The role of Investment Management Systems in regulatory compliance: a Post-Financial Crisis study of displacement mechanisms

The financial crisis of 2007–2009 and the resultant pressures exerted on policymakers to prevent future crises have precipitated coordinated regulatory responses globally. A key focus of the new wave of regulation is to ensure the removal of practices now deemed problematic with new controls for conducting transactions and maintaining holdings. There is increasing pressure on organizations to retire manual processes and adopt core systems, such as Investment Management Systems (IMS). These systems facilitate trading and ensure transactions are compliant by transcribing regulatory requirements into automated rules and applying them to trades. The motivation of this study is to explore the extent to which such systems may enable the alteration of previously embedded practices. We researched implementations of an IMS at eight global financial organizations and found that overall the IMS encourages responsible trading through surveillance, monitoring and the automation of regulatory rules and that such systems are likely to become further embedded within financial organizations. We found evidence that some older practices persisted. Our study suggests that the institutionalization of technology-induced compliant behaviour is still uncertain.

Institutional pressures on financial services firms: the role of information systems in regulatory compliance

The financial crisis of 2008 led to new international regulatory controls for the governance, risk and compliance of financial services firms. Information systems play a critical role here as political, functional and social pressures may lead to the deinstitutionalization of existing structures, processes and practices. This research examines how an investment management system is introduced by a leading IT vendor across eight client sites in the post-crisis era. Using institutional theory, it examines changes in working practices occurring at the environmental and organizational levels and the ways in which technological interventions are used to apply disciplinary effects in order to prevent inappropriate behaviors. The results extend the constructs of deinstitutionalization and identify empirical predictors for the deinstitutionalization of compliance and trading practices within financial organizations.

Designing flexible procurement systems

The systems used for the procurement of buildings are organizational systems. They involve people in a series of strategic decisions, and a pattern of roles, responsibilities and relationships that combine to form the organizational structure of the project. To ensure effectiveness of the building team, this organizational structure needs to be contingent upon the environment within which the construction project takes place. In addition, a changing environment means that the organizational structure within a project needs to be responsive, and dynamic. These needs are often not satisfied in the construction industry, due to the lack of analytical tools with which to analyse the environment and to design appropriate temporary organizations. This paper presents two techniques. First is the technique of "Environmental Complexity Analysis", which identifies the key variables in the environment of the construction project. These are classified as Financial, Legal, Technological, Aesthetic and Policy. It is proposed that their identification will set the parameters within which the project has to be managed. This provides a basis for the project managers to define the relevant set of decision points that will be required for the project. The Environmental Complexity Analysis also identifies the project's requirements for control systems concerning Budget, Contractual, Functional, Quality and Time control. The process of environmental scanning needs to be done at regular points during the procurement process to ensure that the organizational structure is adaptive to the changing environment. The second technique introduced is the technique of "3R analysis", being a graphical technique for describing and modelling Roles, Responsibilities and Relationships. A list of steps is introduced that explains the procedure recommended for setting up a flexible organizational structure that is responsive to the environment of the project. This is by contrast with the current trend towards predetermined procurement paths that may not always be in the best interests of the client.

Towards a method for the economic evaluation of environmental indicators in UK Integrated Arable Farming Systems

Integrated Arable Farming Systems (IAFS), which involve a reduction in the use of off-farm inputs, are attracting considerable research interest in the UK. The objectives of these systems experiments are to compare their financial performance with that from conventional or current farming practices. To date, this comparison has taken little account of any environmental benefits (or disbenefits) of the two systems. The objective of this paper is to review the assessment methodologies available for the analysis of environmental impacts. To illustrate the results of this exercise, the methodology and environmental indicators chosen are then applied to data from one of the LINK - Integrated Farming Systems experimental sites. Data from the Pathhead site in Southern Scotland are used to evaluate the use of invertebrates and nitrate loss as environmental indicators within IAFS. The results suggest that between 1992 and 1995 the biomass of earthworms fell by 28 kg per hectare on the integrated rotation and rose by 31 kg per hectare on the conventional system. This led to environmental costs ranging between £2.24 and £13.44 per hectare for the integrated system and gains of between £2.48 and £14.88 for the conventional system. In terms of nitrate, the integrated system had an estimated loss of £72.21 per hectare in comparison to £149.40 per hectare on the conventional system. Conclusions are drawn about the advantages and disadvantages of this type of analytical framework. Keywords: Farming systems; IAFS; Environmental valuation; Economics; Earthworms; Nitrates; Soil fauna

