Business Commons^™

The Estimation Of Production Functions With Monetary Values, Jesus Felipe, John Mccombie, Aashish Mehta

Angelo King Institute for Economic and Business Studies (AKI)

For decades, the literature on the estimation of production functions has focused on the elimination of endogeneity biases through different estimation procedures to obtain the correct factor elasticities and other relevant parameters. Theoretical discussions of the problem correctly assume that production functions are relationships among physical inputs and output. However, in practice, they are most often estimated using deflated monetary values for output (value added or gross output) and capital. This introduces two additional problems—an errors-invariables problem, and a tendency to recover the factor shares in value added instead of their elasticities. The latter problem derives from the fact that …

The Relationship Of Esg Component Scores And Creditworthiness On Publicly Listed Firms In The Asean-5 Countries, Shayne Jefferson Alvarez, Charlene Ashley C. Cu, Lance L. Lamberte, Patrick Henry G. Yap, Paulynne J. Castillo, Roberto B. Raymundo, Joel Q. Tanchuco

Angelo King Institute for Economic and Business Studies (AKI)

ESG ratings are crucial for ASEAN-5 businesses' creditworthiness. While existing studies often concentrate on ESG's impact on financial performance or general pillars, a detailed exploration of the 10 specific ESG components in the ASEAN-5 is lacking. This study addresses this gap, examining how ESG ratings affect a company's creditworthiness (probability of default) in publicly traded companies across the ASEAN-5 countries while considering potential heterogeneity. Utilizing annual data from 2013-2022 for 10 ESG components and Eikon Refinitiv's probability of default via the Starmine Combined Credit Risk Model across ASEAN-5, the study employs a panel OLS regression model with White's Robust Standard …

Does The Presence Of Foreign Investors Affect Financial Reporting Quality In Philippine Publicly Listed Firms?, Natasha Amber Y. Cabiltes, Megan Justine Siao Beltran, John Miguel Roger Dela Cruz Benito, Gianna Zenovia Domingo Agaton, Mariel Monica R. Sauler, Angelo A. Unite

Angelo King Institute for Economic and Business Studies (AKI)

Reinstate accounting conservatism in the Conceptual Framework – Our findings should be of interest to accounting standard setters, given the ongoing debate on the necessity for accounting conservatism as a characteristic for useful financial statements after its initial removal from the conceptual framework in 2010. While there are arguments that conservatism violates the neutrality of financial reports, further discussions show that conservatism can give a more faithful representation of firm performance (Cooper, 2015; International Accounting Standards Board, 2018).

Analysis On The Credit Accessibility And Growth Of Manufacturing Firms In The Cases Of Indonesia, Philippines, And Vietnam, Sophia Angela Jimenez, Kamille Daquinag, Maria Regina Victoria Sagrit, Brian Irvin Chan, Albert Lamberte, Maria Zunally Rapada, Krista Danielle Yu

Angelo King Institute for Economic and Business Studies (AKI)

Micro, small, and medium enterprises (MSMEs) contribute to income and employment generation, poverty reduction, and industry growth in the ASEAN region (Mendoza, 2015). Their significant contributions to economies have led countries to emphasize the importance of firm growth, which is influenced by credit accessibility. Majority of existing enterprises in Indonesia, the Philippines, and Vietnam are composed of MSMEs with limited financial resources to foster growth (Paratama, 2019). This hinders the potential of manufacturing MSMEs to have sufficient funding. However, existing literature suggests that credit access significantly provides a positive impact on firm growth only until a certain threshold point (Nizam …

An Analysis On The Efficiency Of Philippine Microfinance Institutions: A Stochastic Frontier Approach, Ryan Lou Dio, Elijah Jacob Mendoza, Lunette Clarisse Nunez, Ma. Ellory Villanueva, Myrna S. Austria, Tereso S. Tullao Jr

Angelo King Institute for Economic and Business Studies (AKI)

Microfinance institutions (MFIs) were created to provide loans and financial services for the poor as commercial banks have requirements that are not accessible to them. The Philippines government soon started using MFIs as a poverty alleviation tool to answer the market failure created by the commercial banking industry since it cannot accommodate the needs of low-income earners due to the high costs attached to it. However, recent studies have shown that MFIs are “mission drifting,” which means that they are deviating from their original social purpose and becoming more financially driven. As a result, this paper estimates the financial and …

How Trade Liberalization And Labor Development Could Coincide In The Philippines, Aeneas Dr Hernandez, Brendan Emmanuel A. Miranda, Martin William P. Regulano, Andrae Jamal Tecson, Martin William P. Regulano, Ma. Ella Oplas, Tereso S. Tullao Jr, Winfred M. Villamil

