The Editor's Corner
Boštjan Antončič
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Empirical Analysis of the Severance Pay Non-Performance in Slovenia
Milan Vodopivec, Lilijana Madjar, and Primož Dolenc

Combining information from the Firm Survey of Labor Costs with the information about claims filed with the Guarantee Fund by workers whose employers defaulted on their severance pay obligations, the paper analyzes the so-called non-performance problem of severance pay – the fact that coverage, and thus legal entitlement, does not guarantee the actual receipt of the benefit – as experienced in Slovenia in 2000. The findings are threefold: (i) one-third of total obligations incurred by firms failed to be honored and only a small portion of defaulted severance pay claims was reimbursed by the Guarantee Fund; (ii) while both men and women seem to be equally affected, workers older than 40 were disproportionally represented among those whose severance pay claims failed to be honored; and, (iii) among firms that incurred severance pay liabilities, larger and more productive firms were more likely to observe their fiduciary obligations and pay them out. These findings corroborate the weaknesses of severance pay as an income protection program, pointing to the large scale of the non-performance problem and the inequities created by it.

Key Words: severance pay, severance pay non-performance, Guarantee Fund, Slovenia
JEL Classification: J65, J32
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Diagnostic Process of Company Productivity
Maria Durisova and Emese Tokarcikova

This paper deals with an actual topic of how key factors of enterprise diagnostics can help to increase company productivity. Recognition and use of relevant internal and external information in this field determines the success of the enterprise. Application of the general diagnostic model of company productivity to the net income has been a frequent problem of company practice. This problem is of profit showing, which is an inevitable precondition for long-term company development and growth. Diagnostic access of company productivity allows recognition of specific problems in greater detail, which results from the activity of each company. This article also presents an introduction to the researched area of enterprise diagnostics, which opens opportunities for other publishing activities and can lead to information exchange.

Key Words: enterprise diagnostics, company productivity, diagnostic model
JEL Classification: D21, D24
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Does Dividend Policy Follow the Capital Structure Theory?
Justyna Franc-Dabrowska

Decisions concerning the most optimal choice of financing sources and dividend policy are some of the most difficult financial decisions. This article presents the results of research concerning relationships between two capital structure theories (hierarchy theory and substitution theory) and dividend payment policies in Polish stock companies of the agricultural and foodstuff sector (2001–2006). The research hypothesis was verified positively; company management limits dividend payment according to the hierarchy theory and prefers internal sources of financing economic activities. In order to verify the hypothesis, the methods of descriptive analysis, financial analysis and descriptive statistics were applied, together with a fixed effects model.

Key Words: dividend policy, hierarchy theory, substitution theory, stock companies, model fixed effects
JEL Classification: G32, G35, G38
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Association of Management Tools with the Financial Performance of Companies: The Example of the Slovenian Construction Sector
Peter Friedl and Roberto Biloslavo

The research problem dealt with in this article addresses the association of management tools with the financial performance of companies in the Slovenian construction sector. The aim of the quantitative empirical survey is to collect data on five of the most relevant accounting scores and indicators in the construction sector for the studied period 2001–2005, and to analyse their correlation with the management tools of Slovenian construction companies. The analysis of the relationship between quantitative indicators and scores with the dimensions of the factors in choosing management tools proved no strong correlation. The resultsof the analysis showthat the dimensions of undesirable consequences of transformation and the financial performance of the companies are essentially unrelated. A comparative study of the arithmetic mean of the indicators and scores with the disadvantages in introducing the management tools, however, indicated that there is a certain relationship between them.

Key Words:indicators, scores, financial performance, construction industry, Slovenia
JEL Classification: L20, M20
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Justifying Environmental Cost Allocation in a Multiple Product Firm: A Case Study
Collins C. Ngwakwe

This case study examines the effect of environmental cost allocation on production cost and the outcome for environmental management decisions. Using a revised cost allocation – referred to in this paper as environmental cost allocation – the paper contrasts overhead allocation between traditional cost allocation and environmental cost allocation. In addition, production cost derived from the traditional allocation of waste cost is compared with the revised environmental cost allocation. Findings indicate that a revised environmental cost allocation discloses more accurate overhead cost and hence production cost; and that management is motivated to make informed environmental management decisions if a product related environmental cost is made to reflect in the production cost of the polluting product. The paper highlights the practical significance of objective environmental cost allocation on corporate waste management, which thus creates a valuable awareness on the part of the management and accountants of firms in developing countries for the need to fine-tune the dominant traditional costing system. It also suggests avenues for further research to examine the impact of costing systems on environmental investments.

Key Words: management decision, environmental management, environmental cost allocation, waste cost allocation
JEL Classification: M11, M41
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