This article shows the results of the assessment of the listed Philippine banks’ financial reporting practices as regards their compliance with the financial reporting requirements embodied in the Securities Regulation Code Rule 68 and 68.1 and the Statements of Financial Accounting Standards.

The findings show that the banks’ financial reporting practices still leave much to be desired.  Among the violations include questionable accounting policies which led to overstatement of reported net income, lack of adequate disclosures on guarantees and segment information and non-presentation of amounts expected to be received and due within a year in an unclassified balance sheet.

Past due credit card receivables as a ratio of total receivables of Philippine banks have increased to 22.5% in 2004 from 18% in 2003.  Furthermore, credit card receivables that are 180 days past due have dramatically increased to 62.1% of total past due accounts in 2004 from 12.3% in 2003.  Given the nature of the credit card business, accounts receivables comprise a significant portion of a credit card company’s total current assets as well as its total assets.  Likewise, interest income and other financing charges are generally major components of a credit card firm’s total revenues.

The following accounting practices of credit card firms were examined in this paper: 1) recognition of late payment fees (LPFs) as income; 2) accrual of interest income; and 3) allowance for probable losses.

The impact of the above-mentioned accounting practices on the quality of earnings and receivables reported in the financial statements of selected credit card companies for the period 2001-2003 is discussed in this paper.  The relevant Philippine and International Accounting Standards and other rules issued by Philippine regulatory agencies were used to ascertain the quality of earnings and assets reported by the credit card firms.

This study aims to explore the differences between mutual funds (MF) and common trust funds (CTF) in the Philippines.   It is proposed that the differences between these two types of investigations stem principally from differential regulation and taxation.  Removal of these “artificial” sources of differences should result in a CTF investment which has the same risk-expected return profile as a MF investment, despite the different nature of the fiduciary relationship between the CTF issuer and its investor on the one hand, and the shareholder relationship between the MF issuer and its investor on the other. 

The two approaches of validating CAPM are tested using monthly data of stock returns in the Philippine market. Results indicate that the conditional relationship proposed by Pettengill, Sundaram, and Mathur (1995) perform better than the Fama and Macbeth (1972) approach in explaining risk return trade-off.  Furthermore, the ability of beta in explaining asset returns is revived.

This study investigates the excess returns around the merger date using data on Philippine banks involved in mergers and acquisitions for the period 1999–2002.  The methodology makes use of a unit root test for the daily and cumulative abnormal returns to test the free-rider problem hypothesis.  A unit root test verifies whether a shock, in this case a merger or acquisition, to the excess return or Ait is permanent or temporary.  The free-rider problem occurs when the impact of a shock to Ait is permanent, while it does not occur when the impact is temporary.  Using the constant and linear trend as exogenous variables in the time series equation, the results indicate that the impact of a shock on daily excess returns is temporary, while its impact on the cumulative excess returns is permanent.  The non-rejection of the null hypothesis in the unit root tests performed on cumulative excess returns seems to indicate that the free-rider problem can occur and that investors with information tend to profit from cumulative excess returns.

The Phillips curve depicts the tradeoff between inflation and unemployment rate.  Studies have shown its usefulness in policymaking and most importantly in forecasting inflation.  This paper tests the Phillips curve for the Philippines and calculates the non-accelerating inflation rate of unemployment (NAIRU) using the regression results.  Robust results are obtained validating the inflation-unemployment tradeoff. From this relationship, a Philippine NAIRU of 10-11 percent is estimated.  Results likewise bear out that inflation forecasts using the Phillips curve have good tracking power and that using the skewness of the cross-sectional inflation distribution as the supply shock proxy improves the out-of-sample forecasting power of the Phillips curve.

This study examined the factors explaining human resources (HR) involvement in strategic formulation and its consequences using three perspectives: resource-based view of the firm, institutional theory, and power. The results showed that HR involvement in strategy formulation did not necessarily translate into competitive advantage. However, if HR involvement in strategy formulation was an important goal of the HR function, by itself, organizational age was not a deterrent to its adoption. In addition, the centrality of HR also increased its level of involvement in strategy formulation. This study utilized the Philippine data of the CRANET survey on comparative human resource management.