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Does
the Choice of Market Structure Measure Matter? Evidence
from the Indian Car Industry
-- Sanjay
Kumar Singh and Ruchi Sharma
Recent
empirical studies on the structure performance model have
failed to find a statistically significant positive correlation
between four-firm concentration ratio index or Hirschman
Herfindahl index and industry profitability. Moreover, the
studies find individual firm market shares to be superior
to both the measures of market structure. A few studies
suggest that an increase in the inequality in the market
share of firms would lead to a higher level of profit for
the leading firms and also for the industry. The approach
in most of the previous studies has been to use statistical
tests of nested hypotheses to make a choice among market
share, the inequality in market share, the four-firm concentration
ratio index or Hirschman Herfindahl index. Furthermore,
most of the studies are based on industry data from developed
countries. The main objective of this article is to answer
the question: Does the choice of market structure measure
matter to explain the variation in profitability of the
Indian car industry? The authors have used the Davidson-MacKinnon's
J test to examine the non-nested hypotheses and found that
the inequality in market share, measured in terms of coefficient
of variation of the same, is a superior measure of market
structure. In addition, the coefficient of four-firm concentration
ratio index is significantly negative, which depicts the
absence of collusive behavior among firms.
©
2006 IUP . All Rights Reserved.
The
Impact of Cost of Capital on Economic Value Added: An Analysis
of Rubber and Plastic Processing Industries in Czech Republic
and United States of America
-- Kishor
Goswami,
Drahomira Pavelkova and Adriana Knapkova
The
increasing importance of capital market and shareholders'
activity in today's competitive globalized world has put
managers under tremendous pressure for better financial
management. Economic Value Added (EVA), nowadays, is considered
as one of the most important financial performance measures
of an industry. Cost of capital is one of the major determining
factors of EVA. This article explains the impact of cost
of capital on EVA. It also examines the creation of EVA
in selected rubber and plastic processing industries in
two different economies, viz., the transition economies
of the Czech Republic and the well-developed market economy
of the United Sates of America. The findings reveal that
the Czech Republic performs better than USA in applying
EVA.
©
2006 IUP . All Rights Reserved.
Returns
to Scale in the Private School Industry of Nagaland: A Production
Function Approach
-- Biswambhara
Mishra, P Srinivasa Suresh and K Rio
In
this article, the authors study the intricacies of the private
schooling industry in Nagaland. The main objective of the
study is to estimate the returns to education, by employing
production function techniques. Kohima, the capital of Nagaland,
is selected for the study, as most of the private schools
have mushroomed in and around Kohima, in the recent years.
Three types of production functionsCobb-Douglas, CES and
Translogare estimated to ascertain the underlying production
relation. It is concluded that the industry has a tendency
to exhibit increasing returns to scale, and there exists
a possibility for substituting capital for labor.
©
2006 IUP . All Rights Reserved.
Long
Run Equilibrium Relationship between Production and Employment
in Small Scale Industries in India
-- M
Upender, M Aruna and Ganapati Mendali
The
main objective of this article is to see whether the production
and employment in the Indian small scale industries have
been drifting apart from each other in the long run. The
empirical evidence based on the Augmented Dickey Fuller
(ADF) test, cointegration analysis and error correction
modeling, illustrates that production and employment in
the Indian small scale industries are cointegrated, proving
thereby, that the two have not been drifting apart from
each other in the long run. The constant production elasticity
of employment, based on log level series, is significantly
positive but is less than unity, thus showing that economic
growth is found to be less labor-intensive. More specifically,
1% increase in production is associated with an increase
in employment by 0.3284% per annum in the small scale industries
in India. The results, based on error correction modeling,
demonstrate that the equilibrium error term in the short
run is zero.
©
2006 IUP . All Rights Reserved.
Case
Study
Measuring
Financial Efficiency and Distress of Henkel SPIC India Limited
-- Krishna Chaitanya V and Kamini
Shah
Henkel
SPIC India Limited, which started its operations in India
in 1987, is a joint venture between Tamil Nadu Petroproducts
Limitedone of the companies of SPIC Groupand Henkel of Germany.
The joint venture was named as Henkel SPIC India Limited,
popularly known as HSIL. However, since 2001, the company
is reeling under a financial crunch and suffering heavy
losses. Against this backdrop, the case study examines the
financial distress of Henkel SPIC India Limited, using the
Altman Z-score model. It also measures the financial performance
of HSIL, using certain key ratios/indicators. However, the
scope of the case is restricted to measure the company's
insolvency position and does not venture to find the reasons
responsible for the company turning weak.
©
2006 IUP . All Rights Reserved.
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