Prospective for a new citizenship

Futures thinking does not involve simply bringing rigour to contemplation about the future by employing various methodological tools. It also questions our attitudes about the future and the future power relationships resulting from this. The prospective method is based on the belief that the path is open to a number of possible futures. Its primary purpose is to contribute to a better understanding of the contemporary world, and of the hidden potentialities and dangers. In this way we can identify the actions and choices required to nudge change in the direction of what is desirable. This responsibility cannot be left solely to scientists and politicians: the future is the freedom of all, and prospective is a way of exercising that freedom here and now in order to obtain a future that has been freely debated and chosen.     

Introduction to la prospective: Seven key ideas and one scenario method

This article considers the methodological aspects of la prospective. Seven key ideas are described and one scenario method is outlined. A new approach which emphasizes structural analysis and the driver—dependence variables matrix is described and an example of its application given.     

World dynamics

In this review of Jay W. Forrester's World Dynamics¹, the first model of the whole world system is described and its potential assessed. The background notion is that the rational revolution, for the first time in mankind's evolution, depends on anticipatory action, not on mere reaction to crises. Computer modelling has a powerful potential of increasing our awareness in areas where human thinking fears to tread ; so that by dealing with a multitude of pressures that may destroy the world systems, world policies might be introduced designed to cope with the pressures simultaneously.     

A journey towards a safe harbour: The rhetorical process of the International Integrated Reporting Council

This paper investigates the rhetoric deployed by the International Integrated Reporting Council (IIRC) to legitimise itself and Integrated Reporting (<IR>) and establish its ideology. We draw on Aristotle's rhetorical appeals – ethos, logos, and pathos – and the rhetorical theory of diffusion to conduct a rhetorical analysis of the IIRC's initial documents. Our findings demonstrate how the IIRC's rhetorical strategies serve to: authorise and moralise the IIRC's actions through ethos and pathos; contrast certain social interests and privilege a capitalist ideology through logos; and establish and maintain the IIRC's authority in a way that reflects the interests of the financial community and investors, again, through ethos. We demonstrate how the IIRC has strategically used rhetoric to gain support and develop its authority by contrasting and resisting competing ideological pressures. We also show how a capitalist ideology emerged from this struggle as the shaping force behind <IR> at the cost of marginalising wider social interests. Examining the IIRC's rhetorical process contributes to understanding the ideological struggle surrounding <IR> and enriches our empirical understanding of the ideological turn of rhetorical strategies. Our study contributes to theory and practice by advancing knowledge on the rhetorical strategies that shape and establish dominant ideologies in accounting practice.     

3D,SF and the future

This article assesses the use of ‘science fiction’ (SF) in visioning or prototyping the potential economic and social consequences of so-called 3D printing. What is becoming clear to many commentators as well as science fiction writers is how rapid prototyping, or 3D printing more generally, could permit many final objects to be made near to or even by consumers on just-in-time ‘printing’ machines. This revolution in making would have many implications for the economy-and-society in the future by seriously augmenting, or possibly replacing, current systems of manufactured production, long-distance transportation and consumption. These 3D technologies have featured in SF works, including Neal Stephenson's The Diamond Age, Ian McDonald's Brasyl, Charles Stross's Rule 34 and Cory Doctorow's Makers. The article reports on current research seeking to understand the implications of what may be a major new sociotechnical system in the making. Some creative uses of SF are presented in a professional workshop setting. As well the article documents the use of SF as a methodological prototype in forecasting alternative scenarios of the future. SF prototyping could be a powerful tool in the social science repertoire when put into action in forecasting possible technology and business futures.     

