to prove as it lacks the traditional paper audit trail, which requires the knowledge of specialists in computer technology and internet protocols. Specific computer crimes are Spam, Fraud, Obscene or offensive content, Harassment, Drug trafficking, and Cyberterrorism [12].
Extant Laws To Cybercrime In Nigeria
Combat
Presently, in Nigeria there is no specific law to combat cybercrime. The criminals are just operating freely without any specific law to checkmate their illicit activities. However, there are laws though not directly related to cybercrimes but in a way can to a limited extent be used to deal with this issue. These laws are: Economic and Financial Crimes Commission (Establishment) ACT 2004, Nigerian Criminal Code. The activities of the Yahoo boys are sabotage on the economy of the country. To this extend it constitute economic crimes which Economic and Financial Crimes Commission (Establishment) Act can deal with. Economic crime is defined as; the non- violent criminal and illicit activity
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committed with the objectives of earning wealth illegally either individually or in a group or organized manner thereby violating existing legislation governing the economic activities of government and its administration to includes any form of fraud, narcotic drug trafficking, money laundering embezzlement, bribery, looting and any form of corrupt malpractices, illegal arms deal, smuggling, human trafficking and child labour, oil bunkering and illegal mining, tax evasion, foreign exchange malpractices including counterfeiting of currency, theft of intellectual property and policy, open market abuse dumping of toxic wastes and prohibited goods e.t.c [13]. The other available law is the Nigeria criminal code, which can also presently be used to prosecute these criminals. Most of the activities of these criminals bother on false pretences and cheating which sections 419 and 421 of the Nigerian Criminal Code prohibits respectively. Section 418 defines obtaining property by false pretence as follows; Any representation made by words, writing, or conduct, of a matter of fact, either past or present, which representation of false in fact and which the other person making it knows to be false or does not believe to be true, is a false pretence. Section 419, provides as follows; Any person who by any pretence, and with intent to defraud, obtains from any other person anything capable of being stolen, or induces any other person to deliver to any person anything capable of being stolen, is guilty of a felony, and is liable to imprisonment for three years. If the thing is of the value of one thousand naira or upward, he is liable to imprisonment for seven years. It is immaterial that the thing is obtained by or its delivery is induced through the medium of
contract induced by the false pretence. The offender cannot be arrested without warrant unless found committing the offence.
Discursion
The definition of economic crime referred to above is all embracing. It means the jurisdiction of the Commission covers a wide range of criminal activities including fraud. Fraud, the noun variant of fraudulently, is (i) an action or a conduct consisting in a knowing representation made with intention that the person receiving that misrepresentation should act on it (ii) the misrepresentation resulting in the action or a conduct; (iii) an action or a conduct in a representation made with the intention that the person receiving that misrepresentation should act on it and so on and so forth [14]. A fraudulent action or conduct conveys an element of deceit to obtain some advantage for the owner of the fraudulent action or conduct or another person or to cause loss to any other person. In fraud, there must be a deceit or an intention to deceive flowing from the fraudulent action or conduct to the victim or the action or conduct [15]. An offence is said to be committed fraudulently, if the action or conducts is a deceit to make, obtain or procure money illegally. By the fraudulent action or conduct, the criminal deceives his victims by pretending to have abilities or skills that he does not really have, in one word, he is an impostor. This is why the Commission has been up and doing to prosecute the perpetrators of this crime. Despite the effort of the commission in this regard, it has been difficult to actually bring these boys to book in view of the complexity of the nature of the crime and investigation that needs to be carried out for proper prosecution of a culprit o this crime. Flowing from the provision of section 419,
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false pretence means; knowingly obtaining another persons property by means of a misrepresentation of facts with intends to defraud, Therefore, for the offence of obtaining by false pretence to be said to have been committed, the prosecution must prove that the accused had an intention to defraud and the thing is capable of being stolen. An inducement on the part of an accused to make his victim part with a thing capable of being stolen or to make his victim deliver a thing capable of being stolen will expose the accused to imprisonment for the offence [16]. As it has been noted above, no serious impact has been made by our law enforcement agencies to arrest and prosecute these criminals. Nigeria is a place where computer can be used to commit all sorts of crimes without prosecution, as there is no law on cybercrime. The Nigerian police simply lack Internet policing capability. Nigerian law enforcement agencies are basically technology illiterate, they lack computer forensics training and often result to conducting police raids on Internet service site mainly for the purpose of extortion. It is very common for the police to demand bribe from cyber caf operators that owns sites where suspicious activities are taking place and look the other way. There are so many reports on Nigeria cybercrime situations that well-meaning Nigerians are no longer comfortable with anymore. These reports are damaging the dignity of our country as a sovereign nation. They are humiliating and injuriously affecting our international image, our business, our mental psychology and even our children. However, these reports points towards the fact that Nigeria is operating on a weakened technology platform and digitally illiterate environment that is in urgent need of expert solution.
Conclusion and Recommendations

From our investigation on cybercrime we observed its threat to the economy of a nation and even peace and security. Therefore there is need for a holistic approach to combat this crime in all ramifications. Our proposal therefore is the need for cyber police who are to be trained specially to handle cybercrimes in Nigeria. In addition, the police should have a Central Computer Crime Response Wing to act as an agency to advise the state and other investigative agencies to guide and coordinate computer crime investigation. We also proposed that the country should set up National Computer Crime Resource Centre, a body, which will comprise experts and professionals to establish rules, regulations and standards of authentication of each citizens records and the staff of establishments and recognized organization, firms, industries etc. Forensics commission should be established, which will be responsible for the training of forensics personnel. Above all a comprehensive law to combat computer and cyber related crimes should be promulgated to fight this monster to a standstill. Our proposal on the nature of law to combat cybercrime is not included in this paper. We recommend that before anybody enters into any kind of financial deals with anyone through the internet he/she should use any of the search engines to verify the identity of the unknown.
References
Paul Taylor (in ENGLISH). November 3, 1999 ed. Hackers: Crime in the Digital Sublime. Routledge; 1 edition. Pg.. 200 Ramjit Singh Hunda, Kawajeet Singh and M. D. Singh. 2004. Aspects to Ensure
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Admissibility of Digital Evidence, Law Journal Gurn Nanak dev University Amritsar, Vol. 13, Pg. 1. Balkin, J., Grimmelmann, J., Katz, E., Kozlovski, N., Wagman, S. & Zarsky, T. 2006. (eds) Cybercrime: Digital Cops in a Networked Environment, New York University Press, New York. Brenner, S. 2007. Law in an Era of Smart Technology, Oxford: Oxford University Press Csonka P. 2000. Internet Crime; the Draft council of Europe convention on cybercrime: A response to the challenge of crime in the age of the internet? Computer Law & Security Report Vol.16 no.5. Fafinski, S. 2009. Computer Misuse: Response, regulation and the law Cullompton: Willan Grabosky, P. 2006. Electronic Crime, New Jersey: Prentice Hall McQuade, S. 2006. Understanding and Managing Cybercrime, Boston: Allyn & Bacon.
McQuade, S. (ed) .2009. The Encyclopedia of Cybercrime, Westport, CT: Greenwood Press. The Guardian Wednesday, July 9, 2008 Pg. 39 Krishna Kumar. 2003. Cyber Laws, International Property and e-commerce Security, Dominant Publishers and Distributors New Delhi. Telephone Consumer Protection Act of 1991 Section 40 of Economic and Financial Crimes Commission (Establishment) Act 2004. Bryan Garner. A Dictionary of Modern Legal Usage, 2nd Edition pg. 374 Kettlewell Wastson (1882) 21 Ch.D 685, R. V. Reigles (1932) 11 NLR 33; Wellham V DPP (1960) 44 Cr. App. R. Onwudiwe V FRN (2008) Vol. 6, LRCNCC pg. 334.
2009
Rohita Kumar Mishra, Gokulananda Patel
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SUPPLIER DEVELOPMENT STRATEGIES: A DATA ENVELOPMENT ANALYSIS APPROACH
Abstract
Supply Chain Management (SCM) adopts a systematic and integrative approach to manage the operations and relationship among different parties in supply chain.There are lots of issues for effective implementation of Supply Chain. One of the major issues is supplier development. Studies have investigated how quality management can be employed in SCM to improve performance in the whole supply network.This study will develop an application guideline for the assessment, improvement, and control of quality in SCM using Data Envelopment Analysis. Improvement in the quality of all supply chain processes lead to cost reductions as well as service enhancement. The data is collected from 25 suppliers of food and agro based industry.
Mishra R. K., Patel G. - Supplier Development Strategies: A Data Envelopment Analysis
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Introduction
Supply chain management (SCM) concept has paid much more attention to academician as well as practitioner. It comprises of quality revolution, notion of material management and integrated logistics etc. As the origin of supply chain management is not specific, but its development starts along the line of physical distribution and transport (Croom et al. 2000). Both approaches emphasizes on focusing the single element in the chain that cannot assure the effectiveness of whole system (Croom et al. 2000). Supply chain management is originally introduced by consultants in 1980s and has gained tremendous attention. (La Londe, 1998). A typical supply chain is generally a network of materials, information and services that linked with the characteristics of supply, transformation and demand. The term SCM has not only used to explain the logistic activities and the planning and control of materials and information flow but also used to describe strategic interorganizational issues (Harland et al., 1999; Thorelli, 1986). Many a subject area such as purchasing and supply, logistic and transportation, marketing, organizational behaviour, network management, strategic management, management information system and operation management has contributed to the explosion of SCM literature. In this paper we examine and consolidate over various articles. This study may be the most comprehensive analysis of the multidisciplinary, wide ranging research on SCM. The supply chain is regarded as a sequence of material suppliers, production facilities, distribution services and customers which are linked together by the flow of goods and information. Supply Chain Management (SCM) is a concept that integrates all parties over the value chain into one whole system and manages them as
the assets of an extended enterprise (Simchi Levi et al., 2000). It involves the removal of barriers between trading partners to facilitate the synchronization of information. It involves not only logistic activities like inventory management, transportation, warehousing, and order processing, etc. but also other business processes such as customer relationship management, demand management, order fulfillment, procurement, product development and commercialization etc. Its main focus is to build trust, exchange information on market needs and developing new products. Supply chain performance plays an important role in any organization. The organization must focus on reduction of waste. In supply chain the term variation has to be considered. In this case the six sigma method is useful for reducing the variation. The high quality of products and services from each level of the supplier network is a major part of successful SCM (Choi & Rungtusanatham, 1999). Houshmand & Rakotobe-Joel (20002001) developed an integrated supply chain structural analysis method to identify the priorities for a blood processing centre. In the model all channel member appeared to be in cohesion with their next line in the process. The continuous improvement concepts by Deming, Juran, Feignebaum and Crosby have provided insight into the measurement of supply chain management. Recently, the six sigma improvement methodology has become more popular. The Six-Sigma improvement methodology is a structured tool having the framework of which will enhance strategic business. The supply chain processes will be so designed that thereby cost will be reduced and service can be enhanced. The integration of Six Sigma and supply chain management will definitely beneficial for a company to gain competitive advantage. It is no longer viable for an organization to operate as
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an isolated and independent entity in competition with others. Organizations must seek to work with others in the supply chain to identify sources of competitive advantage. The root of SCM is in logistic literature. The term was first introduced by Oliver and Webber in 1980s to shift attention to cross-functional integration. In an attempt to systematize definitions and understandings, Bechtel and Jayaram (1997) identified four generic schools of thought that so far dominate in SCM literature. Supplier involvement may range from giving minor design suggestions to being responsible for complete development, design and engineering of specific part of assembly. Aleo (1992) discussed Kodaks early supplier involvement programme that involved suppliers in new R& D effort. Kamath and Liker (1994) also examined Japanese product development practices and identified a variety of roles that suppliers may play. Mabert et al. (1992) found supplier involvement to be an important to part of the strategy in five out of six firms. The effective integration of suppliers into new product can yield such benefits as reduced cost and improved access to and application of technology. Firms exchange essential information and engage some supplierscustomers in long-term contract have become the root level of supply chain integration (Spekman et al. 1998). SCM is built on a foundation of trust and commitment. Trust is conveyed through faith, reliance, belief or confidence in the supply partner. Trust is the sense of performance in accordance with intention and expectations. Commitment means the trading partners are willing to devote energy to sustain the relationship. In many cases, commitment makes it more difficult for partners to act in ways that might adversely affect overall supply chain performance. With commitment, supply chain partners become integrated into their
major customers processes and more tied to their goal. Trust comes in various forms such as cognitive trust and calculative trust. The calculative trusts have a significant impact on buyer-supplier relationships and consequently supply chain performance. Hill (1990) argues that contrary to the theory of transaction cost economics (TCE) that opportunism generally characterizes exchange. The relationship based on cooperation and trust is the key to survive in the market place. Further a high level of inter-organizational trust, that enhanced supplier performance, lowered costs of negotiations and reduced conflict (Zahar et al. 1998).
Literature Review
Supply Chain Management (SCM) is a concept that integrates all parties over the value chain into one whole system and manages them as the assets of an extended enterprise (Simchi-Levi et al., 2000). It involves the removal of barriers between trading partners to facilitate the synchronization of information. It involves not only logistics activities like inventory management, transportation, warehousing and order processing but also other business processes like customer relationship management, demand management, order fulfillment, procurement, and product development and commercialization etc. SCM adopts a systematic and integrative approach to manage the operations and relationships among the different parties in supply chains. It is aimed at building trust, exchanging information on market needs, developing new products, and reducing the supplier base to release management resources for developing long term, mutual benefited relationships. The high quality of products and services from each level of
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the supplier network is an essential part of successful SCM (Choi & Rungtusanatham, 1999). An improved SCM process leads to cost reductions, optimum resource utilization and improved process efficiency (Beamon & Ware, 1998). Foker et al. (1997) demonstrate that Total Quality Management (TQM) can influence the quality performance in the supply chain. Wong & Fung (1999) present an in-depth case study of the TQM system of Construction Company in Hong Kong. They examined the strategy, structure, and tasks for managing the supplier-subcontractor relationships that form an integral part of TQM system. Matthews et al. (2000) showed that the concepts of quality management systems and partnering could be effectively incorporated into the construction supply chain. This is because the closer working relationships and the increased technology transfers provide organizations with the opportunity to obtain expert skills from their partners with limited resources. Houshmand & Rakotobe-joel (2001) developed an integrated supply chain structural analysis method to identify the priorities for a blood processing centre operations improvement. In this model, all channel members appeared to be in cohesion with their next line in the process. Romano & Vinelli (2001) discussed how quality can be managed in supply chain. Their case study indicated that the whorl supply network could improve its ability to meet the expectations in quality of the final customer through the joint definition and co-management of quality practices and procedures. Sohn & Choi (2001) develop a fuzzy Quality Function Deployment (QFD) model to explain the fuzzy relationship between customers needs and design specifications for reliability of supply chain management.
Application Guidelines The primary attributes comprises of five modules that enables the improvement of the six-sigma in the supply chain network is as follows: Module 1: Define: This module defines the processes that have the highest priority for improvement, i.e. the key process that will enable maximum leverage and customer satisfaction. Here required activities and the key process output variables that are used to cunt defects and calculate the cost of poor quality. After the activities are identified, they are assigned to process improvement. These processes may include inbound and outbound transport, warehousing, production planning/inventory control, order processing, and customer service. Module 2: Measure: This module measures the capability of the process. The purpose of this module is to identify performance measures such as cost, productivity, and service levels. Moreover, this measure can help to identify the deviations of current measurements. The goal of SCM should be consistent with organizational goals. This modules helps to create an understanding of the types of quality measures that are currently employed. First the deviations that are associated with the various supply chain management and customer requirement are identified. Then the deviation associated with the quality factor for the process is identified. Numerous quality factors can be used as measures in SCM like reliability, order accuracy, worker standards, customer satisfactions, worker quality and cost. Module 3: Analyze: This module analyses when and where defects occur. The purpose is to evaluate current performance and re-evaluate the standards for cost, productivity and service objectives. The best in class standards, e.g. supply material days or cover and customer service level are
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used to examine the measurements that are collected in module-2. A control chat can be employed to detect whether or not the process is in control. A process is considered as in control when there are no occurrences of special causes of variations. For example, a special variation in a supply chain process may be that a truck arrives late due to bad weather. Once the process is in control, the current data can be used to evaluate the process performance. Module 4: Improve: This module focuses on how six-sigma improvement technology can be developed, and identifies the critical factors that arise from the control process. The purpose is to identify and implement changes so that the overall supply chain process performance can be improved. The first step in this module consists of identifying and prioritizing improvement areas. Once these areas have been prioritized, the areas that must receive immediate attention, considering time and cost restrictions, are identified. The purpose of continuous improvement is to reduce the amount of common cause variations in the supply chain process. In planning this improvement should be implemented throughout the process. The process should be tested again to determine whether it is in control. If the process is in control, the standards of cost productivity, and service are set to those of the improved process. Module 5: Control: This module identifies the controls that must be in place to sustain the benefit of the new process. The purpose is to control and monitor productivity and service performance to ensure that the process meets the identified standards.
Application Of Dea To Supplier Development

