Preliminary review of over-regulation in Australian financial services

This article examines a preliminary review and the limited evidence of over-regulation in Australian financial services. The 1997 Wallis Report and the CLERP 6 paper resulted in the amendments to Ch 7 of the Corporations Act 2001 (Cth) by the Financial Services Reform Act. Nearly a decade later the system based upon 'one-size fits all' dual track regime and a consistent licensing regime has greatly increased the costs of compliance. In the area of enforcement there has not been a dramatic change to the effective techniques applied by ASIC over other agencies such as APRA. In particular there are clear economic arguments, as well as international experiences which state that a single financial services regulator is more effective than the multi-layered approach adopted in Australia. Finally, in the superannuation area of financial services, which is worth A$800 billion there is unnecessary dual licensing and duplicated regulation with little evidence of any consumer-member benefit but at a much greater cost

Synthesis and thermal stability of hydrotalcites containing manganese

The hydrotalcite based upon manganese known as charmarite Mn4Al2(OH)12CO3•3H2O has been synthesised with different Mn/Al ratios from 4:1 to 2:1. Impurities of manganese oxide, rhodochrosite and bayerite at low concentrations were also produced during the synthesis. The thermal stability of charmarite was investigated using thermogravimetry. The manganese hydrotalcite decomposed in stages with mass loss steps at 211, 305 and 793°C. The product of the thermal decomposition was amorphous material mixed with manganese oxide. A comparison is made with the thermal decomposition of the Mg/Al hydrotalcite. It is concluded that the synthetic charmarite is slightly less stable than hydrotalcite.

Incorporating sustainability measures in life-cycle financial decision making for highway construction

Public awareness and the nature of highway construction works demand that sustainability measures are first on the development agenda. However, in the current economic climate, individual volition and enthusiasm for such high capital investments do not present as strong cases for decision making as the financial pictures of pursuing sustainability. Some stakeholders consider sustainability to be extra work that costs additional money. Though, stakeholders realised its importance in infrastructure development. They are keen to identify the available alternatives and financial implications on a lifecycle basis. Highway infrastructure development is a complex rocess which requires expertise and tools to evaluate investment options, such as environmentally sustainable features for road and highway development. Life-cycle cost analysis (LCCA) is a valuable approach for investment decision making for construction works. However, LCCA applications in highway development are still limited. Current models, for example focus on economic issues alone and do not deal with sustainability factors, which are more difficult to quantify and encapsulate in estimation modules. This paper reports the research which identifies sustainability related factors in highway construction projects, in quantitative and qualitative forms of a multi-criteria analysis. These factors are then incorporated into past and proven LCCA models to produce a new long term decision support model. The research via questionnaire, model building, analytical hierarchy processes (AHP) and case studies have identified, evaluated and then processed highway sustainability related cost elements. These cost elements need to be verified by industry before being integrated for further development of the model. Then the Australian construction industry will have a practical tool to evaluate investment decisions which provide an optimum balance between financial viability and sustainability deliverables.

Measuring performance of municipal real estate : softening the impact of financial crisis to local governments

Asset management in local government is an emerging discipline and over a decade has become a crucial aspect towards a more efficient and effective organisation. One crucial feature in the public asset management is performance measurement toward the public real estates. This measurement critically at the important component of public wealth and seeks to apply a standard of economic efficiency and effective organisational management especially in such global financial crisis condition. This paper aims to identify global economic crisis effect and proposes alternative solution for local governments to softening the impact of the crisis to the local governments organisation. This study found that the most suitable solution for local government to solve the global economic crisis in Indonesia is application of performance measurement in its asset management. Thus, it is important to develop performance measurement system in local government asset management process. This study provides suggestions from published documents and literatures. The paper also discusses the elements of public real estate performance measurement. The measurement of performance has become an essential component of the strategic thinking of assets owners and managers. Without having a formal measurement system for performance, it is difficult to plan, control and improve local government real estate management system. A close look at best practices in public sectors reveals that in most cases these practices were transferred from private sector reals estate management under the direction of real estate experts retained by government. One of the most significant advances in government property performance measurement resulted from recognition that the methodology used by private sector, non real estate corporations for managing their real property offered a valuable prototype for local governments. In general, there are two approaches most frequently used to measure performance of public organisations. Those are subjective and objective measures. Finally, findings from this study provides useful input for the local government policy makers, scholars and asset management practitioners to establish a public real estate performance measurement system toward more efficient and effective local governments in managing their assets as well as increasing public services quality in order to soften the impact of global financial crisis.

