This study aims at assessing the size of Finland’s grey economy and use of cash in the grey and criminal economy. International studies on Finland and other Nordic countries using the MIMIC multivariate method have suggested rather high GDP shares of the grey economy (14–17%). To clarify this picture, we rely on 28,682 official Finnish tax audits performed during 2003–2009. While the tax audits, which are organized by sector, provide the most reliable available measure of tax evasion, the shares are biased upwards as tax audits tend to focus on companies subject to denunciation or other financial red flags rather than a random sampling. As the magnitude of the selection bias can only be estimated by investigating all firms, this study is limited to estimating the maximum size of Finland’s grey economy.

We examine the grey economy’s extent by each sector independently, using both corporate accounts (production) and household consumption (demand) statistics. In this way, we verify our estimate of the size of the grey economy from two perspectives. The study also attempts to measure the use of cash in Finland’s grey economy. Although the results on the size of the grey economy should only be considered as indicative, the maximum size of the concealed grey and illegal economy appears to be only in the range of 1– 2 % of GDP. Based on these estimates, the use of cash in the grey economy would be well below €1.5 billion. Compared to estimated overall cash use in Finland, this translates to 10 % of total cash spending at most. Keywords: grey economy size, tax evasion, tax inspections, cash usage

The main aims of this paper are to explore the existence of herd behavior and its influence on the stock price of MAS and index of KLSE. The twin disaster within a short period, the disappearing of MAS flight MH370 over the Indian Ocean and the shooting down of MH17 over the Ukraine, had affected Malaysian in general and MAS stock and KLSE index in particular. This paper will explore the existence of herd behavior by using Event Study approach to value the effects of the two events, each event is divided into three time zones; prior, during and after. And the influence of its effects in these time zones is considered. Whether the movement of MAS stocks and KLSE are in tandem is undertaken using EG test of integration.

The findings indicate a significant influence on MAS stocks due to the first disaster but not by the second. Although the stocks and index are affected, there is no evidence of co integration in their movements. The practical implication of the research reflects the need to provide timely, transparent and relevant information for the market to behavior rationally.

Keywords: Herd behavior; Social influence; Malaysian Airline; KLSE.

We show that financial innovations when investors greatly value certainty, by letting firms benefit from safe cash flows in new ways, potentially cause a misallocation of resources at the firm level with low net present value (NPV) projects (with larger amounts of safe cash flows) getting preference over high NPV projects. Even negative NPV projects may be accepted. Such financial innovations benefit large firms (with large cash flows) more than small firms; hence, they widen the value-gap between leader and follower firms. These results indicate that productivity slowdown and the rise of superstar firms are not independent phenomena, rather they share the same underlying cause: Financial innovations letting firms benefit from safe cash flows. We show that misallocation towards low NPV projects gets worse as interest rates approach zero. The value-gap between large and small firms also increases as interest rates approach zero. These results cast doubt on the effectiveness of monetary policy in a low interest rate environment.

Keywords: Financial Innovation, Interest Rate Swaps, Securitization, Credit Default Swaps, Productivity Slowdown, Disproportionate Safety Preference

JEL Classification: G00, G30, G10

Working capital and financing decisions or policies are essential in determining companies’ capacity to invest in any securities, be it non-current or current assets which has a significant role in retaining the organization’s liquidity, solvency, survival, continuity and profitability. This study investigates the effect of  working capital investment and financing policies on the profitability of listed industrial goods companies in Nigeria. The expost facto research design was adopted, and data were sourced from annual reports and accounts of 21 listed industrial goods companies in Nigeria, out of which 14 firms were selected and form the sample size with 140 firm-year observations for the period of 10 years from 2012 to 2021. The ordinary Least Square (OLS) regression model was employed to analyze the data. The test of normality, multicollinearity, and heteroscedasticity were all conducted to improve the reliability and validity of statistical results. Also, the model selection using a Hausman specification test was conducted to determine between random and fixed effects models. The outcome enables the study to reject the fixed and accepted random effect estimator. The study established that aggressive and conservative investment policy have negative and insignificant impact on profitability. The conservative financing policy has a positive and insignificant effect on profitability, while aggressive financing policy has a positive and significant impact on profitability. Hence, the study concludes that aggressive financing policy and conservative financing policy improve profitability, and aggressive investment policy and conservative investment policy reduce the profitability of listed industrial goods companies in Nigeria. The study recommends that companies should embrace aggressive financing policies as a way of increasing their profitability. This will enable the companies to use an appreciable level of current liability to finance their operations’ thereby attracting more profits for the firms. While aggressive investment policy should be improve to enhance a significant positive impact on their profitability. This will enable the companies to use more current assets to finance the industrial goods, thereby generating more profits for firms and shareholders.

Keyword: Profitability; Aggressive investment policy; Conservative investment policy; Aggressive financing policy; Conservative financing policy