Angelo King Institute for Economic and Business Studies (AKI)

As the world adapts to the rapid pace of globalization in the 21st century, countries ease trade restrictions by gradually removing tariffs and non-tariff barriers to incentivize the free flow of goods across nations. This prevalence of trade liberalization policies propelled policymakers and economists to investigate the relationship between trade reforms and economic outcomes including wage inequality around the world. They found that trade liberalization, on average, has had a positive impact on economic growth, but prior studies that examine the effects of trade liberalization on wage inequality in developing countries have found mixed results. Recently, Murakami (2021) examined the …

Tourism: The Industry Of Those That Could Not Industrialize, Jesus Felipe

Angelo King Institute for Economic and Business Studies (AKI)

Discussions about the magnificent possibilities of the Philippine tourism sector are not new. Yet, the constraints the sector faces continue without being addressed. I also often hear references, like the one above, to the sector as one that will contribute significantly to the Philippines eventually attaining high income per capita. In this Brief, I offer some considerations on both issues.

The Culture & Practice Convergence: Looking For Ways Towards Sustainability, Miguel Paolo Paredes

Center for Business Research and Development

Thirty years ago, the Earth Summit gathering in Rio de Janeiro held host to world leaders, setting a blueprint for a more secure future by balancing economic growth and ecological necessity. Created for member states to cooperate in response to worldwide development issues, the United Nations Conference on Environment and Development (UNCED) sought to address these challenges and achieved a global consensus on the priorities for a new development agenda (United Nations Conference on Environment and Development (UNCED), Earth Summit, n.d.) As sustainability issues encompassed the whole of the planet, the summit provided a platform for member states to collaborate …

Philippine Stock Market: What Value Does The Selected Market Information Hold For Filipino Investors?, Edna Delantar

Center for Business Research and Development

There is a high level of information efficiency in the stock market. An efficient market adjusts security prices quickly and accurately to new information, without having to digest it for very long. Often, the pace of adjustment is remarkably rapid. This study focuses on the importance of market information as assessed by 250 retail investors in the Philippine Stock Market. The participants have active accounts and engaged in active trading with selected stock brokers and are at least 18 years old and above (or the age of eligibility to open an account with a broker). The gender of the respondents …

What Innovation Means For The Philippines, Felipe Jesus

Angelo King Institute for Economic and Business Studies (AKI)

The administration argues that the future of the nation is “innovation,” as this is the catalyst to sustaining growth. On paper, this certainly looks like a very defensible strategy. The Philippine Development Plan (PDP) 2023–2028’s Chapter 8: Advance Research and Development, Technology, and Innovation, lays out strategies, programs, and legislative priorities to be pursued to promote innovation among industries and identifies metrics to measure the country’s progress in harnessing research and development, technology, and innovation.

Is Anything Left Of The Debate About The Sources Of Growth In East Asia Thirty Years Later?, Jesus Felipe, John Mccombie

Angelo King Institute for Economic and Business Studies (AKI)

The year 2023 commemorates the 30th anniversary of the publication of the influential, yet controversial, study The East Asian Miracle report by the World Bank (1993). An important part of the report’s analysis was concerned with the sources of growth in East Asia. This was based on the neoclassical decomposition of growth into productivity and factor accumulation. At about the same time, the publication of Alwyn Young’s (1992, 1995) and J-I Kim and Lawrence Lau’s (1994) studies, and Paul Krugman’s (1994) popularization of the “zero total factor productivity growth” thesis, led to a very important debate within the profession, on …

The Financials Of Water: The Case Of Maynilad And Manila Water, Junette A. Perez, Janrick Razon

Center for Business Research and Development

What is water? It is defined in the English Oxford Living Dictionaries as a colorless, transparent, odorless liquid that forms the seas, lakes, rivers, and rain and is the basis of the fluids of living organisms. The paper uses financial ratio analysis to examine the financial performance of the two dominant water and wastewater companies in Metro Manila. It attempts to appreciate how water and wastewater companies perform financially as they confront the complexities of operating an essential utility, water, and wastewater.

