The decision to list abroad: The case of ADRs and foreign IPOs by Chinese companies

This paper examines the decision to list abroad by Chinese companies in the form of ADRs and foreign IPOs from 1993 to 2005. Our sample consists of 33 ADRs, 218 foreign IPOs, and a sample of 1418 domestic listings. We find evidence to support that issuers are motivated to cross-list due to the legal and accounting standards of the foreign markets, more stringent listing requirements and closer regulatory monitoring, significant demands for external capital due to rapid growth, an expanded shareholder base, and foreign expertise. The motives and firm factors differ by the type of issue (ADR versus foreign IPO) and by the market in which the foreign exchange is located (Hong Kong versus Singapore). Subsequent to the listing events, issuers experience a significant drop in profitability, tangible assets ratio, and asset turnover. There is no significant change in capital expenditure. Stock returns after the listing events are generally negative for ADR and foreign IPO stocks. More significantly, these stocks under-perform the market in the post-event window ranging from 3 days to 3 years.     

The decision to trust

Surveys have shown that 80% of Americans don't trust corporate executives and--worse--that roughly half of all managers don't trust their own leaders. Mergers, downsizing, and globalization have accelerated the pace of change in organizations, creating a crisis of trust that didn't exist a generation ago. Leaders who understand how trust is built can actively influence its development, resulting in a more supportive and productive work environment and, not incidentally, a competitive advantage in the war for talent. Building on research in social psychology, and on his 15 years of experience consulting on trust, the author has developed a model for predicting whether trust or distrust will be chosen in a given situation. It helps managers analyze ten factors at play in the decision-making process. Hundreds of top executives have used it to diagnose and address the root causes of distrust in their work relationships. Some of the factors in the model relate to the decision maker: How tolerant of risk, how well-adjusted, and how relatively powerful is he or she? Others relate to the specific situation: How closely aligned are the interests of the parties concerned? Does the person who is asking to be trusted demonstrate competence? Predictability and integrity? Frequent and honest communication? Sue, a relatively new VP of sales, used the trust model to manage her relationship with Joe, an employee nearing retirement who was not performing well in a new sales role. Fearing for his job, Joe wasn't initially inclined to trust her. Sue took concrete steps to communicate openly with Joe, explore other options for him, and show concern for his well-being. When joe was transferred, he let his former colleagues know how pleased he was with Sue's handling of the situation. As a result, the level of trust increased in Sue's department, even though it was experiencing major change.     

The role of corporate governance in the write-off decision

The recent popularity of write-offs allows for examination of the role governance plays in the write-off decision. I find that well governed companies are more likely to announce write-offs. Additionally, better governed firms announce smaller write-offs relative to poorly governed firms. The evidence also indicates that the stocks of well governed firms experience announcement abnormal returns that are over six percent higher than those of poorly governed firms. The results suggest better governed firms take a pro-active approach to reveal bad news early, and thereby mitigate further uncertainty for investors.     

The future of futures decision making

At the dawn of a new millennium, with the past one thousand years ready for reflection and the up-coming one thousand years primed for exciting new adventures, humankind seems to be trapped in the box of myopic, short-term decision making. Voices pleading to expand the horizons of our decision making to ensure sustainability of our species and countless other species on this earth are currently drowned out by a cacophony of voices trumpeting economic globalization, rapid technology development, and real-time financial markets. While futures decision making is not much in evidence today, the question addressed by this paper is whether futures decision making is even possible. Are there inherent constraints in our ability to make decisions that encompass time frames covering centuries if not millennia? An enormous amount of research has been conducted in the general area of decision making over the past several decades. Much has been learned about the psychology of human decision making and decision making within organizations. Countless methods have been developed to guide decision making. Recent work in areas such as imprecise probability and complex adaptive systems is beginning to provide boundaries as to what can be known about the future. This paper reviews much of this diverse literature and synthesizes important research findings across several disciplines to identify numerous significant barriers to futures decision making. The paper presents several recommendations on how to improve futures decision making in the future.     

