Agency costs and the discount rate for public sector enterprises

In this paper, we examine the implications of agency costs on the discount rate for public sector enterprises (PSEs); we do this in the framework of the Capital Asset Pricing Model. With the addition of agency costs, the discount rate for Public Sector Enterprises (PSEs) under uncertainty becomes the risk-adjusted discount rate plus a premium for agency costs; under certainty, the discount rate for PSEs is shown to be the risk-free rate plus a premium for agency costs. Use of a discount rate by PSEs without adjusting for agency costs both under certainty and uncertainty, will lead to sub-optimal capital investment decisions by PSEs.     

Professional accounting development in Nigeria: threats from the inside and outside

Over the years several, sometimes conflicting, theories attempting to explain the development of professions have emerged. The “functionalist” and “interactionist” theories have since lost the spotlight to a more critical approach based on the Weberian concept of closure. Limitations in the concept and practice of this neo-Weberain concept have led to suggestions that research into the sociology of professions, should also include historical analyses of professionalism that capture historical specificities with the aim of generating theory that sees beyond “just massive historical variation” [Collins, R. (1990). Changing conceptions in the sociology of the profession. In R. Torstendahl, & M. Burrage, The formation of professions: Knowledge, state and strategy. London: Sage Publications]. Such research should also investigate the structural conditions under which the professionalisation process takes place [Johnson, T. (1977). The profession in the class structure. In R. Scase, Industrial society: Class, cleavage and control. London: George Allen and Unwin.]. In order to achieve this, there is the need to critically study the relationship of the State and the profession [Klegon, D. (1978). The sociology of professions: an emerging perspective. Sociology of Work and Occupations, 5, 3, 259–283.] and to document more extensively, the process, rather than the product, of closure [Chua, W. F., & Paullaos, C. (1993). Rethinking the profession-state dynamic: the case of the Victorian Charter Attempt, 1885–1906, Accounting, Organizations and Society, pp. 128–691; Chua, W. F., & Paullaos, C. (1998). The dynamics of “closure” amidst the construction of market, profession, empire and nationhood: an historical analysis of an Australian Accounting Association. Accounting, Organizations and Society, 23 (2), 155–187; Ramirez, C. (2001). Understanding social closure in its cultural context: accounting practitioners in France (1920–1939), Accounting, Organizations and Society.]. Such is the approach of this article, which focuses on the development of the accounting professions in Nigeria. It critically examines the profession/ State dynamics that have helped shape the outcome of the various episodes in the history of the accounting profession in Nigeria. An important influence in this dynamics is the nature of government in place (i.e. military or civilian).     

Who makes acquisitions? CEO overconfidence and the market's reaction

Does CEO overconfidence help to explain merger decisions? Overconfident CEOs over-estimate their ability to generate returns. As a result, they overpay for target companies and undertake value-destroying mergers. The effects are strongest if they have access to internal financing. We test these predictions using two proxies for overconfidence: CEOs’ personal over-investment in their company and their press portrayal. We find that the odds of making an acquisition are 65% higher if the CEO is classified as overconfident. The effect is largest if the merger is diversifying and does not require external financing. The market reaction at merger announcement (-90$-90$ basis points) is significantly more negative than for non-overconfident CEOs (-12$-12$ basis points). We consider alternative interpretations including inside information, signaling, and risk tolerance.     

A possible solution to tropical troubles? : Debt-for-nature swaps

Two major problems spurred the development of debt-for-nature swaps —the high rate of destruction of tropical forests and the heavy debts accumulated by these countries. Debt-for-nature agreements are part of a new wave of thinking about the links between the environment and debt. With funds procured through conservation organizations, debt-for-nature swaps and funds have been arranged in several developing countries. This article examines myriad proposals to reduce the debt burden, identifies the link between debt, development and the environment, and clarifies the conceptual framework of the debt-for-nature swaps approach. Debt-for-nature swaps are analysed in terms of sovereignty, socioeconomic impacts and policy implications. It is concluded that the debt-for-nature swaps approach is not intended to provide debt relief on any significant scale nor resolve the debt crisis. Their nominal impact on the debt situation does not imply failure: they improve the management of natural resources. It is a strategy in which a number of goals converge for different groups in developing as well as developed countries.     

Pricing pension buy-outs under stochastic interest and mortality rates

Pension buy-out is a special financial asset issued to offload the pension liabilities holistically in exchange for an upfront premium. In this paper, we concentrate on the pricing of pension buy-outs under dependence between interest and mortality rates risks with an explicit correlation structure in a continuous time framework. Change of measure technique is invoked to simplify the valuation. We also present how to obtain the buy-out price for a hypothetical benefit pension scheme using stochastic models to govern the dynamics of interest and mortality rates. Besides employing a non-mean reverting specification of the Ornstein–Uhlenbeck process and a continuous version of Lee–Carter setting for modeling mortality rates, we prefer Vasicek and Cox–Ingersoll–Ross models for short rates. We provide numerical results under various scenarios along with the confidence intervals using Monte Carlo simulations.     

Energy Consumption and Carbon Emission Based Industrial Productivity in China: A Sustainable Development Analysis

The paper investigates the determinants of productivity growth in China. It also analyses the sustainability of the country's industrial growth by estimating sectoral productivity, accounting for energy usage and emission since the market‐oriented reforms launched in the late 1970s. The empirical analysis indicates that productivity is the most significant driver of growth. The substantial productivity improvement of China's industry is mainly attributable to high‐tech light industrial sectors. Heavy industry lags behind in terms of productivity and overall technical change.     

Demand for money in Bangladesh: a cointegration analysis

The aim of this study is to estimate the demand for real broad (M2) money in Bangladesh using the most recently developed autoregressive distributed lag approach to cointegration analyses. The empirical results show that there is a unique cointegrated and stable long-run relationship among real per capita broad money demand, real per capita income, domestic interest rates and unofficial exchange rate (UM) premiums which act as a surrogate for foreign interest rates. With money as the dependent variable, the results show that the income and interest elasticities are positive while the UM premium elasticity is negative. These results suggest that distortions in the financial and foreign exchange markets should be reduced in order to increase financial saving or monetary accumulation. Our results also reveal that the demand for money in Bangladesh is stable despite the changes in financial and exchange rate policies between 1975 and 1995.     

Trade and Financial Liberalisation and Endogenous Growth in Bangladesh

This paper empirically explores the joint impact of financial and trade liberalisation on economic growth in Bangladesh using various time series techniques, endogenous growth theory and annual data from 1975–95. Our empirical results are in accordance with the predictions of endogenous growth theory that both financial and trade liberalisation, along with investment in human capital enhance economic growth, suggesting the case for liberalisation of both the financial and trade sectors and suggesting that government initiatives in education policy may expedite economic growth. Results are robust across methodologies. [E52, F43, O11, O53]     

Managing offshore outsourcing in the software industry

The objective of this research paper is to investigate the fundamental role of managers in guiding and growing relationships of offshore software outsourcing partnerships. Offshore outsourcing allows businesses to reduce costs, increase shareholder value, gain competitive advantage, decrease cycle time, improve customer loyalty, gain staffing flexibility and increase revenue, and ultimately allows a business to focus on its core competencies. This study provides a strategic analysis on the key advantages and disadvantages between a contracted source vs a wholly owned offshore outsourcing subsidiary. The paper was focused on the dynamics of the management relationship with a look at how culture, language and the legal systems in foreign countries contribute to the overall outcome of offshore outsourcing ventures.