The Maritime Transportation Sector: Addressing Key Challenges Towards Sustainable Development, Rayan Dui

Center for Business Research and Development

The present business landscape expects sustainability from the most diverse organizations. However, sustainability issues in maritime transportation have taken a lower priority among its stakeholders. The different maritime stakeholders have started to become aware of their sustainability responsibility as interest in sustainable shipping has grown among retailers and their shipping vessels, leading to cost-efficiency in their operations and compliance with regulations and conventions set forth by the IMO (Lister, 2015). It must be noted that the maritime transportation sector is central to the worldwide economy as it is responsible for transporting products of all kinds and accounts for approximately ninety …

Vignettes: Social Media Practices Of Selected Social Enterprises In The Philippines, Raymund B. Habaradas, Ian Benedict R. Mia

Center for Business Research and Development

Social media enable firms to engage their consumers at a lower cost and at a higher level of efficiency than traditional communication tools. Using the typology for social media marketing of Coursaris et al (2013), we illustrate how two Philippine social enterprises, namely Human Nature and HOPE, utilize social media, specifically their Facebook brand pages, to promote their social and economic objectives.

Our exploratory study shows that social enterprises adopt different approaches in crafting the messages they release on social media. Their choice of highlighting either their products or their advocacies are influenced by the nature of their products and …

Tax Risk, Corporate Governance, And The Valuation Of Tax Avoidance Across Philippine Firms: How Do Investors Value Corporate Tax Avoidance?, Christine E. Ang, Shawn Luther S. Chan, Sean Ellison G. Sow, Siegwald K. Yap, Madeleine B. Estabillo, Anne Go, Angelo A. Unite

Angelo King Institute for Economic and Business Studies (AKI)

Tax avoidance has traditionally been thought to enhance firm value because it generates cash savings for reinvestment or distribution to shareholders. More recent literature, however, suggests that tax avoidance valuation may not be so simple. Desai and Dharmapala (2009) introduced the “agency perspective” on tax avoidance, arguing that investors consider the risk of tax avoidance as opening opportunities for managers to extract rents from their firms. Positive tax avoidance value would therefore be conditional on good corporate governance quality. Drake et al. (2017) introduced yet another dimension—tax risk—to the valuation of tax avoidance, arguing that tax avoidance that comes with …

Gender Equality And Women Empowerment For Sustainable Development: The Challenge Of Unpaid Work, Jessica Jaye Ranieses

Center for Business Research and Development

This article focuses on women – a sector that has been disproportionately affected by the COVID-19 pandemic due to unpaid care work. Unpaid work refers to “all unpaid services provided within a household for its members, including care of persons and housework” (Elson, 2000, as cited by Xue & McMunn, 2021) and a phenomenon that women had already been bearing significantly even prior to the pandemic. With the COVID-19 pandemic where work has shifted remotely, women have now performed multiple roles more than ever. According to the United Nations (2020), among 38 nations, the amount of time spent by women …

Consumer Protection Of Persons With Disabilities Amidst The Covid-19, James Keith C. Heffron

Center for Business Research and Development

The Persons with Disabilities (PWD) sector was one of the most overlooked and affected sectors during the COVID-19 pandemic. As consumers, PWDs have suffered difficult challenges in the access of essential goods and services, including healthcare, and these challenges have been unduly aggravated because of the crisis. The article exposes and examines the negative impact of the crisis on the consumer rights and behavior of PWDs with a special focus on the novel barriers brought about by the pandemic on their right to access. The current pre-pandemic legislation is not adequate to protect PWDs from these novel barriers as there …

Obstacles To Economic Freedom Affecting Micro, Small, And Medium Enterprises (Msmes) In Southeast Asian Countries, Blaise Kent Calpito, Jocef Fernand Ocampo, Chyna Tomas, Mary June Valenzuela, Renz Adrian T. Calub, Mitzie Irene Conchada, Arlene B. Inocencio, Alellie B. Sobrevinas, Marites M. Tiongco

Angelo King Institute for Economic and Business Studies (AKI)

Obstacles to economic freedom such as trade obstacles, finance obstacles, taxes, and corruption affect the ability of micro, small, and medium enterprises (MSMEs) to maximize firm performance. Existing empirical studies investigating the effect of specific MSME-level obstacles to economic freedom are scarce in Southeast Asian countries. Therefore, this paper focuses on analyzing and comparing the effects of these obstacles to economic freedom on the performance of MSMEs in Indonesia, Vietnam, the Philippines, and Malaysia using firm-level data from the 2015 World Bank Enterprise Survey. The methodology utilizes an ordinary least squares regression, and endogenous treatment effects regression, in determining which …

Small Fishes, Sharp Hooks: Obstacles To Economic Freedom Affecting Micro Small, And Medium Enterprises (Msmes) In Southeast Asian Countries, Blaise Kent Calpito, Jocef Fernand Ocampo, Chyna Tomas, Mary June Valenzuela, Rens Adrian T. Calub, Mitzie Irene P. Conchada, Arlene B. Inocencio, Alellie B. Sobreviñas, Marites Tiongco

Angelo King Institute for Economic and Business Studies (AKI)

Obstacles to economic freedom such as trade obstacles, finance obstacles, taxes, and corruption affect the ability of micro, small, and medium enterprises (MSMEs) to maximize firm performance. This policy brief is based on the observations made regarding the relationship of these obstacles to economic freedom in Southeast Asian countries Indonesia, Vietnam, the Philippines, and Malaysia. This will take into account the recent economic environment of each country.