Integrated clinical pathway management for medical quality improvement-based on a semiotically inspired systems architecture

Clinical pathway is an approach to standardise care processes to support the implementations of clinical guidelines and protocols. It is designed to support the management of treatment processes including clinical and non-clinical activities, resources and also financial aspects. It provides detailed guidance for each stage in the management of a patient with the aim of improving the continuity and coordination of care across different disciplines and sectors. However, in the practical treatment process, the lack of knowledge sharing and information accuracy of paper-based clinical pathways burden health-care staff with a large amount of paper work. This will often result in medical errors, inefficient treatment process and thus poor quality medical services. This paper first presents a theoretical underpinning and a co-design research methodology for integrated pathway management by drawing input from organisational semiotics. An approach to integrated clinical pathway management is then proposed, which aims to embed pathway knowledge into treatment processes and existing hospital information systems. The capability of this approach has been demonstrated through the case study in one of the largest hospitals in China. The outcome reveals that medical quality can be improved significantly by the classified clinical pathway knowledge and seamless integration with hospital information systems.

The role of rules-based compliance systems in the new EU regulatory landscape: perspectives of institutional change and agency

The financial crisis of 2007-2009 and the subsequent reaction of the G20 have created a new global regulatory landscape. Within the EU, change of regulatory institutions is ongoing. The research objective of this study is to understand how institutional changes to the EU regulatory landscape may affect corresponding institutionalized operational practices within financial organizations and to understand the role of agency within this process. Our motivation is to provide insight into these changes from an operational management perspective, as well as to test Thelen and Mahoney?s (2010) modes of institutional change. Consequently, the study researched implementations of an Investment Management System with a rules-based compliance module within financial organizations. The research consulted compliance and risk managers, as well as systems experts. The study suggests that prescriptive regulations are likely to create isomorphic configurations of rules-based compliance systems, which consequently will enable the institutionalization of associated compliance practices. The study reveals the ability of some agents within financial organizations to control the impact of regulatory institutions, not directly, but through the systems and processes they adopt to meet requirements. Furthermore, the research highlights the boundaries and relationships between each mode of change as future avenues of research.

International financial reporting standards (IFRS) as a change agent in Ukraine

This paper aims to examine the perception of key actors regarding the costs and benefits that result from adopting International Financial Reporting Standards (IFRS) in Ukraine. Authors showed that IFRS implementation impacts on internal reporting quality, the relationship with customers, creditors and shareholders, the access to international markets and external financing. They also indicated that financial managers have serious concerns about implementation costs related to the introduction of IFRS. These costs relate to training, instruction on IFRS adoption and translation of current IFRS, changes in software systems, double purpose accounting and deadlines for IFRS adoption and consulting services.

Building post crisis watchtowers: investment management Systems and new institutional logics for regulatory compliance

The financial crisis of 2007-2009 has precipitated large scale regulatory change. Tight deadlines for implementation require organizations to start working on remediation projects before final drafts of regulations are crystalized. Firms are faced with engaging in complex and costly change management programs at a time when profits are diminished. As a consequence of these factors, pre-crisis logics for organizing compliance practices are being questioned and new approaches introduced. Our study explores the use of Investment Management Systems (IMS) in facilitating compliance arrangements. Our motivation is to understand the new logics and the part played by IMS in supporting these approaches. The study adopts an institutional logics perspective to explore the use of such systems at eight financial organizations. The study found new logics for organizing compliance include consolidation, centralization, harmonization and consistency and that the IMS plays an important role in supporting and enabling related activities.

The role of rules-based compliance systems in the new EU regulatory landscape: perspectives of institutional change

Purpose The research objective of this study is to understand how institutional changes to the EU regulatory landscape may affect corresponding institutionalized operational practices within financial organizations. Design/methodology/approach The study adopts an Investment Management System as its case and investigates different implementations of this system within eight financial organizations, predominantly focused on investment banking and asset management activities within capital markets. At the systems vendor site, senior systems consultants and client relationship managers were interviewed. Within the financial organizations, compliance, risk and systems experts were interviewed. Findings The study empirically tests modes of institutional change. Displacement and Layering were found to be the most prevalent modes. However, the study highlights how the outcomes of Displacement and Drift may be similar in effect as both modes may cause compliance gaps. The research highlights how changes in regulations may create gaps in systems and processes which, in the short term, need to be plugged by manual processes. Practical implications Vendors abilities to manage institutional change caused by Drift, Displacement, Layering and Conversion and their ability to efficiently and quickly translate institutional variables into structured systems has the power to ease the pain and cost of compliance as well as reducing the risk of breeches by reducing the need for interim manual systems. Originality/value The study makes a contribution by applying recent theoretical concepts of institutional change to the topic of regulatory change uses this analysis to provide insight into the effects of this new environment

