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Transfer Pricing and the Financial Performance: The Case of Algerian Companies

Author: Anissa Ouelhadj, Mehdi Bouchetara, Messaoud Zerouti

See Issue Contents: fins.2023.1
Abstract:
The increase of international trade represents more than 60% of the international economy, which is more profitable within the same group, moreover the continuous search for satisfactory financial performance by companies. Through this research we investigate whether transfer pricing has a positive and significant impact on corporate group’s financial performance in Algeria, over a period of 5 years since 2016 with a quantitative approach and SPSS software. We tested the regression of transfer pricing variables (tax burden, firm size and leverage) with the financial performance of 60 companies of corporate groups operating on different sectors as a sample of this study. We found that transfer pricing has a significant and positive impact on those companies at 10% error’s margin, despite of the fact that only the firm size has a significant positive impact on ROA of these companies in Algeria with a margin error of 1%. However, we conclude that the more the company has a considerable size, the more it should pay attention to its transfer prices and their declarations to avoid any tax adjustment can hinder its financial performance. separate text which purpose when it is read in isolation from the rest of the work is to inform about its content. It should include such elements as the formulation of research objective, identification of study object, essence of used method, the most important results, and conclusions.
Strong ESG risk management as a way to improve organisational resilience in times of crisis: an analysis of WIG-ESG index constituents

Author: Ulyana Zaremba

See Issue Contents: fins.2023.1
Abstract:
During the last decade sustainable investment practices have evolved substantially. ESG reporting is moving seamlessly from voluntary to mandatory. By investing in companies that score high in ESG rankings, investors hope for the organisation's resilience to the crisis and higher returns. Due to the dynamic development of socially responsible investing both in Poland and worldwide, new indices using ESG screening criteria are being designed, which in turn are the underlying instrument for structured products. The aim of the study was to analyse the constituents of the newly created WIG-ESG index and to discuss its performance and organisational resilience in relation to ESG risk exposure and management. The research showed that the criteria for inclusion in the WIG-ESG index should be amended to recognise companies that care about strong ESG risk management and exclude those with negligible ESG efforts. The second important issue is eligibility for inclusion. If all companies are eligible to be included in the index (ESG testing as a condition for inclusion), this will reduce the rotation of the index's constituents and allow the relationship between a company's ESG score after each update and its long-term performance to be explored.
Effectiveness of Monte-Carlo simulation of the S&P 500 index before and after the outbreak of the SARS-CoV-2 pandemic

Author: Piotr Nawrocki

See Issue Contents: fins.2023.1
Abstract:
Risk and uncertainty analysis is an integral part of the study on the behavior of global financial markets. Emergencies, crises or political events pose a major challenge to analysts, trying to predict the future movements of stock indexes, calling into question their assumptions. One such event was the announcement of the coronavirus pandemic, which undoubtedly affected the functioning of today's economy around the world. The purpose of this study is to examine the strength of the impact of the coronavirus pandemic on the behavior of the U.S. market and to assess the effectiveness of the Monte-Carlo method before and after COVID-19 outbreak. The analysis was conducted with 12 Monte-Carlo simulations of daily closing prices of the S&P 500 index using historical data in the time interval from March 11, 2015, to March 11, 2021 by projecting logarithmic rates of return one year ahead over the period 2019-2022. The results showed a significant and negative impact of the pandemic announcement on the effectiveness of forecasting using Monte-Carlo simulation, reducing the confidence of the estimates. In addition, differences in the sensitivity of the simulation were shown depending on the data period adopted. The results obtained can, on the one hand, provide a basis for considering modifications to Monte-Carlo simulations in order to more effectively reflect market reality during periods of economic instability, as well as, on the other hand, provide important information for market analysts to use shorter time series to guarantee efficiency in MC simulations used during periods of crisis.
Internal Audit in the Territorial Self-Government Units in the Light of Changes

Author: Dominika Kołodziej

See Issue Contents: fins.2022.2
Abstract:
The purpose of this article is the description and justification of the direction of changes which inevitably await the area of the functioning of the internal audit within the territorial self-government units in Poland in the context of the draft bill amending the public finance act and certain other acts. The analysis has been preceded by the review of the evolution of the functioning and the definition of the internal audit within the territorial self-government units in Poland over the last twenty years. Next, the focus shifts to the transformations in the functioning of the internal audit within the territorial self-government units and the challenges overcome by the internal auditors in relation to the changes caused by the Sars-Cov2 pandemic. The sources and causes of the planned legislative changes in the act on public finance concerning the internal audit in the sector of public finance in Poland are presented with a special emphasis on the territorial self-government units. The conducted research is based on the study of literature on public finance, internal audit, and managerial control. A detailed analysis and interpretation of legal acts in force in the researched area was done, particularly including the draft bill amending the public finance act and certain other acts (no UD327 in the list of legislative and programme works of the Council of Ministers as of 1st March 2022) to justify the direction of the changes. Materials from the governmental websites including proposals of new regulations in the act on public finance as well as the assessment of the possible consequences of the presented changes were also used.
A Significance of Climate Risks for the Financial Stability: What Do Trends in Central Banks Communication Tell Us?