Starting with Universe: Buckminster Fuller's Design Science Now

Increasingly, decision makers seek to harness “big data” to guide choices in management and policy settings as well as in professions that manufacture, build, and innovate. Scholars examining this trend tend to diagnose it at once as techno positivist in its insistence on design yoked to quantifiable variables and computational modeling and, alternatively, as an imperative integral to realizing ecologically sustainable innovation. This article investigates this tension. It reflects on the role of futurists, designers, architects, urban planners, social scientists, and artists in interpreting and utilizing comprehensiveness as a design frame. Among nine experimental foresight workshops at the inaugural Emerge conference at Arizona State University, many focused on producing physical objects or media, one modeled and expanded upon a method pioneered by architect and polymath R. Buckminster Fuller. At a time when many of the capabilities to realize Fuller's specifications for big data have matured, I investigate whether comprehensive design as framed by Fuller's method shows promise as a trend enabling ecologically sustainable innovations. A historical look at Fuller's Design Science and the reflection on it in the Emerge workshop marks an opportunity to highlight and interpret the resurgence of comprehensive thinking in design while navigating the contradictions this orientation engenders.     

Bond vs stock market's Q: Testing for stability across frequencies and over time

In this paper we revisit the evidence recently provided by Philippon (2009) about the relationship among bond market's Q, stock market's Q and aggregate investments for the US. Specifically, we analyze the stability of the relationship between aggregate investment and the two measures of Q across frequencies and over time. We find that the relationship between aggregate investment and stock market's Q, in contrast to that with bond market's Q, is both frequency-dependent and time-varying. Both the successfulness of bond market's Q and the poor performance of the usual Tobin's Q can be explained by taking into account stability across frequencies of the first and instability over time of the latter.     

Whether dimensionality reduction techniques can improve the ability of sentiment proxies to predict stock market returns

In this study, we construct China's aggregate sentiment indicator (S^sPCA) based on the method of Huang et al. (2021a), which employs a new dimension reduction method of scaled principal component analysis (PCA), to aggregate useful information from individual sentiment proxies, and further examine its return predictability for the Chinese stock market. The empirical evidence suggests that S^sPCA significantly improves the prediction accuracy for stock market returns both in and out of the sample, and also obtains considerable economic gain for a mean-variance investor. Additionally, the forecasting effect of S^sPCA is superior to that of S^PCA and S^PLS, evaluated using the traditional PCA and partial least square methods, respectively. Moreover, relative to the period of the bull market, S^sPCA exhibits better ability in forecasting stock market returns during the bear market. Finally, special events, such as the outbreak of coronavirus disease 2019 (COVID-19), also affect the predictive performance of the sentiment indicator.     

Effect of cash flow risk on corporate failures,and the moderating role of earnings management and abnormal compensation

In this study, we find that United States firms' average cash flow risk (CFR) shows a significantly increasing trend over the past four decades or so. This does not portend well considering the significance of cash flows in maintaining a firm's financial health and going concern status. The CFR also increases dramatically for firms approaching financial distress or bankruptcy, suggesting its important role in predicting a firm's failure. Empirically, we find that CFR has a strong positive effect on a firm's financial distress likelihood. We also find that the association between CFR and financial distress is negatively moderated in firms with high earnings management and abnormal compensation. The results suggest that managers in firms with high CFR are more likely to use heuristics in form of earnings management. Thus, supporting the upper echelons theory related to managers under performance pressure. Meanwhile, consistent with the notion in the agency theory that financial incentives serve as effective monitoring mechanisms, compensation packages can incentivize better risk management practices and decrease the likelihood of a firm's failure. Our findings are also robust to alternative definitions of a firm's failure: financial constraints, presumed debt covenant violation and legal bankruptcy filings.     

On the game interpretation of a shadow price process in utility maximization problems under transaction costs

To any utility maximization problem under transaction costs one can assign a frictionless model with a price process S ^?, lying in the bid/ask price interval $[\underline{S}, \overline{S}]$ . Such a process S ^? is called a shadow price if it provides the same optimal utility value as in the original model with bid-ask spread. We call S ^? a generalized shadow price if the above property is true for the relaxed utility function in the frictionless model. This relaxation is defined as the lower semicontinuous envelope of the original utility, considered as a function on the set $[\underline{S}, \overline{S}]$ , equipped with some natural weak topology. We prove the existence of a generalized shadow price under rather weak assumptions and mark its relation to a saddle point of the trader/market zero-sum game, determined by the relaxed utility function. The relation of the notion of a shadow price to its generalization is illustrated by several examples. Also, we briefly discuss the interpretation of shadow prices via Lagrange duality.     