A Data Envelopment Analysis Approach To Portfolio Selection: An Application To The Blue Chip Stocks In The Philippine Stock Exchange (2010-2019), Vishal Bhagia, Colleen Monica K. Chiu, Paulynne J. Castillo, Roberto B. Raymundo, Joel Q. Tanchuco

Angelo King Institute for Economic and Business Studies (AKI)

There has been a growing interest in the application of data envelopment analysis (DEA) as a nonparametric approach in portfolio optimization due to its flexibility in overcoming the limitations of the conventional mean-variance portfolio (MVP) model. Therefore, this study aims to validate the allocative efficiency of the DEA cross-efficiency model using blue chip stocks in the Philippine Stock Exchange from 2010 to 2019. This study finds that the proposed model is able to distinguish a unique set of best-performing stocks across each holding period and outperforms the MVP more consistently. The results of this study suggest that the proposed DEA …

Resurgence Of Bundling Mechanisms In Digital Services Trade, Tereso S. Tullao, Vicenzo Della Croce Br.

Angelo King Institute for Economic and Business Studies (AKI)

The expansion of trade through centuries was pushed through a great extent by the unbundling of commodities from various factors that prevent them from being traded globally. The use of the steam engine in shipping, for example, ushered in the rapid expansion of 19th-century trade as transport cost was drastically reduced and countries realized interspatial cost differences across the Atlantic. The previous untradability of services, on the other hand, was broken by various dimensions of globalization that separated the simultaneous production and consumption of services. This unbundling rapidly boosted global trade in recent decades. However, growing developments and innovations in …

How Did The Youth’S Demand For Cigarette Products Respond To The Sin Tax Reform Act Of 2012?, Francis Ignatius L. Nieva

Angelo King Institute for Economic and Business Studies (AKI)

The excise tax on tobacco products in the Philippines has been historically low making the product very accessible even for the youth. In 2012, a Sin Tax Reform Law was passed which increased the excise tax on tobacco products by almost five times its previous value. This price increase is projected to reduce alchohol and tobacco products consumption for all demographic classifications, especially the youth. This study estimated the price elasticity of cigarette demand of the Filipino youth using regression analyses on the pooled Global Youth Tobacco Survey conducted in the Philippines for the years 2004 and 2015. Price elasticity …

Database Formation Of Labor Profiles In Upskilling And Reskilling Programs To Prepare The Philippine Labor Force For The 4ir, Breanna Michaela S. Alaras, Malakai Rei F. Feliciano, Salian Idhanth, Abijah Kathryn B. Sta Ana

Angelo King Institute for Economic and Business Studies (AKI)

The policy focuses on data management of opportunities for upskilling/reskilling and the profile management of individual laborers’ professional information to effectively integrate the influence of technology on day-to-day life (Schwab, 2016). Laborers that register onto the platform will be matched with programs that can help them meet demands that emerged due to the evolution of their job description. The registration is done to make workers capable of integrating new technologies of the Fourth Industrial Revolution (4IR) into their workflow. Reskilling and upskilling can evolve operators of the past into “smart operators” that can work with augmented reality, virtual reality, and …

From Tasks To Riches: A Task-Based Approach To The Determinants Of Wages, Brian Daguman, Samantha Victoria Abordo Baradas, Aileen Abigail D. Co, Martha Louise Delos Santos

Angelo King Institute for Economic and Business Studies (AKI)

In most written literature on labor, wages are determined by labor market supply and demand factors. With this, what a person can control to increase their wages is to focus on their skill endowments, particularly honing skills. These skills this paper will be focusing on are those occupational-specific, which pertains to the tasks and activities that a worker does in their job. That being said, it is important for an average worker to improve their skills through human capital (i.e., internships and on-the-job training) identified in this study as cognitive-interactive, Information and Communications Technology (ICT), and computational skills are found …

Investigating The Effects Of Kyoto Protocol Mechanisms On The Environment And Economy, Erica Reanne C. Co, Samantha Colleen M. Francisco, Chelsie Marie D. Gumba, Joshua Martine J. Magallanes

