Stability to profitability: managing interdependencies to meet a new environment

Management control systems represent what is believed to be an important element in managing internal and external interdependencies. The case study we present in this paper is an attempt to provide additional information contributing to the understanding of the influences on and the roles of management control systems in managing interdependencies. The management control systems were used to deal with changes in the internal and external interdependencies in the domains of strategy and structure of the organization, the organizational field, and the state. The role of the Chief Executive Officer was a key element in both defining the internal and external interdependencies and the employment of the management control systems.     

Prediction and social change: The need for a basis in theory

The author argues that social changes cause personality changes, and that personality changes cause social changes. This mutual feedback effect lies at the heart of the problems of social forecasting. Any valid system of forecasting requires a study of social changes ; but such a study itself necessitates an investigation of personality structures and individual values. The weak links in the causal chain of social change are the source of changes in values and the effect of values upon social goals. The author describes the limited evidence that research into values has provided, and examines critically the methodology employed. He suggests an alternative-but potentially complementary-approach and describes specific problem areas ; finally he reasserts his ultimate goal of a theory of social change.     

Management accounting texts in New Zealand: the need for a paradigm shift

This paper questions the dominance in textbooks of a management accounting grounded largely in neo-classical economics and scientific management. In New Zealand the most popular textbook used in introductory management accounting courses is Horngren and Foster's Cost Accounting - a Managerial Emphasis.The current seventh edition of the text, although extensively used, is not regarded as adequate for the purpose by many New Zealand educators. The text is seen as being rootd firmly in the traditional understandings of the role of management accounting which are subject to increasing challenge. Other popular texts which are influencing the content of management accounting courses also are reviewed. We conclude that, despite much criticism over many years, modern textbooks have failed to evolve; change is overdue.     

Screening when some agents are nonstrategic: does a monopoly need to exclude?

We characterize the optimal screening mechanism for a monopolist facing consumers with privately known demands, some of whom have limited abilities to misrepresent their preferences. We show that consumers with better abilities to misrepresent information benefit from the presence of consumers who lack such abilities. Whenever the fraction of the latter group is positive, there is no exclusion: the firm supplies a positive quantity of the good to all consumers whose valuations exceed marginal cost of production. Our analysis is motivated by the evidence indicating that some individuals have limited ability to misrepresent themselves and imitate others.     

Sovereign collateral as a Trojan Horse: Why do we need an LCR+

Sovereign bonds are widely used as collateral in banks’ funding and trading operations. If a sovereign becomes distressed, the collateral mechanism impairs and banks are suddenly facing significant liquidity calls. Basel III's Liquidity Coverage Ratio (LCR) protects banks against unexpected liquidity calls, but currently excludes sovereign distress. Thus, all banks fulfilling the LCR are still exposed to a liquidity risk stemming from distressed sovereign debt and materializing through the collateral channel. Our paper shows that this unaddressed risk can translate into a system-wide liquidity shock. To gauge the potential damage caused by such a shock, we develop a model based on banks’ home sovereign exposures and a bundle of simplifying assumptions in which sovereign distress triggers bank distress. Our model describes how deteriorating sovereign collateral can lead to an overall liquidity squeeze and non-compliance with Basel III liquidity standards. As this risk is too material to be neglected, we propose an alternative version of the LCR, LCR+, which includes the liquidity impact of sovereign distress.     

A friend in need is a friend indeed: Allocation and demand in IPO bookbuilding

This paper uses proprietary data on European IPOs with detailed information on the demand at different points of time and allocation for institutional and retail investors. The nature of the data allows us to analyze the reason of why institutional investors as a group get more allocations of underpriced issues than retail investors. By explicitly examining institutional and retail demand for different kinds of stocks, we find that this is due to institutional investors' superior ability to detect underpriced stocks rather than the underwriter's preferential treatment. At the same time, the subset of domestic institutional investors supports the underwriter in issues with weak demand and receives in turn favorable allocations in underpriced issues.     

Rationalities, domination and accounting control: A case study from a traditional society

Previous studies on management control in less developed countries have mainly concentrated on the state and privatised enterprises. Drawing upon Weber's work [Weber M. The protestant ethic and the spirit of capitalism. New York, NY: Scribner; 1958; Weber M. General economic history. New York, NY: Collier Books; 1961; Weber M. Economy and society: an outline of interpretive sociology (two volumes). New York, NY: Bedminster; 1968; Weber M. Economy and society. Berkeley, CA: University of California Press; 1978] on traditional society, and a Weberian framework developed by [Colignon R, Covaleski M. A Weberian framework in the study of accounting. Accounting, Organiztions and Society 1991;16(2):141–57], this paper seeks to understand ‘private management practices’, including accounting, in a stock exchange listed company (public limited company). The case study evidence indicates that organisational controls are biased to serve the dominant owners or family/sponsors of the company instead of general shareholders. The paper argues that family dominance is facilitated by the external and internal layers within which the company is operating. The greater understanding of traditional societies developed in Weber's works [Weber M. Economy and society. Berkeley, CA: University of California Press; 1978] is very useful in explaining why managers work to serve the family. Domination by family via trusted managers using accounting calculations instead of bureaucracy is highly relevant, as the case study shows. These findings are not dissimilar to those of previous studies conducted in privatised and family-owned companies in Bangladesh and elsewhere. The paper calls for more research on management accounting practices employing Weber's works, especially in traditional societies.     