The misconception of the option value of deposit insurance and the efficacy of non-risk-based capital requirements in the literature on bank capital regulation

This study shows how the misconception of the option value of deposit insurance by Merton (1977) and its later misuse by Keeley and Furlong (1990), among others, have led some literature supporting the adoption of binding non-risk-based capital requirements to derive incorrect conclusions about their efficacy. This study further shows that what Merton defines as the option value of deposit insurance is actually a component of a bank's limited liability option under a third-party deposit guarantee. As such, it is already included in the value of the bank's equity capital, and the flawed definition makes the Keeley–Furlong model internally incoherent.     

Executive ownership,corporate value,and executive compensation: A unifying framework

This study presents an integrated investigation into the factors affecting executive ownership, the market value of the firm, and executive compensation by explicitly incorporating the simultaneity of the process determining these variables into the empirical estimation. Overall, the results of the study support the notion that a firm's market value, executive stock ownership, and executive compensation are jointly determined. Further, the findings suggest that executive stock ownership and executive compensation may serve as a type of bond by which top executives are induced to act in the best interests of shareholders. The study also finds that a firm's q ratio and an executive's job-specific experience (as well as firm size) are important determinants of executive compensation. This result is generally consistent with the view that the firm optimally establishes its managerial compensation plan in response to both its operating environment and the specific personal characteristics of its chief executive(s).     

Strategic investment decision making practices: A contextual approach

This paper proposes a contextual approach to explaining differences in strategic investment decision (SID) making practices. First, a systematic contextual framework is developed from the existing research literature. Then this framework's potential for explaining differences in SID making practices is explored through 14 case studies of U.K., U.S. and Japanese companies from both stable and dynamic business sectors. Our findings suggest substantial SID differences across our four contextual categories of market creators, value creators, refocusers and restructurers. The differences relate to the emphasis on strategic versus financial considerations, the thoroughness and rigidity of financial analysis, the attitudes towards incorporating less easily quantifiable factors and the level of hurdle rates.     

Information content of equity analyst reports

We catalog the complete contents of Institutional Investor All-American analyst reports and examine the market reaction to their release. Including the justifications supporting an analyst's opinion reduces, and in some models eliminates, the significance of earnings forecasts and recommendation revisions. Analysts both provide new information and interpret previously released information. The information in a report is most important for downgrades; target prices and the analyst's justifications are the only significant elements for reiterations. No correlation exists between valuation methodology and either analyst accuracy or the market's reaction to a report. Our adjusted R²s are much larger than those of studies using only summary measures.     

Historical social capital and contemporary private investment choices

This paper investigates the impact of historical commercial social capital on contemporary private investment choices. We use unique data on shanghui, which represented the most important institutionalization of commercial social capital in China's financial industry in the late Qing Dynasty, to find that the establishment of shanghui is associated with a significant increase in residents' private risky asset investment today. The impact originates mainly from (i) an increase in local available investment finance, (ii) individuals' higher financial knowledge and literacy, and (iii) individuals' higher trust level and risk-taking abilities in the financial market. From a historical perspective, this study partially explains the current private investment choices and household financial investment imbalance in China.     

Scenarios to challenge strategic paradigms: Lessons from 2025

As a process looking for alternative visions of environment and corporate futures, scenario planning challenges strategic paradigms. In that way, scenario planning is dealing with the different beliefs of the many actors who make the organization and its global and business environments. Among these beliefs, emerging ideologies are one of the main shaping factors for the construction of new visions of corporate environment and corporate futures. To analyse the interaction between scenario planning and emerging ideologies, this paper will first propose a conceptual framework based on the dynamics of strategic paradigms. Second, it will discuss Electricité de France 2025 scenarios longitudinal case study in the context of the diffusion process of the French so called prospective approach to show interests and traps of scenario planning to manage paradigm shifts.     

