Managing implementation processes

Abstract

In order to improve financial decision making in local governments in Germany, accrual output-based budgeting is being introduced. As the dynamics of implementation processes are often neglected, we research the shift from established rules and procedures to the application of accrual accounting, especially how public managers deal with new financial management systems and how their expectations are fulfilled. Based on a dynamic capability approach, six case studies in German municipalities are conducted. In a comparative analysis we focus on the dynamics of implementation processes. The findings emphasize that the application of accrual accounting is dependent on strategic orientations of top managers, involvement of middle managers and the capability to develop new structural routines in managing change.     

Industry cost of equity capital: European evidence for multifactor models

We estimate the costs of equity capital for 117 industries from 16 European countries employing the CAPM and 8 multifactor asset pricing models as well as a variety of different econometric techniques. In doing so, we extend previous research on cost of equity estimation in mainly two ways. First, our study involves European instead of US or UK industries, which are investigated in previous research, and we find that cost of equity estimates obtained from the CAPM or multifactor asset pricing models are as imprecise for European industries as for US and UK industries. Second, in addition to the CAPM, the Fama and French [1993 Fama, Eugene F., and Kenneth R. French. 1993. “Common Risk Factors in the Returns on Stocks and Bonds.” Journal of Financial Economics 33: 3–56. doi: 10.1016/0304-405X(93)90023-5[Crossref], [Web of Science ®] , [Google Scholar]. “Common Risk Factors in the Returns on Stocks and Bonds.” Journal of Financial Economics 33: 3–56] three-factor model, and the Carhart [1997 Carhart, Mark M. 1997. “On Persistence in Mutual Fund Performance.” The Journal of Finance 52 (1): 57–82. doi: 10.1111/j.1540-6261.1997.tb03808.x[Crossref], [Web of Science ®] , [Google Scholar]. “On Persistence in Mutual Fund Performance.” The Journal of Finance 52 (1): 57–82] four-factor model, which are usually employed, our study includes six multifactor models that have not yet been examined on their ability to provide precise estimates of the costs of equity: the five-factor model of Fama and French [1993 Fama, Eugene F., and Kenneth R. French. 1993. “Common Risk Factors in the Returns on Stocks and Bonds.” Journal of Financial Economics 33: 3–56. doi: 10.1016/0304-405X(93)90023-5[Crossref], [Web of Science ®] , [Google Scholar]. “Common Risk Factors in the Returns on Stocks and Bonds.” Journal of Financial Economics 33: 3–56] as well as the multifactor models of Pástor and Stambaugh [2003 Pástor, Lubos, and Robert F. Stambaugh. 2003. “Liquidity Risk and Expected Stock Returns.” Journal of Political Economy 111 (3): 642–685. doi: 10.1086/374184[Crossref], [Web of Science ®] , [Google Scholar]. “Liquidity Risk and Expected Stock Returns.” Journal of Political Economy 111 (3): 642–685]; Campbell and Vuolteenaho [2004 Campbell, John Y., and Tuomo Vuolteenaho. 2004. “Bad Beta, Good Beta.” American Economic Review 94 (5): 1249–1275. doi: 10.1257/0002828043052240[Crossref], [Web of Science ®] , [Google Scholar]. “Bad Beta, Good Beta.” American Economic Review 94 (5): 1249–1275]; Hahn and Lee [2006 Hahn, Jaehoon, and Hangyong Lee. 2006. “Yield Spreads as Alternative Risk Factors for Size and Book-To-Market.” Journal of Financial &; Quantitative Analysis 41 (2): 245–269. doi: 10.1017/S0022109000002052[Crossref], [Web of Science ®] , [Google Scholar]. “Yield Spreads as Alternative Risk Factors for Size and Book-To-Market.” Journal of Financial &; Quantitative Analysis 41 (2): 245–269]; Petkova [2006 Petkova, Ralitsa. 2006. “Do the Fama–French Factors Proxy for Innovations in Predictive Variables?” The Journal of Finance 61 (2): 581–612. doi: 10.1111/j.1540-6261.2006.00849.x[Crossref], [Web of Science ®] , [Google Scholar]. “Do the Fama–French Factors Proxy for Innovations in Predictive Variables?” The Journal of Finance 61 (2): 581–612]; and Koijen, Lustig, and van Nieuwerburgh [2010 Koijen, Ralph S., Hanno N. Lustig, and Stijn G. van Nieuwerburgh. 2010. “The Cross-Section and Time-Series of Stock and Bond Returns.” Working Paper, University of Chicago, University of California at Los Angeles, New York University. [Google Scholar]. “The Cross-Section and Time-Series of Stock and Bond Returns.” Working Paper, University of Chicago, University of California at Los Angeles, New York University]. Our results suggest that these models provide even more imprecise cost of equity estimates. One main reason for these inaccurate estimates is the large temporal variation of the risk loadings on the non-traded factors in these models.     