Compliance with international financial reporting standards (IFRS) and the value relevance of accounting information in emerging stock markets : evidence from Kuwait

Since the 1960s, the value relevance of accounting information has been an important topic in accounting research. The value relevance research provides evidence as to whether accounting numbers relate to corporate value in a predicted manner (Beaver, 2002). Such research is not only important for investors but also provides useful insights into accounting reporting effectiveness for standard setters and other users. Both the quality of accounting standards used and the effectiveness associated with implementing these standards are fundamental prerequisites for high value relevance (Hellstrom, 2006). However, while the literature comprehensively documents the value relevance of accounting information in developed markets, little attention has been given to emerging markets where the quality of accounting standards and their enforcement are questionable. Moreover, there is currently no known research that explores the association between level of compliance with International Financial Reporting Standards (IFRS) and the value relevance of accounting information. Motivated by the lack of research on the value relevance of accounting information in emerging markets and the unique institutional setting in Kuwait, this study has three objectives. First, it investigates the extent of compliance with IFRS with respect to firms listed on the Kuwait Stock Exchange (KSE). Second, it examines the value relevance of accounting information produced by KSE-listed firms over the 1995 to 2006 period. The third objective links the first two and explores the association between the level of compliance with IFRS and the value relevance of accounting information to market participants. Since it is among the first countries to adopt IFRS, Kuwait provides an ideal setting in which to explore these objectives. In addition, the Kuwaiti accounting environment provides an interesting regulatory context in which each KSE-listed firm is required to appoint at least two external auditors from separate auditing firms. Based on the research objectives, five research questions (RQs) are addressed. RQ1 and RQ2 aim to determine the extent to which KSE-listed firms comply with IFRS and factors contributing to variations in compliance levels. These factors include firm attributes (firm age, leverage, size, profitability, liquidity), the number of brand name (Big-4) auditing firms auditing a firm’s financial statements, and industry categorization. RQ3 and RQ4 address the value relevance of IFRS-based financial statements to investors. RQ5 addresses whether the level of compliance with IFRS contributes to the value relevance of accounting information provided to investors. Based on the potential improvement in value relevance from adopting and complying with IFRS, it is predicted that the higher the level of compliance with IFRS, the greater the value relevance of book values and earnings. The research design of the study consists of two parts. First, in accordance with prior disclosure research, the level of compliance with mandatory IFRS is examined using a disclosure index. Second, the value relevance of financial statement information, specifically, earnings and book value, is examined empirically using two valuation models: price and returns models. The combined empirical evidence that results from the application of both models provides comprehensive insights into value relevance of accounting information in an emerging market setting. Consistent with expectations, the results show the average level of compliance with IFRS mandatory disclosures for all KSE-listed firms in 2006 was 72.6 percent; thus, indicating KSE-listed firms generally did not fully comply with all requirements. Significant variations in the extent of compliance are observed among firms and across accounting standards. As predicted, older, highly leveraged, larger, and profitable KSE-listed firms are more likely to comply with IFRS required disclosures. Interestingly, significant differences in the level of compliance are observed across the three possible auditor combinations of two Big-4, two non-Big 4, and mixed audit firm types. The results for the price and returns models provide evidence that earnings and book values are significant factors in the valuation of KSE-listed firms during the 1995 to 2006 period. However, the results show that the value relevance of earnings and book values decreased significantly during that period, suggesting that investors rely less on financial statements, possibly due to the increase in the available non-financial statement sources. Notwithstanding this decline, a significant association is observed between the level of compliance with IFRS and the value relevance of earnings and book value to KSE investors. The findings make several important contributions. First, they raise concerns about the effectiveness of the regulatory body that oversees compliance with IFRS in Kuwait. Second, they challenge the effectiveness of the two-auditor requirement in promoting compliance with regulations as well as the associated cost-benefit of this requirement for firms. Third, they provide the first known empirical evidence linking the level of IFRS compliance with the value relevance of financial statement information. Finally, the findings are relevant for standard setters and for their current review of KSE regulations. In particular, they highlight the importance of establishing and maintaining adequate monitoring and enforcement mechanisms to ensure compliance with accounting standards. In addition, the finding that stricter compliance with IFRS improves the value relevance of accounting information highlights the importance of full compliance with IFRS and not just mere adoption.

TCSC control design for transient stability improvement of a multi-machine power system using trajectory sensitivity

This paper discusses the effects of thyristor controlled series compensator (TCSC), a series FACTS controller, on the transient stability of a power system. Trajectory sensitivity analysis (TSA) has been used to measure the transient stability condition of the system. The TCSC is modeled by a variable capacitor, the value of which changes with the firing angle. It is shown that TSA can be used in the design of the controller. The optimal locations of the TCSC-controller for different fault conditions can also be identified with the help of TSA. The paper depicts the advantage of the use of TCSC with a suitable controller over fixed capacitor operation.