It is well know that the long replenishment lead-time, large order tots. Expected
shortage of products, fluctuated product and limited information sharing are the major obstacles to supply chain coordination. However, one key factor influencing the performance of supply chain relationship is trust. Through the high degree of mutual trust, supply chain partners can develop a strategy to maximize supply chain benefits collaboratively. The development of trust requires a lot of effort, such as the partners need to value the relationship, identify correct roles, agree with effective contracts, and be willing to resolve the conflict. Then, though a long period of cooperation, the trust can be gradually built up. Therefore it is clear that the supplier development is a major task in supply chain management (Ayer, 2001). Supplier development involves a long term cooperative effort between a buying firm and its suppliers. It is aimed at creating and maintaining a network of competent suppliers. The development activities include supplier selection and monitoring supplier assistance and training, the provision of incentives for continuous improvements and supplier organizational integration. The ultimate objectives of supplier development are supplier base reduction, concurrent engineering reduction in cycle time, reduction, concurrent engineering, reduction in cycle time, reductions in inventories, and increases in customer satisfaction (Hahn et al., 1990). Grieco (1989) suggests that there should have five steps in the supplier certification process like preliminary evaluation, product design and quality certification, a review of the supply process, performance monitoring and certification. The Raytheon process for supplier development has six steps namely the identification of supplier candidates for projects, the definition of objectives and resources, the identification of baseline opportunities and rank, the analysis of selected opportunities, the implementation
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of projects, and the documentation and realization of improvement. Here we have used both principal component analysis and the Data Envelopment Analysis for evaluating the supplier and compare the result obtained from both.. By evaluation the supplier there is every possibility to develop those suppliers who are lacking in some defined standards.
making more output with the same input or making the same output with less input then the original producer is inefficient. Notations To develop the DEA model, we use the following parameters and variables:
n = Number of DMU {j = 1, 2, ..., n} s = Number of outputs {r = 1, 2, ..., s} m = Number of inputs {i = 1, 2, ..., m} yrj = Quantity of rth output of jth DMU xij = Quantity of ith input of jth DMU ur = weight of rth output vi = weight of ith output
Basic Of Data Envelopmenet Analysis

The discussion and application of Data Envelopment Analysis (DEA) was initiated after the seminal work by Charnes, Cooper, and Rhodes (1978) and subsequent evidence can be found in (Banker, Charnes, Cooper 1984; Ramanathan 2001; Taluri 2000; Despotis. Dimitris, Smirlis 2002). For an in-depth discussion of DEA, one can refer to Seiford and Thrall (1990). DEA can be used to evaluate the efficiency of a number of producers, generally referred as decisionmaking unit (DMU). DEA compares each producer with only the best DMU in the group, which is better than the comparison with average of the group. In DEA, we can consider number of DMUs, each of them consuming similar inputs to varying level to produce. A fundamental assumption behind this method is that if a given DMU, , is capable of producing units of output with inputs, then other DMUs shall also be able to do the same if they were to operate efficiently. Similarly, if DMU is capable of producing units of output with inputs, then other DMUs should also be capable of the same. DMUs , and others can then be combined to form a composite producer i.e. virtual producer with composite inputs and composite outputs. The emphasis of DEA is on finding the best virtual producer for each real producer. If the virtual producer is better than the original producer by either
DEA Model The relative efficiency score of J0 DMU is given by
max h j0 (u, v) =
s
/u Y
r
rj0
/v x
i i=1 m i=1
r=1 m
ij0
subject to/ ur Yrj - / vi xij # 0 j = 1, 2, ..., n

r=1
ur, vi $ 6r, i
The decision variables u = (u1, u2, ..., ur, ..., us) and v = (v1, v2, ..., vi, ..., vm) are respectively the weights given to the s outputs and to the m inputs. To obtain the relative efficiencies of all the units, the model is solved n times, for one unit at a time. The fractional program (1) can be reduced to Linear Programming Problem (LPP) as follows:
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max h j0 = / ur yrj0 subject to / vr xij0 = 1

r=1 m i=1 m
/u y - /v x
r rj r r=1 i=1
ij
# 0 j = 1, 2, ..., n
ur, vi $ 0 6 r, i
This model is called CCR output maximization DEA model (Charnes, Cooper, Rhodes 1978). The routine computation of DEA can be performed using generalized LP software or specialized DEA software. The non-computational aspects are also important in the application procedure of DEA.
The performance of the supplier can be measured by all the ratios of output and input measurement data relevant to the process improvement programs of a supplier. The PCA ranking procedure is based on the ratios of individual inputs and outputs, and one more variable takes into account the overall performance of each supplier as follows:
D1 = Y1/X1, D2 = Y1/X2, D3 = Y2/X1, D4 = Y2/X2, D5 = Y3/X1, D6 = Y3/X2, D7 = /i6= 1 Di
Table-1: Dataset of Inputs and outputs
Supplier X1 X2 Y1 Y2 Y3
S-1 S-2 S-3 S-4 S-5 S-6 S-7 S-8 S-9 S-10 S-11 S-12 S-13 S-14 S-15 S-16 S-17 S-18 S-19 S-20 S-21 S-22 S-23 S-24 S-25
73 45 78 54 76 86 48 58 76 98 59 76 78 65 64 65 68 62 65 80 90 70 78 76 78
99 67 87 67 80 80 68 54 56 65 78 60 68 67 54 43 78 54 78 80 80 70 58 75 65
60 87 43 70 60 45 65 80 80 70 57 60 68 69 70 78 75 74 73 75 76 75 76 77 65
50 45 35 60 70 65 56 54 64 86 96 54 65 76 76 80 85 65 66 54 55 70 75 65 56
35 50 60 75 65 68 46 54 56 76 70 60 60 65 60 57 58 55 50 50 70 60 60 66 70
Specification Outputs
Inputs
Of
Inputs
Outputs
And
X1: Quality management Y1: Quality of the product practices X2: Employee training Y2: Price of the product Y3: Delivery of the product
For illustration we have collected process improvement measurement data from 25 suppliers of steel industries. A detailed questionnaire covering the four statements is given to the executive of the purchasing department and production department. We got the response of 45 executives. These five variables are measured with a score from 0 to 100 in which the higher score is the higher performance. The performance of an individual process improvement effort can be measured by the ratio of the level of output produced by the process effort and the level of process effort. Here we have calculated the rank in both in Principal Component Analysis approach and Data Envelopment Analysis approach and compare the result obtained from the both process.
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Table-2: The eigenvalue and eigenvector analysis of the correlation matrix

Eigen Value Proportion Variable D1 D2 D3 D4 D5 D6 D7
4.2409 60.70% PC1 -0.302 -0.393 -0.366 -0.401 -0.31 -0.359 -0.484
1.3134 18.80% PC2 0.523 -0.235 0.295 -0.405 0.463 -0.452 0.016
0.8504 12.10% PC3 -0.541 -0.556 0.383 0.153 0.425 0.211 -0.055
0.5703 8.10% PC4 0.035 0.058 -0.577 -0.372 0.522 0.5 -0.031
0.0118 0.00% PC5 0.527 -0.646 -0.255 0.382 -0.197 0.235 0.023
0.005 0.00% PC6 -0.12 0.083 -0.444 0.558 0.423 -0.539 0.012
0 0.00% PC7 -0.223 -0.231 -0.192 -0.236 -0.136 -0.159 0.872
Table-2 gives the eigen value and eigen vector analysis of the correlation matrix of the above seven variables. We have four principal components, PC1, PC2, PC3 and PC4 (60.7%, 18.8%, 12.1% and 8.1%) accounts for 99.7%, of the total sample variance.
Table-3: Performance Score of Suppliers