Global financial crisis: implications for Chinese corporate governance

This paper analyses the role of corporate governance failures and weaknesses in the global financial crisis with reference to the evolution of post-crisis corporate governance arrangements in China. The current crisis presents China with an opportunity to analyse its governance problems, reflect on its weaknesses and implement a strategy to address areas which need attention. This paper opens with a description of China’s exposure to the current global financial crisis and continues to critically evaluate the effectiveness of a free market system on corporate governance. Bratton (2002) maintains that incentive structures that motivate the self-regulatory systems generate less powerful checks against abuse than scholars and practitioners have believed. The paper highlights the need for corporate regulatory bodies and policy makers to revise and re-develop financial services sector regulations. Finally, the paper discusses the need of ethics in organizations - an issue that is beyond legislation. In an increasingly interconnected global economy, it is imperative to increase our understanding of what constitutes an effective corporate governance system. The paper contributes to the corporate governance body of literature within the Chinese context by providing insights into the contributing factors to corporate governance failure that led to the global financial crisis. It also provides policy recommendations for China’s policy makers to seriously consider. The results suggest a need for the re-examination of corporate governance adequacy and the institutionalisation of business ethics.

Uptake of agri-environmental schemes in the Less-Favoured Areas of Greece: The role of corruption and farmers' responses to the financial crisis

Vine-growing in the Less-Favoured Areas of Greece is facing multiple challenges that might lead to its abandonment. In an attempt to maintain rural populations, Rural Development Schemes have been created that offer the opportunity to rural households to maintain or expand their farming businesses including vine-growing. This paper stems from a study that used data from a cross-sectional survey of 204 farmers to investigate how farming systems and farmers’ perception of corruption, amongst other socio-economic factors, affected their decisions to continue vine-growing through participation in Rural Development Schemes, in three remote Less-Favoured Areas of Greece. The Theory of Planned Behaviour was used to frame the research problem with the assumption being that an individual’s intention to participate in a Scheme is based on their prior beliefs about it. Data from the survey were reduced and simplified by the use of non-linear principal component analysis. The ensuing variables were used in selectivity corrected ordered probit models to reveal farmers’ attitudes towards viticulture and rural development. It was found that economic factors, perceived corruption and farmers’ attitudes were significant determinants on whether to participate in the Schemes. The research findings highlight the important role of perceived corruption and the need for policies that facilitate farmers’ access to decision making centres.

Financial viability appraisals for site-specific planning decisions in England

In England, appraisals of the financial viability of development schemes have become an integral part of planning policy-making, initially in determining the amount of planning obligations that might be obtained via legal agreements (known as Section 106 agreements) and latterly as a basis for establishing charging schedules for the Community Infrastructure Levy (CIL). Local planning authorities set these policies on an area-wide basis but ultimately development proposals require consent on a site-by-site basis. It is at this site-specific level that issues of viability are hotly contested. This paper examines case documents, proofs of evidence and decisions from a sample of planning disputes in order to address major issues within development viability, the application of the models and the distribution of the development gain between the developer, landowner and community. The results have specific application to viability assessment in England and should impact on future policy and practice guidance in this field. They also have relevance to other countries that incorporate assessments of economic viability in their planning systems.

The role of big data in governance: a regulatory and legal perspective of analytics in global financial services

This paper discusses how global financial institutions are using big data analytics within their compliance operations. A lot of previous research has focused on the strategic implications of big data, but not much research has considered how such tools are entwined with regulatory breaches and investigations in financial services. Our work covers two in-depth qualitative case studies, each addressing a distinct type of analytics. The first case focuses on analytics which manage everyday compliance breaches and so are expected by managers. The second case focuses on analytics which facilitate investigation and litigation where serious unexpected breaches may have occurred. In doing so, the study focuses on the micro/data to understand how these tools are influencing operational risks and practices. The paper draws from two bodies of literature, the social studies of information systems and finance to guide our analysis and practitioner recommendations. The cases illustrate how technologies are implicated in multijurisdictional challenges and regulatory conflicts at each end of the operational risk spectrum. We find that compliance analytics are both shaping and reporting regulatory matters yet often firms may have difficulties in recruiting individuals with relevant but diverse skill sets. The cases also underscore the increasing need for financial organizations to adopt robust information governance policies and processes to ease future remediation efforts.