1st issue / July 2013 – The Annals of the University of Oradea. Economic Sciences, Tom XXII -2013
Title: EMPIRICAL STUDY REGARDING SUSTAINABILITY OF ROMANIAN PENSION SYSTEM
Author(s): Oprean Delia, Podoaba Lucia
Abstract: This paper is part of a broad, applied scientific research, based on popular empirical procedures (such as natural observation). Positivistic and constructive research methodology used was based on the consensual-inductive system (Locke), which is why we studied the different views of specialists on sustainability of pensions in Romania, necessary to formulate the problem of generating relevant information. Research strategies used were the comparative and longitudinal ones, as we analyzed the time evolution of qualitative indicators VUAN (unitary value of net asset) specific to pension funds Pillar II and Pillar III of Romania, concomitant with the number of participants in these funds, as to determine their direct relationship with the need for sustainability in this area. The hypotheses regarding causal relationship efficiency – participants – sustainability and needed measures for pension reform were built in this paper inductively (by analyzing the sustainability issues of pensions in time), causally (by explaining the cause and effect phenomenon studied), deductively, logically and subjectively (due to the existence and perpetuation of conflict premise between generations and social inequality between employees and pensioners). The qualitative approach of the phenomenon studied by collecting information (using mediated data collection technique) has allowed the relevant findings and practical solutions necessary for all those involved in this concerted action of pensions, which affects us all.
Keywords: sustainability, public pensions, private pensions, SWOT (analysis), reform, VUAN (indicator)
JEL Classification: Q01, H55, J32, O11, P41, P47
Pagination: 919 – 930
Title: TRANSPARENCY OF LOCAL BUDGETS IN THE NORTH-WEST REGION OF ROMANIA
Author(s): Pintea Mirela-Oana, Achim Sorin Adrian, Lacatus Viorel
Abstract: The central researched element in our paper is the local budgets, the basic component of local public finances. Local budgets, like any other budgets, are the most important tool for the management (of local governments) planning, forecasting, implementing and monitoring the results of administrative-territorial units activity, also being an appropriate tool for enhancing performance. A budget is the government’s plan regarding the use of public resources to meet the citizens’ needs. The aim of this paper is to realize a research on budget transparency in local governments from the Nord-West Region of Romania, regarding the availability of the budget information on the websites of the county councils and the county residences. The key element of good governance in today global economic environment is transparency that can be defined as the openness of public authorities (central and local) regarding their policy intention, formulation and implementation. For local governments budget transparency is an important issue, due to the growing role of administrative-territorial units, confirmed over time by the economic reality. The importance of local budgets has increased in recent years due to the need to improve management efficiency and accounting al the level of local governments. Not only policy makers but also the citizens need information regarding local government current activities, expenditures, development projects and policies. In this context of a growing need for information, the transparency of local budgets is a mandatory condition for any local government. The combination of budget transparency and public participation in budget processes has the potential to combat corruption, foster public accountability of government agencies and contribute to judicious use of public funds. In this context, budget transparency represents the mean through which ordinary citizens and civil society organizations can access information about the allocation and use of public resources, so that they can assess how government officials manage public funds. Budget transparency needs to be implemented due to the benefits it brings and the most important one is obtaining better budgetary outcomes.
Keywords: budget, budget transparency, local public finance, local governments.
JEL Classification: H60, H72.
Pagination: 931 – 941
Title: “THE KNOWLEDGE TRIANGLE” IN A KNOWLEDGE-BASED SOCIETY
Author(s): Rus Mircea-Iosif
Abstract: The knowledge-based society is the stage where mankind is found and aims to raise the living standards of population but also to increase the level of knowledge. To achieve this latter goal, the states of the world, and especially those in the European Union, must ensure an adequate funding for its realization, and therefore in 2011 it was decided at EU level the achievement of an Innovation Union, in which are to be involved all the European countries, while to stimulate and finance research and innovation the Horizon 2020 program was proposed. The results of the Program, an ”Innovation Union” have begun to be felt, so in 2011, the major companies headquartered in the European Union increased their investments in R&D by 8.9% compared to 6.1% in 2010. This increase was almost equal to that of the U.S.A. companies (9%), higher than the world average (7.6%) and superior to Japanese companies (1.5%). The sectors that used the research-development activity have tended to have increases in employment above average. I believe this information highlights the fact that the European Union may become attractive for research-development and innovation investments even for businesses outside the UE, and this can result in jobs creation and increasing competitivenees of this field of the states of the European Union. In the introductory part of the article, I have briefly presented general notions of the three component activities of the ”knowledge triangle”, in the second part I presented the knowledge society with several features, in the third part, I showed some provisions of the program to stimulate research and innovation Horizon 2020, in the fourth part, I presented an innovation activity connection to private enterprise and entrepreneurial initiative stimulation in the field innovation, and the conclusions shows that research does not stop with achieving the objectives and finding the outcomes research, but is it the background for further research, especially in the context of a new economy”, where innovation through knowledge is the most important.
Keywords: research, innovation, financing, knowledge society
JEL Classification: E25, E26, O28, O31
Pagination: 942 – 947
Title: THE PRO AND CONS OF THE NEW TREATY ON STABILITY, COORDINATION AND GOVERNANCE IN THE ECONOMIC AND MONETARY UNION
Author(s): IOAN TALPOS, ALEXANDRU AVRAM
Abstract: Abstract: In our study, using a descriptive research methodology based on survey and data interpretation, we are trying to state our opinion regarding the pro and cons of the Fiscal Compact, wheather our country made a step forward towards fiscal stabilization or a step backwards towards the space for maneuver of the fiscal policy. Stability and Growth Pact, signed in Amsterdam in 1997, maintained the two limits set by the Maastricht Treaty, signed in 1992, namely those set within 3% of GDP for budget deficit and 60% of GDP for public debt, and established at the same time the regulatory framework for the coordination of national fiscal policies in the EMU. Medium-term objective, enshrined in the Stability and Growth Pact, is for the budgetary position of the Member States of the euro zone to be “close to balance or in surplus” – and to enable them to deal with normal cyclical fluctuations without exceeding effectively the 3% of GDP budget deficit. Achievement of the medium-term objective requires rapid evolution towards a sustainable situation, able to generate sufficient fiscal space for the promotion of discretionary fiscal policy measures – such as those embodied in the increase of budgetary allocations for investments in infrastructure.
Keywords: budget deficit, public debt, fiscal rules, restrictions, automatic fiscal stabilizers
JEL Classification: E32; E62; H61.