Supplier
S-16 S-15 S-2 S-18 S-8 S-11 S-23 S-9 S-17 S-14 S-4 S-7 S-22 S-10 S-19 S-24 S-13 S-25 S-12 S-5 S-20 S-21 S-6 S-1 S-3
Performance Score
6.086872 4.969999 4.888772 4.801562 4.777451 4.541095 4.525728 4.452767 4.391011 4.381763 4.334663 4.287344 4.130429 3.979861 3.908751 3.750469 3.650028 3.402582 3.3898 3.32552 3.215325 3.083776 2.646108 2.610107 1.890862
Rank
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
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Table-4: Efficiency and Weight of Inputs and Outputs of each DMU (Output Oriented DEA, Scale Assumption: CRS)
Supplier Eff. Wx1 Wx2 Wy1 Wy2 Wy3
S-1 S-2 S-3 S-4 S-5 S-6 S-7 S-8 S-9 S-10 S-11 S-12 S-13 S-14 S-15 S-16 S-17 S-18 S-19 S-20 S-21 S-22 S-23 S-24 S-25 Mean
0.545418 1 0.601862 1 0.732617 0.709511 0.907325 0.966631 0.830973 0.882817 1 0.797443 0.723797 0.898324 0.937431 1 0.902665 0.899932 0.798203 0.632663 0.72158 0.816199 0.810186 0.775169 0.872334 0.830523
1.459838 1 0.379833 0.486411 0.749318 0.369521 1.102141 0.577199 0.582955 0.376757 0.512436 0.370093 0.379833 0.862258 0.643169 0.511364 0.910693 0.638179 1.021487 0.853926 0.375659 0.955446 0.379833 0.701183 0.325571 0.661004
0.373619 0 1.281677 0.513589 0.615651 1.0399 0 0.457322 0.620455 0.75598 0.487564 0.883915 1.001771 0.250927 0.423576 0.488636 0.197138 0.473016 0.231327 0.726694 1.010189 0.269746 0.854452 0.588858 0.820779 0.574671
0.459551 1 0 0.437815 0 0 0.429408 0.552803 1 0 0 0 0 0.302734 0 1 0.384703 0.52889 0.439383 0.555872 0 0.338577 0 0.493278 0 0.316921
0.540449 0 0 0 0.35668 0 0.570592 0 0 0 1 0 0 0.396285 0.394718 0 0.615297 0 0.560617 0 0 0.375557 0 0 0 0.192408
0 0 1 0.562185 0.64332 1 0 0.447197 0 1 0 1 1 0.300981 0.605282 0 0 0.47111 0 0.444128 1 0.285866 1 0.506722 1 0.490672
In Table-4 weights and efficiency scores of suppliers is given. Supplier, S2, S4, S11, S16 are relatively efficient. The efficiency scores of suppliers, S7, S8, S15, S17 are more than 90%, and that of S9, S10, S14, S18, S22, S23 and S25 are more than 80%. The least efficiency score is 54.5% which is of supplier-1.
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Table-5: Comparison between various Rankings

Supplier crste vrste Scale Benchmarking Units (CRS) Benchmarking Units (VRS)
S-1 S-2 S-3 S-4 S-5 S-6 S-7 S-8 S-9 S-10 S-11 S-12 S-13 S-14 S-15 S-16 S-17 S-18 S-19 S-20 S-21 S-22 S-23 S-24 S-25 Mean
0.545418 1 0.601862 1 0.732617 0.709511 0.907325 0.966631 0.830973 0.882817 1 0.797443 0.723797 0.898324 0.937431 1 0.902665 0.899932 0.798203 0.632663 0.72158 0.816199 0.810186 0.775169 0.872334 0.830523
0.73913 1 0.794224 1 0.881258 0.897959 1 0.982936 0.990674 1 1 0.846974 0.898618 0.973026 0.956185 1 1 0.937709 0.912754 0.908866 1 0.968552 0.983828 1 0.935335 0.944321
0.737918471 1 0.757798973 1 0.831331207 0.79013725 0.907325 0.983412087 0.838795721 0.882817 1 0.941520024 0.805455977 0.923226876 0.980386694 1 0.902665 0.95971344 0.874499952 0.696101661 0.72158 0.842700606 0.82350403 0.775169 0.932642916 0.876348075
S2, S11, S16 S4, S16 S4, S11, S16 S4, S16 S2, S11 S2, S4, S16 S2, S16 S4, S16 S4, S16 S4, S16 S2, S4, S11, S16 S4, S11, S16 S2, S11, S16 S2, S4, S16 S2, S11, S16 S2, S4, S16 S4, S16 S2, S4, S11, S16 S4, S16 S2, S4, S16 S4, S16
S2, S16 S4, S10 S4, S10, S11, S16 S4, S10 S2, S4, S10, S16 S2, S10, S16
S4, S10, S16 S2, S4, S10, S16 S4, S10, S11, S16 S4, S10 ,S11, S16
S2, S4, S10, S16 S2, S16 S2, S10, S16 S2, S4, S10, S16 S2, S10, S16 S4, S10, S16
Note: crste = technical efficiency from CRS DEA ;vrste = technical efficiency from VRS DEA; scale efficiency = crste / vrste
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In Table-5 a comparative analysis is made between the rankings done by ranking obtained using DEA with various scale assumptions. In DEA (VRS), except S2, S4, S11, S16 other suppliers like S7, S10, S17, S21 and S24 are also efficient. From Figure-1 We have seen wide variation between the two assumptions of scale, i.e. CRS and VRS. In case of scale efficiency S2, S4, S11 and S16 are efficient. The benchmarking units of the inefficient suppliers are given in Table-5.
Conclusion
When a company attempts to improve the performance of SCM, it is crucial for it to understand the quality of the supply chain network. Hence, the five steps of the six sigma model are designed to facilitate continuous improvement and process control. The continuous improvement itself is a dynamic process of the supply chain network. When multiple dimensions are simultaneously considered in evaluating the overall competence of a supplier, the performance socre of each supplier can be obtained by the PCA method and DEA approach. The average technical efficiency score obtained through CRS model is 0.830 and the average efficiency score obtained through VRS model is 0.944 which is higher than the CRS score. Suppliers with high performance scores are likely to sustain a high level of capabilities, and are better candidates for inclusion in an optimized supplier base. So improvement in the quality of all supply chain processes reduces costs and improves the level of customer services. Future research can be possible by taking different factors relating to the supplier side by the help of multi-criteria decision making approach like Fuzzy Logic and others.
References
Beamon, B.M., & Ware, T.M. (1998). A process quality model for the analysis, improvement and control of supply chain systems. International Journal of Physical Distribution & Logistics Management, 28, 704-715. Charnes.A , Cooper W.W. & Rhodes, E. (1978). Measuring efficiency of decision making units. European journal of Operational Research, 2, 429-444. Choi, T.Y., & Rungtusanatham, M. (1999). Comparison of quality management practices: across the supply chain and industries. The Journal of Supply Chain Management, 35, 20-27. Croom, S.R., Romano, P. & Giannakis, M. (2000). Supply Chain Management: An analytical framework for critical literature review. European Journal of Purchasing and Supply Management, 6, 67-83.
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Despotis, K., Smirlis, G. (2002). Data envelopment Analysis with Imprecise Data. European Journal of Operational Research, 140, 24-36. Foker, L.B., Mendez, D., & hershauer, J.C. (1997). Total Quality Management in Supply Chain: what is its impact on performance?, International Journal of Production Research, 35, 1681-1701. Harland, C. M., Lamming, R. C. & Cousins, P. D. (1999). Developing the concept of supply strategy, International Journal of Operations and Production Management, 19, 650-673. Houshmand, A. A., & Rakotobejoel, T. (2001). Integrating the supply chain management and continuous quality improvement approaches by use of the integrated supply chain structural analysis method, Quality Engineering, 13, 91-106. Hill, C. W. L. (1990). Cooperation, Opportunism, and the invisible hand: Implications for transaction cost theory, Academy of Management Review, 15, 500-513. Kamath, R. R., and liker, J.K. (1994). A second look at Japanese product development, Harvard Business Review, 72, 155-170.
La Londe, B.J. (1998). Supply chain evolution by the numbers, Supply Chain Management Review, 2, 7-8. Matthews, J., Pellew, L., Phua, F., & Rowlinson, S. (2000). Quality relationships: partnering in the construction supply chain. International Journal of Quality & Reliability Management, 17, 493-510. Ramanathan, R. (2001). A Data Envelopment Analysis of comparative performance of schools in Netherland. Opsearch, 38 (2), 160-182. Romano, P., & Vinelli, A. (2001). Quality management in a supply chain perspective: strategic and operative choices in a textile apparel network. International Journal of Operations and Production Management, 21, 446-460. Simchi-Levi, D., Kaminsky, P., & SimchiLevie, E. (2000). Designing and Managing the Supply Chain- Concepts, Strategies and Case Studies: McGraw Hill, New Delhi. Talluri, Srinivas. (2000). Data Envelopment Analysis: Model and Extension. Decision Line, 8-11. Thorelli, H. (1986). Networks between markets and hierarchies. Strategic Management journal, 7, 37-51.
2009
Joseph Omotayo Oyeniyi, Joachim Abolaji Abiodun
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SWITCHING COST AND CUSTOMERS LOYALTY IN THE MOBILE PHONE MARKET: THE NIGERIAN EXPERIENCE
Abstract
Switching cost is one of the most discussed contemporary issues in marketing in attempt to explain consumer behaviour. The present research studied switching cost and its relationships with customer retention, loyalty and satisfaction in the Nigerian telecommunication market. Based on questionnaire administered to customers in the mobile telecommunication industry; the study finds that customer satisfaction positively affects customer retention and that switching cost affects significantly the level of customer retention. However, the effect of switching barriers on retention is only significant when customers consider to exit.
Oyeniyi O. J., Abiodun A. J. - Switching Cost and Customers Loyalty in the Mobile Phone Market: The Nigerian Experience
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Introduction
Switching costs are costs that are incurred by buyers for terminating transaction relationships and initiating a new relation. Porter (1980) defined Switching cost as a one time cost facing a buyer wishing to switch from one service provider to another. Jackson (1985), however, defined switching cost as the psychological, physical and economic costs a customer faces in changing a supplier. Jacksons definition reflects the multi-dimensional nature of switching cost, especially as relates to the telecommunication industry In the telecommunication sector there are a number of critical costs that must be considered when switching. These includes the costs of informing others of the change (friends, colleagues and business associates), the cost of acquiring new lines, cost associated with breaking long standing relationships with a service provider, cost of learning any new procedures in dealing with the new service provider and cost of finding new service provider with comparable or higher value than the existing firm. Apart from these there is time and psychological effort of facing uncertainty with the new service provider (Dick and Basu, 1994; Guiltina, 1989).. Consequently, switching cost is more pronounced in mobile telecommunication because mobile telecommunication companies spread high fixed costs over an installed customer base. Departing customer, therefore, lowers future revenue streams, but not fixed costs. Even for new customers, it is argued that it costs more to acquire new customers than to prevent them from defecting (Zeithaml, Berry and Parasuraman, 1996). An inquiry into customers deflection and its attendants cost promised to be a profitable exercise. Therefore, the objective of this study is to examine, on the strength
of empirical evidences, the relationship between switching costs and customers loyalty. We are also concerned with the effect of switching barriers on the relationship that exist between customers satisfaction and retention.
Literature Review
Switching cost had been investigated extensively in literature. It is argued that switching is related to poor service quality in banks (Benkenstein and Stuhlreier, 2004); reaction to high price (Gerrard and Cunnininggham, 2004); and customer satisfaction (Bowen and Chen, 2001).Some other researchers, however, had different argument. There is an argument in literature of the benefits of switching cost to prevent consumers from switching service providers (Ganesh, Arnold and Reynolds, 2000; Keaveney and Parthasarathy, 2001). In terms of classification, Burnham, Frels and Mahajan (2003), classified switching cost as procedural switching costs, financial switching costs, and relational switching costs. These costs were found to be negatively correlated to consumers intention to switch service providers. Klemperer (1995) developed three types of switching cost: artificial cost, learning cost and transaction cost. In utility, however the most appropriate cost is the transaction cost. A consumer must be aware that he can switch service providers before he takes steps. The next step is to decide whether to search and then whether to switch. The effect of customers defection or switching could be significant on revenues and service continuity. Therefore, to reduce the level of customers switching to other service providers in a dynamic competitive environment, service providers develop strategies to respond to consumers switching cost (Farrell and Shapiro, 1988;
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Zauberman, 2003). More importantly, time is found to be a critical factor that influence consumers switching costs and lock-in (Zauberman, 2003). Empirical evidence, however, showed that reducing customer defections by five per cent increased profit by seventy five per cent and that defections have a stronger impact on profitability than market share, unit costs and many other factors usually associated with competitive advantages (Reichheld and Sasser, 1990). Furthermore, a number of factors have been identified in literature as determinants of switching costs some of these are: poor service quality (Yavas, Benkenstein and Stuhldreier, 2004); price (Gerrard and Cunningham, 2004); customer dissatisfaction (Bowen and Chen, 2001). Research evidences indicate that customers can stay with a service provider when they perceived the service quality to be high and behave conversely when the service is perceived to be low (Keaveney, 2001; Jones and Sasser, 1995). Roos, Edvardsson and Gustafsson (2004) and Gerrard and Cunningham (2004), however found that price has an overwhelming effect on switching cost in insurance and banking industries. Brand trust is also found to increase customers commitment and this makes customers propensity to switch weaker (Morgan and Hunt, 1994). Other reasons identified in literature to influence switching cost include seeking variety (Givon, 1984), impulse (Stern, 1962) and situational context (Skoglam and Siguaw, 2004). Jones, Mothersbaugh and Beatty (2000) and Sharma and Patterson (2000) suggested that switching costs are determinants themselves in determining switching. Bumham, Frels and Mahajam (2003) investigation in cross- industry indicate that switching cost such as monetary loss and uncertainties with the new service provider
deter consumers from switching to other service providers despite dissatisfaction. Reference and peer group expectations, norms and pressure for conformity could also discourage customers from switching through peers, expectation, norms and conformity (Yi and Jeon, 2003). This present study is based on the subscription market. Consumers subscribe to mobile services with no initial intention to switch, and they are expected to remain loyal until some factors trigger them to switch. It appeals to reason to suggest that customers loyalty is should be highly influenced by customer satisfaction. This is because customers with higher satisfaction tend to use the service continuously. However, studies showed that customer satisfaction is not enough to explain customer retention despite the fact that it is an important factor in customer retention (Anderson, 1994; Jones et al. 2002).Therefore, the transition from loyalty to switching is determined by changes in the numerous underlying factors. Based on the above the following is proposed:
Hypothesis 1: Customer satisfaction has positive effect on the customer retention