船舶评估重置全价的确定

由于船舶资产专业性强,在评估该类资产时,评估人员因知识面限制,对如何确定船舶重置全价常感到无所适从.尤其对大型船舶,因涉及商业机密,无法进行直接询价,即便询到价格,其准确度也无从把握.本文详细介绍了船舶资产重置全价应包含的内容及确定过程,供评估人员在有关工作中参考.     

The going public decision and the structure of equity markets

The industries in which listed firms are concentrated in less developed equity markets are not random, nor entirely explained by the underlying composition of production. Listed firms and market capitalization are disproportionately concentrated in industries with low beta (measured with their beta with the market portfolio in the U.S.). We document a strong positive relationship between the industry-weighted country beta and the degree of market development across countries. Recent IPO activity confirms the result since new listings have higher betas than the average firm already in the market.     

The effect of information load on decision makers' cue utilization levels and decision quality in a financial distress decision task

Seventeen practising auditors and sixty-seven accounting students participated in a decision making experiment that examined the effect of increasing amounts of accounting information on cue usage and decision quality. Each participant made financial distress decisions under three levels of information load. Approximately one-third of those participating apparently experienced information overload and exhibited an inverted-U relationship between information usage and information load; the others exhibited patterns of increasing cue usage. The individuals who apparently experienced information overload also reached decisions of lesser quality, as indicated by significantly lower decision making consistency, lesser agreement with a composite judge, and lower consensus.     

The exit decision in the European venture capital market

This article analyses the exit decision in the European venture capital market, studying when to exit and how it interacts with the exit form. Using a competing risks model we study the impact on the exit decision of the characteristics of venture capital investors, of their investments and of contracting variables. Our results reveals that the hazard functions are non-monotonic for all exit forms and suggest that, in Europe, Initial Public Offering candidates take longer to be selected than trade sales. Moreover our results show that, in Europe, venture capitalists associated with financial institutions have quicker exits (stronger for trade sales), and highlight the importance of contracting variables on the exit decision. An unexpected result is that the presence on the board of directors leads to longer investment durations.     

Transparency of environmental decision making: a case study of soil cleanup inside the Hanford 100 area

Environmental decisions in a democracy should be transparent. Transparency allows all those who are interested in a decision to understand what is being decided and why. Transparency is especially critical for decisions that are intended to protect public health and safety, and that have long‐term consequences. Decisions are recorded through publicly available documents (such as Records of Decision), collectively known as the public record. In this paper the transparency of the public record is examined for a specific decision at the US Department of Energy (DOE) Hanford site. To do this, the concept of transparency is unpacked into seven objectives: clarity, accessibility, integration, logic/rationale, truth/accuracy, openness, and accountability; and a framework for measuring decision transparency is developed. Then a Record of Decision is evaluated based on four of the seven objectives. Throughout, the importance of understanding decision processes and expected outcomes, and the broad values underpinning activities and choices are emphasized. It is found that, while many aspects of the process are transparent, it is difficult to discern and connect the values, objectives, subobjectives and criteria used as the basis of the decision. Several information structuring improvements (value trees, decision paths, and simple graphics and tables) that could make the public record more transparent are suggested. Such improvements are necessary for long‐term stewardship because future decision makers are likely to rely on the public record as the primary source of decision information. If information is not transparent, future decisions may be compromised.     

The hidden traps in decision making

Bad decisions can often be traced back to the way the decisions were made--the alternatives were not clearly defined, the right information was not collected, the costs and benefits were not accurately weighted. But sometimes the fault lies not in the decision-making process but rather in the mind of the decision maker. The way the human brain works can sabotage the choices we make. John Hammond, Ralph Keeney, and Howard Raiffa examine eight psychological traps that are particularly likely to affect the way we make business decisions: The anchoring trap leads us to give disproportionate weight to the first information we receive. The statusquo trap biases us toward maintaining the current situation--even when better alternatives exist. The sunk-cost trap inclines us to perpetuate the mistakes of the past. The confirming-evidence trap leads us to seek out information supporting an existing predilection and to discount opposing information. The framing trap occurs when we misstate a problem, undermining the entire decision-making process. The overconfidence trap makes us overestimate the accuracy of our forecasts. The prudence trap leads us to be overcautious when we make estimates about uncertain events. And the recallability trap leads us to give undue weight to recent, dramatic events. The best way to avoid all the traps is awareness--forewarned is forearmed. But executives can also take other simple steps to protect themselves and their organizations from the various kinds of mental lapses. The authors show how to take action to ensure that important business decisions are sound and reliable.     