Pagination: 948 – 957
Title: WEATHER DERIVATIVES: THE MOST COMMON PRICING AND VALUATION METHODS
Author(s): Botos Horia Mircea
Abstract: In recent years , weather derivatives have become a common tool in risk management for many sectors. This has its roots in that there is no unique way to determine de value and price solutions that would be generally approved by market-participants, like in the case of the Black-Scholes formula for options on non-dividend-paying stocks is the source for a constant debate between academics and practitioners. One look for fair and truly correct prices, while the others search every-day applicable solutions. To be honest… this is somehow like alchemy. This paper has as purpose the examination of statistical characteristics of weather data, data clearing and filling techniques. The study will be referring to temperatures because that is the best analyzed phenomenon, being the most common. This was also heavily influenced by energy companies and energetic interests, because the degree days were of interest ever before weather derivatives were put for sale. Main ideas are explaining what ways of pricing and valuation are, put into perspective for this financial instrument, taking into consideration that the Black-Scholes Model is not suitable. Also here, we will present the pros and cons that we found for each method. The methods are: the Burn analysis, the index value simulation method (IVSM), the daily simulation method (DSM).On the hole, this paper wants to shed light the weather derivatives pricing methods a mix of insurance pricing and standard financial models. At the end we will prospect the discounting problem, by means of the Consumption based Capital Asset Pricing Model (CCAPM).
Keywords: weather derivatives, burn analysis, DSM, IVSM
JEL Classification: G22, G24
Pagination: 961 – 968
Title: PREDICTION OF CORPORATE BANKRUPTCY IN ROMANIA THROUGH THE USE OF LOGISTIC REGRESSION
Author(s): Brindescu-Olariu Daniel, Golet Ionut
Abstract: The purpose of this paper is to test weather data from synthetic financial statements publically available in Romania can be employed within a logistic regression model to accurately predict the corporate bankruptcy probability over the economic crisis period.
The population initially subjected to our study included all the 26,980 companies from the Timis County that submitted financial statements for 2007 to the public authorities. As this population proved very heterogeneous, we focused on a more homogeneous group, composed of 4,327 companies. The target population was chosen by employing both economical and statistical criterions.
The data from the synthetic financial statements was used to build 12 ratios, 5 of which have proven to be significant within a logistic model for predicting corporate bankruptcy.
It was clear that other sources of information could help improve the accuracy of the predictions, but these sources are not easily accessible to most of the stakeholders. As the synthetic financial statements are publically available, evaluating their utility in the prediction of corporate bankruptcy was one of the main objectives of this research.
The proposed model offers an in-sample overall 70.3% accuracy in the prediction of the bankruptcy event over a 5 – year period, with an out of sample overall accuracy of 67.6%.
Under these circumstances, the model is considered to be of immediate practical utility, as it can represent a tool for performing a fast estimation of the bankruptcy probability of a company that fits the profile of the target population.
As theoretical contributions, the research proves that the companies that filed for bankruptcy during the crisis period showed signs of weaknesses before the beginning of the crisis. Financial ratios that show relevance in the prediction of corporate bankruptcy at local level have been identified and their correlation with the bankruptcy probability has been evaluated. The model is expected to maintain its accuracy with minimal or no additional calibration for companies from the entire Romanian economy that fit the profile of the target population.
Keywords: bankruptcy, financial statement analysis, economic crisis, logistic regresion, accuracy rate
JEL Classification: G33, C31, M41
Pagination: 976 – 986
Title: CATASTROPHIC EVENTS MODELING
Author(s): Ciumas Cristina, Coca Ramona Alexandrina
Abstract: This paper presents the emergence and evolution of catastrophe models (cat models). Starting with the present context of extreme weather events and features of catastrophic risk (cat risk) we’ll make a chronological illustration from a theoretical point of view of the main steps taken for building such models. In this way the importance of interdisciplinary can be observed. The first cat model considered contains three modules. For each of these indentified modules: hazard, vulnerability and financial losses a detailed overview and also an exemplification of a potential case of an earthquake that measures more than 7 on Richter scale occurring nowadays in Bucharest will be provided. The key areas exposed to earthquake in Romania will be identified. Then, based on past catastrophe data and taking into account present conditions of housing stock, insurance coverage and the population of Bucharest the impact will be quantified by determining potential losses. In order to accomplish this work we consider a scenario with data representing average values for: dwelling’s surface, location, finishing works. On each step we’ll make a reference to the earthquake on March 4 1977 to see what would happen today if a similar event occurred. The value of Bucharest housing stock will be determined taking firstly the market value, then the replacement value and ultimately the real value to quantify potential damages. Through this approach we can find the insurance coverage of potential losses and also the uncovered gap. A solution that may be taken into account by public authorities, for example by Bucharest City Hall will be offered: in case such an event occurs the impossibility of paying compensations to insured people, rebuilding infrastructure and public buildings and helping the suffering persons should be avoided. An actively public-private partnership should be created between government authorities, the Natural Disaster Insurance Pool, private insurance companies, reinsurers, stock exchanges, institutions specialized in cat events modeling in order to develop and use alongside compulsory and facultative insurance of buildings new alternative risk transfer solutions as catastrophe bonds(also known as cat bonds).
Keywords: cat risk, cat model, earthquake, financial losses
JEL Classification: G22
Pagination: 987 – 996
Title: ECONOMIC AND FINANCIAL PERIODS INDUCED THROUGH BANKING SYSTEM
Author(s): Ionita Rodica -Oana
Abstract: Abstract:This paper is an empirical study which analyzes the influence of banking system to the economic and financial environment. At the basis of this research there are two subjective definitions of economic instability periods (CII) and of financial instability periods (FII) and two composite indexes called EWI (Economic Warning Index) and FWI (Financial Warning Index) defined in a prior research. Because it is not possible to predict the exact point in time at which the crisis sets in, the purpose of this paper is to identify possible vulnerabilities induced through banking system and to treat them in order to mitigate the costs of the economy. I defined a set of eighteen potential leading indicators from banking/financial sector, in the period 2000 – 2012. The countries included in the study are Czech Republic, Hungary and Romania. It was composed a balance panel with seven hundred and eighty observations. There is both a quantitative and qualitative approach. Using econometrics technicques as OLS regressions, Fixed effects and Fixed dummy effects there were identfied significant banking indicators in explaining economic and financial instability periods. Then, I compose a banking index which captures the costs occurred to the banking system and I assess its performance in explaining the economic and financial instability indexes through in the sample and out of the sample techniques. At the basis of my decision to choose a continuous model was the fact that it motivates policy makers in steering policy continuously and the fact that there is no need to decide between yes/ no value of crisis. This research aim to observe the influence of the banking sector evolution to the incidence of economic and financial instability periods and give us a warning regardless any negative trends in the macroeconomic or financial activity, affecting the national or the global situation. Using model simulations on historical data, the model performance was assessed upon in the sample and out of sample estimation techniques. The evaluation results suggest that banking indicators give us a warning signal of the negative trend of economic and financial environment.