Switching cost is identified as a main cause of customer retention (Bumham, Frels and Mahajam, 2003).In addition, increase in switching cost leads to increase in risk and burden of the consumers as well as the high dependency on the service provider (Jones et al. 2000; Morgan and Hunt, 1994). There are a number of benefits for a long term relationships between a company and the customers, such benefits include fellowship, personal recognition, reduction in anxiety and credit, discount and time-saving and customer management (Berry, 1995; Peterson, 1995). From the above it can
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be inferred that interpersonal relationship between the company and the customer is as important as switching cost. The possibility of a customer switching service provider in the light of the distinguished image of the available alternatives is low (Jones et al, 2000). Where the alternatives are attractive, it becomes a component building of switching barrier. From the above it can is proposed as follows:
Hypothesis 2: The switching barrier will have an effect on the customer retention
Customer satisfaction is an important factor for the customer retention but not a sufficient one (Jones, et al. 2000). Evidences exists that switching barrier has direct effect on the customer retention and adjusts the relationship between the customer satisfaction and the customer retention (Lee et al., 2001; Jones, et al. 2001). Therefore, the switching barrier can have an influence on customer retention with the interaction with the customer satisfaction. Therefore we proposed:
Hypothesis 3: Switching barrier will have an adjustment effect on the relationship between the customer satisfaction and the customer retention.
Materials and Methods The study design utilized for this study is the survey research method. Customers of the three major mobile telecommunication firms in Nigeria were sampled for the study. According to the Nigerian Communication Commission the mobile telecommunication companies used for this study control over 70% of the telcom mobile market in Nigeria. However, the study is limited to customers of
these mobile telecommunication companies in Lagos, Nigeria. Lagos is Nigeria commercial nerve center with a population of over 10 million people. It is former federal capital with high level of population density. All the telecommunication mobile companies used for this study have their headquarters in Lagos. Thus, the fact that it represents a substantial part of business activities in Nigeria may be an excuse for this apparent limitation. A convenient sample size of 1000 was chosen, 300 were returned, and 37 rejected because of large unfilled parts of the questionnaire, as such 263 were used for this study. This results in a 26.30 per cent response rate. The research instrument used was a structured questionnaire. The design of the questionnaire benefited from extant literature dealing with the effects of switching cost and barrier on consumer retention. Specifically, the following works were used Berne, et al (2001) and Colgate, et al (2001). The research instrument attempted to isolate among others emphasis on consumer satisfaction, retention, emphasis on switching barriers, and recovery strategies. The study used a 5-point Likert scales ranging from strongly agree to strongly disagree. The questionnaire was divided into two main sections. Section A dealt with the dimensions of switching barriers; section B dealt with the retention strategies. The entire questionnaire was subjected to face validity. Senior university academics specializing in marketing validated the instrument. Relevant research literature was used for the content validity of the study (Shoham and Kropp 1998). The comment of these academics led to a number of changes in the instrument. The data for the study was analyzed using the SPSS computer package. The hypotheses were tested with multiple regression analysis. The suitability of
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the data on switching cost and retention measure for factor analysis was assessed using Bartletts test of sphericity (p=0.000) and Kaiser-Meyer-Olkin (KMO) Measure of Sampling Adequacy for company A (0.859); company B (0.680) and company C (0.590) . This means that the data-set for this measure could be considered adequate for the application of factor analysis (Kaiser, 1970; Kaiser and Rice 1974; Stewart 1981; Hart, Webb and Jones, 1994). The factor analysis for the data of the three companies studied using specific service quality dimensions are shown in table 1.
Table 1: Factor Analysis for Service Quality mensions
Dimensions Component 1 Component 2 Component 3
validity, as unreliable research measures lessen the correlation between research measures (Peter, 1979). The evaluation of the magnitude of reliability of coefficient does not have any stringent rule. Nunnally (1967) made certain suggestions: modest reliability coefficient in basic research should range between 0.50.6 and for applied research a reliability coefficient of 0.9 is desirable standard. The results of these analyses are shown in the tables below Bivariate frequency distribution of the respondents, according to age, gender and length of usage was presented. Descriptive statistics were computed to examine different levels of satisfaction.
Results and Discussions

Table 2 shows the distribution of respondents age, sex and length of usage. The following sub-sections provide the discussion of the respondents profile. Gender: the gender distribution of the respondents was skewed towards the female. o167 (67.07%) of the respondents were female while 82 (32.93%) were male. Age: Majority of the respondents are within the working class age bracket with only 17 (7.2%) and 28 (11.2%) outside official working age group. Though it was not part of the objective of this study it can be inferred that majority of the respondents are persons with a means of livelihood. Only 7.2% of the respondents are less than 18 years of age.
Reliability Assurance Empathy Loyalty Exit
.573 .710 .533 .633 .684
.874 .827 .814 .757 .730
.724 .768 .674 .695 .710
Construct validity of switching cost construct was also ascertained by conducting a factor analysis following research approach of Deshpande (1982). There were significant intercorrelations among some of the switching cost variables, factor analysis was undertaken to identify a set of underlying dimensions (Kim and Lim (1988). The sample size is relatively large certain criteria of factor analysis were met. It was suggested that at least 50 respondents are required for factor analysis (Hair, et al. 1979). Data from three mobile telecommunication companies were subjected to Cronbachs alpha analysis to determine the reliability of the research measures. Cronbachs alpha coefficient served as additional evidence of convergent validity (McColl-Kennedy and Fetter (1999). Reliability is a condition for
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Table 2: Background of the Respondents