TEACHING NOTE Promoting participation-breathing new life into the old technology of a traditional tutorial: a teaching note

This note is an outline of our experience and a reflection on the lessons learned, when innovative teaching and learning methods were used to encourage participation in traditional tutorial classes. We hope that, by communicating our experience, readers will be encouraged to explore the identified approaches in their own courses. The problem of students' lack of participation in tutorials has long been recognized by staff and students. This problem is further exacerbated by the external factors of increased student numbers and more vocal employer opinions on graduates' lack of personal transferable skills. Three problems were identified as possible reasons for students' non participation in tutorials: dominance by one or a few students; students not forming a cohesive group; too many students in a tutorial. Strategies for dealing with these problems are detailed together with the results of our experience and conclusion on the success of each technique. The general conclusion is that it is possible to breath new life into old technology. Students can be encouraged to participate in a traditional tutorial by utilizing innovative teaching and learning strategies. We hope readers will learn from our experience and be encouraged to incorporate some of the strategies in their courses.     

Extreme value theory versus traditional GARCH approaches applied to financial data: a comparative evaluation

Although stock prices fluctuate, the variations are relatively small and are frequently assumed to be normally distributed on a large time scale. But sometimes these fluctuations can become determinant, especially when unforeseen large drops in asset prices are observed that could result in huge losses or even in market crashes. The evidence shows that these events happen far more often than would be expected under the generalised assumption of normally distributed financial returns. Thus it is crucial to model distribution tails properly so as to be able to predict the frequency and magnitude of extreme stock price returns. In this paper we follow the approach suggested by McNeil and Frey in 2000 and combine GARCH-type models with the extreme value theory to estimate the tails of three financial index returns – S&P 500, FTSE 100 and NIKKEI 225 – representing three important financial areas in the world. Our results indicate that EVT-based conditional quantile estimates are more accurate than those from conventional GARCH models assuming normal or Student's t distribution innovations when doing not only in-sample but also out-of-sample estimation. Moreover, these results are robust to alternative GARCH model specifications. The findings of this paper should be useful to investors in general, since their goal is to be able to forecast unforeseen price movements and take advantage of them by positioning themselves in the market according to these predictions.     

Not-for-profit accounting in a changing world of standard setting: What professors and students need to know

Generally, accounting standard setting in the 21st Century promises to be an interesting and increasingly diverse endeavor. This paper discusses the formation of the FASB’s Not-for-Profit Advisory Committee in 2010 and its work to date. I identify the various changes that will likely impact accounting and auditing for not-for-profit entities. Specifically, prospects for changes to current not-for-profit standards are discussed with emphasis on how future changes might follow the patterns outlined for private companies or small and medium-sized entities. New possibilities and implications for educators and curriculum design are introduced.     

Revival of a traditional community engagement model for the sustainable future of a historical commercial district: Bursa/Turkey as a case

Historical commercial districts in city centres in Turkey face social, cultural, environmental and economical challenges of managing rapid urban and economical development in the last two decades. They are being subjected to dramatic physical deterioration and rapid social and economical decline. Enriching relationships between local tradesmen associations, local authorities and non-governmental organisations through a structured engagement process can deliver innovative new revitalisation approaches and design options towards sustainable futures of historical commercial districts both in Turkey and in the world. This paper presents a community engagement model, which can be seen as the revival of a guild system (Lonca), which is unique to Ottoman Turkish culture, for the sustainable future of a historical commercial district in a Turkish city, Bursa. One of the main objectives of this study is to discuss and evaluate successes and failures of this community engagement model. Other objective of the paper is to discuss the effectiveness of this civil organisation for creating scenarios about sustainable future of a historical commercial district. The key finding of this study shows community engagement models should support public decision making by developing a coherent framework to identify the sustainable future scenarios with multi- or interdisciplinary collaborations.     

Where is globalization taking us? : Why we need a new ‘Bretton Woods’

While globalization brings global increases in income in the aggregate, it also threatens to leave much of humankind in conditions of absolute poverty and to widen the gap between rich and poor. These trends are likely to be accentuated with the advent of the information/knowledge economy, the increasing power of multinationals, and the growing severity of environmental constraints. This article sketches these trends and then addresses the question: what are the necessary conditions for the attainment of a growing global economy with equity and acceptable environmental standards? It then tackles the issue of the prospects for these conditions to be realized under the prevailing global economic/financial system.     

The "perfect storm" in compensation: convergence of events leads to a greater need to review compensation strategies

The recent unprecedented convergence of significant strategic events in the compensation arena has created the need for ongoing and extensive compensation planning. This article reviews the events leading to this point, describes the implications of the results from a recent Aon study with WorldatWork, and suggests what employers can do to successfully navigate the "perfect storm" in compensation.     

Urban sustainability and knowledge: Theoretical heterogeneity and the need of a transdisciplinary framework. A tale of four towns

The academic debate on «sustainable city» is like a large arena, where heterogeneous approaches and contributions, coming from different disciplines, flow into without converging on a common vision. The growing awareness that an increasing percentage of the world's population now lives in urban areas makes the organization of this space a crucial issue for global sustainable development. In order to acquire this challenge, urban studies need to overcome conceptual oppositions, seeking new integrated responses to implement the principle of sustainability at urban scale. This effort requires a new managerial approach of science and policy, which can be based on a transdisciplinary vision to knowledge production. The paper is divided into four different sections. The first and second sections review the theoretical literature on urban sustainability and explore the conceptual relations between knowledge and knowledge production in urban governance processes. The third section presents a comparative empirical analysis based on a survey of 2213 questionnaires carried out in four different urban contexts. The fourth and last section outlines the conclusion, suggesting a new approach to manage knowledge in urban governance, in a trans-disciplinary perspective.