Keywords: economic instability, financial instability, leading indicators, banking system.
JEL Classification: G01
Pagination: 997 – 1009
Title: THE INFLUENCE OF CORPORATE SPECIFIC FACTORS UPON FINANCING DECISIONS
Author(s): Lacatus Viorel-Dorin, Vaidean Viorela-Ligia, Cuceu Ionut-Constantin
Abstract: The purpose of this paper is to analyze the existing theories for the capital structure of a corporation and to determine the factors that influence the financing decisions of Romanian corporations. The gearing ratios vary a lot among Romanian corporations pointing out the fact that the internal specific factors are the ones with a greater impact upon their capital structure, and not the external factors. Our empiric research evaluates the determining factors for the debt ratio (total debt/total assets) of some Romanian corporations, focusing on its explanatory variables by including them within simple and multiple econometric models. The panel data indicators computed for the companies in the Cluj area listed on the Bucharest Stock Exchange were evaluated with the OLS and FEM techniques.The results have been interpreted, pointing out that company size and asset turnover seem to have a positive influence upon the debt ratio of selected companies, while profitability and liquidity seem to influence the debt ratio of selected companies negatively.
Keywords: capital structure, debt ratio, theories of capital structure, determinants of capital structure, empirical data
JEL Classification: G32
Pagination: 1010 – 1017
Title: THE ROLE OF SAVINGS RATE IN DEEPENING MACROECONOMIC IMBALANCES IN CHINA
Author(s): Sarlea Mihaela, Manta Stefan George, Vaidean Viorela Ligia
Abstract: It is well known that China is a growing power and its impressive economic indicators have been the subject of numerous studies along the years. China’s impressive economics growth in the years 2000 based on one hand by an expansionary monetary policy, on other hand by promoting export growth had also brought into discussion another factor: that of the high savings rate. This article brings into light China’s high savings rate -household, corporate and governmental- each with its role played in the entire equation of China’s growth. There have been a lot of studies concentrating on this relationship between savings rate and economic growth. It appears that, in the case of China there is a positive relationship between high savings and high economic growth at least on the short run. This is due to the national savings rate which contributed to current account surplus that facilitated outflow and inflow of capital. Domestic investments and foreign growth had contributed to rapid economic growth despite the low level of consumption. If we add here the low demand for imported goods and the growth of households saving rate in the last year we have an image of deep macroeconomic imbalances. Furthermore, if we add to this analysis the idea of an external saving rate that proved to grow quicker than the world capacity to absorb this flows we have a vivid image of an empire as „rich country, poor population”. This high savings rate in the long run will deepen macroeconomic imbalances. As a spiral this would have to accelerate reforms in the field of pensions, healthcare, social security. On top they would have to encourage the development of the banking system in order to create an image of a powerful country also in the long run. With these internal reforms the savings rate for households will encourage consumption and a normal level of savings, for corporations it will boost investments and for government it will lead to a balance account closer to reality and better use of the incomes.
Keywords: savings rate, current account, monetary policy, macroeconomic imbalances
JEL Classification: E21, F32, H62, J11
Pagination: 1018 – 1027
Title: MODEL AND ANALYSIS OF RATING IN THE HOSPITALITY INDUSTRY
Author(s): MARIS ANGELA, SABAU CATALIN, CSEGEDI SANDOR, NICHITA ANCA
Abstract: For any investor, the economic entity’s financial reporting contributes decisively to a decision on maintaining operational management team, changing its purchase of new shares or sell shares in that company. For this reason I think it is very important that an assessment of the entity’s financial performance and building a credit rating model to generate a fair and reasonable picture of it.
Keywords: performance, rating, bankruptcy
JEL Classification: G32
Pagination: 1028 – 1033
Title: IMPLICATIONS OF THE FINANCIAL SYSTEM ON THE CAPITAL STRUCTURE OF THE ENTERPRISE
Author(s): Toderascu (Sandu) Carmen, Rusu Valentina Diana
Abstract: This paper aims to identify the types of financing structures of the economy that exist in European Union countries highlighting the features of each structure. For each type of financing system of the economy identified we observe the financial resources available to companies. Depending on these we identify how there are financed the companies in each market, more exactly what capital structure do they have, and moreover what is the optimal capital structure in each case. So, by this analysis, we want to see if the financing system of an economy influences the optimal structure of the companies operating in the capital market from that country. In various stages of development of the financial system, the company financing depends on the general characteristics of the environment in which the enterprise operates. The financing system existing in a country plays an important role on the capital structure of an enterprise because according to the specific of each country the enterprises have access to more or fewer financial resources. We also analyze the supply of financial resources within each system, exactly the actual money that businesses can have on those markets and key management decisions on enterprises financing. In this paper we combine the theoretical analysis with the empirical results obtained by the studies realized by European Commission. It is important to keep in mind that the results obtained by the analysis realized in the last years may be influenced by the manifestation of the global financial crisis. An important result of this analyze is that the external environment and the disturbances in the external environment have a significant influence on the financing of businesses operating in a country. This was proved again by the impact of the current financial crisis on the activities of the enterprises on each market from European Union.
Keywords: financing system, capital structure, incipient financial system, economy of financial intermediation, financial crisis
JEL Classification: G32, O11, P51
Pagination: 1034 – 1043
Title: INFORMATION SCENARIOS OVER THE RISK IN INSURANCE
Author(s): Mariana Rodica Tirlea, Miranda Petronella Vlad
Abstract: Risks management means identifying them, assessing, quantifying and strategy to counter them, and finding solutions to some levers to diminish or even eliminate the possibility of developing or their consequences. Hung everywhere, risk is associated with uncertain situations and opportunities. The consequences of risk can result in adverse or positive effects related to the activity of the insurance undertaking or of the reinsurance undertaking. The risk has a pronounced randomly character, and its presence in the field of insurance undertakings and reinsurance. This can be explained by the fact that the risks are taken by these companies and have direct effects on their financial results during the period of validity of the contractual relations. The results of risk effects have an impact on the results of activity of insurance companies. The financial impact of a negative event, exceed the sum of the individual loss, leading in some cases to bankruptcy. The financial impact is due to the positive opportunities, which have not made an appearance, and the first event to transform into income. An important role is the responsibility of the information system, providing solutions based on scenarios, by electronic data processing, consider all types of consequences of a hazard and allow insurance companies and reinsurance, on the other hand, to calculate all the possible consequences of a given event and the ultimate financial impact on them, and finally, to make decisions to base decisions for various insurance products and reinsurance. People insurance records for each situation. In practice the scenario method is only used to make specific estimates for different scenarios depending on the circumstances, which has a certain probability of realization, for the favorable; for the neutral and negative and gives solutions for each individual, taking into account certain criteria. For example, we will present a life insurance in several poses.