Frequency Percent
Gender Male Female Age group (years) <18 19-25 25-34 35-44 +45 Marital Status Single Married Divorced Single Parent Length of Usage (years) One Two Three Four Five Six 52 73 45 18 22 40 20.8 29.2 18 7.2 8.8 16 66 81 52 51 26.4 32.4 20.8 20.4 17 38 85 81 28 7.2 15.2 34 32.4 11.2 82 167 32.93 67.07
A relatively large sample was used for this study (263), therefore, there is no question of normality of data since Central Limit Theorem could be applied. Nonexistence of Muticollinearity is assessed in normality test of the SPSS. Table 3 shows the tolerance test for the independent variables through Collinearity in SPSS. The tolerance values are quite respectable i.e. > 0.01 or not less than 1.00. One other method of testing multicollinearity is estimating Variance Inflation Factor (VIF). As a rule of thumb, if VIF exceeds 10, the variable is highly collinear and could pose a problem to regression analysis. From table 3 all the variables have VIF values of less than 10. The VIF values range between 1.598 and 2.037. Regression Results: After examining the multicollinearity and normality of our variables multiple regression analysis was conducted using loyalty as the dependent variable. The results of the multivariate regression allow us to assess the relationship between a dependent variable (loyalty) and several independent variables. The results are shown in table 4 below
Table 4: Model Summary(b)
Model R R Square Adjusted R Square Std. Error of the Estimate
Length of usage: More than 80% of the total respondents have used their mobile phones for more than a year. However, a significant percentage of the respondents started to use mobile phones in the last two years: one year 52 (40.8%) and two years 73 (29.2%).
Table 3: Test of Collinearity
Variable Tolerance VIF
.688(a)
.473
.469
.35113
Predictors: (Constant), assurance, reliability Dependent Variable: loyalty 1.630 2.037 1.673 1.961 1.598
Reliability Assurance Exit Empathy Loyalty
.614 .491 .598 .518 .626
The results show that assurance of service and reliability of the service account for 0.473 i.e. 47.3 per cent of customer loyalty, p<0.005. It can be inferred that when customers are satisfied they tend to be loyal. The results of the regression show that
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that assurance and reliability are positively related to customer loyalty. This confirms findings of other studies that loyalty programmes are determinants of switching and loyalty. Customers find loyalty as a switching deterrent (Yi and Jeon, 2003). Therefore, loyalty programmes are meant to lure customers from competitors and to keep them with the firms. To test for the relationships between switching barrier and customer retention, exit is used as independent variable while customer loyalty is the dependent variable. The regression analysis for simple regression is shown in table 5 below. The R2 value is 0.329 (32.9%), p<0.005. This indicates that the switching barriers in place by the mobile telecommunication companies account for only 32.9 per cent loyalty. Switching barriers are critical to loyalty. Several switching barriers are employed by the mobile telecommunication companies e.g. price and service quality. A number of other factors may account for loyalty and customer retention. Table 5 shows that loyalty can only account for 32.9 percent of those that exit from the mobile telecommunication companies. This result contradicts several other findings that relate service quality principally to loyalty (Fornell, 1992; Mittal and Kamakura, 2001)
reliability are independent variables. The results of the regression analysis are shown in tables 6 and 7 below. The R2 is 0.442 i.e.44.2 per cent, p<0.005. That means that switching barrier effect on the relationships between customer satisfaction and customer retention account for about 44.2 per cent. The F-ratio in table 7 is 97.45 when p< 0.001
.665(a)
.442
.438
.46381
Predictors: (Constant), assurance, reliabilty Dependent Variable: exit
Table 7: ANOVA(b)
Sum of Squares Mean Square Model
Regression Residual Total
41.929
20.964 97.454 .000(a) .215
52.920 246 94.849 248
Predictors: (Constant), assurance, reliabilty Dependent Variable: exit
Managerial Conclusion
Implications
and
.574(a)
.329
.327
.39533
Predictors: (Constant), exit Dependent Variable: loyalty
The evaluation of the effects of switching barriers on the relationships between customer satisfaction and customer retention is tested by making exit (switching barrier) dependent variable while assurance and
The major contribution from this study is that switching barriers affect significantly the level of customer retention, and also affect the relationship between customer satisfaction and customer retention. It does seem that switching costs could be used to predict consumers behaviour in the mobile telecommunication sector. Customer satisfaction has positive effects on the customer retention. Thus, manager may need to emphasize total satisfaction programme in an attempt to retain customers in the competitive telecommunication market.
Sig.
df
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However, the moderating role of switching barriers in the relationship between customer satisfaction and retention is indicative that for low involvement services as telecommunication services switching barriers may play a big role in customers retention programme. Managers therefore, must significantly consider switching barriers and dimensions of customer satisfaction when making plans or focusing efforts in customer retention. The study attempts to differentiate the consequences of consumers behaviour in terms of exit and loyalty. However, the effect of switching barriers on consequence is significant only when customers consider to exit. One major area of future research is the role of government policy in creation and removal of switching barriers especially in a developing economy where government participation is crucial.
Perspectives, Journal of The Academic of Marketing Service, 23 (4):236-245 Burnham, T. A., Frels, J. K. and Mahajan, V. (2003), Consumer Switching Costs: A Topology, Antecedent and Consequences, Journal of the Academy of Marketing Science, 32(2): 213-217 Bowen, J. T, and Chen, S. L. (2001), The Relationship Between Customer Loyalty and Customer Satisfaction, International Journal of Contemporary Hospitality Management, 13 (4/5):213-217 Colgate, M. and Lang, B. (2001), Switching Barriers in Consumer Markets: An Investigation of the Financial Services Industry, Journal of Consumer Marketing, 18(4): 332-347 Dick, A. S. and Basu, K. (1994), Customer Loyalty: Toward an Integrated Framework, Journal of Academy of Marketing Science, 22 (2):99-113 Farrell, J. and Shapiro, C. (1988), Dynamic Competition with Switching Costs, Rand Journal of Economics, 19:123-37 Ganesh, J., Arnold, M. J. and Reynolds, K.E. (2000), Understanding the Customer Base of Service Providers: An Examination of the Differences between Stayers and Switchers, Journal of Marketing, 64(3):65-87 Gerrard, P. and Cunninham, J. B. (2004), Consumer Switching Behaviour in the Asian Market, Journal of Services Marketing, 18(3): 215-223 Givon, M. (1984), Variety Seeking Through Brand Switching, Marketing Science, 3(1):1-22
Reference
Anderson, R. E. (1973), Consumer Dissatisfaction: The Effect of Disconfirmed Expectancy on Perceived Product Performance, Journal of Marketing Research,10(1):38-44 Berne, C., and Mugica, J. M. and Yague, M. J. (2001), The Effect of Variety-seeking on Consumer Retention in Services, Journal of Retailing and Consumer Services, 8:335-345 Berry, L. L. (1991), Services Marketing is Different, in B. M. Enis & K. K. Cox (Eds.), Marketing Classics: A Selection of Influential Articles (7th ed.:392-400). Boston: Ally and Bacon Berry, L. L. (1995), Relationship Marketing of Services: Growing Interest, Emerging
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Guiltinan, J. P. (1989), A Classification of Switching Costs with Implications for Relationship Marketing in Children, T. L., Bagozzi, R. P., and Peter, P. J 1989 AMA Winter Educators Conference: Marketing Theory and Practice, Chicago: American Marketing Association: 216-220 Hair, J. F., Anderson, R. E., Tatham, R. L. and Girablowsky, B. J. (1979), Multivariate Data Analysis, Oklahoma: Petroleum Publishing Company Hart, S. J., Webb, J.r. and Jones, M. V. (1994), Export Marketing Research and the Effect of Export Experience in Industrial SMEs, International Marketing Review, 11(6): 4-22 Jackson, B. B. (1985), Building Customer Relationship, That Last Harvard Business Review, Nov/Dec:120-128 Jones, T. O., Sasser, W. E. (1995), Why Satisfied Customers Defect, Harvard Business Review, 73(6): 88-99 Jones, T. O., Moththerbaugh, D. L. and Beatty, S.E. (2000), Switching Barriers and Repurchase Intentions in Services,
Journal of Retailing, 76(2):259-274 Kaiser, H. F. (1970), A Second Generation Little Jiffy, Psychometrica, 35: 401-415 Kaiser, H. F. (1974), Little Jiffy Mark 1V, Educational and Psychometrical Measurement, 34:111-117 Keaveney, S. M. (2001), The Relationship between Customer Loyalty and Customer Satisfaction, Journal of Marketing, 13(2):71-82 Keaveney, S. M., and Parthasarathy, M. (2001), Customer Switching Behaviour in Online Services: An Exploratory Study of the Role of Selected Attitudinal, Behaviour, and Demographic Factors, Journal of Academy of Marketing Science, 29(4): 374-390 Klemperer, P. (1995) Competition When Consumers Have Switching Costs: An Overview with Applications to Industrial Organisation, Macroeconomics and International Trade Review of Economics Studies, 62: 515-539 Lee, M., and Cunningham, F. (2001), A Cost/ Benefit Approach to Understanding Service Loyalty, Journal of Services Marketing, 15(2): 113-130 McCol-Kennedy, J. R. and Fefter, R. E. (1999), Dimensions of Consumer Search
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Behaviour in Services, The Journal of Services Marketing, 13(3): 446-772 Morgan, R. M. and Hunt, S. D. (1994), The Commitment-trust Theory of Relationship Marketing, Journal of Marketing, 58(3):20-38 Nuunally, J. (1978), Psychometric Theory, New York: McGraw-Hill, 2nd ed. Petterson, R. A. (1995), Relationship Marketing and Consumer, Journal of the Academy of Marketing Science, 23(fall): 278-281 Porter, M. E. (1980), Competitive Strategy, New York: Free Press Reichheld, F. F. ans Sasser, W. E. (1990), Zero Deflections: Quality Comes to Services, Harvard Business Review, 68 (Sep/ Oct):105-111 Roos, I., Edvardsson, B., and Gusrafsson, A. (2004), Customer Switching Patterns in Competitive and Noncompetitive Service Industries, Journal of Service Research, 6(3):256-271 Sharma, N. and Patterson, P. G. (2000), Switching Costs, Alternative Attractiveness and Experience as Moderators of Relationship Commitment in Professional Consumer
Services, International Journal of Service Industry Management, 11(5):470-490 Shoham, A. and Kropp, F (1998), Explaining International Performance: Marketing Mix, Planning, and Their Interaction, Marketing Intelligence and Planning, 16(2):114-123 Skoglam, I., and Siquaw, J. A. (2004), Understanding Switchers and Stayers in the Lodging Industry: The Centre for Hospitality Research, Cornell University Stern, H. (1962), The Significance of Impulse Buying Today, Journal of Marketing, 26(2):59-62 Stewart, D. W. (1981), The Application and Misapplication of Factor Analysis in Marketing Research, Journal of Marketing Research, 51-62 Weiss, A. M. and Anderson, E. (1992), Converting from Independence to Employee Saleforces: The Role of Perceived Switching Costs, Journal of Marketing Research, 29(1):101-115 Yavas, U., Benkenstein, M., and Stuhldreier, U. (2004), Relationships between Service Quality and Behavioural Outcomes: A Study of Private Bank Customers in
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Germany, The International Journal of Bank Marketing: 22(2/3), 144-157 Yi, Y., and Jeon, H. (2003), Effects of Loyalty Programmes on Value Perception, Programme Loyalty, and Brand Loyalty, Journal of the Academy of Marketing Science, 31(3):229-240
Zauberman, G. (2003), The Intertemporal Dynamics of Consumer Lock-in, Journal of Consumer Research, 30(3): 405-419 Zeithaml, V. A., Berry, L. L. and Parasuraman, A. (1996), The Behavioural Consequences of Service Quality, Journal of Marketing, 60(2):3146
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2009
Muhammad Masroor Alam, Jamilha Fakir Mohammad
123
LEVEL OF JOB SATISFACTION AND INTENT TO LEAVE AMONG MALAYSIAN NURSES
Abstract
This study investigates the level of job satisfaction and intent to leave among malaysian nurses. The objectives of the study were to examine the level of perceived job satisfaction and intention to leave. Based on the literature reviews an instrument of six facets of job satisfaction and intention to leave was developed to find the level of perceived job satisfaction and intetntio to leave.For this purpose, data from 153 nurses in one of the public sector hospital in Perlis, were used. Findings of this study suggested that the nursing staffs were moderately satisfied with their job in all the six facets of job satifaction i.e i.e. satisfaction with supervisor, job variety, closure, compensation, co-workers and HRM/management polices and therefore exhibits a perceived lower level of their intention to leave the hospital and the job. Based on the findings recommendation and suggestions for health managers and health policy makers are presented.
Masroor A.M., Fakir M. J. - Level of Job Satisfaction and Intent to Leave Among Malaysian Nurses
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Background
Nursing staffs in most medical institutions or private organizations in all corners of the world are probably the most undervalued staff members despite the fact that these are the people who take care of our loved ones around the clock when they are hospitalized. Many of the nurses even take on the responsibilities of the medical supervisors or the doctors in command, and this makes them a very important part of the medical system (International Council for Nurses, 2007; Koonar, 2008). Koonar (2008) further says that in the medical profession, nursing staffs are the one who have variety of jobs to perform and need to juggle with many jobs at many places in the hospital or in medical centers and still are under paid and undervalued. The situation is no different in Malaysia. According to the Malaysian Association of Nurses, until 2009, there were no initiatives taken by the Government of Malaysia to increase the incentive of nurses in Malaysia. However, in 2008 the Malaysian Prime Minister, Badawi gave attention to the nursing profession in Malaysia when the government realizes the importance of the nursing profession to the country and therefore increase the incentives budget for nurses in Malaysia. In any industrial setting, employees work plays an important role for organizational achievements. Therefore, it is highly important for management to recognize employees work and provide them with an opportunity to grow and to look after their well-being. It is true that work has predominantly occupied most of employees time than any other single activities, and it also provides an economic well-being. Therefore, job satisfaction is one of the most important areas of research for many researchers, and as such it is one of the most frequently studies work attitude.
According to Wilson and Rosenfeld (1990) , one major reason for conducting research on job satisfaction is that positive or negative attitudes effects towards work form largely many behaviors in the organizations(as cited in Koustelos, 2001). Malaysia, with a nursing workforce of close to 39,000 and an average of 1.69 nurses, per 1,000 populations in the year 2000, has been placed in the low- density cluster in the world (Soilek, 2006). This indicates that Malaysia has the lowest nurse density in the region or cluster and is believed to be suffering from excessive nurse migration, low job satisfaction, poor retention and high turnover (Casey, Fink, Krugman, & Propst, 2004; Soilek, 2006). The shortage of nurses has always been the major symptom of high turnover in the health care industry (Global Health Workforce Alliance, 2008). Yet, little is known on why Malaysian nurses leave. Therefore this research examines the perceived level of job satisfaction and intent to leave among Malaysian nurses in one of the selected public sector hospital as it relates to job satisfaction. This paper is therefore, presented in the following three sections. Section one discusses the literature review. Section two describes the research approach used in the study and section three presents the findings and the discussion.
Literature Review
According to researchers such as Ajzen and Fishbein (1980) and Igbaria and Greenhaus (1992), intentions are, the most immediate determinants of actual behavior. They are also of practical value from a research perspective, as once people have actually implemented the behavior to quit, there is little likelihood of gaining access to them to understand their prior situation. The validity of studying intentions in the workplace can also be drawn from Sagars
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(1994) longitudinal study of salespeople, in which intention to quit was found to differentiate effectively between leavers and non-leavers. However, while it is reasonable to argue that intentions are an accurate indicator of subsequent behavior, little is known what determines such intentions (Firth, Mellor, Moore & Loquet, 2004). Numerous researchers have attempted to answer the question of what determines peoples intention to quit by investigating possible antecedents of employees intentions to quit (Kalliath & Beck, 2001; Kramer, McGraw & Schuler, 1997). While actual quitting behavior is the primary focus of interest to employers and researchers, intention to quit is argued to be a strong substitute indicator for such behavior. In his study, Moore (2002) found that lack of job satisfaction are among the factors that contribute to peoples intention to quit their jobs; however, it is important both from the hospitals managers and the individuals perspective to understand which factors of job satisfaction are related to intention to quit in nursing profession. Job satisfaction is defined as an attitude that individuals have about their jobs. It is an extent to which one feels positively or negatively about the intrinsic and/ or extrinsic aspects of ones job (Bhuian & Menguc, 2002; Hunt et al., 1985). Job -satisfaction has been an interesting construct for researchers in understanding employee behaviors and attitudes. It is an important work-related attitude in work force research for several reasons (Boles et al., 2003). First, satisfaction with the job is directly related to organizational commitment (Brown & Peterson, 1993). Second, job satisfaction is either directly (Netemeyer et al., 1990) or indirectly (Brown & Peterson, 1994) related to an employees turnover intentions. Turnover intentions are perhaps the best indicator of
future turnover (Futrell & Parasuraman, 1984). Thus job satisfaction can influence a variety of important attitudes, intentions and behaviors in a nursing work force. To accurately measure job satisfaction, a number of characteristics of the job may need to be evaluated if one hopes to obtain a broad measure of employee beliefs and attitudes about the job (Churchill et al., 1974). These characteristics or facets may not be of equal importance to every individual. For example, a nurse may indicate that she is very satisfied with her supervisor, salary and company policies, but is dissatisfied with other aspects of work, such as the actual work itself. Organizational research indicates that employees develop attitudes toward such job facets as work variety, pay, promotion, co-workers, company policies, and supervisors (Johnson & Johnson, 2000; Taber & Alliger, 1995). One of the most comprehensive and widely used measures for job satisfaction is presented by Wood, Chonko, and Hunt (1986) and Purani & Sahadev (2007). In this study job satisfaction is characterized as a multidimensional and it has six major facets namely i) satisfaction with supervisor, ii) satisfaction with variety, iii) satisfaction with closure, iv) satisfaction with compensation, v) satisfaction with co-workers, and vi) satisfaction with management and HR policies. Satisfaction with Supervisor According to Wood et al. (1986), this facet of the job satisfaction determines the level of job satisfaction on the basis of employees perception on how much are they satisfied with the information or guidelines provided to them by their supervisors to carry out their job. Satisfaction with Variety Satisfaction with variety is another dimension of job satisfaction, whereby employees perceive the level of satisfaction
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by having variety of tasks such as challenging but not routine. This also helps them to perceive that there are a lot of opportunities available for them to grow in the organization. Furthermore this dimension also measures the employee perception of job satisfaction through the level of perceived freedom in job. Satisfaction with Closure Satisfaction with closure is the dimension of perceives job satisfaction, which determines how an employee perceives his/her job as a source of opportunity that provides him/her enough opportunity to complete the work from start to finish. Satisfaction with Compensation Compensation is one of the most extrinsic indicators of job satisfaction. This dimension determines the level of job satisfaction of employees by knowing how much they are satisfied with the pay or compensation or any other security their jobs have provided to them. Churchill et al. (1974) consider compensation as one among the dimensions of job satisfaction among sales people. Satisfaction with the compensation plan would therefore inevitably influence a sales persons inclination to leave. However, the extent to which a nurse who is satisfied with the compensation package will stay back would also depend on his/her overall assessment of various factors like the compensation package in other organization in relation to the work load and the possibility of getting better compensation packages. Satisfaction with Co-workers Satisfaction with co-workers is the dimension of perceived job satisfaction, which determines how an employee perceives his/her job accomplishment by the support or the presence of his/her coworkers attitude and behavior such as selfishness, friendly or supportive (Purani & Sahadev, 2007).
Satisfaction with Management and HR Policies A major dimension of job satisfaction that emerged from Purani and Sahadevs research (2007) provided a factor of job satisfaction, which relate to the overall satisfaction with the human resources policies and strategies of the organization. This is often verbalized in terms of such statements like This company always acts for the well being of its personnel or the I am satisfied with the overall working conditions. This is a reflection of the trust in the organizations inclination in favor of its employees. Purani and Sahadev (2007) argued that while issues like supervisory behavior and compensation form part of the micro issues regarding a sales persons engagement with the organization, the overall policies and strategies regarding the personnel is associated with a macro perspective with regard to the persons evaluation of the organization. For instance, even if a particular supervisor is fair and empathetic, if the overall policies of the organization with regard to personnel are not up to the satisfaction level of the nurse, he/she may be inclined to quit.
Job Satisfaction And Intent To Leave