Stability analysis based on birfurcation theory of the DSTATCOM operating in current control mode

This paper presents the stability analysis for a distribution static compensator (DSTATCOM) that operates in current control mode based on bifurcation theory. Bifurcations delimit the operating zones of nonlinear circuits and, hence, the capability to compute these bifurcations is of important interest for practical design. A control design for the DSTATCOM is proposed. Along with this control, a suitable mathematical representation of the DSTATCOM is proposed to carry out the bifurcation analysis efficiently. The stability regions in the Thevenin equivalent plane are computed for different power factors at the point of common coupling. In addition, the stability regions in the control gain space, as well as the contour lines for different Floquet multipliers are computed. It is demonstrated through bifurcation analysis that the loss of stability in the DSTATCOM is due to the emergence of a Neimark bifurcation. The observations are verified through simulation studies.

Modeling, stability analysis and control of microgrid

With the increase in the level of global warming, renewable energy based distributed generators (DGs) will increasingly play a dominant role in electricity production. Distributed generation based on solar energy (photovoltaic and solar thermal), wind, biomass, mini-hydro along with use of fuel cells and micro turbines will gain considerable momentum in the near future. A microgrid consists of clusters of load and distributed generators that operate as a single controllable system. The interconnection of the DG to the utility/grid through power electronic converters has raised concern about safe operation and protection of the equipments. Many innovative control techniques have been used for enhancing the stability of microgrid as for proper load sharing. The most common method is the use of droop characteristics for decentralized load sharing. Parallel converters have been controlled to deliver desired real power (and reactive power) to the system. Local signals are used as feedback to control converters, since in a real system, the distance between the converters may make the inter-communication impractical. The real and reactive power sharing can be achieved by controlling two independent quantities, frequency and fundamental voltage magnitude. In this thesis, an angle droop controller is proposed to share power amongst converter interfaced DGs in a microgrid. As the angle of the output voltage can be changed instantaneously in a voltage source converter (VSC), controlling the angle to control the real power is always beneficial for quick attainment of steady state. Thus in converter based DGs, load sharing can be performed by drooping the converter output voltage magnitude and its angle instead of frequency. The angle control results in much lesser frequency variation compared to that with frequency droop. An enhanced frequency droop controller is proposed for better dynamic response and smooth transition between grid connected and islanded modes of operation. A modular controller structure with modified control loop is proposed for better load sharing between the parallel connected converters in a distributed generation system. Moreover, a method for smooth transition between grid connected and islanded modes is proposed. Power quality enhanced operation of a microgrid in presence of unbalanced and non-linear loads is also addressed in which the DGs act as compensators. The compensator can perform load balancing, harmonic compensation and reactive power control while supplying real power to the grid A frequency and voltage isolation technique between microgrid and utility is proposed by using a back-to-back converter. As utility and microgrid are totally isolated, the voltage or frequency fluctuations in the utility side do not affect the microgrid loads and vice versa. Another advantage of this scheme is that a bidirectional regulated power flow can be achieved by the back-to-back converter structure. For accurate load sharing, the droop gains have to be high, which has the potential of making the system unstable. Therefore the choice of droop gains is often a tradeoff between power sharing and stability. To improve this situation, a supplementary droop controller is proposed. A small signal model of the system is developed, based on which the parameters of the supplementary controller are designed. Two methods are proposed for load sharing in an autonomous microgrid in rural network with high R/X ratio lines. The first method proposes power sharing without any communication between the DGs. The feedback quantities and the gain matrixes are transformed with a transformation matrix based on the line R/X ratio. The second method involves minimal communication among the DGs. The converter output voltage angle reference is modified based on the active and reactive power flow in the line connected at point of common coupling (PCC). It is shown that a more economical and proper power sharing solution is possible with the web based communication of the power flow quantities. All the proposed methods are verified through PSCAD simulations. The converters are modeled with IGBT switches and anti parallel diodes with associated snubber circuits. All the rotating machines are modeled in detail including their dynamics.

Rethinking financial literacy in the aftermath of the Global Financial Crisis

Systemic risks and other factors that contributed to the global financial crisis have highlighted the need to reconsider the scope and nature of financial literacy initiatives and programs. In this article, we argue the case for rethinking financial literacy and the need for integrated solutions that explicitly incorporate solutions to behavioural shortcomings exhibited by individuals in their financial decision-making. While recognising the need to consider behavioural biases in individuals’ financial decisions, to date regulatory responses have largely ignored those biases in their proposed education and other strategies designed to address poor financial literacy and improve financial disclosure that, in turn, will improve financial decision-making.