Keywords: risk, general risk, country risk, contractual risks, default risk, insurance risk.
JEL Classification: G22
Pagination: 1044 – 1050
Title: ROMANIAN BANKS LIQUIDITY MANAGEMENT
Author(s): BATRANCEA MARIA, MOSCVICIOV ANDREI, SABAU CATALIN, POPA ANAMARIA
Abstract: Most transactions or financial commitments have implications for a bank liquidity. Transactions are particularly vulnerable to liquidity problems at a specific institution. Therefore, one can deduce the importance of the correct calculation and liquidity indicator, not only for the bank concerned, but especially for NBR uses that bank risk management tool. That is why the authors took into consideration a sample of banks in Romania to show to what extent the banking crisis has influenced the development banks.
Keywords: liquidity, risk assets, volatile equity
JEL Classification: G21
Pagination: 1053 – 1061
Title: IS ADEQUATE THE METHOD OF LOAN LOSS PROVISIONING? – EVIDENCE FROM ROMANIA
Author(s): Chitan Gheorghe
Abstract: The importance of banking system within the financial system requires a special attention in order to secure its stability. Thus, with the occurrence of the financial crisis, in the context of integration of the financial system and creation of unique financial market, became more stringent the need for the existence of specific tools to prevent financial crises and to guarantee the continuity of normal economic activity. In this category are the macro-prudential supervision tools whose role is to reduce the ability of banks to damage the economy by taking on excess risk. Among them is registered the dynamic provisions intended to be used for enhancing bank soundness and to help mitigate part of the pro-cyclicality of the banking system. The current study addresses the methodology for establishing specific provisions for credit risk at the level of the Romanian banking system, highlighting the direct implications over the credit institutions, and indirect implications over the economy as a whole. The study presents as well the possible course of actions in order to remedy the weaknesses in the recognition of loan losses. Thus, while listing the specialty literature, study presents the regulatory framework applicable to loan loss provisioning, underlining the weaknesses of the static provisioning model and the need to look forward to the dynamic model along with the accounting methodology. In this regard it was considered the worsening of a loan portfolio in macroeconomic context and a hypothetical comparative study between the static and dynamic model has been realized. The results of the study revealed that the current provisioning model has a procycle character without considering the influence of macroeconomic factors over the future worsening of the loan portfolio without allowing recognition of future loan losses due to failure to identify future risks generating events and their credible assessment. Therefore it is required the need to establish reserves during the economic growth periods to cover losses from loans in order to prevent disruption of the banking activity and to limit the risk of insolvency. To achieve this goal it is necessary that all the parties involved, namely the banks, the regulatory authority and accounting organizations, to realize the importance of loan loss provisioning and act accordingly.
Keywords: loan loss provisioning, static provisioning, dynamic provisioning, macro-prudential tool, procyclicality
JEL Classification: G21, G28
Pagination: 1062 – 1069
Title: THE IMPACT OF FINANCIAL LIBERALIZATION ON ROMANIAN BANKING SYSTEM EFFICIENCY
Author(s): Ciupac-Ulici Maria-Lenuta, Beju Daniela-Georgeta
Abstract: In the last three decades, many emerging countries have moved away from a system of restrictive monetary and financial controls to a more liberalized financial sector. The restrictive imposed policies were expected to contribute to industrialization of the economy and to the stability of the banking sector. However, financial liberalization had big costs on the banking system’s competitiveness and efficiency. Financial liberalization has a different impact on banking markets. Thus, there is no size that fits all policies concerning banking liberalization process. For highly efficient banks, competition is improving their efficiency standard, while less efficient banks can`t compete with foreign banks and further are decreasing in efficiency or are driven out of the market. Overall, the average efficiency of domestic banking markets should be an important variable in deciding to open up their banking market. Banks that are operating close to the frontier, in general are improving their efficiency following financial liberalization process. Banks that are operating in a further distance can`t manage to compete with foreign market entrants, so, they are losing from liberalization process. In this article we propose to measure the impact of financial liberalization process on Romanian banking system. We used the panel regression to study the informational efficiency of three Romanian banks during 2004 – 2012. The dependent variable of the model was the price of stock bank, and the independent variables were the financial indicators (return on equity, return on assets, net profit margin). In the second regression we introduce a dummy variable for crisis period. Our results show that the financial indicators choose do not affect the efficiency of Romanian bank, but the crisis had a negative impact on them. International context, credit risk, the implementation of Basel III and reducing exposures in the absence of investment alternatives remains key challenges to the Romanian banking system in future.
Keywords: financial liberalization, bank, return on equity, return on assets, net profit margin
JEL Classification: O16; G21; G23
Pagination: 1070 – 1077
Title: THE NEED TO REFORM THE BANKING SYSTEM – A PREMISE FOR THE IMPLEMENTATION OF THE BASEL III ACCORD
Author(s): Cosma Daniela
Abstract: The application of banking reform measures represents a real challenge for banks in this post-crisis period also leading to the rapid implementation of the Basel III Accord. The causes of financial-economic crisis must be identified and dealt with, one of the difficulties the banks face being that to quantify and take risks. The banking system was characterized by weaknesses in the recent global financial crisis. These weaknesses were related to: too much leverage in the banking; not enough high quality capital to absorb losses and an excessive credit growth based on underwriting standards and under-pricing of liquidity. It is felt the need to move from ”deregulation” to an accurate banking regulation process, based on an appropriate mix of macroeconomic policies, that is to the ensurance of a balance between the policies meant to stimulate the demand and those policies which can stimulate the demand. The problem of banking regulation is also taking into account the reactions of the business world which emphasizes the fact that an exaggerated regulating process which supresses innovation would be a major risk.
Many of the changes in the banking system are inspired by the final draft of the G-20 reunion, that of developed countries, in November 2008, a draft considering the economic re-launch and reform. Basel III considers the reform of the banking system by measures whose cover area is much larger and they refer to both the micro-prudential framework and to the macro-prudential one. The application of all the measures established by Basel III Accord is expected to end by 2019, with different effects in the main segments of banking business: retail, corporate and investment banking. The impact of Basel III implementation in the banking system of the USA is almost similar to that of Europe’s, with slight differences regarding the capital and the reduction of mortgage rights, which play a more important role in the USA, the latter having another starting economic point than Europe.