Shortages can be a symptom of low job satisfaction, poor management and lack of organizational support (Zurn et al., 2005). Shortages are resulting in heavy workload, which is a precursor to job stress, and burnout, which have also been linked to low job satisfaction. Nurses job satisfaction is an elusive concept, which is defined within its extrinsic and intrinsic values (Cowin, 2002). Extrinsic values encompass the tangible aspects of the job including wages, benefits and bonuses, whereas intrinsic values include status, recognition, personal and
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professional development opportunities, and other similar factors (Cowin, 2002). Reasons for nurse dissatisfaction have been well documented in the nursing literature. Such reasons include lack of involvement in decision-making, poor relationship with management, low salaries and poor benefits, lack of job security, poor recognition and lack of flexibility in scheduling (Albaugh, 2003). Nurse dissatisfaction has been also linked to emotional exhaustion and burnout, which can affect patient outcomes (Aiken et al., 1997). Job dissatisfaction is a primary predictor of nurses intent to leave (quit their current job) (Shields & Ward, 2001; Tzeng, 2002). A study conducted in the United States presented evidence showing that dissatisfied nurses were 65% more likely to have intent to leave compared to their satisfied counterparts (Shields & Ward, 2001). Other predictors of intent to leave vary from low salaries and fringe benefits, inflexible work schedule (Coomber & Barriball, 2007; Hayes et al, 2006), career advancement prospects (Tzeng, 2002, Rambur et al., 2003), in addition to poor management and job stress (Rambur et al., 2003). Nurses intent to leave linked to situational factors such as family obligations, early retirement (Rambur et al., 2003), and length of service (Larrabee et al., 2003), low levels of motivation, emotional exhaustion and burnout, and to the poor social image of the nursing profession (Tzeng, 2002). It is worth noting that job satisfaction has also been found to be a better predictor of intent to leave as compared to the availability of other employment opportunities (Shields & Ward, 2001; Purani & Sahadev 2007). El-Jardali et al. (2007) also found a negative correlation between job satisfaction and intention to leave in Lebanese nurses. Their studys main objective was to examine the impact of job satisfaction as
a predictor variable on intention to leave used as dependent variable in the study. The finding of the study reveals that the main cause of the dissatisfaction and hence intention to leave was negatively associated with hospitals compensation and incentives (extrinsic rewards). Purani and Sahadev (2007) used a job satisfaction multi-faceted construct as predictor variable and examine its impact on intention to leave among the sales personnel in India. Assuming one of the role as interaction and communication with clients and patient of both profession is common, their study also used experience as moderating variables to examine how working experience could effect the job satisfaction and intention to leave relationship. Purani and Sahadev (2007) found that employees with long stay at workplace had higher level of job satisfaction and would not incline to quit. This finding also suggested that job satisfaction and intention to leave relationship framework must also have other demographic variables consideration into the model of job satisfaction and intention to leave. Pearson and Chong (1997) also examined the impact of job content and job information on organization commitment and job satisfaction among Malaysian nurses in large public sector hospital. They found that job information is stronger predictor to nurses job satisfaction and therefore argued that intrinsic factors such as job information and organization commitment also influence nurses job satisfaction. Despite Pearson and Chongs (1997) insight, they stopped short at job satisfaction and did not examine the consequence of job (dis) satisfaction such as intention to leave. However, they did recommend that satisfaction with information cues available to nurses are crucial to determine nurses job satisfaction which may lead to intent to leave or higher
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job burnout, if not available. Tzeng (2002) examined the impact of working motivational factors as well as job satisfaction factors as independent variables on nurses intention to leave in crosssectional study in Taiwan. He found that low levels of motivation, emotional exhaustion and burnout, and to the poor social image of the nursing profession influenced nurses intention to leave in Taiwans hospitals. This study therefore, suggested that job satisfaction is a multi-faceted construct and should have both intrinsic as well as extrinsic factors to measure job satisfaction (Tzeng, 2002). Next, a discussion on how the research was actually carried out is presented.
was measured in this study is discussed as follows. Job Satisfaction Job satisfaction is defined as the workers appraisal of the degree to which the work environment fulfills the individuals need (Locke, 1976). To measure job satisfaction, the original instrument developed by Wood et al. (1986) and Purani and Sahadev (2007) was used. Six facets of job satisfaction were asked. They are satisfaction with supervisor (4 items), satisfaction with variety (5 items), satisfaction with closure (2 items), satisfaction with compensation (5 items), satisfaction with co-workers (4 items) and satisfaction with the management and HR policies (4 items). The measures of the job satisfaction are the original work of Wood et al. (1986) and also adopted from the work of Purani & Sahadev (2007). These items were rated on a fivepoint Likert type scales ranging from 1 strongly disagree to 5 strongly disagree. The items of respective factors of job satisfaction are computed as average summated score for the data analysis purpose. Intention to Leave Intention to leave is defined as an employees plan of intention to quit the present job and look forward to find another job in the near future (Purani & Sahadev, 2007; Weisberg, 1994). To measure the intention to leave of nurses a three item construct adopted by the work of Jenkins (1993) and Kransz et al. (1995) is used. These items were rated on a fivepoint Likert type scales ranging from 1 strongly disagree to 5 strongly disagree. Respondents were to indicate their level of agreement or disagreement on items such as, In the last few months, I have seriously thought
Research Design And Sampling

To achieve the research objective, a cross-sectional survey of nurses in one of the public hospital in Perlis was carried out. The population of this study comprises registered nurses and those holding a valid Malaysian Nursing Board license to practice nursing in public hospitals. In Perlis, there are 459 staffs or registered nurses currently practicing nursing, and around 404 beds in the Perlis hospital. Nursing officers and head nurses at the sampled hospital in Perils were requested to distribute the questionnaires to nurses fitting the afore-mentioned eligibility criteria. A total of 200 questionnaires were distributed, and a total of 173 were returned resulting in an overall 86.5% response rate. However only 153 (76.5%) were found completed, and considered for data analysis.
Instrumentation
This study involves two important variables. The job satisfaction while and intention to leave. Each of how the variable
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about looking for a new job,, Presently, I am actively searching for other job and I intend to leave the organization in the near future. The items of respective factors of intention to leave are computed as average summated score for the data analysis purpose. Demographic Information In addition to the above questions, respondents were also asked to provide their personal information such as age, gender, education profile, ethnicity, marital status, and income and length of working experience. These items were generally measured on a categorical scale.
Reliability Testing
To measure the reliability of the instruments used, Cronbachs alpha is employed. According to Sekaran (2005), if the Cronbachs alpha is less than .6, this means that the instrument used has a low reliability (and thus opens for some errors). If the alpha value is within .7, the instrument has acceptable
Background Of Respondents
Table I presents the respondents background. The overall profile of the participating respondents demographic characteristics is presented in Table 5.1. Out of 153 respondents, 143 (93.5%) were female and only 10 (6.5%) were male nurses. This finding indicates that female nurses mainly dominate the nursing profession. The distribution of ages of the participating nurses ranged between 22 to 45 years. The average age of the respondent nurses was 27.5 years. The mean age distribution indicates that in the hospital nurses are young, which further suggests that young
girls are keen to join the nursing workforce in Malaysia. As far as the academic qualification of the participating nurses is concerned, all of them hold a diploma level qualification. Diploma in nursing is the minimum qualification to join the nursing workforce in Malaysia; therefore it further suggests that the participating nurses fulfilled the minimum requirement to become the registered nurses as per Malaysian Nursing Board regulations to practice nursing. The majority of the participating nurses are Malay (90.8%). The rest of the respondents are Indian (3.3%), Chinese (2.6%) and the rest belong to other ethnic origin (3.3%). The findings of the ethnic origin of nurses indicates that in the Perlis hospital, the majority of nurses are Malays and this confirms the fact that most nursing jobs in public hospitals are filled by Malays and less number of other races are getting into nursing profession in government hospitals. The majority of the respondents (66%) were married, while the rest are reported as single. Out of 153 respondents, 73 (47.7%) of them have been working in the hospital between 2 and 5 years, while 34.6% between 6 and 10 years, and 13.1% for less than a year. Only a small number of them have been working between 11 and 15 years (4.6%). In general, the profile of the respondents of this study seems to mirror the general population of all staff nurses at Hospital Perlis Malaysia. Hence, there is no reason to suspect that the findings of the present study are not generalizable to the overall population.
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Table I Respondents Background (n = 153)

Frequency Percentage
Gender Male Female Marital status Married Single Ethnic Origin Malay Chinese Indian Others 0 -1 2-5 6 - 10 11-15 More than 15 Level of education Diploma Job Title Staff Nurses Age 153 Mean = 27.05 100.0 SD = 3.696 153 100.0 139 4 5 5 20 73 53 4 3 90.8 2.6 3.3 3.3 13.1 47.7 34.6 2.6 2.0 101 52 66.0 34.0 10 143 6.5 93.5
Working experience (in years)
Reliability Analysis
According to Sekaran (2005), if the Cronbachs alpha is less than .6, this means that the instrument used has a low reliability (and thus opens for some errors). If the alpha value is within .7, the instrument has acceptable. The internal consistency reliability coefficients (Cronbachs alpha) for the scales used in this study are all well above the level of 0.7, acceptable for the analysis purpose (Sekaran, 2005)
with job variety, satisfaction with closure, satisfaction with compensation, satisfaction with co-workers, satisfaction with HR/ Management policies and intention to leave. As can be seen from the table II, the respondents generally perceived that they were satisfied with their supervisor at moderate level (mean = 3.248, SD = .701). With respect to job variety, in general they also indicated moderate level of satisfaction (mean = 3.276, SD = .658). With regard also to perceived level of closure, the respondents felt that the opportunity to finish their job in hospital (mean = 3.346, SD = .723). With respect to compensation, in general they also indicated moderate level of satisfaction with compensation (mean = 3.319, SD = .652). With regard also to perceived level of co-workers, the respondents felt a comparatively higher level of satisfaction with their co-workers in hospital (mean = 3.488, SD = .528) As well as with respect to hospitals management/HR polices, the respondents perceived a relatively lower level of satisfaction (mean = 3.186, SD = .772). Finally the respondents (mean = 2.573, SD = 1.199) on a fivepoint scale for intention to leave indicates that most of the nurses are neither bent on leaving nor staying,
Table II Descriptive Statistics of Variables (n = 153)
Items1
Satisfaction with supervisor Satisfaction with job variety Satisfaction with closure Satisfaction with compensation Satisfaction with co-workers Satisfaction with HR/MGM policies Overall satisfaction Intention to leave
Mean
Standard Deviation (SD)
3.248 3.276 3.346 3.319 3.488 3.186 3.310 2.573
.701 .658 .723 .652 .528 .772 .672 1.199
Findings
Table II highlights descriptive statistics of the main variables of the present study, i.e. satisfaction with supervisor, satisfaction
Note. 1 = strongly disagree, 2 = disagree, 3 = disagree nor agree, 4 = agree, 5 = strongly agree.
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In the following section, each variable will be examined in greater details as to what means in relation to the mean value found earlier.
Table III Descriptive Results of satisfaction with supervisor (n=153)
Items1 Mean SD
Table III Continued