Author: Lada Voloshchenko-Holda

See Issue Contents: fins.2022.2
Abstract:
The article examines to what extent central banks transmit the significance of climate risks for the financial stability to markets. Using simple text-mining techniques we explore Financial stability reports (FSR) of central banks from our sample to assess the relative importance of climate-related topics. In particular, we assess an intensity and a regularity of climate topics in FSR text corpora as subfactors of their importance. We assume that a high importance of climate topics in central banks communication facilitated by their regularity gives a strong signal to markets about the significance of climate risks for the financial stability. Our findings however indicate a generally low importance of climate-related topics in central banks communication (by means of FSR) which contrasts with the high urgency of climate considerations for the financial stability nowadays.
Fiscal Policy of Germany and France. Since Euro Creation Up to Pandemic

Author: Piotr Ptak

See Issue Contents: fins.2022.2
Abstract:
The aim of this article is to demonstrate the development of general government debt and general government balance in two Eurozone countries: Germany and France in order to investigate the extent of fulfilment of the convergence criteria. The article is divided into two periods: from the creation of the Euro currency to the period before the global financial crisis and after it to the time of the pandemic. France and Germany notoriously violated the rules of the Stability and Growth Pact. The beginning of the crisis was a sharp rise in the deficit and debt-to-GDP ratio to over 80% in both countries followed by a fiscal consolidation period. As a result, Germany managed to reduce its debt to 60% of GDP, in line with the SGP requirements, while in France this indi-cator achieved the level close to 100% in 2019. The methodology adopted by the author is based on an analytical approach and a literature review of the subject (see Escolano, 2010). Based on this methodology, the debt sustainability analysis of the general government sector was carried out. The analysis illustrates the changes to be implemented to the primary balance to allow both countries to grow out of debt. According to the author, France should have car-ried out the necessary structural reforms, but above all, reduce the ratio of pub-lic expenditure and revenues to GDP, which is the highest in Europe. Other-wise, if interest rates of ECB continue to rise, France may face a critical situation.
Accounting Geared Towards Corporate Social Responsibility: Analysis of the Polish Insurance Sector

Author: Patryk Obora

See Issue Contents: fins.2022.2
Abstract:
The aim of the study is to present the way in which non-financial information associated with Corporate Social Responsibility (CSR) is reported in the Polish insurance sector. Moreover, the point is to check the engagement of the Polish insurance companies in non-financial reporting and to determine in which areas they are socially responsible. Research carried out in the paper involves the entire set of insurance and reinsurance companies in Poland (as of 15.03.2022) excluding those which do not share the information about their socially responsible activity. Non-financial reporting is facing many problems which derive from the lack of uniform standards and regulations. Consequently, discrepancies generated in CSR managerial practices in Poland have become an issue raised not only by society but also on the legal basis. The research conducted in the paper was both carried out by compiling the existing data on the official websites of insurance companies and by elaborating a case study of Ergo Hestia’ social report. A role model of transparent CSR reporting is the social report of Ergo Hestia Group from 2020, which was prepared in accordance with GRI (Global Reporting Initiative) standards, UN "2030 Agenda for Sustainable Development " goals and the principles of "Good Practice". The study shows that the insurance market is insufficiently involved in sustainable development issues and focuses primarily on building a good reputation. The social commitment of companies overwhelms other areas of CSR, which makes the comparison process difficult to realize. Moreover, the analysis proves that social and environmental involvement of the insurance companies depend on the need of fulfilling the needs of stakeholders.
Application of the FinTech on sustainable development

Author: Małgorzata Pawłowska, Marcin Grzelak, Aleksandra Staniszewska

See Issue Contents: fins.2022.2
Abstract:
Since the global financial crisis of 2008, we have observed a very rapid increase in use of digital technologies in the finance and development of FinTech companies. Similarly, we have observed the impact of climate risk for banking. The aim of the paper is to find out what is the impact of FinTech on achieving sustainable climate and social goals through innovative financial instruments. FinTech may boost the development of green finance, which addresses environmental protection or climate change and has become an opportunity for industrialized countries to achieve sustainable growth. Finally, this paper presents positive and negative impact of FinTech on sustainable growth perspective. To assess the impact of Fintech on sustainable finance, this paper carries out the critical analysis of the newest literature and reports of financial institutions.
An Application of Financial IT Programmes to Support Customer Relations

Author: Maria Kubacka

See Issue Contents: fins.2022.2
Abstract:
The aim of the paper is to present research on the status for the use of financial information systems and CRM systems or ERP modules for customer relationship management to support customer relations, and in particular to identify the status of the use of these systems depending on the type of an enterprise in the Podkarpackie Province. At the same time, it was examined whether the customer relationship management system was coupled with the enterprise's financial and accounting system in terms of importing customer information, and the sources of obtaining customer information were identified. On the basis of the research conducted, it should be stated that the CRM class system was functioning in almost 31% of the enterprises under the survey. As a result of the analysis of contingency tables and verification of statistical significance of the relationships studiem, and using the chi-square independence test, it was confirmed that the type of enterprise differentiated the entities in terms of the use of CRM systems (or relevant ERP modules for customer relationship management) in supporting customer relations. At the same time, the study showed that the use of customer relationship management systems was related to the indication of the desired sources of customer information. The research has filled a gap in knowledge about the use of customer relationship management systems in enterprises in the Podkarpackie Province.
Financial Auditing and the Increased Risk of Fraud During the COVID-19 Pandemic

Author: Agnieszka Lew

See Issue Contents: fins.2022.2
Abstract:
The article discusses the issues related to the increased risk of fraud in business units during the COVID-19 pandemic. The aim of the article was to point out the impact of the pandemic on areas that may be exposed to the embellishment of the presented financial data, as well as to show the increased risk during the audit of the financial statement, which must be taken into account by the statutory auditor when performing the financial audit. Possible solutions were identified, also recommended by the Polish regulator, that may help to sensitise the financial and accounting services to the emergence of fraud in enterprises, and in which areas increased caution should be exercised in the analysis of the presented financial data. It was also pointed out how important a role auditors have in building public trust as ethical leaders. The research methods used in the article were a review of source documents and materials issued by international organizations.

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