Keywords: banking reforms; macro-economic perspective; monetary policy; bank corporate governance; countercyclical capital, credit crunch, bank leverage
JEL Classification: G01, G21
Pagination: 1078 – 1086
Title: FINANCIAL DEVELOPMENT, INSTITUTIONS AND ECONOMIC POLICY – PANEL DATA EVIDENCE
Author(s): Filippidis Ioannis
Abstract: In recent years significant researches have been done to identify what are the determinants of financial development. With regard to this outline, the main objective is to investigate the effect of economic, political and social dimension of institutional quality, as well as the effect of political and macroeconomic factors on financial development. More specifically, the present work aims to contribute to the relevant literature in the following ways: i) in the econometric front, we employ dynamic panel techniques, that allow for heterogeneity among variables, avoiding the known problems of traditional techniques. More specifically, we employ the “system GMM” estimator developed by Arellano and Bover (1995), and Blundell and Bond (1998), controlling for endogeneity among variables; ii) we disentangle into economic, political and social institutional quality in order to quantify the effect of institutions on financial development and check the robustness of our results; iii) in the same logic, we decompose our measure of financial openness into equity- and loan-related foreign assets and liabilities in order to assess whether the hoarding of risky vs. riskless assets or the accumulation of equity vs. debt liabilities affect the development of domestic financial institutions; and iv) to control for a potential bias among variables, we include a large set of information, which covers all the spectrum of possible effects on finance, giving emphasis on political factors and government policies. Our main finding from the regression analyses is a robust empirical relationship from institutions to financial development, a result consistent with most empirical studies. Also, we find a stronger effect from economic institutions to banking sector development and from political institutions to stock market development. Regarding the trade and finance link, we find that openness has a much stronger association with bank-based finance than with stock market development, a similar finding with that of Huang and Temple (2005). As for financial openness, equity-related assets and liabilities have a more robust impact on financial development. Finally, government policy in terms of less government enterprises / government investment and interest rate liberalization have a significant effect on the banking sector rather on the stock market sector.
Keywords: Financial development, institutions, trade openness, financial liberalisation, panel data analysis
JEL Classification: G29, F19, K49
Pagination: 1087 – 1092
Title: ASPECTS REGARDING THE CURRENT ECONOMIC CRISIS AND ITS INFLUENCE ON THE FINANCIAL SECTOR
Author(s): Roxana Hetes, ALEXANDRU AVRAM
Abstract: The recent global financial and economic crisis has revealed some weaknesses in the regulation and supervision of the financial system and its architecture, especially in the treatment of systemic risks and vulnerabilities, and also the financial implications and downsizes of the globalization process. The global nature of financial crisis has highlighted the fact that, although integrated financial markets may offer a number of significant benefits, risks involved are worthy of taking into consideration. In order to ensure the financial stability of the highly integrated global landscape is needed the reform of the financial system architecture, both nationally and internationally.
Keywords: financial markets, banks, supervision, regulation, financial crises
JEL Classification: E02, E44, E59, E61, E65
Pagination: 1093 – 1102
Title: THE FRAMEWORK RESULTING FROM THE BASEL III REGULATIONS
Author(s): Motocu Marius
Abstract: The banking sector is under prudential regulations set internationally by the Basel Committee, in order to ensure its strength, stability and mitigate competitive inequities. Its founding principle is based on a minimum solvency ratio introduced in 1988 in the form of the Cooke ratio, resulting in a harmonization of the rules of banking supervision governing the level of own funds.
Basel II was introduced after the various financial crises of the 1990s (the Mexican crisis of 1994, the Asian crisis, and the Brazilian and Argentinean crisis). Despite a series of reforms, Basel II has quickly shown its limitations with the 2007 crisis that has strongly impacted the financial markets and the world economy generally. In this context, the Basel Committee has developed within Basel III a number of requirements which aim at strengthening the resilience of the banking institutions and financial system. These adjustments will be applied to the three pillars already in place and relate to capital, liquidity and systemic risks.
The new Basel provisions relating to the calculation of the numerator of the solvency ratio are declined according to the triptych: strengthening the quality of prudential eligible own funds instruments, increase of the statutory deductions provided by Basel II, and higher minimum thresholds of solvency ratios. Furthermore, a limitation of the lever, calculated from the balance sheet and elements of off-balance sheet based on non-weighted by the risks, will be introduced.
The Basel III criteria entering into force between 2013 and 2018 constitute one of the major challenges to which the banking sector will face. The real impact of the Basel III reform will depend on the attitude of the banks that will have to change in their strategy, their cost structure and policy of remuneration of the shareholders. A reform which will have therefore an impact on the world economy ensuring as estimated by Governors and supervisors, stability and long term economic performance. This paper will present the main adjustments proposed by the Basel Committee.
Keywords: capital requirements, liquidity coverage ratio, leverage ratio.
JEL Classification: G21, G32.
Pagination: 1103 – 1112
Title: TESTING THE LONG RANGE-DEPENDENCE FOR THE CENTRAL EASTERN EUROPEAN AND THE BALKANS STOCK MARKETS
Author(s): Pece Andreea Maria, Ludusan (Corovei) Emilia Anuta, Mutu Simona
Abstract: In this study we tested the existence of long memory in the the return series for major Central Eastern European and Balkans stock markets, using the following statistical methods: Hurst Exponent, GPH method, Andrews and Guggenberger method, Reisen method, Willinger, Taqqu and Teverovsky method and ARFIMA model. The results obtained are mixed. The Hurst Exponent showed the existence of long memory in all indices, except PX. After applying the GPH method, the results showed that BET, ATHEX, SOFIX and CROBEX have a predictable behavior. The ARFIMA model results support the existence of long memory for BUX, SAX and BELEX. The predictable behavior of index returns may suggest that the CEE and Balkans stock markets are not weak form efficient.