Items1 Mean SD
I received with the security my job 3.326 .785 provides me. I am satisfied with the retirement 3.355 .847 benefits. Total Mean (Compensation) 3.319 .675
Descriptive Results of Satisfaction with Co-Workers (N = 153)
I am satisfied with the information I 3.143 receive from my superior about my job performance There is enough opportunity in my job 3.202 to find out how I am doing. I receive enough feedback from my 3.287 supervisor on how well I am doing. I receive enough information from my 3.359 supervisor about my job performance. Total Mean (Supervisor) 3.248
.854
My fellow workers are pleasant. My fellow workers are not selfish.
3.241 .744 3.248 .746
.663 .817 .900 .809 .643 .646 .804 .854
The people I work with help each other 3.725 .641 out when someone falls behind or gets in a tight spot. The people I work with are very 3.738 .686 friendly. Total Mean (Co-workers) 3.488 .712
Descriptive Results of Satisfaction with HR/Management Policies (n = 153)
Descriptive results of Satisfaction with Job Variety (n = 153)
My job has enough opportunity for 3.183 independent thought and action. There is enough variety in my job. 3.189 I have enough freedom to what I want 3.300 in my job I am satisfied with the freedom I have 3.313 to do what I want on my job.
Hospital management has a clear path 3.091 .996 for nurse's advancement. Physical working conditions are 3.143 .729 supportive in attaining quality of care Management is extremely fair in 3.202 .899 personal policies. Decisions are made keeping in mind 3.326 .880 the good of the nurses. Total Mean 3.191 .876
Descriptive Results of Intention to Leave (n = 153)
I am satisfied with the variety of 3.333 .827 activities my job offers. I am satisfied with the opportunity 3.339 .812 my job provides me to interact with others. Total Mean (Job variety) 3.276 .764
Descriptive Results of Satisfaction with Closure (N = 153)
Presently, I am actively searching for 2.300 1.176 other job. In the last few months, I have seriously 2.594 1.295 thought about looking for a new job. I intend to leave the organization in 2.823 1.429 the near future. Total Mean 2.572 1.300 Note. 1 = strongly disagree, 2 = disagree, 3 = disagree nor agree, 4 = agree, 5 = strongly agree
My job has enough opportunity to 3.307 .755 complete the work I starting to end. I am satisfied with the opportunity my 3.385 .796 job gives me to complete tasks from beginning. Total Mean (Closure) 3.346 .775
Descriptive Results of Satisfaction with Compensation (N = 153)
Discussion
Referring to table III for the details of the level of each variables of job satisfaction, four items were used to measure nurses perceived satisfaction with supervisor and that on average the respondents are satisfied with their supervisors in the hospital. Table III 5.4 highlights the descriptive statistics for
Overall I am satisfied with the 3.294 .760 company's compensation package. I am satisfied with the medical benefits. 3.307 .861 I am satisfied with the holiday 3.313 .799 (vacation) eligibilities.
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each item. Out of the four items, receiving enough information from supervisors shows the highest mean value of 3.59 (SD = .900), followed by getting feedback from the supervisors on how well the performance is being offered (mean = 3.287, SD = .817), enough opportunity for nurses to find how they are doing their jobs (mean 3.202, SD = .663), and satisfied with the information about job performance (mean = 3.143, SD =.854). In general, the respondents appear to have moderate satisfaction with their supervisor with respect to the feedback they receive about their job performance. As far as the satisfaction with job variety is concerned, six items were used to measure nurses perceived satisfaction with job variety and that on average the respondents are satisfied with job variety in the hospital. Table III highlights the descriptive statistics for each item. Out of the six items, the opportunity to interact with people shows the highest level of satisfaction (mean = 3.333, SD =. 812), followed by the satisfaction with job variety and the activities (mean = 3.333, SD = .827). Similarly freedom opportunities while doing jobs are also perceived at moderate level (mean = 3.300, SD = .804). Satisfied with the freedom nurses have to do what they want on job (mean = 3.313, SD = .854), while enough freedom to do work (mean = 3.300, SD = .804), enough variety in job (mean = 3.189, SD = .646), however, nurses perceived the lowest satisfaction with the availability of the independence thought and action (mean = 3.183, SD = .643). In general the overall mean on this dimension (mean = 3.276, SD = .764) also indicates that nurses perceived level of satisfaction with job variety in the hospital is at just moderate level. As indicated earlier, two items were used to measure nurses perceived level of satisfaction with closure. And that on average the respondents perceived satisfaction with
closure (mean = 3.346, SD =. 775). By looking to table III, descriptive statistics for each items of the measure. The statistics in table III indicates that satisfaction with the opportunity nurses jobs give them to complete tasks from begin (mean = 3.39, SD = .796) and nurses perceived level of satisfaction with enough opportunity to complete the work from start to end (mean = 3.307, SD = .775). This indicates that hospital has provided enough opportunities and procedures to support nurses tasks to complete from start to end effectively. Satisfaction with Compensation As indicated earlier, five items were used to measure satisfaction with compensation. And that on average the respondents perceived level of satisfaction with compensation was reported on average (mean = 3.319, SD = .675). Table III highlights the descriptive statistics for each item. Out of the five items, the satisfaction with retirement benefits receives the highest mean value (mean = 3.355, SD =. 847), followed by the satisfaction with the security (mean = 3.326, SD = .785). Similarly satisfaction with holidays and vacation are also perceived at moderate level (mean = 3.313, SD = .799). Satisfied with the medical facilities and benefits reported (mean = 3.307, SD = .861), while an overall satisfaction with the compensation package receives the lowest mean value (mean = 3.294, SD = .760). In general this statistics indicating that nurses perceived level of satisfaction with compensation is also at moderate level. Satisfaction with Co-workers As indicated earlier, four items were used to measure satisfaction with Co-workers. And that on average the respondents
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perceived level of satisfaction with coworkers was reported on average (mean = 3.488, SD = .712). Table III highlights the descriptive statistics for each item. Out of the four items, nurses have felt that the co-workers are friendly at relatively higher level, and receive the highest mean value (mean = 3.738, SD =. 686), followed by the satisfaction with the co-workers, who are perceived as helping (mean = 3.725, SD = .641). co-workers are not selfish also receive the mean value at moderate level (mean = 3.248, SD = .746). Satisfaction with the feeling of looking co-workers as pleasant receives the lowest mean value (mean = 3.241, SD = .744). In general this statistics indicates that nurses perceived level of satisfaction with co-workers is relatively at higher level. Satisfaction with HR/Management Polices As indicated earlier, four items were used to measure satisfaction with HR/ Management policies and that on average the respondents perceived level of satisfaction with HR/Management polices was reported on average (mean = 3.191, SD = .876). Table III 5.9 highlights the descriptive statistics for each item. Out of the four items, the satisfaction with decisions are made keeping in mid of the good for nurses reported the most highest level of satisfaction on this dimension (mean=3.326, SD=.880), followed by the satisfaction with management fairness in personnel policies for nurses (mean=3.202, SD=.899). Similarly satisfaction with working conditions suitable for attaining goals and quality care are also perceived at moderate level (mean = 3.143, SD = .729). While an overall satisfaction with the HR policies in terms of nurses advancement receives the lowest mean value (mean = 3.019, SD
= .996). In general this statistics indicating that nurses perceived level of satisfaction with HR polices is also at moderate level. Intention to Leave As indicated earlier, intention to leave is reflected in the way the respondents relate their behavior to job satisfaction. As indicated earlier, three items were used to measure the nurses intention to leave. And that on average the respondents perceived level of intention to leave was reported on average (mean = 2.572, SD = 1.300). Table III highlights the descriptive statistics for each item. Out of the three items, the intention to leave the hospital in the near future receive the most highest mean value (mean =2.283, SD= 1.429), followed by the intention to leave the current job in the last few month (mean = 2.594, SD =1.295). While an overall serious effort for searching a new job receives the lowest mean value (mean = 2.300, SD = 1.176) In general this statistics indicating that most of the nurses are neither bent on leaving nor staying in the hospital. The objective of this study was to examine the level (score) of nurses perceived job satisfaction and their intention to leave. It is found that the mean scores of all six facets of job satisfaction range between 3.18 3.48. This indicates that nurses satisfaction with the six facets of job satisfaction is at moderate level on a five-point scale. The moderate level of perceived job satisfaction is an indication that the nurses under study are not fully satisfied with their job. With regard to intention to leave, the mean value of 2.57 on a fivepoint scale indicates that the nurses are neither bent on leaving nor staying. In other words, there is a strong intention to neither stay with the hospital nor leave it. However these finding further suggests that it is highly likely that
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some nurses in the hospital would intend to leave in the future, because of their perceived lower level of job satisfaction (Shields & Ward, 2001).
Reseach Implications
Based on the findings of the level of job satisfaction in five facets and the intention to leave , following are the implication of this research for the hospital administrator and policy makers for highly motivated nursing workforce. Nursing HR Management Systems Health care managers and policy makers should develop and institutionalize targeted nurse recruitment and retention strategies by taking into consideration the predictors of nurses intent to leave the hospital. Rather than having a generic policy that applies to all nurses, the findings of this study suggest that retention policies should be sensitive to the needs and interest of nurses with high risk of leaving. For example in this study it found that compensation and closure are two highly demanding satisfaction factors which may cause Malaysian nurses to leave the hospital and eventually force them to migrate to those hospitals where compensation and satisfaction with opportunity to complete the job is viable choice. Leadership/Supervisor Roles The hospital leadership ands supervisors role is crucial for nurses satisfaction. This study finding suggests that the level of supervisors feedback and their leadership role is perceived at a very moderate level and thus needs improvement. The intention of leave is behavior and has always been influenced by the leader or supervisors role. Therefore, a suggestion in this case is
given to hospital management to encourage supervisors and nurses relationship for better and effective workplace, provide supervisors training on motivational and leadership strategies and teamwork effectiveness. Opportunities though Job Variety The study findings indicate that the perceived level of higher job variety in terms of options such as job enlargement, job enrichment, should be considered. Job enlargement can be used (by hospital managers) to make work more interesting (for nurses) by increasing the number and variety of activities performed. Job enrichment can used to make-work more interesting and increase pay by adding higher-level responsibilities to a job and providing monetary compensation (raise or stipend) to nurses for accepting this responsibility. These are just two examples of an infinite number of methods to increase motivation of nurses at the hospital. The key to motivating hospital nurses is to know what motivates them and designing a motivation program based on those needs to minimize their intention to leave. HR/Management Polices in Hospital for Lower Turn Over Human Resource Management policies towards nursing and health care staff in the hospital must improve to minimize the nurses intention to leave. The policies are crucial strategic short-term decisions, which help to achieve organizational long-term objectives such as low turn over. Fairness in performance appraisals, commitment to nurses career development through trainings, development of flexible yet ethical nursing environment for effective and quality nursing services are among few
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of the policies must develop in the hospital and should be aligned to overall objective of the hospital. The outcome of these policies will ensure highly motivated and satisfied nursing work force, would more likely to stay in the current job rather to intend to leave.
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equations test. New Zealand Journal of Psychology, 30(2), 72-78 Koonar, K. (2008). Nursing AssistantAn Intergal Part of the System, http:// rnnurseschools.com/tag/assistant/ . Reterived on Feburary , 2009. Koustelos, A.D. (2001). Personal characteristics and job satisfaction of Greek teachers. The International Journal of Education Management, 15 (7), 354358. Kransz, M., Koslowsky, M., Shalom, N., & Elyakim, N. (1995). Predictors of intentions to leave the ward, the hospital, and the nursing profession: a longitudinal study. Journal of Organisational Behaviour, 16 (3), 277-288. Kramer. R., McGraw, P., & Schuler, R.S. (1997). Human Resource Management in Aus tralia, South Melbourne, Australia: Addison Wesley Longman Larrabee, J.H., Janney, M.A., Ostrow, C.L., Withrow, M., Hobbs, G.R., & Burant. C. (2003). Predicting Registered Nurse Job Satisfaction and Intent to Leave. Journal of Nursing Administration, 33, 271-283. Locke, E.A. (1976). The nature and causes of job satisfaction, in Dunnette, M.D. (Ed.), Handbook of Industrial and Organizational Psychology (1st ed). Chicago: I Rand McNally. Moore, J.E. (2002). One road to turnover: an examination of work exhaustion in technology professionals, MIS Quarterly, 24 (1), 141-168. Netemeyer, R.G., Johnston, M.W., & Burton, S. (1990). Analysis of role
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Health Malaysia, at the United Nations world aids day. Reterived on April, 2009 fromhttp://72.14.235.132/ search?q=cache:67pmZCRGDiIJ:www. moh.gov.my/MohPortal/ Taber, T.D., & Alliger, G.M. (1995). A tasklevel assessment of job satisfaction. Journal of Organizational Behavior, 16 (2), 101-21 Tzeng, H.M. (2002). The influence of nurses working motivation and job satisfaction on intention to quit: an empirical investigation in Taiwan. International Journal of Nursing Studies, 39, 867878 Wilson, C., & Rosenfeld, H. (1990), Managing Organizations. McGraw-Hill. Wood, V.R., Chonko, L. B., & Hunt, S. (1986). Social Responsibility and Personal Success: Are they Incompatible?. Journal of Business Research, 14, 193-212 Zurn, P., Dal Poz, M.R., Stillwell, B., & Adams, O. (2004). Imbalance in the health workforce, Human Resources for Health, 2 (13). Zurn, P., Dolea,C., & Stillwell, B. (2005). Nurse retention and recruitment: developing a motivated workforce, In The Global Nursing Review Initiative. International Council of Nurses, 6.
Social Responsibility Research Network www.socialresponsibility.biz