The determinants of the hybrid security issuance decision for Australian firms

The Australian capital market has number of distinct characteristics that distinguish it from typical U.S. and European markets. There is a limited listed debt market where most firms use bank debt, convertible debt is not callable and stand alone warrants are used to raise capital. This paper examines the determinants of security choice for hybrid issuers in the Australian market. The results support the pecking order model and the impact of financial distress costs and taxation. Alternatively, the results provide support for the sequential financing model where firms with high profitability use convertible debt and firms with low profitability use warrants, to solve the sequential financing problem.     

Out-West Products, Inc.: A financial modeling and decision analysis case

The Out-West Products, Inc. instructional case requires students to build a comprehensive financial model to support planning and decision-making. Part 1 of this team-oriented Excel project requires students to construct a baseline model, while Part 2 provides sensitivity analysis and decision-making extensions. The case incorporates cost-volume-profit, accounting income versus cash flow, and benchmarking analyses. Case objectives provide students with a realistic financial modeling experience that includes: building models; linking data across financial statements; testing solutions and analyzing scenarios; and improving critical thinking skills. These objectives closely align to the AICPA Core Competency Framework for Entry into the Accounting Profession. The case can be used in introductory and upper-division managerial accounting, upper-division cost accounting, and MBA managerial accounting courses, and can be modularized to achieve instructor-specific objectives.     

Futures research and social decision making: Alternative futures as a case study

This article clarifies some basic features of futures research in order to make explicit the relation between futures research and social development in general as well as political planning and decision making in particular. Three paradigms for futures research are described and, as an example of an emancipatory futures research project, ‘Alternative futures’ will be introduced.     

The going public decision of business group firms

IPOs affiliated to business groups represent a large fraction of new issues in global markets. Groups are characterized by stronger private benefits of control and an internal funding advantage. Consistent with these features, group firms are more selective when going public than standalone firms. In particular, group IPOs are larger and older firms and engage less in market timing than standalone IPOs. Group firms invest less and are more profitable post IPO. Private benefits of control also affect the within-group selection of IPO firm. Our findings illustrate novel selection effects in public markets due to pre-IPO control structures.     

The effects of information load and information diversity on decision quality in a structured decision task

The major objective of this research was to study the effects of information load and diversity on decision quality in a structured decision task. The concept of information load was subdivided into the concepts of (1) quantity of repeated dimensions and (2) quantity of different dimensions. The latter concept was called information diversity. Two other independent variables studied were task learning and decision experience. Decision quality was operationalized to decision accuracy and time. It was hypothesized that the relationship between the quantity of repeated dimensions and accuracy would be an inverted U curve, and that repeated dimensions and time would produce a U curve. The initial rise in the accuracy curve and fall in the time curve did not occur in the results but the remainder of the curves were largely supported. There were exceptions, however, that require further investigation. It was further hypothesized that higher diversity would result in lower accuracy and higher time, and that higher learning and experience would both result in higher accuracy and lower time. These hypotheses were also largely supported by the results. Again there were exceptions that require clarification. The results also showed a number of interesting interactions between variables. The practical implications of these findings for accounting and information systems were outlined.     

The decision to terminate overfunded pension plans

This paper examines management's decision to terminate overfunded pension plans. Plan terminations are controversial because they sometimes redistribute pension funds from employee trusts to the firm. This empirical study compares a sample of firms terminating overfunded pension plans with a sample of firms continuing overfunded plans. The examination finds that both business-related and management-related variables help to explain the termination decision. With respect to business-related variables, firms are more likely to terminate overfunded plans that do not include union employees. These firms also tend to be smaller, have tax carryforwards, and have high financial leverage. With respect to management-related variables, termination firms tend to have management compensation plans based on income and high owner control. The results suggest that management motivation to terminate overfunded plans may be increased when the decision will advance the personal interests of managers.