Philippine Management Review

The Localization of Select Asian Economies in the Age of Globalization: An Agglomeration Study

Leila Rahnema — 2024-07-16

The world is highly interconnected, and the strength of linkages indicates an economy’s ability to benefit from participation in global value chains. We utilize the concept of agglomeration to measure domestic linkages in a regional context. Using the Asian Development Bank’s multiregional input–output tables and agglomeration methodology, this paper applies a select group of economies’ backward and forward agglomeration indices from 2007 to 2015 and from 2015 to 2022 to gauge the degree to which value added is sourced from and absorbed by domestic sectors, respectively, from a regional perspective. The results reveal that select Asian economies such as Bangladesh, Fiji, Hong Kong, China, Indonesia, Kazakhstan, Lao PDR, Malaysia, the Republic of Korea, Singapore, and Taiwan have increased their backward agglomeration from 2015 to 2022. This suggests that the low-tech manufacturing sectors in these economies are intensifying their use of domestic inputs. Additionally, there are more Asian economies with increasing forward agglomeration indices. The rise in forward agglomeration indicates that the domestic low-tech manufacturing sectors in these economies are consuming more of their own final goods.

CEO Characteristics Influence on CEO Duality: Evidence from the Philippines

Regina Lizares — 2024-07-16

This study investigates the influence of chief executive officers’ (CEO) demographic characteristics on the likelihood of CEO duality on boards of Philippine publicly listed corporations (PLCs). It draws on the competing perspectives of agency and stewardship, as well as human capital and upper echelon theories. It uses logistic regression on a sample of 252 active PLCs as of the end of 2021. Results indicate 30% of Philippine PLCs continue to practice CEO duality, despite the recommendation of the 2016 Code of Good Governance for Philippine PLCs to separate the roles of CEO and chairman of the board (COB). It also demonstrates that the likelihood of CEO duality is influenced by gender, tenure, and age; that is, an older, longer tenured man has more chances to hold both the position of CEO and COB. This supports the idea that CEO duality choice is associated with experience-based human capital.

Determinants of Profitability of Listed Real Estate Companies in the Philippines

John Lester Aratea — 2024-07-16

The purpose of this research is to identify the overall internal and external property industry determinants of profitability of listed real estate companies in the Philippines. In particular, this research uses reported annual data from 2013 to 2022. Using a robust random effects (RE) panel regression model with Return on Asset (ROA) as dependent variable, the results show that firm size (-), firm revenue growth (+), liquidity (-), efficiency measured using total asset turnover (+) or measured using cash conversion cycle (-) are significant determinants of profitability. On the other hand, using a robust fixed effects (FE) panel regression model with Return on Equity (ROE) as dependent variable, the results show that while firm revenue growth (+) and efficiency measured using total asset turnover (+) or measured using cash conversion cycle (-) are still significant determinants of profitability, solvency (+) is also another notable factor. The results of this study can help companies in the industry identify firm-specific and macroeconomic factors empirically proven to be important drivers of earning potential so that efforts and resources may be properly channeled to capitalize on them, especially at a recovery period from the effects of the COVID-19 pandemic.

A Preliminary Study on the Role of Audit Opinions on Annual Budget Appropriation Outcomes for National Government Agencies (NGAs) in the Philippines

Remvert Bryan Placido — 2024-07-16

Annual audit reports from the Commission on Audit (COA) provide information on a government agency’s compliance with financial reporting standards that may be valuable to government budget legislators and decision makers. Using Chi-square test of independence and logistic regression analysis on the available empirical data, we test whether COA audit reports, as represented by COA audit opinions, have a statistically significant association with government budget appropriation decisions, represented by year-on-year movements on the new general appropriations for National Government Agencies (NGAs). Based on the results, majority of the COA audit opinions issued for fiscal periods within the Duterte Administration (2016-2022) do not display a statistically significant association with the year-on-year movements of the budget appropriations. For the audit opinion years that showed a statistically significant association from the Chi-square test of independence, the correlation between COA audit opinions and year-on-year movements of the budget appropriations were found to be weak. Insights from an audit report should somehow, to a certain degree, affect the increases or decreases in budget allocation. Particularly, much attention should be given to government agencies who receive negative audit reports as these reports may point out misstatements in the financial statement that could potentially be instances of misappropriation of government assets.

An Assessment of the Infrastructure Program of the Duterte Administration

Epictetus Patalinghug — 2024-07-16

This study assesses the performance of the “Build, Build, Build” (BBB) infrastructure program of the Duterte Administration in the Philippines. It reviews the theoretical and empirical literature on the link between infrastructure and economic growth and develops a conceptual framework to analyze the impact of the BBB program. Project-level analysis of the BBB program identifies the right-of-way acquisition problem as the major factor delaying the project implementation. Quantitative analysis of completed BBB projects reveals low correlation with regional output. The seeming lack of synergy of BBB projects is explained by the low investment efficiency index related to project appraisal and selection and by the state of the regulatory approval processes. On the other hand, the BBB program has achieved an all-time high in infrastructure spending compared to previous administrations. However, this study’s assessment of performance vs. targets reveals that it does not live up to expectations. In addition, issues on impact of small versus large projects and on short-run versus long-run impacts have to be settled in future research when relevant data are available.