Social Responsibility Research Network Who are we? We are an international network of scholars who share similar interests in aspects of social responsibility. Currently we have about 500 members and membership is free. Network officers: Chair of the Network: Professor Dr. David Crowther, De Montfort University, Leicester Business School, The Gateway, Leicester LE1 9BH, UK davideacrowther@aol.com Vice Chair: Professor Dr. Gler Aras, Yildiz Technical University, Institute of Social Science, Yildiz Besiktas 34349, Istanbul, TURKEY guleraras@aol.com What do we do? Conferences 2008 7th conference CSR and SMEs Durham, UK 2009 8th conference CSR and NGOs Pretoria, South Africa 2010 9th conference CSR and Global Governance Zagreb, Croatia 2011 10th conference CSR and the New Economy New Orleans, USA Publications Social Responsibility Journal The official refereed journal of the Network; published 4 times per year by Emerald. Discussion Papers in Social Responsibility An opportunity for early publication of articles. Published when necessary by SRRNet. The Newsletter Published 3 times per year and containing news and opinion pieces. Sent to all members. Research Book Series: Issues in Corporate Behaviour and Sustainability Books published in association with the conferences and given to all conference delegates. Full details of all of our activities can be found from our website www.socialresponsibility.biz If you share our aims then please join us. We look forward to hearing from you.
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Isles Internationale Universit

School of Doctoral Studies
(European Union)
Approved by Charter of The Ministry of Education of the British Isles to act as a chartered University outside of the United Kingdom; with Full Accreditation granted from the Acadmie Europenne dInformatisation; established in Brussels, Belgium by Order of the King of Belgium Albert II, with full recognition from The Ministry of Justice and Research of the Belgian Crown: The Isles Internationale Universit (European Union) has been commended to host the School of Doctoral Studies (EU) in Brussels, Belgium, aiming to accomplish three fundamental missions: Development and enhancement of elite doctoral studies programmes, with cutting edge standards on academic and scientific research; Enforcement of EU analogue quality standards on academic programmes developed by tuition institutions outside the EU area: (a) By evaluating academic methodology applied on learning programmes; (b) By providing full coaching and tutoring support to tuition institutions worldwide to upgrade, assure and maintain academic methodology quality levels on their way towards excellence; and (3) By awarding EUASC Seal (EU Analogue Standards Certification) at corresponding quality levels achieved at each evaluation point; and Ensuring academic EU Analogue Standard by performing: (a) Academic Validation on degrees earned by students at recognised and/or certified tuition institutions located outside the EU area; (b) Double Degree awarding on degrees earned by students at recognised and/or certified tuition institutions located elsewhere the EU area; and (c) Degrees awarding on studies programmes developed by tuition institutions, once certification at higher quality levels on applied academic methodology has been achieved and after collaboration agreement has been executed for these purposes .
In order to achieve its missions, the Isles Internationale Universit has gathered some of the best minds in Europe, who have developed sate-of-the-art doctoral academic programmes, elite research methodology and cutting edge technological tools, and who act as permanent Faculty Members to strictly enforce this toolkits proper application on daily basis. Doctoral Studies The School of Doctoral Studies of the EUs academic structure includes four Departments (Business Management and Economics, Engineering and Technology, Science and Social Science) which host 37 Disciplines, offering PhD studies on practically every main field of human knowledge. Over 355 PhD students are involved in more than 116 cutting edge research projects, most of them being currently developed in collaboration with 12 other universities in the EU area and elsewhere; 94% of these students are engaged on programmes designed to undertake pure research assignment and 6% are required to undertake a research assignment and pursue theoretical studies in the form of seminars or courses. Studies towards a doctoral degree are worth 240 higher education credits (ECTS credits) and require an average of four years of full-time study. The research is intended to lead to a scholarly thesis; writing it will take up most of a students time and all theses are publicly defended. Every doctoral student receives a studies grant for partial or total coverage on full programmes term costs, as well as individual tutoring. Currently, slightly over 72% of all programmes full term costs are covered by studies grants. Science students spend a great deal of time in the laboratory. Some departments may require that the thesis be part of an ongoing project within the department. In the fields of technology and natural science, researchers often work as part of a team. If research findings are reproduced in academic journals the thesis may be a compilation of the published articles. Forward inquiries to: admin@iiuedu.eu
Who are we?

The Universidad del Valle de Mxico (UVM) is one of the largest and most prestigious universities in Mexico. Founded in 1960 and accredited by the Federacion de Instituciones Mexicanas Particulares de Educacion Superior, UVM enrolls students at 32 campuses throughout Mexico. Universidad del Valle de Mxico was founded by a Group of entrepreneurs and academics, led by Mr. Jose Ortega in response to the professional requirements of the Mexican labor market, aiming to provide education with quality: High School Undergraduate Undergraduate for working adults Graduate Continuing Education UVMs mission is to be an institution that fully educates with an equilibrium between sciences and technology, ethics and culture, according to the social needs, in search of truth and welfare. The institutional philosophy and educational model seek to educate in human values, updated knowledge and the acquisition of skills that teach the student to competitively adapt to the labor market. UVM alumni are distinguished by their abilities, knowledge, attitudes, and social skills that are shaped by the identity subjects. UVM is the only global university in Mexico Because of its prestige and quality the UVM is part of Laureate International Universities, the most important network of universities in the world which is integrated by 24 well-known private universities in: Spain, Switzerland, France, Costa Rica, Panama, Honduras, Ecuador, Chile, Peru, Brazil, England, Chipre, China, Canada, US, Germany and Mexico. UVM has 35 campuses throughout Mexico offering 38 undergraduate degree programs in Arts and Humanities, Social Sciences, Economic and Management Sciences, and Engineering; 11 undergraduate degree programs for working adults and 28 graduate programs. UVM has more than 100,000 students and more than 9,000 employees (teachers and staff).
UVM opens its door to the world
UVM students have access to international qualified academic opportunities through programs offered by Laureate International Universities
Summer courses Semester academic exchanges Double degree Graduate studies
Recognitions:

Through its history, UVM has received recognitions that prove its excellence: Academic Excellence - Secretara de Educacin Pblica (SEP). Affiliation - Asociacin Nacional de Universidades e Instituciones de Educacin Superior (ANUIES). Academic Quality Certification - Federacin de Instituciones Mexicanas Particulares de Educacin Superior (FIMPES). Second private university in the country holding the highest figure of academic programs accredited by Consejo para la Acreditacin de la Educacin Superior, A.C. (COPAES). National Registree of Scientific and Technologic Institutions and Enterprises (RENIECYT) - CONACYT. According to the Readers Digest Intelligent Decision Markers (IDM) Guia Universitaria 2008, UVM is one of the best upper education institutions in the country, from a range of over 100 public and private universities.
UVMs faculty training programs
UVMs commitment with its students and with the country is to enhance its academic quality and prepare successful professionals; therefore, it invests in constant training and specialization of its teachers through the Centre for Academic Excellence (CAE).
2008 Year of academic strengthening
UVM trained more than 3.000 teachers and staff in different areas of knowledge between January and September of this year. It also started a program of specialization with postgraduate and doctorate courses, as well as an English program. UVM has identified important public and private upper education institutions in Mexico and abroad, to perform together development and training programs.
Teacher training and professional development
Nearly 2.000 UVM teachers all over the country took the Institutional Teaching and Pedagogy Program with a focus on the correct implementation of the educational model, which underlies the students principles: learn to learn, learn to be, learn to do, and learn to undertake. Also, more than 400 teachers of the 35 campuses took 12 seminars in areas such as: Industrial Engineering, Mechatronic, Animation, Marketing, Management, Communication, Law, Psychology,
Health Sciences and Hospitality. 140 academic leaders of the 6 regions in which UVM has classified its campuses in 15 states of Mexico and Mexico City, are enrolled in the Diplomat in Leadership for Academic Management.
Postgraduate Studies in prestigious institutions
A priority for UVM is to have teachers with postgraduate studies; thus, Walden University, a prestigious on-line upper education institution accredited in the US, has offered scholarships for Master degrees in Education, Management, Information Technologies, Psychology and Systems Engineering.
Sports at UVM go beyond boundaries
UVM considers Sports an important part of the students education. This has allowed some of its students to excel at national and international events. Maria del Rosario Espinoza and Guillermo Perez were both Tae Kwon Do gold medal winners in the Olympic Games of Beijing, China. UVM supports young leaders of projects with social impact From creating eco-tourism opportunities to developing a national hotline to combat domestic abuse, young people in Mexico are using their energy and creativity to improve their communities and country. To support their efforts, Universidad del Valle de Mexico (UVM), joined the Sylvan/Laureate Foundation and the International Youth Foundation in 2006 in creating Premio UVM por el Desarrollo Social (UVM Prize for Social Development). Its goal: to celebrate and support outstanding young Mexican social entrepreneurs. Premio UVM has adapted the YouthActionNet Global Fellowship model to provide a tailormade, culturally-relevant, and Spanish-language centered leadership development experience for 15 young Mexican leaders, ages 18-29, annually. The Premio UVM fellowship strengthens the project management and communications skills of young Mexican leaders, while connecting them to their peers and experts to create a national network of youth leaders affecting positive change.
Student Development
Responsible of the education that students receive, UVM sets special emphasis on the students integral education and the continuous improvement of its faculty. This way, it responds to the expectations and trust of Mexican families and prepares good successful professionals with a global vision, who will acquire the skills and knowledge that the labor market requires. The student development area at UVM has important national and international projects as: Institutional Fair of Entrepreneurs UVM Congress Simulation. United Nations Simulation Model. Congresses. Student Councils.

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Business Intelligence Journal January, 2010 Vol.3 No.

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Business Intelligence Journal - January, 2010 Vol.3 No.1

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European Business School, School of Graduate Studies Cambridge, UK.

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Business Intelligence Journal - January, 2010 Vol.3 No.1

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Article 2: Author: Article 3: Author:

Market Analysis of Students Attitudes about Credit Cards

Customer Experience Management in Retailing

Income Smoothing, Real Earnings Management and Long-Run Stock Returns

Building aWorld Class University

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Article 6: Author: Article 7: Author:

Oil Prices and Exchange Rates:The Case of OPEC

Article 10: Author:

Level Of Job Satisfaction And Intent To Leave Among Malaysian Nurses

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INFORMATION FOR CONTRIBUTORS

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Business Intelligence Journal - January, 2010 Vol.3 No.1

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Business Intelligence Journal - January, 2010 Vol.3 No.1

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Business Intelligence Journal - January, 2010 Vol.3 No.1

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Business Intelligence Journal - January, 2010 Vol.3 No.1

Mohsen Dastgir, Hossien S. Sajadi, Omid M. Akhgar

Mohsen Dastgir, Hossien S. Sajadi, Omid M. Akhgar

Business Intelligence Journal

Business Intelligence Journal - January, 2010 Vol.3 No.1

Mohsen Dastgir, Hossien S. Sajadi, Omid M. Akhgar

Business Intelligence Journal

Business Intelligence Journal - January, 2010 Vol.3 No.1

Mohsen Dastgir, Hossien S. Sajadi, Omid M. Akhgar

Table 1. A Sample of Companies Listed in Tehran Stock Exchange

Business Intelligence Journal

+ b4 LOG (NIi) + f SRi = a + b1 OCi + b2 RCi + b3 TCi + b4 ICi

The Results Testing

Business Intelligence Journal - January, 2010 Vol.3 No.1

Mohsen Dastgir, Hossien S. Sajadi, Omid M. Akhgar

LOG (GI) LOG (OI) LOG (IBT) LOG (NI)

0.036 0.153 0.093 0.100

3.307 (0.074) 10.965 (0.002) 6.663 (0.013) 7.125 (0.010)

1.819 (0.074) 3.311 (0.002) 2.581 (0.013) 2.669 (0.010)

25.874 44.105 39.460 31.405

1.928 2.083 1.873 1.854

0.198 0.290 0.289 0.344

48.951 (0.000) 80.173 (0.000) 79.794 (0.000) 102.551 (0.000)

5.280 (0.000) 8.198 (0.000) 6.911 (0.000) 8.027 (0.000)

0.011 0.015 0.014 0.017

18.097 (0.000) 20.054 (0.000) 22.090 (0.000) 22.437 (0.000)

1.980 2.004 1.981 1.977

Business Intelligence Journal