Keywords: emerging markets, long memory, market efficiency, ARFIMA model
JEL Classification: C14, C58, G14
Pagination: 1113 – 1124
Title: COMPARATIVE ANALYSIS OF THE BANK’S CAPITAL ADEQUACY ACCORDING TO THE BASEL AGREEMENT
Author(s): Tesu Ramona Vasilica
Abstract: The present article has as a research field the theoretical, methodological and practical aspects of the capital bank adequacy mechanism, according to Basel Agreement. In this paper we intend to present the advanced approaches of measurement and the minimum requirements regarding the bank capital. The objectives of the research theme, presented in this paper, are oriented mainly towards: presenting the principles and rules which governance the bank capital adequacy mechanism; calculation and comparison of the bank capital adequacy indicators. An objective that we consider needs to be mentioned is the reflection of the modifications which will affect the bank environment in the next years, as a result of adopting the new General Frame of Bank Supervision. Even though the actual stage of research is advanced, in the Romanian and foreign literature, which dedicates a lot of theoretical and empiric studies of the bank capital adequacy mechanism, in this moment, the international crises pointed out the purpose and the implications of the credit institutions within the financial system. In our paper we will use a theoretical and a practical research. The theoretical research describes the laws, rules of application in the banking field in our country. In the practical research we will use as a research method, the quality-comparative analyses, by presenting details regarding the bank capital adequacy indicators. Within the study methodology, we will use the available channels in order to structure in an useful way the research by: description, explanation, exemplification, simulation, comparative. Within the approached channels we mention: reading, analyzing information, research on specialty sites, discussions in the professional groups, discussions with the top managers of the bank, explanation, induction and deduction, conclusion and supporting our own opinion. Among the complicated, difficult, urgent problems of the European integration, within globalization and change, in the fore-ground we have the state of the economy, the economic problems, situation of the banking system. In Romania there is now a modern and competitive banking system, which provides circulation of the economy and domestic supplies banking products and services in accordance with trends in the European banking sector. In this way, the action line, I did a comparative study determining capital requirements under Basel 1, Basel 2, the standardized approaches, credit risk determined. Capitalization of Romanian bank’s remain comfortable, providing good conditions for meeting additional capital requirements Basel III. In what concerns the capital adequacy management, the leading structures of a credit institution need to establish strategies and effective policies in order to maintain, on a continuous base, a level, a correct structure of their own funds, proper for covering the risks that the credit institution is exposed to. We conclude that a bank needs to increase its own funds, which is achieved by several methods decided by management. Presentation of concrete cases in approaching the bank’s capital adequacy represent the personal work which completes the study concerning the purpose of back-up accounting in the banking system, adequate correlation of the risks and capitals.
Keywords: Bank’s Capital Adequacy, Weighted Assets, Own Funds, Solvency, Accord Basel, Comparative Analysis
JEL Classification: G21
Pagination: 1125 – 1132
Title: A MACROPRUDENTIAL SUPERVISION MODEL. EMPIRICAL EVIDENCE FROM THE CENTRAL AND EASTERN EUROPEAN BANKING SYSTEM
Author(s): Trenca Ioan, Balogh Peter, Mutu Simona
Abstract: One of the positive effects of the financial crises is the increasing concern of the supervisors regarding the financial system’s stability. There is a need to strengthen the links between different financial components of the financial system and the macroeconomic environment. Banking systems that have an adequate capitalization and liquidity level may face easier economic and financial shocks. The purpose of this empirical study is to identify the main determinants of the banking system’s stability and soundness in the Central and Eastern Europe countries. We asses the impact of different macroeconomic variables on the quality of capital and liquidity conditions and examine the behaviour of these financial stability indicators, by analyzing a sample of 10 banking systems during 2000-2011. The availability of banking capital signals the banking system’s resiliency to shocks. Capital adequacy ratio is the main indicator used to assess the banking fragility. One of the causes of the 2008-2009 financial crisis was the lack of liquidity in the banking system which led to the collapse of several banking institutions and macroeconomic imbalances. Given the importance of liquidity for the banking system, we propose several models in order to determine the macroeconomic variables that have a significant influence on the liquid reserves to total assets ratio. We found evidence that GDP growth, inflation, domestic credit to private sector, as well as the money and quasi money aggregate indicator have significant impact on the banking stability. The empirical regression confirms the high level of interdependence of the real sector with the financial-banking sector. Also, they prove the necessity for an effective macro prudential supervision at country level which enables the supervisory authorities to have an adequate control over the macro prudential indicators and to take appropriate decisions at the right time.
Keywords: banking supervision, macro prudential monitoring, risk, liquidity, capital adequacy
JEL Classification: E44, G01, G32
Pagination: 1133 – 1141
Title: THE CONCEPT OF PERFORMANCE – HISTORY AND FORMS OF MANIFESTATION
Author(s): Avram (Boitos) Camelia, Rus Luminita
Abstract: Nowadays, a more and more overwhelming role comes to global performance considering the intense competition at every market level. The competition law governs any conducted activity, thus the weakest, without the capacity of adaptability being removed from the competition,also economic,social and environmental changes which, at a global level, led to changing the way of thinking and conducting the global economic activities . At present, performance plays a fundamental role in the survival of the entities found in a permanent adaptation to the market demands by implementing new and successful management strategies. These strategies must cope with the elements specific to contemporary economy, meaning a competitive, unstable and turbulent environment and, under these circumstances, viability of economic agents cannot be achieved without talking about performance. Modern economic entities must cope with the demands of the new global economy, such as global economic crises, economic liberalization, high growing pace of competition, so that they can achieve the predetermined objectives, having the maximum of effects with the minimum of effort, but at the same time one should not neglect the social and environmental factors, directly or indirectly involved in conducting the activity. In the conditions of an environment which denotes less stability, the entities must be capable of making strategical decisions necessary for maintaining a balance and for being able to address and implement srateies for future, strategies which allow maintaining the organisation healthcare unaltered. Thus, we cannot bring into discussion the competitiveness of an entity in the conditions of a turbulent, fluctuating and especially competitive environment without talking about performance. This scientific approach has started from the premise that any economic entity has the goal of getting performance in conducting the activity. Thus, we have tried to get inside the problems of defining the concept of performance, starting from its beginnings until present, following the path taken by this concept from defining it according to a series of criteria such as: profitability,productivity, flexibility, adaptability, growth, to defining it as the level of achieving the organizational objectives; to assessing it according to productivity and efficacy of the economic entity; to its contemporary approach as the creation of value. Moreover, we are trying the defining of performance according to efficiency, efficacy and economies. As a result, being performant means combining all three variables, their combination reflecting the level of performance of an entity.
Keywords: performance, efficiency, economies, efficacy, yield
JEL Classification: M41
Pagination: 1145 – 1153
Title: AN ANALYSIS OF THE PERCEPTION OF CHARTERED ACCOUNTANT TRAINEES REGARDING ACCESS TO THE ACCOUNTING PROFESSION AND PROFESSIONAL TRAINING NEEDS
Author(s): Bunea Ștefan, Sãcãrin Marian, Gîrbinã Maria Mãdãlina
Abstract: In Romania, the certification of the quality of chartered accountant is accomplished by CECCAR(i). It is conditioned by the completion of the period of initial training. A part of this period is provided by the universities, while the other part is provided by CECCAR through the national 3-year internship programme. The objective of our survey was to analyse the way in which chartered accountant trainees perceive the access to the accounting profession, their own limitations in terms of competences, the need for professional training, and the benefits ensured by the professional training within CECCAR. Being a member of IFAC(ii), CECCAR has implemented the requirements of the international education standards. The results of the survey confirm that due to differences in their educational backgrounds trainees perceived certain barriers preventing their access to the accounting profession. They also considered that the training of chartered accountants should be provided by CECCAR rather than by the universities. The self-assessed competence level of trainees in fields such as accounting, taxation, or IT was appreciated as at least good, while the competences regarding organizations and businesses, international financial reporting, corporate governance, and financial markets were appreciated as modest. The need for professional training is assessed by trainees considering the immediate practice and not the expectations regarding future career development or future evolutions of accounting practices. The trainees in our survey do not consider necessary any investment in competences that they cannot use immediately at the level required by small and medium-sized businesses they work for. This implicates that results should be interpretated with caution and other factors (such as long term trends and expectations) should be considered in establishing the educational needs of future accountants.
