Issue #4 (Volume 5 2016)

This paper examines the determinants of the effective corporate tax rates in Italy in the years 1998-2006. While from its inception in the early 1970s, the Italian business income tax regime changed only marginally for over twenty years, in the period between 1998 and 2006, the corporate tax system underwent two major reforms with the declared objective of simplifying the system and reducing the tax burden on firms. Therefore, from a tax policy perspective, the author believes Italy is an interesting case study. The empirical analysis is based on a strongly balanced panel with 5,134 companies that combine company accounts and firm survey data. The author employs a fixed effects panel regression to study the role of size, the debt ratio, the rate of profitability, labor productivity, the assets composition, and internationalization in explaining heterogeneity among firms and, therefore, their effective corporate tax rate. Furthermore, the author employs a quantile regression to analyze the impact of the variation in the effect of independent variables on the effective corporate tax rate at different quantiles of the distribution, thus, providing information on the degree of heterogeneity in firm behavior with the final aim of capturing non-linear effects of the independent variables on the tax rate.

Keywords: effective corporate tax rates, tax heterogeneity, panel regression, Italy.
JEL Classification: H25, H32

Black-Scholes option pricing model (1973) assumes that all option prices on the same underlying asset with the same expiration date, but different exercise prices should have the same implied volatility. However, instead of a flat implied volatility structure, implied volatility (inverting the Black-Scholes formula) shows a smile shape across strikes and time to maturity. This paper compares parametric volatility models with stochastic volatility models in capturing this volatility smile. Results show empirical evidence in favor of parametric volatility models.

Keywords: smile volatility, parametric, stochastic, Black-Scholes.
JEL Classification: C14 C68 G12 G13

The study seeks to examine the espousal of the combined assurance model in South Africa’s public sector, since there is not solitary autonomous unit that offers assurance in seclusion but various units add to the assurance progression. The study is grounded on stewardship theory in which various concepts of stewardship imply it to be a function of governments’ accountability for the wellbeing of citizens. This research study followed a qualitative research approach in which data were analyzed qualitatively based on an interpretative philosophy which examined meaningful and symbolic content of qualitative data from general reports on the provincial audit outcomes for the period (2014-2015). It was concluded that the level of appreciation of the combined assurance model and assurance provision in South African public sector is commendable, although there is still a need to improve and fully implement the model so as to attain good governance through stewardship advance. To that end, the governing body in South Africa’s public sector needs to augment its monitoring of harmonized and all inclusive approach in internal control systems, risk management and compliance issues. This serves in the best legitimate interests and expectations of the “inclusive stakeholders” via embracing of stewardship approach.

Keywords: combined assurance, public sector, stewardship, Auditor General.
JEL Classification: E61, H20

This paper uses the legitimacy theory as a lens to identify the most sustainable performance model to defend and maintain the legitimacy of higher education institutions in the midst of ‘fees must fall’ crisis. The body of evidence presented demonstrates that universities have at least seven critical stakeholders that control resources needed for survival, growth and legitimacy. Using this evidence, this study builds a model that looks at the impact of fee income and workload on success. The model was tested using annual time series panel data for the period 2009-2013 across 23 public universities in South Africa. The model examined the effect of fee income and workload on success rate. Basing the arguments on the notion that students are a critical constituency, with a strong influence on the amount of fee income an institution may amass, the model tested the relationship between performance and fee income using success rate as a proxy for performance. The findings showed that not only is fee income a stronger predictor of success rate, but also that fee income is negatively related to success rate of students. Policy implications of the findings are discussed.

Keywords: higher education, fee income, institutional theory, performance legitimation, workload model.
JEL Classification: I23, D31, L26

Rapid growth of incomes in Nigeria has resulted in increased consumer spending which allowed the emergence of the new market segments, including luxury cosmetic products. Emergence of middle class along with increasing disposable income, increasing urbanization, more females entering the workplace justifies the demand for luxury cosmetics. It is a dream of any women whatever the age group to look and feel beautiful and this is why the cosmetic industry is so large, as cosmetic consumptions by its customers are growing every day. The purpose of the study is to understand the purchasing patterns of the Nigerian consumer who were luxury cosmetic users who frequented the Estee Lauder companies stores in Nigeria. This was a cross-sectional study conducted among 100 consumers who were selected using systematic sampling techniques. A self-administered anonymous questionnaire was used to gather data from respondents. Results indicated that two thirds (66%) of the luxury cosmetic users were within the 18-35 age group. Most of the respondents in the study had a full time job and 31% of the respondents earned between 132,001 – 379,000 naira, which equates to $660 – $1897. Respondents revealed that their top three luxury cosmetic brands were MAC, Estee Lauder and Bobbie Brown. Consumers are aware of the benefits associated with luxury products, therefore, this market segment must be exploited, as it has untapped potential and opportunity.

Keywords: cosmetics, luxury cosmetic market, purchasing patterns, Nigerian consumer.
JEL Classification: D11, D12, L66

There is a growing need to understand how leaders can initiate changes that address the problems of strategy execution. The current article attempts to address the issues that concern strategy implementation. As such, a study was carried out in a local municipality. The results of the study highlighted several important factors: the difficulty of understanding the organizational strategy, the detriment of the strategy and operations gap, as well as the financial challenges faced during the implementation of the strategy. It was, therefore, recommended that the leadership should ensure effective communication of the organizational strategy. Furthermore, there is a need for bridging the strategy and the operational divide.

Keywords: strategy and operational implementation, municipality, vision, municipal financial challenges and effective communication.
JEL Classification: E6, L21, L80