The Big Picture - trends, drivers, wild cards, discontinuities and weak signals

Following work done in the UK, Canada and now starting across Europe,¹ there appears to be renewed interest in charting the boundaries of what to expect between 2010 and 2025 as the character of the 21st century begins to become firmly established. What are the shaping forces, or sources of change and what might be their impacts, particularly where these may create entirely new challenges and opportunities?Futures experts (attendees of the FTA 2008 Conference) were invited to state their opinions on these questions by considering the trends, drivers, wilds cards, discontinuities and weak signals likely to shape the future through the Big Picture Survey. The survey was launched 6 months prior to the Conference. More than 250 responses were submitted by the Conference date. The results collected were synthesised and presented back to the attendees in a plenary presentation by the authors.The current paper aims to clarify the concepts first by suggesting definitions and discussing the distinctions between them. The paper then presents the rationales of conducting the Big Picture Survey (BPS), presents its methodology and discusses the results of the survey in a greater extent.     

Information dynamics, dividend displacement, conservatism, and earnings measurement: a development of the Ohlson (1995) valuation framework

This paper extends the Ohlson (Contemp Account Res 11, 661–687, 1995) equity valuation framework by demonstrating that dividend displacement continues to hold when dividends have a positive forecast coefficient in the linear abnormal earnings dynamic. The analysis demonstrates that such a predictive role for dividends implies a positive association between cum div book value of equity and the present value of expected abnormal earnings, consistent with both dividend displacement and accounting conservatism. While a signaling role for dividends is ruled out, a link between dividends, expected performance, and equity value is, however, demonstrated. The paper also considers a linear information model where an undefined variable replaces realized abnormal comprehensive earnings as an indicator of future performance. The role of this variable as a predictor of future abnormal comprehensive earnings is highlighted and the special case where it corresponds to recurring abnormal earnings is considered. This latter case provides useful implications for implementation of asset revaluations.     

A futurist beyond futurists: the a, b, c, d (and e) of Ashis Nandy

Ashis Nandy is one of the most profound and penetrating futurists of our time. His thought has a deep and abiding significance. He has pioneered the notion of the future as an arena of awareness and future studies as a field of dissent. This article provides a distillation of Nandy's thought and relates his work on alternatives, colonialism and dissent to his vision of an open and pluralistic future.     

The contract,accounting and trust: A case study of an international joint venture (IJV) in the United Arab Emirates (UAE)

This paper reports on the results of a case study that examines the effect of the contract and accounting on inter-organisational trust in an international joint venture (IJV). The empirical setting of the research was an IJV relation between a United Arab Emirates (UAE) firm and its western partner. Data were gathered from multiple sources, including documents, observations, interviews and discussions with managers. The paper aims to explore the process of trust development and the role of the contract and accounting in this. We find that trust developed differently for the partners. Moreover the trust concerns of the partners were not the same. Based on this we conclude that trust was not automatically reciprocated. Instead it needs relating to other items such as the contract, accounting and also the institutional environment. The open-book accounting we observed could only be termed ‘partial’ because the western partner had access to the local partner's books but not the vice versa. But this partial open-book accounting created conflicts between the partners. We argue that developing one kind of trust through one particular medium may help one party but may damage the relationship between the partners.     

On Equilibrium When Contingent Capital Has a Market Trigger: A Correction to Sundaresan and Wang Journal of Finance (2015)

This paper identifies an error in Sundaresan and Wang (2015, hereafter SW) that invalidates its Theorem 1. The paper develops a model of contingent capital (CC) with a stock price trigger that is consistent with SW's framework and yields closed‐form solutions for stock and CC prices. Yet, the model shows that unique stock price equilibria exist for a broader range of CC contractual terms than those required by SW. Specifically, when conversion terms benefit CC investors and penalize shareholders, a unique equilibrium can exist rather than the multiple equilibria stated in SW.     

Disclosure policy: A discussion of Leuz, Triantis and Wang (2008) on “going dark”

LTW (2008) examine firms withdrawing from the SEC reporting system but continuing to trade on Pink Sheets. The paper finds that Sarbanes-Oxley increased the propensity of firms to go dark but, counter to conventional wisdom, had no significant effect on the rate of going-private transactions. Agency costs, as well as poor growth opportunities, proximity to financial distress, and increased compliance costs arising from SOX increase the propensity to go dark. Suggestions to improve the empirical implementation and interpretation involve including additional control and more suitable explanatory variables, and more attention to causation issues and to the quantification of economic significance.     

Complex stylized facts of the Mexican economy: a hirschmanian perspective (to attack the “fear of growing”, more and better)

We elaborate some complex stylized facts related to the Mexican economy. The analyzed period runs from 1960 to 2013 with selected subperiods. Our main findings are: 1) there are involuntary idle capacities in the manufacturing industries; 2) the growth of the Mexican economy is not balanced but unbalanced; 3) there is an inflation-free environment. This fact is consistent with the previous ones; 4) there is a mixed of efficient and inefficient sequences of investment; 5) the stimulus of manufacturing exports on macroeconomic performance has been offset by its imports; 6) the deficits in manufacturing balance and in the current account have been financed without difficulty. Of course, this financing capacity constitutes a second best condition; 7) according to a backward linkages analysis, the towing capacity of manufacturing sector over the Mexican economy would be a larger one if the manufacturing imports penetration had not been so intense since the trade liberalization; and 8) the size of the positive effect of the manufacturing sector on the economy and on the non-manufacturing sectors diminished since the early eighties. Our complex stylized facts highlight the need for an upgrading of the current economic policies.