Keywords: accounting education, access requirements, technical skills, personal skills, professional training needs
JEL Classification: M41, I21, I25
Pagination: 1154 – 1164
Title: THE RELEVANCE OF ACCOUNTING INFORMATION GENERATED BY THE APPLICATION OF IAS 29 RELATED TO SHAREHOLDERS CAPITAL
Author(s): Bunget Ovidiu Constantin, Dumitrescu Alin Constantin, Deliu Delia
Abstract: The current economic environment evolves under globalization circumstances, and it stands for the markets’ globalization trend. Under these circumstances, information has a primordial role. The content of the transmitted information has changed significantly. As part of the economic information, the accounting information evolved as well and its whole circuit has been continuously modernized in the rhythm of the global changes. Thus, it had to adapt to the swing of capital markets worldwide and to aim toward a unique international accounting language, for the taste and understanding of its users.
Historically, Romanian accounting records have been heavily influenced by the use of information for tax compliance purposes.
The primary function of financial/accounting details collection and recording process has been seen by many Romanian entities and management/staff within the entities (both State and private) as being for taxation compliance and taxation reporting purposes. As a result of this, the reported information has tended to reflect a “form over substance” disclosure, that is, greater importance is placed on having particular documents or recording something in a specific way, rather than in “accurately” reflecting the financial position of the enterprise at a point in time or indicating whether the results for the period are an appropriate representation of what has occurred.
Romanian accounting laws and regulations are not as such at fault, with the regulations providing for and encouraging treatments that are consistent in many ways with international accounting principles. Issues have however arisen on how laws and regulations are applied and have tended to reflect the background and outlook of Romanian accountants.
Up to 31 December 2003, Romania was considered to be a hyperinflationary economy, under the criteria of IAS 29 “Financial reporting in hyperinflationary economies”. For Romanian statutory reporting, IAS 29 was not applied. In looking at financial statements where there are significant non-monetary items, users should keep this in mind and consider if there have been any revaluation of tangible and intangible assets and on what basis.
The objective of IAS 29 is to establish specific standards for entities reporting in the currency of a hyperinflationary economy, so that the financial information provided is meaningful. Our empirical analysis encompasses a hyperinflationary economy covering a wide variety of hyperinflationary conditions.
Keywords: hyperinflation, IAS 29, monetary items, accounting information
JEL Classification: M40, M41
Pagination: 1165 – 1170
Title: SOME DISCLOSURE ASPECTS REGARDING CONSOLIDATED FINANCIAL STATEMENTS
Author(s): Cirstea Andreea, Baltariu Carmen-Alexandra
Abstract: The purpose of this article is to analyze the current state of consolidated reporting practice harmonization concerning the choice of presenting the income statement, the changes in equity, the methods used for presenting the cash flow statement, the extant methods for evaluating and reporting goodwill, the extant methods in which jointly controlled entities are accounted in the consolidated financial statements, or the choice for recognizing investments in subsidiaries, jointly controlled entities and associates in the separate statements of the parent company. In order to achieve our goal we selected the first 10 groups, in order of their capitalization value, that were listed on each of the following capital markets: London Stock Exchange, NYSE Euronext (Paris Stock Exchange) and Deutsche Börse (Frankfurt Stock Exchange) and we analyzed, in a qualitative and in a quantitative manner, for a period of six years starting with 2007, their consolidated financial statements with the design to establish exactly which of the aspects stated in the International Financial Reporting Standards were being used for the items presented above. In order to complete the empirical research part of the paper that addresses from a comparative perspective the evaluation of the degree of material harmony between the reporting practices of groups listed on the three stock exchanges above-mentioned, we used statistical and mathematical methods represented by the I Index first described by Van der Tas. Taking into account the fact that since 2005 all listed companies on the European stock exchanges were required to adopt the international accounting standards for their consolidated financial disclosures, the degree of material harmony was studied only in reference to those requirements that presented two methods or possibilities of disclosure.Our findings suggest that the groups analyzed present a high degree of material harmonization with respect to the reporting practices considered, especially in the last three years.
Keywords: consolidated financial statements, disclosure, IAS/IFRS, accounting harmonization
JEL Classification: M41
Pagination: 1171 – 1181
Title: BUSINESS MODELS FOR TAX AND TRANSFER PRICING PURPOSES
Author(s): Corlaciu Alexandra
Abstract: In order to remain competitive, the multinational enterprises (MNEs) are forced by the globalization phenomenon (which manifestation has became more and more stringent) to analyze continuously its effectiveness. In this respect, the structure of the business represents an element which might have an important impact for the enterprise’s overall results. This is why, in the last decades, the MNEs granted special attention to business structures and put significant efforts in business restructurings, where the case, with the scope to keep the efficiency and to remain on the market. Generally, the operational business restructuring process follows one of the business model globally developed, namely manufacturer or sales business models. Thus, according to the functions performed, assets used and risks assumed, the entities within the group are labeled into limited risk units (such as toll manufacturer or commission agent), medium risk (contract manufacturer, commissionaire, stripped distributor) or high risk units (fully fledged manufacturer, fully fledged distributor). Notwithstanding the above, there should be emphasized that the operational business restructuring has to be undertaken with maximal care, as it might have important fiscal impact. Having this regard, the purpose of the present investigation is to provide, from a tax and transfer pricing point of view, a systematic and structured analysis of the generally characteristics of business models (manufacturer and sales business models) used by multinational enterprises in the process of business reorganization, with the scope to increase their performance and the sustainable competitive advantages. Thus, by using the fundamental (theoretical) and qualitative research type, this paper is aiming to present the most important characteristics of each business model (general overview of each model, the principal risk assumed, the usual transfer pricing method used for the remuneration of intra-group transactions). The principal investigation techniques (research methods) used were the literature review and the analysis of international regulation in the taxation field. The present paper follows the positive research perspective.