Voluntary Adopters of Integrated Reporting – Evidence on Forecast Accuracy and Firm Value

This study investigates how integrated reporting (IR) creates value for investors. It examines how providers of financial capital benefit from an improved firm information environment provided by IR. Specifically, this study investigates the effect of voluntary IR disclosure on analyst earnings forecast accuracy as well as on firm value. To do so, we use an international sample of 167 listed companies that voluntarily publish an integrated report. Our analysis shows no significant effect of a voluntary IR publication on analyst earnings forecast accuracy and no significant effect on firm value. We thus do not find evidence for the fulfillment of IR's promises regarding improved information environment and value creation of voluntary adopters. We conclude that such companies might already have a relatively high level of transparency leading to an absent additional effect of IR disclosure. Positive effects of IR appear to be more relevant in environments where IR is mandatory.     

Fractional integration and interval prediction

The motivation for fractional integration in terms of low-frequency spectral behavior and long-lag auto-correlation behavior is well known. Using results on the rate of growth of variances of sums of integrated random variables, we provide additional and complementary time-domain motivation for fractional integration in terms of the long-horizon behavior of (1) the variance-time function, and (2) confidence intervals for predictions. The results are illustrated with an empirical application to real interest rate forecasting.     

A note on Chui,Gai and Haldane’s “Sovereign liquidity crisis: Analytics and implications for public policy”

This note corrects the welfare calculations in Chui, Gai and Haldane’s paper on sovereign liquidity crisis [Chui, M., Gai, P., Haldane, A.G., 2002. Sovereign liquidity crisis: Analytics and implications for public policy. Journal of Banking and Finance 26, 519–544]. We show that the exact formula not only dramatically reduces the computed welfare consequences from 66% of ex-ante expected output to roughly 13%, but also changes the direction of some reported comparative static results. In addition, we clarify the difference between fundamentals-driven and belief-driven welfare costs and extend some of the sensitivity calculations.     

CONSUMER PREFERENCE FOR PST-SUPPLEMENT PORK

Conjoint measurement was used to determine consumer preference for fresh pork produced with genetically engineered porcine somatotropin (pST). A preference model was constructed based on three pork attributes, degree of fat reduction, price, and production technology, which allowed for interactions between attributes to be estimated. Interview surveys were used to collect data in several shopping centres in three Australian cities. Respondents generally preferred leaner pST-supplemented pork, but only at fat reduction levels greater than those possible with conventionally produced pork, and at competitive prices.     

Network development and firm growth: A resource-based study of B2B Born Globals

Using multiple case studies, we explore how Born Global networks develop as the firm's internal resources grow. Building on networks and entrepreneurship research, we develop a theoretical framework and advance five propositions that link resource development and entrepreneurial orientation to network content, structure, centrality, and management. We also explore the benefits that Born Globals gain from this development. Key findings include: resource accumulation and network development have a strong relationship while network content becomes increasingly strategic; strong entrepreneurial orientation coincides with calculative network management; network benefits are not always advantageous to the firms. This study makes empirical contributions to Born Global and Networks research in the context of Business-to-Business firms, and provides practical implications for Entrepreneurs and Born Global managers.     

Hunting while working: An expanded model of employed job search

Major theoretical models of job search fail to consider the changing nature of careers, the influence of the internet as a job search tool, and the diverse objectives for employed job search. Consequently, the study of employed job search has been largely confined to turnover research. We add to existing theory by providing a typology of employed search objectives based on modifying employment conditions (separation-seeking, change-seeking, leverage-seeking), contagion (mimetic-seeking) and employability (knowledge-seeking, network-seeking) and offer propositions related to the antecedents and implications for each objective. This classification offers an alternative explanation for previous research findings, provides a framework for future study, and has practical implications for employee retention and recruitment.     

DISAGGREGATING THE ELECTRICITY SECTOR OF CHINA'S INPUT–OUTPUT TABLE FOR IMPROVED ENVIRONMENTAL LIFE-CYCLE ASSESSMENT

Missing process detail of sectors in Input–Output (I–O) tables has been pointed out as a limitation of I–O analysis in environmental-economic life cycle assessment. Aggregation of resource-intensive sectors decreases the accuracy of the results. Often, economic sectors are compiled in a more aggregated form than environmental satellite accounts, and as [Lenzen, M. (2011) Aggregation Versus Disaggregation in Input–Output Analysis of the Environment. Economic Systems Research, 23, 73–89] asserts, it is superior for environmental analysis to disaggregate the I–O table, even if only partial information exists for the disaggregation. In this paper we present a methodology to disaggregate the electricity sector of the Chinese national I–O table by using regional information and cost data for operation and maintenance of power plants. The electricity sector is disaggregated into a transmission and distribution sector as well as eight sub-sectors representing different types of technology in power plants (subcritical coal, hydro, etc.). The electricity consumption mix of each industry is determined by using regional industry presence and regional electricity power mixes. The disaggregated I–O table offers refined results for calculating emissions embodied in international exports from China, a valuable contribution for estimating national greenhouse gases emissions inventories under the consumption-based approach for countries that rely heavily on imports of goods from China.