Apostolos G. Christopoulos

The estimation of corporate liquidity management using artificial neural networks

In this paper computational intelligence techniques are applied based on Artificial Neural Networks (ANNs) in order to investigate the liquidity performance of Greek listed firms. The effectiveness in managing their liquid assets is estimated with Multi-Layer Perceptrons (MLPs) and Probabilistic Neural Networks (PNNs) based on a set of financial ratios. Various MPL architectures are examined after modifying the number of nodes in the hidden layer, the transfer functions and the learning algorithms. The PNNs use spread values from 0.1 to 50, and 3 or 2 neurons in output layer, according to the coding of corporate liquidity management outcome. A PNN of 10-55-2 architecture is implemented to estimate the effectiveness of liquid assets management of Greek listed firms. We conclude that PNNs outperform MLPs, proved to be an appropriate computational intelligence technique for liquidity management estimation since the proposed PNN evaluate firm’s liquidity classification with 98.46% accuracy over the testing cases.

Investigation of the relative efficiency for the Greek listed firms of the construction sector based on two DEA approaches for the period 2006–2012

This paper applies two different approaches of data envelopment analysis (DEA) in order to investigate the relative efficiency for the Greek listed firms of the construction sector before and during the recession (before recession: 2006–2008; in recession: 2009–2012). In the first stage of this study an output DEA version based on financial ratios is introduced. The main contribution of this approach concerns the use of the Recursive Partitioning Algorithm in order to establish two different groups of variables, one for each sub-period. This technique enhances the estimated power of the first version of DEA model, since it provides for each period the ratios with the highest estimated value and the proposed model adjusted to the current economic circumstances. Although the results show that the number of the inefficient firms remains the same for both sub periods, there is an adjustment in the classification of non efficient and efficient firms. The second model is based on an input–output version of DEA with the use of accounting data as variables. This model classifies the majority of the firms as inefficient for the first sub-period, while the percentage of the efficient firms increases during the second sub-period, according to their average efficiency scores. In order to estimate the reliability of the DEA model a bootstrap method is also applied. The results are significant for discussion especially in relation to the assets’ management policy of firms before and during the recession.

Could business cycles and economic crises smooth out at a reasonable cost?: Empirical findings from the US economy

– The purpose of this paper is to investigate the effect of macroeconomic factors in income growth, as defined by IS‐LM, and the relation between these factors and economic cycles. More precisely, the paper aims to investigate how the demand and supply factors affect income growth, while the relation between these factors and economic cycles is also examined., – The sample under examination is the annual US data for 1928‐2007, using the official data as released in the US Bureau of Economic Analysis, while for the crises the used data have been provided by the National Bureau of Economic Research, Graduate Center of the City University of New York. The Business Cycles were examined, using the methodology developed by the National Bureau of Economic Research, Graduate Center of the City University of New York., – The research findings imply that government consumption expenditure growth is the most important factor that affects Gross Domestic Product growth positively. A change of 10 percent in Government consumption leads to 1.65 percent Gross Domestic Product growth. Also, the duration of crises is affected by lowering interest rates, while being also affected by government and personal consumption. Overall, the empirical findings of the study indicate that the role of private investments for Gross Domestic Product growth may be overrated among policy makers, given the low contribution of this factor to Gross Domestic Product growth., – The model used has some limitations. First, it does not examine the effect of a policy over Gross Domestic Product growth in longer time‐spans. Second, it does not investigate factor inter‐reactions. It could also be argued that other factors that would stimulate growth or affect crisis are not accounted for, such as wars, tax policies, international trade and population growth. Finally, the model investigates only the US economy; therefore, it could be argued that the findings may not coincide with findings from other economies., – The paper contributes to the economics literature by adding a further insight into the possible mix of policy that could be followed by regulatory authorities and governments for both the boost of economy and the finalization of economic crises.

Investigation of financial distress with a dynamic logit based on the linkage between liquidity and profitability status of listed firms

Abstract The scope of this paper is to investigate the predictability of financial distress, adopting a survival model based on dynamic logit for a sample of NYSE listed firms. The main assumption of this study is that liquidity and profitability constitute the key criteria for the configuration of financial distress status of a firm. Specifically, two independent models are applied for the period after the financial crisis of 2007–2008. The first model is constructed on the pillar of liquidity, and the classification into the subgroup of distressed firms is based on specific criteria such as current ratio, current liabilities / total liabilities, Equity / Liabilities and Total Debt / Total Asset. The second model is based on the pillar of profitability where the specific criteria for the classification from the primary group into the subgroup of distressed firms are ROE < ROA and Net Profit Margin ≤ 0. Finally, a third model is established as a result of the combination of the two previous models. A further purpose of this work is to ascertain whether during the period of crisis there has been a differentiation in the policy of listed companies, namely whether their efforts have been shifted to addressing liquidity problems at the expense of profitability.

The IT Industry and the Economic Crisis: Empirical Findings from the USA

This study investigates the effect of ICT investments on the economy and vice versa in the context of an economic crisis. The empirical analysis examines US data during the period 1969-2011. Initially, we estimate the effect of GDP growth on the ICT industry by examining: the relation of economic growth to ICT sales; ICT profitability; changes in employment rate. Following, we estimate the effect of ICT investments on the economy. Our study shows that indeed ICT investments are affected by GDP growth, but not during the recession period. We also find that ICT investments lead to significant GDP growth and employment growth. However, when accounting for other, non ICT private investments, the role of ICT investments for GDP growth and employment was found not significant. Our study provides evidence that ICT investment policy is a significant tool to foster GDP growth and employment in the US, but only in the context of overall private investment policy initiatives. The empirical results are interesting since they provide support for the joint use of ICT and other types of investments for the reduction of unemployment and the increase of economic growth in US and possibly for other countries, so tax incentives for ICT investments should require investments in supplementary to ICT areas. Our findings can be useful to policy makers or/and to macro analysts for estimating the effect of tax incentives for national and regional economies.