Keywords: business restructuring, business model, manufacturer models, sales models, transfer pricing
JEL Classification: H20, H25, M16
Pagination: 1182 – 1189
Title: HARMONIZATION OF NATIONAL REGULATION AND INTERNATIONAL FINANCIAL REPORTING STANDARDS – PARTICULAR CASE OF NONCURRENT ASSETS
Author(s): Coste Andreea Ioana, Fekete Pali-Pista Szilveszter
Abstract: In the scientific literature, accounting harmonization is a top topic because it helps to increase the comparability of financial statements. Also in Romania in the last 10 years becames a topic that is very often debated. The harmonization is trying to reduce differences of financial reporting statements between countries or, in the other words, it is trying to bring to a common denominator of existing rules when appear conflicts of comparability between them. The purpose of this paper is to measure the harmonisation between national and international regulation for a significant element of financial position statement, such as noncurrent assets. This paper provides an empirical research of information that must be presented by entities which apply national accounting standards or international ones when financial statements are prepared, trying to measure the harmonization between the two referential. Thus, in trying to determine the harmonisation, we use the Jaccard coefficient in order to provide an overview of the degree of harmonization of accounting practice. When measuring the degree of comparability of Romanian accounting regulations with International Accounting Standards we analyzed noncurrent assets and impairment of assets using the Jaccard coefficient for accounting treatments and we calculated an average of similarities between the two regulations. Further, the results suggest that there is an average level of harmonization for the accounting treatment of noncurrent assets and for determining the impairment of the assets, the methods are the same. The study contributes to the development of accounting literature about the harmonisation between national regulation and international standards regarding the noncurrent assets and impairment of the assets, which together with the other elements define the activity of the business. In addition, the study provides an analysis of how the regulations treats noncurrent assets, during the life of the asset, namely: the recognition phase, the evaluation and the depreciation.
Keywords: Noncurrent assets, national and international regulations, accounting harmonisation measurement.
JEL Classification: M 41
Pagination: 1190 – 1197
Title: CAN ASSET REVALUATION BE MANIPULATIVE? – A CASE STUDY
Author(s): Crisan Sorana Adina
Abstract: Asset revaluation can trigger different signals to investors depending upon company type, asset intensity and category and investors’ expectations. In the same time, motivations behind asset revaluation decisions are diverse, being influenced by management incentives, credit covenants, faithful representation and various other reasons. In many cases the revaluation decision is imposed upon the company by auditors or the need to reduce information asymmetry. In Romania, one of the main decision drivers is the Fiscal Code, due to buildings taxation provisions. For companies that revaluate their fixed assets for taxation purposes only (which is the case for most small companies in Romania), the primary concern is to reduce the fiscal impact – the preferred scenario in this case is most likely to be the one that reduces tax expenses. Our research aims to provide a full picture of the motivations behind the revaluation decision and point to the manipulation instruments made available to companies by the allowed alternatives in what regards (1) which assets to be revalued and (2) how to recalculate book values. By means of a case study we identify the options available to a revaluating company and show how each one can impact the financial statements and financial ratios, thus influencing financial statement users’ perception. Our analysis is limited to fixed assets revaluation, as these are the ones revaluated by most Romanian companies. The comparative analysis shows that the decision to not revaluate certain assets categories can lead to serious distortions of the faithful image. Financial ratios can be significantly impacted by the type of assets revalued, depending upon the revaluation direction (upward or downward) and the revaluation differences. In upward revaluation leverage ratios and solvency can improve, leading to a better position in relation to credit covenants. Equity is also positively affected. Alternatively, a decrease of assets’ value will be reflected in a negative manner upon these indicators, which might be a serious reason for a company to not revaluate, thus not preserving the true and fair value of assets in the financial statements. Companies can choose between two alternatives of recalculating book values and depreciation. The option taken can also influence the company’s financial position. Our study shows that impact over profitability is lower and that profit tax is not affected in a significant manner even if an influence can be identified.
Keywords: assets’ revaluation, fair value, financial statements, motivations
JEL Classification: M49
Pagination: 1198 – 1209
Title: LEGAL TREATMENT IN THE MANAGEMENT OF FOREST RESOURCES
Author(s): Dãnescu Tatiana, Cãlean Ioana, Sîrb Lucian
Abstract: Forestry plays a significant role in both our country’s and global economy. Any entity, in the present case, forest entity, must operate under specific legislation and its own status. In this respect, the conduct of activities within the entities should be based on appropriate national and/or international legislation that represents the base line in linking the entities’ interests with the objective requirements of economy. Thus, in establishing a legal framework to correspond to activity development of each type of society, a variety of regulations have been drafted along with repealing or modifying others. Currently, economic legislation comprises a wide range of regulations which are projected on the ways in which activity is developed within the forest entities and not only. Regulations in force, besides highlighting the forest entities’ interests, also include all precautions in the conduct of forestry activities in ungrounded ways and the emergence of some adverse events.
Keywords: forest entities, legal framework, legal status of operation
JEL Classification: M40 – M: Business Administration and Business Economics; Marketing; Accounting, M40: General.
Pagination: 1210 – 1220
Title: NEW CORPORATE REPORTING TRENDS. ANALYSIS ON THE EVOLUTION OF INTEGRATED REPORTING
Author(s): Dragu Ioana, Tiron-Tudor Adriana
Abstract: The objective of this paper is to present the new corporate reporting trends of the 21st century. Integrated reporting has been launched through a common initiative of the International Integrated Reporting Committee and global accounting organizations. However, the history of integrated reports starts before the initiative of the IIRC, and goes back in time when large corporations begun to disclose sustainability and corporate social responsibility information. Further on, we claim that the initial sustainability and CSR reports that were issued separate along with the financial annual report represent the predecessors of the current integrated reports. The paper consists of a literature review analysis on the evolution of integrated reporting, from the first stage of international non-financial initiatives, up to the current state of a single integrated annual report. In order to understand the background of integrated reporting we analyze the most relevant research papers on corporate reporting, focusing on the international organizations’ perspective on non-financial reporting, in general, and integrated reporting, in particular. Based on the literature overview, we subtracted the essential information for setting the framework of the integrated reporting evolution. The findings suggest that we can delimitate three main stages in the evolution of integrated reports, namely: the non-financial reporting initiatives, the sustainability era, and the revolution of integrated reporting. We illustrate these results by presenting each relevant point in the history of integrated reporting on a time scale axis, developed with the purpose of defining the road to integrated reporting at theoretical, empirical, and practical levels. We consider the current investigation as relevant for future studies concerning integrated reports, as this is a new area of research still in its infancy. The originality of the research derives from the novelty of integrated reporting, and the aim to explain its origin, which is important to know if we want to understand the present and the future of corporate reporting.
Keywords: non-financial information, sustainability and social responsibility, integrated reporting
JEL Classification: M41, M14.
Pagination: 1221 – 1228