Retrospective wisdom: Long-term orientation and the rating downgrades of financial institutions

This study examines the effects of Hofstede's long-term orientation (LTO) on rating changes in financial institutions (FIs) in 50 countries. The impacts of LTO on rating downgrades are stronger for the speculative grade-rated FIs and more pronounced for the crises sample. The significance effect of LTO on downgrades is robust to various tests and is unlikely due to endogeneity. Switching from a short-term-oriented to a long-term-oriented (LT-oriented) culture lowers the downgrade risk of an FI by 47%, a speculative grade-rated FI by 56%, and an FI of a country in crisis by 58%. LT-oriented societies promote responsible borrowing and a good payment culture. A strong preference for long-term business survival motivates banks in LT-oriented nations to maintain a more prudent bank credit-to-bank deposits ratio, particularly during crises. Incorporating the LTO in banking regulations may encourage banks to adopt long-term perspectives and finance sustainable long-term projects.     

Thirty years of the Global Finance Journal: A bibliometric analysis

In 1989, Global Finance Journal (GFJ) started publishing articles examining financial topics from a global perspective. In 2018, the journal celebrated its 30th anniversary. This study provides a retrospective analysis of the journal's content. It offers insights into the publication activity, citation trends, most prominent themes, and state of collaboration among GFJ contributors and its aggregate contribution to the field of finance. Overtime, GFJ has experienced a rise in both publication activity and citations, which reflects its growing presence among finance journals and the relevance and diversity of its contributions to research.     

Scaling in financial prices: IV. Multifractal concentration

In the Brownian model, even the largest of N successive daily price increments contributes negligibly to the overall sample variance. The resulting 'absent' concentration justifies the role of variance in measuring Brownian volatility.

Mandelbrot introduced in 1963 an alternative 'mesofractal model', in which the population variance is infinite. A significant proportion of the overall sample variance comes from an absolutely small number of large contributions, expressing a 'hard' form of concentration.

To achieve a prescribed proportion of the overall measured variance, those 1900 and 1963 models require numbers of days of the order of N ¹ and N ⁰, respectively. This paper shows that an intermediate possibility exists: a new and very flexible 'soft' form of concentration is provided by the 'multifractal' model Mandelbrot introduced in 1997. The standard 'extreme values' theory applies to mesofractals but multifractals behave very differently. The single largest contribution to sample variance is asymptotically negligible; however, an arbitrarily high proportion of the overall variance is contributed by a number of days of the order of N ^D, where 0<D<1. The characteristic exponent D, a fractal dimension, is a consequence of scaling. It allows 'softness' to be modulated between the unrealistic extremes N ¹ and N ⁰. As N increases, so does the absolute number N ^D, but the relative number N ^D/N decreases to zero. As a result, the bulk of the significant effects concentrates in a small proportion of cases. (This is a finite approximation of a set of measure zero, but mathematical refinements do not matter in this paper.)     

Class,social deprivation and accounting education in Scottish schools: Implications for the reproduction of the accounting profession and practice

This paper investigates the links between class, deprivation and subject choice in the area of business studies, including Accounting and Economics, in Scottish secondary schools. Given the paucity of prior research, this study is necessarily exploratory but its findings will provide a basis for future research in Scotland and elsewhere. First, the literature on the link between deprivation and education is reviewed. Pierre Bourdieu's conceptualisiation of habitus, field and capital are introduced and provide the theoretical framework for the ensuing discussion. Second, the implications for accounting education at both school and university, and for the accountancy profession are examined. Third, the results of interviews, analysis of statistical data provided by the Scottish Government and the Scottish Qualifications Authority and two questionnaire surveys, one of Heads of Departments of Scottish secondary schools and the other of first year accounting students at Scottish universities, are reported in order to explore whether there are any indications of links between class, deprivation and subject choice in the area of business studies in Scottish schools. Finally, the implications of the research findings are discussed and conclusions offered.