Angelo King Institute for Economic and Business Studies (AKI)

As production processes improve, the stimulation of economic growth has overlooked its externalities over time. In pursuit of sustainable development, nations were driven to combat climate change and increasing greenhouse gas emissions through the Kyoto Protocol. The policy brief is based on the investigation of the Kyoto Protocol Mechanisms (Clean Development and Emissions Trading Scheme) through difference-in-difference (DID) estimation, together with panel regression to evaluate the path towards viability using the metrics for externalities (total greenhouse gas emissions) and economic growth (GDP). For this reason, the DID takes into account the quantitative aspect in evaluating the effectiveness of the said …

Determinants Of Entrepreneurial Venture Growth In The Philippines Using The Global Entrepreneurship Monitor, Brian C. Gozun, John Paolo R. Rivera

Angelo King Institute for Economic and Business Studies (AKI)

Entrepreneurial venture growth requires the capacity to produce products that are acceptable to the market, and the level of support given to enterprises helps them produce, innovate, and gain market access. However, entrepreneurs are faced with challenges related to physical and social infrastructure, local and global business environment, a level playing field, access to financing, and access to skill development and knowledge. If these remain unmitigated, they have the potential to hamper entrepreneurial growth. Hence, we inquire on the critical drivers of venture growth that will allow entrepreneurs to stimulate their enterprises using founder characteristics, firm attributes, and entrepreneurial strategies. …

Enhancing External Participation Of Philippine Msmes Towards Entrepreneurial Venture Growth, John Paolo R. Rivera

Angelo King Institute for Economic and Business Studies (AKI)

Alongside profit maximization and value creation, enterprises are in the pursuit of entrepreneurial venture growth. The need to pursue entrepreneurial venture growth given the risks brought about by a volatile, uncertain, complex, ambiguous, and disruptive (VUCAD) world (Rafael et al., 2020) is vital to sustain entrepreneurs’ income, to continue generating employment, and to continue providing value-adding products and services for society. However, entrepreneurial venture growth requires the capacity to produce products that are acceptable to the market; and the level of support given to enterprises to help them produce, innovate, and gain market access. Various functional areas of the business …

Will Create Resolve The Philippines’ Unemployment Woes Amidst The Covid-19 Pandemic?, Krista Danielle Yu, Marites Tiongco

Angelo King Institute for Economic and Business Studies (AKI)

In response to the COVID-19 pandemic, there is a proposal to amend the Corporate Income Tax and Incentives Reform Act (CITIRA) into the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) Act. The proposed amendments are as follows: (a) An immediate five percentage point cut into the corporate income tax (CIT) rate starting July 2020; (b) Maintaining for up to nine years the status quo for registered business activities enjoying the 5% tax on gross income earned (GIE) incentive; and (c) More flexibility for the President to grant a combination of fiscal and non-fiscal incentives, which will be critical …

Discovering The Link Between Investor Attention And Trade Volume In The Philippine Stock Exchange, Patrick Allan G. Morando, Isabel Louise D. Banico, Martin Stevens C. Ng, Riggs Mattieu M. Villardo

Angelo King Institute for Economic and Business Studies (AKI)

Investors regard trade volume as a crucial technical indicator that can confirm trends, predict trend reversals, and determine liquidity (Westerhoff, 2006; Mahender et al., 2014). Trade volume is reported throughout the current trading day as often as once an hour; however, the reported hourly and end-of-the-day trade volumes are merely estimates. Actual and final trade volumes are reported the following day. Given the relative inconsistency of reported trade volumes and uncertainty of future trade volumes, investors miss the opportunity to reinforce their trading decisions through the trade volume indicator.

Derivative Initiative: Does The Use Of Financial Derivatives Influence Firm Value In The Philippine Context?, Julia Alfonso D. Arrastia, Christina Angela N. Balagot, Joseph Anthony C. Go, Dominique Ann Philomena V. Lacuna

Angelo King Institute for Economic and Business Studies (AKI)

Firms use financial derivatives as a way to hedge risky transactions to avoid financial risks. Studies have focused on firms’ use of financial derivatives in developed countries. However, there is limited research done on emerging markets like the Philippines because these economies have only recently adapted advanced reporting standards that obligate the disclosure of the nature and extent of risks resulting from the use of financial instruments. We used Tobin’s Q ratio to proxy for firm value and determine the presence of a hedging premium. Because derivatives are used by firms to hedge against currency risks, interest rate risks, and …